1 00:00:00,080 --> 00:00:02,759 Speaker 1: Let's get to our guests. Carol Schlife Cio at Bimo 2 00:00:02,920 --> 00:00:06,840 Speaker 1: Family Office. Carol, I want to ask you about China. 3 00:00:06,960 --> 00:00:09,560 Speaker 1: I know the FED is on a lot of people's minds, 4 00:00:09,560 --> 00:00:12,400 Speaker 1: but we had this incredible action here in the past 5 00:00:12,480 --> 00:00:15,840 Speaker 1: twenty four hours, and I think there's a burning question here. 6 00:00:15,880 --> 00:00:20,880 Speaker 1: So we had the protests and then the huge police presence, 7 00:00:21,160 --> 00:00:26,400 Speaker 1: and then yesterday China striking a conciliatory tone, the comments 8 00:00:26,400 --> 00:00:30,040 Speaker 1: that we got from the health authorities. How real is this? 9 00:00:30,160 --> 00:00:34,320 Speaker 1: Is this the party reacting to what they saw and 10 00:00:34,400 --> 00:00:37,400 Speaker 1: deciding to give a little or is it just another 11 00:00:37,479 --> 00:00:42,680 Speaker 1: example of carrot and stick. Uh. It's a great question. 12 00:00:42,760 --> 00:00:47,400 Speaker 1: They've got a really fine needle to thread, because it's 13 00:00:47,640 --> 00:00:52,000 Speaker 1: very important that they look supportive, if you will, of 14 00:00:52,040 --> 00:00:56,760 Speaker 1: continuing to do business to entice businesses there, especially their 15 00:00:56,760 --> 00:01:01,480 Speaker 1: relationship with Taiwan. And yet it's got to be very 16 00:01:01,560 --> 00:01:05,640 Speaker 1: trying for the leadership because they want the authoritarian control 17 00:01:05,640 --> 00:01:11,480 Speaker 1: over what's going on there. So hopefully it allows some 18 00:01:11,600 --> 00:01:15,080 Speaker 1: changes for people. Clearly, the global markets want to see 19 00:01:15,200 --> 00:01:19,440 Speaker 1: China loosen the zero COVID policy, because every time there's 20 00:01:19,480 --> 00:01:22,839 Speaker 1: even hints at that, the global markets rally, especially those 21 00:01:23,240 --> 00:01:26,880 Speaker 1: all important technology shares. But it's going to be really 22 00:01:26,920 --> 00:01:31,520 Speaker 1: interesting to watch. Do the actions on the ground match 23 00:01:31,800 --> 00:01:37,760 Speaker 1: what some of the burbage out has has indicated so far. Yeah, 24 00:01:37,800 --> 00:01:41,720 Speaker 1: it's an interesting question whether or not you put money 25 00:01:41,720 --> 00:01:44,680 Speaker 1: to work in China at the moment. There's certainly plenty 26 00:01:44,680 --> 00:01:47,680 Speaker 1: of uncertainty, but plenty of upside as well. How are 27 00:01:47,680 --> 00:01:54,600 Speaker 1: you judging the situation. We're continuing to remain pretty balanced 28 00:01:54,600 --> 00:01:58,920 Speaker 1: overall in our portfolios, and US centric in the portfolios 29 00:01:58,920 --> 00:02:02,360 Speaker 1: because there's the US stocks are on sale this year 30 00:02:02,400 --> 00:02:05,400 Speaker 1: as well, and not as badly as a lot of 31 00:02:05,400 --> 00:02:09,440 Speaker 1: the international stocks. But there's a lot of fundamental support 32 00:02:10,000 --> 00:02:13,880 Speaker 1: underneath things here. Even though you're seeing layoffs in the 33 00:02:13,919 --> 00:02:16,760 Speaker 1: tech sector, you've also got a lot of fiscal stimulus 34 00:02:16,800 --> 00:02:21,040 Speaker 1: headed into the markets that's been earmarked but not necessarily 35 00:02:21,080 --> 00:02:25,160 Speaker 1: spent yet. We've had strong capital spending. We've got a 36 00:02:25,200 --> 00:02:27,480 Speaker 1: lot of strengths in a lot of key industries, and 37 00:02:27,520 --> 00:02:30,120 Speaker 1: we've got to turn in some where some of that 38 00:02:30,160 --> 00:02:33,400 Speaker 1: growth is going to happen to in the next couple 39 00:02:33,400 --> 00:02:35,959 Speaker 1: of years