1 00:00:05,160 --> 00:00:08,480 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along 2 00:00:08,520 --> 00:00:12,360 Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day 3 00:00:12,400 --> 00:00:16,840 Speaker 1: for insight from the best an economics, geopolitics, finance and investment. 4 00:00:17,280 --> 00:00:22,119 Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 5 00:00:22,320 --> 00:00:26,600 Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com, 6 00:00:26,640 --> 00:00:29,880 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. 7 00:00:30,040 --> 00:00:32,920 Speaker 2: And my house is almost nothing on our guests. 8 00:00:33,080 --> 00:00:36,199 Speaker 1: On my coffee table in my living room, there is 9 00:00:36,240 --> 00:00:39,600 Speaker 1: a one hundred page plus researcher report from JP Morgan 10 00:00:40,560 --> 00:00:45,120 Speaker 1: eighteen months ago which brilliantly plays out the demand dynamics 11 00:00:45,159 --> 00:00:47,559 Speaker 1: of what we don't talking us about, which is emerging 12 00:00:47,600 --> 00:00:51,239 Speaker 1: markets joining us now, Christian Malick, Global Heat of Energy, STRATUMY, 13 00:00:51,400 --> 00:00:53,480 Speaker 1: JP Morgan, COVID dot in Away. 14 00:00:53,680 --> 00:00:56,680 Speaker 2: Let's just be honest, China shutdown gotten Away. 15 00:00:57,280 --> 00:01:00,680 Speaker 1: Do you reaffirm what you said eighteen months ago about 16 00:01:00,680 --> 00:01:02,960 Speaker 1: the durability of demand. 17 00:01:02,680 --> 00:01:04,320 Speaker 2: In em for sure? 18 00:01:04,319 --> 00:01:06,360 Speaker 3: Actually, I think it's always good to be here again 19 00:01:06,400 --> 00:01:09,040 Speaker 3: and on demand. What I'd say is that I think 20 00:01:09,080 --> 00:01:11,920 Speaker 3: we're actually stronger in demand growth on a medium term 21 00:01:11,920 --> 00:01:13,880 Speaker 3: than we thought you were. And the main reason is 22 00:01:13,920 --> 00:01:15,400 Speaker 3: that when you look at all the fuels in the world, 23 00:01:15,600 --> 00:01:19,039 Speaker 3: particularly the clean energy fuels. In the second edition of 24 00:01:19,040 --> 00:01:22,280 Speaker 3: that report, we showed that the system the distribution of 25 00:01:22,280 --> 00:01:26,800 Speaker 3: that energy will basically fail the generation of lean energy. 26 00:01:26,880 --> 00:01:28,800 Speaker 3: So you've got all these duels being generated, you can't 27 00:01:28,840 --> 00:01:31,160 Speaker 3: get it to the consumer. What happens is we end 28 00:01:31,200 --> 00:01:34,200 Speaker 3: up with a massive gap of energy in terms of 29 00:01:34,200 --> 00:01:36,000 Speaker 3: what to fill. How do we fill that? We have 30 00:01:36,040 --> 00:01:38,039 Speaker 3: to fill it through the traditional fuels. What that will 31 00:01:38,080 --> 00:01:40,680 Speaker 3: do is drive more demand for hydrocarbons. Are there for 32 00:01:40,760 --> 00:01:42,039 Speaker 3: more demand for oil? 33 00:01:42,480 --> 00:01:44,160 Speaker 1: I mean, I mean we can spend an hour with 34 00:01:44,240 --> 00:01:47,480 Speaker 1: you and as duels focus as a physics estimate of 35 00:01:47,640 --> 00:01:50,720 Speaker 1: energy and the thermone dynamics and ev vehicles and all there. 36 00:01:50,600 --> 00:01:52,200 Speaker 2: But I'm not going there this morning. 37 00:01:52,480 --> 00:01:54,720 Speaker 1: What I will say is you got to get traditional 38 00:01:54,760 --> 00:01:58,640 Speaker 1: hydrocarbons from Saudi Arabian such through the straight to Malaca 39 00:01:58,760 --> 00:01:59,920 Speaker 1: and up the Pacific Ring. 40 00:02:00,400 --> 00:02:02,800 Speaker 2: Is that model still in place? Absolutely? 41 00:02:02,840 --> 00:02:04,720 Speaker 3: And in fact, when we think about Sadi share of 42 00:02:04,760 --> 00:02:07,840 Speaker 3: demand growth, and we've written about this extensively, you know 43 00:02:07,880 --> 00:02:10,760 Speaker 3: a few years ago that ultimately with the industry retreating 44 00:02:10,800 --> 00:02:13,640 Speaker 3: in terms of investments in oil. What we'll see is 45 00:02:13,639 --> 00:02:15,919 Speaker 3: SADI share of demand growth going up to between fifty 46 00:02:15,960 --> 00:02:19,360 Speaker 3: to sixty percent of all demand growth by twenty thirty. Now, 47 00:02:19,440 --> 00:02:21,360 Speaker 3: just to give you perspective on that, the average was 48 00:02:21,360 --> 00:02:24,200 Speaker 3: eleven percent the last thirty years. The low was four 49 00:02:24,600 --> 00:02:27,400 Speaker 3: when we had shale at its max. But a high 50 00:02:27,400 --> 00:02:29,920 Speaker 3: cost of equity, you know, more cash return to shareholders, 51 00:02:29,960 --> 00:02:32,600 Speaker 3: a high cost of debt, higher for longer rates, and 52 00:02:32,639 --> 00:02:35,480 Speaker 3: clearly a push to drive away from the transition has 53 00:02:35,520 --> 00:02:38,040 Speaker 3: meant that the industry is massively underinvested, and that we 54 00:02:38,040 --> 00:02:39,720 Speaker 3: weren't a fan of this un investment. Pisis for a 55 00:02:39,840 --> 00:02:42,280 Speaker 3: very long time. We turn bullets with a super cycle 56 00:02:42,280 --> 00:02:44,600 Speaker 3: in twenty twenty. I always like to say that, but 57 00:02:44,639 --> 00:02:47,600 Speaker 3: that investment now is now way too late. 58 00:02:48,280 --> 00:02:51,880 Speaker 4: Do presidential politics matter, given the crude production in America 59 00:02:52,000 --> 00:02:53,760 Speaker 4: is close to a record at the moment. 60 00:02:54,560 --> 00:02:56,519 Speaker 3: I think it does in the sense that you could 61 00:02:56,560 --> 00:02:58,919 Speaker 3: potentially push for more investments in shale. 62 00:02:59,000 --> 00:03:00,440 Speaker 2: But the issue of shale, and it sort of. 63 00:03:00,440 --> 00:03:02,800 Speaker 3: Goes back years five or six years ago, were all 64 00:03:02,800 --> 00:03:04,360 Speaker 3: wondering how is it when all prices go off, we 65 00:03:04,400 --> 00:03:06,359 Speaker 3: see so many barrels just turning. 66 00:03:06,080 --> 00:03:07,600 Speaker 2: Up, blowing up, lots and lots of wells. 67 00:03:07,840 --> 00:03:10,240 Speaker 3: That was fine then, but we sort of what you 68 00:03:10,280 --> 00:03:13,760 Speaker 3: saw now, you've seeing productivity slow. So as a result 69 00:03:13,800 --> 00:03:16,160 Speaker 3: of the way that was fragged, well dated, showing us 70 00:03:16,200 --> 00:03:19,239 Speaker 3: that productivity is now slowing. So even if we said right, 71 00:03:19,280 --> 00:03:22,600 Speaker 3: go drill, baby, drill right and in lots of investments, 72 00:03:23,280 --> 00:03:25,040 Speaker 3: even if banks were to turn around and say listen, 73 00:03:25,080 --> 00:03:28,000 Speaker 3: will finance you, the issue is the wells themselves. It's 74 00:03:28,040 --> 00:03:30,600 Speaker 3: not magic dust you just throw over wells. That slow 75 00:03:30,639 --> 00:03:34,120 Speaker 3: down is happening, and the marginal cost is going up. 76 00:03:34,480 --> 00:03:36,160 Speaker 3: The one thing I probably learned this year in all 77 00:03:36,240 --> 00:03:38,760 Speaker 3: markets is that we tested seventy and we bounced back. 78 00:03:39,920 --> 00:03:42,440 Speaker 4: Looking at prices now ninety four on Brent, looking at 79 00:03:42,440 --> 00:03:45,280 Speaker 4: the bond market, yield to push in five percent, five 80 00:03:45,360 --> 00:03:47,480 Speaker 4: twenty two year and four fifty out of ten year, 81 00:03:47,520 --> 00:03:50,120 Speaker 4: conversation we're having in the bond market is what is 82 00:03:50,160 --> 00:03:50,640 Speaker 4: the new normal? 83 00:03:50,760 --> 00:03:51,560 Speaker 5: Is it the old normal? 84 00:03:52,040 --> 00:03:54,520 Speaker 4: What's the conversation like in the commodity market, what's the 85 00:03:54,600 --> 00:03:56,440 Speaker 4: new normal for commodity prices? 86 00:03:56,480 --> 00:03:58,080 Speaker 5: Given everything you've just told us. 87 00:03:57,960 --> 00:03:59,240 Speaker 3: Well, I love the way you talk about because I 88 00:03:59,240 --> 00:04:01,440 Speaker 3: think that before in our in terms of we were 89 00:04:01,720 --> 00:04:03,360 Speaker 3: very bullished and then we sort of took time out 90 00:04:03,400 --> 00:04:05,480 Speaker 3: this year. We're very barish in December and we've basically 91 00:04:05,520 --> 00:04:08,160 Speaker 3: gone back to bullish, So we're sort of we've been 92 00:04:08,200 --> 00:04:11,560 Speaker 3: quite tactical that before and after its rates. The flow 93 00:04:11,600 --> 00:04:13,800 Speaker 3: of capital into new or supply is just not what 94 00:04:13,840 --> 00:04:15,440 Speaker 3: it was like in the last thirty years. You had 95 00:04:15,520 --> 00:04:17,800 Speaker 3: cheap money, a lot of productivity. So to ask you 96 00:04:17,800 --> 00:04:20,960 Speaker 3: a question, what that's doing is driving the long term 97 00:04:21,000 --> 00:04:23,560 Speaker 3: price the back end of the curve up to eighty 98 00:04:23,600 --> 00:04:26,039 Speaker 3: and north of eighty, we think it probably normalized towards 99 00:04:26,080 --> 00:04:27,880 Speaker 3: one hundred dollars, And just to sort of give you 100 00:04:27,920 --> 00:04:34,080 Speaker 3: a bottom up sense the companies themselves, if you take capex, dividends, buybacks, debt, 101 00:04:34,920 --> 00:04:38,599 Speaker 3: and windfall tax in this country, in Europe, you need 102 00:04:39,040 --> 00:04:42,159 Speaker 3: at least eighty dollars to be able to invest in 103 00:04:42,279 --> 00:04:45,680 Speaker 3: marginal new oil. That's of fact we've done. We did analysis. 