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Cold Front on Oil Prices?

Tony Nash is back in the Morning Run, hosted by BFM 89.9, as he points out the crude oil price and how long to expect the rally, considering factors like weather, demand, and supply. Tony also mentioned about a potential pullback and snap and how you can better be prepared for it. Should you continue buying tech stocks or move elsewhere? Also, they discussed crops and where the prices are going this year.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/cold-front-on-oil-prices on February 18, 2021.

 

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BFM Description

 

Tony Nash from Complete Intelligence, from freezing Texas, shares with us the current supply constraints in the US impacting oil prices in the short- and medium-term.

 

Produced by: Mike Gong

 

Presented by: Philip See, Wong Shou Ning

 

 

Show Notes

 

WSN: For some color on where global markets are heading, we have in the line with us Tony Nash, CEO of Complete Intelligence. Tony, are you freezing out there in Texas?

 

TN: Yes, we are. We haven’t had it this cold air for decades. So it’s it’s been a really interesting week.

 

WSN: That has had an impact on oil prices. Bloomberg showing Brent crude at $64 per barrel, WTI at $61 per barrel. So how badly impacted our energy markets at the moment? Where do you think oil prices are going?

 

TN: A lot of this is very short term. What you’re not seeing that the traders really pay attention to right now is that a lot of refineries are closed because of weather and they’re starting to close for annual maintenance. There’s this presumption that there’s a demand pull, which we’re not really seeing from anywhere in the world right now, and that the winter storm issues will pull energy prices. But again, the fact is the refineries that would take this stuff are closed. We expect this to be short lived. This is an extension of a crude price rally that we saw that we expected to come in Jan, it’s lasted into February and we really don’t expect this to have a lot of legs to it.

 

PS: What do you think the outlook looks like then for the mid-term like quarter to quarter three?

 

TN: We would see 10 to 20 percent off of this price? We don’t necessarily think that this is a sustainable level short of some sort of supply cuts. But the weather in Texas, for example, we’re going to be kind of in normal weather ranges in two days. What we’ve seen this week and the close down, as we’ve seen this week, it’ll take people a couple of days, maybe a week at most to get things back on line. So this perceived supply shortage will be back on line fairly soon.

 

WSN: How about yields on U.S. 10 year bonds? Because they’ve hit a new high one year high. What what is that trying to tell this? What a market try to tell us?

 

TN: U.S. is trying to raise money and they’re willing to pay more for it. I think that is is really it. I think there is a growing fear that equity markets are as high as they’ll get. We’ve started to see more of that tension come in into chatter over the last few days. People are willing to pay to get out of markets, to park their money in debt.

 

So I’m sure it helps the U.S. as they’re raising more money for stimulus and for operations. But as we creep up to four thousand, that is just unimaginable for a lot of people. And it’s not as if we are doing better as an economy than we were in 2019 or the first quarter of 2020. This is built on stimulus, as we’ve talked about before. It’s built on central bank activity.

 

And you can only stretch that so far before things have to snap. We’ll see some of these things that are at double and triple and quadruple kind of the standard multiples. And P is the only way to measure this stuff. But we’ll see things that are really, really stretched, snap into a more reasonable region. But it’ll happen any time tomorrow, three weeks from now, a month from now, whatever. It’ll just happen. It’ll happen any time. And it’s best to be prepared for it.

 

PS: So are you expecting some pullback eventually? Right. What is the tipping point where investors will essentially do that exodus or flock to U.S. Treasuries then?

 

TN: One of the tipping points is going to be the resolution of stimulus. I’ve been saying for weeks that stimulus will not be what the administration wants it to be. There are such high expectations put on that stimulus right now and they’re not going to get it. They’ll get a lot of it, but they’re not going to get all of it. Expectations are sky high. And when it doesn’t hit, I think that will be one of the catalysts.

 

But there are other things like when the crude price starts to fall because this supply constraint isn’t there anymore. These sorts of things, these things add up and then they snowball and and then you start to see markets really, really take a dove. We’re not necessarily calling for a 2008 generational type of decline in markets. It’s just a bit of a pullback so that people can just say, “OK, wait a minute, let’s check, take stock how businesses are doing. Take a look at our investments and our allocation and then reallocate.” That’s really what it’s about.

