1 00:00:00,080 --> 00:00:01,880 Speaker 1: Let's get to some of the news flow here. On 2 00:00:01,920 --> 00:00:05,200 Speaker 1: the business side, Brian was talking about the volatility in 3 00:00:05,240 --> 00:00:09,360 Speaker 1: the British pound. Prime Minister Liz Trust has or will 4 00:00:09,440 --> 00:00:12,840 Speaker 1: host a reception for her cabinet tomorrow, that is Monday 5 00:00:12,880 --> 00:00:16,720 Speaker 1: in the UK to get members input into the medium 6 00:00:16,840 --> 00:00:20,040 Speaker 1: term fiscal plan that she has put forward. Last Friday. 7 00:00:20,040 --> 00:00:22,920 Speaker 1: We caught the U turn right. She rolled back her 8 00:00:22,960 --> 00:00:26,680 Speaker 1: tax plans and sacked Chancellor of the Exchequer Cross Eye 9 00:00:26,720 --> 00:00:30,760 Speaker 1: Quartang and the new Chancellor is Jeremy Hunt. He was 10 00:00:30,760 --> 00:00:33,760 Speaker 1: saying over the weekend nothing is off the table. That's 11 00:00:33,760 --> 00:00:36,000 Speaker 1: when he was asked whether he would abandon more of 12 00:00:36,000 --> 00:00:39,600 Speaker 1: the Prime Minister's initial economic plan. It could perhaps lead 13 00:00:39,600 --> 00:00:43,000 Speaker 1: to another U turn two parts or portions of the 14 00:00:43,040 --> 00:00:46,960 Speaker 1: mini budget that Trust put forward last Friday. She requested 15 00:00:46,960 --> 00:00:50,279 Speaker 1: that Hunter basically stick to the remaining measures of her 16 00:00:50,280 --> 00:00:53,920 Speaker 1: fiscal plan, although over the weekend he said job one 17 00:00:54,240 --> 00:00:58,280 Speaker 1: is making sure that markets are calm. Paul so Louis 18 00:00:58,280 --> 00:01:01,720 Speaker 1: Fade President James Boulant had left open the possibility of 19 00:01:01,720 --> 00:01:04,760 Speaker 1: a larger December rate hike. The FED raised rates by 20 00:01:04,800 --> 00:01:07,720 Speaker 1: seventy five basis points for the third strap meeting last 21 00:01:07,760 --> 00:01:10,679 Speaker 1: month to a target range of three to three point 22 00:01:10,800 --> 00:01:15,320 Speaker 1: to five. Officials projected a hundred and twenty five basis 23 00:01:15,319 --> 00:01:17,120 Speaker 1: points of tightening for the rest of the year, and 24 00:01:17,200 --> 00:01:20,080 Speaker 1: that would mean seventy five basis points in November and 25 00:01:20,160 --> 00:01:23,920 Speaker 1: fifty in December, but Bullard says still too soon to 26 00:01:23,959 --> 00:01:26,720 Speaker 1: make the call. A further twenty five basis points of 27 00:01:26,760 --> 00:01:31,759 Speaker 1: tightening is penciled in for three according to officials median instiments. 28 00:01:31,880 --> 00:01:33,840 Speaker 1: Let's take it close to look at what we're seeing 29 00:01:33,840 --> 00:01:36,440 Speaker 1: these days in market action with our guest, Kim Forest 30 00:01:36,600 --> 00:01:38,640 Speaker 1: is with us. She is the c i O at 31 00:01:38,640 --> 00:01:41,880 Speaker 1: Boca Capital Partners. On the line from Pittsburgh. Kim, thanks 32 00:01:41,880 --> 00:01:44,160 Speaker 1: for being with us. That was quite a session here 33 00:01:44,240 --> 00:01:47,000 Speaker 1: in the US on Friday s andp down more than 34 00:01:47,040 --> 00:01:49,960 Speaker 1: two percent. We've got a spike in yields, much stronger dollar. 35 00:01:50,120 --> 00:01:54,560 Speaker 1: How do you make money in this market? Very carefully? 36 00:01:55,000 --> 00:01:59,200 Speaker 1: I know I'm being glib, but not really very carefully. 