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Speaker 1: Let's get a man, Pretty Gale, head of f I

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Speaker 1: c C Strategy at Standard Chartered Private Bank f i

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Speaker 1: c C. That's fixed income, Currencies and commodities. Man, pret

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Speaker 1: we're looking at a big pullback in the price of

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Speaker 1: crude oil. We were down more than three percent today

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Speaker 1: in New York, and I think the market is really

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Speaker 1: braced for the Iranian supply that we've been talking about

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Speaker 1: as a result of progress that's being made toward a

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Speaker 1: renewed nuclear deal. Do you think is this is going

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Speaker 1: to have a significant impact right now, uh, warning, well,

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Speaker 1: in the short term, possibly, yes, I think on oil

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Speaker 1: we're looking at factors on both the demand and supply side.

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Speaker 1: So of course the potential for a deal, uh would

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Speaker 1: brighten the supply outlook, which has been one key constraint

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Speaker 1: for all markets or the past past several months. But

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Speaker 1: I think that's coming at a time when they're also

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Speaker 1: concerns about the demand side and just what extent that

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Speaker 1: might weaken if Chinese data remains weak and and and

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Speaker 1: you know, recession indicating the US continued flash some warning signs.

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Speaker 1: But you know, we know that oil is a volatile

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Speaker 1: commodity and in bigger sort of scheme of things unless

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Speaker 1: looking at a massive sort of demand contraction. Um. You know,

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Speaker 1: there's not been a huge amount of flexibility on the

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Speaker 1: supply side, so you know, in the short term momentum

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Speaker 1: is to the downside. You know, we're looking for a

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Speaker 1: move potential all the way down to technical support around

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Speaker 1: eighty two dollars. But looking on a little bit longer

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Speaker 1: term than that though, we're still you know, looking for

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Speaker 1: a slow and gradual grind higher. Because it's a sort

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Speaker 1: of a very sort of disparate short and long term outlook.

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Speaker 1: But I think that's really fitting through the short term

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Speaker 1: term concerns was the longer term demands by balance that

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Speaker 1: we think still remains relatively on the tighter side. Rememberably,

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Speaker 1: when it comes to these recessionary concerns, and I guess

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Speaker 1: the risk of overtightening by central banks as well, is

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Speaker 1: it kind of a cure. I guess these these recessionary

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Speaker 1: fears for reigning in inflation, Well, it's one part of it.

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Speaker 1: I mean, when you think about demand lead inflation specifically,

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Speaker 1: you know, at one level, yes, the one way to

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Speaker 1: bring down inflation is to cool demand, and that's what

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Speaker 1: we've seen in central bank policy do through cycles. UM.

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Speaker 1: But I sort of caveats with two factors this time.

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Speaker 1: I think one is that a large part of what

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Speaker 1: we're seeing is still driven by supply side UM, where

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Speaker 1: addressing supply side constraints is more important than necessarily bringing

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Speaker 1: out bringing down demand. And second it is look, we've

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Speaker 1: it's about slowing demand. Whether that leads to just a

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Speaker 1: group slow down or a milder session or something deeper,

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Speaker 1: those details can still be quite important from a market perspective. UM.

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Speaker 1: And that's the reason why you know, you know sometimes

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Speaker 1: indicates a flashing warning science. But for us, you know,

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Speaker 1: with the way we're dealing with it as investors is

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Speaker 1: more to take a balanced approach to me in equities

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Speaker 1: and bond and not sort of shift our location to

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Speaker 1: one you know, excessively barish extreme. Is it clear to

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Speaker 1: you at this point that we're seeing a major downshift

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Speaker 1: in global growth? I mean, I'm looking at the export data,

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Speaker 1: not just Japan, but Singapore. The numbers we got today

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Speaker 1: were above forecast very quickly. But I think it really

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Speaker 1: depends where. I think some of the group slowed down

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Speaker 1: in China is well known, and over there i'd really

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Speaker 1: be looking much further in the future about where policy

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Speaker 1: might take growth from here. I think of the growth

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Speaker 1: sort of risk, it's it's the u s where it

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Speaker 1: sort of keep a close st because some of the data,

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Speaker 1: like you said, is strong, but for look indicators like

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Speaker 1: the yield go art sort of sending some warding signals.

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Speaker 1: I think that's where we need to really gauge how

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Speaker 1: far good the growth slowed on me go and how

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Speaker 1: we respond as investors. So you're saying, here are preference

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Speaker 1: for Chinese equities, which hasn't changed after that surprise cut

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Speaker 1: from the PBOC on Monday. Just tell us why you're

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Speaker 1: still up based even though we've got these very strong

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Speaker 1: concerns about the continuing slowdown in China. Well, if anything,

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Speaker 1: I think that the rate card, you know, feeds into

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Speaker 1: part of the feeds into why we're still constructive on

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Speaker 1: on on the market. So if we think about Chinese China,

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Speaker 1: I think the big perspective that matters here is that

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Speaker 1: we see China at a very different point in the

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Speaker 1: economic cycle to for example, the US. I mean, the

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Speaker 1: US per central bank policy is tightening in a networt

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Speaker 1: of slow down the economy, while China's clearly seems to

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Speaker 1: be closer to a trough given how weeks Some of

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Speaker 1: the economic data is um but at the end of

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Speaker 1: the economic data, financial markets are ultimately trying to discount

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Speaker 1: the future. And where we take encouragement from is the

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Speaker 1: fact that all to see the direction of policies ultimately

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Speaker 1: uh to towards supporting, towards sort of trying to put

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Speaker 1: floor under that and trying to sort of bring stability.

