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Will The Rally Sustain?

Will The Rally Sustain?

Tony Nash from Complete Intelligence explains whether the US market’s biggest 4-day rally since November can sustain?

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/will-the-rally-sustain on February 3, 2022.

Show Notes

SM: BFM 89.9. Good morning. You are listening to the Morning Run. I’m Shazana Mokhtar together with Wong Shou Ning and Philip See. It 7:05am on Thursday 3rd of February. But first, let’s recap how global markets closed yesterday.

WSN: Well, the US had a pretty good day. That was up 0.7%, SP 500 up 0.9% while Nasdaq was up 0.4%. And for Asia, the only market that was really open with the Niki, and it was up 1.7%. Hong Sung, Shanghai, Singapore and our very own FPM KLCI.

SM: We were all closed for celebrating the Year of the Tiger. Speaking of meta, I think the results came out and they were not within forecast essentially.

WSN: Well, actually after hours, right. The trade actually the share actually tumbled more than 20% in extended trading earlier. And I think it’s on the back of like what you say, Charles. It’s disappointing earning results. And added to that, they are giving weak guidance and said that user growth has stagnated. Now that’s kind of scary for a company the size of matter.

PS: Yeah.

Just to break down the numbers, earnings per share was at $367 versus the expected 384. Revenue was at $33.67 billion. The expected was 33.4, which wasn’t so bad. But Facebook also missed estimates with user numbers with his daily active users at one point 93 billion versus the expected one point 95 billion.

WSN: Now, I think why the markets are nervous is because when you think about it. Right, this company is at a critical juncture at this point. It’s fighting a regulatory battle on multiple France. And it’s also, remember, guys, it’s trying to shift into the Metaverse. And this shift is costing them an extremely a lot of money. So whether they can translate these KPCS that they’ve already kind of agreed to in terms of $2 and cents, that’s the question mark when your core business is not growing.

PS: I guess a big question of how do you monetize from meta and that pathway has not been articulated very carefully, isn’t it? But that’s a long term expectation. As you said, Shannon, there’s so much regulatory pressure on them. And I wonder with the whole discussion about your revenue source, whether you can rely on advertising revenue now going forward. That’s a big challenge for Facebook going forward and better.

SM: I mean, that’s going to be one of the major headwinds to them. I mean, Apple’s iOS changes affected ad targeting and measurements. That’s already a headwind. There’s also the fact that a lot of people are sort of flocking to other options when it comes to social media TikTok, YouTube. I think the advertising rates for Metsa’s own Reals on Instagram, that’s a lot lower than what’s available on other unfeeding stories.

WSN: No rewind, a few earning season rewind. Let’s go back a few quarters. And I think what has happened is that 18 year olds to 29 year olds were flocking to Facebook. Right. So the question is better, is it going to attract them? And what progress are they going to make? So that’s another thing that the markets are looking at.

SM: Joining us on the line now for analysis on what’s moving global markets, we have Tony Nash, CEO of Complete Intelligence. Tony, good morning. Thanks so much for speaking with us today. Can we get a quick reaction from you then on the disappointing results from Meta and Spotify? Does this mean something for tech bargain hunters?

TN: Well, I’d be really careful here because tech is really a deflation play. It’s not an inflation play. And so as we’re in the midst of the inflation cycle, there’s more movement to other sectors. So I don’t necessarily maybe it’s a short term opportunity, but again, if I was investing, I’d be really careful here with the Spotify and other misses.

PS: And can we get your perspective on the energy and financial sector? They helped the US Equities stage a mini rally over the last few days. Why are these economic sectors being buoyant while others like tech creating?

TN: Yeah, well, energy, commodities, finance, those are deflation plays or those are inflation plays. I’m sorry. And so that’s why more money is moving into commodities and energy and so on and so forth. So the market seems to be indicating that it doesn’t believe at least the equity market seems to be indicating that it doesn’t believe the Fed will fight inflation effectively. So they seem to be indicating that we’ll keep ripping on inflation.

WSN: So, Tony, how should we allocate our cash? Let’s say we have cash. Where would you be putting your money?

TN: Oh, gosh. Well, you really have to that’s an individual question. I just want to be really careful. So there’s a lot of money moving into commodities because there’s a belief that inflation is here to stay for a while. So if I were looking around, that’s really where I would look, of course, you have to have a risk allocation and you have to have some money and things like tech. But I would focus on companies that actually make physical stuff rather than, say, the work from home plays that we had over the last two years.

SM: And, Tony, let’s take a look at the US yield curve. It’s flattening even before the Fed has fired the first shot on rate hikes. What could possibly be causing this to happen? And do you see a short or long cycle of rate increases?

TN: Yes, I think to answer your last question first, I think what would be best is a short and abrupt cycle because it would really put a stop on the threat of inflation and so on and so forth. So like a 50 basis point hike in March would probably be the best solution we could find. But when we look at the yield curve flattening first, it is a traditional signal of a looming recession. So if you look at today’s employment data in the US, there was a loss of 300,000 jobs. So we’re in this weird place where we have booming inflation and a loss of 300,000 jobs. So it’s like the late 1970 stagflation. I’m not going to say we’re necessarily there, but if you just look at today, it seems like right. So what the yield curve flattening means is bond traders are pretty nervous and stagnation is ugly. So they seem to be saying that they don’t believe that the Fed will take the necessary action on inflation in the short term. So JPOW is not Volker is really what they’re saying. Paul Volcker from the 1980s. So bond traders can really make things difficult on both the Fed and equity markets.

So the Fed has a real balancing act to do. They don’t want equity markets to crater, but they don’t want bond traders to kind of extract their vengeance on the Fed and equity market. So if we don’t see rates rise, if we don’t see the balance sheet reduced, then bond traders are not going to be happy and it could get ugly in safety, too.

PS: I wonder what all this means for the US dollar. Where does the US dollar hit going forward and how do you see Euro and Yen perform against the greenback?

TN: Yes, again, that depends on which direction the Fed takes. If the Fed’s approach is weak and if fiscal support from Congress is weak or it doesn’t come, as many in equity markets seem to be implying, then the dollar will likely level out or even depreciate a bit. That would mean a stronger Euro and yen versus the dollar in a relative sense. And currencies are all relative. If the Fed resumes the hawkish talk that they started last week in Jpow’s comments and then on Sunday and Monday through some of the regional presence, then the dollar will strengthen and the Euro and the yen will weaken. Obviously on a relative basis. There’s not a lot of strength in Europe. And especially when you look at some of the geopolitical issues around, say, Ukraine and Russia, there’s a lot of risk in Europe. So people are really nervous about Europe and then Japan. Yeah, it’s stronger than Europe, but that’s really not saying a lot. So the yen will strengthen on a relative basis, but it’s not necessarily an endorsement of the strength of the economy.

SM: Tony, thanks so much for speaking with us this morning. That was Tony Nash, CEO of Complete Intelligence, talking to us about some of the trends that will be moving markets in the weeks and months ahead.

WSN: Yeah, it looks like markets are headed towards a very volatile period for the moment. So the Nest did really well. But what we do know is the results of Spotify and also Meta were disappointing. And after hours trading, these stocks took a huge hitting. Even PayPal, which results came out the night before, also is down 20 over percent. It looks like markets are seeing this glass as half empty rather than half full so the minute you disappoint right you really get whacked down because everyone basically was already making money the year before so their patience in terms of like writing out this maybe dip in earnings is just not there.

PS: It’s a consequence of so many issues, isn’t it? Because we saw this dip even before the real earnings came out, isn’t it? Because that was when JPY in the earlier minutes said that they were going to raise interest rates and also accelerate tapering and then I think these really disappointing earnings I think just compounded the matters worse but you do see some pickup going forward so whether they’re selective opportunities you don’t play the sector, you don’t play the themes but you really go stock by stock now, isn’t it?

WSN: Yeah, you have to take a very bottom up approach. The easy money is clearly made but you can see a shift of money and this is what Tony is saying is there’s a shift towards commodity prices right? So brand crew this morning is close to $90 barrel. It’s close to seven year high. This is despite the fact that OPEC has said that they are going to raise output but there’s a lot of judges because of the geopolitical tensions that we’re seeing coming out of Ukraine but maybe it’s also due to the fact that oil is truly an inflation play and inflation is here. It’s not transitory at all.

