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Speaker 1: Let's get to our guest, Todd Elmer ahead of f

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Speaker 1: X and macro analysis for Asia in touch capital markets.

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Speaker 1: So Todd a headline on one of our op ed

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Speaker 1: pieces today is everybody hates stocks, maybe it's time to buy.

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Speaker 1: Do you hate that thesis or do you support it? Conceptually?

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Speaker 1: I do like that thesis because I think that when

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Speaker 1: sentiment reaches an extreme, that can often be an indication

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Speaker 1: that stocks are likely to rebound. However, I think that

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Speaker 1: the difficulty is always in the timing, and from my perspective,

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Speaker 1: I'm not quite convinced that we are there as of yet,

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Speaker 1: because I think that we still have some concerns around

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Speaker 1: some of the macro factors that have been weighing on stocks,

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Speaker 1: notably the relatively aggressive tightening that we're seeing from the

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Speaker 1: Fed UH and the fact that the economy looks set

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Speaker 1: to continue to slow down in the months ahead. And

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Speaker 1: that probably means that you want to be a bit

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Speaker 1: cautious at this point. Um. I think that there are

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Speaker 1: some of these forces in play and may continue to

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Speaker 1: weigh on prices. Does that mean that more more forces

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Speaker 1: that go into buying the dollar as well? Uh? You know,

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Speaker 1: there's all this talk about peak dollar or that we

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Speaker 1: reached it is it too early to call that. I

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Speaker 1: also think it's too early to call peak dollar. In fact,

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Speaker 1: I would see significant further upside for the dollar because

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Speaker 1: it's not just that these macro forces that have been

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Speaker 1: driving the dollar remain in place. It's also that when

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Speaker 1: we look at indicators of positioning across the fex market,

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Speaker 1: we're getting indications that the shift in favor of the dollar,

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Speaker 1: while it's been going on for some time, it's perhaps

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Speaker 1: not quite the magnitude that we might anticipate on the

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Speaker 1: basis of the moves and spot And I think that

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Speaker 1: means that investors have more wood to chomp in terms

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Speaker 1: of dollar buying. Uh, and that could provide us with

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Speaker 1: ammunition for the dollar to go further. So some investors,

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Speaker 1: you know, are saying, wow, you know, earnings are beating,

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Speaker 1: consumers are fine, just look at the bank earnings. What's

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Speaker 1: all this fuss in financial markets? But we should we

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Speaker 1: should point out that financial markets are discounting trouble coming

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Speaker 1: in twelve to eighteen months now. You would think that's

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Speaker 1: because of inflation and an aggressive fit? Is that it? Yeah?

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Speaker 1: You know, I think that the market can get a

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Speaker 1: bit circular, where if investors anticipate that we're going to

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Speaker 1: see a pivot in terms of FED policy as we

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Speaker 1: moved through next year, that that's providing some support to

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Speaker 1: sentiment that rates aren't just going to keep rising in

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Speaker 1: a straight line. But I think that you have to

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Speaker 1: look at the facts on the ground, Todd. I think

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Speaker 1: this is probably one of the most anticipated meetings for

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Speaker 1: the ECB that we we're counting down to later on today.

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Speaker 1: I have to wonder it seems like it's a coin

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Speaker 1: toss whether they actually hike that fifty paces points. What's

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Speaker 1: your take on what's going to happen today? Uh, certainly

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Speaker 1: the market sees a degree of uncertainty as to the

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Speaker 1: magnitude from the ECB, because we're pricing in in between

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Speaker 1: the twenty five and fifty basis point move, and I

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Speaker 1: think that there are hawks on the ECB to perver

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Speaker 1: to move a bit faster. But I do think that

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Speaker 1: that is a relatively or would be a relatively aggressive

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Speaker 1: jump from the Central Bank, which had signaled that it

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Speaker 1: intended to start off with a twenty five basis point move.

