WEBVTT - Surveillance: '23 Recession Risk with Piegza 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.200 --> 0:00:13.200 with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.799 Find Bloomberg Surveillance on Apple, podcast, SoundCloud, Bloomberg dot com, 0:00:23.920 --> 0:00:30.040 and of course, on the Bloomberg terminal. Well, let's outlook 0:00:30.120 --> 0:00:33.280 right now. It's stephile with our chief economis Lindsay Pegs. 0:00:33.320 --> 0:00:35.519 That joins us right now, Lizzie, I don't want to 0:00:35.520 --> 0:00:38.000 get into the silliness of pivot this or pivot that. 0:00:38.520 --> 0:00:42.199 Where are we right now? What is your real g 0:00:42.320 --> 0:00:45.920 d P call for this ending que four? Well, I 0:00:45.920 --> 0:00:49.040 do think there's enough momentum or ongoing resilience in the 0:00:49.040 --> 0:00:52.880 consumer that we will see a second quarter of positive activity, 0:00:53.200 --> 0:00:56.080 albeit markedly below than your three percent pace we saw 0:00:56.080 --> 0:00:58.520 on the third quarter. But the bigger question is can 0:00:58.600 --> 0:01:02.080 we maintain that going into and I don't see that 0:01:02.160 --> 0:01:05.200 resilience being able to be maintained as we continue to 0:01:05.240 --> 0:01:08.960 see some of these variables increasingly way on the consumer, 0:01:09.080 --> 0:01:13.800 i e. Elevated prices, negative income growth, negative manufacturing activity, 0:01:13.840 --> 0:01:17.400 a housing montment that's under extreme pressure, so I think 0:01:17.400 --> 0:01:20.040 that we can argue you can check the recessionary box 0:01:20.080 --> 0:01:22.679 for nearly every sector of the economy even at this 0:01:22.760 --> 0:01:26.320 point except for the labor market. But even there we're 0:01:26.360 --> 0:01:29.200 starting to see cracks, were starting to see signs of 0:01:29.240 --> 0:01:33.880 emerging weakness. So while we do maintain that positive trajectory 0:01:34.120 --> 0:01:38.880 through December, I think is opening the door for recession. 0:01:39.160 --> 0:01:42.400 That's do algebra Monday, lindsay it's wyld coals. I don't 0:01:42.400 --> 0:01:45.000 know what it is C plus I plus G plus 0:01:45.040 --> 0:01:48.160 and X is out there somewhere. Can you split your 0:01:48.200 --> 0:01:52.040 analysis between domestic final sales in real g d P. 0:01:52.840 --> 0:01:56.360 Can you pair off trade dynamics? Are they part of 0:01:56.400 --> 0:02:00.080 getting to a recession? Oh? Absolutely? And I think this 0:02:00.080 --> 0:02:03.840 this when we passed through the trade and inventory data, 0:02:04.280 --> 0:02:07.640 that's really what complicates the earlier weakness that we saw 0:02:07.680 --> 0:02:09.800 at the start of the year and why it's likely 0:02:09.840 --> 0:02:13.600 that we don't see a technical recession in hindsight called 0:02:13.680 --> 0:02:17.400 for the first six months, because when you strip out 0:02:17.800 --> 0:02:20.400 that volatility from trade and inventories, we see that we 0:02:20.440 --> 0:02:24.800 actually had positive momentum from December into the first quarter 0:02:24.880 --> 0:02:27.400 of the year. So this is very much complicating the 0:02:27.440 --> 0:02:30.680 picture and will continue to complicate the picture going forward. 0:02:30.960 --> 0:02:33.720 If we look at third quarter g d P. Now, 0:02:33.760 --> 0:02:36.639 one of the largest contributors to that top line increase 0:02:36.960 --> 0:02:40.440 was trade, contributing nearly three percent, but a lot of 0:02:40.480 --> 0:02:43.680 that was reflective of the weakness on the import side, 0:02:44.040 --> 0:02:47.320 and that reflects a declining demand or at a level 0:02:47.320 --> 0:02:50.960 of declining demand on the consumer part, again highlighting the 0:02:50.960 --> 0:02:54.800 fact that consumers are on increasingly fragile footing. As we 0:02:54.840 --> 0:02:57.320 turned the calendar page into the next year, lindsay, there 0:02:57.360 --> 0:02:59.440 will be some people tuned into this program right now 0:02:59.680 --> 0:03:03.600 listening to another recession call for three