PS: Yeah, and I just think I do see some improvement also in Bitcoin right? If you can see across ECM and Bitcoin up actually marginally just one and a half percent you see some good news there but I wonder if this is a sign of whether that the pressure is really on the equities market going forward but the rest are still holding resilient.

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Tech Crumbles as Spigots Close

TECH CRUMBLES AS SPIGOTS CLOSE

Tech stocks on Nasdaq and NYSE are being pummelled as momentum behind the Fed’s unwinding policy continues. Tony Nash, CEO, Complete Intelligence, discusses.

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/tech-crumbles-as-spigots-close on January 20, 2022.

Show Notes

KHC: BFM 89.9 20th of January 2022, 7:06 in the morning with me Khoo Hsu Chuang with Philip See. Now let’s look at how global markets closed yesterday.

PS: Oh, it was terrible. I think that was a lot of downward pressure in the US. Down S&P500 were down 1%, Nasdaq was down one 2%. Asian markets were relatively mixed. The Nikkei was down two 8%. Hung Seng up marginally zero 6%, Shanghai Composite down zero 3%, STI up zero 1%, and back home, FBM KLCI down zero 8%.

KHC: And to discuss what’s happening in global markets, we now welcome Tony Nash, the chief executive of Complete Intelligence. Tony, Nasdaq down 8.3% year to date. It’s been a bit of a bloodbath. How concerned should equity investors be at this point in time, especially those that are heavily into tech companies?

TN: Yeah, if they’re heavily invested in tech companies, they should be very concerned when interest rates rise. It’s a signal that there should be rotation out of technology. And that’s clearly what’s going on. So if we look at Apple, for example, Apple was down over 2% today. They’ve had a really hard time recovering the kind of $180 share peak they hit in early December. So people have known for a month and a half now. Well, definitely over a month that there’s been a rotation out of tech. So we expect headwind for several months until we get a clear indication of the path that the Fed’s going to undertake and how steeply they’re going to raise rates and start to tighten their balance sheet.

PS: Do you think the markets are priced in all the hikes planned?

TN: I think markets are trying to figure out what rates they’re going to do. I mean, there’s gossip right now that they’re going to raise 50 basis points in March, which would be probably an overshoot. But that’s part of the reason you’re seeing such volatility in equities right now is people aren’t really sure. And it’s a debate. It’s an ongoing debate. So where do you put your money? Well, you look at commodities, you look at commodity companies, energy companies, more traditional say manufacturing, not durable goods. People really stocked up on durable goods over the last two years, but other types of manufacturing companies could be interesting.

KHC: And Tony, we’ll talk about oil in just a second. But where do you think the funds are flowing? I know it’s a liquid activity, but where are the funds flowing away from tech into?

TN: Well, if you look at Walmart, there’s some very reliable, say, retail names that they’re going into. If you look at some of the resource plays, like Goldfields was up almost 13% today, volley was up 4.5%. So some of these commodity plays are really intercepting those games.

KHC: That’s right. And of course, talking about commodities, oil is on a tail 13% higher for Brent at $88. West Texas is up 15% to $87. What are the key drivers behind this upper trajectory beyond obviously this market driven flows, Tony?

TN: Yeah. I mean, part of it is the rotation in the market. There are some supply constraints that have been talked about and kind of been undertaken over the past week with some activities in Iraq between Iraq and Turkey, Libya. And there are some political risks, of course, Kazakhstan, Ukraine and other places. But our view is that oil is really kind of topped out for this run. There’s potentially a little more upside, but we don’t necessarily expect oil to take a run at, say $100 right now. We expect a little bit of a pullback certainly later in the year. We expect much higher crude prices.

PS: Do you think this will have any short term impact on the travel industry then and Airlines particularly?

TN: Yes, of course, it depends on what happens with jet fuel and the magnitude of the rise with jet fuel. But Gosh Airlines are contending with enough problems already as it is. So I think for them it’s just kind of another headwind to kind of throw in their pocket.

KHC: And Tony moving into China, and of course, they are pursuing a zero covet policy. They’ve locked down key shipping ports like Nimbo. Obviously, global supply chain problems have been exacerbated by that. So what measures can countries outside China do, for example, nausea, to alleviate these issues in the short, long term?

PS: I think that’s a technology issue.

TN: Sorry, guys. No, that’s my technology issue.

I apologize.

We’ve had these Covid issues for about two years now, and I think the real problem there is policy uncertainty, and some of these policies are becoming quite dangerous. They were very understandable early in the pandemic. But as we’ve started to recognize the issues, these things really need to be tightened down. So, for example, I think the best thing or we think the best thing countries outside of China could do is accept COVID as endemic and convince China that it’s now endemic. Why is that important? Well, we’ve really been in a bunker mentality, and we can’t really stay in that for another two, five or ten years. So if we look over the past day or so, the UK and Denmark have both announced normalization over the next week, and that’s ending things like work from home, ending vaccine requirements and passports, that sort of thing. The impact will be social, it will be economic, and of course, there will be political benefits. So the only reason these politicians are moving in that direction is because they’re getting such political pressure to unwind the requirements that they’re finally doing it because China is the center of global supply chains.

There has to be political pressure for China to normalize because supply chain constraints are affecting every country. And so this is something that really needs to happen. Now if China will not normalize, if they continue to close factories and ports, then companies just need to move their supply chains closer to their consumption countries. And I say just it’s a very complicated activity, but they’ve certainly had two years to start preparing to move those things. So they should accelerate those plans.

PS: And, you know, Tony keeping on the theme of unwinding and going back to normal, I guess many would say increasing interest rates would be kind of normalizing. But I wonder what their applications will be for countries like Brazil, Egypt, Argentina, South Africa and Turkey Who are potentially vulnerable to rising US rates. What’s your assessment on that?

TN: Yeah, it’s going to be hard for them. These are countries with weak and volatile currencies. Turkish Leira, Brazil riyal in Asia, I work particularly about the Tai Baht and the Rupia and Indonesia, I think they’re both vulnerable to rate hikes. I think part of what we’re witnessing is a transition from government led, say, planning. And for the last two years we’ve all looked to government for leadership on this stuff. And I think we’re starting to see a transition toward private sector leadership, at least in developed countries, at least in the west, those private sector companies will feel that currency volatility in their operations in countries like Indonesia, Thailand, Turkey and so on and so forth. So it’s not going to be painless for those governments, for the people in those countries or for the companies that operate there.

KHC: Tony, delightful to have you on again. Thank you so much for your time. That was Tony Nash, chief executive of Complete Intelligence. I don’t know if you’re an investor this year. I mean, what do you do? We’re just literally 20 days into the new year and it’s been tumultuous, right?

PS: It’s choppy waters. I mean, look at year to date, right? All down. I think S&P, Dow Jones, Nasdaq, Nasdaq down 8% year to date.

KHC: Yes, but then my dad a humongous last eleven years, right? So they’ve seen the market capital explode. A bit of correction isn’t bad for the soul sometimes, but you just wonder Where’s the end inside, right?

PS: Correct. I mean, the debate is I think earnings expect to be robust, but the issue is your evaluations.

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Expectations Of Higher Rate Are Crushing Markets

Expectations Of Higher Rate Are Crushing Markets

Markets are tanking on concerns that rate hikes might occur sooner than expected, hence the possibility that heightened volatility and a flight to value havens could be in store for 2022, according to Tony Nash, CEO, Complete Intelligence.

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/expectations-of-higher-rate-are-crushing-markets on January 5, 2021.

Show Notes

KHC: Good morning. This is BFM 89 nine, five minutes past seven in the morning, 6 January 2022. I’m Khoo Hsu Chuang and I’m joined by Philip See. Okay, let’s also recap how global markets closer today, Phil.

PS: Yeah. Markets in the US really didn’t enjoy the fair minutes. So the Dow is down 1% SMP 500 down 1.9% Nasdaq also down 3.2% across over in Asia mixed the Nikkei was up zero 1% Hang Sing down 1.6% Shanghai Composite down 1% Singapore STI down 6%. But back home as FBMKLCI was up zero 4%.

KHC: Of course, markets are being rented all over the world because of the Fed minutes, which disclose that JPowell might introduce higher rates as early as March. So for some thoughts on what’s moving these markets, we now talk to Complete Intelligence Chief Executive Tony Nash. Tony, good morning. Now we are talking about how financial markets are being crushed everywhere, including in the US by the Fed minutes, which is just faster and higher rate hikes. Maybe as early as March. Do you share the same sentiment?

