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Speaker 2: Joining us now for further discussion of the FED and
Speaker 2: markets is Vincent Signerella, Bloomberg macro strategist Vince. Great to
Speaker 2: have you with us here on the program. So the
Speaker 2: FED took a pretty dramatic step here in cutting by
Speaker 2: fifty basis points, but then it signaled that it's not
Speaker 2: in a hurry to do more. So that's a kind
Speaker 2: of balancing. It seems like their messages we're fine tuning here,
Speaker 2: we're not panicking, we're not doing anything too dramatic. Is
Speaker 2: that the message that the market is reading.
Speaker 3: Yeah, I would say that's the best of the equity
Speaker 3: market is reading. I'm not so sure that market is
Speaker 3: taking it the same way the equity guys. It was
Speaker 3: a really volatile session. I have to say, I'm not
Speaker 3: sure if your listeners saw what happened after the or
Speaker 3: got a feel for what happened after two o'clock. But
Speaker 3: the volatility was extraordinary. We surged, we went read, we
Speaker 3: went back to the levels after the announcement, then went
Speaker 3: read again. It was absolutely all over the place. But
Speaker 3: the one thing that stayed tried and true with that,
Speaker 3: Yale stayed higher. So I kind of always leaned towards
Speaker 3: the fixed income guys as a former FX trader, being
Speaker 3: smarter than we are, and I look to them for guidance.
Speaker 3: And the guidance I get from the fixed income market
Speaker 3: is We're going to wait and see what the data says,
Speaker 3: the same way Powell says, we'll wait to see what
Speaker 3: the data says.
Speaker 1: Evin's One of the things that I was hearing during
Speaker 1: the day is that Poulll was essentially making up in
Speaker 1: going fifty today, making up for the fact that they
Speaker 1: decided to do nothing in July. Is that plausible, do
Speaker 1: you think?
Speaker 4: Yeah?
Speaker 3: I mean he mentioned that, he mentioned that they could
Speaker 3: have gone in July, but he passed over that very
Speaker 3: quickly and just said we could have gone, but we didn't,
Speaker 3: And he didn't really give a lot of color in that.
Speaker 3: I think you know, it would have been maybe a
Speaker 3: little bit better received from the fixed income market if
Speaker 3: they did twenty five basis points. In July did twenty
Speaker 3: five basis points. Now, the good news is that the
Speaker 3: warry going into this about the last two weeks was
Speaker 3: that if he went fifty it would be perceived as
Speaker 3: a bit of a panic. But clearly that wasn't the case.
Speaker 3: It looked more like a catching up, which is fine.
Speaker 3: But then you go back to what you guys had
Speaker 3: mentioned earlier, just a few moments ago, and that he's
Speaker 3: not in a rush. This isn't a predetermined course. We're
Speaker 3: still always saying the data dependent story. And the latest
Speaker 3: data we've seen is the Atlanta GDP FED printing three percent.
Speaker 1: Wow.
Speaker 3: Goldman updated their third quarter GDP at three percent, and
Speaker 3: we've seen an inflation is a little hotter than forecasts.
Speaker 2: So I think the equity market, e Vince, I think
Speaker 2: the equity market, you know, the usually the first trades,
Speaker 2: not really the one that gets sustained. I'm seeing a
Speaker 2: lot of positivity here at the moment. Smpe me and
Speaker 2: E's are up now two thirds of a percent, some
Speaker 2: thirty seven points. The Nicks rallied seven hundred and ninety
Speaker 2: odd points. You're going to get a pretty solid rally
Speaker 2: in Hong Kong today. I would think it seems like
Speaker 2: the market is reading this, the bond end stock markets
Speaker 2: as yeah, things are okay, They've got some room to
Speaker 2: cut here. It's not determined what the what the path
Speaker 2: will be going forward, but it's certainly not panic at
Speaker 2: this time.
Speaker 3: No, no, not at all. And the good news for
Speaker 3: equity markets is, and it depends again on the data
Speaker 3: going forward, is that the quantitative titan cycle is clear over.
