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Speaker 1: Let's get to time or beg Managing director and chief

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Speaker 1: economist at DBS Bank Group Research time More. It seems

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Speaker 1: like investors and economists now are are sort of coming

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Speaker 1: to grips with the notion that growth is slowing more

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Speaker 1: than what we expected. Earnings need to be revised down,

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Speaker 1: and stock prices probably need to be revised lower as well.

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Speaker 1: Your thoughts on the general movement at the moment, Good

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Speaker 1: morning from Singapore. Yeah. I think that the last couple

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Speaker 1: of months there was this hope that we could get

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Speaker 1: Goldilocks scenario where growth slows but just a little bit

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Speaker 1: inflation slows to deter the fat from being uber hawkish,

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Speaker 1: and that combo somehow bails the global economy out from

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Speaker 1: a very tight spot. I think the last three weeks,

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Speaker 1: ever since Chair Powell made his rather tough Jackson Hole remarks,

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Speaker 1: the shifts in market sentiment are palpable. Globally. Whatever is

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Speaker 1: happening in the US and the rest of the we're

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Speaker 1: taking cues from it, and the cues are almost entirely negative,

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Speaker 1: both with respect to the Federal Reserve's desire to keep

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Speaker 1: rates high for a prolonged period of time and the

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Speaker 1: tolerance for sustainably lowered than trend growth for that duration.

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Speaker 1: So that means both from a cost of funding perspective

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Speaker 1: as well as demand for your product perspective, things are

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Speaker 1: going to be progressively worse going forward, and we're seeing

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Speaker 1: that reckoning happening around the world well the time. If

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Speaker 1: this is Stephen angle here, so how far will the

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Speaker 1: FED go this week? And the other eleven central banks

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Speaker 1: which make rate decisions, Stephen, We're not that different from

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Speaker 1: the consensus because the FED has been very clear in

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Speaker 1: its communication. So I think what we've heard from FED

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Speaker 1: governors over the last month or so make it pretty

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Speaker 1: clear that they're basically entertaining a seventi five business points right,

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Speaker 1: and I think it will be a unanimous decision. We've

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Speaker 1: seen a few sentence in the past. I think both

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Speaker 1: the hawkys members of the FED as well the devils

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Speaker 1: members of the FED all would be in the same

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Speaker 1: page for this particular meaning we expect another seventy five

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Speaker 1: points in rate hike in the next two meetings, being

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Speaker 1: fifty in November and in December. That will take us

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Speaker 1: to four terminal rate. The rest of the world will

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Speaker 1: not match the FED one for one, but they would

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Speaker 1: have to hike. So for example, you were talking with

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Speaker 1: the ECB earlier, we see two hundred points of rate

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Speaker 1: hike on their plate as well. It's tough stuff, it

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Speaker 1: really is. Uh And a whole lot of catchy phrases

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Speaker 1: sort of pop into one's mind. Power to his wife, honey,

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Speaker 1: I shrank the economy and for the FED itself. Be

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Speaker 1: careful what you wish for. However, I know that Larry

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Speaker 1: Summers giving some intellectual backing saying the FED is never

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Speaker 1: you know, gotten it wrong in an overtightening. I think

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Speaker 1: people would argue with him your thoughts. I think that

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Speaker 1: we need to think about the global dimension. The past

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Speaker 1: FED hike cycles have been difficult for the US economy.

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Speaker 1: It's been extremely difficult for the rest of the world.

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Speaker 1: And what is different from now, and let's say the

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Speaker 1: vulgar days, is the you could have a substantial fit tightening,

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Speaker 1: slowing the US economy down, slowing inflation down, and in

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Speaker 1: a year or two it all seems like a very

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Speaker 1: very good smart thing to do. But today the U

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Speaker 1: s economy is not as large as it was relis

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Speaker 1: to global GDP as it was in the eighties. To

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Speaker 1: did the rest of the world matter more on the

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Speaker 1: margin and therefore US tightening, if it spills over to

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Speaker 1: the rest of the world, it would come back to

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Speaker 1: bite the U S earnings back because very large chunk

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Speaker 1: of US company earnings are now coming from the rest

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Speaker 1: of the world. Time or let's switch gears and talk

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Speaker 1: about Asia. Obviously China seems to be going in a

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Speaker 1: different direction. They probably need to have some more easy

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Speaker 1: in store, given that the economy has been sputtering along. Uh.

