Liz Ann Sonders and Kevin Gordon Talk Market Response to Iran

Summary

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Bloomberg Talks: Liz Ann Sonders & Kevin Gordon on Market Response to Iran

Air Date: April 1, 2026
Host: Bloomberg
Guests: Liz Ann Sonders & Kevin Gordon (Charles Schwab)

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Episode Overview

In this episode, Liz Ann Sonders and Kevin Gordon from Charles Schwab discuss the volatile market response to escalating tensions involving Iran. The conversation explores investor sentiment amid geopolitical headlines, changes in market structure, how retail investors have evolved since the pandemic, and the role of alternative investments. The episode blends insightful financial analysis with notable asides about investor psychology and generational shifts in the market.

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Key Discussion Points & Insights

1. Market Reactions to Geopolitical Uncertainty

• "Hopium" and the Hope Trade

  • Liz Ann Sonders notes the prevalence of "hopium"—optimism pushing markets higher despite unresolved issues ([00:57]):
    • "Yesterday there was a lot of it. I think it's impossible...to look at a day like yesterday as something akin to what we saw last April 9th. I think there’s still a lot of unanswered questions."
  • She cautions that shifting headlines (e.g., comments on the Strait of Hormuz) create an unstable narrative.

• Discipline Over Knee-Jerk Reactions

  • Kevin Gordon stresses not making rash portfolio changes during conflict ([01:39]):
    • "You never want to make a knee jerk reaction...that gap between Washington and markets is narrowing every single day."
    • He references the investment adage: "Don’t just do something, stand there."

2. Equity Valuations & Rotation

• S&P 500 Multiple Contraction

  • Host references Gordon’s research: S&P 500 forward P/E ratio has dropped from 23.1 to 19.6 ([02:37]).
  • Sonders explains this is pure multiple contraction with rising earnings estimates, especially in energy and tech, but the real picture awaits the upcoming earnings season ([03:01]):
    • "This has been pure multiple contraction...because earnings estimates have continued to go higher."

• Growth-to-Value Rotation

  • Gordon highlights sector rotation trends, noting even tech's best day in a year did not attract strong retail inflows ([03:53]):
    • "Even with that significant bounce, you didn’t really see any material pickup inflows, particularly in the retail cohort."
    • The broadening-out trade from tech to industrials and staples is delayed but not derailed by headlines.

3. Investor Psychology: Fear of Missing Out (FOMO)

• Shifts in Retail Investor Sentiment

  • Sonders observes that retail traders have become less complacent since the war, with less "buy the dip" behavior ([05:49]):
    • "They became a little bit less enthusiastic at the individual stock level with the sort of the buy the dip and chasing performance on the upside."
    • Understanding market positioning—what trades are crowded or neglected—helps manage uncertainty.

• Reappraising 'Dumb Money' Stereotype

  • The guests reject the old moniker for retail investors ([07:19]):
    • Sonders: "Retail used to be called the dumb money."
    • Gordon: "We’re sort of on this campaign to get rid of that moniker, you know, the dumb money. Because it really isn’t and it hasn’t been."

4. Demographics of Investors Post-Pandemic

• Rise of Retail Participation

  • Gordon: Retail’s share in total market activity has almost doubled, especially post-pandemic ([07:26]):
    • "It’s sort of the only class of investors that has gone up by as much as it has almost doubling in percentage..."

• Events Reflect Multi-generational Engagement

  • Sonders describes Schwab client events as increasingly multi-generational ([08:33]):
    • "It’ll be, you know, a retired couple that in some cases they're there with a child and maybe even a grandchild."

5. Defensive Investing and Quality Factors

• Focus on Fundamental Strength
  • Gordon explains their preference for companies with strong balance sheets, positive earnings revisions, and solid margins ([09:40]):
    • "That’s been where the stability has been in consistency of returns."
    • The 'up in quality' theme has trickled down from large caps to smaller companies this year.

6. Rise of Alternative Investments for Retail

• Democratization and Education
  • Sonders emphasizes Schwab’s role in bringing alternatives like PE, private credit, and RE to retail investors ([10:53]):
    • "We are...helping to bring alternative asset classes into the asset allocation discussion. The most important thing is education around it and also fit—making sure that clients...understand how it fits."

