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Speaker 1: Let's get to our guest, Christina Hooper, chief Global market

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Speaker 1: Strategists at Investco. So Christina, as Doug mentioned, the bounce

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Speaker 1: back feels technical in nature, with with program buying kicking in.

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Speaker 1: Stocks had gotten pretty oversold, they had plummeted on this.

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Speaker 1: The fact of the matter is, inflation is high. Rates

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Speaker 1: are going to go a lot higher, and I suppose

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Speaker 1: some would say that this pushes the terminal rate up

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Speaker 1: around perhaps the five percent level that Bloomberg Economics has

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Speaker 1: long suggested. What do you think? Well, certainly, I mean

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Speaker 1: what we got with today's CPI print was greater uncertainty

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Speaker 1: about where the terminal rate is, but certainly a sense

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Speaker 1: that it will be higher than previously thought. And and

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Speaker 1: that to me was one of the key takeaways from today.

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Speaker 1: Well you wouldn't buy this though, would you. Well, it

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Speaker 1: also come by your time horizon, right because clearly, Um,

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Speaker 1: we experienced somewhat over sold conditions today. Now, that doesn't

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Speaker 1: mean that the near term looks bright for equities or

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Speaker 1: risk assets in general. Let's face it, Um, we're in

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Speaker 1: a contraction phase of the economic cycle. Growth is below

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Speaker 1: trend and it's decelerating. Um, But that doesn't mean that

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Speaker 1: it's not a very good buying opportunity for someone with

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Speaker 1: time horizon that extends beyond one to two years. Absolutely,

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Speaker 1: love that has been really that Are you surprised that,

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Speaker 1: you know, the markets did rebounded their way? They did,

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Speaker 1: absolutely and I think many was scratching their heads and asking,

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Speaker 1: you know, what caused this big turnaround? And it certainly

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Speaker 1: didn't seem to be a reassessment of the cp I print.

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Speaker 1: It was hard to find a lot of positives in there. Um,

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Speaker 1: But but it does seem as though, you know, there

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Speaker 1: were other forces at work today. UM. You talked about

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Speaker 1: program buying, the potential for some some short covering UM,

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Speaker 1: also the potential for a reversal of the UK mini

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Speaker 1: budget in terms of the tax cuts that had been proposed,

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Speaker 1: and finally a rumor or expectations on the part of

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Speaker 1: some that the Bank of England might step in and

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Speaker 1: buy more guilt that could pull down yields globally UM.

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Speaker 1: And of course, as we know, UM, the tenure yield

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Speaker 1: has had a lot to do UM this year and

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Speaker 1: has had a strong correlation with stocks. You know, you

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Speaker 1: mentioned that the economy was decelerating, but it still seems

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Speaker 1: to be churning along pretty nicely, not so much affected

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Speaker 1: by three percent interest rates. I think of of of

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Speaker 1: a running back, even twenty pounds heavier, a guy like

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Speaker 1: Nick Chubb can still run a four or five forty.

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Speaker 1: Some things just are well, that's true. I mean, this

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Speaker 1: is certainly a much better economy, um, in terms of

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Speaker 1: fundamentals in a lot of different ways, versus where we

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Speaker 1: were going into the global financial crisis. I think consumers

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Speaker 1: are in a much better place. Christina, you're saying your

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Speaker 1: notes that it feels were like in a holding You're

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Speaker 1: saying that in fact you we are in a bunch

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Speaker 1: of holding patterns, that is why, And what do you

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Speaker 1: make of it? Well, we're in so many different holding

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Speaker 1: patterns because waiting for signs of where we go from here,

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Speaker 1: and of course the most important is the FED. The

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Speaker 1: FED has really dominated markets this here, and it goes

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Speaker 1: beyond that, because the Fed is looking at inflation data,

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Speaker 1: not just the CPI prints, but also of course consumer

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Speaker 1: inflation expectations, really inflation expectations in general. But I think

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Speaker 1: they're they're focused on consumer inflation expectations. UM. We're also

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Speaker 1: waiting on earnings. That's certainly going to also be a

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Speaker 1: key driver of where stocks go from here. So so

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Speaker 1: there are a number of holding patterns that that we're

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Speaker 1: sitting and waiting for news on um to give us

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Speaker 1: a sense of where we're headed in the near term.