 

WSN: Where would you relocate to and what are the safe haven assets? Because almost every asset class on a year to date basis is up. Right. And maybe except for Google, which is down six percent on the year today.

 

TN: What you’re likely going to see is a pretty serious rotation out of technology where people have focused on because of the work from home activities. This may not be immediate, but I think you’ll see a rotation out of a lot of the work from home stuff as people start real life again and you’ll see people move into. This is not really my the basis of our outlook. But you may see more of a regional move into things like tourism.

 

These things have just taken real hits. A lot of them have had speculative rises, some of the cruise lines. But some of them are still way down. All of this depends on gradual normalization. But I can tell you, Americans are really tired of being locked in, really tired of not socializing. And some of these things are going to have to start up again.

 

PS: What about not all out commodities then, like agriculture and precious metals?

 

TN: We had some real pressure. And part of the reason of that pressure was because there was a perception that a lot of the Chinese corn crop didn’t come in last year. But a lot of the drought was outside of that zone. Some of that pressure was alleviated.

 

But still, we’re seeing some pressure on wheat right now in the U.S. It really all depends on how much the current cold snap impacts the output later in the year or the ability to plant. Right now it’s not terrible.

 

Until we start seeing real demand come back in entertaining and in consumption and these sorts of things, we’re not going to see a major demand pull on food because people are already buying their standard cook at home type of things right now as they’ve rebuilt their behaviors over the last year. We’ll see that change. But unless we see a drought or unless we see an issue in a high consumption part of the world, we’re not necessarily going to see a boom in those places.

 

WSN: All right. Thank you for your time. That was Tony Nash, CEO of Complete Intelligence, giving us his views on global markets and saying that, hey, oil prices are going to come under pressure probably in the next two to three months, because this is not really driven by real demand, is just probably weather patterns which are going to normalize anyway in Texas in a few days.

 

PS: He also made a point about oil, where this, I think, a slight surge in prices is actually a short term because supply is going to get back on quite soon.

 

WSN: Yeah, but other interesting news is actually the ongoing saga of big tech versus Australia, because it looks like Facebook has defied Australia’s push to make big pay for news by banning the sharing of content on its platform in the country. And this is the most far reaching restriction is ever placed on any publisher in any part of the world.

 

PS: So the extreme step to remove Australian news came as Google separately struck a global deal with Rupert Murdoch’s News Corp diffusing a long running dispute between the two companies. The dramatically different approaches could mark a pivotal moment for the media industry, which had hoped Australia’s tough regulatory approach would help reset its terms of trade with Google and Facebook worldwide.

 

WSN: So the moves by Google and Facebook came on the day Australia begin debating laws that would force big online platforms to license news. Now Facebook’s action will have a global impact. Under the provisions, news from Australian publishers will be blocked on the platform for all Facebook users, regardless of where they are based. The Australian government said it will continue to engage with Facebook. Press ahead with legislating the code, Canberra also warned that withdrawing news from Facebook’s platform in Australia could dent its credibility with users.

While this is quite big stuff. Actually, yes.

 

PS: Yes. I mean, Australia wasn’t the first country to, you know, get into this spat. I think you really was in having discussions. And France and Spain already had deals with a lot of with Google and Facebook with respect to media purchase. But it’s a question about publishers.

 

WSN: Yeah, I mean, at the end of the day, right. We do know media companies are suffering. Right. Álex has come under pressure. Subscriber growth has come down. How a media company is going to generate the revenue. So in the past, all these big tech companies, the argument was that they got to earn super normal above what is the what super normal profits without paying the likes of the media companies because they were using these media companies content to their benefit.

 

So some countries like Australia and even if you try to kind of diffuse the situation and have, I suppose maybe in their mind, a fairer playing field. But the Google deal nonetheless, if you look at it, the Google deal with News Corp announced on Wednesday goes beyond the Australian market, extending to Murdoch’s titles such as The Wall Street Journal and The New York Post in the U.S. and The Times and the Sun in the UK. No other news publisher has reached a single deal with Google across multiple countries.