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Speaker 1: You know, really, as we just heard from Erica talked about,

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Speaker 1: you know, the COVID zero policies locking down and now

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Speaker 1: being lifted in chung Do. But how much more easy

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Speaker 1: do you expect out of China or on the monetary side,

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Speaker 1: simply because the uh, the Chinese R and B is

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Speaker 1: a question mark. If trade starts to weaken around global softening,

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Speaker 1: and we have the PBUC cutting rates, what does it

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Speaker 1: mean for the currency outlook for China, especially when you

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Speaker 1: have Chinese property developers and other parts of the corporate

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Speaker 1: sector heavily indebted not just domestic creditors but also to

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Speaker 1: external creditors. So the dead crisis that's been brewing in

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Speaker 1: China would not necessarily find any relief if the R

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Speaker 1: and B were to weaken around sustain cuts from the

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Speaker 1: p v o C, so they need to take care

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Speaker 1: of their banking system. They need to help the property sector,

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Speaker 1: but probably not through outright substantial rate cuts from the

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Speaker 1: pbo C, but more through target and measures to help

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Speaker 1: debt restructuring, to help work out between banks and property developers.

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Speaker 1: And also on the fiscal side, we probably will see

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Speaker 1: quite a bit of work, so it won't be the

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Speaker 1: heavy lifting done by the FED, by the by the

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Speaker 1: PBOC the ways been done with the FED, but more

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Speaker 1: by a broader range of government agencies to support the economy.

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Speaker 1: Do you see any scope for governments around the world

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Speaker 1: to cooperate on perhaps um you know, some sort of

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Speaker 1: intervention on currencies to stabilize them. My answer would have

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Speaker 1: been no a month ago, but I think we have

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Speaker 1: reached the level, especially with the ends disorderly depreciation, that

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Speaker 1: room for some degree of talk among central bank authorities

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Speaker 1: has come. We are less than a month away from

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Speaker 1: the IMF meetings, and there would be a chance for

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Speaker 1: all of these deputies from the key global economies to

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Speaker 1: meet on the sidelines and talk about the very basic

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Speaker 1: point that a very large rate hype by the US

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Speaker 1: leads to very large US already depreciate appreciation, which then

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Speaker 1: manifests into global market currency unrest as well as typing

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Speaker 1: of financial conditions, which in turn hurts the US back.

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Speaker 1: So therefore, maybe the US doesn't need to be so

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Speaker 1: gung hole because they need needs to consider the global

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Speaker 1: ramifications and what that means for the US in return.

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Speaker 1: Um So, yeah, I think the stars aligning for that.

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Speaker 1: It looks as though Japanese authorities have been job boning

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Speaker 1: a floor to the ends fall at about one is

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Speaker 1: now one two eighty three as I speak. Do you

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Speaker 1: see the you know, if he creeps back down to one,

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Speaker 1: will there be intervention? I think the room for further

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Speaker 1: job booning is certainly there. There will be nothing done

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Speaker 1: in terms of interest rate hikes, that's out of the question.

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Speaker 1: As for the boj's concern in Japan, it's a peculiar

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Speaker 1: arrangement where the Minister Finances in charge of epics intervention

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Speaker 1: and I think that, you know, they are heading into

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Speaker 1: that territory where they're concerns about financial instability, their concerns

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Speaker 1: about Japan's trade deficit, heading into ever greater UH numbers

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Speaker 1: that would necessity that some degree of action, whether it

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Speaker 1: is just verbal, what actual intervention we'll have to see.

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Speaker 1: I mentioned that Larry summer Is, the former Treasury Secretary,

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Speaker 1: was offering he was really calling for a speed and alacrity.

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Speaker 1: But do do you do you see which scope for

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Speaker 1: a patients? Maybe because a lot of these rate cuts,

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Speaker 1: I mean, rate hikes have not been felt yet in

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Speaker 1: the economy, and yet people are getting very nervous UH.

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Speaker 1: Could patients help. I think that the FED feels that

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Speaker 1: they were a bit behind the curve and they need

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Speaker 1: to really establish or rather re establish their tough credentials

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Speaker 1: as far as monetary policy and anchoring inflation expectations is concerned,

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Speaker 1: and they I think the view is that the US

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Speaker 1: economy underlying fundamental is still pretty strong. There aren't pockets

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Speaker 1: of leverage or enterprise dislocation that could undermine the rate

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Speaker 1: high trajectory that is being communicated. I think what is

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Speaker 1: lacking right now is an appreciation of the impact on

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Speaker 1: the rest of the world and what that means for

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Speaker 1: the U. S Alright, Timer Bank m D and chief

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Speaker 1: economists at DBS Bank Group Research, Thanks so much for

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Speaker 1: your time and your insight