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Speaker 1: Let's get to Christina Hooper. She's our guest for the

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Speaker 1: half hour. Christina is the chief global market strategist at

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Speaker 1: Investco Advisers. She joins from Greenwich, Connecticut. Christina, thanks for

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Speaker 1: being with us. We were talking earlier about Leo Brainerd

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Speaker 1: kind of laying the foundation here for maybe an adjustment

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Speaker 1: in the size of rate hikes. Not to say that

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Speaker 1: the FETE is going to stop raising rates, but the

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Speaker 1: magnitude of these increases will be modulated somewhat fair statement.

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Speaker 1: I think that's very fair. She told us what we

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Speaker 1: had been expecting, right, that we are very likely to

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Speaker 1: get fifty basis points in December, But then she managed

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Speaker 1: expectations around what's to come afterwards. I think there's an

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Speaker 1: assumption that a pause would come soon. Um, but she

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Speaker 1: seemed to suggest we could just be getting multiple bite

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Speaker 1: size rate hikes. Um. Going well into not a huge

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Speaker 1: amount of specificity, but certainly trying to set the stage

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Speaker 1: for not ending and tightening very soon. Well, Christina, Okay,

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Speaker 1: the reason why we're not talking about less aggression is

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Speaker 1: because of that inflation print that we got last week.

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Speaker 1: The thing is that was slightly more benign than anticipated.

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Speaker 1: The thing is we could we are we are at

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Speaker 1: a crossroads, one could argue, and if we get a

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Speaker 1: very strong reading next time along, Yeah, and it's it's more,

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Speaker 1: you know, it's strong with than expected inflasion, that we

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Speaker 1: could see quite the reverse in terms of what happens

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Speaker 1: on these these financial markets. Oh absolutely. And we heard

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Speaker 1: something like that coming from Chris Waller this weekend, which

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Speaker 1: was the market seems to get way out in front um.

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Speaker 1: This is one data point, and I think that is very,

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Speaker 1: very much the case. We all like to believe that

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Speaker 1: it is the beginning of a trend um, but we

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Speaker 1: won't know that until it's in the rear view mirror.

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Speaker 1: And this isn't just a story about inflation. It's also

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Speaker 1: a story about inflation expectations. They need to cooperate and unfortunately,

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Speaker 1: UM there has been a slight uptick up upward UM

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Speaker 1: in the last couple of months UM, both for the

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Speaker 1: New York Fed reading as well as Michigan for longer

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Speaker 1: term inslation expectations. And that's certainly not what the FED

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Speaker 1: wants to see. The FED doesn't want to see higher equities,

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Speaker 1: to which I think is fair right part of tightening

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Speaker 1: financial conditions means lower stock. So anytime there's a bit

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Speaker 1: of you fouri that seems to build in markets, the

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Speaker 1: FED is very quick to kind of pour some cold

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Speaker 1: water on that. But when you look at the labor market,

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Speaker 1: interesting development today, Amazon planning to cut about ten thousand jobs.

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Speaker 1: We know that FedEx is putting up some employees on furlough,

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Speaker 1: signs of maybe a softer holiday season. Very quickly in

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Speaker 1: twenty seconds or we begin to seeing the labor markets

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Speaker 1: start to to soften a bit. I think we are

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Speaker 1: the The issue though, is that it is such an

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Speaker 1: extremely tight labor market, so that could take a while.

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Speaker 1: Although cutting job open and jobs at the same time

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Speaker 1: will help reduce labor mobility and put down the pressure

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Speaker 1: on christ. What's your biggest concern right now? Well, my

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Speaker 1: biggest concern is that the market gets ahead of itself. Um.

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Speaker 1: We talked a little bit about this before that we

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Speaker 1: get into a situation in which um, the said actually

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Speaker 1: feels as though it needs to reign in tighten more

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Speaker 1: um than it otherwise would have because markets became just

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Speaker 1: so frothy. Um And and I worry about that because

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Speaker 1: it would be an unnecessary prolonging of rate heights. And

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Speaker 1: and would hander our ability to get to the end

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Speaker 1: of the rate tightening and and see an economic recovery unfold.