 

Now, critics say the deal would benefit News Corp. rather than the rest of the news industry.

 

PS: Yes, well, we’ve been talking about the price. And since you looking at Google’s valuation, I suspect Google’s to be the winner because they have just really this unique access to this quality content. So. So why not?

 

WSN: Well, they’ve pledged so far to spend one billion over the years on buying news content and reach agreements with publishers in about a dozen countries.

 

But we’ll be watching this space because we do a media outlet.

 

But up next, we’ll be discussing the recently announced national unity blueprint. Stay tuned for that. BFM eighty nine point nine.

 

Thank you for listening to this podcast. To find full great interviews, go to PFM Goodbye or find us on iTunes, BFM eighty nine point nine. That is the station.

 

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Podcasts

American Carnage

In this Morning Run BFM podcast episode, Tony Nash justifies his pessimistic outlook of the US political environment on markets and the transition of the Reddit Army into a full-blown populist movement. Will this be a common theme in the US markets? And what does he mean about the 97% correlation between Bitcoin and gun sales?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/american-carnage on February 4, 2021.

 

❗️ Check out more of our insights in featured in the CI Newsletter and QuickHit interviews with experts.

❗️ Discover how Complete Intelligence can help your company be more profitable with AI and ML technologies. Book a demo here.

 

 

Show Notes

 

WSN: To find out where global markets are heading, we have on the line with us Tony Nash, CEO of Complete Intelligence. Let’s have this little bit of discussion. Will the tussle between the populous investors and institutional shareholders lead to any real structural change in the way Wall Street behaves? Do you think this is going to be a common phenomenon?

 

TN: I do. I don’t think we’ll see much change politically because the funds themselves are very large donors for politicians. There really isn’t an incentive for politicians and regulators to change things. But the populism that we’ve seen in U.S. politics over the last four to six years or even 10 years, it’s growing into financial markets and people are really angry with Wall Street. They’re really angry with bailouts for funds and for banks.

 

This type of populist activism and distributing investment are going to continue and it’ll get more aggressive if the government doesn’t respond or if the funds respond aggressively and arrogantly. This could turn into an aggressive political movement. The funds and the regulators have to be really careful here.

 

PS: You really hit the nail on the head because if you see the backlash, you see the right wing with Ted Cruz, Alexandria Ocasio-Cortez on the left, both asking for investigations and reviews to this. Do you think the US government and the politics of both sides will be able to reconcile and find a solution to regulate, monitor this?

 

TN: They may have an “investigation.” I think nothing will happen. Again, these funds have deep pockets. They invest a lot of money, either directly or indirectly through shadow organizations and corrupt means. So zero will happen on this. Unless there is dramatic…

 

You guys have heard of Antifa in Malaysia, right? If Wall Street needs turned into an Antifa-like organization, and had violent protests, then maybe we would see some results. But there is absolutely no way short of violence in the streets that the US government… You will have Ted Cruz, you will have AOC talk about this. But this government will not respond to this because it’s in their interest to defend these funds.

 

PS: Tony, I’m gobsmacked. In just last month, we had an insurrection and impeachment and inauguration in the space of two weeks. Isn’t that like a big paradigm shift in the politics? Don’t you see any changes there?

 

TN: Here’s what I learned today and I’ll get to your point in just a second. There is a 97% correlation between the sale of guns and the price of Bitcoin in the U.S.. What does that tell us? It tells us there is an absolute lack of trust in institutions. People can’t trust law enforcement. They can’t trust politics. They can’t trust the central bank. Americans feel like they just can’t trust institutions. So they’re investing in Bitcoin and they’re buying guns. So there is a real frustration among Americans. They just absolutely don’t trust the government.

 

WSN: That’s an interesting point, Tony. But on the flip side, if I look at Biden’s administration. Let’s talk about his stimulus plans, because originally the target was a $1.9 trillion plan. But I think that’s probably likely to be scaled down, especially with the vaccination rollout. So what do your gut feel in terms of what the figure will be?

