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Speaker 1: Our guest is Christina Hooper, chief global market strategist that

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Speaker 1: Investco Advisors, Christina on on this program. The strategists and

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Speaker 1: fund managers that we've been talking to basically pretty wary

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Speaker 1: of the rally and risk assets that we've seen of late,

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Speaker 1: but it seems like their desks are out there buying

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Speaker 1: because we've seen a pretty a pretty strong rally. I

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Speaker 1: know your position is slow down, not recession. Is that

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Speaker 1: enough to propel this thing forward? I actually think chances

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Speaker 1: are that it is. If we look at the downturn

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Speaker 1: in the SMP five hundred, really the bear market that

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Speaker 1: occurred from early January to mid June, it was similar

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Speaker 1: to the average that we've seen in terms of bear

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Speaker 1: markets since the fifties, UM and UH. And what has

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Speaker 1: really been the determining factor as to whether or not

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Speaker 1: the rally can be sustained, whether or not this turns

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Speaker 1: into UM, shall we say, a bowl market, or if

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Speaker 1: it is just a fake and it it goes down again,

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Speaker 1: is really whether or not we go into a real recession,

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Speaker 1: a full blown UM, broad based recession. And I think

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Speaker 1: that the Fed is going to be able to engineer

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Speaker 1: UH a soft dish landing I won't say soft, but

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Speaker 1: a softish landing, and I think that will be enough

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Speaker 1: um for for this stock market understood. Uh, I mean

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Speaker 1: this sort of environment Christina David here, by the way,

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Speaker 1: it's it's it's a sort of condition where you know,

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Speaker 1: we're just a bad inflation report away from just us

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Speaker 1: being back to square one. I guess the thesis here is,

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Speaker 1: do you think we're past the halfway point of the

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Speaker 1: tightening side but at least well, I don't know if

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Speaker 1: it necessarily needs to be past the halfway point of

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Speaker 1: the tightening cycle, because so much of this is psychology, right.

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Speaker 1: And if we think about what drove this stock market

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Speaker 1: this year, it was all about the FED, and it

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Speaker 1: was about um changes in expectations around the Fed, the

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Speaker 1: Fed doing something different than the market expected. I mean,

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Speaker 1: the FED made a very dramatic pivot to a more

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Speaker 1: hawkish stance before markets anticipated, and that to me was

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Speaker 1: a real catalyst to send markets down UM. And what

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Speaker 1: we could see now is a pivot to a slightly

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Speaker 1: less hawkish stance. That doesn't mean that that tightening is

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Speaker 1: anywhere near done, but if it is, if the FED

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Speaker 1: is treading a little more softly, then that could be

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Speaker 1: enough to to support the stock market. You know, we

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Speaker 1: saw a little bit of a reversal in the selling

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Speaker 1: of commodities last week until Friday, and then oil dropped

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Speaker 1: more than two percent. Is there a little bit of

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Speaker 1: irrationality and commodity markets? Oh, for sure, I think because

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Speaker 1: it is. It's it's a difficult market to really predict,

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Speaker 1: and I and I think it's just an environment in

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Speaker 1: which many investors are on edge. So you know, I'm

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Speaker 1: not surprised to see um relatively swift moves there. For

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Speaker 1: what last i'd say decade or so, market participants have

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Speaker 1: been craving yield. We now have it three point one

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Speaker 1: percent yield and offering treasuries. Should investors take advantage of

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Speaker 1: that offer? And if so, do you buy the two

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Speaker 1: year or do you buy the thirty year? Oh? Those

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Speaker 1: are great questions. Yes, I think investors should take advantage

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Speaker 1: of yield, but should be thoughtful about it. I mean,

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Speaker 1: we recognize that we're in an environment in which rates

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Speaker 1: are likely to go up. We're going to continue to

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Speaker 1: go up, so so I think right now, um, it's

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Speaker 1: time to to start adding uh some some fixed income exposure.

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Speaker 1: And I think there's there's a variety of different areas

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Speaker 1: to do, and I think the sweet spot is investment grade.

