1
00:00:00,040 --> 00:00:03,480
Speaker 1: We're joined now by Clara Chong, global market strategist at

2
00:00:03,560 --> 00:00:07,720
Speaker 1: JP Morgan Asset Management, and Clara Withoods on Bloomberg today.

3
00:00:08,039 --> 00:00:10,479
Speaker 1: From the Governor of the Bank of Korea, we've seen

4
00:00:10,520 --> 00:00:12,640
Speaker 1: a career of course down shifting the size of its

5
00:00:12,680 --> 00:00:16,360
Speaker 1: rate increases. The Reserve Bank of Australia's downshifted. The third

6
00:00:16,520 --> 00:00:20,000
Speaker 1: is signaling smaller fifty basis point hikes going ahead. Do

7
00:00:20,040 --> 00:00:21,919
Speaker 1: you think we can say with confidence now that the

8
00:00:21,960 --> 00:00:28,400
Speaker 1: global tightening cycle and now has the end in site? Well,

9
00:00:28,480 --> 00:00:31,040
Speaker 1: I think it's it's great that we're starting to hear

10
00:00:31,040 --> 00:00:33,199
Speaker 1: a little bit of a different and slightly more devish

11
00:00:33,280 --> 00:00:35,720
Speaker 1: narrative from the third when to be okay, and you know,

12
00:00:35,840 --> 00:00:38,640
Speaker 1: frankly all of the most of the market central banks

13
00:00:38,640 --> 00:00:41,760
Speaker 1: in the world with regards to the piece of reed hikes. Uh.

14
00:00:41,800 --> 00:00:45,120
Speaker 1: And that's important because military policy, as you know, does

15
00:00:45,159 --> 00:00:49,120
Speaker 1: operate with larger and variable legs. Um. You know. But

16
00:00:49,200 --> 00:00:53,280
Speaker 1: I would really caution against turning to bolish right now. Uh.

17
00:00:53,320 --> 00:00:56,520
Speaker 1: And you know, because you know better than expected and

18
00:00:57,080 --> 00:01:01,040
Speaker 1: instation printing October that's not really create a trend. So

19
00:01:01,080 --> 00:01:02,560
Speaker 1: I think what we will need to see is a

20
00:01:02,600 --> 00:01:05,640
Speaker 1: couple more you know, encouraging prints like the one that

21
00:01:05,720 --> 00:01:09,200
Speaker 1: we saw in October before the FED or any other

22
00:01:09,240 --> 00:01:12,520
Speaker 1: central bank can deliver a more durable pivot to a

23
00:01:12,560 --> 00:01:16,479
Speaker 1: more devilsh policy that will help with access to rally. Yeah,

24
00:01:16,560 --> 00:01:19,720
Speaker 1: even with these downshifts that we talk about, we seem

25
00:01:19,760 --> 00:01:22,039
Speaker 1: to forget sometimes that there actually he is still quite

26
00:01:22,040 --> 00:01:24,319
Speaker 1: a lot of tightening to come. Yet. Do you think

27
00:01:24,319 --> 00:01:26,240
Speaker 1: that the bottom is in for equities when we think

28
00:01:26,280 --> 00:01:31,000
Speaker 1: about things in those terms. Yeah, So we do expect

29
00:01:31,040 --> 00:01:34,600
Speaker 1: that the FED will kind of get to a peak

30
00:01:34,640 --> 00:01:37,160
Speaker 1: funds rate of about five to five and a quarter

31
00:01:37,240 --> 00:01:40,160
Speaker 1: percent by the middle of next year. But the problem is,

32
00:01:40,200 --> 00:01:43,160
Speaker 1: I think once they get there, they will probably stay

33
00:01:43,200 --> 00:01:46,440
Speaker 1: there for a little while as they assess the impact

34
00:01:46,440 --> 00:01:49,120
Speaker 1: on the economy. So, you know, depending on the extent

35
00:01:49,160 --> 00:01:52,920
Speaker 1: of the damage, we could see pivoting maybe in the

36
00:01:53,000 --> 00:01:56,600
Speaker 1: latter half of the second half of three uh. And

37
00:01:56,680 --> 00:01:59,320
Speaker 1: you know that should really help risk ass us to

38
00:01:59,400 --> 00:02:02,440
Speaker 1: find a more sustainable bottom and to vary in a

39
00:02:02,440 --> 00:02:05,840
Speaker 1: more sustainable way. I just want to get your thoughts

40
00:02:06,080 --> 00:02:08,440
Speaker 1: on the Bank of Japan as well, but which is

41
00:02:08,480 --> 00:02:11,800
Speaker 1: of course famously not joined the global tightening cycle. But

42
00:02:11,800 --> 00:02:13,960
Speaker 1: if we take a look at those Tokyo CPI numbers

43
00:02:14,000 --> 00:02:17,320
Speaker 1: from the day inflation running the hottest in forty years.