 

TN: The administration, unfortunately, has lost a lot of credibility because they two million or 20 million vaccines over the past week. They’ve come in saying that they had a better plan and then they’ve actually lost 20 million vaccines. This is supposed to be a Covid relief bill with more money for vaccines and more money to address Covid. But they can’t manage the resources they have today. People are really frustrated with that as this stupid $600 they’ve been promising for six months. Nobody even wants it now. People are so frustrated over this whole thing.

 

So will it be scaled back? Probably. You have Republicans in the Senate especially, who are being really stupid politically by pushing back on this. And you have Democrats who are pushing for stupid spending programs. Again, there is frustration. This is not just in Texas. This is across the country. Americans are so upset with government and so frustrated that they just want something passed and they want the least damage possible. They know it’s going to be a dumb bill. They know there’s going to be pork and they know there’s going to be corruption, but they want the least damage possible done with this.

 

WSN: But if I look at markets, it doesn’t seem like, you know, that that there’s any negativity or disappointment, right? Yeah. Because we are looking at, you know, the index also NASDAQ closed to an all time high. So are you saying that markets are reflecting this or, you know, there’s just too much optimism in terms of forward earnings?

 

TN: No, the markets are reflecting a bet on the central bank. They’re betting on the stimulus coming from the bill, passing through consumers and passing through businesses. And they’re betting on the the bailouts for different industries, on a weaker dollar, on a lot of things. That’s what they’re betting on. They’re not betting on earnings or on corporate health.

 

We suspect that the stimulus won’t be as strong as many had hoped and the central bank won’t be as accommodating as many hope and that there will be a pullback. We think there’s going to be something this quarter in terms of a pullback. But again, nobody is betting on companies or sectors.

 

WSN: All right. Thank you for your time. That was Tony Nash of Complete Intelligence, giving us his views on where global markets are heading and in particular on the U.S. government.

 

Some interesting points. Right Philip?

 

PS: I’m kind of lost for words for that. He really is pushing for this decade implosion of the once vaunted American institution.

 

WSN: He’s saying that there’s a lot of dissatisfaction with regards to the roll out of the stimulus plan. That it is very, very delayed. And people just like, hurry up, just sign the bill and  hand out those 600 U.S. dollar checks. The longer you wait after a while, people just don’t seem to care about it.

 

But when I look at the markets, I’m somewhat still conflicted because I’m not in total agreement with him. I think markets are pricing in vaccine optimism. And on the back of that, there will be some corporate earnings, especially when you come to the tech companies. So is the whole of America unhappy? Well, we do know from the way the vote, is a very divided nation.

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Podcasts

Markets Pause As Wells, BOFA Miss And Stimulus Remain Distant

In this discussion with BFM 89.9, Tony Nash shares views on the recent bank earnings, update on Brexit and why it’s stalled, the future of Hong Kong and how vaccine news play for markets.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/markets-pause-as-wells-bofa-miss-and-stimulus-remain-distant on October 15, 2020.

 


BFM Description

 

The diminishing likelihood of stimulus and poor bank earnings have paused stock markets for now, as electioneering ramps up ahead of November polls, according to Tony Nash, CEO of Complete Intelligence, who discusses bank earnings, market expectations as well as Brexit.

 

Produced by: Mike Gong

 

Presented by: Khoo Hsu Chuang, Wong Shou Ning

 

Show Notes

 

KHC: On the line with us now is Tony of Complete Intelligence for some clarity on markets. Tony, thanks for talking to us. Now, obviously, the Wells Fargo, Bank of America, Goldman Sachs have all reported results so far. What is your take on the financial sector earnings thus far?

 

TN: Goldman obviously reported really well, Bank of America is down five percent. There was a huge disappointment there. Could get worse. A lot of that had to do with these penalties that were levied several weeks ago. But it looks like the investment banks are doing much better than the consumer banks. And until we get a next round of stimulus and we start to see money moving into the accounts of those guys who are unemployed, which is not a small number in the US, I think consumer banks will continue to suffer.

