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Speaker 1: Our guest is Sean Callow, senior currency strategist at Westpac. Sean,

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Speaker 1: looking at your notes, I I see that you are

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Speaker 1: engaging risk tolerance here. The Bank of America fund manager

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Speaker 1: survey had some colorful language, and it's talking about how

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Speaker 1: the environment screams macro capitulation, investor capitulation, and the start

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Speaker 1: of policy capitulation. The firm expects stocks to bottom in

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Speaker 1: the first half of next year. For you, is that

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Speaker 1: too late, too early? Oh? Well, it's a disturbing outlook,

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Speaker 1: that's for sure. We think that that really you're not

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Speaker 1: going to get a sustained rise in sentiment until you've

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Speaker 1: at least got a an indication of when the Fed

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Speaker 1: can see either pause or at least a slowdown in tightening,

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Speaker 1: when it starts to see core inflation easing back, and

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Speaker 1: when perhaps we get some brighter signs out of China's economy.

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Speaker 1: So that's probably at least until the first quarter next year,

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Speaker 1: but on on our base case, it's probably not much

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Speaker 1: later than that, so maybe just early three. Let's just

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Speaker 1: talk about the dollar here, Sean, because it is certainly

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Speaker 1: the story of the year currency wise, and it's relentless

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Speaker 1: strength and it does come against the backdrop of a

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Speaker 1: federal reserve which got more and more hawkish, and I guess,

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Speaker 1: you know, if markets price in some six months ahead,

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Speaker 1: they may well have priced in all the hawkishness, so

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Speaker 1: we'd be at peak hawkishners, so over your peak dollar. Yeah, Look,

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Speaker 1: pricing certainly a big part of it. I mean, for

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Speaker 1: what we do see in terms of the the futures

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Speaker 1: pricing and dollar positioning there it probably could extend a

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Speaker 1: bit further. But so the question I guess is that

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Speaker 1: I definitely would expect that the dollar would would roll

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Speaker 1: over pretty substantially if we do get an indication that

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Speaker 1: the Fed can see that the rate tightening cyclists getting

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Speaker 1: close to the peak. But then then of course you

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Speaker 1: still have the reality of them. Do you actually want

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Speaker 1: to be short the dollar and and long something like

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Speaker 1: the Japanese Yeah, that's a lot of carrie, that's a

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Speaker 1: lot of a lot of yield to give up while

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Speaker 1: you're waiting for the dollar to roll over. So there

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Speaker 1: will definitely be a lot of caution, and particularly with

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Speaker 1: the specific macro negatives of currencies such as the euro,

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Speaker 1: which is probably in recession and obviously sterling uh in

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Speaker 1: recent weeks. It's really been a story about Sterling and

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Speaker 1: absolutely hammered by the well, I guess the dog's breakfast

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Speaker 1: that has been British politics. Now give us a sense

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Speaker 1: of whether we've now perhaps got seen the worst for Sterling.

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Speaker 1: It's training on about one dot. Look, I think we

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Speaker 1: probably have in terms of that brief low the one

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Speaker 1: oh three fifty that was a bit of a panic

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Speaker 1: pedic spike down I think, so it's star stabilizing now

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Speaker 1: and that you think that there may be there there

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Speaker 1: is a bit of bargain hunting even in terms of

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Speaker 1: assets that people getting a chance to to pick up

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Speaker 1: some UK assets, property, what have you, at at a

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Speaker 1: very cheap cheap level. But in terms of the macro

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Speaker 1: picture it's still extremely difficult. So we're clearly waiting to

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Speaker 1: see what the Bank of England will come up with there.

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Speaker 1: They're so far, absolutely far above there. They're an inflation target.

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Speaker 1: We'll get new inflation numbers today looking for about ten headline,

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Speaker 1: so it's pretty awful. They haven't been super quick to

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Speaker 1: tighten policy, so they've probably probably got to do some

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Speaker 1: more catch up there. So it's just such a very

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Speaker 1: difficult macro environment and the Bank of England's flag and recession.

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Speaker 1: So I would really be selling into these rallies and

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Speaker 1: I'd be surprised if it doesn't drop below one ten

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Speaker 1: pretty soon. M If you look at the recent bounce

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Speaker 1: in in um in sentiment over getting a little taken on,

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Speaker 1: a little bit more risk you rescuers is part of it.

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Speaker 1: But as you say, that's probably not too sustainable. The

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Speaker 1: other aspects are oversawled conditions as well as seasonality. They

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Speaker 1: may not be all that sustainable either. There's been some

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Speaker 1: positive over the earning season. Do you think that might

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Speaker 1: be sustainable? Yeah, look, I'm probably not the best person

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Speaker 1: on the earnings season specifically, but but what I certainly

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Speaker 1: would say looking at the economics and the fundamentals of

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Speaker 1: the the US economy is that recession talk remains very

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Speaker 1: much a forecast. I don't know a few weeks ago

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Speaker 1: that people say, oh, already in recession, and here here

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Speaker 1: it is. The US is creating, but the jobs numbers

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Speaker 1: still very solid. The services sector is really quite quite robust.

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Speaker 1: So yes, it's very difficult conditions, but in terms of

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Speaker 1: the actual growth pulse of the economy, I think that's

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Speaker 1: pretty pretty helpful. But the Atlanta Fed GDP estimate for

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Speaker 1: Q three running it too two point eight percent growth,

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Speaker 1: So then that has to be at least supportive for

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Speaker 1: to a certain degree for profits. Okay, And you know

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Speaker 1: when you when you look at the other parts of

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Speaker 1: the currency space, what are you liking and what are

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Speaker 1: you not? In a very general sense, look, I make

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Speaker 1: sure term the key we has the momentum after the

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Speaker 1: CPI yesterday, but in general we we um. We do

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Speaker 1: like like the U. S. Dollar broadly. I know that's

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Speaker 1: a popular view. I think it's too soon to call

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Speaker 1: the peak. But beyond that, in terms of some of

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Speaker 1: the cross rates, to try to leave the dollar out

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Speaker 1: of it, we think the Assie is starting to get

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Speaker 1: quite cheap on some of the cross rates. So we're

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Speaker 1: still really quite bearish on the Euro. In terms of

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Speaker 1: the winter ahead, we don't think that they're the European

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Speaker 1: economy is is really prepared for the energy squeeze. I

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Speaker 1: think that keeps rolling on and that the the euro

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Speaker 1: euro performs against the Assie as I say Sterling as well,

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Speaker 1: and in Australia's case. In general, I think we're just

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Speaker 1: still still expect that there's more to play out in

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Speaker 1: terms of um the energy squeeze and that the net

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Speaker 1: energy exporters like Australia will will end up rallying over

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Speaker 1: the next few months. President she mentioned security one times

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Speaker 1: in his speech on Sunday, compared to just sixtymensions of

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Speaker 1: the economy, So bet against bet against the currency there, Yeah, well,

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Speaker 1: you could certainly be be betting against the economy. I

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Speaker 1: would say, I'm whether the currency is the best way

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Speaker 1: to do that, and I doubt I think it's probably

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Speaker 1: more for for equity. So so it's very hard to

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Speaker 1: be to be boolish the Chinese equity earnings over the

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Speaker 1: next few few months. I'm given that that attitude. But

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Speaker 1: the currency itself, remember, is still on a very tight

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Speaker 1: leash from the central Bank, Thank you so much. Sure,

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Speaker 1: and Sean Color they've seen your currency, trying to just

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Speaker 1: to west Bag getting his take on currencies in the market.