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Speaker 1: Let's get to our guests. Steven Innes is with us.

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Speaker 1: Steve is a managing partner at s p I s

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Speaker 1: A Management. He joins from Bangkok. Steve, thanks for joining us, Um.

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Speaker 1: I think we've got to begin with the COVID situation

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Speaker 1: in China. You know, the story on the ground. What

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Speaker 1: is this done to your thinking on investing in the mainland.

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Speaker 1: I still think we're in the tug of war between

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Speaker 1: the weakening macro fundamentals and the increasing reopening hopes. Believe

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Speaker 1: it or not, allow Um, we're probably getting a little

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Speaker 1: bit of sidetracked here because of the intensity of the

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Speaker 1: coverage of the protest yesterday. I think we have to

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Speaker 1: take a more pragmatic approach here that you know, once

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Speaker 1: this way does uh taper down, I think we hope

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Speaker 1: he's going to happen quite quickly. I guess it really

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Speaker 1: boils down to how far do you want to look

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Speaker 1: through that looking glass? I mean, you know, they're they're

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Speaker 1: the Chinese policymakers are providing a lot of support here. Obviously,

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Speaker 1: the multiplier effects not going to happen with any rate

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Speaker 1: cuts or any sort of stimulus efforts because people are

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Speaker 1: still locked in their their apartments have to be patient. Here,

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Speaker 1: we have to wait, but you know, when it comes

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Speaker 1: to equity markets, they have a mind of their own

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Speaker 1: and they like to chase these uh, these reopening paths,

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Speaker 1: and I think that's where we're probably seeing after yesterday's

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Speaker 1: deep dive. If the experience of other countries is any guide,

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Speaker 1: As COVID works its way through a community, you get

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Speaker 1: a lot of people off sick. Do you anticipate any

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Speaker 1: more disruptions around the supply chain? That's the problem, and

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Speaker 1: that's one of the things why we're looking at the

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Speaker 1: first half of the year is being really dim um,

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Speaker 1: we're not optimistic at all, but on the out on

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Speaker 1: the second half here, we think the second half year

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Speaker 1: is going to be overly optimistic. And again deferring to

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Speaker 1: how you want to play this out, that's the problem.

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Speaker 1: It's going to be a very very bumpy road filled

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Speaker 1: with numerous COVID creators. But I think the glide path

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Speaker 1: passed the first half the year is going to be

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Speaker 1: a lot smoother, and I think that's where the runway

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Speaker 1: is and maybe that's what's appealing to the longer term investors.

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Speaker 1: They're looking at these deep dips that we've seen in

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Speaker 1: Chinese equities over the last year, and look into Bill

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Speaker 1: bargain hunting. Yeah, and one of the pillars on which

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Speaker 1: that the pullback has been based. I mean, that's kind

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Speaker 1: of a weird metaphor, but I used it anyway. Um,

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Speaker 1: the property market, and now we're getting indications that Beijing

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Speaker 1: is going to end one of its major fundraising bands

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Speaker 1: on property developers. We can take that apart in detail,

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Speaker 1: but very quickly, Steve, are you thinking differently about the

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Speaker 1: property space these days? Given news like that? There's still

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Speaker 1: a lot of debt out there, and that's one of

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Speaker 1: the one of the issues that we feel we have

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Speaker 1: to be cautious on the property sector right now, although

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Speaker 1: there's a lot of a lot of a lot of

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Speaker 1: buy in there right now. We have heard from a

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Speaker 1: whole lot of fed speakers today, including Thomas Backen on

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Speaker 1: Bloomberg Television earlier this morning, and the overwhelming theme seems

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Speaker 1: to be reality check for the market's a whole lot

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Speaker 1: more tightening to come with that in mind. Do you

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Speaker 1: think equities have found a flaw? Well, they certainly ractioned

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Speaker 1: it up the Hawk Commeter overnight, and I don't think

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Speaker 1: that's too unexpected because I think a lot of people

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Speaker 1: thought the form C will start to which back on

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Speaker 1: the substantial FCI using that's occurred over the last month.

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Speaker 1: But I think it's inconsistent with the feds policies. But

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Speaker 1: the real reaction is going to be will the market listen?

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Speaker 1: That's the key thing here. Will the markets taking to

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Speaker 1: what the Feds are saying or will they continue to

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Speaker 1: run with the lower inflation narrative that seems to point

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Speaker 1: to a pivot. The big thing we always have to

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Speaker 1: remember here is that when we go, we go, and

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Speaker 1: that's the one thing that the market keeps on remembering

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Speaker 1: what the FED mantra is here. Cutting cycles are the same.