and wondering why 0:03:03.600 --> 0:03:06.120 on earth the Federal Service hiking interest rates by fifty 0:03:06.160 --> 0:03:09.440 basis points on Wednesday and probably signaling they're going to 0:03:09.520 --> 0:03:11.600 do a whole lot more after that. Lindsay, how do 0:03:11.639 --> 0:03:15.000 you reconcile those two things? Well, remember, the Fed is 0:03:15.080 --> 0:03:17.480 trying to slow the economy. So the fact that we're 0:03:17.520 --> 0:03:20.840 seeing increasing calls for recession in three means that the 0:03:20.880 --> 0:03:24.960 feds earlier policy initiatives are already having the intended effect 0:03:25.360 --> 0:03:28.920 of tapping down investment, tapping down consumption, and resulting in 0:03:28.960 --> 0:03:32.760 a significant slowdown in the economy. Now the reason the 0:03:32.840 --> 0:03:35.920 FED is so focused on continuing to raise rates, not 0:03:36.000 --> 0:03:39.480 necessarily at the supersized sevent basis point increase that we 0:03:39.520 --> 0:03:42.920 saw earlier, but fifty basis points, and as you said, 0:03:42.960 --> 0:03:45.920 more work to come down the road is because inflation 0:03:46.080 --> 0:03:49.280 is still elevated and at this point, with the labor 0:03:49.280 --> 0:03:53.200 markets still arguably on modest footing, the FED is hyper 0:03:53.240 --> 0:03:57.960 focused on bringing down inflation reinstating price stability, which the 0:03:58.040 --> 0:04:00.640 Chairman has said time and time again is the bedrock 0:04:00.760 --> 0:04:02.640 of the economy. So how much more damage do you 0:04:02.640 --> 0:04:06.040 think another one hundred basis points of heightening does well? 0:04:06.080 --> 0:04:08.880 I think it ensures that we do see recessionary conditions, 0:04:08.880 --> 0:04:12.560 But depending on the behavior of inflation, depending on what 0:04:12.600 --> 0:04:15.560 we see in terms of international factors, that will determine 0:04:15.800 --> 0:04:18.840 the depth and duration of the downturn. But again from 0:04:18.839 --> 0:04:21.320 the FEDS perspective, it's not about whether or not we 0:04:21.360 --> 0:04:24.040 see negative activity. It's about whether or not we can 0:04:24.040 --> 0:04:28.279 get inflation on a meaningful downward trajectory back towards the 0:04:28.279 --> 0:04:32.719 committee's desire to processual target range. What's your probability getting 0:04:32.720 --> 0:04:35.719 back to two percent until England wins in football again, Lindsay, 0:04:35.839 --> 0:04:38.320 I mean come on, where are we getting back to 0:04:39.960 --> 0:04:43.240 or is well, if you look at the FEDS trajectory, 0:04:43.360 --> 0:04:46.000 there's still very optimistic that we're going to see a 0:04:46.040 --> 0:04:49.360 two handle by twenty by the end of maybe early 0:04:50.560 --> 0:04:52.760 But I think the reality of the data suggests that 0:04:52.800 --> 0:04:56.560 Committee members have been calling for this meaningful improvement in 0:04:56.560 --> 0:04:59.480 inflation for the better part of the past two years, 0:04:59.520 --> 0:05:01.720 and we see we have not seen that come to fruition. 0:05:02.120 --> 0:05:06.120 So the FED the market continues to under appreciate the 0:05:06.240 --> 0:05:09.880 complicated nature of the inflation equation at this point, and 0:05:09.920 --> 0:05:13.479 that's why, along with the fifty basis points increased this week, 0:05:13.839 --> 0:05:17.240 we do expect the FED to meaningfully revise higher their 0:05:17.240 --> 0:05:21.320 expectations and policy and inflation going forward. Does this PGS 0:05:21.320 --> 0:05:23.840 at one oh one? It's service inflation, isn't I mean, 0:05:23.880 --> 0:05:26.520 we're gonna get a reversion to David malpass A World 0:05:26.520 --> 0:05:28.840 Bank was great on this years ago. We're gonna get 0:05:28.880 --> 0:05:33.599 a legit goods disinflation. Dare I say true deflation? But 0:05:33.760 --> 0:05:36.320 services isn't going to get there? What will you? What 0:05:36.360 --> 0:05:40.200 do you see as the sustained services inflation above three? 