to longer term, and so there's a lot 40 00:02:36,000 --> 00:02:39,280 Speaker 1: to be excited about in US markets, and so I 41 00:02:39,320 --> 00:02:42,880 Speaker 1: think We're choosing to take our equity risk there more 42 00:02:42,960 --> 00:02:47,359 Speaker 1: so than UM going neutral weight, even we remain underweight 43 00:02:47,440 --> 00:02:50,960 Speaker 1: and developed in recal markets. Carol, We've got a big 44 00:02:51,000 --> 00:02:54,760 Speaker 1: speech coming up from the Fed. J pal Um. We 45 00:02:54,800 --> 00:02:58,639 Speaker 1: are expecting a pivot too, slightly smaller interest rate increases 46 00:02:58,639 --> 00:03:01,000 Speaker 1: of fifty basis points. But do you get a sense 47 00:03:01,040 --> 00:03:03,320 Speaker 1: we're starting to talk about fifty basis points like it's 48 00:03:03,320 --> 00:03:05,360 Speaker 1: no big deal. I mean, there was still a lot 49 00:03:05,400 --> 00:03:08,000 Speaker 1: of tightening to come fit. Officials have been reminding us 50 00:03:08,040 --> 00:03:10,239 Speaker 1: of that this week. And with that in mind, you 51 00:03:10,360 --> 00:03:12,560 Speaker 1: mentioned u S stocks are on sale, but have we 52 00:03:12,600 --> 00:03:15,440 Speaker 1: found the floor yet? Is there a bit of value 53 00:03:15,440 --> 00:03:19,680 Speaker 1: to come? Well? The interesting thing is is the market 54 00:03:19,760 --> 00:03:22,360 Speaker 1: all year has been trying to fight the Fed because 55 00:03:22,480 --> 00:03:25,400 Speaker 1: Jeremy and Paul has been very consistent all year in 56 00:03:25,520 --> 00:03:29,760 Speaker 1: talking about wanting to get inflation down. And you had 57 00:03:29,760 --> 00:03:32,720 Speaker 1: the FED governors come out over the last week or 58 00:03:32,720 --> 00:03:36,880 Speaker 1: so and reiterate that issue about higher for longer and 59 00:03:36,960 --> 00:03:40,040 Speaker 1: not necessarily at seventy five basis points. If you told 60 00:03:40,040 --> 00:03:42,360 Speaker 1: the market back in January that they were going to 61 00:03:42,400 --> 00:03:45,880 Speaker 1: do four seventy five basis points in a row, I mean, 62 00:03:46,080 --> 00:03:48,640 Speaker 1: the decline would have been a lot more serious and 63 00:03:48,680 --> 00:03:52,000 Speaker 1: a lot quicker because nobody expected it, and so it 64 00:03:52,120 --> 00:03:55,400 Speaker 1: is a little interesting for people to call up it 65 00:03:55,760 --> 00:03:59,680 Speaker 1: a pivot potentially to only fifty basis points. But I 66 00:03:59,760 --> 00:04:01,720 Speaker 1: think the thing that the Fed is trying to make 67 00:04:01,840 --> 00:04:04,160 Speaker 1: very clear, and probably part of the reason why he's 68 00:04:04,200 --> 00:04:06,520 Speaker 1: all light trading today because no one wanted to get 69 00:04:06,520 --> 00:04:09,640 Speaker 1: in front of the comments tomorrow, was that he will 70 00:04:09,680 --> 00:04:15,000 Speaker 1: probably reiterate this concept of fifty basis points and maybe 71 00:04:15,040 --> 00:04:19,279 Speaker 1: another our our host expectation is fifty basis points and 72 00:04:19,480 --> 00:04:23,320 Speaker 1: followed by basis point increases and then holding there for 73 00:04:23,400 --> 00:04:26,520 Speaker 1: some length of time. We don't at this point expect 74 00:04:26,560 --> 00:04:29,119 Speaker 1: to see any cuts in twenty three, and that would 75 00:04:29,600 --> 00:04:32,479 Speaker 1: surprise the market, I suspect, because the market keeps trying 76 00:04:32,520 --> 00:04:34,440 Speaker 1: to infer that the Fed is going to cut in 77 00:04:34,520 --> 00:04:39,000 Speaker 1: twenty three. The markets always seemingly binary in this. It's 78 00:04:39,000 --> 00:04:42,320 Speaker 1: either he's you know, he's he's more hawkish or he's 79 00:04:42,360 --> 00:04:44,919 Speaker 1: less hawkish, and and