Speaker 3: We've moved at least temporarily into an easing cycle. We
Speaker 3: don't know the extent of that cycle or how far
Speaker 3: it's going to go. One of the things I would
Speaker 3: always go harken to is Bostic's comments, which is the
Speaker 3: credibility issue, which is the worst thing we could possibly
Speaker 3: do is cut interest rates and then the data doesn't
Speaker 3: support it going forward, and then we have to turn
Speaker 3: around and raise. So I think we're going to see
Speaker 3: a little bit more of a prudent, careful fed going forward,
Speaker 3: which showed in the dot plot where they just forecast
Speaker 3: twenty five basis points for November and December, which I
Speaker 3: think is reasonable, but also very cautious because it gives
Speaker 3: them the opportunity to go either way. They could easily
Speaker 3: go fifty basis points in November if the economy rolled over,
Speaker 3: or they could easily pull back to do absolutely nothing
Speaker 3: in November if the economy sort.
Speaker 1: So, Powell talked about recalibrating policy to a more neutral
Speaker 1: level in your work. I mean, I know it's theoretical
Speaker 1: and debated. Where the neutral rate seems to be. Is
Speaker 1: three percent fair? Do you think?
Speaker 3: I personally think so. I think the idea that we're
Speaker 3: going to get back to two percent is incredibly unreasonable.
Speaker 3: We have a thirty five trillion dollar national debt, and
Speaker 3: that you know, if you look at both parties and
Speaker 3: where they're going in the election in a couple of months,
Speaker 3: both are talking about increasing spending, so that is not
Speaker 3: likely to go lower. It's going to go higher. The
Speaker 3: idea that interest rates have a substantial downside is I
Speaker 3: think a little bit unrealistic. Three percent is not unrealistic,
Speaker 3: but again it depends on inflation and how much either
Speaker 3: of these candidates, for instance, and their parties want to
Speaker 3: spend to get someplace, and what they will do when
Speaker 3: they get there.
Speaker 2: So one of the things that we've seen in the
Speaker 2: past several weeks is some of these cyclicals and small
Speaker 2: caps outperform. They've they've they've been seen as a beneficiary
Speaker 2: in a in a rate cutting cycle like this.
Speaker 5: Uh.
Speaker 2: Would you put commodities and commodity currencies in there? And
Speaker 2: is this something that investors can can play here continue
Speaker 2: to play?
Speaker 4: Yeah?
Speaker 3: Well, I mean, uh, you know, look at gold, you know,
Speaker 3: record highs, looking at copper futures and doing very well.
Speaker 3: You know, across the board, commodities are trading well. I
Speaker 3: mean in a lower interest rate environment, commodities tend to
Speaker 3: do well. Uh, they're easier to finance. But you know, again,
Speaker 3: it's when the one thing that that is positive for
Speaker 3: that space is the lower that you get us interest rates,
Speaker 3: the cheaper it is for emerging market currencies to finance
Speaker 3: their debt, which makes commodities a little bit cheaper across
Speaker 3: the board. So that gives them the opportunity to, if
Speaker 3: you will, finance exports, uh, and make those commodities cheaper,
Speaker 3: which makes them more affordable.
Speaker 1: And well wanted you were talking about volatility earlier, or
Speaker 1: I saw the dollar bouncing around. I was looking at
Speaker 1: the pound. I was looking at the euro earlier, put
Speaker 1: on your old four x hat. Where's the dollar headed
Speaker 1: from here?
Speaker 3: My personal feeling, I'm just going to look at dollar
Speaker 3: yen and I think that dollar yen has a lot
Speaker 3: of room to go lower. And this has more to
Speaker 3: do with boj policy going forward maybe than the Fed.
Speaker 3: The idea, obviously is the bojil stampad. This time around,
Speaker 3: we've got sort of LDP politics playing in, but there's
Speaker 3: a reasonable possibility they go fifty basis points at the
Speaker 3: meeting that follows, if not the meeting that follows that,
Speaker 3: and you're going to see this divergence in monetary policy.