104 00:04:45,720 --> 00:04:47,720 Speaker 3: We call it the cash break even. So that's very 105 00:04:47,760 --> 00:04:50,600 Speaker 3: supportive for the eighty dollars. The question we've had a 106 00:04:50,600 --> 00:04:52,920 Speaker 3: lot today is why one hundred. Well, when you look 107 00:04:52,960 --> 00:04:54,960 Speaker 3: at their capacity of opek over the next few years, 108 00:04:55,000 --> 00:04:56,040 Speaker 3: the only ones that are going to be able to 109 00:04:56,040 --> 00:05:00,360 Speaker 3: fill that fill that gap in supply, is opek origue 110 00:05:00,360 --> 00:05:03,400 Speaker 3: When spare capacity has fallen to sort of between five 111 00:05:03,440 --> 00:05:06,160 Speaker 3: and ten percent of total capacity in the world, that's 112 00:05:06,200 --> 00:05:09,000 Speaker 3: a risk premium, which we i haven't used that term 113 00:05:09,040 --> 00:05:11,279 Speaker 3: for a very long time in oil, maybe last year briefly. 114 00:05:11,520 --> 00:05:14,080 Speaker 3: That will drive twenty dollars above the eighty to one hundred. 115 00:05:14,440 --> 00:05:16,920 Speaker 6: So when you talk about opek being the big swing factor, 116 00:05:17,320 --> 00:05:19,279 Speaker 6: we've been hearing a lot that Saudi Arabia and what 117 00:05:19,320 --> 00:05:21,520 Speaker 6: they decide to produce is really going to determine whether 118 00:05:21,560 --> 00:05:23,800 Speaker 6: things stay at one hundred, whether things stay at ninety, 119 00:05:23,960 --> 00:05:26,360 Speaker 6: or whether things stay below. Do you reject that? Do 120 00:05:26,400 --> 00:05:29,560 Speaker 6: you think that that sort of a simplistic way of 121 00:05:29,600 --> 00:05:31,320 Speaker 6: looking at it? And in the near term they have 122 00:05:31,400 --> 00:05:33,240 Speaker 6: less control than people give them credit. 123 00:05:33,520 --> 00:05:36,760 Speaker 3: Well, it's a question that's very, very very they have control. 124 00:05:36,839 --> 00:05:37,680 Speaker 2: They have to have control. 125 00:05:37,720 --> 00:05:40,600 Speaker 3: I think ultimately the size have played their cards very 126 00:05:40,640 --> 00:05:43,520 Speaker 3: well and done a fantastic job managing the volatility and oil. 127 00:05:43,760 --> 00:05:46,839 Speaker 3: Right With that in mind, if they're taking great share 128 00:05:46,839 --> 00:05:49,760 Speaker 3: of demand growth, they have a sort of fiducial duty 129 00:05:49,800 --> 00:05:51,920 Speaker 3: to make sure they're stabilizing the price. So people talk 130 00:05:51,960 --> 00:05:54,560 Speaker 3: about an absolute price I just viewed that. I think 131 00:05:54,560 --> 00:05:55,960 Speaker 3: what they're trying to do is make sure it stays 132 00:05:55,960 --> 00:05:58,520 Speaker 3: within a range, which by definition means if we see 133 00:05:58,680 --> 00:06:02,200 Speaker 3: a very cold winter, hurricanes and prices spike very quickly, 134 00:06:02,480 --> 00:06:04,960 Speaker 3: they'll be managing the upside just this way they're managing 135 00:06:05,000 --> 00:06:08,080 Speaker 3: the downside. So I've told generalists this morning, put your 136 00:06:08,080 --> 00:06:11,320 Speaker 3: seatbelts on. It's it's going to be a very volatile supercycle. 137 00:06:11,320 --> 00:06:13,520 Speaker 3: It's not going to be a straight line. And therefore, 138 00:06:13,560 --> 00:06:15,400 Speaker 3: in some ways, I think the bullish factor to that 139 00:06:15,480 --> 00:06:19,880 Speaker 3: inequities is Saudi can control that range, so generalists don't say, wait, 140 00:06:19,960 --> 00:06:22,400 Speaker 3: this is way too this is way too high octane. 141 00:06:22,040 --> 00:06:23,280 Speaker 2: For me to the right. Now. 142 00:06:23,279 --> 00:06:24,560 Speaker 6: That's the reason why I think it's one hundred and 143 00:06:24,600 --> 00:06:26,240 Speaker 6: not one hundred and ten. Right, You think that that's 144 00:06:26,279 --> 00:06:28,279 Speaker 6: where they're going to kind of cap it. But what 145 00:06:28,360 --> 00:06:30,799 Speaker 6: about say Russia and the fact that they just banned 146 00:06:30,839 --> 00:06:32,440 Speaker 6: exports of gasoline. 147 00:06:32,000 --> 00:06:33,000 Speaker 5: And things of that nature. 148 00:06:33,240 --> 00:06:36,200 Speaker 6: Are there other areas that could kind of go against 149 00:06:36,360 --> 00:06:37,320 Speaker 6: what we're seeing from Saudi. 150 00:06:37,520 --> 00:06:39,040 Speaker 3: I think other areas will be demand, and I think 151 00:06:39,040 --> 00:06:41,120 Speaker 3: we're in demand discovery. I mean, everyone's got a view. 152 00:06:41,160 --> 00:06:45,120 Speaker 3: What price does demand? We've looked at historic analysis, and 153 00:06:45,200 --> 00:06:47,760 Speaker 3: one hundred or oil is not that expensive. In fact, 154 00:06:47,800 --> 00:06:49,920 Speaker 3: it's sort of closest or sevent soil of real Again 155 00:06:49,960 --> 00:06:52,599 Speaker 3: before and after it's higher rates, you've got higher rates. 156 00:06:52,920 --> 00:06:56,080 Speaker 3: And therefore, what's the real sort of level of normalized 157 00:06:56,120 --> 00:06:57,720 Speaker 3: price the market demand the. 158 00:06:57,680 --> 00:06:59,919 Speaker 2: World can acclimatize to. We don't know. 159 00:07:00,040 --> 00:07:02,440 Speaker 3: We think one hundred and ten hundred and twenty is fine, 160 00:07:02,880 --> 00:07:05,279 Speaker 3: and therefore at that price, if we started to see 161 00:07:05,360 --> 00:07:08,320 Speaker 3: massive demand destruction, we're wrong. That's the point where I 162 00:07:08,360 --> 00:07:11,040 Speaker 3: suspect Saudi and Rush will have to sort of manage 163 00:07:11,080 --> 00:07:12,600 Speaker 3: that downside once again. 164 00:07:12,840 --> 00:07:15,960 Speaker 5: So the message this morning is buckle up, buckle. 165 00:07:15,720 --> 00:07:19,560 Speaker 3: Up, buckle up, very long, very bullish, but be very 166 00:07:19,560 --> 00:07:20,960 Speaker 3: tactical when you get positioned in. 167 00:07:21,120 --> 00:07:23,040 Speaker 5: That's quite something, Takay it is. 168 00:07:23,040 --> 00:07:23,480 Speaker 2: There's a lot. 169 00:07:23,600 --> 00:07:25,640 Speaker 1: You know, this is really important that the people we 170 00:07:25,760 --> 00:07:27,680 Speaker 1: talk to they all have different views. We heard that 171 00:07:27,760 --> 00:07:30,280 Speaker 1: from mister Morris's city group, different from mister Mail, like 172 00:07:30,280 --> 00:07:34,200 Speaker 1: a JP Morgan, and you got to respect the density 173 00:07:34,520 --> 00:07:39,080 Speaker 1: of the granularity rather Johan, that these people study something 174 00:07:39,120 --> 00:07:42,080 Speaker 1: where we just go, well, Brent's ninety two and that 175 00:07:42,240 --> 00:07:43,160 Speaker 1: just doesn't get it done. 176 00:07:43,200 --> 00:07:44,160 Speaker 2: It's way more grand. 177 00:07:44,160 --> 00:07:46,080 Speaker 5: You're about to do that right now. Brent's ninety four. 178 00:07:46,480 --> 00:07:51,200 Speaker 4: Thanks Christ, Thank you of JP Morgan on the latest 179 00:07:51,200 --> 00:07:52,400 Speaker 4: and the commodity market. 180 00:08:02,760 --> 00:08:05,040 Speaker 1: Joining us right now with the most important interview of 181 00:08:05,080 --> 00:08:08,040 Speaker 1: the day, because when it's like this, you triangulate to 182 00:08:08,160 --> 00:08:08,920 Speaker 1: foreign exchange. 183 00:08:08,960 --> 00:08:12,560 Speaker 2: Jordan Rochester's G ten epix strategists and Murra. I got 184 00:08:12,560 --> 00:08:13,520 Speaker 2: one basic question. 185 00:08:14,120 --> 00:08:15,640 Speaker 1: I'm told I can't get back on the plane and 186 00:08:15,680 --> 00:08:17,120 Speaker 1: go back to New York unless they get a one 187 00:08:17,200 --> 00:08:21,000 Speaker 1: nineteen print and sterling. How quick is Prime Minister Suna 188 00:08:21,080 --> 00:08:23,000 Speaker 1: going to get me to a one nineteen sterling. 