TN: Yeah. I think it’s a little bit weird. So it makes sense for the Fed to stop buying things. So they buy, like mortgage backed securities so that they can put money into the market. So those are things that go onto their balance sheet. So they’ve acquired trillions of dollars worth of assets in order to support markets and get money into the system. So it makes sense to taper off the things they buy. But it doesn’t make sense to raise interest rates because people are complaining about inflation.

Right. And so if people can’t afford stuff, the major issue is stop putting money into the market don’t necessarily raise the cost of money, which is what interest rates are. So the markets feel like Powell has things a little bit out of order and that he needs to just stop putting money in the market before he raises rates. It may be appropriate to raise rates later in the year, but not just yet. So people think this is a little bit preemptive. So I would expect to see statements to walk back this Fed meeting over the next couple of days or week.

KHC: Well, the thing, Mr. Tony, according to the Bloomberg and markets being the forward indicators, that they are the Bloomberg, that there’s going to be a 71% chance that there’s going to be a rate hike as early as the March 16 meeting for the FOMC. What do you make of that?

TN: I see that. But that’s a forecast by economists. So I’d love to see the error rates of the economists. So I think that the real expectation is around the market welcoming of that. So is it possible they raised by March? Yeah, it’s possible. I think they need to start the paper first to see how likely it is, because again, the major issue is inflation and raising interest rates is a very old school way of fighting inflation before we had the tools that we have right now brand QE QE and other things.

PS: So getting a perspective. Clearly, what we saw in the nest was 3% down. I think interest rate sensitive stocks like tech stocks, I think were biggest hit. Is it time to take some money off the table after a good run?

TN: Sure. Yeah. That’s definitely part of the calculation. Absolutely.

PS: And then the question is, do you rotate it into value?

TN: Well, I think what we’re expecting probably sooner rather than later. We saw some big moves today, but yeah, there is expected irritation out of tech. We’ve seen people load up on tech and durable goods over the past two years. They’re way overstretched. So we do expect tech to see some serious downside over the next quarter, two quarters. And we do expect a rotation more into traditional industries, what people would consider boring industry. So people who make stuff like actually make stuff, even things like tourism and those sorts of things.

So we expect to do some rotation there.

KHC: Yeah. Tony, the other spectre is obviously the covered variants. IHU and of course Florona as well. Assuming that you are right in the possibility of the Fed walking back comments about the March rate hike or the possibility of a March rate hike. Right. What would the smart money be doing now in terms of possibly buying to the dip and getting a nice bounce from a short term trading perspective?

TN: Well, I think you have to look at things like energy, which has gotten a lot of attention over the past week. I think you have to look at what opportunities will there be if the variant slows down and money remains cheap. Okay. So if we’re not going to see a dramatic rise in interest rates from the Fed, then you may have some legs on some things like real estate. I’m not sure. But you may I’d have to do some research there, but I think you really need to look at things like tourism and people getting out Airlines.

Those sorts of things really have to think about when people start to get out in force, what kind of difference can be made in markets?

KHC: I think you quite rightly pointed out that increasing interest rates is a very old fashioned way of dealing with inflation. What, in your opinion, are possibly alternative solutions to addressing higher costs, which is definitely a reality today.

TN: Look, a lot of the issue is on the supply side. So you raise interest rates when the issues are on the demand side and the demand side peaked in 2020 after the Fed just released a huge amount of money on to US citizens. So a lot of the issues are supply chain issues, and they’re on the supply side. So better to reduce or taper off the supply of money going into the system and focus on building out supply chain so if there were an infrastructure bill that came and said, we’re going to focus on these supply chains and make them more robust.

And we’re going to focus on near shoring manufacturing to reduce the length of the sophistication of those supply chains. I think that’s really all that they can do right now to focus on that supply side. So in short, interest rates aren’t going to help. There has to be a more medium and long term investment in Shoring up the supply side. Yeah. I agree with you.

PS: I think that’s a very medium long term outlook. And I just wondering how earnings will look like this year.

TN: Well, certainly not going to look like 20 or 21. A lot of the 21 interest earnings were up until, say Q3, there were effects based on expenses that were cut in 20. There was a lot of headcount reduction and real estate reduction in 20 because of work from home and staff reduction, those sorts of things. So 22 is going to be harder. It’s going to be a much more disciplined old school efficiency, automation and top line growth type of environment.

KHC: Well, Tony, given that we are only six years, six days into the new year, how should asset allocation strategies look like for the conservative investor in 2022?

TN: You know, you’ve got to really be careful of volatility and you’ve got to be careful of risk, even things like political risk, which is what’s happening in Kazakhstan today. We really have to be careful of political risk in market. So with the events in Kazakhstan, then I think you’ll start to see people really take another look at Em and try to figure out how much risk are in those investments. You may see people steer away from em because of that risk. So I think you’re going to see more consideration for developed markets.

You may even see more consideration for Europe. I think Europe may have a good year this year.

PS: And I wonder if there’s a consideration for traditional safe havens like gold, US dollar and treasury spend.

TN: Yeah. Well, that certainly supports the dollar, Treasuries and so on. Gold. I’m not so sure about gold may have some upside, but the focus on developed markets may will definitely support the US dollar and Treasuries.

KHC: All right, Tony, thank you so much for your time. And that was Tony Nash, the chief executive of Complete Intelligence, talking about the Fed minutes, which I have perturbed markets in a significant way.

PS: I think markets are factored in the tapering, but not the interest rate moving earlier.

KHC: Yeah.

PS: That’s why you saw the tech heavy Nasdaq really hit quite badly with 3.2% decline.

KHC: Yes. And of course, we saw the Bloomberg indicators surveying economists a 71% chance that there’s going to be a rate hike at the March 16 meeting.

PS: Incredible.

TN: Right.

PS: You know, you talk about just four or five months ago, we were talking about only two hikes at best, in June. And now we’re seeing things shift very fast.

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Impact Of PBOC (China’s Loose Monetary Policy)

Impact of PBOC's Loose Monetary Policy

BFM 89.9 asks Tony Nash from Complete Intelligence on how China’s PBOC adoption of looser monetary policy will affect the yuan and the broader Chinese economy. 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/impact-of-pboc-chinas-loose-monetary-policy on December 24, 2021.

Show Notes

SM: BFM 89 nine. Good morning. You’re listening to the morning run. I’m Shazana Mokhtar are together with Philip See. It is Christmas Eve, Friday, the 24 December 9:06 in the morning. But in the meantime, let’s take a look at the activity on Bursa Malaysia.

PS: It’s flat like Coke without any bubbles.

SM: Oh, no, that’s the worst kind of flat.

PS: Yes, the foot sabotage. Malaysia is flat slightly down .09% at 1515.

SM: So still above 1500.

PS: Still above 1500.

But it’s been yoyoing a bit green and red so far. But the rest of the markets across Asia are in green territory. The Straits time is up at 3100. Cosby also up 58% at 3015. Nikkei also up zero 6%, 28814. Now, just to bring your attention, looking at the crypto Bitcoin 5998.65 above the 50,000 mark. Theorem also uptrend 4114115.184. Now, if we shift over to the currencies, ring it to US dollar 4.11988. You’re seeing some strengthening there. But across the other two currencies pound and sing dollar, we’re seeing some weakness there.

Ring it to pound 5.62967. Ring it to Sing dollar 3.0922. Now, looking over to the value board. Really. Smattering of small caps actually driving it, but cost number one Ata IMS at .72 cent unchanged, followed by SM Track up 13% at .13, followed by Kajura Tran asphas flat at .26%.

SM: Okay, so that is the snapshot of Bursa Malaysia at 9:09 this morning. We’re taking a look now at how global markets closed yesterday.

So if we look at the US markets, they closed in the green. The Dow was up 0.6%. The S&P P 500 was up zero 6% as well. The Nasdaq was up zero 9%. So a lot of optimism going into the Christmas weekend. Joining us on the line for analysis on what’s moving markets. We have Tony Nash, CEO of Complete Intelligence. Tony, good morning. Thanks for joining us today. Now 2022 is just a week away. And given the triple headwinds of Fed tapering, Omicron and a China slowdown, will there be a difference in how developed and emerging markets in Asia are going to be impacted?