37 00:01:59,280 --> 00:02:04,040 Speaker 1: And X stand your timeline. I think the traditional um 38 00:02:04,040 --> 00:02:07,200 Speaker 1: looking only a year ahead, or god forbid, a shorter 39 00:02:07,280 --> 00:02:10,520 Speaker 1: time period than that, it's going to be difficult, if 40 00:02:10,560 --> 00:02:14,520 Speaker 1: not impossible, to make money. So if you've got a 41 00:02:14,560 --> 00:02:19,040 Speaker 1: longer term time horizon. What do you buy now the 42 00:02:19,120 --> 00:02:23,399 Speaker 1: stuff that everybody hates and and by that I probably 43 00:02:23,480 --> 00:02:30,880 Speaker 1: mean UM semiconductors. That's a place to start. UM and uh, 44 00:02:31,000 --> 00:02:33,680 Speaker 1: well that I'd start there. Let's let's just leave it 45 00:02:33,680 --> 00:02:35,680 Speaker 1: at that. So we had Jim Bullard over the weekend 46 00:02:35,720 --> 00:02:39,000 Speaker 1: indicating that maybe we get another supersized rate hike this month. 47 00:02:39,360 --> 00:02:44,799 Speaker 1: Uh that would be November. I'm sorry, not October, but December. Uh, November, 48 00:02:44,840 --> 00:02:47,680 Speaker 1: maybe another hundred and fifty basis points in total between 49 00:02:47,680 --> 00:02:49,800 Speaker 1: now and the end of the year. I don't know 50 00:02:49,800 --> 00:02:51,880 Speaker 1: how much more that would boost the dollar. We had 51 00:02:51,960 --> 00:02:55,520 Speaker 1: quite the rally in UH in the US session on Friday. 52 00:02:55,880 --> 00:02:57,840 Speaker 1: Dollar has got to be ahead win for some of 53 00:02:57,840 --> 00:03:00,880 Speaker 1: these multinational firms. And I would put tech in that basket. 54 00:03:01,760 --> 00:03:04,400 Speaker 1: I would, But again, UM, where are you going to 55 00:03:04,520 --> 00:03:09,200 Speaker 1: go to get semiconductors UM? You know? And and when 56 00:03:09,280 --> 00:03:11,639 Speaker 1: are you going to get them? That's the other problem 57 00:03:11,880 --> 00:03:15,960 Speaker 1: is we've we have kind of this strange thing where 58 00:03:16,000 --> 00:03:19,320 Speaker 1: most of them are made in Taiwan. UM. I get 59 00:03:19,360 --> 00:03:22,400 Speaker 1: it that for the short short term there's been double 60 00:03:22,480 --> 00:03:26,840 Speaker 1: triple ordering maybe and we have oversupply right now. But 61 00:03:27,000 --> 00:03:31,040 Speaker 1: I strongly believe that we are going to start really 62 00:03:31,160 --> 00:03:34,640 Speaker 1: using semiconductors to replace the people that we don't seem 63 00:03:34,680 --> 00:03:37,560 Speaker 1: to have that want to come to work. So I 64 00:03:37,600 --> 00:03:40,520 Speaker 1: think that there are bigger headwinds rather than this short 65 00:03:40,640 --> 00:03:44,839 Speaker 1: term kind of issue with a little bit of over 66 00:03:45,200 --> 00:03:48,040 Speaker 1: or maybe even a lot of overproduction, but it's for 67 00:03:48,120 --> 00:03:51,120 Speaker 1: a relatively short period of time. I want to get 68 00:03:51,120 --> 00:03:53,000 Speaker 1: to your thoughts on real estate in the moment, but 69 00:03:53,080 --> 00:03:55,640 Speaker 1: just to revisit that point about the dollar, Yes, very 70 00:03:55,680 --> 00:03:58,760 Speaker 1: strong now, but again, if you take a look at 71 00:03:58,760 --> 00:04:02,160 Speaker 1: a longer time horizon, long do you expected to stay 72 00:04:02,200 --> 00:04:05,640 Speaker 1: elevated like this? Well, I guess as long as the 73 00:04:05,760 --> 00:04:11,160 Speaker 1: US has um elevated uh interest rates about you know, 74 00:04:11,280 --> 00:04:14,320 Speaker 1: with compare when comparing against the rest of the world. 