 

KHC: On that particular issue of the impasse in terms of a stimulus being introduced before elections, what is the biggest deterrent to consensus being reached on that front?

 

TN: One of the biggest issues is that you have a lot of states, all of them that are Democrat states that are heavily indebted. So what the House majority leader is pushing is a bailout program for those Democrat states like California, New York, Illinois, that have have billions of dollars in debt that have been racked up over the last 10 or 20 years. What are typically Republican states typically have balanced budgets. It would effectively be the Republican states bailing out the Democrat states. It’s a problem here in the US.

 

The other item is the House majority leader, Nancy Pelosi, wants to give stimulus checks to illegal immigrants in the US. She wants to give a few thousand dollars to people who are in the US illegally. And the Republicans are saying, no, why would we do that? So those are two of the things that are really holding things up in terms of the stimulus plan. And it’s electioneering. Democrats want to give money to the party faithful in their heavily indebted blue states. And they also want to try to get some votes from the illegal aliens who aren’t legally allowed to vote. But they want to get some loyalty from those illegal immigrants who are in the US.

 

WSN: Another thing that seems to be having an impact on markets is vaccine news. So every time we hear of a vaccine trial feeding, markets correct. Is it possible at all to quantify how much of this is in the markets really in terms of optimism?

 

TN: Remember, in 2019, every day, whenever we needed a bump in markets, Trump would tweet, a trade deal is near. And then we finally had the phase one deal in December. It seems like whenever there’s a tweet or some news about a vaccine, it’s because a bump in markets is needed. There’s a lot of cynicism among traders about vaccine. Until we see something actually proven and actually in a market, you’re not going to see a real firm belief in the difference it can make. So it’s going to be at least Q1 or so before we see things deployed.

 

We don’t necessarily expect the benefits to happen until 2021. But the problem, at least here in the US, is that nobody wants to be the guinea pig. At least half of Americans surveyed don’t want to be the first one. They’re going to have to see some high-level politicians go in, roll up their sleeves, get the job and and really face the consequences, if there are any negative consequences, because a lot of Americans just aren’t believers and they’re really worried about the effects of it.

 

KHC: OK, switching to the UK, if the UK fails to negotiate a Brexit deadline deal today, how should investors position themselves? And would you recommend shorting sterling assets?

 

TN: I think it’s a possibility. I don’t know if I’d necessarily recommend it, because I think the status quo is baked in to expectations. We haven’t necessarily had a positive outlook to negotiations for two or three years now. I think the expectation is that things will continue to muddle through and markets will fold that end. So I don’t know. Outside of a very positive agreement for the UK, I don’t necessarily think there’s huge upside anywhere.

 

And outside of a very negative concession given by the UK, I don’t think there’s huge downside anywhere because the EU is just intransigent there. They’ve been embarrassed by this whole process. They don’t want to negotiate and they’re not moving at all. So I think we’re in the range of where things will be outside of a major announcement somewhere.

 

WSN: Looking at China yesterday or a few days ago, his speech has outlined a comprehensive vision of for Shenzhen. What does this mean for Hong Kong’s economic future? Do you see a bright, a bleak one for the city street?

 

TN: Hong Kong’s fate was sealed in 2014 with the demonstrations. And I’ve been saying this since twenty fifteen. At that time, the MDC and the folks in the central government were planning on other options for the activities that were happening in Hong Kong. What we saw with the announcement in Shenzhen yesterday was simply cementing Shenzhen’s place, the central city at the end of the PRD, right at the end of the Pearl River Delta.

 

And so Hong Kong is no longer the central location. It is a place to get hard currency. But it’s no longer an industrial location. I believe we’ll start to see financial services move to other places over the next ten years. Not an overnight activity, but it’s something that certainly the central government wants to happen.

 

KHC: OK, Tony, thanks so much for your time. That was Tony Nash of Complete Intelligence.

