1 00:00:00,160 --> 00:00:03,120 Speaker 1: Now, the market came into twenty twenty three convinced there 2 00:00:03,120 --> 00:00:06,200 Speaker 1: would be a global recession, and then the market came 3 00:00:06,200 --> 00:00:08,640 Speaker 1: into twenty twenty four convinced there would be a soft 4 00:00:08,800 --> 00:00:11,319 Speaker 1: economic landing, and then a few weeks ago the market 5 00:00:11,360 --> 00:00:13,440 Speaker 1: got very nervous about growth again, and now it seems 6 00:00:13,480 --> 00:00:15,040 Speaker 1: like we're back to a soft landing again. What on 7 00:00:15,080 --> 00:00:17,200 Speaker 1: earth is going on? Sam Dickey is from Fisher Funde. 8 00:00:17,239 --> 00:00:19,800 Speaker 2: Sam, Hey here, how's it going? Very well? 9 00:00:19,840 --> 00:00:21,600 Speaker 1: Thank you? And so what are we feeling this week? 10 00:00:23,320 --> 00:00:25,200 Speaker 2: It is hard to keep up? And the good news 11 00:00:25,239 --> 00:00:27,720 Speaker 2: is this week the market is convinced we are going 12 00:00:27,760 --> 00:00:31,120 Speaker 2: to have a soft economic landing. And just to remind ourselves, 13 00:00:31,400 --> 00:00:34,680 Speaker 2: if that is achieved or said another way of recession 14 00:00:34,760 --> 00:00:38,040 Speaker 2: is avoided. What the US Federal Reserve and other central 15 00:00:38,080 --> 00:00:41,239 Speaker 2: banks around the world have achieved is kind of like 16 00:00:41,360 --> 00:00:43,200 Speaker 2: landing a seven four to seven on a pin head. 17 00:00:43,320 --> 00:00:45,320 Speaker 2: So that rate ride cycle we saw in twenty two 18 00:00:45,360 --> 00:00:48,120 Speaker 2: and twenty three was the fast and fastest than forty years, 19 00:00:48,120 --> 00:00:51,600 Speaker 2: and to not cause a big turn in the employment cycle, 20 00:00:51,640 --> 00:00:53,880 Speaker 2: or to not cause a sharp slow down in economic 21 00:00:53,880 --> 00:00:55,000 Speaker 2: growth is quite astounding. 22 00:00:55,480 --> 00:00:58,320 Speaker 1: Is this kind of volatility and how we feel and 23 00:00:58,360 --> 00:01:00,840 Speaker 1: what we're expecting unusual. It feels like it is. 24 00:01:01,720 --> 00:01:04,440 Speaker 2: It's very unusual. And to give you some context there, 25 00:01:04,480 --> 00:01:06,680 Speaker 2: if we look back over the last thirty years or so, 26 00:01:07,319 --> 00:01:10,360 Speaker 2: and you look at the entry year, so from January 27 00:01:10,360 --> 00:01:14,920 Speaker 2: one to December thirty first variability and say US economic 28 00:01:15,000 --> 00:01:18,040 Speaker 2: forecasts before we finally land on a number for the year, 29 00:01:18,760 --> 00:01:23,520 Speaker 2: the current forecasting era or volatil is three to four 30 00:01:23,560 --> 00:01:24,679 Speaker 2: times as much as normal. 31 00:01:25,840 --> 00:01:28,360 Speaker 1: What is causing this? Sam? Why are we being so 32 00:01:28,480 --> 00:01:29,280 Speaker 1: volatile here? 33 00:01:30,400 --> 00:01:33,800 Speaker 2: It's still an overhang. The entire global economy stopped after 34 00:01:33,800 --> 00:01:37,360 Speaker 2: being running or after being set a round to precision 35 00:01:37,760 --> 00:01:40,480 Speaker 2: for many, many years, interest rates will cut to zero 36 00:01:40,520 --> 00:01:42,920 Speaker 2: around the world, and below zero you might remember back 37 00:01:43,520 --> 00:01:46,760 Speaker 2: it's sort of twenty twenty, and then we had inflation 38 00:01:46,840 --> 00:01:48,800 Speaker 2: and we had the fastest rate rise in four decades 39 00:01:48,840 --> 00:01:52,160 Speaker 2: of the after shops continue, I'm still astonished that global 40 00:01:52,200 --> 00:01:54,400 Speaker 2: companies can operate well with that backdrop. 41 00:01:54,560 --> 00:01:57,080 Speaker 1: So can we put it down simply to just being 42 00:01:57,120 --> 00:01:59,720 Speaker 1: an uncharted territory and we don't really know what to expect. 43 00:02:01,240 --> 00:02:04,520 Speaker 2: That's yeah, that's basically what's happening. Mean, it's very unusual 44 00:02:04,520 --> 00:02:05,600 Speaker 2: a sort of behavior. 45 00:02:05,360 --> 00:02:07,600 Speaker 1: Okay, So where are we in terms of what we're expecting, 46 00:02:07,680 --> 00:02:09,080 Speaker 1: let's say in the US at the moment. 