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Speaker 1: Seven and a half minutes past year. Let's get to

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Speaker 1: our guest, Sean Taylor, a pack c I O and

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Speaker 1: head of Emerging Markets at DWS. We can talk em

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Speaker 1: in a moment, Sean. But I just find this very

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Speaker 1: interesting what's happening between the markets and the Fed. So

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Speaker 1: we know that j PAL got sort of all vulcar

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Speaker 1: on us because they didn't feel comfortable with how much

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Speaker 1: the market had rallied off the June lows. And it's

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Speaker 1: really an odd situation because the markets are rallying again.

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Speaker 1: They're not like trying to get in Jerome Pala's face,

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Speaker 1: but they're just looking beyond. They think inflation is peaking

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Speaker 1: and that you know, the FED will get it up

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Speaker 1: to four percent and then things can get better later.

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Speaker 1: And you know, so j PAL is telling the markets

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Speaker 1: don't do what you normally do, which is look ahead.

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Speaker 1: I find it very puzzling. Yeah, I notice. I mean

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Speaker 1: it is very interesting, and I mean a lot of it.

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Speaker 1: If you look at the smph artists to do I

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Speaker 1: think with sort of tactical levels as well. Obviously in June,

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Speaker 1: you know, in the middle of June, in the market

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Speaker 1: that's sold off, the will started to look and see

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Speaker 1: that the inflation was coming down, and there could be

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Speaker 1: a potential, you know, said pivot Um in in mid August,

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Speaker 1: as you said in Jackson Hole, power made that clear

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Speaker 1: it wasn't gonna happen. Markets headed down again and they've

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Speaker 1: probably got a bit oversold, and the data has actually

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Speaker 1: been reasonably supportive. Headline data, I think on tonight will

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Speaker 1: be reasonably positive for inflation, but I think the underlying

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Speaker 1: trends is still clear. We've got higher than normal inflation

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Speaker 1: particularly and rents, some a wage pressure and rates and

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Speaker 1: rates will continue to go up. Rates are going to

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Speaker 1: continue to go up. There is that kind of one

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Speaker 1: of the best trades ahead of what we're expecting from

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Speaker 1: the f OMC later this month. And what's your kind

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Speaker 1: of dollar bit there too? Well? I think, you know,

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Speaker 1: short term, if the headlines are good, probably the dollar

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Speaker 1: weakens a little bit and and risk is back on.

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Speaker 1: But I think then it adjusts after a while. I mean,

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Speaker 1: at the moment we're almost at are sort of next

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Speaker 1: year's ten years US Treasury forecast. So if you know,

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Speaker 1: if anything goes above our forecast, and that because obviously

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Speaker 1: our forecast for a one year basis and we accept

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Speaker 1: that that things can get higher in the shorter term,

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Speaker 1: then it's probably a good time to be buying fixed income.

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Speaker 1: And for the first time in many years, fixed income

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Speaker 1: is giving a yield um with know with with with

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Speaker 1: which is good. It's now there's now more of them

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Speaker 1: alternative um. But I think it's going to be you know,

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Speaker 1: quite patchy actually between now and the next in the

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Speaker 1: next few months. Yeah, particularly with recession probably looming in Europe.

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Speaker 1: It doesn't seem like that's priced in. Do the markets

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Speaker 1: know something that we don't know from the headlines? We

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Speaker 1: la'st true. I mean, if you look at it compared

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Speaker 1: to the last few months, you could probably say, actually,

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Speaker 1: the US at the moment, the data seems to be

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Speaker 1: saying it could achieve a soft landing um with just

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Speaker 1: a higher cost of capital going forward on a higher

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Speaker 1: level of inflation. Um. Yeah, Europe, I mean, looks like

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Speaker 1: they can't avoid the recession. But I suppose whenever you

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Speaker 1: get you know, like a sort of the the mid

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Speaker 1: the military advisors are saying over the weekend that you know,

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Speaker 1: the Ukraine is putting more pressure on Russia, et cetera,

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Speaker 1: that people are sort of living in hope. I suppose

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Speaker 1: in a way, Um, you know, gas prices have come

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Speaker 1: down a bit. At prices have come down a bit

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Speaker 1: that has taken a little bit off of pressure off

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Speaker 1: the governments in Europe and in the UK as well

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Speaker 1: have decided to help out and protect consumers from some

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Speaker 1: of those rising prices. But I mean, in my view,

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Speaker 1: it's really kicking the can down the road, and I

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Speaker 1: expect it will have an impact negatively on the ecomic

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Speaker 1: growth going forward, and it's probably not priced in Sean.

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Speaker 1: We're awaiting the reopen of China and Hong Kong and

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Speaker 1: potentially joining in that rally that we saw across the

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Speaker 1: region yesterday when they were closed. Does She's overseas trip

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Speaker 1: also give us kind of some positive momentum that he's

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Speaker 1: leaving in the nation for the first time since the

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Speaker 1: pandemic and could start to see a pivot after the

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Speaker 1: party congress. Um, I think it does. I mean, obviously

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Speaker 1: we need to see more details of the opening up

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Speaker 1: plan and this morning as well as you've reported earlier

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Speaker 1: that you know there's lockdown is happening in other in

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Speaker 1: other areas of China, But it is positive. It's his

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Speaker 1: first trip abroad. UM. A lot of his you know,

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Speaker 1: advisors have been traveling as well, so you know, I

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Speaker 1: do think we're getting to a stage where we have

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Speaker 1: some visibility, although timing is is still pretty pretty key.