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Speaker 1: So I think that in addition to you know whether

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Speaker 1: or not we get that bigger hike, the market is

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Speaker 1: going to be sensitive to the guidance, and the political

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Speaker 1: developments in Italy are really serving to focus the market

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Speaker 1: on what the CP announces in terms of the anti

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Speaker 1: fragmentation tool. Uh. And I think that that gives us

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Speaker 1: a lot of scope for disappointment you on one of

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Speaker 1: those three fronts. And I think that that could be

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Speaker 1: negative for the Euro if we do see any disappointment. Yeah,

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Speaker 1: because there was a little bit of a bounce in

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Speaker 1: the Euro when we started hearing about fifty. But I

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Speaker 1: know that JP Morgan analysts there's ay, even if you

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Speaker 1: get a fifty basis point hike, that's not going to

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Speaker 1: save the euro. And one of the big reasons is

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Speaker 1: because of the gas situation that that is depressing much

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Speaker 1: more um you know, of of the European economy than

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Speaker 1: people would like. I think that's exactly right where the euro.

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Speaker 1: It's had a bit of a better week after what

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Speaker 1: had been a rough period with the dip below parody,

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Speaker 1: but the gas situation is not going to improve any

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Speaker 1: time in the in the near term. Um. That means

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Speaker 1: we are still going to see the exposure to geopolitical

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Speaker 1: developments in Ukraine. We know that that is going to

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Speaker 1: exact date toll on the European economy. We know that

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Speaker 1: the CP overall is unlikely to keep pace with other

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Speaker 1: central banks. The European economy has more leverage to the

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Speaker 1: slowdown in China. So there's just a lot of strikes

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Speaker 1: against the Euro at this point and against a broader rebound. Um,

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Speaker 1: I think that we're heading back below parody sooner rather

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Speaker 1: than later. M hmm, yeah, that is the I feel

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Speaker 1: like people are starting to say that, right any kind

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Speaker 1: of this kind of rally we've seen in the last

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Speaker 1: few days is pretty short lived at this point, uh,

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Speaker 1: which goes to kind of the b O J. Definitely

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Speaker 1: not as much theatrics as as last month, and not

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Speaker 1: as much excitement than what we saw. But but I wonder,

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Speaker 1: you know, when it comes to one of these kind

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Speaker 1: of big macro shorts this year, it was really the end.

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Speaker 1: Can that trade continue? You know, I think that that

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Speaker 1: trade is certainly more mature than some of the other

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Speaker 1: trades in the market. And when we look at the

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Speaker 1: you know, dilemma that policymakers face in Japan, you know,

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Speaker 1: the the there does seem there is likely to be

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Speaker 1: some negative impact from the end weakness, which is both

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Speaker 1: at a kind of historic level and historic pace of

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Speaker 1: weakening that we've seen in recent quarters. So I think

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Speaker 1: that the market will be sensitive to any indications that

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Speaker 1: that slow ship of Japanese policy is starting to turn around.

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Speaker 1: But I don't think that we're there as of yet.

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Speaker 1: But I don't think that we're going to get that

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Speaker 1: indication at the policy meeting tomorrow, which means that it's

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Speaker 1: probably a non event for the market. How much has

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Speaker 1: an aggressive FED had a big impact on central banks

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Speaker 1: and a Asia? I think it's having a huge impact

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Speaker 1: on central makes not just in Asia but across the

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Speaker 1: globe because, um, it's really exacerbating a lot of the

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Speaker 1: pickup that we're seeing in terms of global inflation, because

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Speaker 1: a lot of these particularly the smaller economies, are more

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Speaker 1: sensitive to important inflation, and as their domestic currencies weaken,

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Speaker 1: they're being forced to tighten policy more. In some cases,

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Speaker 1: they're being forced to uh intervene directly in terms of

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Speaker 1: the exchange rate to help slow down the pace of

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Speaker 1: depreciation from their domestic currencies. Um And unfortunately, I don't

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Speaker 1: think that that's going to change anytime soon because the

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Speaker 1: FED has laser like focus on combating inflation US, but

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Speaker 1: it hasn't necessarily you know, achieved its goal as of yet.

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Speaker 1: Ten seconds best trade out there right now. In effects

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Speaker 1: to look at G tend to look at relative trades.

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Speaker 1: I think G ten provides opportunities. I like short Euro

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Speaker 1: at this point. Okay, that was quick. Todd Elmer, head

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Speaker 1: of FX and macro analysis for Asia into Capital Marcus

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Speaker 1: joining us from Boulder, Colorado,