Speaker 3: And the interesting thing is does that play into a
Speaker 3: substantially stronger yen which unwinds the carry trade, which then
Speaker 3: unwinds the equity trade. So that's going to be something
Speaker 3: equity traders need to keep in focus. That something that
Speaker 3: the fixed income market doesn't necessarily have to worry about.
Speaker 2: Yeah, that's something something that we've been musing over here,
Speaker 2: but it's not happening currently. I mean, the Nike has
Speaker 2: been pretty choppy, but today up up. Yeah. Yeah, it's
Speaker 2: been a very interesting time for Japan. The Bank of
Speaker 2: Japan meeting will be interesting and then the election next week. Well,
Speaker 2: just finally, I mean, do you feel good about I mean,
Speaker 2: how are the kids doing? The kids?
Speaker 1: Okay, Yeah, everything's good.
Speaker 3: Everything's good. I'm you know, a little a little chubbier,
Speaker 3: but otherwise do it fine.
Speaker 2: It's you're talking, You're you're eating and drinking well and
Speaker 2: we love to see that.
Speaker 3: Wow.
Speaker 2: Anything else, Doug A.
Speaker 1: Quick no, no, just don't be a stranger.
Speaker 2: Vinny, Yeah, call on this program. Yeah. I was going
Speaker 2: to get you in here. We can't pay you, but yeah,
Speaker 2: it's not a nice to have your time. Vince Signorella.
Speaker 2: There Bloomberg macro strategist with some keen insights on the FED.
Speaker 2: Helen ju joins us here in our studios in Hong Kong,
Speaker 2: Managing Directorates and CIO at NF Trinity. Helen, thank you
Speaker 2: very much for coming in. So it seems like this
Speaker 2: is just a little insurance policy taken out by the
Speaker 2: FED on the soft landing thesis. They're urging caution, they're
Speaker 2: saying there's no there's no panic here. They have room
Speaker 2: to cut and they're doing so. Do you think that
Speaker 2: this is a message that investors in Asia will embrace.
Speaker 4: Look, I think the message is quite clear. The message is,
Speaker 4: first of all, we don't want to look like we're
Speaker 4: falling behind the curve, as many people have been accusing
Speaker 4: them of recently, but that you know, it's too early
Speaker 4: to say that they're going to go all out dubvish,
Speaker 4: mainly because they said twelve times during the meeting that
Speaker 4: things are still pretty solid.
Speaker 5: So I think it's good. It's a good message.
Speaker 4: Right, So things are still good, but we're also fairly supportive.
Speaker 5: And you know, we're mindful of the risks, et cetera.
Speaker 4: So I think in combination, you've seen you know, Japan's
Speaker 4: opening up, and I think in the short term there's
Speaker 4: going to be a little bit more of a risk
Speaker 4: on attitude, not just because of the FED, but also
Speaker 4: because the data earlier this week was quite strong.
Speaker 1: So we talk a lot about long and variable legs
Speaker 1: when it comes to monetary policy. Maybe things, as a
Speaker 1: result of what have been very high rates start to
Speaker 1: slow down even more from here. Do you think the
Speaker 1: US manages a soft landing and we avoid recession? Is
Speaker 1: that the way you see it.
Speaker 4: We do think that the soft landing is the base
Speaker 4: case assumption. At the moment, I mean, we see.
Speaker 5: The bigger risk.
Speaker 4: However, is really a meaningful slenoun in terms of the
Speaker 4: jobs market. As you know, the US is a very
Speaker 4: consumption oriented market, and people the way that they spend
Speaker 4: is but depending on whether they feel secure in their
Speaker 4: employment and whether they have that wealth effect, and both
Speaker 4: of these factors have been full on positive after COVID,
Speaker 4: whereas in most other markets they've reversed. So the jobs
Speaker 4: market is really critical. If jobs market starts the weekend
Speaker 4: in the stock market will come down and everything's kind of interlinked, right.
Speaker 5: If that were to happen.