TN: I think with the tightening in the Fed and with what emerging markets are going to have to do, meaning in the near term, like China is going to have to loosen. So I think you’ll have a strengthening dollar and more of a rush for capital into the US, so that should at the margin, kind of help US markets stay strong across debt and equity. Other things. I think in emerging markets it could eventually China loosening. The PVC loosening could help demand in emerging markets, but it’s going to be hard to get around the hard slowdown that started in China around Omicron.

PS: I see.


And so when you contrast that to the Fed tightening, right. You said China PBOC is adopting a looser monetary policy. How will this affect the UN in relation to those Asian currencies in which there’s a lot of trade between these two countries?

TN: Yeah. CNY has been strong for a protracted period, and it’s made sense on one level, so China can import the energy and food, particularly and some raw materials that it needs in a time of uncertainty. So the PVC has kept it strong through this period. What we’ve expected for some time. And what we’ve shown is that after Lunar New Year, we expect the PPOC to begin to weaken the CNA. We don’t think it’s going to be dramatic, but we think it’s going to be obviously evident. Change of policy, Chinese exporters, although they’ve been producing at not capacity, but then producing pretty.


Okay. China is going to have to devalue the CNY to help those exporters regain their revenues that they’ve lost over the last two years. So we’re in a strange period globally of moving from kind of state support back to market support, whether it’s the US, Europe, Asia, we’ve really had state supportive industries, state supportive individuals as we move beyond covet. Hopefully we’re moving more into a market orientation globally, and there will be some volatility with that.

PS: Yeah, but I was wondering for China, especially, I’m interested to know what the state of the Chinese consumer will be in 2022 because the government is worried for slow down. Right. And wouldn’t they want to expedite and give a bit more ammunition to the Chinese consumer?

TN: They would. But the problem is with Chinese real estate values declining, a lot of consumer debt is secured against real estate. And so the ability of Chinese consumers to expand the debt load that they’re carrying. Is it’s pretty delicate? It’s a fine balance that they’re going to have to run. So either the economic authorities in China push real estate markets up to allow Chinese consumers to keep debt with their real estate portfolios, or they make other consumer debt type of rules that allow Chinese consumers to hold more debt.

Real estate is the part that’s really tricky in this whole equation in China, because if real estate values are falling, the perceived wealth of those consumers is falling pretty rapidly as well, and the desire to consume excessively, it’s just tempt out.

SM: And I suppose still sticking to our view of China looking at metal commodities, what metals have been affected by the slowdown of demand in China? And do you foresee a recovery for them in early 2022?

TN: Yeah. We’ve seen industrial metals like copper and steel, and those sorts of things really slow down dramatically compared to where they were earlier in 2021. We’re seeing reports of, say, copper shortages at the warehouse level at the official warehouses in China, but that’s not real. What we’re seeing and I speak to copper producers in Australia and other places. What they’re telling us is that those copper inventories are being shifted to unofficial warehouses to create a perception of shortage. So we may see a run. We may see an uptick in, say, industrial metals prices in early 22, but we don’t expect it to last long because the supply of constraint is not real.


So until demand picks up for manufacturing and goods consumption. And the other thing to remember is we’ve had a massive durable goods wave through covet. Everyone’s talked up on durable goods. Okay, so there is almost no pent up demand for durable goods. And this is the stuff that industrial metals go into on the demand side, there are some real problems on the supply side. There seems to be plenty of supply in many cases. So we don’t necessarily see the pressure upward, at least in Q1 of 2022 on industrial metals.

PS: And that’s why I’m quite interested where you say that this demand is, I think slowly going to dissipate because yesterday key US inflation gauge sharpest rise in nearly 40 years, right? Personal consumption expenditure surged 5.7% in November. How long do you think this elevator level will last?

TN: Well, US consumers are pretty tapped out. So I think inflation happens for a couple of different reasons. Some people say it’s only monetary. Not necessarily true. We’ve seen real supply constraints that contribute to inflation. We’ve seen demand pulls because of overstimulating economies, and those two things together have accelerated inflation. And so we have to remember at the same time in 2020, we saw prices. If things go down pretty dramatically around mid year, say a third of the way through the year to mid year to just after mid year.

Some of these inflationary effects have been a little bit base effects because prices fell so hard in 2020. But we have seen consumption ticking up because of government stimulus. And we have to remember if the Fed is tightening things like mortgage backed securities, their purchases of mortgage backed securities will slow. Okay, so if people can’t refinance their house or buy new houses again, those wealth effects dissipate if you have a home. If your home price is rising, whether it’s the US or China or elsewhere, the wealth perception is there and people have a propensity to spend.

But if the Fed is pulling back on mortgage backed securities, then you won’t necessarily have that wealth effect that will dissipate. So government spending will decline marginally because build back better didn’t pass. We won’t have that sugar rush of government spending flowing into the economy early in 2002, although we may see something later. I believe governments love to spend money. So I believe the US government will come with some massive package later in the year to bring government spending back up.

SM: Tony, thanks very much for speaking to us. And an early Merry Christmas to you. That was Tony Nash, CEO of Complete Intelligence, giving us a quick take on what he sees moving markets in the final year. In the final weeks of 2021. Looking ahead to 2022.

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Podcasts

Be Warned: High Prices Are Here To Stay

BE WARNED: HIGH PRICES ARE HERE TO STAY

Our CEO, Tony Nash, talks about inflation’s and Omicron’s role in US shares sinking, as fears spread over their non-transitory nature. And how will Asia react to the ‘non-transitory’ nature of inflation and the new Covid variant? Is Gold a good asset to use to hedge against inflation?

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/be-warned-high-prices-are-here-to-stay on December 02, 2021.

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Show Notes

PS: Markets in the US were down across the board. The Dow is down 1.3%. S&P 500 down 1.2% Nasdaq down 1.8%. Now over across in Asia, everyone was up. Nikkei was up .4% Hang Seng up .8% Shanghai Composite also up .4% and STI Singapore up 1.9%. And as I was saying early on, FBM KLCI was down 1.1%.

TN: Yeah. Thanks for having me, guys. I think the biggest consideration really is Powell’s comments on inflation, saying it’s kind of no longer transitory. So people should expect inflation to stay. What that means generally is we’ve hit a new pricing level is his expectation. So meaning prices are not in his mind, in many cases, going to go back to the levels that we saw before this inflationary stairstep. And what we’ve seen, particularly in the US, is consumers have accepted this and consumers accepted it, thinking that it was a temporary rise in prices.


But what he delivered today is some bad news that it’s likely a permanent prize in the level of prices. And the kind of short term cost rises that people thought they were going to endure are more permanent.

KSC: Yeah. So, Tony, try and give us a bit of a perspective here, because obviously the last twelve years and the last accelerated two years of monetary easing have induced this inflation. How does it all end? And does it stop the weak economic growth we’ve been seeing in the US the last few months.

TN: Yeah. So US economic growth, we don’t see a rapid acceleration of US economic growth. And so we have the US, China, Japan, and the EU, all at very subdued growth rates. And that’s bad. Those are the four largest economies with elevated price rises. Earnings are growing in some areas. I’m sorry, wages are growing in some areas, but they’re not necessarily growing across the economy. And part of that, particularly in the US, is a shortage of staff. So people have opted out of the workforce. We’ve lost, like 6 million workers in the US since Covid.


And so there are fewer workers. And so we have wages rising in certain areas. But it’s not necessarily across the board. So people are really going to have to start taking a look at their disposable income to understand what of these ongoing price rises that they can continue to accept. And I think we’re at a point where, since it’s no longer viewed as temporary, people and companies are going to have to start making trade offs. This is really the bad news is when people have to, when it’s no longer temporary, companies and people have to start making trade offs of what to do with their resources.


And that’s where the real problem is. So it’s not ongoing expansionary spending. And even I think it was Biden who said today we don’t expect a stimulus package for the current variant. Again, people are having to look at trade offs, and this is the real problem. When companies have to look at trade offs, they’re looking at their operating costs, they’re looking at their capital expenditure, they’re looking at their investments, they’re looking at other things. So down to Earth type of environment where we’re starting to enter Realville, we’re starting to exit the kind of fantasy environment we’ve been in the monetary induced sugar coma that we’ve been in for the past year and a half.

PS: So that’s a very interesting point, because I’ve always felt like in 2021, we saw this huge divergence in recovery right between the developed world led by the US and emerging markets, which are still really struggling to contain the virus and such. So when we talk about Asia, how do you think markets will react to this tightening of monetary policy by the Fed?

