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Speaker 1: Let's get to our guests for this half hour. It's Sheatsall,

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Speaker 1: financial advisor and managing director at UBS. So we had

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Speaker 1: a big change today and so it bears talking about,

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Speaker 1: you know, the possibility of some new direction here. We

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Speaker 1: mentioned earlier that Mike Wilson at Morgan Stanley and Eric

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Speaker 1: Johnston at Cantor Fitzgerald have completely flipped their views. They

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Speaker 1: were among the biggest bears on Wall Street now turning positive.

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Speaker 1: You heard the comments there from Eduard Denny. No need

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Speaker 1: for me to go into a lot of the reasons

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Speaker 1: why these people think that the time to to look

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Speaker 1: it's time to look more bullish. Now, I'd like to

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Speaker 1: get your views and whether or not this kind of

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Speaker 1: rally we saw today can last. Well. We still think there's, uh,

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Speaker 1: there's still a lot of uncertainties in the market, and

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Speaker 1: we remain neutral on US and global equities. UM. Some

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Speaker 1: of the main reasons are, you know, the studnly high

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Speaker 1: installation and we have the policy uncertainty, and in still

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Speaker 1: the ongoing geopolitical tensions, um war in Ukraine's it's still ongoing.

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Speaker 1: So um, you know, in the near term, probably until

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Speaker 1: you're in we still feel like the market is going

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Speaker 1: to be quite volatile, and we are staying very cautious

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Speaker 1: in the near term. So what do you put money

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Speaker 1: to work in this environment? I mean you represent ultra

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Speaker 1: high nip width individuals and and their needs. Is their

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Speaker 1: interest greater and hyns right now? Are there's still opportunities

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Speaker 1: out there. There are certainly opportunities, um, but it's going

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Speaker 1: to be more long term. Uh, and it really depends

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Speaker 1: on the client uh and what is their time horizon.

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Speaker 1: So uh, we would say the near term is you know,

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Speaker 1: if we'd like to stay cautious, uh, more cash does

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Speaker 1: not hurt at this point, and really we would like

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Speaker 1: to see um more stability in the interest rates and

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Speaker 1: maybe a pause in the hip of rates before we

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Speaker 1: start adding too much into the equity market. Well, if

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Speaker 1: you're thinking about a pause from the FED, you've got

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Speaker 1: to think about at it now because you know, in

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Speaker 1: by December they'll be up over four right, and that's

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Speaker 1: getting close to what the target terminal rate is. So

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Speaker 1: I mean, if if you really believe that, then maybe

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Speaker 1: now is the time to start thinking about switching your position. Certainly,

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Speaker 1: I mean that definitely is Uh, there are definitely opportunities

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Speaker 1: but we still feel there's a lot of uncertainty out there,

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Speaker 1: and the set has long stress that they will need

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Speaker 1: to see signs of a cooling labor market along with

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Speaker 1: lower inflation before toning down rate heights. So, um, you know,

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Speaker 1: in the labor market still still strong at this point.

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Speaker 1: So you know, our fund expected fund rates about four

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Speaker 1: and a quarter by year end UH and a peak

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Speaker 1: about four and a half percent in March two thousand three.

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Speaker 1: So we wanted to see a little bit of cooling

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Speaker 1: in the labor market and lower inflation before getting getting

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Speaker 1: more into the equity market. And as she we were

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Speaker 1: talking about the path a head full of the fit

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Speaker 1: as this tightening continues, do you anticipate a recession or

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Speaker 1: at least an earnings recessions as input costs and rights

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Speaker 1: continue to rise. And coupled to that, do you expect

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Speaker 1: to see the number of bankruptcies rising as well? I mean,

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Speaker 1: it could certainly happen. We are just more cautious at

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Speaker 1: this point. It really depends on if, uh, you know,

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Speaker 1: some of the numbers and the inflation numbers are going

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Speaker 1: to come down a little faster than expected. So at

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Speaker 1: this point, you know, we are staying very cautious high

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Speaker 1: in cash, and we are not advising clients to jump

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Speaker 1: into the markets right away if they're sitting on the sideline.

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Speaker 1: What we saw happen last week with the UK, I

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Speaker 1: think got the attention of people everywhere around the world.

