1 00:00:00,080 --> 00:00:02,599 Speaker 1: We're joined to the South Hour by Steve Bryce, chief 2 00:00:02,640 --> 00:00:06,320 Speaker 1: investment officer at Standard chatter Bank of Singapore Wealth Management, 3 00:00:06,360 --> 00:00:09,080 Speaker 1: talk about the goings on on the markets and Steve, 4 00:00:09,840 --> 00:00:11,840 Speaker 1: not a lot of action on the markets today and 5 00:00:11,880 --> 00:00:14,680 Speaker 1: we had a rather tip and finish to US equities 6 00:00:14,720 --> 00:00:18,040 Speaker 1: as well. Do you get a sense that investors are 7 00:00:18,079 --> 00:00:19,880 Speaker 1: sitting on the sideline and waiting to see what the 8 00:00:19,880 --> 00:00:22,440 Speaker 1: next fair meeting brings or is there something else going on? 9 00:00:24,120 --> 00:00:25,960 Speaker 1: I think obviously, you know, as we are head towards 10 00:00:26,040 --> 00:00:27,920 Speaker 1: year end, there's a little bit of you know, trying 11 00:00:27,960 --> 00:00:30,080 Speaker 1: to think what's what's going to happen next year. So 12 00:00:30,120 --> 00:00:32,199 Speaker 1: if you look at the you know, just just the 13 00:00:32,240 --> 00:00:34,680 Speaker 1: analyst and research community, you know there's a there's a 14 00:00:34,680 --> 00:00:36,800 Speaker 1: bit of a lull orways at this time as people 15 00:00:36,800 --> 00:00:40,599 Speaker 1: are releasing the three outlooks and obviously activities quite thin. 16 00:00:40,680 --> 00:00:42,800 Speaker 1: You do help, of course, have that firm scene meeting 17 00:00:42,840 --> 00:00:45,680 Speaker 1: as well, um or that the minutes of the meeting 18 00:00:45,720 --> 00:00:47,519 Speaker 1: coming out this week, and I think that's going to 19 00:00:47,560 --> 00:00:51,320 Speaker 1: be very important because you know, until Friday, people were 20 00:00:51,880 --> 00:00:55,240 Speaker 1: um getting increasingly comfortable that that you know, slow the 21 00:00:55,240 --> 00:00:57,440 Speaker 1: pace of right hats just to a mere fifty basis 22 00:00:57,440 --> 00:01:00,880 Speaker 1: points was still pretty rapid, but obviously lower than the 23 00:01:01,000 --> 00:01:03,760 Speaker 1: seventy five basis points we've been used to. And then 24 00:01:03,760 --> 00:01:07,120 Speaker 1: we had obviously one FED president coming out and saying, well, 25 00:01:07,200 --> 00:01:09,240 Speaker 1: seventy five is not off the table. So I think 26 00:01:09,280 --> 00:01:12,000 Speaker 1: that's led people to be a little bit cautious and 27 00:01:12,000 --> 00:01:14,080 Speaker 1: try and figure out whether we are still in the 28 00:01:14,319 --> 00:01:17,920 Speaker 1: in the peak FED expectation rate expectations as we expect, 29 00:01:18,240 --> 00:01:20,360 Speaker 1: or whether there's actually going to be another leg higher 30 00:01:20,360 --> 00:01:23,880 Speaker 1: in rate expectations into Q one next year. Yeah. We 31 00:01:23,920 --> 00:01:26,720 Speaker 1: did hear from Vil Bostick at the FIT he's favoring 32 00:01:26,920 --> 00:01:30,720 Speaker 1: a slower pace of increases, trying to engineer that soft landing. 33 00:01:30,800 --> 00:01:33,400 Speaker 1: So do you feel that landing pad is starting to 34 00:01:33,480 --> 00:01:35,840 Speaker 1: shrink by the day. What's your CAB base case in 35 00:01:35,959 --> 00:01:40,480 Speaker 1: terms of avoiding a recession? Um? So, yes, So we 36 00:01:40,480 --> 00:01:43,640 Speaker 1: we have a seventy five property of recession in the 37 00:01:43,720 --> 00:01:47,039 Speaker 1: US next year. Um. You know, if anything that's rising 38 00:01:47,040 --> 00:01:49,480 Speaker 1: we've seen since we sort of published that, we've seen 39 00:01:49,520 --> 00:01:52,400 Speaker 1: the inversion obviously of the three months and ten year 40 00:01:52,440 --> 00:01:54,600 Speaker 1: part of the yield curve as well, which you know 41 00:01:54,880 --> 00:01:58,640 Speaker 1: has a perfect track record for predicting recessions. Um, so 42 00:01:58,840 --> 00:02:00,800 Speaker 1: you know, it does look like we're in for a recession. 