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Speaker 1: Let's get to our guess now vision. Evathan as head

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Speaker 1: of Economics and Strategy at Missoo who Bank, joining us

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Speaker 1: on the line from Singapore. Let's start with what we're

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Speaker 1: seeing in the oil market, a little bit more steady

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Speaker 1: movement after plunging almost six percent on that demand picture,

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Speaker 1: and of course the strength that we are seeing in

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Speaker 1: the dollar. I mean, when you look at the hawkies,

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Speaker 1: central bank tones that we're getting the lockdowns in China,

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Speaker 1: what is the picture for the creed market? But it

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Speaker 1: does look like crude prices will be most sensitive to

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Speaker 1: any demand cues that come through like we saw overnight. Nevertheless,

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Speaker 1: you know, absent any fresh demand cues to the downside, particularly,

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Speaker 1: what I think would come about from the creup market

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Speaker 1: is price stickiness on the way down. So whilst we

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Speaker 1: see other commodities softening a lot more, oil could turn

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Speaker 1: out to be a lot stickier, primarily because of the

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Speaker 1: geopolitical backdrop as well as moves by the all back

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Speaker 1: class very very strongly suggesting UH that they would take

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Speaker 1: action to back stop, including if an Iran deal comes through.

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Speaker 1: So these uh, you know, these these indicators of the

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Speaker 1: crowd market suggest to us that the the stickier prices

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Speaker 1: are now the more violent corrections, and these locations can

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Speaker 1: be further out a lot of the sickness, as you say,

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Speaker 1: coming into the commodities market and driving up these price pressures.

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Speaker 1: What do you think we're going to hear from J.

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Speaker 1: Powe in terms of I guess trying to hold some

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Speaker 1: of these higher prices, and I guess that the likelihood

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Speaker 1: that we're going to see a devilish pivot is is

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Speaker 1: very very slim. Oh yeah, I mean I'm inclined to

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Speaker 1: think so for for most of the markets that have

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Speaker 1: been used to uh, you know, either for the more

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Speaker 1: extreme perceptions double speak from from Power or for the

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Speaker 1: more measured ones, uh, you know, template statements. Jackson Hole

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Speaker 1: was a bit of a revelation because it didn't mince words,

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Speaker 1: unequivocal in in every sense. I think it makes sense that,

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Speaker 1: you know, a commentary from J. Power will be quite

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Speaker 1: consistent with what we saw at Jackson Holle uh and,

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Speaker 1: and I think the emphasis will be on two things.

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Speaker 1: One is, the job is not done yet, even if

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Speaker 1: inflation starts decelerating, simply given how much higher inflation is

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Speaker 1: above ideal levels. Uh And and the second one would

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Speaker 1: be even if the job is deemed done uh, and

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Speaker 1: probably above four percent levels, it will remain. Therefore, sometimes

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Speaker 1: I think these two would be the main statements even

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Speaker 1: if markets I think found joy in Bernard's allusion to,

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Speaker 1: you know, a potential pivot some way down the road.

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Speaker 1: We were just hearing the news as well that she

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Speaker 1: Jumping and Vladimir Putin are going to meet in person

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Speaker 1: for the first time since the start of the war

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Speaker 1: in Ukraine. Amidst all of what we're saying with hawkish

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Speaker 1: central banks, that the downturn in the economy, how much

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Speaker 1: does this just add to these pressures too? And I

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Speaker 1: guess how concerned are you about a global downturn? I

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Speaker 1: would be increasingly scarned for for two reasons. One is

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Speaker 1: the geopolitical picture and and and even within China, the

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Speaker 1: political uh landscape as such that uh, you know, economic

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Speaker 1: incentives are not top most political incentives are, and they

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Speaker 1: come out at the cost of economic recovery. So that's

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Speaker 1: that's one. The other is in so far that Presidency

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Speaker 1: expresses uh, you know, unchecked support for for Russia, UH,

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Speaker 1: then the geopolitical situation could worsen. UH. Supply side shocks

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Speaker 1: could remain and that would lead us to a recession.

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Speaker 1: Do we actually see China here significantly relaxing the dynamic

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Speaker 1: zero policy after the Party Congress. Our suspicion is that

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Speaker 1: they will discernibly begin to relax, But I don't think

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Speaker 1: it's going to be a distinct one of them. Rather

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Speaker 1: we think it would probably be quite fast. Uh And

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Speaker 1: and over the course of at least the first half

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Speaker 1: of next year. I mean, one reason is up you turn,

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Speaker 1: would be for the lack of a better term, a

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Speaker 1: loss of face, given how recently presidency has been doubling

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Speaker 1: down on the zero COVID policy. But there there is

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Speaker 1: a sense amongst those worried about the economy that something

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Speaker 1: needs to change, and and so we think those changes

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Speaker 1: will start taking place late this year. When it comes

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Speaker 1: to the currency, and this is something we're watching across

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Speaker 1: Asia with this strong dollar. Why is seven you know

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Speaker 1: so significant? We know we're seeing very strong moves by

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Speaker 1: the PBOC to try and rein in this weak currency,

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Speaker 1: but there's also the thought that maybe they'll allow it

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Speaker 1: to depreciate further. In terms of I guess trying to

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Speaker 1: guide some of these moves that you're seeing in the economy.