189 00:08:23,240 --> 00:08:26,280 Speaker 7: That's something that could happen before your end. The moves 190 00:08:26,280 --> 00:08:28,160 Speaker 7: aren't as rock and rollers last year, though. We haven't 191 00:08:28,160 --> 00:08:30,240 Speaker 7: got a Liz Trust versus a Lettus moment right now 192 00:08:30,320 --> 00:08:32,360 Speaker 7: to kind of get you that move lower. But we 193 00:08:32,360 --> 00:08:35,640 Speaker 7: were at one eighteen in March earlier earlier this year, 194 00:08:35,800 --> 00:08:38,280 Speaker 7: so it's very possible that one nineteen we could be 195 00:08:38,280 --> 00:08:39,520 Speaker 7: talking the next six weeks. 196 00:08:39,800 --> 00:08:40,959 Speaker 5: You're a parity call. 197 00:08:41,080 --> 00:08:43,880 Speaker 4: Earlier this week on this program, Jane Foley wrap our Banks, 198 00:08:43,880 --> 00:08:45,600 Speaker 4: she said, maybe where are you on that? 199 00:08:45,679 --> 00:08:45,760 Speaker 7: Now? 200 00:08:45,800 --> 00:08:47,000 Speaker 5: I was going to say, is that the call? 201 00:08:47,480 --> 00:08:50,280 Speaker 7: It's definitely a maybe, but that that requires your next 202 00:08:50,360 --> 00:08:53,480 Speaker 7: guest to tell us about oil, Christian Amic. So if 203 00:08:53,520 --> 00:08:56,120 Speaker 7: oil goes to one hundred, okay, we get to one 204 00:08:56,160 --> 00:08:58,520 Speaker 7: oh five maybe one o four in euro but to 205 00:08:58,679 --> 00:09:01,360 Speaker 7: get down to parity, we need that energy squeeze that 206 00:09:01,400 --> 00:09:03,760 Speaker 7: will hit that trade bands. Because what's happened. The euro 207 00:09:03,800 --> 00:09:06,400 Speaker 7: Area's got a lovely current account service once again thanks 208 00:09:06,440 --> 00:09:08,680 Speaker 7: to lower natural guests, so we need a cold weather 209 00:09:08,720 --> 00:09:09,520 Speaker 7: forecas froctile. 210 00:09:09,559 --> 00:09:12,480 Speaker 4: So things need to go wrong in Europe. We've done 211 00:09:12,559 --> 00:09:14,280 Speaker 4: enough on the US side. That's not where the surprise 212 00:09:14,320 --> 00:09:15,559 Speaker 4: comes from for you, I. 213 00:09:15,520 --> 00:09:18,760 Speaker 7: Think, so the US in the next two CPI prints, 214 00:09:18,800 --> 00:09:21,440 Speaker 7: what's going to be interesting is oil's up seven percent 215 00:09:21,480 --> 00:09:24,280 Speaker 7: this month, but gasoline futures are down, so we're not 216 00:09:24,280 --> 00:09:26,400 Speaker 7: going to get a really hot CPI print on headline 217 00:09:26,400 --> 00:09:28,480 Speaker 7: that we got for last month. We've got zero point 218 00:09:28,480 --> 00:09:30,439 Speaker 7: six month a month. The next month could just be 219 00:09:30,520 --> 00:09:33,200 Speaker 7: zero point two for headline. But if gasoline futures weren't 220 00:09:33,200 --> 00:09:35,760 Speaker 7: a spike back, we get another hot CPI for the US, 221 00:09:35,800 --> 00:09:37,840 Speaker 7: followed by another one. If oil goes to one hundred, 222 00:09:38,400 --> 00:09:40,280 Speaker 7: then you could be talking parity in Europe from a 223 00:09:40,400 --> 00:09:41,840 Speaker 7: US perspective. 224 00:09:41,720 --> 00:09:43,880 Speaker 6: In general, we talk about dollar strength right now, is 225 00:09:43,920 --> 00:09:46,200 Speaker 6: it a dollar story or is it everything else story 226 00:09:46,480 --> 00:09:47,040 Speaker 6: being weak? 227 00:09:47,480 --> 00:09:51,000 Speaker 7: Oh, it's bothally, So the dollars strong because we've had 228 00:09:51,320 --> 00:09:54,480 Speaker 7: a basically reinflation. We've had not just energy prices going 229 00:09:54,520 --> 00:09:58,360 Speaker 7: back up, but these UAW strikes. We're interesting seeing some 230 00:09:58,400 --> 00:10:01,560 Speaker 7: signals that car inflation could come back. So it's really 231 00:10:01,559 --> 00:10:03,520 Speaker 7: hard for the market to look for a dubbish fed 232 00:10:03,600 --> 00:10:07,680 Speaker 7: right now, especially with continuing claims falling lower once again. 233 00:10:07,760 --> 00:10:10,199 Speaker 7: So we're not seeing any material job layoffs in the US, 234 00:10:10,679 --> 00:10:12,920 Speaker 7: and then that's the US side. In Europe, it's horrendous 235 00:10:12,920 --> 00:10:15,520 Speaker 7: in terms of growth. Look at the UK Services PMI. 236 00:10:15,600 --> 00:10:17,800 Speaker 7: We had one of the biggest falls in the employment 237 00:10:17,840 --> 00:10:20,600 Speaker 7: index within that PMI today, so it's quite clear that 238 00:10:20,679 --> 00:10:23,480 Speaker 7: unemployment's rising in the UK and we're seeing softness in 239 00:10:23,520 --> 00:10:25,600 Speaker 7: German labor market data as well. So an answer your 240 00:10:25,640 --> 00:10:28,120 Speaker 7: question is always both, because it's currencies, we always do both. 241 00:10:28,320 --> 00:10:30,720 Speaker 7: The European data for growth and for employments are looking 242 00:10:30,760 --> 00:10:31,280 Speaker 7: pretty shaky. 243 00:10:31,400 --> 00:10:33,880 Speaker 6: What's the level of strength for the dollar where it 244 00:10:33,880 --> 00:10:35,119 Speaker 6: becomes truly disruptive. 245 00:10:35,640 --> 00:10:38,000 Speaker 7: Well, in terms of the disruption, we're already getting close 246 00:10:38,040 --> 00:10:40,840 Speaker 7: to those levels, as John said, parity in euro that 247 00:10:40,880 --> 00:10:42,320 Speaker 7: would be a disruptive level for sure. 248 00:10:43,559 --> 00:10:43,920 Speaker 2: Oil. 249 00:10:44,280 --> 00:10:45,959 Speaker 4: I want to talk a little bit more about Croute 250 00:10:46,080 --> 00:10:49,160 Speaker 4: and the move we've seen. You said that maybe if 251 00:10:49,200 --> 00:10:52,080 Speaker 4: something goes wrong with gas, what about Brent and WTI? 252 00:10:52,440 --> 00:10:54,400 Speaker 4: What about that we're already in the nineties on Brent. 253 00:10:54,400 --> 00:10:55,880 Speaker 4: Doesn't that change things for Europe? 254 00:10:56,000 --> 00:10:58,560 Speaker 7: It already has, it already has That's why I think 255 00:10:58,960 --> 00:11:00,880 Speaker 7: the first half of this year and energy was weak. 256 00:11:01,160 --> 00:11:03,439 Speaker 7: I thought that we could see euro finished a year higher, 257 00:11:03,840 --> 00:11:06,320 Speaker 7: but that's completely changed. I didn't expect Brent to go 258 00:11:06,360 --> 00:11:08,640 Speaker 7: above ninety. Well you changed from one fifteen to one 259 00:11:08,679 --> 00:11:11,520 Speaker 7: oh five on the euro right, Brent move for sure, 260 00:11:11,920 --> 00:11:14,800 Speaker 7: and we had this horrible range. So macro pms have 261 00:11:14,800 --> 00:11:16,920 Speaker 7: had a very, really tough first half to the year 262 00:11:17,000 --> 00:11:19,080 Speaker 7: because Euro has been in the yo yo and everyone 263 00:11:19,160 --> 00:11:21,040 Speaker 7: getting excited at the high, it is excited at the 264 00:11:21,040 --> 00:11:23,760 Speaker 7: lows get stopped out chasing their tail. I think we 265 00:11:23,760 --> 00:11:26,160 Speaker 7: were going to see a proper breakout. FX has lacked 266 00:11:26,200 --> 00:11:28,640 Speaker 7: a trend in the dollar this year. We're now getting 267 00:11:28,640 --> 00:11:30,839 Speaker 7: a trend thanks to the energy story. So last year 268 00:11:30,960 --> 00:11:33,360 Speaker 7: was thanks to Vladimir Putin. We got a big trend 269 00:11:33,360 --> 00:11:35,559 Speaker 7: in the euro this year. It's thanks to MBS in 270 00:11:35,600 --> 00:11:39,079 Speaker 7: Saudi Arabia. Why isn't the yen weaker today, Well, because 271 00:11:39,080 --> 00:11:41,000 Speaker 7: you haven't had a hawkish move from the Bank Japan. 272 00:11:41,080 --> 00:11:43,520 Speaker 7: What's what's quite interesting is we thought the Ford guidance 273 00:11:43,520 --> 00:11:48,120 Speaker 7: would change. The Ford Guidance still says potential additional easoning easing. 274 00:11:47,840 --> 00:11:48,520 Speaker 5: Could be used. 275 00:11:48,800 --> 00:11:51,160 Speaker 7: So that was a bit odd given we thought you 276 00:11:51,200 --> 00:11:54,120 Speaker 7: Wade a shifted a little bit more hawkish with his 277 00:11:54,280 --> 00:11:57,120 Speaker 7: article from two about two weeks ago. And then the 278 00:11:57,200 --> 00:11:59,440 Speaker 7: main problem for dolly En is it's quite easy to 279 00:11:59,480 --> 00:12:01,679 Speaker 7: say cost to carry is very expensive to be long 280 00:12:01,760 --> 00:12:03,959 Speaker 7: the ends, so therefore don't buy it. But you've got 281 00:12:03,960 --> 00:12:07,400 Speaker 7: the Ministry of Finance threatening FX intervention risk and we've 282 00:12:07,400 --> 00:12:10,160 Speaker 7: even had softer words from US Treasury Secretary of Yellen 283 00:12:10,559 --> 00:12:14,760 Speaker 7: about maybe Japan can intervene. She hasn't said it that exclusively, 284 00:12:14,800 --> 00:12:16,400 Speaker 7: but she's definitely softened her tone. 285 00:12:16,440 --> 00:12:17,800 Speaker 6: So in other words, we can take a look at 286 00:12:17,800 --> 00:12:19,280 Speaker 6: the yen and just say that nobody wants to bet 287 00:12:19,320 --> 00:12:21,360 Speaker 6: against the central bank, and nobody wants to bet against 288 00:12:21,440 --> 00:12:24,520 Speaker 6: foreign intervention that they're likely to deploy, but it has 289 00:12:24,640 --> 00:12:27,640 Speaker 6: nothing to do with the differential at this point between 290 00:12:27,640 --> 00:12:30,000 Speaker 6: the monetary particiesly. 