Speaker 4: Then we go into vicious feedback loop, in which case
Speaker 4: I do think that growth will slow down much more
Speaker 4: than expected, So we have to watch very carefully.
Speaker 5: I think we're not completely out of the woods.
Speaker 2: So what's the smart way to play this in markets
Speaker 2: at the moment?
Speaker 4: Well, I think it's quite interesting because the market's basically
Speaker 4: saying two totally different things to you, right, So the
Speaker 4: credit spread, the share price performance of FAG US equities
Speaker 4: in general, US financials, US industrials, they're basically telling you
Speaker 4: there is barely any landing. Things are completely fine. On
Speaker 4: the other hand, if you look at some other sectors
Speaker 4: like consumer discretionary, tech, hardware, you know, a lot of
Speaker 4: areas outside the US and maybe commodities recently, these areas
Speaker 4: are telling you that things are not so fine, and
Speaker 4: actually treasury yields as well. Right, So I would say,
Speaker 4: you know, if we do have a decent soft landing scenario,
Speaker 4: I would be more interested in looking at a gradual
Speaker 4: recovery of those areas that have priced in more of
Speaker 4: a landing scenario and being underweight some of the areas
Speaker 4: that really hasn't priced in any kind of landing at all.
Speaker 1: So we've arrived, the easing cycle has has begun. Maybe
Speaker 1: we get another fifty basis points between now and the
Speaker 1: end of the year. What does that mean for central
Speaker 1: bankers and your neck of the woods. I'm thinking primarily
Speaker 1: of the BOJ at the moment.
Speaker 4: Well, I think the BOJ is a slightly different case
Speaker 4: from elsewhere just because of their starting point being so
Speaker 4: incredibly low versus all the other major central banks. But
Speaker 4: I would say elsewhere in Asia and in emerging markets anywhere,
Speaker 4: even in DM for for sure, other than the Japan
Speaker 4: special case, it definitely opens up the window right for
Speaker 4: people to do a bit more if they need to,
Speaker 4: because what people had been suffering throughout most of last
Speaker 4: year and end of the year before was basically that
Speaker 4: you don't have too much flexibility because you don't want
Speaker 4: your currency to endlessly depreciate against the dollar, which has
Speaker 4: been so strong for so long. So I think this
Speaker 4: is definitely a positive for non US markets and non
Speaker 4: US central banks.
Speaker 2: Can we connect the dots from the cut by the
Speaker 2: FED to the housing market in China and to the
Speaker 2: mood among the average the average mister and missus Wong
Speaker 2: in China, I mean, how are they feeling these days?
Speaker 4: There's not much of a direct linkage between the FED
Speaker 4: and the property owners in China. I would say the
Speaker 4: indirect linkage is that if there's less pressure on the
Speaker 4: R and B from the dollar strengthening, then the PBOC
Speaker 4: has more room to cut. But the PBOC has already
Speaker 4: been very proactive in terms of dropping mortgage rates as
Speaker 4: well as overall interest rates. So I think that's not
Speaker 4: the most important thing. The thing is about price expectation
Speaker 4: and confidence in the market.
Speaker 5: Even if rates are zero.
Speaker 4: You know, if you think prices are going to go
Speaker 4: down continuously year after year, you're not going to go
Speaker 4: out and buy a property. So I think that's the
Speaker 4: thing that they have to wrestle with at the moment.
Speaker 4: The expectation within the market has really weakened substantially, and
Speaker 4: you have to stabilize the expectation, if not reverse it
Speaker 4: before the market could possibly potentially pick up. So right now,
Speaker 4: all you've seen is secondary market is more active because
Speaker 4: there's more supply available as people who were previously hoarding
Speaker 4: or putting their properties on the market. The primary market
Speaker 4: has really suffered because of you know, developers not taking
Speaker 4: a lot of land the past few years and just
Speaker 4: you know, lack of a less of a price advantage
Speaker 4: for the primary market.
Speaker 5: So I think it's going to be challenging.
Speaker 1: Are your clients asking you about what the stakes are
Speaker 1: in the US presidential election.