 

His comments in terms of of China also resonate because we’ve got certain diplomats, a top ranking government officials coming to the Asian region for a charm offensive, but also his comments on banks, a tale of two halves, really, consumer banks that well said Bank of America really failed to meet expectations. They did beat expectations, but they felt some way of sort of you and your performance numbers. But then the investment banks like Goldman Sachs have done really well because of the trading desks and the stimulus checks that were written in the third quarter.

 

WSN: Yeah, actually, 2020 is the reverse of 2008 during the great financial crisis. If you remember then American banks itself, all the investment banks. Right, because of the derivative losses in the books exposed to the shuffle in equity markets. But this time around, actually, the volatility has really helped them. So for a change, they’ve seen incredible jumps in trading investment income. But it’s the main street banks which are feeling the pinch. So, yes, there’s an increase in deposits for these banks.

 

But for the consumer banks, for the main street banks, nobody or less people are taking out loans, is less credit cut usage as a result. So, you know, no such not such good times for the consumer banks. Better for the. And bad guys out there.

 

KHC: Now, of course, and Morgan Stanley reports tomorrow we saw net interest margin set wells and Bank of America really being crushed as well. And not many, not many companies reporting earnings are giving outlook statements.

Categories
Podcasts

Dollar stays soft till year end

Tony Nash joins BFM 89.9 The Business Station for another discussion on the global markets — particularly the growing US market amidst the weakening dollar. Why is that? Is it about the vaccine optimisim, the 2020 US election, or the pending unemployment benefits? What about gold’s fast value upgrade — will this continue or is it too vulnerable to handle right now? And Euro is performing impressively against the dollar — should investors dive right in or still be cautious?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/dollar-stays-soft-till-year-end on August 6, 2020.

 

BFM Description

Tony Nash, CEO Of Complete Intelligence tells us why markets in US are still hitting new highs while giving us his views on the direction of the US dollar and whether it makes a difference who sits in the White House this November.

 

Produced by: Mike Gong

 

Presented by: Khoo Hsu Chuang, Wong Shou Ning

 

Show Notes

 

BFM: For more insights into global markets, we speak to Tony Nash, CEO of Complete Intelligence. Good morning, Tony. U.S. markets continue to break records. Now, how much of that is driven by vaccine optimism and a potential deal for unemployment benefits?

 

TN: I think there is a deal for unemployment benefits and it will continue to drive consumption. The disposable income that people had — that 600 extra dollars a week — really helped the consumer side of the economy stay afloat for the things that were open.

 

There is an expectation that if something similar passes, that it will help consumption in Q3. However, we see things like manufacturing employment are coming back quite strongly despite the ADP number that was out today. Services is lagging a bit largely because of restaurants and shops and etc., not being open so much. But it is on the expectation of a weakening dollar as well with both equity markets and commodities.

 

BFM: The same euphoria is happening to gold and it’s now something like 2,040 USD an ounce, one of the highest, if not the highest it’s ever been. Is it not vulnerable to a price correction, though?

 

TN: We don’t think it would be by much for some time because a weakening dollar is more reliant on central banks’ monetary policy. It’s likely that commodities will continue to rally. And the dollar has a lot of dedicated bulls. There may be a couple of hiccups before the end of the year, but we don’t see a whole lot slowing it down. Having said that, we don’t see a lot more headway to the upside. There’s some, but we don’t see like another 20 percent gain or something like that. It’s possible, but that’s not within our baseline expectation.

 

BFM: There’s even talk of three thousand dollars an ounce. You don’t think that’s going to happen, obviously?

 

TN: I think that’s possible. But not likely.

 

BFM: Meanwhile, the Euro has strengthened against the US dollar now. So is this, again, the weakening dollar rather than Euro strength? And what does this mean now for investors? Should they be more bullish on the Eurozone?

 

TN: A number of investors are bullish on the Eurozone because many of the countries in Europe are fully back to normal and and they’re doing quite well. So there is optimism about European companies, but it is also related to the weakening dollar. I think one of the other considerations around dollar weakness, whether it’s gold or euro or other things, is the uncertainty around the U.S. election.

