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Speaker 1: Let's get to our guest Heartwood. Isl is with us,

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Speaker 1: head of a pack Equities and Credited Ubs Wealth Management,

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Speaker 1: on the line from Singapore. We've been talking about the FED. Heartwood.

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Speaker 1: What did you make of what you heard from FED

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Speaker 1: share J Powell in the press conference? Yeah, um, to me,

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Speaker 1: it was very much in line with was a what

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Speaker 1: what we thought was going to happen, most likely getting

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Speaker 1: another big one in September and then afterwards maybe another

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Speaker 1: ones too, would they enough to hear? And it also

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Speaker 1: seems to be more or less the contentious, So therefore

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Speaker 1: always a bit surprised by a sort of strong reaction

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Speaker 1: by the by the market. But I don't know. I

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Speaker 1: to me, it has to look and feel of a

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Speaker 1: short squeeze. I don't know. I'm a bit skeptical whether

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Speaker 1: this is sustainable. There's skepticism too in terms of two

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Speaker 1: of the big bond market giants diverging on whether the

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Speaker 1: FED is doing enough. We heard from Guggenheim, Scott Minor

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Speaker 1: and Double Lines Jeffrey good Luck. That's kind of really

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Speaker 1: stoking a lot of the volatility we're seeing in the

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Speaker 1: treasury market. How are you seeing all this play out,

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Speaker 1: particularly as we look to the forward Gunen's from the Fed. Yeah,

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Speaker 1: I mean as far for US UM treasury goes. So

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Speaker 1: we had, you know, as a longer term outlook also

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Speaker 1: into next year, we had a two seventy five and

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Speaker 1: for a while many many investors thought this is this

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Speaker 1: is to be nine and now we're we're we're already there.

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Speaker 1: So um yeah. But but if we think about this,

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Speaker 1: the schooling that's starting to take place right all the

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Speaker 1: way from the macro to do also the micro or

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Speaker 1: take companies telling us to slowing down spending, etcetera, we

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Speaker 1: wouldn't think that necessarily did the tenure for example, does

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Speaker 1: have to revisit three percent, you know, let alone higher

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Speaker 1: than that. So, if anything, it's a bit surprising that

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Speaker 1: we're already there. But we think this is more or less,

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Speaker 1: you know, the six or twelve month probably some sort

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Speaker 1: of equilibrium that we would have found any way. It's interesting.

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Speaker 1: We had a piece on the Bloomberg terminal today indicating

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Speaker 1: the Japanese investors have been pulling out of the U.

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Speaker 1: S Treasury market in Bank of America does not expect

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Speaker 1: them to come back anytime soon. Some of this is

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Speaker 1: tied to dollar strength. We know that the rate story

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Speaker 1: up and all today has been biased to the upside.

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Speaker 1: Do you think that other other investors offshore are going

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Speaker 1: to avoid US treasuries at this point? Um, well, it's

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Speaker 1: a bit difficult to say. Abou Japan I think is

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Speaker 1: in a in a particularly interesting situation. So so let's

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Speaker 1: look at this quick. That's on the on the one hand, Um,

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Speaker 1: you've at least very recently or angiously made some some

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Speaker 1: gains on these positions. And then of course the Japanese

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Speaker 1: investors do realize that there on the Central Bank Governor Mr.

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Speaker 1: Kuroda Is is about to be replaced next spring and

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Speaker 1: and very likely um by by a less devilsh rais

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Speaker 1: ultra dovershments. So if it's only slightly less less doverished person,

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Speaker 1: then you would expect at some stage also the um

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Speaker 1: somewhat out of times now that the yield control control

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Speaker 1: in in Japan to also be at least somewhat relaxed.

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Speaker 1: So so yeah, it looks like like you know that

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Speaker 1: there could be a strange thing of the of the

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Speaker 1: n N plan and then then you don't necessarily need

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Speaker 1: and then potentially more than than you could possibly make

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Speaker 1: in terms of games on the tenure. So to me,

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Speaker 1: that sounds reasonable to to consider that. And we're looking

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Speaker 1: at the reaction to the fair decision on what it

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Speaker 1: means for asset classes across Asia. Do you kind of

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Speaker 1: stay defensive here Harmett, here's a particular case, they're not

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Speaker 1: necessarily extremely defensive um. So so on the equity side,

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Speaker 1: when where we have preferred positions are overweight if you will,

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Speaker 1: um is um Indonesia in this case. So what we

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Speaker 1: think also, I mean somewhat sickling that you could say,

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Speaker 1: because they export a lot of energy I think coal

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Speaker 1: and other commodities, nickel, et cetera. So that's interesting, actually

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Speaker 1: is holding up quite well this market, so we we

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Speaker 1: continue to like that sort of exposure. And then China

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Speaker 1: is just so independent of everything else because they kind

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Speaker 1: of created their own cycle. And on that cycle, I mean,

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Speaker 1: you saw the last quarter rights your point four percent growth.