291 00:12:29,080 --> 00:12:30,400 Speaker 5: Has everything to do with the differential. 292 00:12:30,720 --> 00:12:33,880 Speaker 7: And if the MF thret of intervention wasn't there, we 293 00:12:33,920 --> 00:12:36,360 Speaker 7: would be closer to one fifty right now. If the 294 00:12:36,520 --> 00:12:39,160 Speaker 7: idea of the boj turning hawkish wasn't there, we'd be 295 00:12:39,200 --> 00:12:42,360 Speaker 7: closer to one fifty. But because of that threat, people 296 00:12:42,360 --> 00:12:44,480 Speaker 7: are being reluctant to get into that trade. 297 00:12:44,679 --> 00:12:45,640 Speaker 5: But if you were to look at. 298 00:12:45,520 --> 00:12:47,520 Speaker 7: The cost of carry, it's even higher than what it 299 00:12:47,600 --> 00:12:49,680 Speaker 7: was last year when we were at these exact same levels. 300 00:12:49,840 --> 00:12:51,000 Speaker 5: Belisa, it's deja vus. 301 00:12:51,040 --> 00:12:53,679 Speaker 7: I was in September, New York, in New York hours 302 00:12:53,840 --> 00:12:56,320 Speaker 7: the Ministry of Finance came in and intervened at Dollian 303 00:12:56,360 --> 00:12:57,200 Speaker 7: around one fifty. 304 00:12:57,240 --> 00:12:58,720 Speaker 5: It feels a bit like deja VU's. 305 00:12:58,760 --> 00:13:00,560 Speaker 7: People are just bit reluctant. 306 00:13:00,600 --> 00:13:00,760 Speaker 1: Here. 307 00:13:01,040 --> 00:13:02,320 Speaker 2: You and I are in the same page. 308 00:13:02,360 --> 00:13:04,000 Speaker 1: First thing in the morning I do was I look 309 00:13:04,000 --> 00:13:07,640 Speaker 1: at swissy frank different pairs to four decimal points, to 310 00:13:07,760 --> 00:13:10,280 Speaker 1: just see when a Swiss Frank in his signal strength. 311 00:13:10,960 --> 00:13:15,800 Speaker 1: You say, Switzerland stakey is a place chf sek swissy 312 00:13:15,800 --> 00:13:19,000 Speaker 1: stacky is a trade to play here for long Swiss Frank. 313 00:13:19,080 --> 00:13:21,360 Speaker 2: Why will the Swiss frank strength. Let's start with that. 314 00:13:21,480 --> 00:13:23,760 Speaker 7: Yeah, absolutely, so we always have our main dollar views, 315 00:13:23,760 --> 00:13:25,600 Speaker 7: our sterling views. But then you have to talk about 316 00:13:25,679 --> 00:13:28,520 Speaker 7: RV and what we're talking about here, Tom is long Switzerland, 317 00:13:28,720 --> 00:13:32,439 Speaker 7: short Sweden. Now, Switzerland has seen massive appreciation of its 318 00:13:32,480 --> 00:13:35,000 Speaker 7: currency over the past year, but I think that's a 319 00:13:35,040 --> 00:13:37,040 Speaker 7: trend that carries on. We're going through a period of 320 00:13:37,080 --> 00:13:41,080 Speaker 7: an adjustment for Switzerland. Last year, before they started raising rates, 321 00:13:41,120 --> 00:13:44,120 Speaker 7: it was negative seventy five basis points. We're now around 322 00:13:44,120 --> 00:13:46,120 Speaker 7: the one fifty one seventy five on the front end, 323 00:13:46,400 --> 00:13:49,040 Speaker 7: So you're getting paid for holding Swiss in the bank account, 324 00:13:49,120 --> 00:13:51,480 Speaker 7: where last year you were being charged. We've known that 325 00:13:51,520 --> 00:13:54,000 Speaker 7: for a while, but we're still going through an adjustment phase. 326 00:13:54,200 --> 00:13:57,960 Speaker 7: And the banking repatriation flows back into Switzerland. Those Swiss 327 00:13:58,000 --> 00:14:01,400 Speaker 7: banks were lending to American corporates, ping corporates, they're not 328 00:14:01,400 --> 00:14:03,560 Speaker 7: going to do that next year because they've got nice 329 00:14:03,600 --> 00:14:05,400 Speaker 7: yields at home. So we're seeing a lot of that 330 00:14:05,440 --> 00:14:08,040 Speaker 7: money come back into Swiss, boosting the currency. And the 331 00:14:08,040 --> 00:14:10,960 Speaker 7: second reason is when growth slows down, you go along 332 00:14:11,000 --> 00:14:11,400 Speaker 7: the Swiss. 333 00:14:11,480 --> 00:14:14,040 Speaker 1: Okay, I'll go with that, except the SMB to me's 334 00:14:14,040 --> 00:14:16,560 Speaker 1: almost a sovereign wealth fund with the equity ownership they 335 00:14:16,559 --> 00:14:18,760 Speaker 1: have and particularly the load de bode. 336 00:14:18,520 --> 00:14:21,160 Speaker 2: Position and Apple as well. 337 00:14:21,240 --> 00:14:25,120 Speaker 1: Does their equity stub within the central Bank Does that 338 00:14:25,240 --> 00:14:28,080 Speaker 1: preclude usual strong Swiss dynamics. 339 00:14:28,480 --> 00:14:31,240 Speaker 7: I think the SMB has just taking the view that 340 00:14:31,600 --> 00:14:33,640 Speaker 7: we're happy to take a loss on our FX reserves. 341 00:14:33,680 --> 00:14:36,040 Speaker 7: And in fact what they're doing is they're selling their 342 00:14:36,040 --> 00:14:39,200 Speaker 7: foreigner holdings as well, so they're actually consistent sellers of 343 00:14:39,400 --> 00:14:42,920 Speaker 7: They're eighty percent bonds, twenty percent inequities, so the largest 344 00:14:42,960 --> 00:14:45,000 Speaker 7: part will be in the fixed income space. But we've 345 00:14:45,040 --> 00:14:48,360 Speaker 7: seen eleven billion of intervention per month from the Swiss 346 00:14:48,360 --> 00:14:48,640 Speaker 7: give me. 347 00:14:48,640 --> 00:14:51,720 Speaker 1: A level and euroswissly the core pair there at the 348 00:14:51,720 --> 00:14:53,880 Speaker 1: word point nine five point ninety four. 349 00:14:54,040 --> 00:14:57,840 Speaker 7: It's easier to trade this Swiss stocky than EuroSwiss EuroSwiss. 350 00:14:57,840 --> 00:14:58,840 Speaker 5: I've actually stayed out of it. 351 00:14:58,840 --> 00:15:01,440 Speaker 7: It's one of the most non macro currency pairs in 352 00:15:01,440 --> 00:15:01,640 Speaker 7: the G. 353 00:15:01,760 --> 00:15:07,240 Speaker 4: Ten EuroSwiss Swissy stocky. It's the most London thing I've 354 00:15:07,240 --> 00:15:07,800 Speaker 4: heard all week. 355 00:15:08,000 --> 00:15:10,160 Speaker 2: Well, you know, I mean, it's it's real, man. We've 356 00:15:10,160 --> 00:15:11,200 Speaker 2: got to bring these people in. 357 00:15:11,240 --> 00:15:15,200 Speaker 1: I mean, there are days General Levy and I got 358 00:15:15,400 --> 00:15:18,000 Speaker 1: Rochester here, and you know, we got to bring our 359 00:15:18,120 --> 00:15:20,320 Speaker 1: FX people in. They start me, you know, go start 360 00:15:20,320 --> 00:15:22,320 Speaker 1: me today. They watch in Singapore every evening. 361 00:15:22,360 --> 00:15:23,680 Speaker 5: That's very killed, and they watch me and. 362 00:15:23,680 --> 00:15:26,920 Speaker 1: There popa FX trades and Singapore off what we're blathering about. 363 00:15:27,200 --> 00:15:28,800 Speaker 1: So I got to go to Rochester here to get 364 00:15:28,800 --> 00:15:29,800 Speaker 1: some romance in it. 365 00:15:30,000 --> 00:15:32,480 Speaker 2: Can we just finish Mayfair and look at a Ferrari? 366 00:15:32,680 --> 00:15:37,280 Speaker 4: So that's Sweden versus Switzerland on the Swiss side, that 367 00:15:37,400 --> 00:15:40,080 Speaker 4: haven currency on that growth slowed down, you think money 368 00:15:40,160 --> 00:15:42,480 Speaker 4: is going to go back there? Who else is in 369 00:15:42,480 --> 00:15:44,280 Speaker 4: that bucket? Because it used to be Japan? 370 00:15:44,600 --> 00:15:46,160 Speaker 5: What else is the good question? 371 00:15:46,360 --> 00:15:48,040 Speaker 2: Yeah, it's it is Euro. 372 00:15:48,280 --> 00:15:50,560 Speaker 7: That's kind of why the Euro hasn't been rock and roll. 373 00:15:50,720 --> 00:15:52,120 Speaker 7: So you're asking me about the one o five down 374 00:15:52,160 --> 00:15:54,120 Speaker 7: to parrot of you. We've got better trades to do. 375 00:15:54,240 --> 00:15:57,160 Speaker 7: Short sterling versus the dollars, a better trade. The way 376 00:15:57,200 --> 00:15:59,640 Speaker 7: we're playing euro is short euro versus CAD. But the 377 00:15:59,640 --> 00:16:02,640 Speaker 7: reason I mentioned Euro is because we are having banking repatriation. 378 00:16:02,840 --> 00:16:06,160 Speaker 7: For a long time, German banks, French banks had negative 379 00:16:06,160 --> 00:16:06,800 Speaker 7: interst rates. 