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Speaker 1: Let's get to our guest, Steven In his managing partner

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Speaker 1: at s PI Asset Management. So, Stephen, the calibrate comment

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Speaker 1: was kind of pushed aside a little bit today because

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Speaker 1: you have this big number coming tomorrow and if you

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Speaker 1: look at pp I today, at number tomorrow is probably

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Speaker 1: going to be a little scary. Um. However, the calibrate

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Speaker 1: comment is still there. And what if this number isn't

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Speaker 1: quite so hot? What does that mean? Well, you know,

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Speaker 1: the markets very much in the data dependent mode, and

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Speaker 1: I could imagine for a great degree the FED will

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Speaker 1: be also, but well, one softer note, change the tone

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Speaker 1: in the markets right now. That might be a bit

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Speaker 1: too much to ask, but it will certainly take a

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Speaker 1: lot of heat off off of the risk off narrative

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Speaker 1: I think we have right now. I think arguably rates

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Speaker 1: volatility are driving um stock market volatility. Of course, a

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Speaker 1: lot of that is getting driven by the UK as

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Speaker 1: set and meltdown, but also if we look around the

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Speaker 1: U S, a lot of the US rate high narrative

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Speaker 1: is getting pressured by higher fed, higher fed, higher fed.

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Speaker 1: So I think any sign that we're plateaung on inflay,

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Speaker 1: and given that inflation is the FEDS big narrative right now.

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Speaker 1: I think that could be okay for risk not great.

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Speaker 1: I think it could be okay. I think we'll need

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Speaker 1: to see consecutive runs of weaker, weaker inflation data and

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Speaker 1: as you say, a FED pivot a distant memory. But

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Speaker 1: we're looking potentially to a fit pool. Is when does

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Speaker 1: that happen? And I guess, just to your point about

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Speaker 1: what we saw in the UK as well, how much

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Speaker 1: is central bank credibility on the line at the moment? Yeah, well,

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Speaker 1: you know, the markets are already testing medal, uh, this

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Speaker 1: intervention medal. I mean we saw in Japan um breaking

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Speaker 1: the line in the theoretical line in the stand of

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Speaker 1: the intervention level on the on the end um, we're

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Speaker 1: seeing it in the UK. But I think, you know,

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Speaker 1: there's so much intervention and they're pretty much you know, prevented.

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Speaker 1: They didn't pull the rug from under the pension funds

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Speaker 1: UM and that was a good thing in the UK.

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Speaker 1: And I think there's probably a semblance that the Bank

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Speaker 1: of England knows what pension funds have on the book

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Speaker 1: here and the market is a little bit more relaxed

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Speaker 1: going into the last day of the buybacks, but I

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Speaker 1: still think there's gonna be a lot of fireworks there. Hence,

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Speaker 1: I think there's gonna be a lot of fireworks continuing on.

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Speaker 1: And the rates volatility. Just look at the move index

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Speaker 1: is trading up, you know, one sixty, and these are

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Speaker 1: these are unheard of levels, um you know, for for

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Speaker 1: for bond markets. Obviously, if the bond markets aren't calm,

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Speaker 1: it's indicating some dysfunction and broader markets. And I think

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Speaker 1: this is why investors are are are worried here. And look,

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Speaker 1: I don't even think an easy and yields is necessarily

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Speaker 1: going to bring back your typical investors. Sure the machines

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Speaker 1: will kick in, but your longer term typical type investors

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Speaker 1: will be very, very reticent to come back in the market,

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Speaker 1: especially in macro volatility so high, and this just ongoing

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Speaker 1: to multi we see in markets. Whether it's from geopolitical

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Speaker 1: concerns or whether it's from hockeage FED that's the problem.

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Speaker 1: So we're looking ahead to the Party Congress in China

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Speaker 1: on the weekend and what kind of policy pivot we

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Speaker 1: might see there with regards to COVID. But when it

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Speaker 1: comes to the p BOC, do you think they could

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Speaker 1: potentially preserve room for a policy rate cut amid the

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Speaker 1: global recession risk. Well, I honestly think, um, that's one

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Speaker 1: of the release valves that the market has right now. Um.

