It seems like you know recession risks are building. You hear this kind of first kind of acknowledgement from Jay Powell that
maybe it is imminent. Do you should I believe what he says. How much weight does his words have. I think it's awfully if you
look at what's happening in the economy right now given the elevated inflation and the Fed needs to tighten further to
contain it we're definitely seeing inflate a recession or risk being more elevated even though in the near term think the
strength of the household as well as corporate balance sheets could contain some of that risks but definitely more more of a
problem next year. Yeah I mean you've got underway equities haven't you. So to where are you seeing opportunities elsewhere.
Yes. So currently given our expectation of growth being maybe uptrend at the start of next year and also inflation being
elevated we think there's definitely more downside risks to both earnings and margins. So we have moved underweight to equities.
So currently we have overweight stunned for cash. We just think in the current environment a defensive position probably is the
right one. So you're saying we might not see inflation recession this year but you're saying an earnings recession is very much
in focus. Yes. So even though about a full blown economic recession is possible not our base case at the moment but if you
think about where growth is going and also the fact we have higher labor costs and higher commodities costs that's likely to
weigh on margins and earnings. This is it earnings growth to be nothing like what we've seen. Disappointing. How much of that is
not priced in in your view. And you know what else is the market pricing in on top of that. Because if perhaps you get an
earnings recession rather than perhaps a economic recession. So definitely we think some of that weakness in earnings is already
in the price. But if we are heading to our economic recession and we think there is more room for equities to fall from here
I'm just looking to the year to date performance. We're just showing a chart on just cross assets. Right. If he's right the
best to the worst. It really was energy at oil. You have the dollar then you have the likes of you know gold and then you get
lower to that. It's basically 10 year treasuries and then the S&P.
Is there anything that could change this narrative for the rest of the year. Do you think that anything could shift.
I think if we we are looking for environments where growth is calling but inflation remain elevated that ranking is unlikely
to change. We're still think commodities probably well to relatively battle in this environment in the middle while half
of the fixed income assets and right at the bottom would be equity using commodities can still outperform given the
recession risks that are building right now. We think there's still if you look at the commodities markets especially the oil
products markets that inventory is still relatively low. So there is still room for it to move higher if we do have a
squeeze. More on the supply side. And with all that said and what you said in terms of the economic conditions I mean
applicable to a lot of the world but not to China. So you must have of course a different strategy. Then I noticed that you are
getting more and more positive on Chinese equities and perhaps even added a bit more on tech as well. Cause that's a big one.
Yeah. So we definitely moving more constructive on Chinese equities. We think that's an environment where global growth is
slowing. We're seeing China's economic cycle as well as policy cycle moving in the other direction. I know. So recently we're
just seeing more positive more dovish stance from the policymakers on the tech sector as well. We think that could be
could be a support constructive. What would it take to beautiful. A bullish at this point is does that does the housing
market have to come back in a meaningful way for you to turn a little bit more optimistic on China. I mean to term what
optimistic we probably need to see more meaningful shift in the Covid policy stance that would really really some of the pent up
demand we've seen in consumption. What about credit cards overall. If we look at the U.S. so we're turning more cautious
there. We think that the current spread levels are not that attractive given elevated recession risks far relative basis.
Where are we seeing potential off had to into a recession. We do prefer the higher quality assets. So our relative basis we're
like investment grade to high yields equities. If I think a recession is probable now do I think that we've seen a peak when
it comes to U.S. Treasury yields. I think that stuff's really more to the risks right now. So there's still room for it to
move higher if we see high inflation prints coming through a more hawkish Fed but definitely US growth concerns take hold. We
could see it move lower from here.