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Speaker 1: Let's get to our guest, Stein Jakobsen, c I O

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Speaker 1: and chief economist at Saxo Bank. Well, let's start off

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Speaker 1: with Europe. Steen. It's a pretty difficult environment there now.

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Speaker 1: You've got very high levels of inflation. The ECB will

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Speaker 1: have to get aggressive, and it's all happening as a

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Speaker 1: crisis and energy crisis is sweeping through the continent. Do

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Speaker 1: things look pretty dire for risk assets at the moment?

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Speaker 1: Yes and no. Of course forward looking at the market

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Speaker 1: is seriously concerned about the constraints, and of course the

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Speaker 1: reason development on Russia closing down indefinitely as it looks

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Speaker 1: right now, on the gas into Europe and in particular

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Speaker 1: Germany is again raising red flags. But you have to

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Speaker 1: remember we come from an extremely strong personal balance sheet

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Speaker 1: and similar to the U S, we still have very

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Speaker 1: very high employment. But it's absolutely critical that we solve

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Speaker 1: and disconnect the energy price of his right now is

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Speaker 1: I sing in Europe only on natural gas? In other words,

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Speaker 1: you have production of electricity in Europe which is significantly

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Speaker 1: cheaper than the marginal cost of natural gas. And I

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Speaker 1: think that's a real issue because as you write this

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Speaker 1: says in the in the New summary, Germany sixty billion,

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Speaker 1: the Swedish primary Premier minister saying she would use hundreds

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Speaker 1: of billions of really to support UH. Spain is using support.

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Speaker 1: France is already courtelling the prices. So we are in

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Speaker 1: for a massive fiscal expansion in Europe to offset this

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Speaker 1: UH this drawn out, how long do you see this

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Speaker 1: situation where the elevated energy prices persisting. So in theoretic

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Speaker 1: in terms, we have roughly the stories we need in

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Speaker 1: terms of natural gas, but of course, as I've just

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Speaker 1: indicated to no marginer price is not really in the

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Speaker 1: priced off that and if you look at the structural

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Speaker 1: isue of Europe and this is really what's driving the

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Speaker 1: medium average price, we will have at least two to

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Speaker 1: three windows of this much much higher energy price because

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Speaker 1: the resolution in terms of solving for the supply is

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Speaker 1: very very very slowly in motion. So unfortunately I don't

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Speaker 1: really see any relief on the energy side, But I

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Speaker 1: do think the consumers will adopt and I do think

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Speaker 1: the governments around your role, as I just indicated, go

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Speaker 1: to the fiscal tools to support the negative impacts on

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Speaker 1: energy and food on the consumer itself. It's also a

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Speaker 1: good time to get your take on the US jobs report,

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Speaker 1: the challenge that the Fed is um is facing here

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Speaker 1: at the moment, it seems like inflation is starting to

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Speaker 1: roll over, but there's such a gap between where inflation

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Speaker 1: is and where the FED funds rate is that there's

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Speaker 1: more work to be done. Your thoughts there, So the problem,

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Speaker 1: I think it's to two things. From the feder reself.

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Speaker 1: I think Jackson hole the fact it was only nine

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Speaker 1: minutes long from from from Powell indicates that he was

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Speaker 1: under very very clear mandate that he needs to communicate

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Speaker 1: Hawkin Nous. So so in game theory kind of way,

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Speaker 1: I think what's going on right now we're not only

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Speaker 1: FED but also a global center bank, is that if

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Speaker 1: they're going to fail right now, they've rather fail and

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Speaker 1: being too hardest and being too davish. This whole story

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Speaker 1: about being transitory, the inflation, the whole story about being cyclical,

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Speaker 1: about core inflation being mean reverting doesn't work anymore exactly

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Speaker 1: for the same reason that we've just discussed. In Europe,

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Speaker 1: we are not really dealing with the supply side. So

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Speaker 1: so for me, the Federal Survey court hard is and

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Speaker 1: that coincide, of course with the fact that in in

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Speaker 1: August we saw the early signs of QT working, and

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Speaker 1: I think as we come into September we'll see additional qut.

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Speaker 1: You were talking about j Pal's hawkishness at Jackson Hall ofll.