TN: Yeah. We think that Southeast Asia generally will stay pretty muted. We don’t expect early breakout at least over the next quarter or two. We don’t expect really breakout moves in Southeast Asia. We expect China to have a fair bit of volatility, but we do expect China to be generally positive over the next quarter to quarter horizon. We do expect Japan to continue to rise pretty well in India as well. Japan largely on the back of monetary policy automation, other things. So Asia is not one market, of course.


So we do expect different parts of Asia to react differently. Korea will be a mix between China and Japan like it always is. So we’ll see some volatility there reflecting China, but we’ll see some, I guess, acceleration and equities like we would see in Japan to make some both.

KSC: Well, Tony, in truth, inflation has been with us for some weeks now. But what hasn’t been with us for some weeks has been on the Omicron that’s the other big roadblock posing an obstacle to markets. How does Asia behave? How does Asia react, especially since we’re going to be opening in a few hours time?

TN: Yeah, I think Asia generally. You guys know I lived in Asia for most of my life, and Asia generally takes these things in stride with more vaccines available with the typical kind of weathering, the storm kind of approach that people have, particularly in Southeast Asia. I think people will generally take it in stride. This is really the first pandemic. Let’s say in the west that people have had for probably 50 years where they’ve really been kind of freaked out and worried in Asia, we’ve seen these types of pandemics for 2030 years.


It’s a bit different. People are more conservative, people are more used to these types of volatile, say, public health and market and other type of environments in Asia. So of course, we’ll see things shake up, but we won’t necessarily see the dire kind of messages that we’ve seen, say in the west. I don’t think we will. We’ve seen dire messages come out of, say, Germany and Italy and Austria, particularly over the past week with full lockdowns with 100% vaccine mandates, with really dire messaging. I don’t necessarily think we’re going to see super negative messaging in Asia like we’ve seen there.

PS: We won’t freak out as much as what you’re saying then essentially.

TN: No. Come on, man. It’s Asia, right? People are used to volatility in Asia and the developed markets. Developed markets are highly calibrated. Right? 0.2% change. Either way is people see as dramatic in Asia a small they’re not as calibrated. So people are accustomed to more ups and downs, and people just generally take it in stride.

PS: And I said that generally it’s quite calming. Is gold with inflation basically consigned away from this trend trade term? What’s your view in terms of gold? That’s a hit against inflation then? Because if I look at the data, the method is down 6% year to date.

TN: Right. And a lot of the inflationary rise has already happened. A lot of the stuff happens in stairstep fashion, and a lot of the mitigation efforts are already under way. So while we’ll continue to see inflation and we’ll continue to stay at an inflated level, I don’t necessarily. Or we’re not seeing dramatic price rises going forward. Okay. You’ll see it in pockets where there are, say, supply issues or something like that. But gold is more effective when everything is well, gold is a barometer for finding value.

I’ll say that much. It’s a tangible metal and people see it as worth something. And so what used to happen is gold and say the dollar as the dollar do value the gold would appreciate. But now we have crypto and people treat crypto kind of in the same way they used to treat gold. The gold market is really trying to find itself. So I think we’re going to have to see some fallout in crypto if it is to happen. We’ll have to see some fallout in crypto before we start to see gold being the safe haven again or being the preeminent safe haven.


So until Bitcoin and the other crypto assets really deteriorate in value and people go flocking back to gold, which I think will happen eventually. I don’t think it’ll happen overnight, but until we see a lack of faith in crypto, I don’t think we’ll necessarily see dramatic price pressure on gold.

KSC: Tony, you talked about Asia, right? And now China is moving to banners via structure, which is the loophole that allows its companies to list in New York and other foreign exchanges. What does this mean in terms of China’s overall strategy to go its own way to quote Fleetwood Mac?

TN: Sure. Yeah. So I think, of course, it hurts Western banks, and it hurts the Western banks that are in Asia because they don’t necessarily have those fees to take things public in the west. But I think the bigger problem is this those companies going public don’t have US dollar denominated resources to access, and so they have to get CNY or Hong Kong dollar or Japanese yen or other Sing dollar other denominated assets. Okay. But the US dollar is 87% of global transactions. So it helps those companies to have US dollar reserves, especially as they’re newly public.


Because why do you go public? Because you want to buy another company, you want to use that cash for a big investment or something, you want to expand in a big way. So if you don’t have the US dollar assets that come from going public, say, in New York or somewhere in the US or whatever, it’s really hard to have a big source of cash to do a massive international expansion or undertake a big international project or do a big international buy that’s I guess the biggest downside I would see from the decline of that type of structure in China.

KSC: All right, Tony, thank you so much for your time, Tony Nash there chief executive of Complete Intelligence. And just to hang on this last point, Phil, if you don’t list in the US, you don’t get US dollars necessarily. But that doesn’t matter if you are China, and you believe that the real market is domestically or within ASEAN, where you’ve got to combine, I don’t know, 2.1 trillion people or 2.1 billion people. That’s quite a fair few heads. Yes.

PS: Correct. I think it’s a question of whether you see a convergence between where you list versus where you operate.

KSC: Absolutely.

PS: And I think in the past we thought, okay, you could tap financial markets globally to serve your local markets. But I think China is kind of proving the point. No. I think it’ll be closer together.

KSC: Yeah. And what he was talking about in response to your question on gold, Phil, how gold hasn’t responded to all this uncertainty, which has been traditionally the case. And Bitcoin is somewhere hovering around in the mid 50s, which is a bit weird because you would expect some kind of flight to what was seen as safe havens, right.

PS: Ironic is considered Bitcoin a flight to safe havens.

KSC: Well, because it’s finite in nature. So it’s a bit like gold, right. It seems interesting, because in the last few weeks, we’ve seen a move among corporates like Mark Zuckerberg of Facebook and now Jack Dorsey, formerly of Twitter, who has left his job at Twitter. Still, at the same time was CEO of Square fintech platform financial platform. He’s moving to turn Square into a company called Block, and it’s a bit like it would make Mr. Miyagi proud because martial arts moves from square to block, but he’s going all in.

PS: But this is a very interesting thing because he’s going all in on crypto. And I think you’re referring to Blockchain blockchain reference to Blockchain, which is the distributed platform for data used by Crypto.


But it’s interesting, right? This whole name shift.


I think Jack Dorsey, I think, is trying to evolve away from just being a pure payments provider to offering solutions that are anchored on blockchain as a solution.

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Podcasts

Bottlenecks To Ease With Xmas Coming?

Tony Nash gave the BFM 89.9: The Morning Run his thoughts on how the sooner-than-expected Fed rate hikes could affect global markets. Will inflation derail hastening of the tapering talk? How does crude oil look like in the next few months? As the Christmas season is coming, how much of a concern supply chains will be for the consumers and the economy? When the Fed begins normalizing rates, which currencies will be vulnerable if or when this happens?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/bottlenecks-to-ease-with-xmas-coming on November 25, 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

 

SM: BFM 89.9 good morning. You are listening to the Morning Run. I’m Shazana Mokhtar together with Khoo Hsu Chuang and Philip See. It’s 9:07 in the morning. Thursday, the 25 November. If we look at how the US markets closed yesterday, the Dow was down marginally by 0.3%. The S&P 500 was up 0.2%. Nasdaq was also up 0.4%. So for some thoughts on where international markets are headed, we have with us on the line Tony Nash, CEO of Complete Intelligence. Good morning, Tony. So the Fed minutes revealed that the pace of tapering may be hastened, while macro data points from personal spending to job data suggest that the US economy is in quite the sweet spot, but will inflation derail this?

 

TN: Yeah. There was a statement from one of the Fed governors today talking about that inflation is not transitory in their mind or could potentially not be transitory in their mind. That’s a real danger to people who are thinking that we’re really in a sweet spot right now because it could mean Fed intervention, meaning tightening sooner than many people had counted on. So I think people had counted on some sort of intervention, maybe in Q2, but it may be happening sooner. That would have a real impact on the dollar. The dollar would strengthen, and that would have a real impact on emerging markets all around Asia, all around Africa. People would feel it in a big way where there is US dollar debt.

 

KHC: We are seeing that strengthening US dollar in our currency now. But I just want to get your perspective on crude oil because various countries from the US to China are now tapping into their strategic crude reserves to alleviate the present energy crisis. But if you look at crude now, it’s not really being responsive, right to these actions?