380 00:16:06,920 --> 00:16:09,160 Speaker 5: American corporates asking for money let's go for it. 381 00:16:09,240 --> 00:16:12,680 Speaker 7: Let's lend abroad that's now reversing because they've got positive 382 00:16:12,720 --> 00:16:13,120 Speaker 7: yields up. 383 00:16:13,280 --> 00:16:15,480 Speaker 1: Do you have a level on DXY where you go omg, 384 00:16:15,600 --> 00:16:17,400 Speaker 1: you wake up in London and go wow d X 385 00:16:17,520 --> 00:16:21,680 Speaker 1: y one oh seven, one ten? What's what's the prism 386 00:16:21,760 --> 00:16:23,720 Speaker 1: you have of DXY where things change? 387 00:16:24,040 --> 00:16:26,040 Speaker 7: Well by what what do you mean? So for the 388 00:16:26,080 --> 00:16:27,760 Speaker 7: Fed for it to have an impact. 389 00:16:27,840 --> 00:16:30,000 Speaker 2: Mean for us, for people trading the market got. 390 00:16:29,840 --> 00:16:33,040 Speaker 5: Ten seconds to give us a number before one tent. 391 00:16:33,200 --> 00:16:36,200 Speaker 4: There you go, that's that's what we're scaring one ten Jordan, 392 00:16:36,200 --> 00:16:38,800 Speaker 4: Thank you, Jord and roast of Numa. 393 00:16:39,080 --> 00:16:40,520 Speaker 2: Swissy Stacking. 394 00:16:43,960 --> 00:16:47,400 Speaker 1: Sarah Melick with US now chief investment officer at Nuven. Sarah, 395 00:16:47,400 --> 00:16:52,240 Speaker 1: though fear is out priced down yield up. Should we 396 00:16:52,320 --> 00:16:56,240 Speaker 1: be in a sense of panic or frenzy or caution 397 00:16:56,800 --> 00:16:57,440 Speaker 1: or is this a. 398 00:16:57,480 --> 00:16:59,960 Speaker 2: Normal adjustment that we will survive. 399 00:17:01,280 --> 00:17:03,480 Speaker 8: Well, there's two issues the market needs to suggest to 400 00:17:03,560 --> 00:17:05,440 Speaker 8: and that's what's going on with the economy and what's 401 00:17:05,480 --> 00:17:08,600 Speaker 8: going on with race. The economic soft lending narrative is 402 00:17:08,600 --> 00:17:11,480 Speaker 8: definitely being challenged and the markets had started to price 403 00:17:11,600 --> 00:17:11,960 Speaker 8: that in. 404 00:17:12,040 --> 00:17:14,560 Speaker 9: So that's what the markets are adjusting to rates. 405 00:17:14,600 --> 00:17:18,399 Speaker 8: Of course, interest rates higher for longer, inflation higher for longer, 406 00:17:18,440 --> 00:17:20,640 Speaker 8: all of that together is going to be a headwind 407 00:17:20,680 --> 00:17:21,280 Speaker 8: for the markets. 408 00:17:21,320 --> 00:17:24,280 Speaker 9: Also, we think long term a lot of cash still on. 409 00:17:24,320 --> 00:17:26,280 Speaker 8: The sidelines, So I don't think the bull market's over, 410 00:17:26,400 --> 00:17:28,080 Speaker 8: but short term you do need to be a little 411 00:17:28,119 --> 00:17:30,920 Speaker 8: bit cautious. The two areas we like our technology stocks 412 00:17:30,960 --> 00:17:35,320 Speaker 8: and dividend growers. Technology stocks still less correlated to economic growth, 413 00:17:35,320 --> 00:17:37,640 Speaker 8: so I think they can have a rebound from here, 414 00:17:37,680 --> 00:17:39,760 Speaker 8: and the dividend growers is an area the market that's 415 00:17:39,800 --> 00:17:43,000 Speaker 8: really underperformed here today, and they tend to perform well 416 00:17:43,200 --> 00:17:45,399 Speaker 8: in markets that have that are going down, so they 417 00:17:45,480 --> 00:17:48,040 Speaker 8: have less downside captured. So those stocks I think are 418 00:17:48,119 --> 00:17:50,800 Speaker 8: cheap and could protect portfolios and provide income. 419 00:17:52,400 --> 00:17:55,400 Speaker 6: Sarah, what you just said is actually incredibly controversial today. 420 00:17:55,440 --> 00:17:57,800 Speaker 6: It might not have been controversial two weeks ago, but today, 421 00:17:58,000 --> 00:18:01,240 Speaker 6: basically you're going against everything that everyone is saying. At 422 00:18:01,240 --> 00:18:03,560 Speaker 6: a time you have tech go going down to such 423 00:18:03,600 --> 00:18:06,640 Speaker 6: a degree and leading the declines. So how is tech 424 00:18:06,920 --> 00:18:10,359 Speaker 6: defensive at a time when they potentially could be interest 425 00:18:10,400 --> 00:18:13,639 Speaker 6: rate sensitive and when they have exploded? The Big seven 426 00:18:14,040 --> 00:18:17,840 Speaker 6: seven magnificent stocks have absolutely driven everything we've seen so 427 00:18:17,920 --> 00:18:20,520 Speaker 6: far in terms of gains in the US equity market. 428 00:18:21,359 --> 00:18:23,520 Speaker 8: Well, let's start with semiconductors, which is an area that 429 00:18:23,520 --> 00:18:26,200 Speaker 8: we like. September tends to be their seasonally worst month 430 00:18:26,240 --> 00:18:27,640 Speaker 8: in terms of performance. 431 00:18:27,200 --> 00:18:29,280 Speaker 9: So not surprised to see that they peaked out in 432 00:18:29,320 --> 00:18:29,920 Speaker 9: about July. 433 00:18:30,040 --> 00:18:32,320 Speaker 8: But if you look at the tailwinds for semis and software, 434 00:18:32,320 --> 00:18:34,959 Speaker 8: which is our two favorite areas of technology. First of all, 435 00:18:35,040 --> 00:18:37,720 Speaker 8: artificial intelligence, we don't think that it's hype, it's a 436 00:18:37,760 --> 00:18:39,919 Speaker 8: real trend. It did get a little bit crowded, but 437 00:18:40,000 --> 00:18:42,800 Speaker 8: I think it'll last for many years. Second, inflation has 438 00:18:42,840 --> 00:18:45,680 Speaker 8: been increasing because of energy prices, which we think will 439 00:18:45,720 --> 00:18:48,200 Speaker 8: moderate after the huge upswing that we've seen. 440 00:18:48,240 --> 00:18:49,920 Speaker 9: And then continued services. 441 00:18:49,440 --> 00:18:51,960 Speaker 8: Spending, which has been around for a while that continues 442 00:18:52,000 --> 00:18:55,439 Speaker 8: to moderate. Another tailwind for technology sucks and interest rates. 443 00:18:55,520 --> 00:18:57,640 Speaker 8: We see the FED basically one and done from here. 444 00:18:57,720 --> 00:18:59,720 Speaker 8: One more rate hike. What got priced out of the 445 00:18:59,720 --> 00:19:03,439 Speaker 8: market next year was two rate cuts. We didn't expect 446 00:19:03,480 --> 00:19:05,480 Speaker 8: rate cuts for twenty twenty four. But as the FED 447 00:19:05,520 --> 00:19:08,320 Speaker 8: positive again, I think these are all positives or tech stocks. 448 00:19:08,320 --> 00:19:10,119 Speaker 8: So a few of these headwinds that have come in 449 00:19:10,119 --> 00:19:12,320 Speaker 8: the last two months as the sector did get crowded, 450 00:19:12,440 --> 00:19:13,080 Speaker 8: will move out. 451 00:19:13,000 --> 00:19:13,440 Speaker 10: Of the way. 452 00:19:13,680 --> 00:19:17,600 Speaker 8: Also, looking at portfolio managers, they generally were underweight to 453 00:19:18,040 --> 00:19:20,320 Speaker 8: some of these megacap techtocks coming into this year, so 454 00:19:20,520 --> 00:19:22,960 Speaker 8: you could see a lot of people stepping in for 455 00:19:23,080 --> 00:19:23,680 Speaker 8: catching up. 456 00:19:23,600 --> 00:19:25,879 Speaker 9: To get their waiting in their portfolios to the right level. 457 00:19:26,080 --> 00:19:28,440 Speaker 8: And then clients are holding still about twenty five percent 458 00:19:28,440 --> 00:19:30,840 Speaker 8: of their portfolios and cash that at some point needs 459 00:19:30,840 --> 00:19:32,040 Speaker 8: to come back into the markets. 460 00:19:33,440 --> 00:19:34,800 Speaker 6: Does it though, I mean this is sort of the 461 00:19:34,880 --> 00:19:37,840 Speaker 6: key question. Does it if you're earning five percent on it? 462 00:19:37,920 --> 00:19:40,480 Speaker 6: Actually maybe it looks pretty good. And there's a question 463 00:19:40,560 --> 00:19:43,280 Speaker 6: about whether we've actually seen the effects of rates that 464 00:19:43,320 --> 00:19:45,639 Speaker 6: are now the highest going back more than a decade 465 00:19:45,640 --> 00:19:47,439 Speaker 6: two thousand and seven, two thousand and six, depending on 466 00:19:47,440 --> 00:19:50,280 Speaker 6: which denomination you look at. Are you saying that these 467 00:19:50,320 --> 00:19:52,960 Speaker 6: are rates that we can live at that basically we 468 00:19:53,080 --> 00:19:55,240 Speaker 6: have seen the effects and they haven't been too bad. 469 00:19:56,119 --> 00:19:56,280 Speaker 7: Yeah. 470 00:19:56,320 --> 00:19:58,000 Speaker 8: I think what clients learned this year was there was 471 00:19:58,000 --> 00:20:00,960 Speaker 8: an opportunity cost for holding cash is when inflation is 472 00:20:01,000 --> 00:20:02,919 Speaker 8: at the levels that it was, and the markets have 473 00:20:03,000 --> 00:20:05,040 Speaker 8: done what they've done, you know, year to date, even 474 00:20:05,040 --> 00:20:07,359 Speaker 8: though they've moderated a bit in the last couple of months. 