43 00:02:00,840 --> 00:02:03,480 Speaker 1: I think the key question now for investors is is 44 00:02:03,520 --> 00:02:06,160 Speaker 1: this going to be a mild one and therefore you know, 45 00:02:06,240 --> 00:02:09,000 Speaker 1: largely priced. To be honest, equities there Peter Trough were 46 00:02:09,040 --> 00:02:12,799 Speaker 1: down twenty seven, which is an average recession for equities, 47 00:02:12,840 --> 00:02:14,480 Speaker 1: or we're going to see something a bit more sinister, 48 00:02:14,520 --> 00:02:17,520 Speaker 1: which could mean we could have a last leg lower. Yeah, 49 00:02:17,560 --> 00:02:19,560 Speaker 1: what's next for the s and be for example, do 50 00:02:19,600 --> 00:02:22,800 Speaker 1: you see us getting sustainably above four thousands or are 51 00:02:22,840 --> 00:02:24,960 Speaker 1: we going to be sibling somewhere in the higher threes. 52 00:02:26,360 --> 00:02:29,920 Speaker 1: I think the on on the the for us probably 53 00:02:29,960 --> 00:02:32,880 Speaker 1: there's still another leg lower. Right, So so you know 54 00:02:33,000 --> 00:02:35,720 Speaker 1: the central scenarios that you know, we we we have 55 00:02:35,800 --> 00:02:40,560 Speaker 1: a recession. Earnings are not sorry, consensus analysts are not 56 00:02:41,200 --> 00:02:45,320 Speaker 1: forecasting a recession effectively when it comes to earnings next year. 57 00:02:45,360 --> 00:02:48,760 Speaker 1: So we probably see earnings revisions going becoming negative and 58 00:02:48,800 --> 00:02:52,720 Speaker 1: that could lead to lower equity prices over the course 59 00:02:52,760 --> 00:02:55,280 Speaker 1: the next three to six months before we form a bottom. 60 00:02:55,320 --> 00:02:58,880 Speaker 1: As the Fed pivots from hiking rates to ultimately looking 61 00:02:58,880 --> 00:03:01,160 Speaker 1: at when they're going to cut That seems a distant 62 00:03:01,240 --> 00:03:04,000 Speaker 1: prospect today of course, but if we're looking over the 63 00:03:04,000 --> 00:03:06,000 Speaker 1: next twelve months, that should be should be something we're 64 00:03:06,040 --> 00:03:08,680 Speaker 1: looking for. And Steve we just hadded they're running us 65 00:03:08,680 --> 00:03:11,680 Speaker 1: through the latest COVID numbers out of China twenty six 66 00:03:11,680 --> 00:03:14,919 Speaker 1: thousand cases. Now the Hong Kong CEO tis positive now 67 00:03:15,080 --> 00:03:18,560 Speaker 1: too deaths. Is this the moment where we really find 68 00:03:18,560 --> 00:03:23,639 Speaker 1: out the truth about China's future COVID plants? Yeah, I 69 00:03:23,680 --> 00:03:26,160 Speaker 1: think obviously, I think we're getting We were getting the 70 00:03:26,240 --> 00:03:29,520 Speaker 1: sense that, you know, China did want to open up 71 00:03:29,680 --> 00:03:33,440 Speaker 1: and reopen its economy obviously, you know, as early as possible, 72 00:03:33,480 --> 00:03:35,720 Speaker 1: and and then this is obviously going to be a 73 00:03:35,800 --> 00:03:39,120 Speaker 1: challenging situation to remit. To me, it reminds me a 74 00:03:39,160 --> 00:03:42,120 Speaker 1: bit of what happened in Singapore earlier this year when 75 00:03:42,160 --> 00:03:45,520 Speaker 1: they announced a lot of the relaxations and then COVID 76 00:03:45,560 --> 00:03:51,120 Speaker 1: cases went up and the authorities here stopped easing restrictions 77 00:03:51,240 --> 00:03:54,000 Speaker 1: or slowed down the easing of restrictions, but didn't reverse course. 