You look at what league Jane says and it's quite an admission. And you know quite often they underplay these things. And if
it's still being underplayed it must be a Chinese economy in a rather parlous state.
Good morning Rick. Great to be with all of you. Look it was very interesting and very unusual for a figure as senior as Premier
Li to address as many as 100000 officials all the way down to the very local level saying we
need to get unemployment down immediately very fast. So that I think is somewhat encouraging to hear. But the market remains a
little bit cautious. We've seen a couple of false dawns where we've heard what sounded like very encouraging words. But so far
we haven't really seen the follow up action for concrete actions coming through across the policy space. A little bit here. A
little bit. But nothing really in the shock all category. So you gave markets confidence to move forward from here. So I think of
course really interesting. But the markets still very much in a wait and see a kind of you have to prove it's to mindsets. Well
we need to see more concrete tangible action to help find a bottom in confidence and then perhaps in markets.
And BlackRock just a few weeks ago you guys made a call of really dropping your bullish call on China after what we've seen
in the stock market. Is there anything you've seen if they actually abandoned this growth target for say would that change
your mind on that view. So I think already the market is very much of the view that the
growth target is not so hard. So I think if we think about where the market's actually expectation is versus the official target
I think a lot of the work in terms of an expected lower growth is already done.
The uncertainty remains around policy. And China obviously with the recent Shanghai ongoing Shanghai lockdown it seems to us
that we are in a period of maximum uncertainty. Visa v China with of course the ongoing lockdowns.
It's hard to know where the next one will be how bad it will be. And very naturally that gives investors let's say pause for
thought. And this China situation isn't just relevant for China but of course it has important spillover impacts for the global
economy potentially exacerbating already. How can I say troublesome supply side situation worsening. That's with impact
implications for inflation and obviously isn't good for the global growth picture. So clearly it's a challenging time for
China. But with China being such an important part of the global economy of course the global implications are also worth noting.
We think an equity market losses have argued. Then I'd like to ask you whether we've priced most of this in and whether the
bath bulk at the losses is behind us. It's almost a question whether you know the Fed.
Is it easier for the Fed to pivot dovish or is it easier for China to abandon or tweak its Covid zero policy. I guess the
point here is the ISE positioning now in these endless cheap equity market.
So I think David you pick up the critical points which is that there's a tradeoff right. So so this kind of single focus on
inflation in the West we think is kind of misguided because there are always tradeoffs in life whether that's in China
between zero and five and a half percent or in the West. Between inflation and unemployment and so forth. So recognizing that
tradeoff we think is absolutely fundamental. And I think it's been quite interesting to hear just this week the Atlanta Fed
governor start to recognize that it seems to us and say hey maybe we can go to neutral and then see where we are given
monetary policy works with lagged and variable kind of time factors I guess. So we think that acknowledging the tradeoffs
are of course very different kettle of fish in China vs. the U.S. and elsewhere. But just recognizing that there are
tradeoffs and having a single policy goal we think is very challenging. So I think in both China and the US for very
different reasons we would like to see is a broader recognition that there is a tradeoff rather than a single focus on. One
variable I think is sadly life is more complicated than that. I've been talking to traders. You know one wonders whether
what's happened perhaps reinstates the veracity of the film discovered I'm not going to go that. But let's just take a look
at what's going on market wise because what we do see is a trade off taking place that does seem as though inflation concerns are
being slowly replaced by growth ones. Yeah. And that's important. So I love a bit of a Phillips curve
as well. It's quite normal to understand that there are trade offs right. So normally if you tighten because you're worried
about inflation but that's fine of course but normally it leads to some negative consequences as well. Be that in housing. Be
that an unemployment. Be that in consumer confidence. So sadly we can't have our inflation and our growth cake. We need to at
least landing the cake cocktail I guess to some degree. And I think it's encouraging as you're saying Rich. I think we're
starting to see that's kind of all over the world a recognition that inflation of course at 40 year highs. Cost of living crisis
of course it's front and center. There's no confusion as to why that would be the case. But just focusing on inflation moving to
a very restrictive policy and therefore potentially throwing hundreds of thousands or millions of people globally into
unemployment shouldn't be forgotten. I don't think policymakers are forgetting that. And I think they're making Matt Miller a
little by little. In recent times and I'd expect we'd expect more of that in the weeks ahead.