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Speaker 1: Let's get to our guest, Adrian Zirker, ce IO and

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Speaker 1: head of Global Asset Allocation at UBS Global Wealth Management. Adrian,

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Speaker 1: nervous times here and we see losses across the boards.

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Speaker 1: How cautious should we get here in our investing good morning? Um?

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Speaker 1: Definitely for for now we want to be quite coarsely

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Speaker 1: position for for markets. We have for this double value

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Speaker 1: of growth slow down and still if they aggressive FED

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Speaker 1: as inflation remains high. This week will get a bit

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Speaker 1: more information about how inflation has developed in the month

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Speaker 1: of September, but most likely state elevated, and the FED

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Speaker 1: will have to continue to sound very hawkish and to

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Speaker 1: hike aggressively. So we expect another seventy five basis points

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Speaker 1: of hide at the beginning of the of November and

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Speaker 1: that will weigh on the market. Adrian, how many more

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Speaker 1: big hikes are coming from the Fed after November? Well,

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Speaker 1: I think we were a bit more sanguine about that.

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Speaker 1: So we do expect that the base points in November

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Speaker 1: fifty basis points. In December, there's the potential for another

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Speaker 1: twenty five basis points at the beginning of February. There's

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Speaker 1: no meeting in January and then we should be probably

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Speaker 1: done the market spizing in slightly higher terminal rates. UM.

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Speaker 1: So it could be a surprise as we would see

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Speaker 1: inflation starting roll over more visible in the fourth quarter

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Speaker 1: particul in December UM, so that that's probably the the

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Speaker 1: upside for the market. But until then, until it's really

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Speaker 1: clear evidence, the set will sound hawkish and will be

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Speaker 1: biased to be more on the aggressive side as they

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Speaker 1: have fallen behind the curve. So that staying power is

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Speaker 1: very much a question. I like the way Tom or

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Speaker 1: Like of Bloomberg Economics put it. He said, talking like

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Speaker 1: Voker is easy. Um, we're hiking until the job is done.

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Speaker 1: Walking like Vulcar actually hiking rates when investors are losing

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Speaker 1: a lot of money and work, there's a losing jobs

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Speaker 1: is hard. Now later on he says that basically he

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Speaker 1: he he thinks all central banks have talked to talk,

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Speaker 1: but will they walk the walk? That seems to suggest,

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Speaker 1: at least in his view and Bloomberg Economics, is that

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Speaker 1: the main risk is that policymakers don't go far enough,

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Speaker 1: not that they're going too far. What do you think?

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Speaker 1: I probably would see the risk exactly on the opposite

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Speaker 1: due to the set has they did the posty mistake.

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Speaker 1: They were waiting too long, they fell way behind basically

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Speaker 1: where they should be with the interest rates, and now

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Speaker 1: they're hiking aggressively not seeing that actually despite we have

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Speaker 1: very resilient labor market, but there's a lot of slak

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Speaker 1: building up when you look at some of the leading

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Speaker 1: indicators from from the macro side. We also look at

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Speaker 1: the financing, we look at housing activity and all that. Basically,

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Speaker 1: it's just that the economy will flow the put down

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Speaker 1: actually much much quicker, and so if if the fat

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Speaker 1: doesn't start to pivot in the next three to four months,

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Speaker 1: they will send basically the economy over the cliff and

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Speaker 1: we will see a deep possession. So that's that's for

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Speaker 1: us the biggest concerns I mentioned. We're very much looking

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Speaker 1: forward to China reopening after the Golden Week holiday and

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Speaker 1: looking ahead to the Party Congress as well. You're continuing

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Speaker 1: to avoid Chinese property bonds and equities. Are you expecting

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Speaker 1: that there could be any potential upside in these areas

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Speaker 1: once we get through the Party Congress? Well, the Party

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Speaker 1: Congress is of course important. I think the issue we

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Speaker 1: see is that usually the reshuffling of the government will

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Speaker 1: take up to March next year and we have the

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Speaker 1: Policy Congress again and then we will get more direction

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Speaker 1: on where the economy actually should go to get growth

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Speaker 1: numbers and expectations. They will be definitely over the next

