Mark Matthews, head of Asia research at Julius Baer, discusses the current bond rally, Federal Reserve policy and his investment strategy. He speaks on Bloomberg Television.
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Transcript
You know, I have to wonder, just given what we see in this bond rally, how much more can yields head lower? You think, Mark? Oh, I think they can go quite a bit lower. Judging by what the futures market is telling us, and if you look at the most
Recent data coming out of the US, the economy is softening. We had the jobs report for March, which was significantly below expectations. And then ADP payrolls for sorry, jobs report was for February. ADP payrolls from March overnight and the ISE some services PMI there.
They’re all basically converging on the same page, which is an economy that’s softening. And I think if you just combine that with with what’s happened in the banking sector, there is good reason for the Fed to be pausing here and eventually start cutting in the second half of the year,
Which would mean yields go down. OK. What is that? And what if inflation continues to be elevated? I mean, we certainly have seen central banks this week saying that even if there’s a pause, it doesn’t really quite mean that they’re gonna be cutting anytime soon. That would be a problem.
Thankfully, we don’t think inflation will remain elevated. We don’t think it’s going back to 1 or 2 percent, but we think it can settle between 3 to 4 percent starting in the second half of this year. And I don’t want people to be bored ad nauseum hearing about the delayed effect
Between the real market for property prices and how it figures in the inflation baskets, but that delayed effect does exist. So we’re looking at shelter numbers from last summer and we know that after last summer, property prices peaked and came down. So it’s inevitable that will be helpful as well.
Gasoline prices, they’re way below where they were after Russia invaded Ukraine last year. So, I mean, you’re right, inflation is something to bear in mind, but we think it is coming down. We’re quite certain about that. OK. So what’s the what’s the investment prognosis and prescription mark?
Because if someone told me stock markets at various points this year, I would have gotten burned. So when they put that money. Exactly, David, if you’d told me at the beginning of this year we were going to have to bank failures in the US. And Credit Suisse bought by UBS under
Emergency legislation and all of that stuff, I wouldn’t have been buying big cap technology, but that’s exactly what’s outperformed. I do think we’re in a bad news is good news environment, and that’ll probably persist until around May or June because people will like the fact that yields
Are falling. But eventually when you get so much bad news, it just kind of turns into bad news period. And then I think what what really continues to do well is the bond market and treasuries are already up 5 percent so far this year.
But that’s some play. That’s a place, you know, to come back to what I said earlier, if yields are going to continue to decline that. That is also a good place to be. So maybe I just say one last thing,
Which is I think the breakout in gold is very important and indicative of people wanting to hedge against the dollar going down. And if the dollar does soften and we’re looking for one point one five euro dollar twelve months from now, 123 dollar yen, that’s a positive tailwind
For financial assets generally. Well, what about China? Generally speaking. Well, like China, a lot it’s reopening and you’ll have seen the housing data, the key property developer sales are up 30 percent year on year and the PMI ISE are very robust, certainly higher than
Most of the rest of the world. And the market is not expensive. The last I looked, the Hang Seng was sort of around 12 times and it still got very chunky dividend yield. So I think China could be up about 20, possibly even 30 percent between now and the end of the year.
The Hang Seng index specifically.
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I think ear vax prevents him from hearing fed won’t stop till inflation is 2%
The idea that the Fed will settle for inflation at 3-4% and start cutting rates by the end of the year is fantasy.
AGAIN AND AGAIN CHINA USA EUROPE + JAPAN + AUSTRALIA NZ CANADA S KOREA TAIWAN SWISS + ALMOST ALL OF EM(S) HAVE TOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO MUCH DEBT TO GO FUTHER FROM HERE!!!!!!!!!!!!!!!!:)
THAT'S WHY GOLD + ENERGY ARE THE ONLY SAFE HAVEN ASSETS THAT BECAUSE THOSE ARE LIMITED EDITION UNDERSTAND?!!!!!!!!:!)
IF I ADD A BIT MORE EXPLANANTION ABOUT YEN'S POSITION ——- > VERY SIMPLE THAT IF BOJ DOES NOT CHANGE ITS POLICY IN APRIL THEN YEN WILL NOT BE GOING TO APPRECIATE BECAUSE OF TOO MUCH YEN LIQUIDITY IN JAPAN + OTHER MARKETS BASED ON (-)INTEREST RATE —– > IN OTHER WORDS ——- > JAPAN YEN'S VALUE GOING WEAKER AND WEAKER BECAUSE OF THE TOO MUCH LIQUIDITY PROBLEMS = MONEY PRINTINGS MEANS MARKET IS STARTING TO RECOGNIZE THAT BOJ UNLIMITED YEN PRINTING IS NOTHING DIFFERENCE WITH MONEY PRINTINGS FROM USA EUROPE + EVEN CHINA UNDERSTAND?!!!!!!!!!!!!!!!!!!