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Speaker 1: So what do you do with earnings? If you get,

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Speaker 1: you know, very strong earnings for the past quarter, but

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Speaker 1: then a lot of worry baked into the next quarter,

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Speaker 1: that puts you in kind of a difficult position. Oh,

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Speaker 1: certainly it does. Man Again, a lot of it goes

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Speaker 1: back to your time horizon. Right if your time horizon

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Speaker 1: is well beyond a quarter, then it's it's not a concern.

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Speaker 1: It could in fact be a buying opportunity at a

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Speaker 1: certain point. But but but certainly, right now, as we

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Speaker 1: look ahead, we are waiting for that other shoot to drop,

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Speaker 1: and you know, some of it might not come in

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Speaker 1: the third quarter. I think this is going to be

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Speaker 1: very much a stock pickers earning season where they're going

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Speaker 1: to be the haves and the have nots um those

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Speaker 1: companies that have been able to defend their profit margins

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Speaker 1: have been able to to raise prices. We've already heard

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Speaker 1: from some of them. There are some companies that are

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Speaker 1: benefiting from consumer spending. The consumer has remained relatively strong

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Speaker 1: and they've directed their dollars in certain places. They're not

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Speaker 1: spending on goods uh so much anymore, they're spending it

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Speaker 1: on services. So of course we heard from from Delta

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Speaker 1: today about about their their improved revenue because of of

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Speaker 1: the interest in flying, and that's what consumers are spending

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Speaker 1: their money on. So I think again this is going

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Speaker 1: to be an environment that hasn't have not But what's

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Speaker 1: really key is not only the reports we get, but

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Speaker 1: the guidance we get for the fourth quarter. You've seen that,

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Speaker 1: you know, as you as you mentioned holding patterns. We've

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Speaker 1: got the worn Ukraine. On top of that, it's going

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Speaker 1: to see how your affairs during the winter, how Britain's

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Speaker 1: fiscal and monetary policy pens out, and of course the

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Speaker 1: near term the China Body Congress is as well. You've

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Speaker 1: got all these things, you know, how do they rank

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Speaker 1: in terms of uncertainty for you? Oh, that's a great question.

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Speaker 1: I would say I would start with the FED um

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Speaker 1: because you know, we certainly got hawkish f O mc

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Speaker 1: minutes yesterday, but there weren't glimmers of hope um. And

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Speaker 1: I'll give you a quote from the minute uh um

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Speaker 1: that they would like to be able to calibrate the

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Speaker 1: pace of further policy tightening with the aim of mitigating

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Speaker 1: the risk of significant adverse effects on the economic outlook. UM.

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Speaker 1: So so there's a glimmer pope there, but but a

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Speaker 1: decidedly hawk is set of f OMC minutes. And of

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Speaker 1: course what we got today was was increased uncertainty about

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Speaker 1: where the said ends up in terms of a terminal rate. UM.

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Speaker 1: But certainly we have have uncertainty beyond that um Europe

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Speaker 1: and energy Um will they be able to source energy

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Speaker 1: this year? Um? And I think there are even more

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Speaker 1: questions about what if this goes into next winter and

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Speaker 1: what are the prospects meant um. So I would rank

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Speaker 1: that high on the list as well. UM. Okay, so

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Speaker 1: you I think we'd all agree that people want to

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Speaker 1: buy quality stocks. But how do you define quality? Well,

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Speaker 1: that's a great question, and it's it's a quality is

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Speaker 1: certainly new uh more conservative accounting can help in terms

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Speaker 1: of determining what quality and what isn't. But I think

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Speaker 1: also a lot of it has to do with whether

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Speaker 1: or not the results we see this time around has

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Speaker 1: staying power are the trends still in place to deliver

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Speaker 1: good earnings for the fourth quarter. Christina, thank you so

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Speaker 1: much for joining us. That is that Casina Hoopa as

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Speaker 1: she's chief Global Markets markets Strategists to invest getting her

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Speaker 1: take on the markets after that heart of than expected

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Speaker 1: CPI print well. Just as an example of the difficulty

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Speaker 1: and looking forward. T SMC had very strong earnings, but

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Speaker 1: then it slashed its capital spending target by around ten percent.

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Speaker 1: Makes it interesting. Stay with us. This is Bloomberg