1 00:00:00,000 --> 00:00:03,000 Speaker 1: To get to our guest, Charo Chanana, market strategist at 2 00:00:03,000 --> 00:00:07,400 Speaker 1: Saxo Capital Markets. Charo enjoyed looking at your notes, and 3 00:00:07,440 --> 00:00:09,400 Speaker 1: I was thinking back to yesterday when I was reporting 4 00:00:09,440 --> 00:00:12,520 Speaker 1: on the I S M services number. We all know 5 00:00:12,560 --> 00:00:15,640 Speaker 1: what the bearer cases here and aggressive fed slowing growth 6 00:00:15,680 --> 00:00:18,799 Speaker 1: and recession possibly coming, but that's not the story that 7 00:00:18,840 --> 00:00:20,800 Speaker 1: the market is telling. So I want to put a 8 00:00:20,880 --> 00:00:22,840 Speaker 1: question to you that kind of looks at the many 9 00:00:22,920 --> 00:00:26,720 Speaker 1: combinations for growth and inflation. They can both be rising, 10 00:00:27,200 --> 00:00:29,560 Speaker 1: they can both be falling. You can have one up 11 00:00:29,560 --> 00:00:32,040 Speaker 1: and the other down or the reverse of that. But 12 00:00:32,120 --> 00:00:34,960 Speaker 1: the one that works for the equity market, the sweet 13 00:00:35,000 --> 00:00:40,040 Speaker 1: spot is inflation falling while growth hangs in there, and 14 00:00:40,080 --> 00:00:42,479 Speaker 1: we're actually seeing a glimpse of that at the moment. 15 00:00:42,520 --> 00:00:48,040 Speaker 1: Can it continue? Hi, good morning, UM, Thank you for 16 00:00:48,120 --> 00:00:50,920 Speaker 1: having me. Yes. I think that's a very good point. 17 00:00:51,040 --> 00:00:55,279 Speaker 1: There are a range of permutations there in terms of 18 00:00:55,680 --> 00:00:59,160 Speaker 1: how the growth outlook is and the inflation outlook is. 19 00:00:59,240 --> 00:01:05,000 Speaker 1: But you know, between this recessionist versus inflationist camp, we've 20 00:01:05,080 --> 00:01:08,360 Speaker 1: been off the view um for a good number of 21 00:01:08,400 --> 00:01:11,880 Speaker 1: months and I think still uh going forward as well. 22 00:01:13,040 --> 00:01:16,759 Speaker 1: We do think that the inflation concerns will continue to linger. 23 00:01:17,240 --> 00:01:20,280 Speaker 1: We are in an environment where there is a lack 24 00:01:20,319 --> 00:01:25,920 Speaker 1: of physical assets. Uh, the energy crisis is only getting worse. Um. 25 00:01:25,920 --> 00:01:28,560 Speaker 1: You know, so going from here as well, we do 26 00:01:28,640 --> 00:01:31,959 Speaker 1: see inflation being the main concern now. To address that 27 00:01:32,040 --> 00:01:35,520 Speaker 1: inflation problem, of course, the central banks are trying to 28 00:01:35,640 --> 00:01:39,120 Speaker 1: kill demand and that will show in the economic growth numbers. 29 00:01:39,160 --> 00:01:43,720 Speaker 1: That is the whole objective of monetary tightening, right. Uh, 30 00:01:43,800 --> 00:01:46,800 Speaker 1: So again, you know, to to summarize, I think our 31 00:01:46,880 --> 00:01:50,600 Speaker 1: view is still that inflation will continue to remain higher. Uh, 32 00:01:50,680 --> 00:01:52,600 Speaker 1: it is unlikely it will go back to the two 33 00:01:52,600 --> 00:01:55,200 Speaker 1: to three percent levels that the US is used to, 34 00:01:56,080 --> 00:01:59,600 Speaker 1: which we will mean some demand destruction, some growth slow down, 35 00:01:59,840 --> 00:02:02,800 Speaker 1: but it will be more measured. And so what kind 36 00:02:02,840 --> 00:02:05,000 Speaker 1: of I guess volatility or ratic moves do you think 37 00:02:05,080 --> 00:02:07,640 Speaker 1: we will expect in markets when we're looking ahead as 38 00:02:07,640 --> 00:02:09,959 Speaker 1: well to these key data points like the U s 39 00:02:10,000 --> 00:02:14,040 Speaker 1: cp I figure and the jobless rate. So you know, 40 00:02:14,080 --> 00:02:18,440 Speaker 1: the volatility could have been controlled had we had some 41 00:02:19,200 --> 00:02:22,280 Speaker 1: better guidance from the Fed. But the July meeting, as 42 00:02:22,320 --> 00:02:26,040 Speaker 1: we've seen, you know, the FED has completely given away 43 00:02:26,240 --> 00:02:30,320 Speaker 1: um on providing any forward guidance. So that certainly means 44 00:02:30,360 --> 00:02:33,120 Speaker 1: that the volatility is going to rise from here because 45 00:02:33,560 --> 00:02:36,240 Speaker 1: every data point that we get from the US or 46 00:02:36,400 --> 00:02:40,400 