0:05:41.680 --> 0:05:44.080 I think that's absolutely reasonable, But you're right, we are 0:05:44.080 --> 0:05:46.800 going to see this bifurcation between goods and services, and 0:05:46.839 --> 0:05:49.680 already we're seeing it in the data outside of inflation, 0:05:50.080 --> 0:05:54.080 manufacturing turning back into contractionary territory, while we look at 0:05:54.080 --> 0:05:56.560 the I s M Services Index and that is still 0:05:56.720 --> 0:06:00.760 arguably on solid footing. And so this by vurcation agun 0:06:00.960 --> 0:06:03.719 does highlight the difficult nature that the FED is going 0:06:03.760 --> 0:06:08.120 to face and trying to tackle broader inflation pressures, particularly 0:06:08.160 --> 0:06:11.839 as we see this wage price spiral continue to accelerate. Well, Lindsay, 0:06:11.880 --> 0:06:14.080 young John are way too young to understand this. We 0:06:14.240 --> 0:06:18.479 survived this before. If we only come down with services 0:06:18.520 --> 0:06:22.440 elevated to five or four percent or three point eight percent, 0:06:23.080 --> 0:06:28.000 life goes on, right, people adept right, absolutely, and we 0:06:28.080 --> 0:06:30.800 will come out of this. But I think the trajectory 0:06:30.880 --> 0:06:32.920 of how we come out of this depends on the 0:06:32.920 --> 0:06:36.680 Fed's resolve to reinstate price stability. If they start to 0:06:36.720 --> 0:06:39.360 get cold feet, if they start to pull back prematurely, 0:06:39.760 --> 0:06:43.040 then we could see inflation become entrenched in the economy, 0:06:43.160 --> 0:06:45.360 meaning that we don't see that improvement back to the 0:06:45.360 --> 0:06:48.200 FEDS two percent target. But if they stay the course, 0:06:48.240 --> 0:06:50.599 it will be more painful in the near term, but 0:06:50.680 --> 0:06:53.799 we could see the economy emerged faster and with more 0:06:54.600 --> 0:06:57.880 gusto as we begin to get back to a potential 0:06:57.960 --> 0:07:01.000 level after that two percent target is re stated. Lindsay, 0:07:01.040 --> 0:07:14.440 Thank you, Lindsay p excident of Stayfall. Lauren Canvas City 0:07:14.480 --> 0:07:16.640 joins US now at the US Ecrety Strategy at RBC 0:07:16.800 --> 0:07:18.800 Capital Markets. Laurie, I just want to start with Mike's 0:07:18.800 --> 0:07:21.000 worts and then we'll get to yours. Mike Wilson says 0:07:21.000 --> 0:07:23.400 the final chapter to this bare market, it's all about 0:07:23.440 --> 0:07:26.360 the path of earning's estimates, which we think are far 0:07:26.560 --> 0:07:29.040 too high. Laurie, you want a similar page. Do you 0:07:29.120 --> 0:07:32.840 agree with that? So I'm on a similar page with Mike, 0:07:32.920 --> 0:07:35.000 but I don't exactly agree with him. I think it's 0:07:35.000 --> 0:07:37.520 a little bit more complicated. So we're at one for 0:07:37.600 --> 0:07:41.040 next year. The consensus has been around one, and I 0:07:41.080 --> 0:07:43.360 do think that the need to pull those forecasts down 0:07:43.440 --> 0:07:46.400 is going to create some headwinds and additional volatility, perhaps 0:07:46.400 --> 0:07:48.760 a retesting of the low. But does it have to 0:07:48.800 --> 0:07:51.040 make a new low. I'm not so sure. I think 0:07:51.080 --> 0:07:53.280 the main issue here is that the by side wants 0:07:53.280 --> 0:07:55.520 certainty around multiple so that they can come in and 0:07:55.520 --> 0:07:58.000 buy and we can have a sustainable rally. All the 0:07:58.040 --> 0:08:00.360 by ciders know, and they've known since June the next 0:08:00.440 --> 0:08:03.440 year's numbers were too high. If you look historically, most 0:08:03.440 --> 0:08:05.960 of the cuts and down earnings years are in by April. 0:08:06.360 --> 0:08:08.520 And if you look on a single stock basis, when 0:08:08.520 --> 0:08:11.080 the rate of revisions to the upside is falling, you 0:08:11.120 --> 0:08:13.160 watch for it to turn positive again. You watch for 0:08:13.200 --> 0:08:16.920 that shift from negative revision territory back to positive revision territory. 