7. Public Concern About U.S. Debt and Deficits

• A More Anxious Tone Among Clients
  • Sonders describes a shift toward more alarmist client questions about debt, deficits, and the dollar's status ([12:14]):
    • "The questions are a little bit more...calamitous...it’s not just, what do you think of the high rising burden of debt...It’s what is the tipping point?"

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Notable Quotes & Memorable Moments

• Kevin Gordon quoting Jack Bogle ([01:39]):
  "Don’t just do something, stand there."

• On retail investors ("dumb money") ([07:19]):
  Sonders: "Retail used to be called the dumb money."
  Gordon: "We’re kind of...on this campaign to get rid of that moniker, you know, the dumb money. Because it really isn’t and it hasn’t been."

• On alternative investments ([10:53]):
  Sonders: "Don’t just think of it as the shiny new object. I need to get some of this. It’s the education that sits behind it."

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Timestamps for Key Segments

| Timestamp | Segment | |------------|----------------------------------------------------------------------------------------------| | 00:57 | Sonders on "hopium" and market instability | | 01:39 | Gordon on investor discipline and the narrowing gap between Washington & Wall Street | | 02:37 | Discussion of S&P 500 P/E contraction | | 03:53 | Sector rotation and lack of retail inflows into tech | | 05:49 | Sonders on shifting retail investor sentiment and positioning | | 07:19 | Rejection of the dumb money label for retail investors | | 08:33 | Multi-generational attendance at Schwab client events | | 09:40 | Focus on quality factors and market trends beyond the Magnificent Seven | | 10:53 | Sonders on democratizing alternative investments and their role in portfolios | | 12:14 | Increasing anxiety among clients about U.S. debt and deficit |

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Tone and Style

The discussion reflects a pragmatic, seasoned perspective on current market conditions, with Sonders and Gordon emphasizing thoughtful analysis and investor education. The conversation presents actionable insights for both institutional and retail investors, mixed with conversational anecdotes and occasional humor.

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For anyone seeking an accessible yet nuanced view of today’s market in the wake of geopolitical shocks, policy uncertainty, and demographic shifts, this episode provides sharp analysis with both candor and context.

Transcript

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[Liz Ann Sonders]

Bloomberg Audio Studios podcasts

[Podcast Host / Moderator]

radio news for this wonderful segment of the program nationwide into the original San Francisco of Charles Schwab, Liz Ann Saunders and Kevin Gordon joining us this morning. David Rosenberg published up in Toronto and emphasized the word hope. You lead in your note with the word hope. Lizzie and Saunders gauge the Hopium out there right now.

[Liz Ann Sonders]

Well, yesterday there was a lot of it. I think it's impossible, given the instability of how we get information and narrative changes and headlines to look at a day like yesterday as something akin to what we saw last April 9th. I think there's still a lot of unanswered questions, even just, you know, you're reporting on Trump's comment about the cease fire being contingent upon the Strait of Hormuz opening. Yet yesterday it was, you know, we, we might end this thing even if the straight doesn't open. So here we go again.

[Paul Sangasso]

Exactly. Kevin, given those crosswinds out there when you're talking to your clients, what's the message? Is it to look past all this craziness and focus on the fundamentals? What's the conversation?

[Kevin Gordon]

I mean, especially with any conflict like this, you never want to make a knee jerk reaction. I mean, we've adjusted how we think about markets and the economy responding to this as it's continued to drag on. Clearly we've taken, you know, we've dialed back expectations for what growth is supposed to look like. But I often think, you know, in terms of an investor's reaction, I can't help but think about the Jack Bogle quote, don't just do something stand there. And I think in this moment, you know, it kind of feels because you don't want to make, you can't have a high conviction view on any particular asset class. I think right now you can have some conviction maybe on something like commodities that's somewhat obvious. But I think for the equity market, you know, to Liz Ann's point about how we get information these days, I mean that that gap between Washington and markets is narrowing every single day. I mean, in terms of policymaking's impact on day to day equity moves. So I think that needs to be taken into consideration.

[Podcast Host / Moderator]

I mean, let me do this, Paul. Kevin Gordon out with an incredible chart. You know, Liz Ann Sonders hasn't seen it, so let's cover it right now.

[Liz Ann Sonders]

You know, Liz Ann Sonders didn't create it.

[Podcast Host / Moderator]

The standard poor 500 forward 12 month P E was a lofty 23.1 and has come in. I'm going to go stand Fisher on you here. It's coming. I'm popping 15 or 20% from 23.1 into 19.6 as well. Does that scream opportunity with you? For you, a sub 20s and P multiple.