Speaker 1: every FED speaker will be scrutinized to its best extent 47 00:02:40,880 --> 00:02:43,040 Speaker 1: um in order to kind of get more light on 48 00:02:43,080 --> 00:02:46,639 Speaker 1: the future part of federates. Our senses that the markets 49 00:02:46,680 --> 00:02:51,320 Speaker 1: are underprising um expectations on the federate hikes uh and 50 00:02:51,520 --> 00:02:54,560 Speaker 1: on the terminal rates. Uh So, I mean we continue 51 00:02:54,600 --> 00:02:56,320 Speaker 1: to watch for that. You know, there is a fair 52 00:02:56,400 --> 00:02:59,799 Speaker 1: chance that inflation might have peaked, but again, I think 53 00:02:59,800 --> 00:03:03,320 Speaker 1: it's going to be important to look for signs um 54 00:03:03,360 --> 00:03:06,919 Speaker 1: about the pace of the acceleration from there, how fast 55 00:03:06,960 --> 00:03:08,880 Speaker 1: it can go down and how low it can go 56 00:03:09,160 --> 00:03:12,000 Speaker 1: for this cycle. Then, do you think we've potentially reached 57 00:03:12,000 --> 00:03:15,240 Speaker 1: Paike oil? I think in the short term, yeah, we 58 00:03:15,280 --> 00:03:18,240 Speaker 1: are likely to see more downside pressures because you know, 59 00:03:18,280 --> 00:03:22,720 Speaker 1: with these demand concerns uh now have been aggravated by 60 00:03:22,919 --> 00:03:26,880 Speaker 1: the Bank of England actually outright calling the recession as 61 00:03:26,880 --> 00:03:29,160 Speaker 1: well as the e c B as well last night, 62 00:03:29,880 --> 00:03:33,480 Speaker 1: giving us some downbeat projections and growth. Uh So, I 63 00:03:33,480 --> 00:03:36,440 Speaker 1: think the focus is likely to shift towards demand and 64 00:03:36,800 --> 00:03:40,360 Speaker 1: the supply side, with the reserves being released in Libya's 65 00:03:40,360 --> 00:03:44,280 Speaker 1: production back. Also, I think that is looking a bit 66 00:03:44,320 --> 00:03:47,200 Speaker 1: better in the short term. So um yeah, we possibly 67 00:03:47,280 --> 00:03:50,520 Speaker 1: could see more downside pressures in the near term. So 68 00:03:50,560 --> 00:03:52,680 Speaker 1: yours is a little bit of a dark view about 69 00:03:52,800 --> 00:03:57,400 Speaker 1: about growth globally. I can cite this world Chip sales 70 00:03:57,560 --> 00:04:01,080 Speaker 1: growth decelerated for six straight month. I would seem to 71 00:04:01,120 --> 00:04:04,360 Speaker 1: suggest that we've got some strain on the global economy, 72 00:04:04,400 --> 00:04:06,800 Speaker 1: but that's just me. What do you look at the 73 00:04:06,840 --> 00:04:10,280 Speaker 1: most closely to decide whether or not we're turning a corner? 74 00:04:12,040 --> 00:04:15,120 Speaker 1: I think if you specifically talk about the US, I 75 00:04:15,160 --> 00:04:17,880 Speaker 1: am actually looking at the labor market very closely, and 76 00:04:17,920 --> 00:04:21,200 Speaker 1: of course we do have the NFP numbers due today. 77 00:04:21,720 --> 00:04:27,760 Speaker 1: Um again, lagging, isn't that a lagging indicator? Absolutely, it 78 00:04:27,880 --> 00:04:30,760 Speaker 1: is a lagging indicator, But you know, it also gives 79 00:04:30,800 --> 00:04:35,320 Speaker 1: us a sense about the things that the central banks 80 00:04:35,320 --> 00:04:37,760 Speaker 1: are looking at right and in terms of the decisions 81 00:04:37,760 --> 00:04:40,880 Speaker 1: they are taking and their decisions of what the um, 82 00:04:40,920 --> 00:04:42,960 Speaker 1: you know, the economy is going to face in the 83 00:04:43,000 --> 00:04:46,640 Speaker 1: near future. Uh. And also the wage growth that is 84 00:04:46,680 --> 00:04:49,200 Speaker 1: that is the more important aspect from the job's data, 85 00:04:49,360 --> 00:04:51,760 Speaker 1: which of course you know kind of gives us a 86 00:04:51,800 --> 00:04:53,920 Speaker 1: sense of the money that is exactly in the hands 87 00:04:54,000 --> 00:04:56,719 Speaker 1: of the American consumers, and that is a very good 88 00:04:56,760 --> 00:05:01,240 Speaker 1: signal of forward inflation or consumption patterns. Cherry, I know 89 00:05:01,279 --> 00:05:03,719 Speaker 1: you also look quite closely at India. We are expecting 90 00:05:03,760 --> 00:05:06,720 Speaker 1: to say, a hike from the r v I today 91 00:05:06,760 --> 00:05:09,240 Speaker 1: if we get I guess a little bit too devilish 92 00:05:09,320 --> 00:05:10,880 