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Speaker 1: Our guest for this half hour as Middle Contentia, head

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Speaker 1: of Emerging Market Strategy at t D Securities. Middle to

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Speaker 1: be fair, I mean, we've been saying all morning that

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Speaker 1: this move by the Bank of England has led to

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Speaker 1: a huge rally in inequity markets. We should say that

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Speaker 1: we rallied off very oversold conditions, and there are people

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Speaker 1: like Bernstein, They're out there saying that, uh, you know,

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Speaker 1: the equities rallied because of this because the stocks were

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Speaker 1: were oversold. But this was a major move by the

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Speaker 1: Bank of England. We also saw intervention from the Bank

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Speaker 1: of Japan. Our investors wrong to think that big central

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Speaker 1: banks are starting The Fed's not there yet, but they're

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Speaker 1: starting to rethink some of their policies. I think that's

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Speaker 1: a fair assessment. And clearly we've had a significant amount

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Speaker 1: of pintening across the board from central banks globally. And

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Speaker 1: I think what we've seen of course in the UK's

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Speaker 1: obviously markets taking Prince at the FISC collections, the expansion

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Speaker 1: obviously that we've announcing the mini and clearly that had

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Speaker 1: a lot led to a lot of pressure on guilt

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Speaker 1: and UK markets. And look, I think we are as

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Speaker 1: you say, seeing intervention of various sorts from central banks

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Speaker 1: and government. But I don't think this intervention is going

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Speaker 1: to stem the pressures. I mean, as you've seen historically,

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Speaker 1: this type of intervention may just slow or at least

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Speaker 1: alleviate some pressure in the short term, but I think

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Speaker 1: some of the intrinsic and fundamental concerns that are still

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Speaker 1: weighing on market remain in place. So, as you say,

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Speaker 1: it's provoked a bit of a risk rally into they's

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Speaker 1: session and overnight in the US. But again we have

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Speaker 1: doubts about the sustainability of this, given that such interventions

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Speaker 1: generally end up proving fairly short lived. For example, in

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Speaker 1: the UK guilt market, there's going to be a lot

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Speaker 1: of supply in the weeks and months ahead, which could

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Speaker 1: add renewed pressure on bonds in the UK for instance.

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Speaker 1: In this region, though, I mean, you look at the

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Speaker 1: big moves that we saw in credit, what we saw

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Speaker 1: with equities at these April twenty laws as well. Do

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Speaker 1: you see more foreign investors exiting the region at the moment.

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Speaker 1: I think, unfortunately that is the case. We continue to

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Speaker 1: see outflows from regional on an equity market. Um the

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Speaker 1: fact that risker version is still pre elevated when you

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Speaker 1: look at polatility measures, and at the same time as

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Speaker 1: inflation pressures across this region still remain fairly elevated, and

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Speaker 1: with the FED hiking so aggressively, it does seem very

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Speaker 1: difficult to see a resumption of capital and flows into Asia.

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Speaker 1: So I think that trend will continue for the time

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Speaker 1: being and unfortunately doesn't seem to be any end inside

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Speaker 1: at least for now. It's pretty hard to be bullish

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Speaker 1: right now over the longer term, given that the FED

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Speaker 1: is promising more pain and we have obviously very difficult

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Speaker 1: conditions in Europe and in China and in many parts

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Speaker 1: of the world. Is this the type of thing where

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Speaker 1: you just want to get beyond the next six months?

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Speaker 1: I think so. I think that the pain is still

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Speaker 1: still going to continue. As you mentioned, the third is

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Speaker 1: still going to high fairly aggressively. And you know, we

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Speaker 1: we think the TERMINI in the US could get up

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Speaker 1: to that four point seven five with risks on the

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Speaker 1: upside to even that to the level. So you know,

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Speaker 1: what we've seen in the last several months is continued

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Speaker 1: reassessment of tightening expectations, even from for the FED. On

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Speaker 1: the up side, and until we see some sense that

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Speaker 1: things are starting to calm down at inflation pressures have

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Speaker 1: peaked and are starting to come off the boil, and

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Speaker 1: at the pace of hikes will slow until that point.

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Speaker 1: It just looks like, as you say, we're going to

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Speaker 1: be in this risk aversion and paining environment for most

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Speaker 1: risk assets in the next several weeks and months. And

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Speaker 1: as I mentioned, I think it's very hard to see

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Speaker 1: an end in this lease for now. I mean maybe

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Speaker 1: as we go into probably the second quarter of next year,

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Speaker 1: things may start to improve. The one because as stronger

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Speaker 1: than expected fixed for a twenty six day after verbal support,

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Speaker 1: the central bank warning against one where bets on China's currency.