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Speaker 1: That's that's a good question. So that's that's certainly a

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Speaker 1: somewhat some dichotomy between managing the room and beyond a

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Speaker 1: trade weated basis versus UH, you know, being very wary

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Speaker 1: of psychological levels such as seven UH. And one reason

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Speaker 1: for that could be, you know, we've seen seen pretty

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Speaker 1: sharp moves, not all entirely on the part of the

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Speaker 1: Room and B you know, partly driven by the dollar,

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Speaker 1: but nevertheless really sharp moves. And so there may be

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Speaker 1: a fear that you know, getting past psychological levels could

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Speaker 1: see a lot of speculative interest piling in leading to

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Speaker 1: capital outflows, not unlike twenty fifteen twenty sixteen type of

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Speaker 1: you know, China crisis sell off. So I think pre

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Speaker 1: empting that with that with that kind of a stitch

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Speaker 1: in time attitude maybe one reason. The other even on

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Speaker 1: a trade weighted basis, whilst it remains fairly elevated well

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Speaker 1: above the eighteen levels of the rooman B near, the

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Speaker 1: fact is that in the last three two to three

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Speaker 1: months that the rooman B has UH you know, pulled

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Speaker 1: back quite significantly from even on trade weighted level levels.

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Speaker 1: So I think there is a more distinct move to

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Speaker 1: temper that uh to perhaps put across the point that

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Speaker 1: they're not totally hands off. It's not just the one

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Speaker 1: you've got the one at this thirs in year low

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Speaker 1: we saw a record for the pay so yesterday you've

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Speaker 1: got the yen plunge of course as well. At these levels.

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Speaker 1: How much of a concern is that we could see

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Speaker 1: another Asian currency crisis? It is not insignificant. I think,

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Speaker 1: you know, it depends on two things that take place.

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Speaker 1: One is really a huge dollar wave, bullish dollar with

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Speaker 1: inconveniently raising uh, you know, inflation risks, thereby compounding the

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Speaker 1: sell off and then feeding back into you know, factual

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Speaker 1: reserve cash. But that is one thing that can set

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Speaker 1: off a really bad spiral. I think the authorities are

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Speaker 1: very worried about that. And the other is perhaps through

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Speaker 1: the credit channels. Given that nations across e m S,

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Speaker 1: particularly across e M S particularly are more indebted after COVID,

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Speaker 1: any negative credit repulse would also be another huge concern.

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Speaker 1: So really, this this bullish dollar strength, it will not

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Speaker 1: be just taken as a byproduct off hawky ish fat.

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Speaker 1: It has gotten metro stability implications. Let's talk about the

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Speaker 1: europe picture when we talked about the global recession worries.

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Speaker 1: But yesterday you had the Euro trying to get back

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Speaker 1: to that parity level. But what are you expecting from

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Speaker 1: the ECB? And if we do see this record seventy

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Speaker 1: five basis point high, does that even help the Euro

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Speaker 1: that much? I think it will boil down to the

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Speaker 1: rhetric behind what the ECB is doing. Uh. And and

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Speaker 1: to to your point, even a slightly more hawkish rhetric

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Speaker 1: with the seventy five basis point move, may not be

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Speaker 1: sufficient for the Euro to sustainably regain traction because as

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Speaker 1: the um you know, energy shocks have become a bigger

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Speaker 1: issue in fiscal strains grow, Fragmentation risks also start to

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Speaker 1: become very accentuated. And under these conditions, uh, you know,

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Speaker 1: ECB heights may do very little to restore confidence in

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Speaker 1: the Euro. About twenty seconds left. Whereas I guess the

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Speaker 1: best place to be amidst all this global economic downturn

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Speaker 1: everyone's saying, an is that right? Is it Singapore? Where

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Speaker 1: we are? I think Singapore is safe for now, but

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Speaker 1: you know, a global recession will not spare Singapore. And

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Speaker 1: a global recession means very few safe places, so that's

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Speaker 1: just how things pan out, I suppose alright. Vision always

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Speaker 1: great to chat to you, Vision of Vera than head

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Speaker 1: of Economics and Strategy at Missooh Bank, on the line

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Speaker 1: from Singapore for US here on Bloomberg Daybreak Asia