so it's like it reminds me 80 00:04:44,960 --> 00:04:46,680 Speaker 1: of to tell the truth, you know, well the real 81 00:04:47,080 --> 00:04:50,480 Speaker 1: to your own paler, please stand up. And so so 82 00:04:50,680 --> 00:04:53,000 Speaker 1: do you think that he because we have to look 83 00:04:53,000 --> 00:04:57,520 Speaker 1: at his emphasis. Does he emphasize more that there's a 84 00:04:57,640 --> 00:05:00,479 Speaker 1: moderation in the pace, or does he emphasis is more 85 00:05:01,279 --> 00:05:05,040 Speaker 1: that there's a lot more work to be done. I 86 00:05:05,080 --> 00:05:09,880 Speaker 1: think he'll I think he'll mention the moderation in the pace, 87 00:05:10,000 --> 00:05:12,560 Speaker 1: and he'll lean into again the fact that there is 88 00:05:12,560 --> 00:05:15,000 Speaker 1: a lot of work to be done. But I wouldn't 89 00:05:15,040 --> 00:05:17,560 Speaker 1: be surprised if he starts pointing to some of the 90 00:05:17,600 --> 00:05:21,160 Speaker 1: hopeful signs that they're seeing. The housing market is backed 91 00:05:21,200 --> 00:05:26,880 Speaker 1: off um freight prices notwithstanding a potential railroad strike, but 92 00:05:27,000 --> 00:05:30,600 Speaker 1: freate prices have come down, the ports are clearing up. 93 00:05:30,600 --> 00:05:33,520 Speaker 1: There's things on the goods side that are making sense, 94 00:05:34,440 --> 00:05:38,479 Speaker 1: and but the stickiness right now is on the services side. 95 00:05:38,480 --> 00:05:41,880 Speaker 1: And the demand for services, as we saw over the 96 00:05:41,960 --> 00:05:45,760 Speaker 1: holiday weekend here, the demand for services as opposed to 97 00:05:45,800 --> 00:05:49,880 Speaker 1: goods is really high. So while deflation in in the 98 00:05:50,000 --> 00:05:53,839 Speaker 1: rate of it's not deflation, but a lessening rate in 99 00:05:53,920 --> 00:05:58,000 Speaker 1: the rate of increase in goods is important, it's not 100 00:05:58,080 --> 00:06:01,240 Speaker 1: going to be felt as much. And if Fred's going 101 00:06:01,279 --> 00:06:03,720 Speaker 1: to watch that, because the Fed really wants to see 102 00:06:03,760 --> 00:06:07,400 Speaker 1: some leveling in the overall rate, what's your case for 103 00:06:07,400 --> 00:06:10,240 Speaker 1: the dollar going ahead? Because the pace of rate hikes 104 00:06:10,279 --> 00:06:12,760 Speaker 1: likely to ease from the FED, but still a lot 105 00:06:12,839 --> 00:06:16,760 Speaker 1: of uncertainty out there globally speaking, as there's still some 106 00:06:16,839 --> 00:06:19,719 Speaker 1: haven demand to be had for the U. S. Dollar. Yeah, 107 00:06:19,760 --> 00:06:22,320 Speaker 1: I think there is some haven and there's a lot 108 00:06:22,320 --> 00:06:26,279 Speaker 1: of strength relative to other economies in the US economy too, 109 00:06:26,279 --> 00:06:29,240 Speaker 1: So it's going to continue to attract capital. Not the 110 00:06:29,360 --> 00:06:31,320 Speaker 1: least of which is even if you you know, if 111 00:06:31,360 --> 00:06:35,440 Speaker 1: you're a European manufacturer and you've got more consistent energy 112 00:06:35,520 --> 00:06:38,240 Speaker 1: supplies and closer to your consumer over here, you're going 113 00:06:38,279 --> 00:06:43,799 Speaker 1: to think about putting constructing constructing facilities here and expanding 114 00:06:44,440 --> 00:06:47,280 Speaker 1: capabilities in the United States. So that's going to keep 115 00:06:47,320 --> 00:06:50,799 Speaker 1: the dollars strong and keep attracting capital into the US 116 00:06:50,880 --> 00:06:54,400 Speaker 1: as well. All Right, Carol Schlife, we will have to 117 00:06:54,480 --> 00:06:56,640 Speaker 1: leave it there. Thanks for joining us on Bloomberg Daybreak 118 00:06:56,680 --> 00:07:01,200 Speaker 1: Asia though. Carol Schlife is c IO at BMO Emily Office.