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Speaker 1: What do you think they're trying to achieve you and

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Speaker 1: will they do it? I think they're probably trying to

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Speaker 1: leave slow down the weakness and you are. The reality

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Speaker 1: is though, that there's capitulation to some extent in the

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Speaker 1: view that they don't expect this to turn around until

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Speaker 1: the dollar itself stop strengthening. But I think the warnings

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Speaker 1: that were sent overnight or yesterday were sent to the

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Speaker 1: domestic audience. Banks clearly been warned not to speculate against

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Speaker 1: the one, and I think that's had some impact. But again,

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Speaker 1: you know, I think what we've been seeing an't enough

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Speaker 1: here in terms of the measures, whether it's stronger fixings,

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Speaker 1: verbal warnings, and other such measures to really turn the

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Speaker 1: trend around. I think also what's interesting is that well

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Speaker 1: dollar yuan has moved higher, the trade weight to the

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Speaker 1: du want has not really weakened that significantly. So it

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Speaker 1: does suggest if anything that you want is just really

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Speaker 1: trending in line with other Asian currencies. I lower. So

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Speaker 1: we we see a lot of unintended consequences when we

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Speaker 1: have central banks with very tough policy like this, and

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Speaker 1: then when you get fiscal policy going in the other direction.

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Speaker 1: Is there an unintended consequence that you're a bit nervous

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Speaker 1: about something that could be lurking behind the shadows. Yeah,

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Speaker 1: I think it's a good question. I mean, I think

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Speaker 1: every time you do see these sort of interventions and

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Speaker 1: market operations from the central banks, it becomes very tricky

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Speaker 1: to fine tune this, and there's always risk of either

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Speaker 1: bubbles or moves the other way where you see two

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Speaker 1: supertight liquidity and crashes in markets. And I think all

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Speaker 1: of this and I hope that the UK is a

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Speaker 1: classic example. You've got the central bank, the Bank of

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Speaker 1: Thing that I've been doing quantity of tightening, really trying

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Speaker 1: to withdraw liquidity, and then you've had these sudden announcement

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Speaker 1: of measures over the next thirteen days of liquidity really

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Speaker 1: liquidity injections because they're buying that, and that's going against

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Speaker 1: that policy. There are risks of inflation coming through because

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Speaker 1: of that, and so I think it's extremely difficult in

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Speaker 1: this environment where central banks are getting actively involved and

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Speaker 1: not leading pressure or leaving the forces to the market.

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Speaker 1: I think there is a risk of a policy era.

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Speaker 1: I just want to get back to to the China

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Speaker 1: story and in terms of what we're expecting more from

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Speaker 1: the data showing the slowdown in that economy. We're looking

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Speaker 1: very much to the Party Congress. We've now seen she

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Speaker 1: jumpaying a merge after his quarantine. We're really going to

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Speaker 1: see something that's going to turn the dial here and

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Speaker 1: allow the economy to open up further. I think it's

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Speaker 1: unlikely the measures so far have not been enough for

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Speaker 1: sufficient to move the needle um and I think some

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Speaker 1: of the key engines of growth, such as exports, are

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Speaker 1: already showing some weakness, whether it's going to be more

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Speaker 1: infrastructure or some sort of fiscal spending in China. I

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Speaker 1: don't think we're going to see enough to already move

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Speaker 1: the needles. So, if anything, our growth fore class at

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Speaker 1: two point nine percent for China's economy this year still

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Speaker 1: stands um and I think growth will continue to face

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Speaker 1: more negative momentum in the weeks and months ahead. You

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Speaker 1: do need to see something much more significant to turn

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Speaker 1: the economy around. Another said, I just don't think we're

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Speaker 1: seeing that as yet. Okay, I want to put your

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Speaker 1: strategy had on here in in focus. A lot of

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Speaker 1: people like to talk about the sixty model portfolio model,

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Speaker 1: whether it's dead, but it seems like now it's ready

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Speaker 1: to find another day. Because you can get four on

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Speaker 1: short term government debt and you can get five to

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Speaker 1: six percent on munies. It's almost financing you to to

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Speaker 1: bet on equity. I think that's fair. I mean, or

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Speaker 1: at least hedging, or at least hedging you know, yeah, no,

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Speaker 1: that's right. I mean, I think the sixty body model

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Speaker 1: really disappeared for quite a while, and it became all

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Speaker 1: about equities and generally anything with risk and bonds were shunned.

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Speaker 1: And suddenly, as you say, you have strength and bonds

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Speaker 1: look like a somewhat more attractive proposition for perhaps longer term.

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Speaker 1: And we're already seeing a number of invest in how

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Speaker 1: you're starting to get more more positive on bonds. Perhaps

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Speaker 1: we are seeing that we turn of that model s

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Speaker 1: even if it's not just a pure investment, it could

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Speaker 1: be for hedging purposes. But look, I think that the

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Speaker 1: sixty forty model hasn't disappeared fully. What we're seeing now

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Speaker 1: is probably the beginnings of that time. Mate. We have

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Speaker 1: to live at their Mattel kitecture from T Day Securities.

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Speaker 1: This is Bloomberg