Speaker 4: I think everybody's watching the election very very closely. Right
Speaker 4: a couple of months ago that the default assumption was
Speaker 4: that Trump was going to win for sure. You saw
Speaker 4: that in everything from you know, financials and tech, you know,
Speaker 4: which are the more regulated risk sectors, as well as
Speaker 4: the market overall, as well as you know, people basically
Speaker 4: thinking that muals should go up and corporate tax rates,
Speaker 4: tax cuts will get extended. Now.
Speaker 5: I think a lot of that is kind of unclear.
Speaker 4: And if Kamala actually wins, it's probably going to be
Speaker 4: better for the rest of the world because of the
Speaker 4: much lower Trump's specific Trump specific tariff risks. But for
Speaker 4: the US, I think it's probably a little bit of
Speaker 4: a challenge the exceptionalism thesis.
Speaker 2: Can I just get thirty seconds from you? On consumption
Speaker 2: in China, we touched on that briefly. The consumption picked
Speaker 2: up a little bit here during the holiday, but it's
Speaker 2: still away from better levels. How do you see things
Speaker 2: over the next couple of months.
Speaker 5: It's lukewarm at the moment.
Speaker 4: I don't think it's getting substantially worse than before, but
Speaker 4: we don't see much room for dramatic pickup either, precisely
Speaker 4: because of the property price expectation issue we talked about earlier,
Speaker 4: and the very significant impact is having unwealth effects in China,
Speaker 4: and that's the total opposite of what's happening in the US,
Speaker 4: where property crises are still boyant, stock market is still boyant,
Speaker 4: and people are going on and spending a lot despite the.
Speaker 1: Inflation we talked about Japan. I mentioned the fact that
Speaker 1: with the FED doing what it is, maybe it takes
Speaker 1: a little bit of pressure off the BOJ. But obviously
Speaker 1: the Japanese situation is very different. Here, we're seeing quite
Speaker 1: the rally going on in the Japanese equity market. It
Speaker 1: seems to be a pretty robust debate on whether or
Speaker 1: not we're going to get another rate hike between now
Speaker 1: and the end of the year from the BOJ. Do
Speaker 1: you want to weigh in on that? Is that likely.
Speaker 5: Possible?
Speaker 4: But I don't think that it's necessarily for sure. I
Speaker 4: think that there was obviously a pretty significant reaction to
Speaker 4: the last one and more volatility resulting versus what always expected.
Speaker 4: So I think, and you know, I think it really
Speaker 4: depends on the data, right and whether they really see
Speaker 4: a meaningful evidence of continued, you know, robust growth and
Speaker 4: more inflationary pressures in the economy.
Speaker 1: Yeah.
Speaker 2: So you and I live in Hong Kong, and Hong
Speaker 2: Kong is an important place. Hong Kong will no doubt
Speaker 2: benefit from rates moving down by the FED. Again, we
Speaker 2: don't know how much, but fifty basis points here, can
Speaker 2: you see a little bit of a pickup in activity
Speaker 2: in Hong Kong or Is it wholly dependent on the
Speaker 2: Chinese economy rebounding.
Speaker 4: It's not wholly dependent on the Chinese economy rebounding, but
Speaker 4: I think it's very important because the Chinese economy really
Speaker 4: drives consumption here in Hong Kong, the financial markets here
Speaker 4: in Hong Kong and the property market and the you know,
Speaker 4: buying demand coming from North.
Speaker 5: But that said, leaving China aside, I.
Speaker 4: Do think that you're right, Hong Kong will benefit hugely
Speaker 4: from the rate cut cycle in the US because of
Speaker 4: the you know, pegged currency, et cetera, and the fact
Speaker 4: that the property market's been under a significant amount of pressure.
Speaker 4: So I think at least this alleviates some of the
Speaker 4: pressures on the mortgages et cetera over time, and we'll
Speaker 4: start to stabilize, if not start to potentially boost confidence
Speaker 4: towards price expectation on Hong Kong's own property market in
Speaker 4: the residential space.