0:08:17.000 --> 0:08:20.720 And stocks typically bottom the smp FI price three to 0:08:20.800 --> 0:08:24.640 six months before earnings estimate revisions for single stocks stopped 0:08:24.680 --> 0:08:27.320 going down. What that means is that if we can 0:08:27.360 --> 0:08:29.000 kind of get all these cuts out of the way 0:08:29.040 --> 0:08:32.280 by March, it's still reasonable based on the historical playbook, 0:08:32.280 --> 0:08:34.600 for October to be below. Now that doesn't mean we're 0:08:34.640 --> 0:08:37.480 not going to turn around, but I don't necessarily think 0:08:37.480 --> 0:08:39.240 that we have to break to a new low because 0:08:39.240 --> 0:08:41.400 of this earnings issue and making a time cooler. Now 0:08:41.440 --> 0:08:43.800 it's really really difficult, Lorrie, But what do you suggest 0:08:43.800 --> 0:08:48.240 people do between now and March? So I think you 0:08:48.320 --> 0:08:51.320 have to back up and say what have people already 0:08:51.400 --> 0:08:54.640 done and where are they? And most defensive sectors are 0:08:54.760 --> 0:08:57.680 near peak multiples relative to the SMP five hundred, and 0:08:57.679 --> 0:09:00.040 people have been loading into staples all year, wrote it 0:09:00.200 --> 0:09:02.840 into healthcare since the summer. I don't think people have 0:09:02.960 --> 0:09:05.440 enough recovery trades for when we finally do put that 0:09:05.520 --> 0:09:08.439 final bottom in and start to recover. So we tell 0:09:08.480 --> 0:09:10.920 people look at things like financials, look at things like tech, 0:09:11.400 --> 0:09:13.440 look at things like small caps. Those are areas that 0:09:13.520 --> 0:09:16.240 typically outperform when you're coming out of a recession, after 0:09:16.280 --> 0:09:19.080 you've made that final bottom, and small caps, frankly, John 0:09:19.080 --> 0:09:21.720 are already starting to outperform. They put in their relative 0:09:21.720 --> 0:09:24.040 blow back in Bay. So we think that people really 0:09:24.080 --> 0:09:26.400 don't need too much more defense. And you know, I 0:09:26.440 --> 0:09:29.480 wouldn't necessarily dump all your defensive shares right now, but 0:09:29.559 --> 0:09:32.480 I would start thinking ahead to that recovery trade, not 0:09:32.600 --> 0:09:35.160 just this final term, Lauren. I think of the great Dave, 0:09:35.280 --> 0:09:38.320 David Triple and pioneer years ago. It would explain to 0:09:38.360 --> 0:09:40.840 me the small cap and mid cap go once every 0:09:40.920 --> 0:09:43.520 nine years, once every eight years, whatever the pop is. 0:09:43.880 --> 0:09:45.960 And I read in your research you're really looking for 0:09:46.000 --> 0:09:48.560 that pop to be this year. If we have a 0:09:48.600 --> 0:09:51.760 great zombie roll up, which frankly, we're beginning to percolate 0:09:51.800 --> 0:09:55.240 and see because money actually costs something, how does small 0:09:55.360 --> 0:09:58.600 caps react to the fact we now have a risk 0:09:58.679 --> 0:10:01.840 free rate, we have zombie companies that have to do something. 0:10:01.880 --> 0:10:05.400 How does that play into your call? So I think 0:10:05.400 --> 0:10:07.960 you want to be in line with the higher quality 0:10:08.040 --> 0:10:11.440 small caps, the bigger names, the more liquid names, um, 0:10:11.480 --> 0:10:13.880 you know, kind of where the typical small and MidCap 0:10:13.880 --> 0:10:16.920 portfolio manager likes to invest, not kind of the bottom 0:10:16.960 --> 0:10:19.240 three quintiles of market cap, where you get tend to 0:10:19.240 --> 0:10:21.240 get the dicier balance sheets, you tend to get the 0:10:21.280 --> 0:10:24.840 lower quality names. We actually think there's plenty evaluation appeal 0:10:24.920 --> 0:10:27.240 in that upper echelot of small cap right now, which 0:10:27.240 --> 0:10:28.880 is one of the things that makes it so interesting 0:10:28.960 --> 0:10:30.720 to me because we haven't had that for a really 0:10:30.760 --> 0:10:34.880 long time. Or small caps correlated to the weaker dollar. Finally, 0:10:34.960 --> 0:10:38.520 end of strong dollar international play? Do you cross correlate 0:10:38.840 --> 0:10:43.439 those two categories. I think that the dollar is