WEBVTT - Stefanie Holtze-Jen on the Markets (Audio)

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<v Speaker 1>All right, let's get to our guess now it's definitely

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<v Speaker 1>holds yen ce io apack at Deutsgia Bank International private bank,

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<v Speaker 1>and pick up there on what we are seeing with

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<v Speaker 1>the energy crisis deepening in Europe and leaders really scrambling

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<v Speaker 1>to deal with that. How much of it is a

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<v Speaker 1>concern here is that this could push us into a

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<v Speaker 1>global recession. There's a lot of concern of course, UM,

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<v Speaker 1>maybe not in regards to a global recession right away,

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<v Speaker 1>but for sure if we look at Europe, we have

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<v Speaker 1>been working on the assumption so far that Russia would

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<v Speaker 1>not switch off nord stream UM forever, you know, not

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<v Speaker 1>giving away this leverage they had in their hands. But

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<v Speaker 1>now it's been made quite clear that they have been

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<v Speaker 1>UM connecting the sanctions to their inability to repair and time.

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<v Speaker 1>And therefore, um, you know, we have to assume that

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<v Speaker 1>maybe that pipeline um techniqual isia will persist and we

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<v Speaker 1>won't get North Stream back to where it was before,

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<v Speaker 1>which was already be low capacity. So so far, UM,

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<v Speaker 1>our assumption was that we may have a mild recession

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<v Speaker 1>in Europe. But of course if um you know the

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<v Speaker 1>underlying UM assumption on that changes. Um, it will look

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<v Speaker 1>like more of a severe recession scenario. And of course

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<v Speaker 1>that's very wearing. And of course yes it has global implications. UM.

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<v Speaker 1>China is the main trading partner to Europe. UM. If

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<v Speaker 1>EU rober sliding into recession, Um, not just China, you're

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<v Speaker 1>the U S. Everybody else will of course be impacted.

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<v Speaker 1>What does it mean for the A c B. You're

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<v Speaker 1>saying they will continue with rad hikes here. Yes, well,

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<v Speaker 1>we are already have seen quite a reprising last week

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<v Speaker 1>UM on the E c B, more on the back

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<v Speaker 1>of UM Council official commentary than what has transpired over

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<v Speaker 1>the weekend on the energy side. But I guess it's

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<v Speaker 1>just this energy situation is just exacerbating the problem. Um. UM,

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<v Speaker 1>So seventy five um, sorry, seventy five basis points hike

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<v Speaker 1>look very much on the card on Thursday, and UM,

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<v Speaker 1>well they have been stepping off their forward guidance. But

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<v Speaker 1>we would expect to get a bit of a clearer

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<v Speaker 1>idea on Thursday as towards the path ahead. Most probably

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<v Speaker 1>that would be more on the hawker side, all right.

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<v Speaker 1>And moving to the FED now as well, you're saying

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<v Speaker 1>they're expecting to remain hawkish when we look at what

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<v Speaker 1>we saw in their jobs numbers. I mean, it's still

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<v Speaker 1>a pretty strong labor market, still a very strong dollar

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<v Speaker 1>as well. How much further tightening do you expect from

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<v Speaker 1>the Fed? You well, to be honest, I saw some

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<v Speaker 1>of soft lending hints as well in these labor market report.

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<v Speaker 1>But then of course the drolls data show still strong

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<v Speaker 1>drop opening. So you have that mixed bag. And given

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<v Speaker 1>what we learned, the Jackson home was probably as much

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<v Speaker 1>as one lower CPI print also a bit of a

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<v Speaker 1>softer data set um from from the employment market, most

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<v Speaker 1>probably won't derail the FED from their path to just

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<v Speaker 1>frontload as much as they can there it hiking path. Well,

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<v Speaker 1>we have a bit of more commentary ahead of the

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<v Speaker 1>CPI next week on the thirteen UM out of the

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<v Speaker 1>US before we go into blackout and then into the

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<v Speaker 1>next f WORMS meeting on the twenty one. But I

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<v Speaker 1>guess that repricing is uh has happened, and its correct

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<v Speaker 1>to assume there will be more coming and more hawker

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<v Speaker 1>is tonality from the FED um as we see data

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<v Speaker 1>stay that way and not convincingly shift the other way around.

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<v Speaker 1>So we saw about a four percent drop in the

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<v Speaker 1>SMP five in August, following that big drop that we

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<v Speaker 1>saw in June as well, which was kind of a

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<v Speaker 1>guess reversed by those July gains. Where do we trade

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<v Speaker 1>for the rest of the year. I know that you're

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<v Speaker 1>positive on energy and healthcare. Yes, Um, Actually, Um, there

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<v Speaker 1>is a fine balancing act of course that we'll need

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<v Speaker 1>to be delivered by the FED, but so far we're

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<v Speaker 1>still working on the basis that it will be only

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<v Speaker 1>a mild resaction, and consequently, also the asset um reprisings

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<v Speaker 1>that will have to happen won't see um, you know,

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<v Speaker 1>massive sell offs. Then of course, UM almost probably have

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<v Speaker 1>a difficulty t recover before we see the reality kicking

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<v Speaker 1>in with the October earnings from the US. I think

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<v Speaker 1>the market is very well expecting that those will have

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<v Speaker 1>more of a reality check in regards as to how

