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Speaker 1: Let's get to our guest, Paul Gamble's co founder and

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Speaker 1: managing partner at MBMG Group. So I'll give you a

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Speaker 1: couple of scenarios here, Paul. The first one profit margins

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Speaker 1: under pressure. Recession is looming, the bear market is still

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Speaker 1: very much intact, and a lot more losses are coming.

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Speaker 1: That's one. The other one is, well, the American banks

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Speaker 1: are telling you that the U. S. Consumer is strong,

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Speaker 1: the economy is very good. Now there is no organic recession.

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Speaker 1: Which one gets the warm and cuddly hug from Mr

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Speaker 1: Paul Gamble's Good morning Bragg and morning Ginet. Um, Well, look,

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Speaker 1: we've we've oh, yes, so far, we've been very concerned

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Speaker 1: that the former case, the recession case was was was

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Speaker 1: likely to win out. But we were waiting for data

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Speaker 1: that would that that would really you know, justify making

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Speaker 1: a call on that. So we were and sort of,

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Speaker 1: I guess, you know, trying to sit on the fence

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Speaker 1: but leaning towards the recession side. Well, you know, we've

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Speaker 1: now absolutely come off the fence. Um, isn't the correct answer? Both?

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Speaker 1: Isn't the correct answer? Both? Because the consumer instrong on

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Speaker 1: the economy is good, but the Fed is going to

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Speaker 1: wreck it because it wants to to to get inflation

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Speaker 1: under control. Well, that's that's that's that's what That's what

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Speaker 1: we would have said a month ago. Right now we

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Speaker 1: would say, you're looking at results from the quarter when

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Speaker 1: that was still the case. But the more current data

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Speaker 1: is actually telling us that the Fed have already wrecked it. UM.

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Speaker 1: If we look at UM, if we look at things

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Speaker 1: like household savings, if we look at things like consumer

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Speaker 1: debt levels, well we've seen that the savings have all

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Speaker 1: been spent pretty much within the last quarter. We've seen

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Speaker 1: that the nature of household debt has really changed into

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Speaker 1: emergency debt with revolving credit and credit are really come

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Speaker 1: into the four. So unless something really changes in the

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Speaker 1: FED right now, then that data that you're talking about,

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Speaker 1: that's kind of you know, we're worried that that was

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Speaker 1: the last hurrah, that was that was the last good

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Speaker 1: period where it was still possible to make a case

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Speaker 1: for UM. You know that the consumer was strong, that

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Speaker 1: employment was still okay. But now we think that that

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Speaker 1: that boat is sailing fast unless the Fed FED really

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Speaker 1: do and about turn. And Paul, in terms of an

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Speaker 1: about turn, I guess how aggressive they're going to be.

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Speaker 1: But what did you read into the slowdown in hiring

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Speaker 1: from Apple and Goldman just adding to those recessions fears too. Yes,

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Speaker 1: so so look, I mean I think you know what

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Speaker 1: what was interesting there is that the market really, you know,

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Speaker 1: it's it's been desperate to try to bounce. It's been

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Speaker 1: you know, it's, um, it's like the deadest of cats.

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Speaker 1: It's been. It's been trying to find some some opportunity

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Speaker 1: to bounce. And the open yesterday we thought we had that,

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Speaker 1: but actually it was just pulled back by reality. Gravity

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Speaker 1: over took it. And you know, the problem is that, um,

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Speaker 1: you know, going going back to Brian's point, you know,

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Speaker 1: we have had this reasonably strong quarter, but now all

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Speaker 1: these things like Apple cutting back on hiring, they're all

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Speaker 1: going to end up pulling back any kind of grounds

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Speaker 1: for optimism at all. And and and you know, even

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Speaker 1: the oil price action. There are so many complicators out

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Speaker 1: there talking about risks to the overall global economy. Also

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Speaker 1: want to talk about the strength of the dollar, even

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Speaker 1: though we have been seeing a little bit of a

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Speaker 1: pullback there. But what kind of I guess risk if

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Speaker 1: we do see what they're calling this doom scenario where

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Speaker 1: you see the dollar kind of pull back, and then

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Speaker 1: that could be quite a fast turnaround as well in

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Speaker 1: terms of that drop. Well, Princess Juliett, I guess, um,

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Speaker 1: look at some point dollar is going to weaken, and

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Speaker 1: it's it's going to be largely driven by um, you know,

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Speaker 1: much more realistic interest rate expectations. But the question is,

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Speaker 1: you know, when is when is the Fed going to

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Speaker 1: going to put it um. Just in the last couple

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Speaker 1: of weeks, we've we've had this situation where people were

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Speaker 1: talking about there being a hundred basis points hike at

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Speaker 1: the next meeting, and now I think that's that's probably

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Speaker 1: been cut back consensus to seventy five bits. But it's

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Speaker 1: it's really much more to do with sort of you know,

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Speaker 1: longer term, bigger picture, how how far are they Fed

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Speaker 1: going to push this before they pivot to uh to

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Speaker 1: you know, stopping stopping rate hikes and then reversing rate hikes.

