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Speaker 1: Let's get to our guests now. Nan at Teschla Fed

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Speaker 1: but is ce io for a mayor and global head

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Speaker 1: of economics and Research at Credit Sue She joins us

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Speaker 1: on the line from Singapore today. We're looking very closely

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Speaker 1: at all of these concerns about a global recession, how

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Speaker 1: deep it could be. We also heard from more FED

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Speaker 1: official saying they need to keep hiking rates to restore

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Speaker 1: price stability. Do you kind of agree with one of

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Speaker 1: those speakers, James Bullard, who warned that the FED credibility

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Speaker 1: could be on the line here. I think generally the

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Speaker 1: central banks are currently really fighting for their credibility juliet Um.

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Speaker 1: And so far the Fed has done an okay job

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Speaker 1: because if you look at the break even tenure inflation

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Speaker 1: as a as a good reflection of long term inflation expectations,

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Speaker 1: they have been trending down from their previous times this year.

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Speaker 1: So I would say so far the FED is on

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Speaker 1: good course. But it is absolutely a fight for credibility

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Speaker 1: against inflation. How concerning is it that we could see

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Speaker 1: a global recession, particularly when when you look at what's

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Speaker 1: happening in Europe and then and the Gash. I guess

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Speaker 1: crosses that is occurring there. We saw that big twenty

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Speaker 1: two jump in futures of an eight in Europe and

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Speaker 1: also in the UK. We think the recession is now

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Speaker 1: is now to be expected um for two thousand and

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Speaker 1: twenty three, where this is likely to also show in

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Speaker 1: overall the overall annual growth rate. We do anticipate minus

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Speaker 1: zero point two percent in our forecast of credit suites

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Speaker 1: for the Eurozone and for the UK. It might be

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Speaker 1: also in the similar in the similar magnitude UM. It

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Speaker 1: might also become even deeper than that if conditions in

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Speaker 1: Europe and the UK continue to deteriorate. In the US,

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Speaker 1: the risk of recession is a bit lower. However, probability

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Speaker 1: of recession is at thirty percent according to our models,

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Speaker 1: and that is the material. What buffers that potential downturn

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Speaker 1: in the US is it still the very strong jobs market.

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Speaker 1: Is the fact that the households still have quite a

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Speaker 1: lot to spend. There are really two things that are

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Speaker 1: shielding the US at the moment. One is that this

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Speaker 1: is a large economy that essentially depends on its private consumption.

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Speaker 1: I mean, the US private consumption contributes the majority of

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Speaker 1: growth so far as long as the US labor market

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Speaker 1: is resilient, then also the consumers are likely to carry

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Speaker 1: some of these overall and growth resilience. That's one. Secondly,

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Speaker 1: as far as the housing market is concerned, most most

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Speaker 1: households do have long term mortgages, so it takes some

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Speaker 1: time for the increase of yields is actually feeding through

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Speaker 1: to their uh to their expenses. So that's a second factor,

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Speaker 1: the fact that they have a lot a lot of

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Speaker 1: fixed mortgages and that it takes time to feed through.

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Speaker 1: The second um shielding effects. And then thirdly, they're not

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Speaker 1: so exposed to the energy crisis and the direct implications

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Speaker 1: of the war in the Ukraine as countries in Europe

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Speaker 1: and Asia buffeted from that too. Let's talk about the

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Speaker 1: China picture, because we're closely awaiting the Party Congress. We

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Speaker 1: have seen President she re emerged after not being seen

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Speaker 1: in public since his first foreign trip in more than

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Speaker 1: two years earlier this month. Do we see a turnaround

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Speaker 1: or letting go of some of those very strict COVID

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Speaker 1: zero policies, and if so, how does that help the

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Speaker 1: growth story? I think that in indeed, after the Party Congress,

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Speaker 1: we we might be expecting some gradual relaxing here of

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Speaker 1: the non zero COVID policy, and especially because also the

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Speaker 1: focus now is turning back from the global health situation

