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Speaker 1: Let's get to our guest. Katherine Kaminski is with us.

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Speaker 1: She is chief research strategist also a portfolio manager at

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Speaker 1: Alpha Simplex Group. On the line from Boston, Katherine, thanks

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Speaker 1: for being with us on the Fed Minutes day. If

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Speaker 1: I can put it that way, it seems like when

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Speaker 1: you read the minutes here, they're really trying to bring

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Speaker 1: the plane in to do a bit of a soft

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Speaker 1: landing here. Is that your takeaway? Definitely? I mean, but

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Speaker 1: think about it from their perspective. They know what they

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Speaker 1: have to do, but they don't want to stress out

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Speaker 1: the market, so they need to kind of tread lightly

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Speaker 1: because they have to stay steady given the current economic

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Speaker 1: conditions we have with inflation. So are we any wiser

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Speaker 1: about the future path of rights after those minutes? I

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Speaker 1: would say for me, it's more a signal that it's

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Speaker 1: go ahead, because of course they're going to say that

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Speaker 1: they're concerned. Of course they're going to try and quell

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Speaker 1: the market and try and get people to calm down.

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Speaker 1: From our side, and more of a technical side, we're

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Speaker 1: definitely seeing um that longer term signals could definitely single

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Speaker 1: to again rising rates, and that to me just a

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Speaker 1: sort of a sign that this could actually really happen again,

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Speaker 1: and we're going to continue to see them hold study. Well,

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Speaker 1: they're saying slower pace of rate hikes at some point,

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Speaker 1: that's seems like it's a logical thing to say, and

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Speaker 1: some expression of anxiety about the risk of overtightening, which

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Speaker 1: kind of goes back to the point that I was

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Speaker 1: trying to make earlier about being able to engineer a

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Speaker 1: soft landing. Statistically, it's it's highly improbable, I mean, could

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Speaker 1: be potentially be looking at a situation where the FED

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Speaker 1: is successful in that effort. Well, I mean that's the

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Speaker 1: point is that the challenges you have really rough tools, right,

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Speaker 1: So you have monetary policy which is not you know,

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Speaker 1: a direct linked to inflation, but can help. And so

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Speaker 1: I think that's where they're kind of trying to figure

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Speaker 1: out what they can do. But it's clearly not going

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Speaker 1: to be a straight line, and there's going to be

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Speaker 1: mis steps like they're already have been in the past.

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Speaker 1: I mean, if you think about it, they were too

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Speaker 1: late to act already, and that's part of the problem

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Speaker 1: that we're having now. And so I think when they

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Speaker 1: say at some point at some point means different things

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Speaker 1: to different people, so you know, it definitely is something

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Speaker 1: to help people understand that this is not in perpetuity,

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Speaker 1: but that you know, it is going to be something

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Speaker 1: they're going to have to weigh again and again to

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Speaker 1: determine how what the next course of action is going

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Speaker 1: to be. So how does this inform your strategy? We've

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Speaker 1: had a story today here in Australia about pension funds

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Speaker 1: de risking adding treasuries. Does that look like a wise

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Speaker 1: move to you? So we've actually seen a very large

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Speaker 1: amount of de risking since June um pretty much across

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Speaker 1: the board. People have been taking off shorts which were

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Speaker 1: pretty pretty strong earlier this year. So I think de

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Speaker 1: risking is exactly what we're seeing right now as well,

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Speaker 1: this idea that we need to wait and see what

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Speaker 1: the future direction is going to be. And I think

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Speaker 1: you're seeing that in the equities markets as well. Given

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Speaker 1: the level of equity markets and the amount of recovery,

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Speaker 1: it's less um you know, under value than it was earlier.

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Speaker 1: So I think people are starting to pause and try

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Speaker 1: and figure out, um, is it time to maybe be

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Speaker 1: a little more risk averse and wait until we know

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Speaker 1: a little bit better what's going to happen next. So, Catherine,

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Speaker 1: we've been talking about the five minutes, trying to break

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Speaker 1: those down the path of inflation. How would your market

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Speaker 1: outlook changed recently? Where are you investing at the moment

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Speaker 1: based on what you've been hearing over the past few weeks. Well,

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Speaker 1: I mean, I think what's challenging right now is we

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Speaker 1: have to ask ourselves whether we're in a recovery uh

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Speaker 1: for the equity markets, or whether we're sort of in

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Speaker 1: a period where we might go back into this bear trend,

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Speaker 1: like you said about the two day UM moving average.