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<v Speaker 1>the economy is doing. China is going to accelerate its

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<v Speaker 1>stimulus rollout in the third quartermaking moves to defend the

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<v Speaker 1>one as well. When do we see a tipping point

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<v Speaker 1>for better growth recovery in China? Well, that that's an

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<v Speaker 1>excellent question, you know, UM, We've been talking to each

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<v Speaker 1>other over the past month, and I've been always a

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<v Speaker 1>bit more optimistic on China compared to the rest of

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<v Speaker 1>the street. UM look like that the global headwinds and

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<v Speaker 1>also all the news around the property sector has been

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<v Speaker 1>depressing sentiment again UM on asset prices and UM of

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<v Speaker 1>course UM with the incoming data being still depressed because

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<v Speaker 1>of the COVID policy being followed to the you know,

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<v Speaker 1>to the strangest requirements. It's UM. It's a situation where

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<v Speaker 1>most probably we will have to defer this view of

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<v Speaker 1>getting more cautiously optimistic into the fourth quarter rather than

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<v Speaker 1>the third quarter. But I think because UM, you know,

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<v Speaker 1>we have been opening a bit more positive today and

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<v Speaker 1>I think it's really down to UM the resolve from China.

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<v Speaker 1>We had these news that they totally understand they need

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<v Speaker 1>to put everything in the third quarter or as much

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<v Speaker 1>as possible in terms of the infrastructure and fiscal support

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<v Speaker 1>their planning. They have already had lower interest rates before,

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<v Speaker 1>and now they've also shown us that with UM taking

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<v Speaker 1>the reserve requirement for ethics deposits down from eight to

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<v Speaker 1>six percent, that they're also showing resolve and not letting

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<v Speaker 1>the yuan depreciate to an extent that this will have

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<v Speaker 1>more UM outflows out of the country. What do you

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<v Speaker 1>think in terms of whether or not it's it's right

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<v Speaker 1>to invest into China heading into the latter part of

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<v Speaker 1>the year. Morgan Stanley saying yesterday they expect consensus earnings

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<v Speaker 1>downgrades to continue into the fourth quarter. Yeah, well, if

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<v Speaker 1>you haven't been invested in China at all, there's obviously

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<v Speaker 1>a few sectors to um UM to not look into,

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<v Speaker 1>for instance, properties UM and then UM. It's important to

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<v Speaker 1>UM start scaling in UM in a cautious way. You're

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<v Speaker 1>cautious manner. But if you have been investing so far

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<v Speaker 1>as we have been doing for our clients for instance,

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<v Speaker 1>we're just looking for opportunities and we keep in liquid

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<v Speaker 1>alternostitatives to be able to to make those moves. So

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<v Speaker 1>it's UM that turning point everybody is waiting for most

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<v Speaker 1>probably it doesn't come at a switch. It is something

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<v Speaker 1>that you have to, you know, approach UM step by step,

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<v Speaker 1>and these valuations obviously already are quite interesting. We are

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<v Speaker 1>waiting to see Japan fully open to tourism. I mean,

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<v Speaker 1>that's something that I think the world is kind of

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<v Speaker 1>opening waiting for the end One forty I think Goldman

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<v Speaker 1>SAX saying could get to one forty five. How attractive

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<v Speaker 1>a Japanese equies. Yeah, we have recently and that is

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<v Speaker 1>a very technical UM notion. UM actually taken up and

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<v Speaker 1>overweight in the Japanese equity sector. UM and at the

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<v Speaker 1>same time having reduced that A X J overweight we

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<v Speaker 1>had before UM, just in terms of timings to to

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<v Speaker 1>look at. You know, if especially the end trajectory stays

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<v Speaker 1>the way it is, most probably it's something that will

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<v Speaker 1>benefit that equity outlook even more. And then as we

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<v Speaker 1>heard already, we have all these news in terms of reopening.

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<v Speaker 1>It's cautious, of course, but it looks like we would

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<v Speaker 1>see a different style in terms of COVID management going

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<v Speaker 1>forward and the tourism to be able to pick up

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<v Speaker 1>on the back of it. What's the Australia picture look

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<v Speaker 1>like for you? We're looking at potentially a fourth half

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<v Speaker 1>point high from the RBA, but there's been in some

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<v Speaker 1>pretty strong company earnings there well personally, UM, that's uh,

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<v Speaker 1>you know, we're just ahead of that decision that I

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<v Speaker 1>was actually expecting. UM. Given that the A B A

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<v Speaker 1>A B A has already UM guided us that maybe

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<v Speaker 1>they take the foot of the paddle a little bit,

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<v Speaker 1>um that this won't be a fifty basis points hike,

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<v Speaker 1>but maybe less. But maybe it's fifty basis points with

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<v Speaker 1>the according language around it. So I also, as you said,

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<v Speaker 1>you know, earnings are in a different are coming in

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<v Speaker 1>slightly strong. We had already quite a sizeable correction on

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<v Speaker 1>the housing market. You know, maybe now is the time

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<v Speaker 1>in the light of this to um go off the

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<v Speaker 1>paddle a little bit and very excited to see how

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<v Speaker 1>it will turn out today. All right, thank you so

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<v Speaker 1>much as always for your time. Stephanie Holtz and ce

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<v Speaker 1>io a pack at dertgea bank international private bank with

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<v Speaker 1>US