Speaker 1: Are we going to get more stimulus out of beychain,
Speaker 1: either on the fiscal side or or the monetary side.
Speaker 1: Do you think.
Speaker 4: It's difficult. We've been trying to hope for more stimulus
Speaker 4: for a while. We have gotten a great deal of
Speaker 4: stimulus already.
Speaker 5: Right, if you think about the rate.
Speaker 4: Cuts, the mortgage reset, the mortgage cuts overall, the infrastructure spend,
Speaker 4: the local government financing vehicle fixes, and the fiscal side.
Speaker 4: A lot of these things have come together with consumption
Speaker 4: policies like ev trade in and incentives, etc.
Speaker 5: But all of that has struggled.
Speaker 4: Against the face of the declining property price. So I
Speaker 4: think we will get more to answer your question, but
Speaker 4: is it going to be super effective if property price
Speaker 4: continues to slip.
Speaker 5: I think it's going to be an uphill battle.
Speaker 2: We've got about thirty seconds for this. I just want
Speaker 2: to ask you what is your number one pick right now?
Speaker 2: What's your big conviction trade at the moment.
Speaker 4: I think the big convention trade is basically to be
Speaker 4: more positive on Asia rather than just develop market. I
Speaker 4: think that all of Asia has actually suffered pretty significantly
Speaker 4: as a result of the very very strong dollar, and
Speaker 4: I think that reversal is going to give a lot
Speaker 4: more breathing room here in terms of the property market.
Speaker 5: As you talked about in terms of consumption.
Speaker 4: If Kamala Harri swins and we don't have as much tariffs,
Speaker 4: that's going to be a positive as well. And I
Speaker 4: think that some of the semi related stuff in Korea, Taiwan, etc.
Speaker 4: Has been pressured and is better value and less crowded.
Speaker 2: All right, we've seen money flow into Southeast Asia, the
Speaker 2: Singapore stock market, for instance, of about six and a
Speaker 2: half percent in the past month. Helen, Thank you. Helen
Speaker 2: Ju from NF Trining.
Speaker 1: Naomi Fink, Chief Global strategistic NICO Asset Management, joining us
Speaker 1: live here on daybreak asient. Naomi, thanks for making time
Speaker 1: to chat with us. Obviously it's about the FED today.
Speaker 1: We can talk about what it may mean for the
Speaker 1: Bank of Japan and going into the decision today, this
Speaker 1: debate is it going to be twenty five? Is it
Speaker 1: going to be fifty? We got fifty? What do you
Speaker 1: make of that?
Speaker 6: Well, I personally thought that twenty five would have been
Speaker 6: more appropriate given the economic data out of the US.
Speaker 6: Although the labor market picture is softening, it's not softening
Speaker 6: to the extent that we should really be worried about
Speaker 6: growth right now. I still expect growth to remain positive,
Speaker 6: although potentially slower. I think it was more about the
Speaker 6: fact that the FED had room to cut given wherever
Speaker 6: neutral is, it's below where we are now. And also
Speaker 6: market expectations had already priced it in, so there wasn't
Speaker 6: the worry that delivering a fifty basis point cut would
Speaker 6: send a message that there was some sort of undetected
Speaker 6: weakness in the economy and then perhaps cause the opposite
Speaker 6: effect to what happened, that markets would see it as
Speaker 6: a surprise and react poorly to it.
Speaker 2: So, with bond yields edging up a little bit, does
Speaker 2: that send a message that the bond market is a
Speaker 2: little concerned that inflation may tick back up again, or
Speaker 2: is that just an indication of a slightly better reading
Speaker 2: of the US economy.
