WEBVTT - Kopi Time E067: Year-end commentary: Testing the guardrails 0:00:07.440 --> 0:00:07.760 mm hmm. 0:00:11.039 --> 0:00:11.619 Welcome 0:00:11.619 --> 0:00:13.180 to Kobe times, final episode 0:00:13.180 --> 0:00:17.260 of 2022. I'm tamar chief economist coming to you without 0:00:17.270 --> 0:00:20.250 a guest with our year and commentary. 0:00:21.140 --> 0:00:21.400 We 0:00:21.400 --> 0:00:23.590 called our 2021 Outlook a 0:00:23.590 --> 0:00:25.369 bifurcated world and 0:00:25.370 --> 0:00:28.930 the year lived up to that thesis. The global economic 0:00:28.930 --> 0:00:33.600 recovery was extremely uneven from vaccine distribution to the impact 0:00:33.600 --> 0:00:34.140 of the sharp 0:00:34.140 --> 0:00:34.860 rally in asset 0:00:34.860 --> 0:00:36.280 markets. Both of 0:00:36.290 --> 0:00:38.590 those favored the wealthy. And let's also not 0:00:38.590 --> 0:00:39.839 forget all the fiscal 0:00:39.840 --> 0:00:40.850 and monetary support. 0:00:41.240 --> 0:00:42.150 They were of course the 0:00:42.150 --> 0:00:43.450 most supportive in nations 0:00:43.450 --> 0:00:44.519 with the most were brutal. 0:00:45.440 --> 0:00:46.240 A globally 0:00:46.240 --> 0:00:48.989 coordinated approach to distribute medical equipment 0:00:48.990 --> 0:00:50.450 and vaccines. On one hand, 0:00:50.700 --> 0:00:53.260 financial support on the other hand would have shortened 0:00:53.270 --> 0:00:54.700 the duration of the pandemic 0:00:54.710 --> 0:00:55.600 and soften 0:00:55.610 --> 0:00:56.400 its blow to 0:00:56.400 --> 0:00:58.360 livelihoods. But that didn't happen 0:00:58.740 --> 0:00:59.740 unfortunately. 0:01:00.020 --> 0:01:01.000 And predictably 0:01:01.840 --> 0:01:04.410 Our 2022 Outlook is titled 0:01:04.410 --> 0:01:05.940 testing the guardrails. 0:01:06.160 --> 0:01:09.520 The bifurcated world after delays and missteps 0:01:09.530 --> 0:01:10.910 has built some 0:01:10.910 --> 0:01:12.250 guardrails admittedly 0:01:12.840 --> 0:01:13.260 vaccine 0:01:13.260 --> 0:01:16.459 production is up and distribution is becoming more. Even 0:01:16.840 --> 0:01:18.830 economies are opening up with vaccinated 0:01:18.830 --> 0:01:19.750 travel lanes. 0:01:20.080 --> 0:01:22.020 Strong demand for manufactured goods 0:01:22.020 --> 0:01:22.979 and commodities is 0:01:22.980 --> 0:01:24.060 helping the emerging 0:01:24.060 --> 0:01:25.459 markets that export 0:01:25.459 --> 0:01:25.750 them 0:01:26.340 --> 0:01:27.050 funds 0:01:27.060 --> 0:01:29.440 and facilities from multi laterals 0:01:29.450 --> 0:01:32.210 for short term challenges like debt repayment 0:01:32.220 --> 0:01:33.140 and buying medical 0:01:33.140 --> 0:01:35.160 equipment and for long term 0:01:35.160 --> 0:01:36.030 challenges like 0:01:36.030 --> 0:01:37.110 transition to renewable 0:01:37.110 --> 0:01:37.650 fuels. 0:01:38.040 --> 0:01:38.300 They 0:01:38.300 --> 0:01:39.700 are becoming increasingly 0:01:39.700 --> 0:01:40.350 available 0:01:41.240 --> 0:01:41.750 hands 0:01:42.240 --> 0:01:43.500 2022 Ought to be 0:01:43.500 --> 0:01:45.380 characterized by strong consumer 0:01:45.380 --> 0:01:47.340 demand in developed markets 0:01:47.350 --> 0:01:49.320 and a substantial reopening 0:01:49.320 --> 0:01:51.400 dynamic in emerging markets 0:01:51.410 --> 0:01:52.130 clouded of 0:01:52.130 --> 0:01:54.250 course attacked by U. S. Monetary policy 0:01:54.250 --> 0:01:54.750 moves. 