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Speaker 1: Let's get to our guests now. Isaac Pool is Global

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Speaker 1: CEO around the Financial Services joining us also from Singapore.

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Speaker 1: So our reporter Michael McKee earlier said, the main focus

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Speaker 1: of the November FED meeting is the December FED meeting.

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Speaker 1: How murky is their path given we have this downturn,

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Speaker 1: but then you saw that rebound in US job openings.

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Speaker 1: It is really murky, and it is really challenging for

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Speaker 1: the FED to get the messaging right at their November

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Speaker 1: meeting because it's it is about the December meeting. The

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Speaker 1: market is aching to hear how they're going to start

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Speaker 1: slowing the pace of rate hikes. But then it's so

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Speaker 1: it's also about setting this up for an eventual pause

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Speaker 1: because the market is still pricing a pivot. They're still

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Speaker 1: pricing a terminal rate with rate cuts almost immediately after

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Speaker 1: that terminal rate has reached. And that's never happened before

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Speaker 1: from the Fed. They always get to a level and pause.

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Speaker 1: So there's there's quite a lot of work for the

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Speaker 1: FED to do to get that message across to markets

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Speaker 1: um and set up for the next twelve eighteen months.

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Speaker 1: And what does that mean for treasuries? Do we see

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Speaker 1: a more flattening of the curve here, particularly when you've

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Speaker 1: got that tight labor market. It's it really does mean

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Speaker 1: that there is a risk of steepening at some stage,

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Speaker 1: and that's going to be bull steepening. If the FED

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Speaker 1: losers hold of their narrative of the market, starts to

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Speaker 1: believe rates are going to get so high so quickly

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Speaker 1: that it forces the recession down on the economy. That

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Speaker 1: tends to drive bull steepening in the in the curve,

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Speaker 1: and that's the point when recession really hits the economy.

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Speaker 1: So an inverted curve now is telling us that at

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Speaker 1: some point over the next three years there will be

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Speaker 1: a recession. If we start to see that steepen really quickly,

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Speaker 1: then we're in recession. And that's something that FED needs

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Speaker 1: to be really cautious and careful that they want to

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Speaker 1: extend this cycle, not not force the force the recession on. Honest,

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Speaker 1: in the next twelve months, you're saying that that you

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Speaker 1: don't think there will be a recession next year. So

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Speaker 1: moderately overweight US equities. How much of of a rally

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Speaker 1: do we see when we had that eight percent gain

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Speaker 1: in October on the SMP five D. Yeah, I mean

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Speaker 1: part part of that was just unwinding of the of

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Speaker 1: the ten year treasury yield, reversing from its its peaks

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Speaker 1: up around four thirty or so. I think that there's

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Speaker 1: coincidentally at the same time being a rattling down in

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Speaker 1: earnings expectations, and that really does reflect the expectation that

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Speaker 1: there will be a recession. I mean, the consensus is

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Speaker 1: for a recession early in if the sent can avoid that,

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Speaker 1: and it provides quite a lot of upsides still from here.

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Speaker 1: Even so, we saw Chinese stocks rally very strongly yesterday

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Speaker 1: afternoon on that unconfirmed social posts on the reopening. We've

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Speaker 1: been look tracking the rallies though in the Hang Seng

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Speaker 1: China Enterprises Index, and mostly they're reversed if they gain

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Speaker 1: around that five percent level. So do investors get burned

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Speaker 1: again here given there is actually no information on these rumors. Yeah,

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Speaker 1: I mean it's challenging when you see these big rips

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Speaker 1: of unconfirmed rumors, and that that means that there is

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Speaker 1: quite a lot of scope for for that to back

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Speaker 1: down if if we don't get some confirmation. I think

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Speaker 1: investors will be looking at China and hoping to see

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Speaker 1: some some planning for an exit from the zero COVID policy.

