Hans Olsen, CIO of Fiduciary Trust Company, joined Yahoo Finance's Jen Rogers and Myles Udland to discuss the latest in the markets amid coronavirus and why he's optimistic that he's seeing a bottom in the market.

Video Transcript

JEN ROGERS: I want to bring in Hans Olsen, CIO of the Fiduciary Trust Company, to talk about the action that we are seeing this week. I mean, we're kicking off a new week here. You say that you are cautiously optimistic, which it's good to have some optimism out there.

But we have a lot of bad data still to come. And people keep telling us we're going to have really rough headlines coming out for the foreseeable future. Do you think it's possible that the market has really priced in all the negative news to come?

HANS OLSEN: Not likely. What I think is happening is that it's starting to mention what we're dealing with. When I say I think I'm cautiously optimistic that we've put in-- we're starting to form a bottom in the market. When you start to form a bottom, that means you get rallies and you retest lows. You could possibly even go lower. But I think there are three very important things that have occurred.

The first is that the Federal Reserve has truly unleashed pretty much all its firepower-- unlimited resources being brought to bear there. A relief package that amounts to about 10% of GDP is set to also get unleashed. And then the third thing is we're starting to see estimates as to what earnings are likely to be and GDP will likely be on the part of Wall Street. So there's a consensus that's trying to be formed right now as to how bad this could get in terms of numbers.

I expect that we're going to see a lot of tough data ahead, and we'll see it in the weeks ahead. We're probably two weeks away from the peak of the infection curve. But I think what you're seeing right now is markets trying to price this. And that is the first and important step in moving beyond.

MYLES UDLAND: And Hans, do you think that part of why the market has been so quick-- at least in the last, what, five trading sessions-- to try to find something like a bottom is because we've all been so conditioned over the last 10 years when the Fed steps in, you know, they're kind of giving you the all clear, it's time to buy the dip. And obviously, 35% decline is not a dip, right? That is a full-on bear market that happened in about 12 trading sessions. But is some of that learned behavior coming back right now?

HANS OLSEN: I actually think what was at play was that we had panic going on in the fixed income complex. You would see trading action there that resembled right out liquidation, full-on panic. And it wasn't until the Federal Reserve really unleashed this series of commercial paper facilities, money market financing facilities, and the like that we started to get a bid in the dollar funding market. And with that, I think we started to get a base being formed.

Importantly, you can't have an equity market that recovers without a fixed income market that's functioning, because the fixed income market, at the end of the day, is the lifeblood for a commercial life. That's where credit comes from.