0:01:55.440 --> 0:01:57.430 But the omicron variant 0:01:57.430 --> 0:01:58.419 threatened to spoil 0:01:58.420 --> 0:02:00.060 that narrative to some extent. 0:02:00.640 --> 0:02:03.090 Even if it turns out to have more 0:02:03.100 --> 0:02:06.550 bark than bite? Basically what I'm saying is it's very 0:02:06.550 --> 0:02:08.020 infectious but turns out to be 0:02:08.020 --> 0:02:10.339 not particularly lethal. The world's 0:02:10.340 --> 0:02:12.030 vulnerability to variance 0:02:12.040 --> 0:02:13.430 is will underscored 0:02:13.430 --> 0:02:17.299 by these developments and that again sheds harsh light on 0:02:17.300 --> 0:02:20.050 the danger posed by the global vaccine. Inequity 0:02:20.840 --> 0:02:22.550 markets therefore will remain 0:02:22.550 --> 0:02:25.760 on the edge with inevitable news flow of this nature. 0:02:26.940 --> 0:02:27.450 Now 0:02:27.940 --> 0:02:28.430 beyond the 0:02:28.430 --> 0:02:29.130 pandemic, 0:02:29.340 --> 0:02:30.500 let's talk about the 0:02:30.510 --> 0:02:31.790 other big elephant in the 0:02:31.790 --> 0:02:33.160 room inflation. 0:02:33.840 --> 0:02:34.570 The inflation 0:02:34.570 --> 0:02:36.990 debate, supply versus demand 0:02:37.000 --> 0:02:38.080 temporary versus 0:02:38.080 --> 0:02:38.980 structural 0:02:38.990 --> 0:02:40.340 has run its 0:02:40.340 --> 0:02:45.230 course with policy liftoff from the emergency accommodation very likely 0:02:45.230 --> 0:02:45.800 to be the 0:02:45.810 --> 0:02:46.780 big team 0:02:46.790 --> 0:02:48.150 For 2022. 0:02:48.840 --> 0:02:50.100 The US Fed would 0:02:50.100 --> 0:02:54.049 have to balance inflation risk against keeping the economic recovery intact. 0:02:54.139 --> 0:02:55.260 That's the key challenge 0:02:55.740 --> 0:02:56.690 inflation out turn 0:02:56.690 --> 0:02:58.940 in the U. S. Gets most of the headlines. But 0:02:58.940 --> 0:03:00.380 the phenomenon goes beyond 0:03:00.389 --> 0:03:04.990 its domestic factors like strong stimulus tight labor market and 0:03:04.990 --> 0:03:05.210 will 0:03:05.220 --> 0:03:06.140 affect stemming from a 0:03:06.139 --> 0:03:07.489 frothy asset market. 0:03:07.810 --> 0:03:08.590 In fact 0:03:08.650 --> 0:03:10.250 many items in the consumer price 0:03:10.250 --> 0:03:11.210 index in the 0:03:11.210 --> 0:03:13.260 U. S. Or elsewhere that have soared lately 0:03:13.340 --> 0:03:13.630 are 0:03:13.630 --> 0:03:14.679 taking their cues 0:03:14.680 --> 0:03:15.480 from global 0:03:15.480 --> 0:03:16.250 prices 0:03:17.139 --> 0:03:18.910 given the prevalence of common 0:03:18.910 --> 0:03:21.450 factors like natural gas, 0:03:21.460 --> 0:03:23.660 petroleum fertilizer and a 0:03:23.660 --> 0:03:25.860 range of food items inflation 0:03:25.860 --> 0:03:28.590 unsurprisingly has picked up in the euro area and the U. 0:03:28.590 --> 0:03:29.810 K. Although not 0:03:29.810 --> 0:03:30.740 as sharply as in the 0:03:30.740 --> 0:03:34.030 US right here in Singapore inflation has picked up in 0:03:34.030 --> 0:03:34.750 recent