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Speaker 1: Let's get to our guest. Ben Emmons joins us Ben

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Speaker 1: as Managing director of Global macro Strategy at Medley Global Advisors.

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Speaker 1: He joins from l A, Ben, thanks for being with us.

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Speaker 1: It's always a pleasure. So much to unpack here, but

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Speaker 1: I want to begin with the end because we've seen

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Speaker 1: a pretty dramatic reversal from the strengthening that occurred Friday

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Speaker 1: here in New York after the Japanese authorities stepped in

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Speaker 1: and to prop up the currency. The f T is

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Speaker 1: I'm sure you're well aware of saying, Uh, it looks

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Speaker 1: like the Bank of Japan spent nearly thirty billion and

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Speaker 1: that seems to be uh, kind of a failed attempt here.

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Speaker 1: How do you make of the situation right now or

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Speaker 1: what do you make of it? Yeah, Doug, I think

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Speaker 1: you're right, like it's you know, it's quickly reversing towards

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Speaker 1: one fifty. You know that was the last cent to

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Speaker 1: when they started to make a lot of chatter on

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Speaker 1: that's maybe where they would do something. By the way,

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Speaker 1: the stuty billion dollars, if that's correct, it's actually larger

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Speaker 1: than the previous intervention in September, and the pattern looks

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Speaker 1: exactly the same as in September. Right, you get this

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Speaker 1: spiked to higher level those at at that time one

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Speaker 1: forty six and a huge rally to towards one forty

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Speaker 1: at that time. Same sort of a whipsal move you see. Now,

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Speaker 1: So I think the currency markets just testing the bo

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Speaker 1: Jane and administry finance out see what more firepower will

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Speaker 1: come from here? And so it will be the ongoing games.

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Speaker 1: So and as as the festpee comes out, yes, there

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Speaker 1: maybe some debate about slowing great has down what we're

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Speaker 1: getting COPC this week. Everybody will be watching that. That

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Speaker 1: could actually put a lot of pressure US rates and

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Speaker 1: thereby again week in the end. But surely, ben I

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Speaker 1: mean going out and intervening in the FX markets to

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Speaker 1: support the yen at the moment is a bit like

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Speaker 1: making a teapot out of chocolate, given that the fundamentals

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Speaker 1: actually remained the same. And to the thing is, you're

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Speaker 1: going to go back to the same position. Surely, yeah,

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Speaker 1: that's the intervention. Uh, you know problem so to speak

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Speaker 1: here issus Indeed true if you intervene, but you have

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Speaker 1: weak fundamental securrency market was right back to the point

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Speaker 1: of intervention. Therefore, you know, the move that we had

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Speaker 1: to one fifty two was not really in under shooting

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Speaker 1: and overshooting fundamentals that matter. It's just reflecting fundamental So

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Speaker 1: you're right about that, and that remains an issue for

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Speaker 1: the end that there's also ano our aspect, it is

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Speaker 1: that within Japan there's a leniency towards this weekend that

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Speaker 1: it's actually a good for coal, for profits, it helps

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Speaker 1: the economy with exports and new steps of ideas. So

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Speaker 1: I think Mark is very wary here that, yeah, you

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Speaker 1: could try to intervene to slow down the base appreciation,

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Speaker 1: but you cannot stop the depreciation. So we may we

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Speaker 1: may well we visit again one fifty two to the dollar.

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Speaker 1: And much of this is, you know, ben as a

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Speaker 1: result of dollar strength. And here we had in the

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Speaker 1: States on Friday, San Francisco fed the President Mary Daily

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Speaker 1: suggesting maybe it's time to begin planning, not doing, but

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Speaker 1: planning for a reduction in the size of rate hikes

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Speaker 1: very quickly thirty seconds or so in this segment that

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Speaker 1: do you think it's premature of that to be this gust.

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Speaker 1: It will always be discussed, that's always on the table,

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Speaker 1: that that that idea, but it's probably premature. Given the

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Speaker 1: nature of inflation, that data come out on Friday will

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Speaker 1: be really critical. I think if it is too strong again,

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Speaker 1: there will be no debate about slowing rate hikes. So

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Speaker 1: pretense moment on Friday, I think ahead of us. Then

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Speaker 1: let's take a look at the UK. Your latest missive

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Speaker 1: is entitled salad Days. Well, it's not exactly that in

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Speaker 1: the UK, is it. It's not a part of a

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Speaker 1: that's a youth and inexperienced etcetera, etcetera. It's the Lettuce

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Speaker 1: story really here, which is about the only reference you

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Speaker 1: can make with salad. But it's more like groundhold day only.