mann seems very sleepy
SINGAPORE$ IS BEING BALANCED WITH ITS FISCAL POLICY + MONETARY POLICY BASED ON ITS BUDEGT!!!!!!!!!!!:) ——- > AGAIN AND AGAIN CONSERVATIVE MONETARY POLICIES OF SINGAPORE GOVERNMENT IS NOW PAYING WELL OFF FOR ITS CURRENCY VALUE _ ITS PROPERTY VALUES AGAINST ALMOST ALL OF OTHER ECONOMIES IN THE WORLD!!!!!!!!!!!!!!!!!!!!!!!!!!!!:) NOW EVEN SWISS IS ON THE VERGE OF COLLAPSING DUE TO THE RIDICULOUS M&A BETWEEN CS AND UBS MEANS WHAT THEY ARE GOING TO DO WITH +700B$ BAD DEBT OF CS+ UBS + 1.4T$ BAD DEBT?!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:)
AGAIN AND AGAIN IT'S AN ENORMOUS TIME TO BUY GOLD + ENERGY THAT AGIAN GOLD PRICE HAS NO OTHER OPTIONS BUT TO HIKE INTO 3K$ – 3.5K$ THIS YEAR AND OIL PRICE IS RECOVERING ITS 130$ – 140$ BB/LS THIS YEAR!!!!!!!!!!!!!!!!!!!!!!!!:)
P.S WE ARE SEEING THE END OF CURRENCY BUBBLES FROM TOO MUCH DEBT HOWEVER ——— > IN TERMS OF SAFE HAVEN CURRENCY ——– > ONLY SINGAPORE$ IS THE ONE CURRENCY TO KEEP ITS VALUE BECAUSE OF ITS GOVERNMENT THAT ——— > I CHECKED OUT FACTS OF SINGAPORE$ THAT SURPRISINGLY SINGAPORE GOVERNMENT DID START ITS TIGHTENING OF MONETARY POLICY SINCE 2011YR WOW THROUGH ITS REAL ESTATE MARKET REGULATIONS TILL EVEN NOW WHIHC HAS BEEN + 12YEARS!!!!!!!!!!!!!!!!!!!!!!!!
P.S IN CASE OF 'YEN' AGAIN IT IS LOSING A GREAT TIMING TO GO APPRECIATION MUCH MORE THAN NOW INTO +68YEN +/- NOW ITS PROBABILITY ONLY BEEN LEFT +11.13% MEANS BOJ MUST SCRAP ITS ABSURD MONEY PRINTINGS OR AT LEAST TWEAK ITS YCC < —————- THIS IS MATH NOT A GUESS OR SPECULATION!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
THIS YEAR WE WILL SEE EVEN MUCH MORE THAN 2022YR THAT ——- > LOSS MAKING FROM BONDS + STOCKS MARKETS SIMULTANEOUSLY AGAIN AND EVEN IT WILL BE WORSE THAN 2023YR IN 2024YR!!!!!!!!!!!!!!!!!!!!!!!!!!!!:)
MORE THAN +99.989990% PROBABILITY FROM THE EQUATION OF ZETA FUNCTION + VECTOR MATRIX WITH BAYESIAN INFERENCE!!!!!!!!!!!!!!!!!!!!!!!!!!!!:)
JAMIE DIMON CEO OF JP MORGAN ———– > HE IS WROING ONE FACT THAT WE ARE IN A MUCH MUCH MUCH MUCH MUCH MUCH MUCH MUCH MORE SERIOUS SITUATION THAN 2008YR THAT WE ARE INDEED STRAIGHTLY HEADING TOWARDS THE BIGGEST EVER ECONOMIC DISASTERS SINCE THE BEGINNING OF THE 20TH CENTURY MEANS ' ECONOMIC ARMAGEDDON'
Blink once Blink Twice
AGAIN AND AGAIN WE ARE SEEING THE LAST MOMENT OF US$ BITCOIN CHINA YUAN (+H.K$) EURO POUND + YEN (IS LOSING TIMING) + S KOREAN WON TAIWAN$ NZ$ AUSSIE$ SWISS FRAC + STOCKS + BONDS + REAL ESTATE SECTOR ———- > AGAIN AND AGAIN ONLY GOLD + ENERGY ARE THE SAFE HAVEN ASSETS < ———– > NO MORE US$ + US T – DEBT ARE SAFE HAVEN ASSETS!!!!!!!!!!!!!!!!!!!!!!!!!!!:)
IT IS TOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO LAT TO FIX THE FIANCIAL ENGINEERING PROBLEMS AS I'VE SAID MANY TIMES THAT NOW ———- > US 10YR YIELD – US FED FUNDS RATE IS STRAIGHTLY HEADING TOWARDS (-)200BP FROM (-)170BP BEFORE END OF 1ST HALF OF 2023YR THAT WHERE IT IS NOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:)
AGAIN AND AGAIN DO THE MATH AS I'VE SAID MANY TIMES ALREADY IN BLOOMBERG CHANNEL THAT ———– > NOW US 10YR YIELD IS AT 3.2920% – US FED FUNDS RATE +5.0% = (-) WOW 170BP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:) MEANS ———- > THERE ARE MUCH MUCH MUCH MUCH MUCH MUCH MUCH MUCH MORE DEBT PROBLEMS MOUNTING AND MOUNTING AND MOUNTING AND MOUNTING INTO COMING MONTHS AND YEARS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:)
AS I'VE SAID ALREADY THAT WE ARE IN A SITUATION THAT ' THE RECESSION BEFORE THE ARMAGEDDON' !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:) —— > AGAIN AND AGAIN TOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO MUCH DEBT PROBLEMS ARE HURRICANING THE ENTIRE ECONOMY AND US$ + US T – DEBT ARE NO LONGER SAFE HAVEN ASSETS THAT AGAIN ONLY GOLD + ENERGY ARE THE SAFE HAVEN ASSETS TO HEDGE AGAINST THE RECESSION INTO THE ARMAGEDDON!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:)