months 0:03:34.840 --> 0:03:36.619 With headline inflation running at three 0:03:36.620 --> 0:03:37.610 .2% through 0:03:37.610 --> 0:03:38.350 october 0:03:38.540 --> 0:03:39.530 although the year to date 0:03:39.540 --> 0:03:40.650 average price level is 0:03:40.650 --> 0:03:42.050 Up only about two 0:03:42.060 --> 0:03:43.210 over the corresponding 0:03:43.220 --> 0:03:44.260 period last year. 0:03:45.840 --> 0:03:46.620 What about 0:03:46.630 --> 0:03:50.220 emerging asia? Well, china India and Indonesia have 0:03:50.220 --> 0:03:52.220 not yet seen comparable 0:03:52.230 --> 0:03:52.990 upward pressure to 0:03:52.990 --> 0:03:56.430 prices reflecting subdued domestic demand, an 0:03:56.430 --> 0:03:57.480 incomplete pass 0:03:57.480 --> 0:04:00.570 through of world prices at the local pump level. Still 0:04:00.580 --> 0:04:04.650 inflation by no means is a non issue in India 0:04:05.040 --> 0:04:06.470 and there is a risk of fuel 0:04:06.470 --> 0:04:08.280 prices being raised in china and 0:04:08.290 --> 0:04:09.060 Indonesia 0:04:10.680 --> 0:04:12.840 at the component level. 0:04:13.060 --> 0:04:14.250 Energy prices 0:04:14.800 --> 0:04:16.760 admittedly have soared this year 0:04:16.760 --> 0:04:17.859 and demand some degree of 0:04:17.860 --> 0:04:18.849 scrutiny from us. 0:04:19.240 --> 0:04:19.940 Think about 0:04:19.940 --> 0:04:21.830 it, demand for energy has jumped 0:04:21.839 --> 0:04:23.680 due to trade rebound with 0:04:23.690 --> 0:04:27.179 gas prices jumping on account of low stock and strong 0:04:27.180 --> 0:04:28.400 demand, especially as 0:04:28.400 --> 0:04:30.060 coal usage has been discouraged 0:04:30.540 --> 0:04:33.270 on oil. Opec kota has held up 0:04:33.279 --> 0:04:34.370 shale production in the U. 0:04:34.370 --> 0:04:35.400 S. Has been poor 0:04:35.460 --> 0:04:36.719 and transportation demand 0:04:36.720 --> 0:04:38.460 has jumped with economic reopening 0:04:39.320 --> 0:04:39.779 then 0:04:39.790 --> 0:04:42.969 there is call which has suffered from pandemic induced 0:04:42.970 --> 0:04:44.160 supply disruptions 0:04:44.720 --> 0:04:45.920 in all cases though, 0:04:45.930 --> 0:04:49.050 supply is coming back gingerly, but it is coming back 0:04:49.540 --> 0:04:50.050 outside of 0:04:50.050 --> 0:04:53.970 industrial economies. On the food price side, we have seen 0:04:53.980 --> 0:04:55.220 major development 0:04:55.220 --> 0:04:59.370 with respect to rise in soybean. These are important ones. 0:04:59.370 --> 0:05:00.250 They have a lot of 0:05:00.260 --> 0:05:04.630 political and social sensitivities and there are reasons to worry 0:05:04.630 --> 0:05:07.250 about these prices and also quote for broader 0:05:07.250 --> 0:05:08.260 range of prices 0:05:08.640 --> 0:05:09.320 on the rice 0:05:09.320 --> 0:05:10.620 and soybeans side, they 0:05:10.630 --> 0:05:13.099 rose a lot last year. Uh They 0:05:13.100 --> 0:05:14.560 have somewhat moved 0:05:14.560 --> 0:05:15.990 past the pandemic 0:05:16.000 --> 0:05:18.560 induced supply crunch and some idiosyncratic 0:05:18.560 --> 0:05:20.490 factors. For example, in china last 0:05:20.490 --> 0:05:22.240 year there was a major driver 0:05:22.240 --> 0:05:23.170 for soybean demand 0:05:23.170 --> 0:05:25.000 and prices because there was a 0:05:25.000 --> 0:05:27.260 spike in soybean based feedstock demand. 