Live on Bloomberg TV

00:00So are you pricing in a recession at this point and what would that mean for the equity space. We were in late cycle and what we don't see recession in 2022. We have to look forward and say eventually we'll go into the next recession. And as you were mentioning not all recessions are alike and they don't all have to be like 2008 which was somewhat catastrophic when it comes to equity prices. So if we look back at the 80s in the early 80s a recession a year later after that recession the market S & P 500 was up 25 percent. If we look in the 90s a year later the reset the equity markets the S & P 500 was up 5 percent. So oftentimes while we may see declines we then see a quick rebound. And the other thing to note is that from the time the yield curve inverts to the time of a recession that starts in P 500 tends to go up on average twelve point four percent. So investors may not want to miss out on that potential rally. I think the fear right now is that if we continue to see yields rising we may see really these investors flock to the bond space ride this G TV chart on the Bloomberg showing how yields are risen and the real rate also could turn positive any time now. So what would that mean for the equity space especially if you're trying to find some value. Well the good thing about this is that means that a balanced portfolio will have more yield than it has had. When it comes to the fixed income portion and what you don't want to give up all of your fixed income. The other point to note is that that spread between the S & P 500 dividend yield and the 10 year treasury is the wide spread we've seen since 2018. So quite a big spread. So yes indeed. Once again it's time to look at fixed income and see a place for it. And it does have a place for investors. I think it's easier to your point again. Investors will continue to look at fixed income. But if you're looking at a balanced portfolio and also to remember if you look year to day large cap value is in the positive. So there are areas in the equity markets to look at as well. Just a minute ago we were hearing from Fayed Governor Christopher Wallace the Christopher Wallace saying that the Fed is using a hammer in terms of rights and that that brute force does cause some collateral damage. And if you're looking around the market the collateral damage. Are there any areas that have got avoid or written all over them for you. Well I think that's what we've seen today we've seen pricing adjustments with the expectation of 50 basis points coming up. And it might not just be one 50 basis point rate hike it might be another one after that. And so the markets have to reprice. So we're looking at defensive positions like health care as a sector that looks very attractive right now as far as valuations in areas of the market like managed care and large pharma that we think can get through some of these more difficult times. We've got earnings season of course kicking off this week. J.P. Morgan Goldman Citi among those the first to report. What are you anticipating in this environment of hot inflation. Well inflation is going to be the key. And talking about companies who are price takers and price setters so what are the companies that are able to go ahead and set their prices. And what are the companies that just have to take a decrease in profit margin. And I think the markets are going to react strongly to the ones in a positive way. They can set prices like in the area of food. So if you look at companies like Tyson or Portly in the areas of food where they've been able to raise prices versus other use the market where they've just had to take the profit margin cut.

No schedule data available.

WealthWise Financial's Gilbert on Markets and Strategies

Loreen Gilbert, WealthWise Financial CEO discusses markets and investment strategies. She speaks with Shery Ahn and Paul Allen on "Daybreak Asia". (Source: Bloomberg)

More From Daybreak Asia
All episodes and clips

Bloomberg Markets
"Bloomberg Markets" is focused on bringing you the most important global business and breaking markets news and information as it happens.
More episodes and clips