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Speaker 1: So let's get to our guests now. Getty Shama is

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Speaker 1: founder and investment manager at Alpha's Future with Us from Minneapolis.

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Speaker 1: So so much volatility, and I do want to start

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Speaker 1: with the Europe story as we're seeing the pressure here

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Speaker 1: for the Prime Minister trust to cut spending and win

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Speaker 1: back the confidence of investors. We've seen such volatility, such

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Speaker 1: a fall coming through in the pound, just on a

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Speaker 1: broad level, how do governments sort of kind of walk

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Speaker 1: back from like this when they've seen such an impact

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Speaker 1: to investor confidence. I think the governments um across countries

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Speaker 1: are really no difficult position. But uh, you know, they

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Speaker 1: want to adopt fiscal policy, which is which fuels consumption,

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Speaker 1: supports demand, provides support to the consumers, while at the

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Speaker 1: same time they're battling inflation, which is which is quite high.

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Speaker 1: We saw the data from Europe today. Um it's uh,

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Speaker 1: it's gone, it's gone to double digits. And at the

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Speaker 1: same time we have central banks who are trying to

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Speaker 1: raise rates and tight financial conditions to control that inflation. So, um,

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Speaker 1: it is a difficult balance. And um, you know, with

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Speaker 1: all the fiscal stimulus that is coming through in Europe,

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Speaker 1: in UK and um, possibly in the US as well.

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Speaker 1: You talked about the physical response for UM Hurricane Ian

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Speaker 1: in Florida, so it's the rebuild of Flaorida. Florida will

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Speaker 1: effectively be inflationary. So it means that quantitative title will

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Speaker 1: have to go on longer and faster, and it's it's

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Speaker 1: possible that we might see increased systemic risks in the market,

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Speaker 1: as we saw in the case of UK. Yeah, and

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Speaker 1: we heard as well from some of the FAIR speakers

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Speaker 1: saying that the volatility that's been caused by the UK

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Speaker 1: by Europe won't cause the FED to pause its tightening campaign.

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Speaker 1: At what point does US recession or potential recession stop

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Speaker 1: the FED from raising rates? I think as of now, UH,

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Speaker 1: the Fed is not going to think about the session

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Speaker 1: risks because while the data in the US economic data

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Speaker 1: and the US is slowing down, it's not slowing down

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Speaker 1: at the pace that the FED UH expects. Like we

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Speaker 1: got weekly UM claims today which were much lower than expected.

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Speaker 1: We have UM stronger consumer sentiment. So while some of

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Speaker 1: this data is weakening, but it's still holding up pretty

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Speaker 1: well to UH, you know, for the FED to stay

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Speaker 1: hawkish because UM at the end of the day, again,

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Speaker 1: inflation is high and they need to UH for credibility reasons,

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Speaker 1: just like we saw in the UK with Banks of England.

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Speaker 1: They cannot at this moment of time stop being hawkish

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Speaker 1: UM and they need to bring the inflation concerns down

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Speaker 1: before before the long term inflation expectations actually start rising.

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Speaker 1: So we've been talking about the crosses in Europe, what's

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Speaker 1: happening in the UK, and of is what is happening

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Speaker 1: in the US as well, and Dene's mentioning Hurricane e

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Speaker 1: in which she touched on before. When it comes to

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Speaker 1: all these inflationary pressures, do you think we're at a

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Speaker 1: point where we have reached peak inflation? And when do

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Speaker 1: I guess price pressures start to ease Somewhat, It's possible

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Speaker 1: that we we have reached big inflation because we are

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Speaker 1: seeing UH the oil price has come down quite a

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Speaker 1: bit from the peak in June to lie and possibly

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Speaker 1: the supply chain challenges are also normalizing a bit, and

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Speaker 1: some of the pandemic related pig high demand is normalizing.

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Speaker 1: But I think it's hard to say whether the UM

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Speaker 1: whether inflation will actually come down fast enough to UM

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Speaker 1: to de FATS two person target. We may not see

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Speaker 1: that pace of decline because um, you know, there is

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Speaker 1: two inflation I think are still significant as we still

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Speaker 1: have the energy crisis in Europe and it's getting was um,

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Speaker 1: the geopolitical tensions are rising and given how how tight

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Speaker 1: the labor market is. Um, so it's it's possible that

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Speaker 1: inflation rates stay high, though not speak about the nine

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Speaker 1: person that be so earlier in the year. The tight

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Speaker 1: labor markets certainly one thing, and we're looking at the

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Speaker 1: cost of wage increases there too. But what about it

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Speaker 1: the other end, when you've got mortgage rates in the

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Speaker 1: US at these fifteen year highs, fresh pain for home

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Speaker 1: buyers and the impact there too, a lot of the

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Speaker 1: discretionary spending that perhaps people had saved during the pandemic.

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Speaker 1: At what point does the consumer really start to feel

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Speaker 1: this and we do see a deep recession, absolutely, I

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Speaker 1: think home affordability in the US is going down pretty rapidly,

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Speaker 1: and we are seeing a sharp slow down in housing

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Speaker 1: in the housing market. But at the same time, you're

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Speaker 1: not seeing the risk of big leveraged um leverage driven

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Speaker 1: declines because the consumer is not as leverage as it

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Speaker 1: was in the case of the financial crisis. So while um,

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Speaker 1: the house prices are coming down, there's still way about

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Speaker 1: pre pandemic levels. And you have to think, so while

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Speaker 1: we're seeing high mortgage rates making it difficult for consumers

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Speaker 1: to buy new homes right now, at the same time,

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Speaker 1: we still have shortage of supply in the market. So um.

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Speaker 1: And you know, it's not that we have a lot

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Speaker 1: of inventory. So when we're looking at sorry, when we're

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Speaker 1: looking at asset prices, and particularly we're looking at these

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Speaker 1: multi year lows on on currencies for example, with the

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Speaker 1: dollar strength, and then equities basically trading globally around pandemic levels,

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Speaker 1: what looks attractive to you? So um, at the end

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Speaker 1: of the day, I think the US market remains relatively

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Speaker 1: more attractive. And the reason is that, um, you know,

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Speaker 1: US dollar is is a safe haven and US market

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Speaker 1: has more defensive stocks than or more defensive sectors than

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Speaker 1: anywhere else. I think international markets are attractive from evaluation perspective,

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Speaker 1: but they're also very cyclical and unless we see a

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Speaker 1: strong economic environment which gives support to their currencies and uh,

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Speaker 1: and the economic environment uh, the international markets and actually

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Speaker 1: um uh you know, the strong US dollar is actually

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Speaker 1: a big headwind for international markets and and also high

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Speaker 1: inflation is a drag for consumer spending and corporate profits locally.

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Speaker 1: So I think we have to be Our recommendation to

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Speaker 1: investors is across markets to be selective, looking for individual

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Speaker 1: opportunities where companies have brasiliant business models and pricing power

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Speaker 1: and have blue leverage balance Chee dress um if I

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Speaker 1: think investors have to stay diversified, defensive, quality focus and

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Speaker 1: um yeah, not trying to catch up falling knife always

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Speaker 1: good advice. All right, Guti, thank you and have a

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Speaker 1: great weekend. Guy Shama is found at an investment manager

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Speaker 1: at Alpha's Future on the line from Minneapolis for US

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Speaker 1: here on Bloomberg Daybreak Asia