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Speaker 1: I think it's also over the weekend been and yesterday

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Speaker 1: I've been some more positive news from the government in

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Speaker 1: terms of you know, we're hearing that the plans are

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Speaker 1: happening to help the economy more so, I think the

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Speaker 1: focus will change over the next month or two from

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Speaker 1: politics to the economy and potentially looking at opening consolutions,

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Speaker 1: which will be positive. Do you have any trades targeted

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Speaker 1: at whatever comes out of the Party Congress UM. I

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Speaker 1: think for us the easiest trade in China really is

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Speaker 1: the opening up place because you know at some time,

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Speaker 1: at some time that will happen, and really related also

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Speaker 1: to consumption those classic airline services and consumption place UM,

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Speaker 1: and you know, the e commerce Internet place will will

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Speaker 1: will the benefit of that. We have to see though,

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Speaker 1: for them, for the for the structurals UM future of China,

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Speaker 1: what happens with common prosperity at at the UM, you know,

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Speaker 1: not necessarily the Party conference, but going forward, what's the message,

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Speaker 1: what's the growth rate going to be what's the balance

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Speaker 1: of the private sector, because you know, in two hamsand

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Speaker 1: and twelve we heard that the economy was going to

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Speaker 1: be rebalanced, and a lot of us thought that meant that,

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Speaker 1: you know, that the state would not take so much

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Speaker 1: so much part of it and that would be driven

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Speaker 1: more by the private sector. That But then obviously from

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Speaker 1: February last year, we've seen that's been changing with the

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Speaker 1: common prosperity. So it'll see where the balances. Your remaining

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Speaker 1: cautious on property, which makes sense given those problems don't

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Speaker 1: go away after the Party Congress or the reopening of

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Speaker 1: borders necessarily, but it'll swear looking at opportunities in India,

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Speaker 1: India and Indonesia tell us why, Yeah, it's really it's

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Speaker 1: really growth rates. I mean, you've had you know, um

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Speaker 1: some some some decent performance out of both those markets

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Speaker 1: year to date. Um they've they've also both been hurt

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Speaker 1: by what should normally have been headwinds with the oil

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Speaker 1: price and also with rates going up. But the growth

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Speaker 1: coming through is very strong. Is a good domestic story.

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Speaker 1: It's less both markets are less driven by the global cycle.

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Speaker 1: And I think you know, even though we're seeing a

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Speaker 1: bounce Julia today in career. In Taiwan, those markets are

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Speaker 1: still quite tech tech heavy. There's sort of tech driven,

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Speaker 1: and you know, the US and we are feeling and

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Speaker 1: if you look at a lot of the results in

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Speaker 1: the US that the demand for people to buy more

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Speaker 1: computers and you know, more more phones, et cetera is

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Speaker 1: not their relative to services in the US. So we

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Speaker 1: think they probably still lag where you know, consumption picking up.

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Speaker 1: I mean in India, the property cycle is looking very

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Speaker 1: interesting thing and that's giving a very good base more

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Speaker 1: affordable consumption picking up. And actually we've got a much

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Speaker 1: higher growth rate in both India UM and in Ansia

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Speaker 1: going forward, especially the delta relative to China. So I

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Speaker 1: think they're interesting stories. But if we have a turning

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Speaker 1: point in the markets, it will be China. We're just

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Speaker 1: not ready to hold it yet, really yet, because we

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Speaker 1: need to see the markets. COVID zero policy going, let's

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Speaker 1: get another angle on that. So we know President she's

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Speaker 1: going to Central Asia and likely we'll meet with the

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Speaker 1: Russian president Vladimir Putin. You know, is there anything that

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Speaker 1: she could tell Putin that would impact the course of

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Speaker 1: that conflict. Well, that's obviously all eyes are going to

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Speaker 1: be on this because the last the last meeting was

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Speaker 1: at the Olympics just before um, you know, the conflict started.

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Speaker 1: So it will be very interesting to see the retoric

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Speaker 1: coming out of that. It's and it's pretty hard to

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Speaker 1: it's pretty hard to make an investment conclusion. I'm afraid,

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Speaker 1: Brian on it without without what's going to be talked about,

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Speaker 1: whether it's gonna be positive for oil, where it's gonna

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Speaker 1: be negative to oil, whether it's going to be you know,

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Speaker 1: more about you know, finding a possible solution, or that

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Speaker 1: there is more about isolation. Yeah, it's going to be

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Speaker 1: certainly interesting to watch. Sean, We thank you as always.

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Speaker 1: Sean Taylor APEX, CEO and head of Emerging Markets at

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Speaker 1: d WS, joining us from Hong Kong,