Where I'll be what is going on. Why don't we sit there and get
any breaks right now. What do you think is actually being priced In into equity in fixed income markets.
Well I think the narrative has moved from inflation risk and Central bank reaction function now forward to looking at this
growth inflation puzzle In the light of the quite aggressive central bank reactions at
the moment. So we're not getting any reprieve because we have This. And the one hand we also have and maybe and hopefully we
get informed this week on the inflation picture out of the yes We are possibly pricing peak fed hawkishness. We are little
pricing our peak coal that China uncertainty and negativity. And We are also of course starting the week with the celebrations of
the 9th of May in Russia. So we are also looking again at the Russia Ukraine situation and repricing peak uncertainty around
whether we get an deceleration or an acceleration of any kind of Movements there.
Someone absolutely says Exactly. A lot of balls in the air as it were. Let's take a look
at the bond market. Do you see any letup in the declines we've Been seeing in a.
Gifts. Do you have any idea when people can perhaps see the Stemming of these losses.
Well it'd be fantastic if I if I knew that exact timing. I just. But I think we all have to be quite nimble in these kind of
markets given all the uncertainties I've just laid out. It's Very difficult to pin point but that's why I'm looking forward
to this week with the inflation data coming out because you're Possibly if we have
you we are seeing the peak in inflation then maybe we have also Seen the peak in pricing. Central bank reaction function and
more aggressiveness. And maybe we get a bit of a moderation in Our losses in the equities and the fixed income market because
we are then pricing less of a recession risk. So. Light at the end of the tunnel. Maybe this week. But maybe it's
a hope we would see. Maybe maybe not. We are seeing pretty much stress across asset
classes. What do you do Stephanie. How do you play this. Do you Buy the dip. Do you do you sell the bonds. What do you do with
the stock market in particular. Well you have to make sure you are looking at the sectors that
may be having a more longer term potential. So I think it's Important to keep the longer term strategic themes in mind as
well. You know bigger stuff like cybersecurity for instance we Have recently upgraded in the US the health care sector given
the market is at the cycle where it is and everybody gets more Defensive it's looking more attractive now.
We have you know you have to have a look and way up between the Shorter term and the medium and the longer term short term we
are clearly underweight Europe. We are neutral in the US but we Are actually still overweight in Asia. Extra panel.
Weisel of a weight in Asia what we re expecting capital outflows From the region to perhaps the US.
Yes you are touching on a very important point. We have seen That interaction between higher U.S. higher U.S. dollar higher
U.S. rates et cetera and predominantly playing out against China Because they are the central bank. Divergent is the biggest of
all in the region. So we have seen how this capital outflows has Been hitting the renminbi of course and that is something to
watch and be very mindful of. But they are if you look at other Parts in the region. So we have been recently conducting some of
a deep dive in Southeast Asia. Maybe there are also some Countries where you have a more differentiated picture and that
you can also find opportunities. Still talk to me a little bit about the dollar and how long you
see dollar strength for here. It is causing a few issues. Tell Me in the discussions you have with the monetary authority of
Singapore what prison are they looking at it through.
Well whatever we discuss in these forums is obviously nothing I
can discuss in a wider forum. But if you look at euro dollar or The dollar you always have two sides to the equation off of the
dollar pricing. So when you look at euro dollar in particular Our studies suggest we have about five to six big figures risk
premium that weighing on the euro right now because of that Uncertainty surrounding the the forward pass on the Russia
Ukraine situation. And of course because Europe is still Weighing and trying to come to a conclusion as to whether there
will for coal gas and oil imports from Russia. So that's one Part that's keeping your dollar
down. And then of course as long as there's some risk aversion Is in the market then the US dollar as a still short term safe
haven is still at play as well. A strong dollar. X Y at a 19 year high. On the other side.
Weakness in the yuan that will impact Asian currencies. No. It will. But maybe we shouldn't just look at the shorter term
picture and then project from there. And I know a lot of people Are now looking at parity which is easy to say if you are not
too far away from it. But if you look at it from a medium term And longer term structural drivers and this is a debate that's
not necessarily happening at the MLS. But if you look at central Banks around the globe it's actually in the public domain that
there will be a redistribution of your central bank holdings Away from the dollar going forward. I think we have seen an
unprecedented move from the Americans in terms of Being able to put sanctions on a central bank and freeze those
assets. And then of course you will have bigger concerns from Other central banks as well. We have seen smaller central banks
I think in Israel already starting to diversify. You have seen And this again is a longer term issue. Now commodity contracts
being priced away from the dollar. So ultimately over the medium And longer term you would see this to turn as well. So don't be
fueled by what's happening in the short term and just project That for the medium and long term as well. There are other
factors at play.