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Speaker 1: couple of months more positive news. But we actually think

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Speaker 1: the key issue is your coed policy and the question

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Speaker 1: is will we see a shortcut out of that or

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Speaker 1: a windy road And it's probably more a windy road

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Speaker 1: until sort of March next year. Hopefully by then we

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Speaker 1: will start to see an easing of these policies, but

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Speaker 1: it will take some time. And I think that's really

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Speaker 1: the key issue currently that Chinese facing, and that's uh

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Speaker 1: so mean very weak growth numbers despite this year rebound,

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Speaker 1: it's in a weak property market and it's very difficult

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Speaker 1: to get out of that because the governments really books

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Speaker 1: themselves into a corner. What would some measures be that

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Speaker 1: could work on addressing the crisis in the property market, well,

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Speaker 1: definitely greater investment into infrastructure itself, um and then really

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Speaker 1: looking into how to support basically probably the lenders. And

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Speaker 1: at this point we will also have seen the basically

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Speaker 1: that some easing of some policies for the property developers

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Speaker 1: which have come through. But at the end it's it's

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Speaker 1: really a broad based stimulus package which we haven't really seen.

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Speaker 1: And there's there's there's of course policy coming through, it's

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Speaker 1: tickling through, but they're actually in the historical context rather light,

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Speaker 1: uh and not very decisive at this point. And that's

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Speaker 1: probably what we have to see, which is difficult, of course,

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Speaker 1: with the policies that overall, and we are heading basically

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Speaker 1: at this at this juncture of basically equalizing more people

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Speaker 1: and and trying to lift basically the lower part and

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Speaker 1: and basically narrowing basically this wealthcare wealth gap in China.

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Speaker 1: And I think these two policies are clashing currently together.

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Speaker 1: When we look at the oil market, we're seeing around

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Speaker 1: ninety two dollars for crude and whether or not the

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Speaker 1: aggressive FED hikes are going to kind of impede what

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Speaker 1: we've seen from opeque class. How much does a return

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Speaker 1: to a hundred dollars about al kind of spook investors here. Well,

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Speaker 1: commies are most peopod as we think commodities. Oil is

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Speaker 1: our favorite sup as a class, so we actually do

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Speaker 1: think we can go even above under jewistall over the

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Speaker 1: next couple of months um as demand is slowing down

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Speaker 1: through the measurements we see globally also that central banks

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Speaker 1: are increasing their interest rates and growers slowing down. But

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Speaker 1: the supply side is so constraint that we actually do

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Speaker 1: thinks that oil will reach back over round the jew stall,

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Speaker 1: and we do think among all the folk we see

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Speaker 1: actually in the market on the commodity side, we have

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Speaker 1: most visibility and so therefore to our most preferred as

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Speaker 1: a class at this point, Do you think that that

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Speaker 1: will create a rising geopolitical tensions, particularly between Saudi Arabia

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Speaker 1: and some of the other oil producers in the US. Absolutely,

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Speaker 1: I do think we are already drifting into a more

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Speaker 1: multipolar world, and it's definitely one of the key thinking

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Speaker 1: whether we have when we talk about strategy as location

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Speaker 1: and how we try to build robust portfolios. We see

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Speaker 1: the drift between the U, s China, we have Russia

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Speaker 1: now in the mix, and of course the Saudi Arabia

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Speaker 1: in the Middle East. All that is adding to complexity,

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Speaker 1: but they also shows that that Saudi Arabia was was

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Speaker 1: brave enough basically to go out and does a very

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Speaker 1: big cut despite the US was actually a lobbying for

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Speaker 1: for for a lower cut, and so this will definitely

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Speaker 1: brew over the next couple of months, and we definitely

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Speaker 1: hear more out of the US also from the policy natures,

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Speaker 1: and they will try to to use their means that

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Speaker 1: they can um to to address that. All right, Adrian,

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Speaker 1: always a pleasure, Thank you for joining us. Adrianska ce

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Speaker 1: io and head of Global Asset Allocation at UBS Global

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Speaker 1: Wealth Management on the line from Hong Kong for us

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Speaker 1: here on day Break Asia