 

TN: Right? That’s right. So what the US agreed to release is about two and a half days of consumption. Not much. The releases agreed in the UK and India, for example, were really token releases. They weren’t really major portions of their consumption. So these countries are kind of giving a nod to the Biden administration, but they’re not really alleviating the supply concerns that are spiking prices. So it really has been a dud for the White House. It’s been kind of an embarrassment because crude prices haven’t fallen, really. They fell initially, but they really came back after the release announcement was absorbed.

 

PS: Yeah. Tony, that trickling in oil supply releases from the US government hasn’t done much to alleviate the supply concerns. Gas prices in America have been on a massive uptrend as well, just in terms of inflation and not being as transitory as people expected, as we enter Christmas season, how much of a concern is it for consumers as well as the economy?

 

TN: It’s a real concern. I have to tell you, I’ve driven halfway across the US for our Thanksgiving holiday, which is tomorrow morning. It’s Thursday here, and we’ve seen a lot of trucks with cargoes on US roads, and I make this drive pretty regularly. So it seems like a lot more on roads than I normally see. So that’s good in terms of the domestic supply chain.

 

I think it’s the international supply chain that is really concerning, and we still have those backups in the Port of Long Beach. That is the real main constraint for supply chains in the US. So I don’t think we’re going to see major disruptions outside of other ports. But through Long Beach, we definitely see issues.

 

The semiconductor supply chain is the main impact for, say, electronics and automobiles in the US. We did see semi manufacturers start to produce more auto related semiconductors, say mid-Q3 and into Q4. We should start to see those automotive supply chains, the semiconductor dependent issues and automotive supply chains alleviate, probably in Q1. So that will help.

 

But for the Christmas season, I’m not sure that there’s a whole lot that’s going to help with electronics and say automobiles.

 

PS: Yeah, Tony with JPowell still back and still in the fair chair in terms of his reappointment. And he does hike rates earlier than expected to address inflationary concerns. How much of a dangerous is to slowing down the economy in America and as  the rest of the world.

 

TN: Sure, it is a risk in America. I think it’s really hard to hire people in the US right now. There’s a lot of job switching happening and people haven’t come back into the workforce. We lost about 5 million people in the workforce in the US through the Covid period. So that’s a real issue. Anything that raises the cost of doing business is problematic for the US and will inhibit growth. The main problem in the US is that the environment right now, it continues to crush small companies. It’s very difficult for small companies. And while it may seem that small companies don’t matter that much, they are the main employer in the US and the main growth engine in the US. And the Biden administration hasn’t helped this with a lot of their policies. Their policies have been very favorable toward big companies. If the Fed pushes inflation, it will make borrowing a little bit harder. I’m sorry if the Fed pushes the interest rate, it’ll make borrowing a little bit harder. But the collapsing, say, the tapering of the Fed balance sheet will have a bigger impact on liquidity in the US.

 

SM: And if I could just touch on large US dollar debt and what happens to emerging markets when the Fed begins normalizing rates, which currencies do you see as going to be particularly vulnerable if or when this happens?

 

TN: Well, I think one that I’m really keeping an eye on is the Chinese Yuan because it’s a highly appreciated currency right now. And the Chinese government has kept the CNY strong so they can continue to import commodities and energy for the winter. And they’ll likely keep it strong through Chinese New Year. We expect CNY to really start to weaken, say, after Chinese New Year to help Chinese exporters. So winter we mostly pass. They want to help kind of push a Chinese export, so they’ll start to really devalue, seeing why probably end of Q1 early Q2.

We do see pressure, the Euro, as you’ve seen over the last three weeks, there’s been real pressure on the Euro as well. Other Asian currencies. We do think that there will be pressure on other Asian currencies. Sing Dollar will likely continue to stay pretty consistent. But we’ll see some pressure on other Asian currencies simply because of the US dollar pressure. The US dollar is something like 88% of transnational transactions. So the US dollar as a share of transnational transactions actually come up over the past two to three years. So there’s much more pressure with an appreciated dollar and it’s coming.

 

KHC: Just like the one. Tony, India Indian equities record high. Have you reached to speak considering PTM’s IPO failure?

 

TN: Yeah. I think there’s been a lot of excitement there, and I think it’s at least for now. I think it has I don’t think you can ever really claim that an equity market has hit its peak, but I think for now, a lot of the excitement is dissipated. It may come back in a month, it may come back in six months. But I think that momentum is really important. And as you see, failed IPOs, I think it’s really hard for equity investors to kind of get their mojo back.

 

SM: Tony, thank you so much as always for speaking to us and happy Thanksgiving to you and your family. That was Tony Nash, CEO of Complete Intelligence, giving us his thoughts on how the sooner-than-expected Fed rate hikes could affect global markets.

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Podcasts

Bottom Up is the Strategy

Expectations Of Higher Rate Are Crushing Markets

Tony Nash, CEO and founder of Complete Intelligence, joins the BFM 89.9 The Morning Run show to give insights on the US Market, specially now that the CPI hits 6.2%. What does this mean for the Fed Fund? They also discussed Disney Plus and how to invest in equities right now, especially how to allocate your assets in the current economic climate? Will the telecommunication and transport sector, and oil and gas benefit from the $1 trillion infrastructure spend bill that was just passed? Lastly, what is his view on the oil market? Will it continue its bullish trend, and for how long?

 

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/bottom-up-is-the-strategy. on November 11, 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

 

SM: BFM 89.9 Good morning. You are listening to The Morning Run. I’m Shazana Mokhtar there together with Wong Shou Ning. But for some thoughts on what’s moving global markets we have on the line with us. Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Always good to have you. Can we get some of your thoughts on, I guess this red equity markets outlook? One of the stocks that reported after hours was Disney and they reported results that underwhelmed with only about 2 million new streaming subscribers added this quarter the stock is down and after market hours trading. Do you see this as a buying opportunity, or do you think that there are still headwinds when it comes to the sectors that Disney operates in?

 

TN: Yeah. I think Disney has some real headwinds. Their park attendance is down on COVID concerns and regulations. Their streaming service just doesn’t really have the content throughput meaning the new content that people would expect from, say a Netflix or a Hulu or other types of streaming services. So part of what Disney needs to do is really have much more throughput on their content on Disney+.

 

WSN: What about CPI numbers, Tony? Are you really concerned about that? They came in at 6.2%, which was higher than street expectations of 5.9%. I think from now onwards, it’s going to be very hard for the Fed to say that inflation is just transitory, right?

 

TN: Oh, very much. So the Fed targets 2%, and this was just a little bit above that to the point where it’s really turning heads now and it’s really got people afraid. So part of this is base effects on last year, but not much it really is the supply and demand are weird. In some places, you have real supply chain shocks. You also have demand issues, say winter is coming, things like natural gas, oil, these sorts of things. They’re really being impacted. Food is being impacted. So people are seeing price rises that they haven’t seen for a long, long time.

 

 

S&P500 US Stocks in 2021
Historical and forecast data for the US S&P 500 in 2021. Run forecasts like this with the power of AI and ML with the CI Futures app.

 

 

 

WSN: Does this change your investment strategy, Tony? Or maybe a change in terms of your asset allocation? Are you going to go long equities or short fixed income? What’s your plan for 2022 or even in the next three months?

 

TN: Well, we’ve been saying for a while that this really isn’t a broad market environment. This is individual equity or say individual commodity type of market. Because if you are investing broad, yes, you’ll get incremental gains depending on where you are in the world in which market you’re in. But it really is a stock pickers market. You really have to understand the company. You have to understand how a trade you have to understand where the value is and how that is relative to the rest of the market in the economy.

 

And you also have to understand, actually, at least in the US, you have to understand what the Fed is doing. In your own country, you have to understand what your central bank is doing and what I mean by that is how easy are the monetary conditions? How does that impact individual countries and markets? How does that impact demand and, say commodity prices? So it’s not an easy question to answer, but it is a more specific and expert-driven market than it has been for the last two years.

 

SM: All right. Sounds like you’re giving our listeners a good reason to stay tuned to our chats every morning, Tony. Turning our attention to some recent developments in the US Biden’s 1 trillion infrastructure bill has just been passed. How much of a windfall will this be for US transport infra and telecommunication companies?

 

TN: Well, it’ll be a windfall, but it’ll happen over an extended period. This really won’t be spent for probably five to eight years. It will drip out over that time. So, yes, it is a lot of money, but it’s not happening in one tranche. And by passing this bill, it’s effectively saying this is it for infrastructure for the next almost decade. Okay.