complicated 0:10:43.480 --> 0:10:46.280 for small caps. They have been benefiting from an earnings 0:10:46.320 --> 0:10:48.720 perspective by dollar strength. If you look at if you 0:10:48.720 --> 0:10:50.560 try to sort of match up the relative cycle with 0:10:50.600 --> 0:10:52.240 the dollar, of the time, you're not you're gonna just 0:10:52.240 --> 0:10:55.880 want to pull your hair out. It's not be careful with. 0:10:57.640 --> 0:11:01.040 But but recently they've been benefiting from an earnings perspective 0:11:01.080 --> 0:11:03.440 because they don't have those pressures. I think that what 0:11:03.520 --> 0:11:05.120 I see right now, And you know, I just got 0:11:05.160 --> 0:11:08.120 off a week of being in Europe talking to investors there. 0:11:08.440 --> 0:11:11.720 They are very European based. Equity investors are very perplexed 0:11:11.720 --> 0:11:14.560 by the expensive valuations that we have sitting in SMP 0:11:14.640 --> 0:11:18.040 five companies right now. You don't have that same valuation 0:11:18.080 --> 0:11:20.240 pressure down in small cap right now. So I think 0:11:20.240 --> 0:11:23.600 when you're you're starting to cross borders, I think you've 0:11:23.600 --> 0:11:25.839 still got the better valuation story here and that will 0:11:25.880 --> 0:11:28.839 be appealing regardless of some of these currents. But are 0:11:28.880 --> 0:11:31.080 they gonna? Are they gonna roll up? I mean, I 0:11:31.120 --> 0:11:34.199 don't mean the quality small caps and there's like three thousand, 0:11:34.240 --> 0:11:36.600 let's say is a working number. What are the other 0:11:37.360 --> 0:11:39.679 under gonna do? Is there gonna be one grand roll up? 0:11:39.679 --> 0:11:43.760 Because money finally costs something? I mean, what do you 0:11:43.760 --> 0:11:48.479 mean by roll of exactly? Time? Mergers, transactions, combinations. Microsoft 0:11:48.559 --> 0:11:52.600 taking out tency weensy bit of the London Stock Exchange 0:11:52.640 --> 0:11:55.240 today just to get on board that kind of stuff. 0:11:55.360 --> 0:11:57.560 I think I think that you will get that in 0:11:57.679 --> 0:12:01.840 certain sectors where you have have more valuation appeal. I 0:12:01.880 --> 0:12:04.760 think industrials, even though it's not cheap, it's always an 0:12:04.800 --> 0:12:06.840 area where we see those roll up stories, and the 0:12:06.880 --> 0:12:09.760 reshoring thesis could further some of that along. But I 0:12:09.800 --> 0:12:12.680 think ultimately those roll ups in that mn A cycle, 0:12:12.760 --> 0:12:14.720 that's really more about what waits us on the other 0:12:14.760 --> 0:12:18.000 side of this recovery and a sluggish GDP environment, growth 0:12:18.040 --> 0:12:21.079 is scarce, and companies, I think will feel more compelled 0:12:21.120 --> 0:12:22.959 to go out and buy growth. And you can find 0:12:22.960 --> 0:12:25.080 that in some of those higher qualities fall caps, not 0:12:25.160 --> 0:12:28.040 necessarily the smaller ones, but again it might bring you 0:12:28.080 --> 0:12:30.080 back to some of those higher quality, you know, more 0:12:30.120 --> 0:12:32.440 liquid type names and lor. You've touched on something really 0:12:32.440 --> 0:12:35.160 important here, and that's about ladyship in the recovery in 0:12:35.200 --> 0:12:37.920 the second half of next year. Is it too added 0:12:37.960 --> 0:12:40.319 to draw conclusions about where that leadership comes from. That's 0:12:40.320 --> 0:12:42.840 a discussion were ultimately happen right now. Why is the 0:12:43.160 --> 0:12:46.600 now the right time to have that conversation. I think 0:12:46.640 --> 0:12:48.480 it's the right time because you know, you know as 0:12:48.480 --> 0:12:51.080 well as I do, John, When these bottoms happen, and 0:12:51.120 --> 0:12:53.960 people are convinced of these bottoms, they just sort of 0:12:54.000 --> 0:12:55.760 take off and you don't have time to get in. 0:12:55.840 --> 0:12:57.760 You have to do your homework early while things are 0:12:57.760 --> 0:12:59.920 sort of quiet and turning around. But I saw you 0:13:00.080 --> 0:13:02.320 last week. We