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Speaker 1: I mean that pretty much suggests we're very much at

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Speaker 1: the bottom of that cycle. So therefore, I mean from here,

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Speaker 1: you know, you can argue about the speed of recovery,

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Speaker 1: but things should go up. And then that's another market

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Speaker 1: that was like, it's interesting. I was looking at a

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Speaker 1: piece that was forwarded to me by one of our

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Speaker 1: frequent guest, Ben Emmon's from Metally Global Advisors. This community

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Speaker 1: right outside Wuhan locking down a million residents, echoing some

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Speaker 1: of the earlier measures taken by the government there during

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Speaker 1: the early stages of the pandemic. I mean, so clearly

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Speaker 1: we're not out from underneath this risk in China is

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Speaker 1: how are you managing that when it comes to putting

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Speaker 1: the capital work to work on the mainland. Look, we

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Speaker 1: we um we do still see a delta, I don't.

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Speaker 1: I mean also sometimes when I when I see reports

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Speaker 1: and it says that the policies haven't changed, well I

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Speaker 1: would argue that at least versus March and April, you know,

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Speaker 1: which you saw in complete cities entirely looked down for

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Speaker 1: an extended period, including all the production facilities. We do

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Speaker 1: not not receive that, right, I mean, I'm not saying

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Speaker 1: what we're talking about a complete whole scale reopening. But

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Speaker 1: what we do see is, yes, you know, there are

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Speaker 1: these these cases as you would expect, right, and there's

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Speaker 1: there's waves coming up. But what you do not see

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Speaker 1: this time is such a start sharp slowdown in these

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Speaker 1: logistics indicators on other words, Um, you know, also the

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Speaker 1: authorities are much more mindful of the economic impact, so

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Speaker 1: you do see somewhat of a delta, and I think

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Speaker 1: that alone is encouraging. Let's look and some of your bigger,

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Speaker 1: broader calls outside of Asia as well. You've mentioned staying

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Speaker 1: a little bit defensive when it comes to Asia, and

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Speaker 1: you're preferring value over growth. But we've got these concerns

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Speaker 1: about recession, not just in the US, but particularly in

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Speaker 1: Europe too, particularly as we continue to watch what's happening

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Speaker 1: in Ukraine and the flow and effects of the energy market.

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Speaker 1: Just tell us some of your concerns there. Yes, I

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Speaker 1: mean certainly, you know. I mean, if there is there's

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Speaker 1: a place where we're probably the most likely that is

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Speaker 1: most likely the candidate for very sharp slot on possibly

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Speaker 1: even a recession. You can argue because of the energy

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Speaker 1: dependencies that that might be, um eurbe and looking at

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Speaker 1: also the the estimates on the on the equity side,

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Speaker 1: I mean, our estimates for next year is now the

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Speaker 1: whole fifteen below consentious or so that's that's quite meaningful. Um.

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Speaker 1: So it's um something we would need to expect the

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Speaker 1: consentious to come down quite a bit where are you

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Speaker 1: when it comes to technology? And I'm not speaking about

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Speaker 1: China exclusively. We had the numbers from Samsung quarterly profit

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Speaker 1: missed and and revenue from the semiconductor division was a

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Speaker 1: little light as well. I mean, where are you when

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Speaker 1: it comes to big tech in the A pack now?

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Speaker 1: Um So we do like a heavier right adventure, We

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Speaker 1: do like the the China platforms, but again there's a

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Speaker 1: completely detached you know, from rates and everything that happens elsewhere.

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Speaker 1: And it's also to stand alone, say in terms of

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Speaker 1: other other take in China, sorry, outside China is mostly

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Speaker 1: really also what you mentioned right, soundsing, ETCeteras are mostly

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Speaker 1: um more sort of traditional techment. It's also either SEMy

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Speaker 1: conductors or components so in the somewhere in the food chain,

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Speaker 1: and therefore they're more closely linked to European economies. In

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Speaker 1: the US as well, we would argue that for seeming

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Speaker 1: heart but unfortunate, we're gonna have to live with their

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Speaker 1: heartmat It Sol from UBS Wealth Management