75 00:04:14,800 --> 00:04:17,240 Speaker 1: And I think that's one of the main drivers right 76 00:04:17,240 --> 00:04:20,760 Speaker 1: now behind the strength of the dollar. So you know, 77 00:04:20,839 --> 00:04:23,560 Speaker 1: it looks like the FED is committed through at least 78 00:04:23,640 --> 00:04:27,159 Speaker 1: the end of this year to continue raising so um 79 00:04:27,200 --> 00:04:30,000 Speaker 1: that would be that or I don't know if the 80 00:04:30,040 --> 00:04:32,640 Speaker 1: rest of the world is going to catch up with us. 81 00:04:33,120 --> 00:04:35,480 Speaker 1: So if the if the FED remains aggressive, I mean, 82 00:04:35,520 --> 00:04:38,640 Speaker 1: what are the what's the probability of a broken economy 83 00:04:38,720 --> 00:04:40,960 Speaker 1: after that? I mean, do we go into a recession 84 00:04:41,040 --> 00:04:44,400 Speaker 1: in your view? Well, I have this feeling that for 85 00:04:44,440 --> 00:04:46,320 Speaker 1: a lot of people in the US, we're already in 86 00:04:46,360 --> 00:04:51,720 Speaker 1: a recession. Um, it's not in the companies where um 87 00:04:51,800 --> 00:04:56,520 Speaker 1: they deal around the world, but for smaller companies and 88 00:04:56,600 --> 00:04:58,800 Speaker 1: certainly for people who buy gas and have to go 89 00:04:58,880 --> 00:05:01,320 Speaker 1: to work, and a lot of us no hunger have 90 00:05:01,400 --> 00:05:04,480 Speaker 1: to actually physically go to work, so we can kind 91 00:05:04,480 --> 00:05:09,520 Speaker 1: of save in that area. But um, you know, I'm 92 00:05:09,560 --> 00:05:12,520 Speaker 1: just saying that there's probably a recession right now, and 93 00:05:12,560 --> 00:05:15,320 Speaker 1: the Fed's going to exacerbate it and maybe make it 94 00:05:15,360 --> 00:05:20,000 Speaker 1: go worldwide if we continue down this path of extremely 95 00:05:20,680 --> 00:05:24,480 Speaker 1: um different interest rates across the world, with the US 96 00:05:24,560 --> 00:05:29,839 Speaker 1: being very very high. So with the decision in the background, 97 00:05:30,200 --> 00:05:32,600 Speaker 1: what do you avoid then? If you're buying what everybody heights, 98 00:05:32,960 --> 00:05:35,560 Speaker 1: what are you staying away from? Right? Well, again, you know, 99 00:05:35,600 --> 00:05:37,560 Speaker 1: we have three or five year time period. Maybe I 100 00:05:37,560 --> 00:05:42,000 Speaker 1: didn't make that explicit. I'm I'm looking for like long 101 00:05:42,080 --> 00:05:45,680 Speaker 1: long term, not thirty six months, right because who knows. 102 00:05:46,400 --> 00:05:49,680 Speaker 1: I'm thinking that the FED is a thinking organization and 103 00:05:49,720 --> 00:05:53,640 Speaker 1: they'll figure this out. Um, the Michigan sentiment should have 104 00:05:53,760 --> 00:05:56,520 Speaker 1: given them some indication that what they've done so far 105 00:05:56,560 --> 00:05:59,920 Speaker 1: this year hasn't had any real impact on people's law. 106 00:06:00,480 --> 00:06:04,119 Speaker 1: So you know, maybe you shouldn't keep doing what you're doing. 