475 00:20:07,359 --> 00:20:09,600 Speaker 8: Markets are still well above cash here to date, so 476 00:20:09,760 --> 00:20:12,879 Speaker 8: there's an opportunity costs for holding onto that cash. So 477 00:20:12,960 --> 00:20:15,800 Speaker 8: I think clients are figuring that out. And when it 478 00:20:15,800 --> 00:20:17,520 Speaker 8: comes to high interest rates, you know, the ten year 479 00:20:17,560 --> 00:20:20,119 Speaker 8: at over four percent is a headwind for the markets, 480 00:20:20,119 --> 00:20:22,040 Speaker 8: but it all depends on what economic growth does. And 481 00:20:22,080 --> 00:20:24,880 Speaker 8: if economic growth stays strong, I think the markets can 482 00:20:24,920 --> 00:20:26,879 Speaker 8: handle a tenor that's at these levels. 483 00:20:28,160 --> 00:20:32,000 Speaker 1: Sarah, this discussion on technology is so absolutely critical, a 484 00:20:32,080 --> 00:20:35,639 Speaker 1: huge body of retails taking the story. If institutional is 485 00:20:35,760 --> 00:20:38,760 Speaker 1: not now the gloom is rates up. There's a duration 486 00:20:38,960 --> 00:20:40,400 Speaker 1: argument about technology. 487 00:20:40,440 --> 00:20:40,959 Speaker 2: I get it. 488 00:20:41,400 --> 00:20:45,360 Speaker 1: Where in the income statement will you see tech superiority, 489 00:20:45,760 --> 00:20:48,399 Speaker 1: Are they going to outperform on revenue growth or do 490 00:20:48,440 --> 00:20:52,200 Speaker 1: you go down where they surprise with a better marginal 491 00:20:52,240 --> 00:20:54,439 Speaker 1: free cash flow And. 492 00:20:54,480 --> 00:20:56,280 Speaker 9: The answer is all of the above. 493 00:20:56,320 --> 00:20:58,480 Speaker 8: In the sense that the good news for software companies 494 00:20:58,520 --> 00:21:00,439 Speaker 8: is they don't need to rely on pricing power, and 495 00:21:00,520 --> 00:21:03,240 Speaker 8: as inflation does continue to moderate, which we think that 496 00:21:03,320 --> 00:21:07,080 Speaker 8: it will take, software companies are less effective by having 497 00:21:07,080 --> 00:21:09,760 Speaker 8: to lower their prices because and hold on to pricing power. 498 00:21:10,080 --> 00:21:11,480 Speaker 9: Margins are important for tech sucks. 499 00:21:11,480 --> 00:21:13,199 Speaker 8: You thought saw that with Meta this year, where they 500 00:21:13,200 --> 00:21:15,200 Speaker 8: were ahead of the curve in terms of cutting costs 501 00:21:15,200 --> 00:21:18,000 Speaker 8: and preserving their margins, and other companies have followed, which 502 00:21:18,040 --> 00:21:20,680 Speaker 8: is important too. And then strong free cash flow growers. 503 00:21:20,680 --> 00:21:23,040 Speaker 8: You look at Broadcom right now as a company that 504 00:21:23,080 --> 00:21:26,000 Speaker 8: we like, strong free cashal ability to buy it back 505 00:21:26,080 --> 00:21:28,879 Speaker 8: up to like nine billion in shares. VMware is going 506 00:21:28,880 --> 00:21:30,840 Speaker 8: to add free cashload to their model. So all the 507 00:21:30,880 --> 00:21:31,960 Speaker 8: above for these companies. 508 00:21:33,320 --> 00:21:37,159 Speaker 1: Lisa's buying a new iPhone today at Covent Garden, Syrus 509 00:21:37,160 --> 00:21:40,360 Speaker 1: should should be also acquiring Apple shares at the margin. 510 00:21:41,359 --> 00:21:43,800 Speaker 8: Apple as a company we've not been as bullish on 511 00:21:43,880 --> 00:21:47,000 Speaker 8: for many reasons. Number one is the post COVID normalization 512 00:21:47,080 --> 00:21:48,720 Speaker 8: of their unit growth I think is going to be 513 00:21:48,760 --> 00:21:49,480 Speaker 8: an issue for them. 514 00:21:49,520 --> 00:21:51,400 Speaker 9: And even with the uppers of the iPhones. 515 00:21:51,400 --> 00:21:53,760 Speaker 8: I'm a user of an iPhone myself, but uppers have 516 00:21:53,800 --> 00:21:57,160 Speaker 8: been pretty incremental recently, so they're not as exciting. 517 00:21:57,400 --> 00:21:59,320 Speaker 9: I'm glad Lisa as excited about it though. 518 00:21:59,760 --> 00:22:02,320 Speaker 8: And also their next big product is VR, which has 519 00:22:02,320 --> 00:22:04,120 Speaker 8: a very high price point, so I think those could 520 00:22:04,160 --> 00:22:07,080 Speaker 8: be struggles for Apples, which has got you premium multiple 521 00:22:07,119 --> 00:22:10,640 Speaker 8: as people that's been a consensus holding for many investors. 522 00:22:11,440 --> 00:22:13,120 Speaker 6: I just want to set the records straight and Tom, 523 00:22:13,160 --> 00:22:15,399 Speaker 6: they know this. I am not a line waiter. I 524 00:22:15,400 --> 00:22:18,119 Speaker 6: am not someone who's some sort of rabid enthusiast. I 525 00:22:18,160 --> 00:22:19,639 Speaker 6: cracked my phone, so at some point I'm gonna have 526 00:22:19,680 --> 00:22:22,280 Speaker 6: to get a new photo garden lined up there. 527 00:22:22,680 --> 00:22:26,720 Speaker 5: Oh my god, is Lisa bradits lence? Yeah, so let's 528 00:22:26,760 --> 00:22:27,119 Speaker 5: move on. 529 00:22:27,200 --> 00:22:27,400 Speaker 2: Sara. 530 00:22:27,640 --> 00:22:29,639 Speaker 6: I'm curious though, just as we sort of take a 531 00:22:29,680 --> 00:22:33,320 Speaker 6: look at the whole week, is sixty forty still profoundly 532 00:22:33,400 --> 00:22:35,760 Speaker 6: challenged at a time where we're seeing bond sell off 533 00:22:35,800 --> 00:22:38,719 Speaker 6: at the same time intended with stocks. 534 00:22:38,640 --> 00:22:40,320 Speaker 9: And it was challenged in twenty twenty two. 535 00:22:40,359 --> 00:22:43,119 Speaker 8: I think twenty twenty three's had had a better return 536 00:22:43,160 --> 00:22:45,320 Speaker 8: for the sixty forty forty portfolio, but it taught us 537 00:22:45,320 --> 00:22:48,560 Speaker 8: a lesson about diversification and alternatives. An area we really 538 00:22:48,640 --> 00:22:51,520 Speaker 8: like outside of the traditional sixty forty is private credit. 539 00:22:51,680 --> 00:22:54,520 Speaker 8: It also tends to be resilient to an economic slowdown, 540 00:22:54,520 --> 00:22:56,919 Speaker 8: and that's really important right now is owning areas of 541 00:22:57,240 --> 00:23:00,640 Speaker 8: in your portfolio that are less successible to economics slowdowns 542 00:23:00,960 --> 00:23:03,000 Speaker 8: can continue to grow. You know, I did also have 543 00:23:03,119 --> 00:23:04,960 Speaker 8: one more question for all of you. Though you talked 544 00:23:04,960 --> 00:23:07,359 Speaker 8: about Katy Perry, are you are you and the Katy 545 00:23:07,440 --> 00:23:10,600 Speaker 8: Perry camp or Taylor Sweat? Oh? 546 00:23:10,640 --> 00:23:12,719 Speaker 1: Well yeah, I got to go with Katie Frankie. But 547 00:23:12,800 --> 00:23:15,360 Speaker 1: well I love what Taylor's been doing with the National 548 00:23:15,400 --> 00:23:18,520 Speaker 1: I mean she and Antonov, what they've done has been extraordinary. 549 00:23:18,560 --> 00:23:20,120 Speaker 2: She's gonna with a needle on GDP. 550 00:23:20,800 --> 00:23:23,000 Speaker 1: I mean, can Olivia go out there and move the 551 00:23:23,000 --> 00:23:23,920 Speaker 1: same needle. 552 00:23:25,000 --> 00:23:25,960 Speaker 2: You're asking him? 553 00:23:26,320 --> 00:23:31,520 Speaker 5: I'm not engaging, That's what was that a question for Sarah? 554 00:23:31,640 --> 00:23:34,560 Speaker 2: No, it was for you. Didn't try to just compare. 555 00:23:35,280 --> 00:23:36,119 Speaker 2: She's ignoring me. 556 00:23:37,480 --> 00:23:51,119 Speaker 1: Thank god, we needed a voice near the end of 557 00:23:51,160 --> 00:23:54,520 Speaker 1: our sojourn to provide balance and of you forward. 558 00:23:54,640 --> 00:23:56,480 Speaker 2: There's no one in London that. 559 00:23:56,560 --> 00:24:00,240 Speaker 1: Can do that like Janet Henry, Global Chief Economy for 560 00:24:00,280 --> 00:24:05,159 Speaker 1: the Hong Kong and Shanghai Banking Corporation wired into Asia. 561 00:24:04,760 --> 00:24:07,959 Speaker 2: Literally like no one we talked to. You've got a 562 00:24:08,040 --> 00:24:10,960 Speaker 2: lovely view. And then there's China. 563 00:24:11,119 --> 00:24:15,560 Speaker 1: What does HSBC, with all of your context, say about 564 00:24:15,600 --> 00:24:21,119 Speaker 1: the stability and the economic recovery of China. 