[Liz Ann Sonders]

This has been pure multiple contraction in this corrective phase because earnings estimates have continued to go higher. I think the answer to that will be better defined once we actually start earnings season. We know why energy sector estimates have gone up. Tech sector estimates have gone up with a concentration in just a couple of names. The analysts really haven't done much adjusting to estimates for a calendar year. Maybe because they're waiting, you know, for as much time as possible to get up to the eve of reporting season and or wait till they get commentary from companies.

[Paul Sangasso]

Kevin, we had a rotation I think kind of late last year coming into, prior to the war, maybe coming out of some of the high growth, high multiple stuff that had been the, the drivers this market to maybe in some more cyclical stuff, small and mid caps. Was that just a short term trading thing or is that something longer? Do you guys.

[Kevin Gordon]

Yeah. You know what's been interesting is that even, even on a day like yesterday when you had tech having its best day, the tech sector having its best day since 2025. That was to me in response to what had become the momentum trade in favor of energy, you know, not in favor of tech. What was interesting though is even with that significant bounce, you didn't really see any material pickup inflows, particularly in the retail cohort into. I think that that response mechanism or lack thereof is pretty important because even in advance of the war there was a lot of de risking in that particular sector for that cohort where they were starting to put money to work in, you know, outside of that and having a little bit higher conviction in areas of, you know, whether it was industrials, whether it was, you know, parts of consumer discretionary and staples or whether it was even financials. So I think that that dynamic, the fact that that hasn't really shifted it does tell me that there is still probably more to that, you know, broadening out Trade, if you want to think about it that way. But I just think it's been a little bit more delayed, not necessarily derailed, but we're sort of in the camp that it can happen. It's just of course now at the mercy of, of these headlines every day. It's probably not going to happen as fast as we had thought.

[Podcast Host / Moderator]

Liz Ann Saunders, Kevin Gordon with us with Charles Schwab together. We just love doing this huge response last time. Thank you for listening across LIZ Ann sanders, Nation. Okay, I want to talk process here. Do you guys like on something as basic as the adjustment of fear of missing out, is he allowed to disagree with you?

[Liz Ann Sonders]

I mean is it he's allowed to disappoint.

[Podcast Host / Moderator]

Are you doing Steve Roach one on one where you fight like cats and dogs?

[Liz Ann Sonders]

You know, seven years ago when I hired this guy, I think he, not that I ever put fear in anybody, but I think you were, it was your, a natural thing for you. Yep, I agree. Now he can say whatever he wants, but we're, we're, we're pretty consistently aligned.

[Podcast Host / Moderator]

Where are you on fear of missing out right now, gauging it after the shock of this war?

[Liz Ann Sonders]

You know, I think the, the retail trader did slightly shift their tack throughout the course of this war. They became a little bit less enthusiastic at the individual stock lever level with the sort of the buy the dip and you know, chasing performance on the upside. So I think there's been a little bit of a little less complacency being expressed in some of the moves by the retail trader. I really though think what's going on here is given the inability to gauge what the next headline is going to be, what the next narrative shift is going to be. What we can glean and understand is positioning where I think there's so much short term money in the market, whether it is the retail trader or systematic hedge funds or the CTA world. And, and there's a lot of focus on, all right, what are the crowded trades? What are the desolate trades? And either playing a momentum there or looking for the potential inflection point where you see a shift. So if you can understand the positioning, even though you can't anticipate the headlines, it helps you stay in gear.

[Paul Sangasso]

I mean, I guess what I've learned over the last, I don't know, 10, 15 years, a little bit more, is that your retail investors are, they're pretty good. I mean they buy the dips. They're pretty, I mean I haven't seen any, I haven't felt Any, I don't know, panic selling retail used to be

[Liz Ann Sonders]

called the dumb money.

[Kevin Gordon]

Exactly.

[Paul Sangasso]

When I was allocating IPOs, I'd be

[Liz Ann Sonders]

like, oh, I always used to say, not our investors.