 

I think priced into the dollar weakness is the possibility of a Biden win. And there is not a lot of excitement around a Biden economy. If there is clarity of a Trump win, Trump has done some interesting things in the economy and pulling back regulations and other things, it’s possible there will be more dollar strength.

 

BFM: Oil has been trading in a very tight range. API and US crude data showing a fall in inventories. Why isn’t prices rising more then?

 

TN: It’s demand. Yes, the supplies are falling, but the demand, it came back, but it is not continuing to rise as quickly as they had when they first started to open up. And until we start seeing things like flights happening again, business travel, personal travel, happening again in a big way, we’re not really going to see things like jet fuel consumption come back. That’s really where a lot of the growth is.

 

A lot of Americans are driving more in cars because things like mass transit… So I’m in suburban Houston, Texas. Right next to my office is a very large car park for commuters into the city. That car park has been closed since February. So the people who want to drive into the city will have to drive their own cars. There really isn’t a mass transit option. So individual consumption has risen because people who want to go to work have to drive themselves. But we don’t have things like jet fuel consumption that have come back anywhere close to where they were in January.

 

BFM: I want to come back to the US dollar. What’s your view on it? You expect it to continue to weaken? And if so, how has that changed your strategic asset allocation?

 

TN: Well, we really just turned. Through July, we expected the dollar to start to rally in October, November. But just in our forecast on Monday and we’re expecting a weakening dollar to the end of the year. So that market has evolved a bit where it’s tough for that asset to come back in value. And part of that is the veracity of the euro strength. We are a bit worried about the dollar value. Again, if we see a Trump win, which is it likely now? I don’t think we really know that. But if we do, we do expect that we’ll see some dollar strength to come back a bit earlier. If it’s a Biden win, we expect the dollar to remain weak, as you know, monetary policy and central bank and QE infinity, those sorts of things, will potentially be part of the economic plan.

 

So we don’t expect a strong dollar rally this year. It would be Q1 before we start to see some real strength in the dollar. We’re not expecting the dollar DXY, for example, to go into the mid 80s or anything like that. But we do expect it to remain weak over the next several months.

 

BFM: Friday sees US non-farm payrolls come out. Are you expecting the numbers to reflect this softening job market?

 

TN: You don’t necessarily see the job market softening. There are a couple of dynamics. As unemployment benefits dry up, people are going to have to start going back to work. So they probably won’t be as rich as they have been for the last few months. So people are going to have to get out and they’re going to have to work a bit more.

 

And we have also seen manufacturing come back pretty strongly. So, for example, one of our clients is an auto parts manufacturer in Michigan in the US. As auto makers pivoted to make ventilators, the auto parts business dried up. So these guys went from 400 workers to like 15 workers, like a dramatic cutback. Over the last three months, as of August, they’ll be back to 100 percent of their workforce working. So they’ve seen literally of the in their workforce utilization.

 

And we’ve spoken to a number of people who that’s what they’re seeing, and this is particularly on the manufacturing side, where they cut back dramatically in March, April, May. And since then, they’ve really started to build up pretty rapidly, given the extent of the cuts that they had to make in Q2.

 

BFM: All right. Thank you for your time. That was Tony Nash, CEO of Complete Intelligence, highlighting about the U.S. dollar rate. He expects it to remain soft until maybe when you’re recovering in the first quarter. And of course, that is also dependent on who might actually win or might be in the White House come November.

 

So let me bring this to the walking. And according to the Financial Times, Joe Biden is, you know, head and shoulders above Donald Trump in terms of the polls, which means in three months time Mr. Orangeman will be out of the White House. No more orange in the White House.

 

Yeah, but did you see those tweets that Donald Trump is trying to do to delay the elections?

 

Well, he has been questioning whether they are going to be reliable in the first place, right?

 

Yes. Well, we’ll be watching the space. I mean, it’s less than 100 days to the US presidential elections is going to be interesting times. I just wonder, you know, in the meantime, who’s really managing the United States? Because unfortunately, the COVID-19 cases just seem to get increasingly worse. But let’s hope they actually saw unemployment benefits deal quickly because otherwise the economy will really pay the price for it.