47 00:02:10,400 --> 00:02:12,359 Speaker 2: Probably the simplest way to answer that is Gold and 48 00:02:12,440 --> 00:02:15,840 Speaker 2: Sacks cut their probability of a US recession about two 49 00:02:15,919 --> 00:02:18,079 Speaker 2: or three days ago at any time in the next 50 00:02:18,080 --> 00:02:20,680 Speaker 2: twelve months or so, from twenty five percent chance to 51 00:02:20,720 --> 00:02:24,200 Speaker 2: a twenty percent chance, which is near the lowest probability 52 00:02:24,240 --> 00:02:25,840 Speaker 2: we've seen in the last two or three years. And 53 00:02:25,880 --> 00:02:28,560 Speaker 2: then you think about what's driving that low likelihood of 54 00:02:28,760 --> 00:02:32,040 Speaker 2: a recession. It's the US consumer consumptions around seventy percent 55 00:02:32,040 --> 00:02:34,680 Speaker 2: of the economy over there, and retail sales are still 56 00:02:34,720 --> 00:02:35,760 Speaker 2: growing really strongly. 57 00:02:36,520 --> 00:02:38,520 Speaker 1: And where are we at with let's say Europe. 58 00:02:39,639 --> 00:02:42,079 Speaker 2: So yeah, and on the US, by the way, we 59 00:02:42,080 --> 00:02:44,079 Speaker 2: were expecting two and a half percent growth. That's softened 60 00:02:44,080 --> 00:02:45,880 Speaker 2: a bit to two percent, but that's still very far 61 00:02:45,919 --> 00:02:49,519 Speaker 2: from a hard landing. The Eurozone is a bit more sluggish, 62 00:02:49,639 --> 00:02:53,040 Speaker 2: is often the case with Europe, but even those growth 63 00:02:53,160 --> 00:02:56,359 Speaker 2: expectations have been getting revised up this year, and that 64 00:02:56,480 --> 00:02:59,239 Speaker 2: block is expected to grow about one percent this year. 65 00:03:01,720 --> 00:03:03,639 Speaker 2: China is always interesting. You and I have talked many 66 00:03:03,639 --> 00:03:06,800 Speaker 2: times before about the challenges of too much debt, addiction 67 00:03:06,960 --> 00:03:11,080 Speaker 2: to infrastructure spending, properly spending, an aging population. Earlier in 68 00:03:11,080 --> 00:03:14,320 Speaker 2: the year, we talked about how bearish sentiment was heither 69 00:03:14,440 --> 00:03:16,480 Speaker 2: in the fact they'd sort of got the three bazookas out, 70 00:03:16,520 --> 00:03:19,680 Speaker 2: so they were cutting monetary policy, they were driving fiscal policy, 71 00:03:19,720 --> 00:03:22,560 Speaker 2: and they were making the sort of macro prudential measures 72 00:03:22,560 --> 00:03:25,600 Speaker 2: around properly much easier. And that did see the market 73 00:03:25,639 --> 00:03:27,799 Speaker 2: rebounded a bit, but I think the conclusion still was 74 00:03:27,840 --> 00:03:30,680 Speaker 2: saying there that they haven't addressed those big imbalances. 75 00:03:30,919 --> 00:03:34,440 Speaker 1: Sam gosh, it feels like it's really hard to draw 76 00:03:35,040 --> 00:03:38,440 Speaker 1: lessons for investors, I guess, given that this is basically 77 00:03:38,480 --> 00:03:40,440 Speaker 1: about flying blind, But are there lessons here? 78 00:03:41,760 --> 00:03:45,000 Speaker 2: I think it's just a reminder that forecasting macro economic 79 00:03:45,080 --> 00:03:47,960 Speaker 2: conditions is always hard, but it's especially so now, and 80 00:03:48,000 --> 00:03:51,520 Speaker 2: long term investors should typically not switch their portfolios around 81 00:03:51,560 --> 00:03:54,119 Speaker 2: much depend on the perceived macroeconomics flavor of the day. 82 00:03:54,160 --> 00:03:56,840 Speaker 2: And Peter Lyncher, a very famous investor, said there is 83 00:03:57,280 --> 00:04:00,760 Speaker 2: been more money lost by investors preparing for a recession 84 00:04:01,000 --> 00:04:03,200 Speaker 2: or sickond guessing whether there's going to be a recision 85 00:04:03,280 --> 00:04:06,160 Speaker 2: or not, then actually in the recission themselves. So sit 86 00:04:06,200 --> 00:04:08,680 Speaker 2: any other way. Stay invested in high quality companies with 87 00:04:09,320 --> 00:04:13,200 Speaker 2: wide economic motes and long growth runways, almost irrespective of 88 00:04:13,240 --> 00:04:14,240 Speaker 2: the economic outcome. 89 00:04:14,680 --> 00:04:16,320 Speaker 1: Sam, thanks so much for running us through. I really 90 00:04:16,320 --> 00:04:20,400 Speaker 1: appreciate advice. The advice is Sam Dickie for Chafunds. 91 00:04:20,680 --> 00:04:23,840 Speaker 2: For more from Hither Duplessy Allen Drive, Listen live to 92 00:04:23,960 --> 00:04:27,000 Speaker 2: news talks. It'd be from four pm weekdays, or follow 93 00:04:27,040 --> 00:04:28,800 Speaker 2: the podcast on iHeartRadio.