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Speaker 1: And I think from our side, what's interesting today is

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Speaker 1: that from a cross asset perspective, we really saw that

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Speaker 1: inflation trade, rising rates, strong dollar trade come roaring back

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Speaker 1: as soon as there was some indication that really we're

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Speaker 1: going back to this raising rate environment, despite the fact

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Speaker 1: that people thought that the Fed and other central bankers

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Speaker 1: would back off. And so I think from my perspective,

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Speaker 1: where we look at a lot of trends across multiple

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Speaker 1: asset classes, it looks like that particular trend may come

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Speaker 1: back in vogue and we might start to see a

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Speaker 1: potential reversal and some more giftback inequities in the next

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Speaker 1: few weeks, UM, as we know that you know, this

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Speaker 1: rate right, rate hike environment may actually come to fruition.

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Speaker 1: So let's take an I'm sorry to interrupt there, but

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Speaker 1: take a step back with us and take a look

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Speaker 1: at klind of global markets. We focus a lot on

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Speaker 1: this program about what's happening in Asia. Are just on

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Speaker 1: a valuation basis and the differential that we're seeing between

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Speaker 1: the US, let's say in China, for example, is that

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Speaker 1: an to pique your interest? Yeah, I mean, if you're

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Speaker 1: seeing that, especially in other asset classes, the dollar in

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Speaker 1: particular has been the biggest winner this summer. Um, it's

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Speaker 1: given back some recently, but if you think about the

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Speaker 1: relative positioning of the US just having stronger numbers UM

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Speaker 1: and some of the concerns for slowdown in China and

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Speaker 1: some of the issues there, Um, you're really seeing a

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Speaker 1: lot of that come out more in the currency markets

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Speaker 1: as well as in some relative signaling in the equity

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Speaker 1: markets as well. So on the balance of probabilities, if

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Speaker 1: you're looking at equities, do you still continue to look

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Speaker 1: to the US first at this point? Um, We've really

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Speaker 1: seen of course, certain areas such as the nick I

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Speaker 1: the topics. Some other signals were coming on the long

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Speaker 1: side a little bit more strong recovery recently. But all

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Speaker 1: in all, I think the thing that we've really noticed

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Speaker 1: is that there's very very mixed signals in equities right now,

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Speaker 1: and that means that we really have to see a

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Speaker 1: little bit more confirmation about what really happens when we

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Speaker 1: do actually see rate rises and if we do really

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Speaker 1: see the slowdown that we're expecting, and so from that perspective,

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Speaker 1: we may, you know, have a little bit more indication

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Speaker 1: within the next two to three months. And that's why

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Speaker 1: people are taking risk off the table because there's really

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Speaker 1: very little confirmation in any direction in terms of what

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Speaker 1: is going to happen. And I think that's a difficult

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Speaker 1: place as an investor. What do you do right now?

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Speaker 1: So one of the key threads within the inflation narrative

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Speaker 1: has been the energy complex, and we've seen a pretty

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Speaker 1: dramatic pullback uh today's pop in w t I here

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Speaker 1: in New York notwithstanding, but oil prices are down pretty substantially.

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Speaker 1: When you look at the charts, I know, you get

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Speaker 1: involved with a lot of technical analysis. I mean, do

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Speaker 1: you like what you see here is it favorable when

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Speaker 1: you examine crude oil? Are we going to see lower

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Speaker 1: crude oil prices? That is actually one of the signals

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Speaker 1: in the commodity basket that has held the strongest for

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Speaker 1: us UM. We've seen a massive, you know, sort of

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Speaker 1: mixing of signals so earlier the summer energy has remained

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Speaker 1: a little bit more bullish. We've seen instead negative signals

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Speaker 1: and short signals in areas like copper, bass metals, precious

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Speaker 1: metals as well. So when you think about commodities, I

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Speaker 1: think the question is going to be are the issues

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Speaker 1: of with commodities really over UM? And in that sense,

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Speaker 1: there's actually still some tailwind that we might have a

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Speaker 1: reversal of that trend in the future, as we really

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Speaker 1: haven't solved any of the energy problems that exist already

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Speaker 1: and we're coming into the North American winter season. Yeah, Catherine,

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Speaker 1: we're out of time, unfortunately. Katherin Kaminski, Chief for Such

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Speaker 1: Strategists and portfolio manager at Alpha Simplex Group, thanks so

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Speaker 1: much for joining us. This is Bloomberg