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Speaker 1: And when you think through from a cyclical perspective, I mean, yes,

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Speaker 1: the recovery in economic data the group ETA usually takes time,

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Speaker 1: but as long as policy makers are successful in achieving that,

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Speaker 1: usually equity markets tend to discount that end of the fact.

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Speaker 1: And of course that comes against the backdrop of evaluations

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Speaker 1: that that we think are quite undemanding. So I think, no, no,

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Speaker 1: don't no doubt some weak economic data, but it thinks

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Speaker 1: the direction of policy that's really quite key to a view. Yeah,

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Speaker 1: but look at the COVID situation, right and the adherence

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Speaker 1: to this COVID zero policy. The administration or the leadership

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Speaker 1: is adamant about that. And look at the new credit

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Speaker 1: data for the month of July, the slowest pace since

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Speaker 1: at least twenty seventeen, so it seems to be that

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Speaker 1: under the surface that confidence is collapsing. Well, some of

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Speaker 1: those are challenges, absolutely, but I think COVID's a great

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Speaker 1: example of where look at it's a challenge is the

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Speaker 1: risk that we need to continuously keep an eye on.

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Speaker 1: But at the end of the day, you know how

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Speaker 1: much more of a negative surprises are coming up, you

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Speaker 1: know from a market perspective at least, because similar to

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Speaker 1: what we've discussed in the US, at the end of

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Speaker 1: the day is less about the absolute but more about, uh,

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Speaker 1: you know what the actual events sort of stand up

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Speaker 1: versus you know what markets expectations already are. And the

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Speaker 1: thing with COVID is, look, we've seen sort of new challenges,

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Speaker 1: but we've not seen a return of the broad lockdown

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Speaker 1: that we saw in Shanghai, you know, a few months ago,

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Speaker 1: for example. And the lesson we've learned from previous lockdowns

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Speaker 1: is the elsewhere in the world. If you go back

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Speaker 1: to twenty the first round lockdown of course a big

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Speaker 1: shock to the economy, but subsequent ones, obviously businesses and

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Speaker 1: markets becoming better and better and just working their way

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Speaker 1: around it. So not to downplay the risk but I

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Speaker 1: think it comes to the same point about you know what,

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Speaker 1: what our markets already discounting, and at the end of

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Speaker 1: the day, are weeks getting a net improvement or a

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Speaker 1: net worsening from here? And I guess we fall on

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Speaker 1: the side just off the optimists. Okay, And and if

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Speaker 1: you're falling on the side of the optimists, when do

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Speaker 1: we start to see a pickup coming through in equities

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Speaker 1: Asian US dollar bonds, which have lagged behind their peers. Well,

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Speaker 1: I think from the Asian equity side, I think are

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Speaker 1: view on China sort of the key component of that.

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Speaker 1: So I think we do start to see some of

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Speaker 1: that our performance come through. Actually, we had already started

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Speaker 1: seeing Asian equity start out perform from May. They've just

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Speaker 1: taken a bit of a back seat recently again because

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Speaker 1: of COVID, and of course we saw about of geo

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Speaker 1: politics political tensions rise once again, which we know from

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Speaker 1: longer history, you know, usually tends to be short lived.

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Speaker 1: I think on the dollar bond side, it's sort of

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Speaker 1: a similar trend. It's definitely more muted, But you know,

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Speaker 1: I think it's interesting that when you stuck up Asian

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Speaker 1: dollar bonds on a relative basis. They've still been one

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Speaker 1: of the best performing dollar bond asset classes worldwide this year,

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Speaker 1: which may not feel like it because of the soft

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Speaker 1: absolute returns, but you know, we still think that Asia

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Speaker 1: dollar bonds, which is a majority investment grade asset class, uh,

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Speaker 1: the yields on that in the region six percent are

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Speaker 1: actually quite attractive for the credit quality on offer. And

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Speaker 1: look in the higher part that you know, the clearly

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Speaker 1: gonna be some concerns from China's growth data and of

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Speaker 1: course the property sector, but we look at the broader

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Speaker 1: asset class and the yield. You know, more than mix

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Speaker 1: up for some of the risks anything is the yield,

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Speaker 1: especially if you added to a broader income basket, and

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Speaker 1: what makes it quite attractive. Man, pretty very quickly thirty seconds.

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Speaker 1: So directionally, are we expecting more weakness or are you

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Speaker 1: in the offshore Chinese you want? I think on balance

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Speaker 1: i'd be biased towards greater weakness in the short term.

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Speaker 1: I think that's the direction at least when the director

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Speaker 1: from from where interest rates are going. But I think

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Speaker 1: more of a short term technical move rather than a

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Speaker 1: longer term change in trend, because you know, we also

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Speaker 1: need to polace that against the backdrop of where the

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Speaker 1: dollar goes. If we need see the dollar turning into

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Speaker 1: more range bound or potentially even peaking, that might mean

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Speaker 1: any weakness in the UN could be relatively more short

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Speaker 1: term factor than a long term one. Alright, man, Prett

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Speaker 1: always a pleasure, Thank you man, pretty girl as ahead

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Speaker 1: of f I c C strategy at Standard charted private bank,

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Speaker 1: joining us from Singapore here on Bloomberg Daybreak Asia