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Speaker 1: We're just a couple of weeks away now from the

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Speaker 1: next FIT meeting. What are we looking at here at

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Speaker 1: fifty or another seventy five basis points? Yeah, of course

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Speaker 1: we were somewhere in between obviously between fifty and seventy

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Speaker 1: five with the with the market notching closer to the

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Speaker 1: seventy five basis points, and I really think the market

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Speaker 1: one seventy five that they want to get away and

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Speaker 1: get this hide in place so they can look as

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Speaker 1: they constantly have twenty three as as a period second

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Speaker 1: half potentially that we we see the pigan rais when

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Speaker 1: you see the real economy outpacing the financial economy. Um,

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Speaker 1: what sort of investments are brought to the form as

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Speaker 1: absolutely the right question. What's going on right now is

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Speaker 1: that the tangible economy or the tangible assets. It's our

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Speaker 1: performing the intangibles. And we have to remember, since nine

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Speaker 1: the intangibles has gone from less than seventy of the

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Speaker 1: capital market to more than so. Today we left with

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Speaker 1: a market which is you know what every marketing manager

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Speaker 1: dreams of, a digical economy. What is happening now is

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Speaker 1: the revenge of the real economy, the tangible assets. So

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Speaker 1: what makes sense is to belong in in in logistics

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Speaker 1: and energy, in in commodities, and in defense stocks, and

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Speaker 1: in things that actually simply sits in the world world

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Speaker 1: and which directly has a productivity gain embedded into their investment. Well,

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Speaker 1: you're in Singapore at the moment, you're going to be

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Speaker 1: making some remarks as part of an Asia Pacific macro events.

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Speaker 1: What are the key things you're going to be talking

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Speaker 1: about here and what are the key risks in the

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Speaker 1: region that the aggregate demand, which is what all economy use,

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Speaker 1: is not it cannot be used forul for analyzed economy

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Speaker 1: right now. This is about the fact that, yes, we

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Speaker 1: have a slowdown in the global economy at the accecate

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Speaker 1: demand side, but aggregate supplies still sits significantly north of

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Speaker 1: that intersection between supply and demand, which means that we

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Speaker 1: will continue to have inflationary pressing for longer. That accentuate

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Speaker 1: what we just talked about, you need to be intangible

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Speaker 1: assets as an our performance. The real economy needs to

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Speaker 1: have a bigger weight than your able weight in order

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Speaker 1: to the market to reset. And part of that, of

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Speaker 1: course is a build up of not just one not

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Speaker 1: just alternative energy, but a multiple source of energy sources

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Speaker 1: that needs to come online. And we need to build

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Speaker 1: for the future, not for the past, as we've done

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Speaker 1: with the energy policy. And beneath all of that, of course,

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Speaker 1: we also have that we are now, in our opinion,

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Speaker 1: in a period of the market where if you look

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Speaker 1: at the capital weight indiducts like the SMP and ASTAC

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Speaker 1: seven to the center, the stock market is cheap, is

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Speaker 1: very expensive to promise the thirty percent, which of course

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Speaker 1: is the intellible assets, all the platforms I was hugely

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Speaker 1: expensive variety of the consuming demand, whereas the real economy

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Speaker 1: and the the small immedia sides as the madcap, all

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Speaker 1: of these stocks are already there achieve. So is any

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Speaker 1: part of this next line that I'm going to deliver

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Speaker 1: not accurate? Uh read my lips. Inflation will not come

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Speaker 1: down to two to three percent, Stean Jocobson, Yeah me, yeah,

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Speaker 1: I'm going to commit to that. Like Joseph, you push

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Speaker 1: I hope he lost the election on it, didn't they.

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Speaker 1: I hope I'm not going to lose my job doing that.

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Speaker 1: But his was on raising taxes. His was on raising taxes.

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Speaker 1: But you're saying inflation is not going to get even

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Speaker 1: down to three, You're a scary man. I'm not. And

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Speaker 1: and and you know, for the REGOR it is not me.

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Speaker 1: But it's the the inability of the supply side that

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Speaker 1: the in the lack of elasticity on the supply sidversity issue.

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Speaker 1: I think we will get a number of new in

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Speaker 1: issues during your window. Because you have your member in

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Speaker 1: the commodity mark. We have to saying that in order

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Speaker 1: to get lower prices, you need higher prices. So yes,

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Speaker 1: there will be implications I can give you, like l

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Speaker 1: m G Ships, which is of course well sold. Because

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Speaker 1: of all these arbitracts between the U S and Europe

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Speaker 1: and Australia and and and the UK. There are forty

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Speaker 1: more capacity coming online over the next five years. So yeah,

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Speaker 1: in some places we're seeing improvement in the long term picture.

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Speaker 1: But what I'm saying and read my lips, is that

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Speaker 1: over the next one year and probably over the next

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Speaker 1: two years in fleation is not coming up alright, some

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Speaker 1: chilling words to him. Well, it's nice to get some

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Speaker 1: firm commitment from from your Steene Jacobson, c I O

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Speaker 1: and chief economists at Saxo Bank. Really appreciate your comments

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Speaker 1: and insight today