107 00:06:04,400 --> 00:06:06,280 Speaker 1: I don't know, Kim. I just want to pick up 108 00:06:06,279 --> 00:06:08,279 Speaker 1: on a point we were making where we lift off 109 00:06:08,320 --> 00:06:10,720 Speaker 1: about what you're staying a wife from. I know you're 110 00:06:10,720 --> 00:06:13,480 Speaker 1: not a fan of reeds. Well, they had defensive they 111 00:06:13,480 --> 00:06:16,640 Speaker 1: are stiple, But what are the risks for you? Sure? Well, 112 00:06:16,680 --> 00:06:19,479 Speaker 1: a couple of things, and I didn't quite fully address this. 113 00:06:19,600 --> 00:06:23,120 Speaker 1: So what the Fed here has done by raising interest 114 00:06:23,240 --> 00:06:27,919 Speaker 1: rates is they have slowed or maybe even reversed UM 115 00:06:27,920 --> 00:06:31,680 Speaker 1: real estate prices from rising. And why is that? Well 116 00:06:31,800 --> 00:06:35,640 Speaker 1: for real estate that is owned by you know, normal 117 00:06:35,680 --> 00:06:38,240 Speaker 1: people and they live in it. The way we look 118 00:06:38,279 --> 00:06:41,800 Speaker 1: at real estate here is it's not the absolute value 119 00:06:41,800 --> 00:06:43,880 Speaker 1: of the real estate when we're buying it. It's a 120 00:06:43,920 --> 00:06:48,200 Speaker 1: cash flow. So it determines that the mortgage rate determines 121 00:06:48,720 --> 00:06:52,400 Speaker 1: how affordable things are. And it had been pretty darn 122 00:06:52,480 --> 00:06:57,719 Speaker 1: affordable with three mortgage rates that um that that's where 123 00:06:57,760 --> 00:07:01,200 Speaker 1: we started in two and other at seven. So that 124 00:07:01,400 --> 00:07:06,400 Speaker 1: is driving down actually UM retail real estate. And I 125 00:07:06,400 --> 00:07:09,200 Speaker 1: would only assume that it would do that for commercial 126 00:07:09,240 --> 00:07:12,280 Speaker 1: as well. The other thing is is just another thing 127 00:07:12,280 --> 00:07:14,560 Speaker 1: that I touched on in my earlier segment, is a 128 00:07:14,640 --> 00:07:17,720 Speaker 1: lot of white collar workers never no longer drive to 129 00:07:17,720 --> 00:07:20,360 Speaker 1: work and go to work every single day. So that 130 00:07:20,560 --> 00:07:25,559 Speaker 1: is going to completely change the way companies use real estate. 131 00:07:25,640 --> 00:07:28,680 Speaker 1: I mean, I think that we'll always have a concept 132 00:07:28,720 --> 00:07:31,760 Speaker 1: called the office, but it it's going to look very 133 00:07:31,800 --> 00:07:34,520 Speaker 1: different than it has for the past I don't know 134 00:07:34,640 --> 00:07:38,520 Speaker 1: forty years. So where are you in terms of offshore 135 00:07:38,560 --> 00:07:42,120 Speaker 1: investing right now? Are you seeing opportunities in foreign markets, 136 00:07:42,160 --> 00:07:45,880 Speaker 1: anything in Asia that you like? Well, I think we're 137 00:07:45,920 --> 00:07:49,240 Speaker 1: all kind of captive to the dollar, and if it 138 00:07:49,440 --> 00:07:53,320 Speaker 1: is a an area of the world that will flourish 139 00:07:53,480 --> 00:07:58,560 Speaker 1: with a stronger dollar, it maybe look worth am a 140 00:07:58,680 --> 00:08:02,920 Speaker 1: look see at it. Um. We generally play US companies, 141 00:08:02,960 --> 00:08:06,480 Speaker 1: but they're exposure to different areas of the world as 142 00:08:06,520 --> 00:08:12,800 Speaker 1: opposed to directly owning equities in a different market. If 143 00:08:12,840 --> 00:08:17,400 Speaker 1: you're getting Longbow and you want to look off shore, 144 00:08:17,440 --> 00:08:21,360 Speaker 1: and you mentioned semi conductors before, some offshore semi conductor 145 00:08:21,400 --> 00:08:24,480 Speaker 1: manufacturers with a look at the moment, Well, it is 146 00:08:24,600 --> 00:08:28,000 Speaker 1: kind of a dangerous time as China kind of has 147 00:08:28,080 --> 00:08:32,679 Speaker 1: not ruled out. Um, you know, a military uh uh 148 00:08:33,800 --> 00:08:38,160 Speaker 1: move on Taiwan. I don't think anyone is really expecting 149 00:08:38,200 --> 00:08:41,280 Speaker 1: that at this point. But there's other areas that are 150 00:08:41,320 --> 00:08:44,960 Speaker 1: in the semiconductor chain that may be worth a look. UM. 151 00:08:45,080 --> 00:08:48,640 Speaker 1: Some of the companies that I follow that while they 152 00:08:48,679 --> 00:08:53,080 Speaker 1: may not make semiconductors, they make parts that go into semiconductors. 