[Kevin Gordon]

Yes, we're kind of. Lizand and I are sort of on this campaign to get rid of that moniker, you know, the dumb money. Because it really isn't and it hasn't been. And I think to your point, Paul, about, you know, the, this cohort of investors, particularly post pandemic, I mean you talk about the past 10 to 15 years. Yes. The retail share has gone up. It's sort of the only class of investors that has gone up by as much as it has almost doubling in percentage, you know, terms of, in terms of the volume of the market. But if you look particularly the past six years, five to six years. Yeah. There hasn't really been, number one, what I would think of as a real bear market, certainly not one associated with a recession. And I think that has sort of conditioned investors and particularly this new cohort who, you know, especially for those who are younger.

[Paul Sangasso]

Yes.

[Kevin Gordon]

In the, you know, whether it's Gen Z or young Millennial, I think it has kind of conditioned them to think that this will sort of always work as a strategy. But also having a longer time horizon, that's not always associated with having a high risk tolerance.

[Paul Sangasso]

So when you guys have your events and you guys go all over the country, what's the, I mean, is there people like me walking in this door or are there younger people walking? Because it seems like my. Depends on where we're on their phone, they're engaged.

[Kevin Gordon]

Yeah. Depends on where we are. But I mean, it's bar in Brooklyn.

[Liz Ann Sonders]

You know what we, we find incline events a lot. The bigger ones are multi generations.

[Kevin Gordon]

Yes.

[Liz Ann Sonders]

So it'll be, you know, a retired couple that in some cases they're there with a child and maybe even a grandchild. So interesting. It's the whole, it's the whole age mix. When you have $12 trillion in assets, you have a little bit of everything age wise.

[Podcast Host / Moderator]

Losing son is Kevin Gordon with us. We continue futures up 27. The Vix slides from the angst 31 level where Kevin said go to cash down to 25.19. Here we are 50 minutes away from a scheduled President Trump at the Supreme Court. I just saw it on Fox Trigger. He had a substantial number of people below the steps of the Supreme Court in Washington. We'll give you video of that on YouTube as we can here. Don't see that quite right now. So I've got another quote here. This is from Kevin Gordon's research, I believe. Factor focus, high interest coverage, strong balance sheet, positive earnings revision trends and stable improving profit margins. Kevin, is that Mag 7?

[Kevin Gordon]

Not all of them, but I think that over the long term that has proven to be number one. That's been where the stability has been in consistency of returns. Post pandemic we really have been in a more sort of factor dominated world because it's just harder to make these monolithic sector calls. It's getting harder. It's not impossible, but it's getting harder because of the concentration in a lot of these areas. I mean communication services is such a standout for that because it's essentially two names that are sometimes close to 80% of that sector. But no, we still believe in that up in quality sort of story. And I would say actually that that's moved the. I think what's been one of the more beneficial elements of this market year to date is that's moved down the cap spectrum a little bit. So the percentage of unprofitable companies, even in an index like the Russell 2000 that has rolled over year to date, it's still relatively high. But I think that there's been a benefit now spread throughout the market, not necessarily just in your classic S&P 500.

[Paul Sangasso]

Liz Ann, you and I started in the business kind of around the same time. One of the things that's really changed, I think is, is the whole alternative investment opportunities for everybody, including retail investors.

[Liz Ann Sonders]

Yes.

[Paul Sangasso]

How do you guys at Schwab position alternative investments? Whether it's hedge funds, private equity, private credit, real estate, all that kind of stuff. How do you guys position that?

[Liz Ann Sonders]

And you know, we are, we have been big democratizers over the past 50 plus years. And I think we're, we're part of that process now and helping to bring alternative asset classes into the asset allocation discussion. The most important thing is education around it and also fit making sure that clients who are bringing, whether it's private credit or private equity or hedge funds, that they understand how it fits. And what is hopefully a well planned strategic asset allocation portfolio. Where are the correlations? What is the willingness to give up some of that transparency, to give up some of that liquidity? Don't just think of it as the shiny new object. I need to get some of this. It's the education that sits behind it. And most of the investors that we talk to who want to add that into the mix are those that take what we call an advised approach where they're working with one of our advisors, one of our financial consultants in developing a long term actual plan.

[Podcast Host / Moderator]

I have to ask this to close out, Liz. And you did a real public service for the nation. I brought this up before on our fiscal policy. You must be getting questions on our

[Liz Ann Sonders]

debt and deficit every single solid day.

[Podcast Host / Moderator]

Is it any different from the time of Pete Peterson, Paul Sangasso, and the senator from Georgia is the same old, same old.