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Speaker 1: You know, outside of a FED pivot, we could probably

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Speaker 1: look towards China for either fiscal or some sort of

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Speaker 1: policy measure, but I do believe it's a little bit

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Speaker 1: unlikely right now. I think they're more focused on the

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Speaker 1: domestic landscape, so we may see targeted rate cuts that

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Speaker 1: apply specifically to um to internal values, not necessarily rate

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Speaker 1: cuts on the broader scale that are going to improve

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Speaker 1: global centers. So what I'm looking more for is these

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Speaker 1: you know, perhaps around housing, perhaps around infrastructure, that are

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Speaker 1: really geared towards domestic concerns, not necessarily international concerns. I

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Speaker 1: think what we're hearing is the buzz is that there

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Speaker 1: may be a change apology shift, but not in the

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Speaker 1: way that people think that it will be more like

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Speaker 1: towards national security at the expense of economic growth, and

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Speaker 1: that they will lower down you know, the sort of

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Speaker 1: quote unquote economic development number one priority. UM. So that

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Speaker 1: that's something that will definitely be watching out for. On

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Speaker 1: the practical side, as we look at risk colorants and

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Speaker 1: buying stocks in such investment. Um, do good dividend stocks

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Speaker 1: look less attractive now given that their yields are actually

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Speaker 1: lower now than what even sovereigns are. Yeah, I mean

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Speaker 1: everything looks unattractive right now, and that's the problem. Um,

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Speaker 1: we're in this type of market, and I think that's

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Speaker 1: harping back to the rates of volatility, yields pressing higher,

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Speaker 1: and that really plays negatively into what you just correctly

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Speaker 1: alluded to the dividend stocks where you payouts are actually

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Speaker 1: lower than what you can get from yields and let

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Speaker 1: alone the equivalent credit rating UM yields that you could

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Speaker 1: get for similar stocks. And this is part of the

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Speaker 1: problem that we're that we're seeing in markets for seeing

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Speaker 1: a widening in those credits spreads, were seeing a race

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Speaker 1: hiring yields, and this is also causing a lot of

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Speaker 1: negativity through the broader markets. We talked about the global

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Speaker 1: recession fears and certainly had the I m F this

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Speaker 1: week as well, downgrading global growth forecast. What does the

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Speaker 1: oil picture look like? As we've seen a little bit

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Speaker 1: of steadiness in that market, but they slow down concerns

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Speaker 1: potentially offsetting some of the supply cuts we're getting from OPEC. Yeah,

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Speaker 1: it is. You know, It's like oil is one of

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Speaker 1: those assets where anytime you get some bad news, market

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Speaker 1: goes into cell mode. And we've got back to back

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Speaker 1: to back bad news, China lockdowns, we had the i

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Speaker 1: m F and obviously OPEC last night came out and

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Speaker 1: downgraded their growth and demand forecast. Not expected, unexpected, mind you,

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Speaker 1: because they did cut production. But I still look at

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Speaker 1: oil being able to lift up here. I think the

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Speaker 1: production cut was quite significant by OPEC. I think where

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Speaker 1: the next major catalyst is going to come from, despite

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Speaker 1: threat of reserves from the US coming back, perhaps increase

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Speaker 1: in NOPEC legislation would be the return of China moving

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Speaker 1: out of this COVID sitch, COVID UH, COVID lockdowns and

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Speaker 1: COVID repressive policy perhaps as we enter three and this

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Speaker 1: could be a big boost for medium term oil or

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Speaker 1: oil prices. I guess my biggest curiosity even from you,

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Speaker 1: is whether or not you see enough signs of inflation

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Speaker 1: coming down to be at all optimistic going forward. And

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Speaker 1: we've talked about shipping prices and commodities and used cars

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Speaker 1: and inventories getting bloated. Is it enough to have some

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Speaker 1: optimism or no? Yeah, this these are good things. Um,

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Speaker 1: you know, we have to see a continuation and that

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Speaker 1: the worrying aspect is the jobs report, for as one

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Speaker 1: of the key metrics that the Federal Fed reserves uses

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Speaker 1: in this sort of implies that demand is still fairly

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Speaker 1: strong in the US markets because jobs are still strong,

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Speaker 1: But we have to see a continuation of the froth

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Speaker 1: coming off the inflation side of the market, particularly the core.

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Speaker 1: I think on the overall side here, I think we've

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Speaker 1: seen that significant drop in gasoline prices, which is really

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Speaker 1: going to help out the bigger picture as far as

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Speaker 1: the broad CPI, but as the core prices that markets

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Speaker 1: are still concerned about and because the Fed is still

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Speaker 1: concerned about, so we have to keep an eye on those.

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Speaker 1: Always a pleasure, Stephen, Thank you. Steven and s is

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Speaker 1: managing partner at s Bisset Management with us on the

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Speaker 1: line from Bangkok. He Bloomberg Daybreak Asia