44
00:02:18,600 --> 00:02:20,760
Speaker 1: When is the bo j going to blink? Here? Do

45
00:02:20,800 --> 00:02:27,120
Speaker 1: we have to wait until Governor corota corogous term ends. Yeah.

46
00:02:27,160 --> 00:02:30,400
Speaker 1: I think for the bog that they are still firmly

47
00:02:30,440 --> 00:02:33,280
Speaker 1: taking the view that the inflation that they're seeing at

48
00:02:33,320 --> 00:02:37,560
Speaker 1: the moment, uh, it's more due to supply side issues

49
00:02:37,680 --> 00:02:42,120
Speaker 1: rather than really are from the demand perspective. So I

50
00:02:42,120 --> 00:02:44,919
Speaker 1: think they're still sticking to that stands, And as long

51
00:02:44,960 --> 00:02:47,520
Speaker 1: as they stick to that stands, it's going to be

52
00:02:48,520 --> 00:02:50,679
Speaker 1: a case where you're going to try to stick to

53
00:02:50,720 --> 00:02:55,040
Speaker 1: their yok of control policy and state devilish despite everyone

54
00:02:55,120 --> 00:02:58,639
Speaker 1: else in the world and developed well at least are

55
00:02:58,680 --> 00:03:01,799
Speaker 1: pursuing hockey Is policy sees. So, I think until they

56
00:03:01,800 --> 00:03:06,840
Speaker 1: see concrete signs that inflation no pressures are broadening out

57
00:03:07,320 --> 00:03:10,320
Speaker 1: from the suppire side perspective to the demand perspective, I

58
00:03:10,320 --> 00:03:13,760
Speaker 1: think it's likely that they stay pat You mentioned the

59
00:03:13,800 --> 00:03:17,000
Speaker 1: lag effect a little bit earlier on. Considering that most

60
00:03:17,040 --> 00:03:20,120
Speaker 1: of the indicators at our disposal are backward looking, where

61
00:03:20,120 --> 00:03:26,359
Speaker 1: do your plates the risk that there has been some overtightening. Yeah, so,

62
00:03:26,440 --> 00:03:29,520
Speaker 1: I mean it's hard to tell, right. I think we

63
00:03:29,560 --> 00:03:32,440
Speaker 1: will probably start to see more of the impact on

64
00:03:32,480 --> 00:03:36,200
Speaker 1: economic numbers, maybe into the first half of next year.

65
00:03:36,280 --> 00:03:39,200
Speaker 1: But if you look at the consumer today, yes, savings

66
00:03:39,280 --> 00:03:41,640
Speaker 1: rates are coming down, but you know, the retail sales

67
00:03:41,720 --> 00:03:44,160
Speaker 1: number that we saw most recently were still really strong.

68
00:03:44,240 --> 00:03:46,960
Speaker 1: And more importantly, we still have unemployment in the three

69
00:03:47,040 --> 00:03:49,440
Speaker 1: is handle, right, which means that a labor market is

70
00:03:49,440 --> 00:03:52,080
Speaker 1: still very tight. So you know, it's hard to tell

71
00:03:52,120 --> 00:03:54,920
Speaker 1: whether there's been overtightening at this point. But so far

72
00:03:55,080 --> 00:03:57,200
Speaker 1: since the Fed started pivoting at the beginning of the

73
00:03:57,200 --> 00:04:00,360
Speaker 1: SERI were not really seeing the impact of uh tighter

74
00:04:00,440 --> 00:04:03,839
Speaker 1: or more restrictive monetary policy hit the economy just yet.

75
00:04:04,040 --> 00:04:05,520
Speaker 1: So I think we have to wait a little bit

76
00:04:05,560 --> 00:04:09,600
Speaker 1: more to to assess what the truth impact is alright.

77
00:04:09,880 --> 00:04:14,040
Speaker 1: Clara Chung, global market strategist that JP Morgan Asset Management