[Liz Ann Sonders]

The questions are a little bit more. They have a little bit more of a calamitous tone to them. Oftentimes when we get questions, it's not just, what do you think of the, you know, high rising burden of debt or, you know, how long are we going to run deficits this big? It's what is the tipping point? And then it's often got a follow on, like, is the dollar going to lose its reserve currency status? Is the US Going to default? Is China going to literally or figuratively wake up one day and just decide to dump all of its treasuries? So there's a little bit more of that. Boy, I feel like we're at a tipping point tone to the questions.

[Podcast Host / Moderator]

Can we move on from the NCAA tournament, please, please, Kevin, explain Pepperdine playing UCLA back to back in Stanford. In volleyball, it's like religion.

[Paul Sangasso]

They're players.

[Kevin Gordon]

Yeah, it's my favorite sport in school to follow.

[Podcast Host / Moderator]

Is anyone under six, five?

[Kevin Gordon]

No, only me, but I wasn't on the team.

[Liz Ann Sonders]

Are they recruiting you, Kevin?

[Podcast Host / Moderator]

Is it like a conduit from Punahou in Hawaii and you just go to Puno and say, we want the six dumbest kids. Let's go.

[Kevin Gordon]

Not dumbest, tallest. But no, it's an amazing. They're killing it. I love following that sport. Beach volleyball was my favorite to follow.

[Podcast Host / Moderator]

Oh, they were beach volleyball as well?

[Liz Ann Sonders]

Yes. Our women's beach volleyball team went to College Square. There was beaches.

[Podcast Host / Moderator]

Did they have beach volleyball in Delaware?

[Liz Ann Sonders]

We had an area called the Beach. It was like the quad and it didn't even have grass, though, so. Yeah, it kind of looked like the

[Kevin Gordon]

water was a little different, though. Yeah, I think the water in Malibu was a little bit better.

[Podcast Host / Moderator]

Help. You know, this better. We've done way too much west coast today. We had Harvey M. I know, I know.

[Kevin Gordon]

Claremont Economics out there is never too much West Coast.

[Paul Sangasso]

Santa Clara Broncos, baby. There we go.

[Podcast Host / Moderator]

Beach volleyball.

[Kevin Gordon]

We. Pepperdine has just consistently across the board over the years, that's been one of, if not our best sports. I mean, in our tournament rankings in that it's Amazing.

[Paul Sangasso]

So that and waterfall's really in Malibu?

[Kevin Gordon]

Yes, California.

[Podcast Host / Moderator]

Let me explain.

[Liz Ann Sonders]

You got to look up a picture. I know.

[Podcast Host / Moderator]

Let me. Let me translate this for you. And this involves Jenny Creamel. April 2, Pepperdine's playing UCLA in volleyball. April 2 in Western New York. You get up and you've got a biochemistry class at 8am and you have to walk what's called a quarter mile west.

[Kevin Gordon]

Yes.

[Podcast Host / Moderator]

Into the wind. Coming in from Buffalo.

[Kevin Gordon]

Not to mention in Malibu, though, you've got to wake up and climb 100 stairs because we call it stepperdale. So it's tough.

[Liz Ann Sonders]

Violins playing Just for you over here.

[Kevin Gordon]

I'll bring out my violin.

[Podcast Host / Moderator]

Your volleyball updates. We do it all here.

[Kevin Gordon]

We do it all.

[Podcast Host / Moderator]

Kevin Gordon, thank you so much for bringing Liz in.

[Kevin Gordon]

Thank you.

[Podcast Host / Moderator]

Son is with you. You're both wearing black. Kathy Jones retiring. Extraordinary career.

[Liz Ann Sonders]

Amazing. We will. We will miss her a lot as.

[Podcast Host / Moderator]

Did you see her tweet?

[Liz Ann Sonders]

I did not.

[Podcast Host / Moderator]

She did a taco tweet on President Trump.

[Kevin Gordon]

Okay.

[Podcast Host / Moderator]

It was totally outside compliance. It was miles.

[Liz Ann Sonders]

So it begin.

[Podcast Host / Moderator]

She did.

[Kevin Gordon]

I'll put the compliance plug. She did mention yesterday on Twitter that this is now her personal account.

[Podcast Host / Moderator]

Very personal. We await that from Kevin Gordon as well. Liz Ann Saunders. Kevin Gordon forever at Charles Schwab.

[Dr. Guy Winch]

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