Title screen appears, "CNBC First in Business Worldwide”

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A Man appears on the screen wearing a navy suit, standing in a news studio, and behind him four screens with news content being played.

He begins to speak.

Dan: Analysis now with Aaron Anderson. He's senior vice president of research at Fisher Investments. He joins us live today from California. And Aaron, you know, last time you and I spoke, you were very optimistic on the outlook for markets, but we continue to see this recession repricing playing out as we close the curtain on what has been a long period of low rates and easy money. Are you still as optimistic on the outlook and when it comes to positioning for a recovery as you were last month?

The screen was split in half and another man appears on the other half of the screen wearing a navy suit, sitting in his office.

He begins to speak

A banner identifies him as Aaron Anderson, Fisher Investments.

Aaron: Yeah, it was great to speak with you again, Dan. Yes, we are, absolutely. Although I would also say that we don't know if the bottom is in for the market yet or not. But I think a recovery is coming probably a lot more quickly than many investors are anticipating today.

On the screen a table appears showing the U.S Fair values of S&P500, Dow Jones and Nasdaq.

After it a U.S treasury Yields table that shows the yield over the past 30 years.

Aaron: I just think there's so much worry already reflected in the marketplace, so much certainty that we're in a recession or about to enter one. And now with equities fully into bear market territory based on basically any major index that you look at, to me you'd have to have a real significant economic leg down, not just a recession but a prolonged recession, a really deep one to justify another big leg down in the market. And that just doesn't likely to us right now.

Screen is back in split-mod with both Dan and Aaron on each side.

Dan: Aaron also wanted to ask you about what's happening in currencies big dollar gains as we speak. We're also on parity watch for the Euro right now as well. Can you offer a perspective on what's driving the USD right now and what risks this might present for markets and commodities down the pike?

On the screen a U.S dollar Index appears next to the speaking Aaron.

Aaron: Well, he is right. It's really been so dramatic from a currency standpoint, usually somewhat relative to at least things like equity is a somewhat boring market, but not these days. I think there are a few main drivers of dollar strength right now. I think the view is growing that the US. Maybe will weather this period with, at worst, a mild recession, but maybe even avoid one altogether, where I think that there's more surety amongst investors that Europe is heading into.Recession.UK is headed into recession. And that's going to cause the central banks in those regions to be less hawkish than the Fed might be.

On the screen next to the speaking Aaron a Forex Majors table appears showing the Currency's stats.

Aaron: And so, I think monetary policy differentials are certainly playing a role, economic expectations are playing a role there where people are saying maybe more stability in the US than they are in other parts of the world. I think Japan is a little bit different. It's almost a currency on its own with the BOJ taking basically a completely different approach than other central banks are right now. They're about as dubbish as can be and so I think that's a key reason that the yen has been as weak as it has been.

Screen is back in split-mod with both Dan and Aaron on each side.

Dan: I guess you could also say we're seeing safe haven demands for the USD as recession risks rise. Aaron, in your view, is there anything that can derail the ascent of the USD at this point?

On the screen next to the speaking Aaron a U.S Dollar Rates table appears.

Aaron: I think you're absolutely right, Dan. I do think that there is also just a risk off component to it. We haven't had a lot of big rallies so far in equity markets this year, but even in those periods, they haven't been accompanied by tremendous dollar weakness. But certainly, the dollar hasn't been as strong during those periods as it has when you're in more of a risk off mode. And so, I think all of that comes together economic differentials, monetary policy differentials, but also that safe haven status for the dollar. It used to be the yen that primarily played that role. But I think just given some of those differences in economic expectations and monetary policy expectations I mentioned, it's sort of taken a backseat to the dollar as more of a risk off currency.

On the screen next to the speaking Aaron a U.S Dollar – Japanese yen chart appears.

Aaron: And so, going back to our expectations for equity markets, I think as you do start to see a recovery here, I think some of that pressure probably comes off the dollar. Maybe not entirely, because I still do think that investors are fairly convinced that the US. Economy is in better shape than others are, that the Fed is likely to be more aggressive than other central banks are. But I think you're exactly right to say that risk on risk off has certainly favored the dollar in a risk off mode these days. Days, I think as things might turn around as we start to see risk assets perform better, that's probably a slight headwind to the dollar.

Dan: Aaron, we've got to go. We'll leave it there. Always appreciate your take on the markets and the outlook. That's Aaron Addison of Fisher investments joining us live out of California today.

Title screen appears, "CNBC First in Business Worldwide”

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