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Speaker 1: Speaking of economic recovery, looks as though Beijing took some

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Speaker 1: steps last Friday to try to address that issue for

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Speaker 1: the Chinese economy with the relaxation of some controls not

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Speaker 1: only for the property market but for COVID policy as well.

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Speaker 1: Is it too soon to put new money to work

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Speaker 1: in China? I don't think it's too soon. It really

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Speaker 1: hasn't been too soon since we saw valuations get very attractive.

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Speaker 1: Now understand, I understood that valuations are rarely, if ever

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Speaker 1: predictive in the shorter term um, but um valuations the

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Speaker 1: cyclically adjusted pees uh really attractive for Chinese equities relative

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Speaker 1: to history, relative to other countries. UH. So, So that

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Speaker 1: to me was when it was time to start thinking

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Speaker 1: about it, and so it's still is time to be

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Speaker 1: thinking about and perhaps even adding to China equities. I

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Speaker 1: think there's a lot of upside potential, especially when since

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Speaker 1: sentiment has just been so negative and a long term

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Speaker 1: or short term is one part of my question. The

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Speaker 1: other one is actually, uh, is it time to become

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Speaker 1: less defensive as well? Elsewhere. So I don't know. I

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Speaker 1: don't think it's time just yet. I think, well, it's

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Speaker 1: certainly time to be thinking about the potential for m

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Speaker 1: the stock market UM to get UM more positive. Uh,

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Speaker 1: It's certainly a time to be thinking about a recovery

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Speaker 1: regime unfolding for markets UM. But I do believe we're

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Speaker 1: going to seem more than just one data point with

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Speaker 1: regard to c P. I. I think we're going to

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Speaker 1: need to seek confirmation from inflation expectations. So it's going

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Speaker 1: to take a little time before we know if this

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Speaker 1: really is something of a turning point for inflation, and

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Speaker 1: the said can be a lot more comfortable about hastening

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Speaker 1: the end of tightening. Speaking of turning points, I think

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Speaker 1: the market has been captivated by this meltdown that we

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Speaker 1: have seen in the crypto space, not only in currencies

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Speaker 1: but in some of these crypto exchanges as well. Take

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Speaker 1: a step back, Christine, to put this in context. Is

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Speaker 1: this significant in the way that it can impact market

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Speaker 1: psychology or is this Hey, it's not a big surprise.

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Speaker 1: We knew it was a big asset bubble. It's time

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Speaker 1: to deflate it and move on. Well, I think taking

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Speaker 1: a step back, we recognize that this is not the

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Speaker 1: first time, and in fact, this isn't the biggest time

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Speaker 1: we've seen something like this happen. It is a risk

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Speaker 1: in the crypto space, especially since so many really don't

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Speaker 1: understand the mechanics of how one can buy and hold

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Speaker 1: and and um you know where the vulnerabilities are UM

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Speaker 1: with whatever platform you're using to access cryptos. Do I

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Speaker 1: think it turns away investors? Well, certainly some will be

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Speaker 1: will be shaken by this. Others won't because it's not

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Speaker 1: about the crypto specifically, it's about the the exchanges. Uh So,

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Speaker 1: so I don't think this is a death blow by

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Speaker 1: any stretch of the imagination, but I do think it

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Speaker 1: will create UM a level of caution among some investors. Well. Absolutely,

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Speaker 1: And it's quite right as well here because I mean,

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Speaker 1: we've had several blow ups so far this year. The

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Speaker 1: question is that would another one, not I mean on

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Speaker 1: the scale of FTX, possibly not, but another one which

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Speaker 1: had garnered media attention could really put the deathknew into

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Speaker 1: all this. Well, I'm not sure that that any other

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Speaker 1: blow up could put a death Knew into into this. UM.

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Speaker 1: This really does seem to have just you know a

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Speaker 1: broad level of appeal um but but it certainly will

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Speaker 1: uh air more investors and and make more be far

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Speaker 1: more conscious. Christine, don't thank you so much for joining,

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Speaker 1: as always a pleasure of the Christina Hoopo, the chief

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Speaker 1: global market strategist and investo, advises