 

So those companies who can successfully lobby and or successfully bid are going to get paid well over that period, those who don’t have the infrastructure in place to do that are going to have a tougher time. So. It’s a massive number. But it’s happening over an extended period.

 

WSN: What about oil and gas? Do you see them benefiting from this push into infrastructure?

 

TN: I don’t see an immediate positive impact for oil and gas. There are other reasons I’m positive on oil and gas, but on infrastructure, because this will come out over such an extended period of time. You see, infrastructure spending is really meant to be the foundation for future growth. Right. So you create the infrastructure that, say productivity gains and other things can leverage off of in the future. If we were doing a lot of infrastructure over, say, the next three years, you would expect a lot of oil and gas to be used to manufacture that, to power that and so on and so forth. But because it’s an extended period and because it’s distributed all around the US, there really isn’t a concentration of, say, the activity and it’s happening over a long period. I know I’ve said that several times, but that’s my biggest takeaway from this bill is the slow drip that it comes out on.

ICE Brent Crude forecast with CI Futures
Historical and forecast data for the ICE Brent Crude Oil in 2021. Run forecasts like this of other commodities with the power of AI and ML using the CI Futures app. Book a demo to know more.

 

WSN: But you did say that you are a bit of a oil and gas bull at this juncture. What are your reasons for it, though?

 

TN: Well, we have regional, say, shortages or regional supply chain issues, say in Europe and parts of Asia for oil and gas, particularly gas, right now, as winter is coming on. Gas has performed well over the last, say six to nine months, maybe a year, and we expect it to continue to do well for the next few months. Crude oil? It looks like we’ll see some interesting upside in crude oil as well, partly on those regional supply issues as well.

 

WSN: But historically, by this time, right. Wouldn’t the shale producers be pumping away, too? And kind of adding supply? But it doesn’t seem to be the case this time, right. Because Brent crude this morning is still $83 a barrel.

 

TN: Right. Well, the shale is a different story because there are so many restrictions and regulations put in place by the US government under the current administration that it’s taking more for them to get started. So without the, I would say, aggressive kind of enforcement and new impediments to domestic shale production in the US, Yes, I believe we would have more rigs moving by now. But because of the impediments that the administration has put in place, the US administration is asking the Middle East, and they’re asking Russia to produce more.They’re not necessarily leaning on US producers. They’re trying to minimize the production here in the US. And part of that is the Green New Deal and other things to kind of regulate green energy into existence in the US.

 

SM: Tony, thanks very much for your insights. That was Tony Nash, CEO of Complete Intelligence, talking to us about some of the trends moving markets, capping the conversation with a look at the oil and gas sector, and specifically why perhaps the US shale producers aren’t pumping out product, given the higher oil prices at the moment.

 

WSN: Yeah. I think it’s very interesting to follow this very closely because it’s almost as if the oil and gas or energy sector because of the renewables, is going through a structural change. So the transition to renewables is real. But it’s not going to be linear. And because a lot of national oil companies are shifting the way they spend their capex, it does mean that for the moment, all prices might remain elevated because we haven’t found these new energy sources to fully compensate. So I think this is an interesting time, but it also makes running a business extremely challenging, because all of us, whatever said and done are energy dependent.

 

SM: And it’s interesting for Malaysia as well, because while other consumers would Bimbo the high oil prices as a country, we do benefit from the high energy prices.

 

WSN: We are still a net energy exporter, but we do, of course, subsidized petrol at the pumps. I mean, Ron 95 is still to ring it in $0.07, but there are still going to be costs for industrial usage because that’s based on market prices. So of course, it’s inflation. That’s the thing everybody’s talking about US 6.2% never anybody would ever thought it would hit that high. Yeah.

 

SM: It really seems to look like the use of the word transitory by the Fed wasn’t completely transitory now. Maybe they may be regretting their choice of words. It is coming up to 719 in the morning. We’re taking a quick break. Stay tuned. BFM 89.9.

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Podcasts

Inflation Stares Down A Reflating US Economy

BFM 89.9 The Morning Run talks to Tony Nash for his insights on the US economy. Why the tech industry is performing better than other industries? Is it the new inflation theme? And how about the reflation narrative? How will that affect price pressures for corporates in Q4 of 2021? Why is China importing less from the US while exporting a whole lot more? What’s the status of the supply chain issues amidst the coming holiday season?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/inflation-stares-down-a-reflating-us-economy on October 14, 2021.

 

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Show Notes

 

KHC: Okay, well, the Dow was unchanged. Basically, it just went side raced last night. The S&P was up by 0.3%. The Nasdaw was up by 0.7%. Preceding that, the Nikkei was down by 0.3%. The Hang Seng was actually closed due to the typhoon and also today for a public holiday. The Shanghai was up by nearly half a percentage point. The Sci by one and a half percent. Of course, FBM KCI yesterday up by 1%.

 

SM: And for some thoughts on what’s moving markets, we speak to Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Thanks for joining us today.

 

So last night Nasdaq did better than the other indices on the back of tech companies having better pricing power. Do you see this being the new theme as inflation rises?

 

TN: Sure. I mean, I think tech prices can be adjusted pretty quickly for the most part. And I think especially with tech hardware, people understand that supply chain issues are very real. So I think the ability to change prices in tech are pretty quick, especially around software and software services. I think whether it’s prices rising or even in the case of additional competition, prices falling, I think they can do it in tech much more quickly than they can in other industry sectors.

 

KHC: Yeah. And, Tony, most of the news has focused on the effects of the energy crisis on China and, of course, in Europe. But in what race does this crunch impact the US. Is American immune from it?

 

TN: Oh, no, not at all. I think there are some considerations in the US. First is how regulated are the markets. So when you look at markets like New York, Massachusetts, California, highly regulated markets. Also, they don’t really have energy. They don’t have natural gas and oil, or they don’t really actively drill for it there. So they’ll have a tougher time over the winter, I think. In places like Texas and the Gulf Coast in the south, where we drill oil and gas in Texas, we also drill offshore in the Gulf of Mexico. We have supply, we have the pipelines in place. They’re pretty unregulated markets. We’ll find it easier here because of the availability of the energy and the infrastructure that we have.

 

SM: And looking at the reflation narrative. It’s starting to get louder in markets. Do you think last quarters corporate earnings were affected by rising price pressures, or is that going to be felt more in the coming Q4?

 

TN: Yeah. I think they were a little bit, but not much. Don’t forget in really Q2 of 2020 and early Q3 is when companies really started shedding costs because of a COVID. So they reaped those year on year profit benefits. Those profit growth benefits through 2021, so far. But that base effect really comes to an end in Q3 of ’21. So we’ve expected. Well, since the end of Q2  earnings, we’ve been telling people Q3 earnings will be worth because those base effects are gone and also because inflation has intensified. So, yeah, it definitely gets worse than Q3.

 

KHC: Yeah. So we are on the cusp of earning seasons reporting. And of course, I think Delta reports later today. JP Morgan as well. What’s your sense of what corporate earnings will be in this coming quarter?

 

TN: Well, they’ll still be earnings, but the growth rate will definitely be slower this quarter. There are some areas where they’ll continue steady. But in things like travel, where we’ve seen with airlines where we’ve seen fuel prices rise, we could see some real issues there. Not major issues, but we would see that eating into profit margin.

 

KHC: Okay. Let’s talk about the China trade surplus then, of course, with the US rising record high in September. Tony, why is trying to import less from the US while exporting a whole lot more currently?

 

TN: Well, part of what we’ve seen, the US exports a lot of ag and energy to China. And so when commodities prices rise, China buys less. We saw things like corn and sorghum and soybeans rises in the middle and end of Q2, early Q3 rose pretty dramatically and trying to slow down its buys of those. Now we see natural gas rising pretty rapidly, actually. So a year and a half ago, it was, say, a 1.5 in the US. Natural gas is now $5 in the US. So it’s risen pretty dramatically. So trying to slowed the buys of, say, US natural gas. They’ve also slowed some buys of, say, natural gas and all from other parts of the world.

 

So they’re buying commodities. They can slow those buys. And we’ve seen that impact, for example, on their electricity markets. The US buys largely manufactured goods. And so because of supply chain issues, Americans have really been over buying what’s available so that they can ensure supplies for months ahead. So there’s still, say empty shelves in many cases in the US. There are still backlogs. But we’re over buying because people don’t want to see empty shelves here.