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Speaker 1: When that happens, that's obviously going to book a massive

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Speaker 1: downward pressure on the dollar. We we we're starting to

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Speaker 1: see you short term signs that maybe maybe maybe we're

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Speaker 1: getting close to that high. The fact that the euro

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Speaker 1: managed to hold parity. Um. And you know, again, one

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Speaker 1: of the reasons for dollar strength is the fact that

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Speaker 1: this this procession that we're talking about isn't just the

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Speaker 1: U S phenomenon. We're gonna you know, we're going to

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Speaker 1: see problems everywhere. But obviously the expectations on interest rate

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Speaker 1: differential shift a probably more adverse for for dollar than

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Speaker 1: they are for other currencies because the FED has been

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Speaker 1: perhaps the most aggressive in terms of projected rate hikes.

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Speaker 1: So with with it could be close to the top

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Speaker 1: the dollar. We could be could we maybe be looking

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Speaker 1: at a pretty shallow recession here because you've got you know,

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Speaker 1: as you mentioned even the Apple and Goldman news. I mean,

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Speaker 1: they're not laying off people, they're just hiring fewer people. Um.

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Speaker 1: You know that's we have more jobs in the US

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Speaker 1: than we have workers to fill them. So, uh, you're

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Speaker 1: talking about at some point, you know, you'll probably get

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Speaker 1: a peeking of inflation. We we haven't seen those numbers yet,

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Speaker 1: but they could be coming. You see the housing prices

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Speaker 1: coming down, home builders sentiment falling at a rapid pace.

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Speaker 1: The higher interest rates are working. Uh. Is that is

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Speaker 1: that something that you know you can your your scenario

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Speaker 1: is kind of dark, but I'm saying shouldn't be so dark.

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Speaker 1: It's very hard to know because actually the monetary policy

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Speaker 1: side is one small part of it. That the real

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Speaker 1: issue is actually fiscal policy. That you know, we've got

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Speaker 1: a shortfall in terms of what we need in terms

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Speaker 1: of credit creation going into the global economy this year

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Speaker 1: um and that that's largely based on sovereign's putting putting

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Speaker 1: less money into their economy, is particularly the US. So

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Speaker 1: it's really a fiscal problem that's been exacerbated by by

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Speaker 1: monetary policy. And I'm not seeing any great appetite yet

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Speaker 1: for a turnaround on that. So even if the if

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Speaker 1: the FED were to stop making the problem worse, then

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Speaker 1: you know it's it's it's a fiscal virus rather than

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Speaker 1: just irritable power syndrome. That it's a lot deeper. We've

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Speaker 1: got it. We've got to actually start creating new money

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Speaker 1: into the economy. Just a quick word finally on China

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Speaker 1: to COVID zero, of course a lag and we had

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Speaker 1: Goldman downgrading their forecast for growth yesterday. But the property

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Speaker 1: to false is risk of a hard landing of the

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Speaker 1: housing sector. Buy an ex official how much of that

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Speaker 1: of a concern for investors. I think it's really interesting

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Speaker 1: that there are the policymakers have come out and they're

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Speaker 1: starting to to remedy this. Unlike in Europe, unlike in

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Speaker 1: the States, I think the Chinese policymakers are going to

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Speaker 1: be a lot more responsive and a lot more reactive

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Speaker 1: and probably start doing the right kind of policy actions.

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Speaker 1: So it's a worry and there's a lot of problems,

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Speaker 1: a lot of structural problems, but we think there's a

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Speaker 1: lot more willingness to tackle them. Hey Jueles, Paul who

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Speaker 1: gambles with his future calling you princess? Huh, I don't.

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Speaker 1: I don't mind that name. It's better than somebody other

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Speaker 1: names I've had before. You called yourself princess from time

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Speaker 1: to time. Exactly, exactly, all right, Paul, Thank you so much.

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Speaker 1: Paul Gamble's co found and managing partner at m b

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Speaker 1: MG Group on the line for us from Bangkok here

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Speaker 1: on Bloomberg Daybreak Asia.