Ambiguity and uncertainty is the biggest problem of this right. You've got major institutional Wall Street players saying this
is a pause in the bear market. No. This is actually something that could see the rally run to the end of the year. On that
spectrum where do you sit. Probably more likely in the camp that says the markets have run
a bit too hard and we'll see a pullback. I think the risk of a the market's going below the June lows is
quite high. We have seen a good rally though and of course that does with bringing with it the possibility that we might have
seen the low. But you have to allow that the inflation numbers do seem to be rolling over. That's certainly good news. But
we've got a long way to go before we get inflation back to desired levels. So that means more action by the state. And in
the meantime we're starting to see a weaker economic data about us. Obviously last night in New York manufacturing survey and
also today in a HP home builder survey that I think Sarge is weaker earnings growth ahead in the US earnings downgrades. And
of course we're going through a seasonally difficult time of year. This August September October period is known for weakness
in share market. So I'd be a little bit cautious at this point. I think the risk of a pullback is quite high.
Investors when it comes to China seem much more interested in looking at what this PRC rate cut pivot means that their
willingness to support the economy and kind of pushing aside just how bad the numbers were in the fact that they're still
dealing with these twin drags of the Covid lockdowns as well as the property market. Right. Is the market being too optimistic
about a recovery in China. Possibly it's six. I mean if you talk to Chinese share market it
had a little bit of a bounce out of a slowly this year but it wasn't very strong. What. I don't think the markets got too
ahead of itself. Obviously China is a big risk factor in terms of global growth. And those numbers were very weak. The policy
using we saw in response to that in terms of the US production infrastructure isn't enough to address that. And of course we've
got ongoing uncertainty in China regarding potential more Covid lockdowns. And then of course you've got Europe which is
a very high risk of recession as well. So the global outlook is somewhat fraught. So at this point in time I guess the question
investors have to face is whether DAX 20 odd percent or so decline in share markets that occurred in June has anticipated
all of that. Obviously if inflation subsides and bond yields keep falling
that may well be the case. But if we go through a period where bond yields and interest rates will stay high and you go into
recession then I think you probably have to say we've got a lot more downside. Share markets go take a look at the 10 year yield
in China because we really saw that plunge after the PBL see a rate cut. Right.
Is this an opportunity for foreign investors in the sense that it now seems to be pretty uncorrelated to treasuries in the
sense that we're seeing that policy divergence coming from the PBL sea and the Federal Reserve. And of course we have seen the
relative stability. Even if you look at the yield movements over the past couple of years
I think there probably is an opportunity there for investors. We are seeing different directions for the Chinese economy or the
Chinese policy response compared to that in the US. Obviously China is ahead of the US that started tightening a lot earlier
coming out of the pandemic. And now it's saying the results of that in much weaker economic data and therefore there is an
opportunity there for investors. But if it's a more difficult one given the day the complications about investing in China
these days the political risk associated with that particularly when it comes to share markets then makes it a little bit
difficult for investors compared to what might have been the case for those tensions rose. Shane just quickly the Aussie
earnings season going to be as supportive as the US earnings season was in the second quarter for soft markets.
I think it probably will. So far so good. We are seeing most companies report rising earnings on a year ago. And don't forget
the last six months generally in Australia has been pretty strong. The last four months to date has been very strong
despite a lockdown at the end of last year in some states. So that I think is propelling profits higher. It's not uniform.
There are companies which are struggling with fashion pressure a cost pressure and so on warnings of slower demand ahead. The
fact that the numbers that are backward looking are actually quite positive and that is providing a bit of support for our
markets much as it did in the US as the US went through its earnings report he says. Over the course of the last month.