78 00:03:54,000 --> 00:03:56,280 Speaker 1: So it's obviously gonna be interesting to see, you know, 79 00:03:56,400 --> 00:03:59,200 Speaker 1: how china response this is. We've seen a very strong 80 00:03:59,280 --> 00:04:02,320 Speaker 1: rally in China markets, you know, in recent times, Asia 81 00:04:02,360 --> 00:04:05,200 Speaker 1: as a whole is up seventeen cent pete to trop 82 00:04:05,280 --> 00:04:09,240 Speaker 1: to peak. Sorry um, So from from that perspective, this 83 00:04:09,280 --> 00:04:11,760 Speaker 1: has obviously been a very important impetus to that. So 84 00:04:12,160 --> 00:04:14,640 Speaker 1: investors be very interesting to see what the response is 85 00:04:14,680 --> 00:04:16,880 Speaker 1: going to be. So would your advice be to put 86 00:04:16,920 --> 00:04:18,640 Speaker 1: money to work in China right now? Or is it 87 00:04:19,040 --> 00:04:22,880 Speaker 1: wise just that exercise a little bit of caution. So 88 00:04:22,920 --> 00:04:24,600 Speaker 1: if we if we look at it from a twelve 89 00:04:24,640 --> 00:04:28,640 Speaker 1: month perspective, you know we we we're overweight Asia extrapan equities. 90 00:04:29,080 --> 00:04:30,960 Speaker 1: That's as much a dollar story as it is a 91 00:04:31,080 --> 00:04:34,880 Speaker 1: China reopening. But obviously China policy and policy in this 92 00:04:34,920 --> 00:04:37,640 Speaker 1: space does does matter to that. I think, Yeah, if 93 00:04:37,680 --> 00:04:41,520 Speaker 1: I was saying do I deploy capital into Chinese markets 94 00:04:41,520 --> 00:04:44,320 Speaker 1: the day after a seventeen cent rally with this negative 95 00:04:44,360 --> 00:04:46,840 Speaker 1: news coming out, I think I'd probably hold off doing 96 00:04:46,880 --> 00:04:49,880 Speaker 1: so and look for better entry levels. Yeah, that dollar 97 00:04:49,920 --> 00:04:52,040 Speaker 1: story is an interesting one too, because we have seen 98 00:04:52,080 --> 00:04:55,520 Speaker 1: the offshore You are a weekend against the green beeg 99 00:04:55,560 --> 00:04:57,479 Speaker 1: and that is the Bloomberg question of the day. Do 100 00:04:57,480 --> 00:04:59,960 Speaker 1: you think that dollar yuan as pete for the site 101 00:05:00,000 --> 00:05:03,640 Speaker 1: call um? I think the answer to that is really 102 00:05:03,839 --> 00:05:09,240 Speaker 1: has has a dollar peaked? So from more broadly, I think, 103 00:05:09,279 --> 00:05:11,320 Speaker 1: you know, so the renumbly will probably chack what happens 104 00:05:11,320 --> 00:05:15,000 Speaker 1: at at the global level. I mean clearly from you know, 105 00:05:15,040 --> 00:05:18,719 Speaker 1: we we went to an extreme sort of oversould condition 106 00:05:18,720 --> 00:05:21,440 Speaker 1: in a very short term basis, so some sort of 107 00:05:21,440 --> 00:05:24,240 Speaker 1: bounce was to be expected. Um. I think, you know, 108 00:05:24,360 --> 00:05:26,800 Speaker 1: if we have got peak fed expectations and we do 109 00:05:26,880 --> 00:05:30,320 Speaker 1: see continued tightening elsewhere in the world, then the dollar 110 00:05:30,440 --> 00:05:33,440 Speaker 1: ultimately will will come lower. But it's too early to 111 00:05:33,480 --> 00:05:35,320 Speaker 1: define that's going to be the case over the next 112 00:05:35,640 --> 00:05:37,600 Speaker 1: the next two months, I think, you know what, what 113 00:05:37,720 --> 00:05:39,240 Speaker 1: price actually going into the end of the year is 114 00:05:39,240 --> 00:05:40,840 Speaker 1: going to be really important to see whether we can 115 00:05:40,839 --> 00:05:44,159 Speaker 1: extrapolate the recent weakness of the dollar through the rest 116 00:05:44,200 --> 00:05:46,599 Speaker 1: of next year. Yea, And how about yields. We've seen 117 00:05:46,640 --> 00:05:49,239 Speaker 1: yields pushing higher both for the U s tenure China 118 00:05:49,320 --> 00:05:51,960 Speaker 1: tenure yield moved higher last week as well. How much 119 00:05:52,240 --> 00:05:54,240 Speaker 1: more room to run do you think there is there? 