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Speaker 1: In fact, cutting cycles are typically more aggressive that the

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Speaker 1: tightening ones. They think about half the time for the

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Speaker 1: same distance travel. So once again it's a looking glass

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Speaker 1: view that the market seem to be getting a thrilled

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Speaker 1: and when are the Feds going to cut? And this

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Speaker 1: continues to attract some investments, and yeah, I think the

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Speaker 1: bottom is in when it comes to equity markets based

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Speaker 1: on the lower inflation narrative. Well, Mr Barkin maintained that

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Speaker 1: the FED is not focused on the equity market, but

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Speaker 1: we know they intend to tighten financial conditions. Okay, that

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Speaker 1: typically would mean lower stocks, higher interest rates in a

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Speaker 1: week er dollar, but the dollar has been on a

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Speaker 1: tear and a lot of that has to do with

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Speaker 1: a COVID story in China, maybe a little bit of

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Speaker 1: a haven trade. What is your view on the dollar

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Speaker 1: right now? Do we continue to strengthen? I mean a

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Speaker 1: little bit of weakness now in Asia, but we had

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Speaker 1: a pretty good move to the upside of New York trading.

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Speaker 1: I just want to put that in for a little

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Speaker 1: bit of perspective. But Steve, where where where are we

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Speaker 1: with with a dollar? One of the interesting things when

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Speaker 1: we approach your end is trying to figure out where

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Speaker 1: the dollar is going to go into year, and let

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Speaker 1: alone where it's going to go into three. I think

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Speaker 1: a lot of perception out there is a defed pivot

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Speaker 1: narrative is going to effectively weaken the dollar. Especially can

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Speaker 1: see Europe because differentials play a night's outsize role there. However,

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Speaker 1: one has to look at things in the broader context here,

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Speaker 1: we're moving definitely towards a recession. This is one of

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Speaker 1: the things that the market seems to be sort of

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Speaker 1: not factoring into the bigger equation right now. If we

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Speaker 1: do move into that recession narrative, well, I think the

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Speaker 1: dollar remains bid, but it's a wait and see trade.

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Speaker 1: I don't think it's an absolute to just buy the

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Speaker 1: dollar is ela dollar. I think you have to wait

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Speaker 1: for the signals to tell you what's going to do. Certainly,

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Speaker 1: those recession storm clouds are building, not attracted some safe

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Speaker 1: haven demand over the night bumble, Those recessions storm clouds

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Speaker 1: float over the global client, global landscape. That's the big

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Speaker 1: question we have and have to answer right now. Yeah,

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Speaker 1: we're recession is one thing, but according to a Bloomberg

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Speaker 1: Serve a half professional investors survey, to worry now about

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Speaker 1: the stagflation risk? Is this something in your thesis? Yeah,

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Speaker 1: I think that's the next steping so, and I think

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Speaker 1: what we have to see how Europe in particular manages

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Speaker 1: this winter. Right now, we're getting a little bit of

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Speaker 1: reprieved because of the warmer whether and that's not really

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Speaker 1: raising energy prices to the extent of a lot of

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Speaker 1: people felt So the energy crisis isn't really hitting. But

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Speaker 1: we have to keep an eye on what's going on

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Speaker 1: in the eastern part of Europe. Now we also have

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Speaker 1: to keep an eye on what's going on in China.

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Speaker 1: We're talking like three major economies are coalescing at once

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Speaker 1: into recession era. I don't think that's good for currency markets.

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Speaker 1: I think it's good for the dollar. However, well, if

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Speaker 1: the outlook is for weaker growth, we can debate the

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Speaker 1: issue of recession. But I think one of the things

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Speaker 1: that's been adversely impacting the crude oil market is the

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Speaker 1: story on weak demand. I mean, no matter whether it

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Speaker 1: manifests as full blown contraction in the global economy or not.

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Speaker 1: And now the countervailing factor maybe that OPEC plus considers

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Speaker 1: cuts in output deeper than what the market had been predicting.

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Speaker 1: Do you have a view on crude oil. Boy, they've

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Speaker 1: been floating a lot of trial balloons of late, haven't they.

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Speaker 1: We were talking a supply increased earlier or late last week.

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Speaker 1: Never we're talking supply cuts. But you know, in reality, here,

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Speaker 1: when we're looking OPEC plus in general, this would just

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Speaker 1: be Saudi Arabia trimming at the march. And here I think,

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Speaker 1: uh uh. The one thing I really worry about when

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Speaker 1: we go into OPEC meetings, however, is OPEC seems almost

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Speaker 1: aimed to wrong put the market at timing of policy ships.

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Speaker 1: We can't rule let the production cut just because they're that.

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Speaker 1: The other thing I'm looking at what's going on each

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Speaker 1: China right now is the market seemed to be taking

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Speaker 1: a more pragmatic approach here. I think they're eating caution.

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Speaker 1: They didn't interpret these flashpoints overly garrison or occurring on

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Speaker 1: the ground right now. Alright, Steven and As, we're out

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Speaker 1: of time, but thanks so much for joining us on

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Speaker 1: bloom Big Daybreak Asia. Steven and As is managing partner

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Speaker 1: at s p I Asset Management,