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Markets Update: Europe and COVID-19

2020-03-27

Andrew Wilson of Goldman Sachs Asset Management explains how volatility in U.S. financial markets from the COVID-19 outbreak is playing out across Europe as well. “European markets have been very much in the eye of the storm,” Wilson says. “So the focus is on what policy responses are coming out of Europe, just as much as it is out of the U.S.” 

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Welcome to our exchanges, compact market updates. From March twenty seven. Every week we check in with leaders across the burned to get there could take on what they're watching in markets and is certainly a lot to watch object. He were in today's Gaspe, Andrew Wilson of Consumer and investment, as with division were actually working remotely, like many others, too. I'm dying from New York and Andrews over London and he'll be catching. It happened. Latest movement in european markets welcome Andrew Beckett, very much deck, though before jumpy, and this will give us a quick intro and tell us what you put the fairy easier for some hours. Welcome. lucky as for texting, come and liquidity business within the Goldman Sachs Asset Management as us. Ok, so obviously, We ve been doing a lot of volatility, yours equity markets, how european markets been training the last few weeks and has been pretty much working in parallel with the vote already working in the. U S ear, I think you're gonna look at what the underlying
was here, of course, is a global phenomenon. You know that virus having started in in Asia and moving around the rest of the world, and we ve seen that locality across all markets and, as members will be aware, really Europe is now being described as the Epp. He said the certainly many more deaths that have happened- unfortunately, in Europe than there has been in China, so european law? it's really have been very much in the eye of the storm, so the volatility that you want, witnessed in the? U S has played out across european market, whether that is in the text, come equity or currency markets in the same way that we ve seen in the? U S so suddenly focus is on what policy response the coming out of Europe just as much as it is out of the U S per year, with the head of the: U S and gained some significant outbreaks. Why are european markets so closely part of Europe
that was bought. Wiping pressure got to acknowledge that. As you said, Europe was a hidden listen, so you know the focus really was water The response from the European Central Bank that important laid he was dogma, is still the world's reserve currency, so the actions of the Federal Reserve and their ability to ensure that there are no good market functioning effectively in. U S dollars remains critical to all financial market. So one it's important that the Eu S, liquidity remains as it possibly can and then, secondly, that the actions that deal specifically with european assets- and here I would point to point to italian government bonds- Again- is being supported by the European Central Bank- measured subject- combination all the reserve currency and the importance that plays overfed plays in determining mark liquidity combined with major specifically dealing with the european issues, and I think,
combination is important in terms of providing some stability and liquidity to global markets. So do you as far as he has the ability to do national stimulus package on the fiscal five and, as you said, the new leadership, a busy bee. They were able to step in and make a big move onto it. What do you see on the fiscal fraud Europe and our market participants focused on that love, yet looking make it good point Jake's at it in the euro, since it is not always right borders with things through the passage of this two trillion package, but it certainly is much easier to do at dinner. who country again is across a large number of countries. So I think the easy be has really been the driving force behind providing stimulus
liquidity to the market, but unlike other countries, what is important equally is now combination of monetary and fiscal, and there has been some more talk, and indeed today we have a meeting of EU leaders that was following a meeting of the EU finance ministers earlier in the week to try and come up with some measures to have a coordinated fiscal response. The discussion is around year using the European stability mechanism, so that yes M to provide some What's funding that countries that debate discussion is really a round the terms and conditions or what is being put to his condition, Alitalia, round use of that facility. I don't think there's a large amount of optimism in the markets today that we are expecting anything imminent, but it is and can carriages that that is being talked about and discuss them and sending markets are focusing on that? I think where we are today in the announcement within the next week, even
be viewed as a positive surprise. If we can find some way to have a coordinated fiscal response, but it is definitely more challenging across the EU twenty seven. Then it is as across the U S. On a year, urgent, ITALY's been at the centre of this for a while. Now in in one thing, that's restored a little butter. Confidently themes is that there were some early. below virus slowdown, ITALY, our markets, responding to them in what you are now you're lucky. I we need to acknowledge that tab. We're not medical experts and all of us are learning in terms of how the deadly virus is playing out. I can we take a small amount of comfort from the bank we are seeing a reduction in the number of inspections I think, we're looking at China blaming them ahead in this process in the dialogue towns that seem too
necessary to reduce infections, and, of course, we ve seen by its people were hurt. It occur, flattened they asked the council last week, or so very few new cases, certainly new on the grand cases so its early days in ITALY to get too optimistic, and we have to be humble about our ability to analyze, an event like this, but I think there is some encouragement from Asia that, with the right measures, lockdown measures, although they have a great deal of economic harm, they sit. reduce ignore, can't leave the infection rights hang given that's what we are also seeing in ITALY now. I think there is some optimism, maybe cautious optimism, admittedly, but nevertheless some optimism that we may be getting to the point that we begin to see a reduction and affection writes that I wouldn't want to put too much weight of it still relatively early days, but in a world I think, as cross, that we are able to get this terrible virus under control. Do you,
see in dialogue with a lot of clients. What what's the biggest question you ve been getting from plants this week. interesting Jake, because we, as you say, we aren t enough discussion with a large number of clients, and I think the it's amazing. How sentiment can change the tone of those conversations at this week, as we have seen markets bounced back actually pretty strongly, as we talk here, today. Suddenly those conversations and really this is just the last few days- have turned into opportunities this time to deploy more problem into some of the riskier assets. Have really saying very significant marked down. So you know there are people now beginning to think about deploying capital to They decided. That's gonna tenant a flood of money, but nevertheless there is a little more optimism around you're. Having a view on witty in game is here the thinking that this could be it a good time to the point they some capital?
ices that look kid I significantly cheaper than they were at the start of the year, a special there's, always a buyer wherever dollars know what one thing you're looking at in the weeks ahead were european or more broadly, the global market. The key issues has been a large number of fiscal measures put in place, both in the? U S, Europe, and even here in the UK, a key aspect is going to be the ability to deploy that capital. So, as we know, business activity is They stopped us can I have a very significant impact on the financial position of particular smaller companies and only employees of those companies. Governments are being very proactive in responding to that with the various measures but you know that the money may have stopped today in and we gotta be sure that the government measures get that money
where it is needed to the businesses to the individuals in a timely manner? So I think, looking at those measures, the deployment of them and how effective they are going to be. I think he's gonna be the critical issue in terms of the saying- and I have said the others downturn is going to be. I think, looking beyond just the sort of one to two weeks. Time arise and I think we will all continue to watch the infection. Rights in China is the measures they are to reduce many of the restrictions that were put in place just to see what happens to infection right. So if we do so, You know the economy's able to open up people get back to work, not see any meaningful uptake and affection right? I think the markets will again take a great deal of camp had from the fact that you know the reason ability to really restrain this spread of the virus. What Nike,
in encouraging a cautionary by encouraging. No thanks for joint yesterday Andrew my pleasure. Thank you. That's all. Through this week's markets update on exchange the common fact, and in case you must check out or other up until this week with common such research tat strategy, some economists who discussion billions to: U S work more cat amidst the ongoing covered nineteen outbreak. Thank you for listening and I hope everyone in Spain healthy and safe. This part gas was reported on March twenty to them In twenty all price references and market forecasts correspond to the date of this recording. This podcast should not be copied, distributed, published or reproduced in whole or in part. The information contained in this cast does not constitute research or recommendation from any Goldman Sachs Entity to the listener. Neither Goldman Sachs
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Transcript generated on 2021-07-02.