We need to extricate ourselves from 2019 And the way you do that is to speak to People of their annual forward view Kitsch Oaks of course it's Sauk Jen Writes a definitive 20/20 view on Foreign exchange and does it with a Prism of short sharp sentences I love What you do is boom boom boom boom What's the thing that matters within the 10 20 pages you have what's a single Distinction right now the single Distinction is that it's all about Growth fundamentally so the question for Next year is how much will the US Economy slow I was in the States Recently there's a lot of optimism I Think that optimism is way too Optimistic in terms of the dangers Facing the US economy if the US economy Slows President Trump wins the dollar Falls yeah I look at the 2020 we want to Cover that more in the hour ahead but Really right now it's about the entire News flow of data and particularly on Trade I mean it's extraordinary to get To December 15th with a few distractions We have along the way and you know my Working career has been made up of 90 to 95 percent growing sometimes rapidly Growing world trade we we learnt in School that it was a good thing this is Brand-new this shrinking world trade I'll put a book on everybody's Christmas List but the economic consequences of
The peace by John Maynard Keynes is the Short book to read this Christmas that's Relevant about us now yes if we get well Trade weaker you we will not get respite For emerging markets we will not get Respite for the Chinese economy and a Weaker Chinese yuan will be one of the Big themes for next year what would can Say about the u.s. terrorists December 15th he would say we need to rethink all Of this and not go down this path but Who is rethinking nobody's rethinking This no I think that December the 15th Is that the chances of postponement are A reasonably good and I know nothing in Terms of the politics of this but that Letting those tariffs increase in terms Of the pressure it puts on charm the Chinese economy on the Chinese yuan and On US consumers given where these Tariffs hit two weeks before Christmas And surely this gets postponed but you Know I mean sure We've been we've been surprised to Multitude of talents but I think the Market expects them to be postponed and Is just nervous they might not be okay But I just don't understand with them With the you know when bonds and Equities go back to tracking each other Or what needs to happen to for the Markets to just become a little bit more Normal or a little bit more what we were Used to then we need to go back to
Focusing on what the Fed does what Inflation does well growth does we need To not have days like Friday when we get A non-farm payroll result that's a big Big big surprise and by Monday morning We've got yields exactly back where they Weren't where we started give or take You know that's what we we need to get And get back to that focus we're not Being allowed to do that it's one thing To forecast the the thing that's gonna Happen it's nothing to get the timing Right this year's so many people got Weaker dollar wrong I mean it was really Quite resilient what will be the Catalyst to get the weaker dollar the Downside surprised when the US growth Consensus starts falling as fast as Other peoples growing consensus and we Could go back all the way back to so you Know in terms of interest rate Differentials growth differentials this Is so like the early 1980s so the the Period of Volcker and Reagan and the Period of dollar mark going to 3:45 in In February but but if you looked at the The yield differential between ten-year Notes and tenure boons This is the time when they're most like That they haven't been as wide as this Since then you know remember the Fed had Cut rates three times before the dollar Peaked right and and the yield Differential that had been crushed
Before the dollar yeats and lit peaked In February 1985 because we we had so Much momentum built into that trade and And then we got it to turn around I Think the timings incredibly hard to get Right but I think it needs to be I think We need to see the whites of the eyes of A u.s. slowdown