Speaker 1: coming through from the board, What does that mean for 93 00:05:10,920 --> 00:05:15,280 Speaker 1: the route which is already holding at these lows, Um, 94 00:05:15,320 --> 00:05:18,200 Speaker 1: I think it would be hard for the RBI to 95 00:05:18,360 --> 00:05:21,080 Speaker 1: stay da wished now, with inflation having been such a 96 00:05:21,080 --> 00:05:24,960 Speaker 1: problem over the last three years actually, and the global 97 00:05:25,000 --> 00:05:28,080 Speaker 1: tightening wave that we've been seeing, I think it is 98 00:05:28,160 --> 00:05:31,800 Speaker 1: time for emerging Asian central banks also to catch up 99 00:05:31,800 --> 00:05:35,640 Speaker 1: with that tightening wave that we've been seeing, even though 100 00:05:35,680 --> 00:05:38,640 Speaker 1: that might mean, of course some pressure on their currencies. 101 00:05:39,400 --> 00:05:42,719 Speaker 1: But yeah, I think that being said, I think, I 102 00:05:42,720 --> 00:05:46,200 Speaker 1: mean we should rather be prepared for more Hockeyish than 103 00:05:46,240 --> 00:05:50,000 Speaker 1: expected ARBIA rather than a da Wish one. So let's 104 00:05:50,040 --> 00:05:51,840 Speaker 1: say I got a million dollars I want to put 105 00:05:51,920 --> 00:05:55,760 Speaker 1: to work, UM, what what's your strongest conviction here at 106 00:05:55,760 --> 00:05:59,800 Speaker 1: the moment or what should I do with this money? Um? Yeah, 107 00:06:00,040 --> 00:06:03,480 Speaker 1: I think it's probably a good idea to kind of 108 00:06:03,480 --> 00:06:06,120 Speaker 1: hold off for now because our senses uh you know 109 00:06:06,240 --> 00:06:09,120 Speaker 1: that you we might say, see some sideways action in 110 00:06:09,160 --> 00:06:12,599 Speaker 1: the equity markets over the next month or so. Um, 111 00:06:12,640 --> 00:06:15,920 Speaker 1: But like I, you know, referred to earlier, I think 112 00:06:15,920 --> 00:06:19,679 Speaker 1: markets are miss pricing fair expectations and when that realization 113 00:06:19,800 --> 00:06:24,760 Speaker 1: comes through, when we understand that there are a significant 114 00:06:24,880 --> 00:06:27,320 Speaker 1: number of more rate heights to come in the US, 115 00:06:27,440 --> 00:06:30,520 Speaker 1: that could mean the next uh you know, shoot to 116 00:06:30,640 --> 00:06:35,360 Speaker 1: drop for the equity markets, particularly even for this earning season. Actually, um, 117 00:06:35,400 --> 00:06:38,920 Speaker 1: you know, companies have reported better than feared results, but 118 00:06:39,560 --> 00:06:42,400 Speaker 1: uh you know, it's hard to imagine that that could 119 00:06:42,480 --> 00:06:46,760 Speaker 1: continue because um, you know, hired uh prices are eating 120 00:06:46,760 --> 00:06:49,520 Speaker 1: into the margins. So you know, these two things combined 121 00:06:49,600 --> 00:06:53,080 Speaker 1: into the end of September could certainly mean the next 122 00:06:53,440 --> 00:06:56,080 Speaker 1: leg down in the equity markets, and that would possibly 123 00:06:56,120 --> 00:06:58,880 Speaker 1: give you some good entry points. Just a very quick 124 00:06:58,880 --> 00:07:01,040 Speaker 1: but on what you're saying here in Singapore, I mean 125 00:07:01,080 --> 00:07:03,679 Speaker 1: DBS saying yesterday they're not too worried about the China 126 00:07:03,720 --> 00:07:09,760 Speaker 1: contagent story. Um, I think we would be cautious, um, 127 00:07:09,960 --> 00:07:13,160 Speaker 1: you know, of the situation developing further I think our 128 00:07:13,200 --> 00:07:17,240 Speaker 1: sensors that in terms of a military conflict, um, I 129 00:07:17,280 --> 00:07:20,560 Speaker 1: think everybody knows that a lot is at stake, so 130 00:07:20,640 --> 00:07:24,080 Speaker 1: we probably won't get too far out there. But it 131 00:07:24,200 --> 00:07:27,960 Speaker 1: is more a question of how this shapes out strategically. 132 00:07:28,120 --> 00:07:31,880 Speaker 1: And you know, China having learned from the Russia Ukraine 133 00:07:31,960 --> 00:07:34,640 Speaker 1: story as to how it can choke the global markets 134 00:07:34,680 --> 00:07:37,280 Speaker 1: like the Russia Russia did. In terms of commodities, I 135 00:07:37,320 --> 00:07:40,760 Speaker 1: think all charity Janana market strategies, from sexo capital markets 136 00:07:40,800 --> 00:07:42,240 Speaker 1: from Singapore, this is Bloomberg