did have a lot of discussions about 0:13:02.360 --> 0:13:05.880 what is the new leadership. Typically in a sluggish economic 0:13:05.880 --> 0:13:07.880 growth backdrop, which I think is the price we pay 0:13:07.920 --> 0:13:10.880 for a short, shallow recession growth, stocks out per form. 0:13:11.160 --> 0:13:12.720 But is it the old growth or is it the 0:13:12.720 --> 0:13:15.280 new growth? And that's why I think the sector, like industrials, 0:13:15.360 --> 0:13:17.240 is starting to get a bit over valued. Now we're 0:13:17.280 --> 0:13:20.120 just neutral there. We don't like the valuations, but we 0:13:20.200 --> 0:13:21.960 have been talking to people a lot about how that 0:13:22.040 --> 0:13:24.439 might be the best long term growth story in town. 0:13:24.480 --> 0:13:26.719 And that might be one of the reasons why you're 0:13:26.760 --> 0:13:30.240 seeing these valuations lift. People basically kind of looking at 0:13:30.240 --> 0:13:33.360 the old economy and saying what's old might potentially be 0:13:33.480 --> 0:13:35.760 new again and that might be where you get for 0:13:35.840 --> 0:13:38.800 the better growth profile going forward. Laurie, this was brilliant. 0:13:39.120 --> 0:13:41.080 That would be a stranger come back saying, Laurie canvass 0:13:41.120 --> 0:13:48.040 in to the BBC capital market it is time for 0:13:48.080 --> 0:13:50.800 global Wall Street to lean forward for one of the 0:13:51.000 --> 0:13:53.720 great great calls of the last number of years has 0:13:53.800 --> 0:13:59.000 when the persistency and courage of HSBC to say strong 0:13:59.520 --> 0:14:04.720 and brilliant dollar. They amend that sort of So we 0:14:04.760 --> 0:14:06.719 have a sort of kind of like discussion with Darren Mayor, 0:14:06.840 --> 0:14:09.280 head of Research America's and ahead of the U s 0:14:09.360 --> 0:14:12.439 F strategy, with a great Paul Michael as well. I 0:14:12.760 --> 0:14:15.960 there's an ambivalence to your note. You're not calling for 0:14:16.080 --> 0:14:19.360 week dollar right, Well, we're calling for a dollar correction. 0:14:19.480 --> 0:14:21.680 It kind of amounts to the same. But it's not 0:14:21.800 --> 0:14:25.600 this big trend reversal. In other words, we don't undo 0:14:25.800 --> 0:14:28.960 everything that we've we've delivered by virtue of dollar strength 0:14:29.000 --> 0:14:31.320 over the last eighteen months or so. Let's talk to 0:14:31.440 --> 0:14:33.880 people like John who you know trade off folks on 0:14:33.920 --> 0:14:37.920 the break here. John's doing f X trade series. We 0:14:38.120 --> 0:14:41.200 want to do that. But is it a tradeable come 0:14:41.240 --> 0:14:44.280 off the bloom? After it's upon there, come off the bloom. 0:14:44.360 --> 0:14:47.640 Get that day loop nailed that, okay? Is it a 0:14:47.720 --> 0:14:50.280 tradeable come off the bloom? Or is this going to 0:14:50.400 --> 0:14:53.080 be a messy sludge where nobody really makes big figures. 0:14:53.760 --> 0:14:56.200 Look our whole process was we described it, We thought 0:14:56.240 --> 0:14:58.000 to be this would be the chop before the flop. 0:14:58.040 --> 0:15:02.200 We have this really choppy period, then we'll get the flop. Yeah, 0:15:02.240 --> 0:15:05.120 but nice phraseology, but completely the wrong way around, because 0:15:05.160 --> 0:15:06.600 what we've had is the flop and we're still kind 0:15:06.600 --> 0:15:09.880 of waiting for the chop. You know. This the reverse 0:15:09.920 --> 0:15:11.800 that we've had over the lad You know, we changed 0:15:11.800 --> 0:15:16.080 our dollar view for dollar abolitionist to dollar choppiness and 0:15:16.120 --> 0:15:18.440 then weakness just a month ago, and in that month 0:15:18.480 --> 0:15:21.000 we've had like one of the biggest monthly declines in 0:15:21.080 --> 0:15:23.560 the dollar. So it's really you know, even for quote 0:15:23.600 --> 0:15:25.560 unquote a bear like us, now our new found bear 0:15:25.640 --> 0:15:28.680 like us, it's been a big old move. I wonder 0:15:28.680 --> 0:15:30.440 as the chopping is about to come though, you know, 0:15:30.560 --> 0:15:33.720 into the CPI, into f O M c UM and 0:15:33.720 --> 0:15:36.920 and into kind of the beginnings of January where everybody 0:15:36.960 --> 0:15:39.120 thinks they know what the trend is for three and 0:15:39.160 --> 0:15:41.280 then they're all suddenly forced to revisit in the first 0:15:41.280 --> 0:15:43.840 couple of weeks their risk that we're over playing the 0:15:43.840 --> 0:15:46.000 one side of the currency pair. When I think about 0:15:46.000 --> 0:15:48.400 Euro dollar, which got down to about ninety five, and 0:15:48.400 --> 0:15:50.560 then we avoided the worst case scenario coming into winter. 