0:05:27.640 --> 0:05:29.140 But these 0:05:29.140 --> 0:05:29.860 things have 0:05:30.240 --> 0:05:31.690 somewhat run its course, 0:05:31.690 --> 0:05:32.830 but not everything. 0:05:32.839 --> 0:05:34.650 If you think about cereals 0:05:34.650 --> 0:05:37.099 beyond rice, uh coffee, 0:05:37.110 --> 0:05:40.770 sugar, meat, fish, edible oil, 0:05:40.850 --> 0:05:42.969 these things have gone through major 0:05:42.970 --> 0:05:44.570 supply shortages while 0:05:44.570 --> 0:05:47.060 they have had to keep up with sustained global demand 0:05:47.940 --> 0:05:51.220 of these food items that I just talked about. 0:05:51.230 --> 0:05:52.250 There is no major 0:05:52.250 --> 0:05:55.080 driver of supply demand dynamic to ease anytime 0:05:55.080 --> 0:05:56.330 soon. You see 0:05:56.339 --> 0:05:57.320 food production 0:05:57.330 --> 0:05:58.469 is somewhat inelastic in the 0:05:58.470 --> 0:05:59.060 short run 0:05:59.440 --> 0:05:59.870 and 0:05:59.870 --> 0:06:03.650 climate change related events are causing crop failure with increasing frequency. 0:06:04.000 --> 0:06:04.840 So there is reason to 0:06:04.850 --> 0:06:05.460 worry here. 0:06:05.940 --> 0:06:09.599 If elevated food prices is a given that would cause 0:06:09.600 --> 0:06:10.220 considerable 0:06:10.220 --> 0:06:14.330 stress in developing societies that are food important dependent. Another 0:06:14.330 --> 0:06:15.289 risk for them is 0:06:15.290 --> 0:06:16.370 that the US 0:06:16.370 --> 0:06:20.390 dollar strength, which is probably likely next year around taper 0:06:20.390 --> 0:06:21.460 and rate increase 0:06:21.540 --> 0:06:22.630 that would also push 0:06:22.630 --> 0:06:25.160 up the import costs for developing countries. 0:06:25.540 --> 0:06:25.960 No, 0:06:26.640 --> 0:06:28.670 there is a good chance that energy 0:06:28.670 --> 0:06:30.000 and food prices won't keep 0:06:30.000 --> 0:06:33.360 rising, will remain high but not necessarily keep rising 0:06:33.740 --> 0:06:35.120 because there would be some 0:06:35.120 --> 0:06:40.020 degree of demand adjustment. You may have um in elastic supply, 0:06:40.029 --> 0:06:42.200 but there's a limit of how much we can buy 0:06:42.210 --> 0:06:44.350 these things at very high levels. So demand would have 0:06:44.350 --> 0:06:47.720 to adjust to some extent. But one area where demand 0:06:47.720 --> 0:06:50.560 looks rather in elastic is base metals, 0:06:51.140 --> 0:06:52.520 demand for various metals 0:06:52.520 --> 0:06:53.810 related to electronic 0:06:53.810 --> 0:06:55.110 manufacturing continues to 0:06:55.110 --> 0:06:56.270 soar as the 0:06:56.270 --> 0:07:00.350 world turns more digital and energy transition efforts gathered momentum, 0:07:01.040 --> 0:07:01.390 low 0:07:01.390 --> 0:07:06.950 greenhouse gas technologies including renewable energy, electric cars, hydrogen 0:07:06.960 --> 0:07:07.710 and carbon 0:07:07.710 --> 0:07:08.979 capture. All of these 0:07:08.980 --> 0:07:12.910 things require more metals than their fossil fuel based counterparts. 