120 00:05:55,640 --> 00:05:57,720 Speaker 1: I think as far as the US tenure, you know, 121 00:05:57,760 --> 00:06:00,160 Speaker 1: we we don't think there's a lot to go all. 122 00:06:00,200 --> 00:06:01,960 Speaker 1: In fact, we think we've already peaked. As far as 123 00:06:01,960 --> 00:06:04,000 Speaker 1: the ten year yield is concerned, and that's on that 124 00:06:04,800 --> 00:06:08,240 Speaker 1: peak US interest rate to expectations, so we think that, 125 00:06:08,400 --> 00:06:10,080 Speaker 1: you know, we may see five or five and a 126 00:06:10,160 --> 00:06:13,039 Speaker 1: quarter in terms of the terminal rate, but ultimately we 127 00:06:13,160 --> 00:06:15,360 Speaker 1: will come lower. Obviously, is that as we head into 128 00:06:15,400 --> 00:06:18,239 Speaker 1: recession for China it's a bit more nuanced, of course, 129 00:06:18,279 --> 00:06:21,600 Speaker 1: because the economy there is in recovery mode obviously from 130 00:06:21,640 --> 00:06:25,320 Speaker 1: a very weak base at one point um and inflationary 131 00:06:25,360 --> 00:06:27,840 Speaker 1: pressures haven't have been subdued but are starting to take 132 00:06:27,920 --> 00:06:30,279 Speaker 1: up a bit. So um, it's a little bit harder 133 00:06:30,320 --> 00:06:31,800 Speaker 1: to say. I think, you know, probably we have seen 134 00:06:31,800 --> 00:06:34,960 Speaker 1: the trough as far as yields are concerned in China, 135 00:06:35,600 --> 00:06:37,479 Speaker 1: but they're not going to go up very dramatically at 136 00:06:37,480 --> 00:06:39,479 Speaker 1: the end of they they need to support the economy, 137 00:06:39,520 --> 00:06:41,719 Speaker 1: so they do want to keep on yields under control. 138 00:06:42,320 --> 00:06:44,280 Speaker 1: I just want to quickly get your thoughts on what's 139 00:06:44,279 --> 00:06:47,440 Speaker 1: happening just across the Causeway from you and Malaysia. Very 140 00:06:47,520 --> 00:06:52,640 Speaker 1: interesting election over the weekend, probably the worst come imaginable 141 00:06:52,680 --> 00:06:57,880 Speaker 1: for markets though. Yeah, I mean it's obviously people like 142 00:06:57,960 --> 00:07:01,279 Speaker 1: clarity investors hate uncertainty, right, and so they've got the 143 00:07:01,279 --> 00:07:05,680 Speaker 1: most uncertain outcome that they can get. Obviously, now the 144 00:07:05,720 --> 00:07:08,520 Speaker 1: focus will be on how quickly they can form a government. 145 00:07:08,560 --> 00:07:10,640 Speaker 1: Obviously this pressure coming through for them to try and 146 00:07:10,960 --> 00:07:14,560 Speaker 1: decide how to proceed today. I think that's probably maybe 147 00:07:14,600 --> 00:07:16,640 Speaker 1: a little bit in the optimistic, but certainly the pressure 148 00:07:16,720 --> 00:07:20,480 Speaker 1: is on her. So I think investors were largely expecting 149 00:07:20,480 --> 00:07:24,080 Speaker 1: this outcome. But obviously the quicker it's resolved and we 150 00:07:24,120 --> 00:07:26,119 Speaker 1: know who's what the leadership is going to be for 151 00:07:26,120 --> 00:07:29,360 Speaker 1: for Malaysia, the better for investors. Yeah, the King giving 152 00:07:29,880 --> 00:07:32,360 Speaker 1: all parties involved until today to work it all out. 153 00:07:32,920 --> 00:07:36,320 Speaker 1: Good luck that. Steve Bryce, chief Investment Officer at Standard 154 00:07:36,360 --> 00:07:39,120 Speaker 1: Charter Bank of Singapore Wealth Management, thanks so much for 155 00:07:39,200 --> 00:07:39,960 Speaker 1: joining us today.