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Speaker 1: It kind of raised questions about the financial system itself.

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Speaker 1: I mean, how strong are your concerns about the integrity

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Speaker 1: of the global financial system. Um, you know, we're certainly

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Speaker 1: very concerned about that. Uh, the Eurozone and the UK

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Speaker 1: are likely to you know, experience three sessions on it,

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Speaker 1: probably on a six to twelve months horizon. Um, gonna

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Speaker 1: happen there, and the war is not making it any better. Um.

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Speaker 1: In distinctions have been imposed, disrupting thematic commodity belows and

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Speaker 1: creating extreme volatility in some markets. So, um, you know

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Speaker 1: that's that's that's an area of very high volatility in

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Speaker 1: terms of where you put money to work at the moment.

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Speaker 1: I know you're averse to consume a discretionary, which is understandable.

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Speaker 1: You do favor tick, But what does the name like

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Speaker 1: Apple fit for you in the picture like that, because

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Speaker 1: it kind of has a foot in both camps. Yes,

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Speaker 1: I mean, it's it's a long term hold, and we

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Speaker 1: were certainly we have been trimming down on tech on

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Speaker 1: growth uh all year and are most preferred right now.

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Speaker 1: It's consumer stables, energy and healthcare. Uh. You know, the

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Speaker 1: high rates and the high inflation is not gonna, you know,

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Speaker 1: be very helpful in terms of in terms of the

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Speaker 1: growth and tech stox. So we rather say more conservatives

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Speaker 1: in this market. And uh and energing healthcare is just

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Speaker 1: one of our favorite areas right now. And you like

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Speaker 1: value over growth. So you may be thinking about cyclical

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Speaker 1: and particularly if some of those arguments that you know

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Speaker 1: people are making that inflation is coming down a lot

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Speaker 1: faster than you think, and that you know the FED

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Speaker 1: will will moderate its position probably by December, then would

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Speaker 1: would not cyclical look attractive to you? Yes, I mean

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Speaker 1: it's it would be. It's certainly attractive. And I think

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Speaker 1: that would be if this did happen, Like let's say

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Speaker 1: you're in somehow the FED pivot, assuming US inflation be

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Speaker 1: clients and and and spreads could then retrace a bit,

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Speaker 1: then we would certainly not only go into cyclicals or value,

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Speaker 1: but also start adding back into growth and tech. US Well,

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Speaker 1: if you have a long term if the clients have

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Speaker 1: a long term horizon you didn't have about emerging markets.

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Speaker 1: When do you start taking a look over there again,

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Speaker 1: probably a little bit later. We still like us, We

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Speaker 1: still prefer us over some of the other developing markets

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Speaker 1: or emerging markets. You know, we're expecting overall week earnings

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Speaker 1: in two three, and emerging market equity likely faced a

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Speaker 1: further earning earnings downgrade, you know, but the valuations are

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Speaker 1: now pricing in more recession risks. I guess, um, I'm

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Speaker 1: kind of curious about how you think the next full

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Speaker 1: year rolls out, because we've got turbulent times now, and

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Speaker 1: you know you've said that you're pretty cautious here. Um,

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Speaker 1: does that turn for the better next year or does

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Speaker 1: it turn for the worst? Well, we certainly hope that

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Speaker 1: it will turn from the better next year. I mean,

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Speaker 1: the said is raising rates UH to hopefully cool down

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Speaker 1: the inflation, and by we're expecting by March would have

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Speaker 1: a peek around four and a half percent on the

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Speaker 1: said fun rate. And when that happens, if great starts

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Speaker 1: to really start to come down, I mean, we hope

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Speaker 1: that the economy will start to pick up again, but

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Speaker 1: it's gonna be a slow it's going to be slow

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Speaker 1: growth going into next year. It's just the recovery isn't

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Speaker 1: going to be that fast. There's no there's really not

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Speaker 1: a lot of support. There's um, there's just not a

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Speaker 1: lot of support going into next year. But I think

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Speaker 1: it will eventually pick up alright, Chat our financial advisor

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Speaker 1: and managing director at u B S Thanks so much

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Speaker 1: for joining us on Bloomberg day Breakasia