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Speaker 1: And that's a good one, right the uh yeah, I

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Speaker 1: think you know amazing that that as Boris Johnson couldn't

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Speaker 1: get enough backing. You know, you actually did the right

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Speaker 1: thing too quickly, not go you know, try to push

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Speaker 1: that forward. So we should shuldn't actually going to be

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Speaker 1: the next prime minister and we're gonna go back to

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Speaker 1: our stairding. And he does have the credibility I think

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Speaker 1: with the markets on that front, and Jeremy Hunt just

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Speaker 1: endorse him through the telegraph that that's just out now.

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Speaker 1: So I think that the effect on markets will be

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Speaker 1: relatively limited at least maybe want to supportive for the pound,

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Speaker 1: and guilt Hills will probably say lower or stabilize, so

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Speaker 1: no effect there been from there. He will is going

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Speaker 1: to face some really difficult choices to get through Parliament

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Speaker 1: a a you know, a star the plan right in

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Speaker 1: order to maneuver the economy. And it's in the real

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Speaker 1: tilspin the economy too, so he's not in an easy

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Speaker 1: position for that matter. But it's amazing that he he's

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Speaker 1: been able to make his is uh is in roads

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Speaker 1: to primary Saffle. Yeah, we're going to go through a

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Speaker 1: tuple a couple of tough months for the British economy.

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Speaker 1: Inflation is above eleven percent and obviously as we enter

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Speaker 1: the colder months of the year where energy is going

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Speaker 1: to be a huge problem. Give me our outlook for

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Speaker 1: for the UK economy right now, Beneah, I'd say contraction.

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Speaker 1: So it's fallen already in recession and it does have

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Speaker 1: very much like at least a quarter of the two

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Speaker 1: quarters of that contraction coming significantly through. It will be

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Speaker 1: the first test case on how then inflation may may

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Speaker 1: start to ease there as a result of higher unemployment

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Speaker 1: because any no other major developed economy has yet to

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Speaker 1: deal with that, right, there's only very minor changes yet

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Speaker 1: in the underlying transportick United States, we still have a

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Speaker 1: pretty strong quarter now. So, but there's also a case

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Speaker 1: of where you do have a form of stagflation, meaning

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Speaker 1: like you have much higher inflation and contracting economy with

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Speaker 1: obviously the risk of high uneployment. So yeah, it's not

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Speaker 1: a good outlook unfortunately. But can you really tackle inflation

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Speaker 1: without significantly reduced in growth and also by consequence elevating unemployment. Yeah,

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Speaker 1: there's almost no choice in order to go to do

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Speaker 1: it that way. Um, but I do think that the

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Speaker 1: you know, in the case of the Bank of England,

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Speaker 1: they will catch up now towards the fat they will

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Speaker 1: I think put in several major rate hikes at least

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Speaker 1: seventy five to maybe a hundred that that that will

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Speaker 1: be delivered because the previous turmoil during the trust fiscal plans,

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Speaker 1: really we can depend so much that has immediately effect

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Speaker 1: on inflation so so and it will affect again growth

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Speaker 1: and you know the Bank of Investor meet that their

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Speaker 1: mandate for that matter. But to your point, it's it

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Speaker 1: is to be seen right to what extent a week

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Speaker 1: or a negative growth two is going to bring that

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Speaker 1: inflation rate down. It's still very in the open. So Benning,

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Speaker 1: about the minute we have left here, I'm curious to

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Speaker 1: get your take on what you heard coming out of

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Speaker 1: the Party Congress. Uh. Pretty much, she's solidifying full control

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Speaker 1: over the party, the economy. I mean, everything is under

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Speaker 1: his thumb, all of us. And I think you know

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Speaker 1: you see the reaction markets Kearney is nothing about geopolitics

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Speaker 1: and uncertainty and that sort of thing. Right, It more

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Speaker 1: looks like there's a continuation. It's a big shuffle of power,

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Speaker 1: but that in itself doesn't have too much of of

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Speaker 1: of an impact on markets as yet. But people obviously

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Speaker 1: will look at this that from here, really will this

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Speaker 1: zero COVID policy truly stay in place? And this new leadership,

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Speaker 1: It didn't seem to be too clear from this. It

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Speaker 1: looked to me more like shuffling right at the moment.

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Speaker 1: So Um. On the other hand, it's also about the

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Speaker 1: reopening of the economy. They will move forward with that,

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Speaker 1: although there's been some rumors that there will be certain

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Speaker 1: parts of Beijing again lockdown temporarily. So I think that's

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Speaker 1: the take from it. It's a it's a continuation with

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Speaker 1: him as a center, and that the geopolitical consequences as

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Speaker 1: you see put in originally reaching out to him, will

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Speaker 1: be coming forth from here in the next number of

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Speaker 1: months for that that new leadership means for for the world.

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Speaker 1: So yeah, that's what we can conclude at the moment.

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Speaker 1: Always a pleasure taking so much for joining his Ben

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Speaker 1: that Sir Ben Emmons, Managing Creative Global micro Strategy at

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Speaker 1: Medley Global Advisors,