0:07:12.950 --> 0:07:14.200 A multiyear 0:07:14.200 --> 0:07:16.370 rally in metals, industrial metals, that is 0:07:16.420 --> 0:07:17.230 look 0:07:17.300 --> 0:07:18.150 pretty likely to 0:07:18.150 --> 0:07:18.560 us 0:07:18.740 --> 0:07:20.410 all. The high prices of metals such 0:07:20.410 --> 0:07:21.260 as cobalt, 0:07:21.440 --> 0:07:22.260 copper, 0:07:22.270 --> 0:07:23.660 lithium and nickel could 0:07:23.670 --> 0:07:24.760 inadvertently cause 0:07:24.760 --> 0:07:28.460 delays in climate transition. So that's one major downside 0:07:29.840 --> 0:07:30.980 interestingly. And finally 0:07:30.980 --> 0:07:31.970 on the inflation side, 0:07:32.180 --> 0:07:33.870 precious metals would be obvious 0:07:33.870 --> 0:07:35.790 candidates for a rally at this juncture 0:07:35.950 --> 0:07:37.860 as their historical role has been to act 0:07:37.860 --> 0:07:40.360 as a hedge against a broader rise in the price level, 0:07:40.940 --> 0:07:42.690 oddly, that has really not been the 0:07:42.690 --> 0:07:43.210 case. 0:07:43.930 --> 0:07:44.380 Now. 0:07:44.390 --> 0:07:47.290 Earlier, gold and silver bowl jumped. That's during 0:07:47.290 --> 0:07:49.619 the uncertainty heavy phase of the pandemic 0:07:49.620 --> 0:07:50.580 for last year. 0:07:50.780 --> 0:07:51.390 But since 0:07:51.390 --> 0:07:52.660 then gold has been largely 0:07:52.660 --> 0:07:53.560 flatter week 0:07:54.040 --> 0:07:55.590 while silver 0:07:55.600 --> 0:07:56.920 jumping on the back of 0:07:56.930 --> 0:08:00.390 demand uh, do from coming from china 0:08:00.400 --> 0:08:02.030 has corrected lately. 0:08:02.040 --> 0:08:03.010 Also with china's 0:08:03.010 --> 0:08:03.460 slowdown. 0:08:04.240 --> 0:08:06.690 What does that tell us? Well, to me that 0:08:06.690 --> 0:08:07.760 is a major verdict from the 0:08:07.760 --> 0:08:10.450 market that it is fairly sanguine about the medium term 0:08:10.450 --> 0:08:12.160 inflation scenario. So there's a 0:08:12.160 --> 0:08:14.960 lot of discussion about the near term inflation 0:08:14.960 --> 0:08:15.930 and we recognize 0:08:15.930 --> 0:08:16.920 some of those risks, 0:08:16.930 --> 0:08:18.880 but for the medium term market 0:08:18.880 --> 0:08:22.000 based indicators are telling us there isn't that much to 0:08:22.010 --> 0:08:22.660 worry about. 0:08:23.240 --> 0:08:23.540 That's 0:08:23.540 --> 0:08:27.070 That for inflation, let's move on. What are the other 0:08:27.070 --> 0:08:28.180 risk factors for 20 0:08:28.180 --> 0:08:31.320 22? Well, first in that list is the state of 0:08:31.320 --> 0:08:32.329 the asset market 0:08:32.340 --> 0:08:36.050 marked by historically high evaluation across the spectrum. 0:08:37.040 --> 0:08:39.540 While interest rates, liquidity and 0:08:39.540 --> 0:08:40.900 investor appetite 0:08:40.910 --> 0:08:42.840 remain conducive for that fraud to 0:08:42.840 --> 0:08:44.010 persist. The 0:08:44.010 --> 0:08:45.250 space between profit 0:08:45.250 --> 0:08:48.070 taking and a downward spiral 0:08:48.080 --> 0:08:51.650 is narrowing because of such lofty levels. 