565 00:24:22,440 --> 00:24:26,560 Speaker 10: HSBC has a perhaps more balanced view of China than 566 00:24:26,600 --> 00:24:29,399 Speaker 10: some of the hysteria that hit the markets. Yes, not 567 00:24:29,560 --> 00:24:32,320 Speaker 10: so long ago. I think we're not going to get 568 00:24:32,359 --> 00:24:35,719 Speaker 10: any quick answers one way or the other on China, 569 00:24:35,960 --> 00:24:37,520 Speaker 10: and we need to learn to live with that. 570 00:24:37,640 --> 00:24:37,800 Speaker 2: You know. 571 00:24:37,880 --> 00:24:41,400 Speaker 10: Financial markets always want to know with certainty where things 572 00:24:41,440 --> 00:24:43,199 Speaker 10: are going to be in two years time, and they 573 00:24:43,200 --> 00:24:46,520 Speaker 10: want to price it today. The fact is, in China, 574 00:24:46,920 --> 00:24:50,920 Speaker 10: what we have seen recently is some signs of stabilization 575 00:24:51,119 --> 00:24:55,359 Speaker 10: in the economy. Industrial production showed some improvement, Retail sales 576 00:24:55,359 --> 00:24:59,440 Speaker 10: showed some improvement. Credit data is showing some improvement. Are 577 00:24:59,440 --> 00:25:03,080 Speaker 10: there still major challenges in the property sector. Yes, and 578 00:25:03,119 --> 00:25:06,760 Speaker 10: we are seeing a gradual rollout of policy stimulus that 579 00:25:06,920 --> 00:25:10,080 Speaker 10: is now being reflected in monetary data. Are there major 580 00:25:10,119 --> 00:25:13,520 Speaker 10: issues in local government debt stocks? Yes, there are, but 581 00:25:13,640 --> 00:25:15,040 Speaker 10: are they providing liquidity? 582 00:25:15,119 --> 00:25:15,359 Speaker 2: Yes. 583 00:25:15,480 --> 00:25:19,560 Speaker 10: This is a multi year story of ongoing stabilization and 584 00:25:19,600 --> 00:25:22,199 Speaker 10: the next round will be structural reforms to deliver the 585 00:25:22,240 --> 00:25:25,120 Speaker 10: long promised higher quality of growth. 586 00:25:24,840 --> 00:25:27,960 Speaker 1: And monthly and three monthly annualizing. Within your research note, 587 00:25:28,000 --> 00:25:32,280 Speaker 1: we see a disinflationary tinge that dovetails. Was Steve Major's 588 00:25:32,320 --> 00:25:36,560 Speaker 1: long term conviction of price up yield down that's been 589 00:25:36,640 --> 00:25:39,760 Speaker 1: tested the last seventy two hours. Do you guys stand 590 00:25:39,760 --> 00:25:45,200 Speaker 1: with a disinflationary tendency which filters in to lower yield well. 591 00:25:45,000 --> 00:25:47,840 Speaker 10: From an RCER economic perspective, for the last two years, 592 00:25:47,880 --> 00:25:50,600 Speaker 10: tom As you know, I've been talking about a deterioration 593 00:25:50,920 --> 00:25:54,800 Speaker 10: in the growth inflation tradeoff, a different mix of lower 594 00:25:54,840 --> 00:25:59,240 Speaker 10: growth higher inflation, and that probably requires a different policy 595 00:25:59,280 --> 00:26:01,080 Speaker 10: rate level than we were used to in a pre 596 00:26:01,160 --> 00:26:05,199 Speaker 10: pandemic era. Yes, we have some disinflation, but there are 597 00:26:05,240 --> 00:26:08,040 Speaker 10: plenty of risks out there. Even the Fed's goldilocks view 598 00:26:08,080 --> 00:26:10,520 Speaker 10: that they set out at the FOMC, the level of 599 00:26:10,560 --> 00:26:14,840 Speaker 10: uncertainty around that they are omitting is quite high. But 600 00:26:15,040 --> 00:26:17,120 Speaker 10: by the same token, it's not so long as you've 601 00:26:17,119 --> 00:26:20,760 Speaker 10: already highlighted that everyone was forecasting a recession first half 602 00:26:20,760 --> 00:26:23,320 Speaker 10: of last year, this year, second half of this year, 603 00:26:23,600 --> 00:26:26,879 Speaker 10: now a soft landing. The fact is this is an 604 00:26:26,960 --> 00:26:30,440 Speaker 10: unusual cycle. The last three years were unusual. Why does 605 00:26:30,480 --> 00:26:33,280 Speaker 10: the market keep fitting with the idea that this is 606 00:26:33,320 --> 00:26:36,120 Speaker 10: going to be a very ordinary downturn with a very 607 00:26:36,440 --> 00:26:38,200 Speaker 10: ordinary FED response. 608 00:26:38,680 --> 00:26:39,320 Speaker 5: Changed, Janet? 609 00:26:39,359 --> 00:26:42,719 Speaker 4: From your perspective, the relationship between the labor market and 610 00:26:42,760 --> 00:26:45,600 Speaker 4: price pressure just based on those forecasts and chair and 611 00:26:45,640 --> 00:26:47,960 Speaker 4: power and self hesitant to ascribe a narrative to a 612 00:26:48,000 --> 00:26:49,080 Speaker 4: median projection. 613 00:26:49,240 --> 00:26:51,439 Speaker 5: But let's have that conversation anyway. We have done over 614 00:26:51,440 --> 00:26:52,520 Speaker 5: the last couple of days. 615 00:26:52,680 --> 00:26:54,840 Speaker 4: They're essentially saying we can get inflation down to two 616 00:26:54,840 --> 00:26:56,960 Speaker 4: with unemployment not climbing much above four percent. 617 00:26:57,560 --> 00:26:58,439 Speaker 5: What do we learn from that. 618 00:26:59,520 --> 00:27:03,360 Speaker 10: We've learned that they are extrapolating what's happened so far 619 00:27:03,640 --> 00:27:07,879 Speaker 10: right now. Yes, so you're right. I mean, it's remarkable. 620 00:27:07,920 --> 00:27:11,040 Speaker 10: We've never been in the recession camp. We've been in 621 00:27:11,040 --> 00:27:14,280 Speaker 10: the more protracted slow down, the rolling recession camp, a 622 00:27:14,280 --> 00:27:17,199 Speaker 10: couple of years of sub trend kind of growth. But 623 00:27:17,320 --> 00:27:20,280 Speaker 10: now the Fed has overtaken us on the unemployment rate. 624 00:27:20,720 --> 00:27:22,719 Speaker 10: You know, we only had unemployment at four percent by 625 00:27:22,760 --> 00:27:24,200 Speaker 10: the end of the year, but we've got at four 626 00:27:24,200 --> 00:27:25,960 Speaker 10: and a half by the end of next year. The 627 00:27:26,000 --> 00:27:28,679 Speaker 10: Fed hasn't even got that, having previously said that it 628 00:27:28,720 --> 00:27:32,200 Speaker 10: was going to rise by more. It has been extraordinary 629 00:27:32,280 --> 00:27:34,719 Speaker 10: that wage growth has gone from nearly six to just 630 00:27:34,800 --> 00:27:37,639 Speaker 10: over four. But the recent progress has actually been a 631 00:27:37,640 --> 00:27:41,240 Speaker 10: bit slower. And everyone's talking about the strike. We don't know. 632 00:27:41,760 --> 00:27:44,600 Speaker 10: It could be that actually there are other areas of 633 00:27:44,600 --> 00:27:48,920 Speaker 10: the economy where because of collectivized wage bargaining in Europe, 634 00:27:49,080 --> 00:27:51,639 Speaker 10: because of public sector pay in the UK, because of 635 00:27:51,680 --> 00:27:56,520 Speaker 10: strikes in the US. That it's not a linear story. Actually, 636 00:27:56,640 --> 00:27:59,280 Speaker 10: it's a bit rocky on the way down. And the 637 00:27:59,320 --> 00:28:03,920 Speaker 10: disinflation process, as we've discussed before, does not continue us. 638 00:28:04,080 --> 00:28:07,480 Speaker 10: We've got other areas of inflation volatility, and the markets 639 00:28:07,480 --> 00:28:09,640 Speaker 10: are going to have to accept that they really are 640 00:28:09,960 --> 00:28:12,080 Speaker 10: willing to keep interest rates higher for longer. 641 00:28:12,119 --> 00:28:13,760 Speaker 4: So people who go on the Federal Reserve website and 642 00:28:13,760 --> 00:28:16,199 Speaker 4: they open up the summary of economic projections, should they 643 00:28:16,280 --> 00:28:18,040 Speaker 4: view them as foe casts or respirations? 644 00:28:18,160 --> 00:28:22,760 Speaker 10: What are they they should view them? Obviously that every 645 00:28:22,840 --> 00:28:28,159 Speaker 10: central bank, given their inflation targets, their inflation priorities, that 646 00:28:28,440 --> 00:28:31,040 Speaker 10: is their primary goal and they will do what is 647 00:28:31,119 --> 00:28:33,879 Speaker 10: required to get there. Obviously, what we got in the 648 00:28:33,920 --> 00:28:36,520 Speaker 10: FED projections, and to some extent we've got in another 649 00:28:36,600 --> 00:28:40,160 Speaker 10: central bank projections as well, is that they're almost willing 650 00:28:40,200 --> 00:28:42,520 Speaker 10: to take a little bit longer to get there. The 651 00:28:42,600 --> 00:28:44,440 Speaker 10: FED is saying it's not going to be at target 652 00:28:44,480 --> 00:28:48,560 Speaker 10: till twenty twenty six, so and they have said that 653 00:28:48,600 --> 00:28:52,680 Speaker 10: their central scenario is now that they can get there 654 00:28:52,960 --> 00:28:55,000 Speaker 10: by being a bit slower, a bit more patient about 655 00:28:55,040 --> 00:28:58,800 Speaker 10: getting there. They can get there without a traditional recession 656 00:28:58,880 --> 00:29:03,800 Speaker 10: when the economy has kind of deep contraction. But as you, 657 00:29:03,840 --> 00:29:06,920 Speaker 10: no one never read it. Page two, Page four, Question four, 658 00:29:07,160 --> 00:29:10,680 Speaker 10: Question five, what's your certainty about this range of forecasts? 659 00:29:10,760 --> 00:29:12,960 Speaker 10: It's still very high. It's not where it was during 660 00:29:12,960 --> 00:29:15,000 Speaker 10: the pandemic, but it's still high. 661 00:29:15,280 --> 00:29:17,840 Speaker 6: Are you basically saying what we're seeing this week in 662 00:29:17,920 --> 00:29:20,880 Speaker 6: markets is a sea change about our understanding of central 663 00:29:20,880 --> 00:29:24,080 Speaker 6: bank's patients. With such high inflation that they will tolerate 664 00:29:24,120 --> 00:29:26,840 Speaker 6: it for quite a bit longer, and that means it 665 00:29:26,920 --> 00:29:29,560 Speaker 6: will become more entrenched in a way that people previously 666 00:29:29,600 --> 00:29:30,480 Speaker 6: had not expected. 