Of course other factors there including whether the technicals lined up as well.
It's a big ask. So is it fair to say that this is
probably more likely than not a bear market pause.
So I think if we look at you from Texas to sell US equities have been testing
you throughout these moves on average you have to sort of hit it pull back.
So feeling above it suddenly a bit higher would signal an extension to the
rally fee. However it probably means that you will
get another leg down in the making. And just as markets I think the equity
market is suddenly testing that moment. And I think there's a few key variables
that we are monitoring in terms of whether this this rally will extend.
The key is really the dollar because we really need to see if we can dollar for
risk assets sustain sustained recovery. But broadly speaking if we look at the
U.S. dollar it has been definitely a
strengthening in the past couple of weeks.
In fact it is now at the highest level since June May 2022.
And media other currencies Ellis affected the lows this year.
Also this is the dollar. And suddenly the Fed Jackson Hole would
be quite key then to watch later as well.
And given the rise in equity markets with easily seen financial conditions
actually easing itself tightening. So to some degree no we are expecting
that Chet Powell may well push that it gives.
The idea is that we should expect that it should give it anytime soon given
financial conditions actually improved versus the cure rates which really goes
against the current policy stance to really tame inflation and pricing
pressure on the next months ahead. So these are to make you think that
there was other factors such as oil prices which will feed into other views
whether you use efficient speaking. But net net I think the macro backdrop
going forward is going to be quite challenging.
I do see some of these sectors IP address ongoing basis.
China is the other big factor that needs to be addressed.
Right. Of course.
What to wait for them to announce and a delay in one additional one trillion
dollars. You are telling you I should say in in
funding. Is this enough to lift animal spirits
when it comes to emerging Asia and China in particular.
Well we are constructive on China. I think unlike many of the other
developed economies China is probably the only other major economies that
looks to be easing policies rather than tightening policies and curbing growth.
So what's so easy to us. The one trillion dollars nineteen point
policy package is a step in the right direction.
It also cut policy rates quite a lot of primary DAX.
Well I tried to ease more you know excessive financing by some of the major
companies. So to ask this they're actually looking
for China. OK I want to look at oil prices.
I had a conversation with a former Fed official while I was sitting out in
front of my cabin today and he was excused expressing all kinds of concerns
and hesitations about the Fed. That one was oil prices.
He says yes they're down but there's there's still ISE that they are going to
move higher. And there's so many geopolitical
factors. There's so much in the world.
What do you see with oil prices. And if it does move higher does that
does that hurt economies. Does it change.
Is it make it harder for the Fed to back off.
So energy prices you know we will continue to pose a risk to official were
white. With the US as Europe.
Certainly we've seen some moderation in oil price lately.
That's really a function of considerable demand.
But again if you look at if we look at inventory levels.
Yes. You know relative lots of history and
the fact that we also still have major geopolitical pension elsewhere.
It is in Russia. You know obviously you run if you could
come true control dash reconstruct this route possible oil supply and maybe
resulting in slightly lower oil prices in the short term.
But long term I think given the shift the structural shift to decolonization
and driven them as a cap ex by major companies we believe that energy prices
are probably fires with site. Dollar dropping out.
This is very important to many markets around the world.
Certain certainly all kinds of currencies.
I think short term we do expect the U.S. dollar to potentially continue the
extension in terms of his recent rally. Obviously a lot will depend on what
level of Jihye Lee I'll see in the Jackson Hole.
But what we see here is that you have a key supply around 1 0 4 4 7 0 feet.
It puts us in a below what probably means that you'll probably see in this
coming right range at the elevated level for the time being and you get other
data points or even comments by policymakers who suggest otherwise.
So in the near-term I'm probably biased on the upside but Brad Stone slight.