0:08:52.140 --> 0:08:52.640 Unlike the 0:08:52.640 --> 0:08:56.890 chinese authorities who appear impervious to asset price correction 0:08:56.910 --> 0:08:58.070 to some extent, 0:08:58.080 --> 0:08:59.920 the Fed faces 0:08:59.920 --> 0:09:02.260 tremendous pressure to support the markets and 0:09:02.260 --> 0:09:03.750 Therefore 2022 will 0:09:04.140 --> 0:09:05.089 brings several 0:09:05.090 --> 0:09:07.140 tests for the Fed, which 0:09:07.150 --> 0:09:09.920 would want to go ahead with paper and rate increases, 0:09:10.040 --> 0:09:10.319 but at 0:09:10.320 --> 0:09:13.109 the same time would would not want to undermine asset 0:09:13.110 --> 0:09:13.900 markets in a very 0:09:13.900 --> 0:09:14.970 big manner because 0:09:14.970 --> 0:09:16.420 then the negative wealth effect can 0:09:16.420 --> 0:09:18.550 percolate through the system and cause the 0:09:18.550 --> 0:09:19.760 recovery to falter. 0:09:21.240 --> 0:09:22.620 The second risk factor 0:09:22.630 --> 0:09:23.250 is china. 0:09:23.840 --> 0:09:24.240 The global 0:09:24.240 --> 0:09:25.430 economy and markets 0:09:25.429 --> 0:09:26.840 took notice of china's market 0:09:26.840 --> 0:09:28.569 sell off and economic slowdown 0:09:28.570 --> 0:09:32.880 In 2021. But there was actually very little spillover. 0:09:32.890 --> 0:09:34.540 That's surprising given china's 0:09:34.540 --> 0:09:35.750 large scale. 0:09:36.340 --> 0:09:37.150 Now, 0:09:37.840 --> 0:09:38.770 just because that didn't 0:09:38.770 --> 0:09:41.390 happen in 2021 doesn't mean it will not happen in 0:09:41.390 --> 0:09:41.939 2020 0:09:41.940 --> 0:09:42.460 two. 0:09:42.840 --> 0:09:45.280 So we think that further correction in china, be 0:09:45.280 --> 0:09:48.910 it from pandemic resurgence regulatory crackdown or power 0:09:48.910 --> 0:09:49.950 shortage could 0:09:49.950 --> 0:09:51.010 put a major dent 0:09:51.010 --> 0:09:54.010 in global demand and investor sentiment next year. So watch 0:09:54.010 --> 0:09:54.309 out for 0:09:54.309 --> 0:09:54.750 that 0:09:55.340 --> 0:09:58.660 3rd, dealing with the fiscal cost of the pandemic. 0:09:59.040 --> 0:10:00.540 Now, many countries have 0:10:00.540 --> 0:10:01.420 seen their debt 0:10:01.420 --> 0:10:02.760 GDP ratio go up by 0:10:02.760 --> 0:10:04.090 15 to 30 0:10:04.090 --> 0:10:05.460 over the past couple of years, 0:10:05.840 --> 0:10:07.650 regardless of the level of interest 0:10:07.650 --> 0:10:11.020 rates. The time to stop adding to debt has arrived, 0:10:11.130 --> 0:10:13.660 which would require both healthy GDP growth 0:10:14.360 --> 0:10:16.420 and reduction in fiscal support. 0:10:16.580 --> 0:10:17.349 So you need 0:10:18.240 --> 0:10:22.260 GDP to continue to grow that can add or stop 0:10:22.270 --> 0:10:24.090 addition to grow debt 0:10:24.090 --> 0:10:24.990 GDP to go up 0:10:25.000 --> 0:10:26.540 or you can start cutting back on 0:10:26.540 --> 0:10:30.160 fiscal support, which can also then reduce the fiscal impulse 0:10:30.160 --> 0:10:30.520 and debt 0:10:30.520 --> 0:10:31.460 creating flows. 0:10:32.340 --> 0:10:34.770 Now this is going to be a challenging act to 0:10:34.770 --> 0:10:36.290 say the least with a high 0:10:36.290 --> 0:10:37.190 chance of a few 0:10:37.190 --> 0:10:38.410 sovereign stumbles. You 0:10:38.410 --> 0:10:39.910 can't really orchestrate 0:10:39.910 --> 0:10:41.880 a slaughter on the debt market without 0:10:41.880 --> 0:10:44.290 some stumbles here and there. You have already 0:10:44.290 --> 0:10:45.490 seen that in some parts of the 0:10:45.490 --> 0:10:45.860 world. 