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Contextualizing recent market data and volatility

Jeff Kleintop, Chief Global Investment Strategist at Charles Schwab & Co., joins Yahoo Finance Live to discuss recent data and applying it to current market action.

Video Transcript

- Right now, we have stocks off between the major indices, between 2% and 3%. Dow 30, the biggest laggard. It is off some 3%. But we are off the lows of the session that we hit this morning.

Want to bring in Jeff Kleintop, Chief Global Investment Strategist with Charles Schwab, to just-- let's start first with this stimulus package and what you think it means in terms of our recovery. Is this a catalyst that can set us on a V-shape trajectory.

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JEFF KLEINTOP: That's an important question. No, it's not a catalyst. But it is fuel. So once people finally feel like they can leave their homes again, this is the money they're going to spend. This is the money that they're going to get in terms of checks. This is the money that's going to ensure they still have a job, that their companies are not bankrupt, that they can make payrolls. So that when we do feel OK leaving our homes again, we've got that ability to power some type of rebound.

So it's not the trigger. That'll be the health data. But it's the fuel that ultimately, when we get that health data suggesting it's clear, that we've got the clear again, that we can actually power some kind of rebound.

- Hey Jeff, I want to ask a little bit about GDP and something you point out, which is that the way we report it, that angle-izing number is going to create kind of a terrifying figure, I guess when we get it the last week of July. And I guess I think a lot of people right now-- you look at the claims number yesterday-- are struggling with how to understand and contextualize the kind of data we're seeing now.

What are you thinking about? How are you trying to think through some of these stunning numbers, and explain them to people who are very scared by the data we're seeing? And it is bad data, but it might not be quite as apocalyptic as a 50% GDP decline would otherwise sound.

JEFF KLEINTOP: Right, so yeah. You think about like a 40% decline, it's a shock and awe kind of number-- something like we've never seen before. But because we annualize GDP in the US-- something no other major nation does-- that means we take the actual hit, which was more like 10%, if it's even that bad, multiply it by 4.

Now, if you think about so much of the US is shut down right now and activity is simply ground to a halt in so many industries, thinking that just 10% of our output for a quarter seems entirely reasonable when you put it in that context. And the idea that it may be limited in its duration, maybe it doesn't seem quite so scary when you think of it that way.

- Let me ask you a question, Jeff, about the stimulus package and its effect on the market. Is this enough to sort of restore confidence? I mean, we've seen the market sort of stabilize. But is it your assumption that this is just a temporary respite? Or how are you sort of looking at what this will do in terms of stabilizing at least sentiment, never mind actual trading?

JEFF KLEINTOP: Well, the question right now is how deep are we going to go? And then, how much can this stimulus package offset that depth? Last week, we only got the first glimpse of it, the claims number, which was just amazingly high. Of course, coming this week, we'll get the ISM report on manufacturing. We'll get another claims report. We'll even get car sales for the month of March. These are going to be some grim numbers.

So the question is, can the stimulus program, which is only slowly going to be put in place, can that offset the negative daily drops of grim data that's going to be hitting people? I'm not sure it's going to. And I think that the magnitude of the depth of this decline, although we just talked about it, it's not as bad as maybe a 40% or 50% number. It's still very significant. I think that will weigh on the minds of investors. I'd be surprised if it's a straight up move from here.

- Jeff Kleintop, Schwab Chief Global Investment Strategist. Have a great weekend. Thank you so much for your time.

JEFF KLEINTOP: Thanks. Stay safe, everyone.