0:15:50.600 --> 0:15:52.920 We had that period of mild weather for the Europeans. 0:15:52.920 --> 0:15:54.800 When I think about Sterling getting down to one or 0:15:54.800 --> 0:15:56.280 three fifty, I think in to day, the end of 0:15:56.280 --> 0:15:59.960 September and coming back through one twenty. Largely it was 0:16:00.000 --> 0:16:02.040 the other side of the trade. It was the Sterling side, 0:16:02.080 --> 0:16:05.000 the Euro side, that really kicked off that move. We 0:16:05.080 --> 0:16:07.480 cleaned up the policy story in the UK. We avoided 0:16:07.480 --> 0:16:10.480 that terrible winter and the shutdowns we anticipated. Maybe they 0:16:10.520 --> 0:16:12.480 still evolved. I don't know, But do you think we're 0:16:12.520 --> 0:16:15.640 overplaying the U S side of the currency pair. I 0:16:15.680 --> 0:16:18.440 would say, look showed us that the dominant thing to 0:16:18.440 --> 0:16:20.320 get right was the dollar. I mean we could at 0:16:20.320 --> 0:16:22.720 the margin we had periods where this Sterling was was 0:16:22.760 --> 0:16:25.680 the swing factor a couple of peers where euro was. 0:16:25.720 --> 0:16:27.840 But I mean look at us this week. We have 0:16:27.960 --> 0:16:30.600 got an ECB meeting, we have got talking about it. 0:16:30.640 --> 0:16:33.800 Who knew? You know? Um? And but I think there's 0:16:33.800 --> 0:16:36.040 a recognition and the reality is you've got to get 0:16:36.040 --> 0:16:38.520 the dollar right. And in a way, before you get 0:16:38.560 --> 0:16:40.440 the dollar right, you've got to get the SMP right. 0:16:40.560 --> 0:16:44.400 Because risk appetite has been the core of everything that's 0:16:44.400 --> 0:16:46.880 happening in the FX market and to the safe Avan dollar. 0:16:47.000 --> 0:16:49.160 So I'm not trading rates next year, I'm trading sentiment. 0:16:49.480 --> 0:16:51.880 You're training row row risk on risk, all right, that 0:16:51.920 --> 0:16:53.280 all the way to that. So when you think about 0:16:53.280 --> 0:16:55.800 paying some of that choppy dollar weakness through G ten, 0:16:56.400 --> 0:16:58.400 what's the select currency pay you want to do that through? 0:16:59.200 --> 0:17:01.520 I think the high betac currencies on the way up 0:17:01.520 --> 0:17:03.160 in the dollar should be the high beta occurrency is 0:17:03.160 --> 0:17:05.240 in the way down. So your Aussie, New Zealand, your 0:17:05.280 --> 0:17:08.159 knocky stocky and less so the Canadian dollar. And we 0:17:08.240 --> 0:17:10.240 we've seen that even in this dollar sell off. You know, 0:17:10.320 --> 0:17:13.479 Canada's underperformed others. So I think you go to the 0:17:13.960 --> 0:17:15.960 I mean, honestly, i'd say the AUSSI perhaps and and 0:17:16.000 --> 0:17:18.719 the Kiwi, Norway and Sweden. I know that's what you're 0:17:18.800 --> 0:17:20.560 day trading, just as we came off came on air. 0:17:20.680 --> 0:17:23.280 But you know they're there for the braver man side, 0:17:23.280 --> 0:17:24.920 there for the braver man and that's why you're still 0:17:24.920 --> 0:17:27.840 having to do this gig as well. So I yeah, 0:17:27.880 --> 0:17:32.240 I think as the US dollars as the US dollar 0:17:32.480 --> 0:17:34.600 and New Zealand US dollar, they they'd be the two 0:17:34.720 --> 0:17:37.560 this China reopening reinforced that trait. I think it's being 0:17:37.600 --> 0:17:42.080 overplayed a little bit. Um. I mean the transition is 0:17:42.080 --> 0:17:44.919 going to be complicated towards you know, a reopened China. 