667 00:29:31,040 --> 00:29:33,520 Speaker 10: I'm not saying that they will tolerate it staying at 668 00:29:33,520 --> 00:29:36,760 Speaker 10: these levels, and they certainly will not tolerate any signs 669 00:29:36,800 --> 00:29:40,280 Speaker 10: that it's reigniting, whether that's from wage pressures or elsewhere. 670 00:29:40,640 --> 00:29:43,320 Speaker 10: They need to see further progress. They need to be 671 00:29:43,400 --> 00:29:47,840 Speaker 10: confident that that progress is going to continue. And obviously 672 00:29:47,880 --> 00:29:51,320 Speaker 10: financial markets at the first sign that maybe a central 673 00:29:51,360 --> 00:29:54,360 Speaker 10: bank is done, is celebrating the fact that the next 674 00:29:54,400 --> 00:29:57,360 Speaker 10: move is going to be downwards. And actually the more 675 00:29:57,360 --> 00:29:59,640 Speaker 10: that financial markets do that, the more likely it is 676 00:29:59,680 --> 00:30:02,800 Speaker 10: that a central bank that's trying to tighten financial conditions 677 00:30:03,320 --> 00:30:06,360 Speaker 10: actually stops raising rates. So I think that what they're 678 00:30:06,360 --> 00:30:08,360 Speaker 10: telling us is that they are determined to drive at 679 00:30:08,440 --> 00:30:11,160 Speaker 10: lower They might be patient about the timeline with which 680 00:30:11,200 --> 00:30:13,440 Speaker 10: they gets there, but they're not going to take any 681 00:30:13,520 --> 00:30:15,320 Speaker 10: risk that it becomes entrenched. You have that from the 682 00:30:15,320 --> 00:30:16,600 Speaker 10: bundanz Bank again overnight. 683 00:30:16,880 --> 00:30:18,920 Speaker 6: The game theory that you just laid out, does that 684 00:30:19,040 --> 00:30:21,800 Speaker 6: mean that the yields that we're seeing now are finally 685 00:30:21,840 --> 00:30:25,920 Speaker 6: self fulfilling and will actually create or faster the tight 686 00:30:26,000 --> 00:30:28,440 Speaker 6: credit conditions that are necessary to get to the FEDS, 687 00:30:28,480 --> 00:30:30,640 Speaker 6: and that they're central bank scores? I mean, in other words, 688 00:30:30,720 --> 00:30:32,280 Speaker 6: do you think that these are sustainable or do you 689 00:30:32,280 --> 00:30:34,280 Speaker 6: think that this is what we need to get lower? 690 00:30:35,280 --> 00:30:40,600 Speaker 10: I think how financial markets react, obviously, I'm just the macroeconomist, 691 00:30:41,080 --> 00:30:44,200 Speaker 10: will be a function of what central banks obviously do. 692 00:30:45,040 --> 00:30:48,680 Speaker 10: But the central bank is trying to tighten financial conditions, 693 00:30:48,800 --> 00:30:51,920 Speaker 10: is trying to slow demand. They still think by slowing 694 00:30:52,000 --> 00:30:55,440 Speaker 10: demand they can impact on inflation and ensure that the 695 00:30:55,480 --> 00:30:58,880 Speaker 10: inflation continues to slow. But we keep talking about that 696 00:30:58,920 --> 00:31:02,400 Speaker 10: all of the uncertainty that are still out there we've 697 00:31:02,440 --> 00:31:06,040 Speaker 10: got a renewed inflation volatility, not least from oil and 698 00:31:06,120 --> 00:31:11,880 Speaker 10: from food. We've still got uncertainties regarding labor markets. The 699 00:31:11,920 --> 00:31:14,000 Speaker 10: truth is they don't know what they're going to have 700 00:31:14,040 --> 00:31:16,000 Speaker 10: to do, which is why as well as saying we're 701 00:31:16,040 --> 00:31:18,400 Speaker 10: ready to raise rates higher, we're ready to keep them 702 00:31:18,440 --> 00:31:21,480 Speaker 10: on hole for a very very long time. It's actually 703 00:31:21,560 --> 00:31:25,200 Speaker 10: all still about the data dependency. So yes, they're still 704 00:31:25,240 --> 00:31:27,760 Speaker 10: watching all of these factors as long as they can 705 00:31:27,800 --> 00:31:30,560 Speaker 10: see progress, whether it's a consequence of high yields where 706 00:31:30,680 --> 00:31:32,920 Speaker 10: the it's a consequence of what's happening in equity markets, 707 00:31:33,080 --> 00:31:35,600 Speaker 10: whether it's a consequence of what's happening in spending behavior. 708 00:31:35,840 --> 00:31:38,520 Speaker 10: As long as they see the inflation data coming down, 709 00:31:39,200 --> 00:31:41,840 Speaker 10: that will be enough to become more confident about the 710 00:31:41,880 --> 00:31:42,360 Speaker 10: medium term. 711 00:31:42,680 --> 00:31:43,880 Speaker 2: I have to ask this question. 712 00:31:43,920 --> 00:31:47,840 Speaker 1: It's with immense respect for what HSBC, like Bloomberg went 713 00:31:47,880 --> 00:31:50,320 Speaker 1: through with COVID. I mean, we've heard from the quarantines 714 00:31:50,320 --> 00:31:53,920 Speaker 1: of HSBC in the travels during COVID and China. 715 00:31:54,080 --> 00:31:56,120 Speaker 2: You walk out of the Bloomberg building. 716 00:31:55,840 --> 00:31:58,560 Speaker 1: In Hong Kong, you go across that historic tramway and 717 00:31:58,600 --> 00:32:02,840 Speaker 1: there's one Queen's Center you're building your place. It's the 718 00:32:02,920 --> 00:32:07,600 Speaker 1: foundation of Hong Kong finance. What's the stereotype right now? 719 00:32:07,600 --> 00:32:10,520 Speaker 1: We most get wrong about the new Hong Kong. 720 00:32:14,120 --> 00:32:17,040 Speaker 10: That is a very broad question. 721 00:32:17,360 --> 00:32:18,000 Speaker 2: That's a friday. 722 00:32:19,000 --> 00:32:22,719 Speaker 10: It is a Friday. But actually, you know, as an economist, 723 00:32:23,360 --> 00:32:27,640 Speaker 10: I always think that sometimes we think about countries, you know, 724 00:32:27,840 --> 00:32:29,480 Speaker 10: obviously as an economist, and I love it that people 725 00:32:29,480 --> 00:32:31,200 Speaker 10: want to talk about countries, they want to talk about 726 00:32:31,240 --> 00:32:33,960 Speaker 10: central banks. But a lot of the things that happen, 727 00:32:34,040 --> 00:32:36,000 Speaker 10: whether it is in Hong Kong, whether it's in Dubai, 728 00:32:36,040 --> 00:32:38,360 Speaker 10: whether it's in London, whether it's in New York, is 729 00:32:38,440 --> 00:32:42,440 Speaker 10: actually more about sectors and it's more about companies. So 730 00:32:42,560 --> 00:32:45,920 Speaker 10: whatever you view you have regarding the macro story, when 731 00:32:45,920 --> 00:32:49,200 Speaker 10: we're thinking about where the true transformational shifts lie in 732 00:32:49,240 --> 00:32:52,160 Speaker 10: the coming years, and a lot of it is in technology, 733 00:32:52,440 --> 00:32:55,760 Speaker 10: there is still a lot of dynamism and there's still 734 00:32:55,800 --> 00:32:59,200 Speaker 10: money being provided to companies ten seconds. 735 00:32:59,200 --> 00:33:01,080 Speaker 5: So you are trying to us in trouble. That's what 736 00:33:01,120 --> 00:33:01,640 Speaker 5: you're trying to do. 737 00:33:01,920 --> 00:33:03,320 Speaker 2: My Hong Kong, are you homecore? 738 00:33:03,360 --> 00:33:06,920 Speaker 10: Absolutely, As someone that's lived in Hong Kong for five years, 739 00:33:07,040 --> 00:33:09,480 Speaker 10: I'm still a homegouryist. 740 00:33:09,240 --> 00:33:10,520 Speaker 5: Or are you done on that subject? 741 00:33:10,640 --> 00:33:14,800 Speaker 1: I think it's important. I think HSBC Steve Major, great, 742 00:33:15,000 --> 00:33:17,600 Speaker 1: Janet Henry. These people have a prison in there. You 743 00:33:17,600 --> 00:33:20,560 Speaker 1: know all the stereotype blatherer we deal with are Steve Engel. 744 00:33:20,640 --> 00:33:23,880 Speaker 4: Since we're causing trouble, Miss David Blame, I'm miss David bloom. 745 00:33:23,960 --> 00:33:25,280 Speaker 2: Yeah, he's truble, he was great. 746 00:33:25,400 --> 00:33:29,200 Speaker 5: Names Trouble's trum. JOHNA. Henrick, thank you appreciate it's going 747 00:33:29,240 --> 00:33:29,480 Speaker 5: to say. 748 00:33:30,000 --> 00:33:33,800 Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and 749 00:33:33,960 --> 00:33:38,120 Speaker 1: anywhere else you get your podcasts. Listen live every weekday 750 00:33:38,440 --> 00:33:41,880 Speaker 1: starting at seven am Eastern on Bloomberg dot Com, the 751 00:33:42,040 --> 00:33:44,160 Speaker 1: iHeartRadio app tune In. 752 00:33:44,560 --> 00:33:47,920 Speaker 11: And the Bloomberg Business app. You can watch us live 753 00:33:48,160 --> 00:33:52,400 Speaker 11: on Bloomberg Television and always. I'm the Bloomberg Terminal. Thanks 754 00:33:52,440 --> 00:33:56,320 Speaker 11: for listening. I'm Tom Keen, and this is Bloomberg 755 00:34:00,720 --> 00:34:02,240 Speaker 9: Resing the Haste