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00:00How this works, a lot of people might as simple over the last couple of weeks. Jim, it goes something like this. The banking issues lead to credit stress. You have to bring forward the recession downgrade credit. BlackRock did just that downgrading credit. They said this would dent confidence, it would hurt growth. Do you agree? I do agree with that. And I think what we have to really distinguishes is this a systemic event? Or is it a heavy blow to confidence? I think it's a heavy blow to confidence. Is it a credit crunch like in 2008 or is it a credit tightening? I think it's a credit tightening. So ultimately, whatever you thought the recession risks were two weeks ago. It has to be higher today. Whatever you thought inflation might have and you know, going forward, it's probably also lower because you're going to have slower growth going forward. So it's really it's really a trade off in terms of all of the tightening that we may see. It's very, very likely to see in the banking sector and from the banking sector. When does that start to show up in the economy? Is it in the third quarter or is it in the fourth quarter? Is it right away? Usually these things work with a bit of a lag. And I think that that lag effect is really what's creating the uncertainty. So, look, I mean, most people don't expect that we're gonna grow more than 1 percent this year anyways. So if we're gonna shave off a half a percent or more, that actually that's actually a meaningful amount. Meaning shave off a half percent. Given the tightening of credit standards that, you know, that creates more of a negative outlook for Ford for 2023, and it's something that we need to be concerned about. Jim COWAN, sandalwood. Yeah. Look, I mean, I don't disagree too much from that. I think high yield around 9 percent, investment grade credit around five and a half percent. Default risks are likely to go up with a slower economy. But I don't think it's going to be excessive. So I think these yields give you some protection. The other thing I'll say in equities is that, you know, we we would expect earnings to come down. We would expect profit margins to come down. But I also think that there are some opportunities for companies with good balance sheets and decent liquidity that actually you can go shopping on sale a little bit here. You have to be very selective and it's very sector specific. I would argue more the materials and industrials sectors of the market, maybe some consumer staples. So again, somewhat defensive on the equity posture. But I do think that there are some things that some bargains out there to.

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Bank Crisis Not a Credit Crunch: Morgan Stanley's Caron

The recent turmoil in banks is "a heavy blow to confidence," Morgan Stanley Global Balanced Funds co-CIO Jim Caron says. Speaking during an interview with Jonathan Ferro on "Bloomberg The Open," Caron also discusses his views on the current state of financial markets. (Source: Bloomberg)

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