0:17:45.640 --> 0:17:49.520 Perhaps markets slightly overegging the tourist angle and what that 0:17:49.600 --> 0:17:52.399 might mean in terms of flows. Um. But it is 0:17:52.480 --> 0:17:56.080 encouraging and the pro growth stances encouraging. But look, even 0:17:56.080 --> 0:17:58.359 at HSBC, we've been looking for a rebound in China 0:17:58.440 --> 0:18:02.320 six months down the road for two years. Um. So 0:18:02.440 --> 0:18:04.680 you know, as as the market, and it's difficult because 0:18:04.720 --> 0:18:06.400 every time we think, okay, we're when I get there, 0:18:06.440 --> 0:18:08.680 we don't get there. And you've got the leadership there 0:18:08.680 --> 0:18:10.399 with the Hong Kong position of the Hong Kong and 0:18:10.520 --> 0:18:14.320 Shanghai Banking Corporation. What is the pair in the Pacific 0:18:14.440 --> 0:18:20.159 rim to play Asia open? I think Korea will be one. Um. 0:18:20.720 --> 0:18:24.920 It's w against what against the dollar? I mean, I 0:18:24.960 --> 0:18:26.960 think that's you gotta go. I think I think it's 0:18:26.960 --> 0:18:30.600 the cleanest way. I mean, I think you do to 0:18:30.640 --> 0:18:32.760 your question earlier, you do have to come back to 0:18:32.800 --> 0:18:34.760 a dollar view. Now, then how do you express it 0:18:34.800 --> 0:18:38.240 in Asia? I think Korea is one option. Um. I 0:18:38.280 --> 0:18:41.879 guess the round is another high beta option. Brazil is 0:18:41.920 --> 0:18:43.760 when you could like so as if you had there 0:18:44.680 --> 0:18:48.359 for sure. Mohammed from Cairo and Cambridge emails in and 0:18:48.400 --> 0:18:50.720 he says, would you tell us Dara about Durham ConA? 0:18:51.040 --> 0:18:54.240 I mean, I mean if we get a Creatian Morocco final, Yes, 0:18:54.280 --> 0:18:56.800 I mean they've got all these obscure currencies. I mean 0:18:57.040 --> 0:19:01.119 going there? You are you like long the Durham? Do 0:19:01.119 --> 0:19:03.159 you know what I would love to give you? I 0:19:03.160 --> 0:19:05.200 would love to give you the big figure in that cross, 0:19:05.240 --> 0:19:07.359 but I have no idea. But as I was mentioned 0:19:07.560 --> 0:19:09.520 in the break, I am trying to dust off my 0:19:09.560 --> 0:19:11.760 family treat to see if I've got any Moroccan heritage 0:19:11.760 --> 0:19:14.280 in there so I can join in the celebrations when 0:19:14.320 --> 0:19:16.840 they beat Croatian the final three nil. It's been fantastic 0:19:16.840 --> 0:19:19.040 to see you think of Croatian Morocco final. Is that 0:19:19.040 --> 0:19:21.960 what you're looking for? Now? We've always been counter consensus, 0:19:22.840 --> 0:19:25.159 so why not soccer? Guys? Can I ask you a question? 0:19:25.600 --> 0:19:30.359 They played before the Sunday game, like the third Wednesday? 0:19:30.800 --> 0:19:33.119 But yeah, yeah, yeah, that's never a great game. To 0:19:34.920 --> 0:19:37.560 everybody's like, don't hurt me, right, I don't know why 0:19:37.560 --> 0:19:40.080 they played that game. I really don't. Yeah, it's a 0:19:40.080 --> 0:19:43.120 tricky one. I think it's finding this finding the bronze 0:19:43.160 --> 0:19:45.680 medalist isn't really wanted. How easy was it to get 0:19:45.680 --> 0:19:47.680 tickets for this World Cup? I'd love some insight into 0:19:47.760 --> 0:19:49.400 that because every time I watched the game, they say 0:19:49.400 --> 0:19:53.399 it's another sell out, and I'm like totally with you 0:19:53.480 --> 0:19:55.679 and your gas like me because I could see literally 0:19:55.680 --> 0:19:58.280 from England was like thousands of empty s England. I 0:19:58.320 --> 0:20:00.080 thought it was busy, but when they keep saying to 0:20:00.119 --> 0:20:02.320 sell out when there's thousands of empty seats, well, look 0:20:02.320 --> 0:20:03.880 in English, you might think they're all down the pub, 0:20:04.160 --> 0:20:07.280 but you know that that could be a reason. I 0:20:07.320 --> 0:20:08.760 don't know. It's just when you can sell a ticket, 0:20:08.760 --> 0:20:10.479 doesnt mean you have to turn up. Steve Major made 0:20:10.520 --> 0:20:13.840