0:10:46.240 --> 0:10:47.820 So these risks are likely to 0:10:47.820 --> 0:10:49.440 manifest outside of Asia 0:10:49.559 --> 0:10:50.510 more so than Asia. 0:10:50.520 --> 0:10:53.050 But the stress could certainly spill over to these shores. 0:10:53.840 --> 0:10:54.270 Coming 0:10:54.270 --> 0:10:56.010 back to the Feds forthcoming 0:10:56.010 --> 0:11:00.840 challenges. Even if developed asset markets managed to handle the liftoff. 0:11:00.850 --> 0:11:02.959 Two questions will linger. First, 0:11:02.970 --> 0:11:04.800 would inflation come down with a bit 0:11:04.800 --> 0:11:06.050 of policy normalization 0:11:06.059 --> 0:11:07.370 or would it require 0:11:07.370 --> 0:11:08.380 forceful crow 0:11:08.380 --> 0:11:09.650 dampening action. 0:11:10.190 --> 0:11:11.530 Second, would 0:11:11.540 --> 0:11:12.620 emerging markets be able to 0:11:12.620 --> 0:11:14.330 handle the lack of volatility in 0:11:14.330 --> 0:11:15.710 capital flows that 0:11:15.710 --> 0:11:16.630 would accompany the Fed 0:11:16.630 --> 0:11:17.120 moves. 0:11:17.540 --> 0:11:18.160 So 0:11:18.740 --> 0:11:19.850 lots to worry about, 0:11:20.340 --> 0:11:23.199 but it is important to play called attention 0:11:23.200 --> 0:11:23.949 to these risks. 0:11:23.960 --> 0:11:24.660 Surely 0:11:25.240 --> 0:11:27.809 there is also a good chance that it could all 0:11:27.820 --> 0:11:28.960 work out next year. 0:11:29.740 --> 0:11:30.580 These are 0:11:30.590 --> 0:11:31.450 not some 0:11:31.840 --> 0:11:34.240 very, very aspirational points. 0:11:34.240 --> 0:11:36.160 I'm about to make consider the following 0:11:36.740 --> 0:11:38.300 in the near term. The 0:11:38.300 --> 0:11:40.030 transition to an endemic 0:11:40.030 --> 0:11:41.190 Covid could keep 0:11:41.190 --> 0:11:41.860 progressing. 0:11:42.340 --> 0:11:43.380 Put aside omicron 0:11:43.380 --> 0:11:44.960 for a second. Think about the 0:11:44.970 --> 0:11:45.920 wider picture, 0:11:45.929 --> 0:11:50.530 vaccination. Rollout of antiviral treatments, herd immunity being 0:11:50.530 --> 0:11:53.880 built up Well then maybe we are actually 0:11:53.880 --> 0:11:55.270 not at a very scary part of the 0:11:55.270 --> 0:11:57.960 pandemic, but we're actually the final chapter of the pandemic. 0:11:58.730 --> 0:11:59.650 Then there's the issue of 0:11:59.650 --> 0:12:00.829 supply side bottlenecks, 0:12:00.830 --> 0:12:01.960 especially at the ports. 0:12:02.340 --> 0:12:02.740 They're going 0:12:02.740 --> 0:12:06.110 to ease the consumer demand may remain 0:12:06.110 --> 0:12:07.320 resilient, but 0:12:07.320 --> 0:12:09.689 the way to release the goods, the way to distribute 0:12:09.690 --> 0:12:11.410 the goods is certainly within our 0:12:11.410 --> 0:12:13.160 grasp and it is in the office 0:12:14.140 --> 0:12:16.550 Then there is a big challenge of our generation china. 0:12:16.550 --> 0:12:17.250 Us 0:12:17.260 --> 0:12:18.429 they're not going to become 0:12:18.440 --> 0:12:19.630 Allies in 2020 0:12:19.630 --> 0:12:20.210