153 00:08:53,120 --> 00:08:57,520 Speaker 1: They're domiciled in areas like Vietnam, and that might be 154 00:08:57,559 --> 00:09:01,760 Speaker 1: an area to look at, um because of their relative 155 00:09:01,800 --> 00:09:06,760 Speaker 1: lower cost of doing business there, and they're relatively skilled 156 00:09:07,040 --> 00:09:11,280 Speaker 1: labor that's um found in that country. So looking there 157 00:09:11,480 --> 00:09:13,280 Speaker 1: might be a place to start. So I can think 158 00:09:13,320 --> 00:09:17,079 Speaker 1: of a memory company like Micron versus let's say a 159 00:09:17,080 --> 00:09:21,280 Speaker 1: processor uh that may be produced by a company like 160 00:09:21,520 --> 00:09:27,000 Speaker 1: Advanced micro Device Devices, or even a graphics card created 161 00:09:27,000 --> 00:09:29,800 Speaker 1: by a company like in video. There are three choices 162 00:09:29,800 --> 00:09:31,720 Speaker 1: where would you put money to work? If I said 163 00:09:31,720 --> 00:09:34,520 Speaker 1: you have to pick one of the three, I'd pick 164 00:09:34,640 --> 00:09:39,360 Speaker 1: a m D Well and Micron. But if it's only one, 165 00:09:39,480 --> 00:09:42,000 Speaker 1: I'd pick a m D. I think that they have 166 00:09:42,400 --> 00:09:45,680 Speaker 1: a pretty good CEO there that has changed the direction 167 00:09:45,720 --> 00:09:49,000 Speaker 1: of the company, and I think that that's important that 168 00:09:49,080 --> 00:09:52,480 Speaker 1: you need to think differently in different times, and it 169 00:09:52,600 --> 00:09:56,080 Speaker 1: seems like that CEO will be able to guide that 170 00:09:56,160 --> 00:10:02,559 Speaker 1: company through the choppy waters of the semiconductor UH industry. 171 00:10:03,160 --> 00:10:06,600 Speaker 1: Just to roundoff, we have from jumping over the weekend, 172 00:10:06,679 --> 00:10:09,560 Speaker 1: spoke for nearly two hours. Anything in that speech that 173 00:10:10,000 --> 00:10:14,880 Speaker 1: changed your perspective on investing in China. We've long been 174 00:10:15,960 --> 00:10:21,240 Speaker 1: leaning away from investing in China for several reasons. UM. First, 175 00:10:21,920 --> 00:10:26,480 Speaker 1: given their kind of negative growth. Um you know that 176 00:10:26,800 --> 00:10:31,400 Speaker 1: was actually caused by China wanting negative growth with the 177 00:10:31,440 --> 00:10:36,400 Speaker 1: one child policy. We haven't been really interested in UH 178 00:10:36,640 --> 00:10:40,520 Speaker 1: finding companies that might serve that market because we think 179 00:10:40,520 --> 00:10:43,040 Speaker 1: it's like a lot of areas in the world going 180 00:10:43,080 --> 00:10:44,800 Speaker 1: to be shrinking, but we think it's going to be 181 00:10:44,800 --> 00:10:49,360 Speaker 1: shrinking really aggressively. So we've been staying away from China. Alright, 182 00:10:49,440 --> 00:10:52,480 Speaker 1: Kim Forest, ce IO at Boca Capital Partners, thanks so 183 00:10:52,559 --> 00:10:54,760 Speaker 1: much for joining us on the Daybreak Asia