Speaker 6: Well, if the bond market yields are ticking up because
Speaker 6: of expectations that inflation may come back, I think that's
Speaker 6: a reasonable concern. Given we're not at the target yet
Speaker 6: even per the Fed's own guidance, we don't expect to
Speaker 6: reach target until sometime in twenty twenty six. Plus we've
Speaker 6: got some potential inflationary events depending on what happens with
Speaker 6: the election and beyond the election, things like the dead limit,
Speaker 6: the US dead limit. If we do have, for example,
Speaker 6: tariffs or some sort of protectionist measures put in place,
Speaker 6: that could be inflationary. Similarly, if we have expectations for
Speaker 6: fiscal easing, then that could also mean inflationary expectations by
Speaker 6: households that the FED will have to react to. Plus
Speaker 6: it may make those negotiations that aren't going well already
Speaker 6: over the debt ceiling that much harder.
Speaker 1: So maybe we have another fifty basis points sin FED
Speaker 1: easing between now and the end of the year. What
Speaker 1: does that mean for the Bank of Japan. Does this
Speaker 1: take a lot of pressure off the BOJ or just
Speaker 1: a little bit?
Speaker 6: So I don't expect that the Bank of Japan is
Speaker 6: really going to change its trajectory, which is for hikes
Speaker 6: in the future. However, the Bank of Japan also has
Speaker 6: the luxury of delivering those hikes at a pretty slow pace,
Speaker 6: given inflation is not really running away. In fact, it's
Speaker 6: pretty well behaved. Bank of Japan is also far from neutral,
Speaker 6: but on the downside, so it makes sense that it
Speaker 6: will continue to deliver hikes, but I think that it's
Speaker 6: going to do so at a very measured pace. So
Speaker 6: I don't think that we should be pricing in a
Speaker 6: rate hike every meeting, or even every other meeting, potentially
Speaker 6: once a quarter for now until we really start seeing
Speaker 6: signals that consumption domestically in Japan is speeding up.
Speaker 2: The dot plot suggests a full one percentage point of
Speaker 2: cuts next year, so call it one hundred bases points.
Speaker 2: Is it too hard to look out into next year?
Speaker 2: Is this really just kind of speculating or do you
Speaker 2: see trouble next year?
Speaker 6: I think the FED has to work with what it
Speaker 6: has so far, and for example, there are a lot
Speaker 6: of unknowns. We don't know the outcome of the election.
Speaker 6: We don't know what's going to happen with the debt ceiling.
Speaker 6: We don't know what's going to happen with what appears
Speaker 6: to be escalating tensions in the Middle East. There are
Speaker 6: a lot of unknowns there, and the FED will have
Speaker 6: to react to them as they happen, but they can't,
Speaker 6: I guess, speculate too much about them before they do.
Speaker 1: I'm going to throw you a curveball. I hope you
Speaker 1: don't get upset with me. We've on September twenty seventh,
Speaker 1: we have the leadership race for the LDP in Japan.
Speaker 1: Can you weigh in on what's happening right now politically
Speaker 1: in the country.
Speaker 6: Yes, I'm not too upset with that. I think that's
Speaker 6: a fair question. I think that the upcoming LDP election
Speaker 6: does bring emphasis on politics in a market where emphasis
Speaker 6: doesn't tend to be placed too much on politics because
Speaker 6: a lot of times, for example, the UH the LDP
Speaker 6: premiership is is not as influential, for example, as US leadership,
Speaker 6: just because of the different structure of the political systems. However,
Speaker 6: I think that there is some potential in the future
Speaker 6: to influence future elections. So we have I think three
Speaker 6: leading candidates, and of those I don't anticipate any big
Speaker 6: changes in the near term, but the winning candidates' ability
Speaker 6: to then win future elections will probably matter, and it
Speaker 6: will matter for the longer term continuity of the policies
Speaker 6: that have been put in place, and so far, apart
Speaker 6: from the scandals of course that nobody liked, the policy
Speaker 6: hasn't really been too bad for Japan. It's been quite supportive.
Speaker 6: We've seen some tax exemptions for investment, We've seen some
Speaker 6: corporate governance strengthening. It's it's generally been quite good.
Speaker 1: Naomi. Will we leave it there. Thank you so much
Speaker 1: for taking time to chat with us. Please come back again,
Speaker 1: Naomi Think Chief Global strategist at Nico Asset Management, joining
Speaker 1: us from the Japanese capital.
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