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Speaker 1: That would make a lot of sense, but I think

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Speaker 1: rumors ideas just just leave the outlook choppy, volatile over

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Speaker 1: over your term and what about in terms of what

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Speaker 1: we see with you are because that is also being

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Speaker 1: I guess hit UT's hard by the dollar strength. We've

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Speaker 1: here heard an ex officials say that the p BOC

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Speaker 1: should be prepared to act like Japan on its effects

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Speaker 1: and kind of intervene here. I think that, I mean

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Speaker 1: the p BOC will will manage the ure to a

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Speaker 1: basket of currencies and and they could get concerned if

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Speaker 1: it starts to show some sort of financial stability risk,

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Speaker 1: particularly to Chinese companies who are paying US dollars denominated debt.

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Speaker 1: But but right now that that currency is becoming more competitive,

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Speaker 1: it doesn't seem to be driving any real financial stability issues.

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Speaker 1: And ultimately, the big macro story there is that China

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Speaker 1: is effectively in procession and there's no way out of

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Speaker 1: that really until we get a movement on on zero COVID.

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Speaker 1: So it's appropriate for that currency to be weaker. I

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Speaker 1: don't think the p VOC will be leaning too heavily

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Speaker 1: against that right now, it hasn't been a disorderly move

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Speaker 1: really over the last six months in the currency. Okay,

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Speaker 1: let's get back to some of the other central bank

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Speaker 1: moves that we've seen in the region. I mean, we

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Speaker 1: had the r b A yesterday with just a twenty

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Speaker 1: five basis point hike. You could argue they were among

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Speaker 1: the first here to potentially slow down the tightening pace.

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Speaker 1: What do you see in terms of further moves from

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Speaker 1: the likes of the a BA and a BANZ. Yeah,

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Speaker 1: there's more hikes to go. I think the ABA has

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Speaker 1: been really clear on that that they need to get

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Speaker 1: the cash straight to restrictive and it's blow three At

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Speaker 1: this level, it's not really restrictive. We think above three

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Speaker 1: pc gets restrictive. But I think they've been very sensible

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Speaker 1: in saying, look, we need to tighten up. We know

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Speaker 1: that we need to go further, but we want to

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Speaker 1: give ourselves a chance to prevent a recession that is

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Speaker 1: unnecessary and avoidable really, so I think that's going to

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Speaker 1: be the playbook for the RBA from here, perhaps hiking

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Speaker 1: through to March. Then we could see a pause. And

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Speaker 1: I think the Albion's is also getting closer to ending

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Speaker 1: their rate hikes than perhaps the market anticipating in that

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Speaker 1: that is something that will start to be seen around

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Speaker 1: the rest of the world in other developed market central

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Speaker 1: banks over the course of this year and certainly early

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Speaker 1: next year. And how much does As we were talking

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Speaker 1: about tight labor markets earlier, but what wages growth really

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Speaker 1: complicate things here too. When workers are demanding higher wages,

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Speaker 1: consumers still very m want to spend. Yeah, I mean

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Speaker 1: tight labor markets are making this pretty challenging. There is

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Speaker 1: significant tightness coming through in Australia and the US globally.

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Speaker 1: I think the central banks want to see participerate participation

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Speaker 1: rates pick up. They want to see demands so often

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Speaker 1: and and the historically when we see rates titan that

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Speaker 1: drop away can happen very very suddenly and very very quickly.

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Speaker 1: There's a real risk here that the central banks globally

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Speaker 1: over tightened and we are facing a disinflationary environment. That

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Speaker 1: is something I think they'll be looking to avoid at

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Speaker 1: all costs. It will make their credibility very difficult to

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Speaker 1: maintain and retain that in that situation. So yes, there

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Speaker 1: will be a FOLCU for some wages, but it's it's

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Speaker 1: probably something where they'll be cautious al right, Isaaca. Always

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Speaker 1: a pleasure. Thank you. Isac pull Is, Global ce IO

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Speaker 1: at Oriana Financial Services on the line for US from Singapore,