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Speaker 1: I think there's potential there, especially US investment grade right now. Um,

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Speaker 1: but there are you know, there are a variety of

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Speaker 1: different opportunities. And I don't think investors should avoid dividend

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Speaker 1: paying stocks either. Um, those those look relatively attractive. There's

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Speaker 1: still some some nice yields there. So I you know,

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Speaker 1: in terms of two versus ten, that's that's a question

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Speaker 1: for the times. I think I would. I think I

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Speaker 1: would have exposure to both. So it's tempting to think

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Speaker 1: that on the back of the drop in commodity prices

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Speaker 1: on Friday and the big rally on Wall Street, that

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Speaker 1: Asia will follow along. The problem is that if you

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Speaker 1: look here recently, Hong Kong and China stocks are down

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Speaker 1: two to three percent in the last month, while the

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Speaker 1: SMP has rallied eleven percent, and it seems to be

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Speaker 1: that China is suffering from more than just the selected

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Speaker 1: COVID lockdowns. Are you tempted to take advantage of that,

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Speaker 1: you know, disparate movement in the in the two areas

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Speaker 1: over the past month or so. Absolutely, I think there

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Speaker 1: is potential for real positive surprise UH in China, And

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Speaker 1: let's face it, UM, there has just been so much

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Speaker 1: pessimism UH, and as you pointed out, that has really

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Speaker 1: literally driven driven a great disparity and performance. UM. But

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Speaker 1: let's face it, the Chinese economy is reopening, Hong Kong

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Speaker 1: is reopening. This is an environment in which we're going

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Speaker 1: to see improving economic data. I think we're going to

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Speaker 1: see certainly improvement in retail sales, improvement in industrial production UM.

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Speaker 1: And of course we also have the tail winds of

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Speaker 1: accommodative monetary policy as well as accommodated fiscal policy. So

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Speaker 1: I think investors should be patient. I don't know if

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Speaker 1: we're going to see a turn around immediately, but this

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Speaker 1: is an overshold environment. And how does one act on

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Speaker 1: on that thesis? Is it a broad index e t F.

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Speaker 1: Is there a specific sector exposure that you want? Well,

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Speaker 1: I think you really want to be careful around property

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Speaker 1: as it as it works out, it's kinks, but I

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Speaker 1: think exposure in particular to China tech UM makes it

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Speaker 1: makes a lot of sense and as a as a

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Speaker 1: very attractive opportunity right now. Again, it's not a thesis

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Speaker 1: that that it might not play out UM in the

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Speaker 1: very near term, but I I feel, you know, this

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Speaker 1: is a very attractive entry point if someone has if

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Speaker 1: an investor has a long enough time horizon UM and

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Speaker 1: I'm thinking even just six to twelve months, I think

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Speaker 1: we would realize positive surprise. But Christina, some of the

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Speaker 1: points working against that thesis. It's not just the COVID

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Speaker 1: lockdowns and you know, hopefully they're coming out of that,

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Speaker 1: and it's not just the property sector, but it's also

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Speaker 1: the animal spirits just seemed to be gone from from consumers.

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Speaker 1: And you can kind of see that from the loans

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Speaker 1: data that we got on Friday, and seems like if

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Speaker 1: you balance out with the liquidity in the banks, there's

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Speaker 1: plenty of money there, but people are just not taking

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Speaker 1: out loans. Uh, that might be hard to turn around. Well, yes,

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Speaker 1: certainly that is not an easy UM overnight fixed. But

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Speaker 1: I do believe that there's certainly a lot of a

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Speaker 1: lot of tools in the policy arsenal that can certainly

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Speaker 1: change that. And then I think when we will see

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Speaker 1: Chinese policymakers deploy over time, some of them. So so

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Speaker 1: to me, again, I don't know if we're going to

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Speaker 1: see a change overnight. But that's okay. Um. You know

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Speaker 1: there's that old adage we want to be greedy when

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Speaker 1: others are fearful, fearful when others are greedy. Um, if

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Speaker 1: this is a time where our investors are are in

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Speaker 1: mass uh fearful Uh, that spells opportunity. Okay. On that note,

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Speaker 1: and as we look ahead to the week, in a

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Speaker 1: very big and a busy day for China today, Christina Hooper,

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Speaker 1: we thank you so much for coming on the show.

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Speaker 1: Have a great week ahead, ma'am. Chief Local Strategies. They're

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Speaker 1: at Investque Advisors,