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Speaker 1: to actually the economic growth situation. We see that also

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Speaker 1: from the comments around international trade and how the global

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Speaker 1: economic slowdown is affecting negatively Chinese economic growth. So, uh,

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Speaker 1: there is hope that we are growing to see gradually

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Speaker 1: what Hong Kong is now also going through be extended

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Speaker 1: to the regions in China as well. What we're doing

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Speaker 1: is that this would feed into a higher growth rate

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Speaker 1: next year for China than this year. Okay, and let's

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Speaker 1: get now to to your Banks Global Wealth Report, because

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Speaker 1: you do see China as among the most countries, sorry,

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Speaker 1: among countries that will add the most millionaires, and you're

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Speaker 1: saying the world in general is going to get more

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Speaker 1: millionaires after the wealth loss that we've seen in just

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Speaker 1: tell us about some of the findings from the Credits

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Speaker 1: Face Global Wealth Report. Yeah, I mean, wealth has been

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Speaker 1: on this tragic trajectory of growth that was really among

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Speaker 1: the most impressive in two thousand and twenty one. It's

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Speaker 1: probably been the year where we have seen the highest

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Speaker 1: growth rates even accounting for exchange rate fluctuations and so forth,

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Speaker 1: really very strong growth, more than nine percent over the

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Speaker 1: year compared to an average of six percent in in

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Speaker 1: previous In the previous decade, China as much as the

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Speaker 1: US have been driving those and a lot of the

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Speaker 1: wealth increases have come from how strong financial assets have

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Speaker 1: been with all the support that monetary policy, fiscal polity,

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Speaker 1: and so forth have given throughout the pandemic. Um, As

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Speaker 1: global wealth is increasing, so is the number of millionaires,

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Speaker 1: and and so there's really a parallel here to to

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Speaker 1: a effect. Um we think that you know, two thousand

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Speaker 1: twenty two might be showing a bit of a slower

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Speaker 1: growth of wealth because of the inflation effect. One thing

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Speaker 1: is to see nominal wealth growth, but the other is

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Speaker 1: to to really have an increase of real wealth. So

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Speaker 1: there's also going to be a little bit of artificial

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Speaker 1: growth here coming through the effects of of of inflation.

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Speaker 1: But over a five year period, we think that the

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Speaker 1: world continues to move in a very positive trajectory where

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Speaker 1: the average the average wealth per adult in the world

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Speaker 1: is likely to first time ever reached the hundred thousand

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Speaker 1: dollar mark. And and that is really a very meaningful

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Speaker 1: level at the top end though, is it is wealth

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Speaker 1: being distributed eavely. What countries are saying that the greatest

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Speaker 1: I guess increases in wealth. So the distribution of wealth

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Speaker 1: is unequal across countries as well as within a number

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Speaker 1: of countries. We we can measure that, for example, with

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Speaker 1: the help of statistics like the Genie coetrition that is

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Speaker 1: quite well known. But the good news is that over

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Speaker 1: the last ten years, in fact, this inequality of distribution

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Speaker 1: across countries for sure has been on the declining trend,

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Speaker 1: and the reason for that was the catch up of

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Speaker 1: emerging markets and China in particular. So this is the

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Speaker 1: good news because also going forward emerging markets will continue

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Speaker 1: to catch up and make up most of the wealth

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Speaker 1: increases are bringing up the median wealth per adults. All right, now,

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Speaker 1: it great to chat. We didn't get to talk about

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Speaker 1: another report that you've edited, which is what I read

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Speaker 1: on the Bloomberg terminal the other day, and I loved

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Speaker 1: how to invest in handbags the luxury most likely to

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Speaker 1: hold value. So listeners can find that on the Bloomberg

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Speaker 1: terminal the report showing that Chanel bags in particular rose

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Speaker 1: almost in valley from the previous year. Nash Heschler is

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Speaker 1: ce IO for a mayor and global head for economics

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Speaker 1: and Research at Credit Sweet with us here in Singapore

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Speaker 1: on daybreak Asia