 

SM: And I guess one final question, Tony, before we let you go, taking a look at our region, the Asian region. The economic outlook seems more brilliant in Asia as countries reopen. Which economies do you see outperforming as border restrictions lesson in this part of the world?

 

TN: Yeah. We definitely hope to see Asia come back pretty strong. We expect India, China, Taiwan, Philippines, Australia to perform best in Q4. Australia, obviously on the back of commodity and energy price exports. China and Taiwan on the back of global manufacturing kind of supply chains. Of course, they won’t be totally cleared up in Q4, but we will see continued buying and over buying for those items. So we don’t necessarily see it as a border issue because travelers, for example, we’ll have to consider how long will they have to quarantine if they do travel, because we don’t necessarily expect that to go away soon. So we don’t expect the cross border restrictions lightning up to impact too much. It will impact a bit, but we don’t see too much upside in Q4 yet.

 

SM: Tony, thanks as always for speaking with us. That was Tony Nash, CEO of Complete Intelligence, giving us a view of the economies in Asia that could improve as economies open up. But he says travel is still not going to be that lightning rod for growth or activity at this moment. Things are still going to be cautious on that front.

 

KHC: Yeah. The aviation sector has really come into focus in the last few days. Air Asia has been top volume in the last few days, and I think it looks. Look at Southeast Asia’s region. I mean, travel is such a huge factor in the economies. We know that Indonesia is slowly opening up. Bali has talked about opening up. Thailand is opening up. No choice, right? Obviously, with tourism, such a systemic part of the economy. China is still locked up. China is actually arages biggest market, right? So many destinations.

 

India is still locked up. So it’s a mixed bag. Right? But the one thing that has really put a spanner in the works is this whole inflation thing. You know how the Fed talked about how it’s going to be transitory is gonna be here for the short term. It’s not the case. I mean, you’ve seen wages go through the roof, supply chain disruptions, which is send prices higher labor shortages, much more jobs than people get to apply for. In fact, people are leaving jobs like in F&B, restaurants, waiting jobs, low pay, long hours. They go into much better paying jobs. Energy price as I think Brent, this morning’s at $83. Global energy crunch so much this inflation is commit malicious. I don’t now what that’s going to do? The market. But it’s definitely something.

 

SM: Watch out for that’s. Right. And if we’re talking about supply chain bottlenecks that are contributing to inflation, we have a story here coming out of the US, where President Joe Biden wants to break a log jam at US ports and stave off a holiday season of shortages and delays. Tony was speaking earlier about empty shelves in the US and the fact that US customers are overbuying because there’s so much demand. But supply chain is blocking these products from getting to the shelves. And Joe Biden wants to solve this by making ports operate longer just to clear that backlog. But that isn’t really quite solving the problem because, as you pointed out, there are other trends, such as the labor issues that are finally coming to a head in this scenario. And it’s causing a lot of chaos in terms of supply chains.

 

KHC: Yeah. Because, you know, this part of California, in fact, part of Los Angeles, right. It’s one of the biggest basic choke points for supply into the US. And, I mean, that’s got, like something like 60 to 70 container ships waiting in the Bay just to get in and offload this stuff. It’s incredible. To supply chain shortages, I think that’s supposed to last until 2023. Right.

 

SM: Right.

 

KHC: And there’s this huge amount of capital going into the US in the semiconductor companies that are just building chips which are going to require less energy and smaller to just alleviate some of this choke point. This bottleneck is crazy. I mean, this is how capitalism world sometimes.

 

SM: The juxtaposition to what happened last year is so stark. Last year, there were enough containers. They couldn’t leave their forte because they just couldn’t get the containers to ship their products. And now they’re just too many of them, and they’re jamming up the Port. So it’s really curious how the pandemic has kind of shifted us from one extreme to the next term in the economy. Stay tuned to BFM 89 nine.

 

Categories
Podcasts

Blame the Hot Money

US markets continue their bullish trend. BFM 89.9 asks Tony Nash if this is due to better than expected corporate earnings in the coming quarters or the Fed monetary policy. Also discussed are the OPEC+ oil production and how oil will be affected by hurricane Ida, and what’s the status of supply chain specially around semiconductors?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/blame-the-hot-money on September 2, 2021.

 

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

 

Show Notes

 

WSN: We speak to Tony Nash, CEO of Complete Intelligence. Now, US markets, I think it’s a bit of a choppy day, but still, nonetheless, the trend is bullish one. And what is that based on, though, is it expectations of stronger corporate earnings this quarter or just driven by ample liquidity flooding financial markets?

 

TN: I think more the latter than the former. We saw really good corporate earnings in the previous quarter, but in the current quarter, we’re hearing more rumblings of trouble with earnings. And that’s part of the base effect in the previous quarters, in 2020, companies had cut a lot of costs late in the year, so they’re reaping the benefits now. We’re starting to see the base effects come in where they had already cut a lot of those expenses in Q3 of 2020. So now we’ll see that going forward, we won’t see as much kind of profitability.

 

So what’s the baked into the market right now? It’s the Fed, it’s stimulus. It’s an expectation of a $3 trillion fiscal stimulus bill. So if we start to hear that this $3 trillion fiscal infrastructure bill won’t happen, we’ll see some disappointment if we see the jobs numbers on Friday come in disappointing, we’ll see some dampened momentum. And if we hear any more talk about tapering, which I don’t think we will for at least six months. But if we do, we’ll see some downward pressure in the market.

 

So all of those things are possible. But in the meantime, the Fed is injecting $120 billion into the market every month to keep everyone happy. And markets seem to be taking it well.

 

WSN: And I want to stay on corporate earnings, because I just wonder whether the recent inflationary pressures on the economy will be reflected in perhaps lower margins for corporate’s incoming quarters.

 

TN: Sure, companies are feeling pressure not just with raw materials and input factors, but also with salaries. Wage inflation in the US is pretty high right now. Companies are feeling it from all sides. So I think those margins are much thinner, both on those base effects I mentioned earlier. Also inflationary effects, both in terms of input goods and wages.

 

PS: And you say you paint a bit more cloudy picture for the US, but if you compare the US economy and financial markets versus Europe and China, they really have outperformed global peer strike. Could you explain it disparities there?

 

TN: When you look at China, I think it really has a lot to do with stimulus. China is really late to the game in terms of providing stimulus. They spent quite a long time in 2020 and 2021 deleveraging their economy. So getting rid of debt. Very procyclical. China was shrinking and they were delivering, which is maybe healthy for the balance sheet, but not necessarily the best thing to do to grow the economy.

 

In Europe, the ECB is really nervous with inflation. And so they may take more aggressive action against inflation instead of continuing to loosen to accelerate the economy. So the US is outperformed because nobody thinks the Fed is going to take aggressive action year, certainly. And probably not at least until Q two of 2022.

 

WSN: And how do you think the US dollar will react against the Euro and the yen in light of all these recent FED announcements on the timing of the tapering and also the rate hikes?

 

TN: We have the dollar continuing to weaken through, say, November. And we’re starting to see some expectations of dollar strength, not a lot of strength, but marginal dollar strength starting in, say, November. And that could be on, say, ECB deciding to continue to loosen. It could be on China. Adding stimulus. Currency is a relative game. As central banks get more active globally relative to the US, it could really help weaken their currencies on a relative basis.

 

PS: And let’s talk about oil because I want to get your views on yesterday’s OPEC+ meeting. They are sticking to next month’s  oil production increases. What impact will that have on prices in view? There also Hurricane Ida has also hit US or production?

 

TN: Yeah. Well, he can. It has fit some under sea production, but it’s really hit more refining capacity than really production. So the bigger issue in the US is around gasoline prices and refining, than it is around kind of supply of oil with OPEC+, it’s kind of a status quo. Let’s move ahead as we had expected, which is a really good sign. Look, oil is trading between what, 67 and $75 generally, and that’s kind of their happy. So as long as it stays in that zone, OPEC will continue to move ahead and stay within the agreement. If it goes higher, then they may accelerate the production. If it goes lower, they may pull back a little bit.

 

WSN: And let’s stay on supply side disruptions. Right. We talked about that just a few minutes ago. But do you think that there are still concerns over this, especially for things like semiconductors and certain commodities?

 

TN: Oh, yeah. Absolutely. So the supply chain issues, we hear a lot about Chinese ports and backups to Chinese ports and these sorts of things. But the Port in Long Beach in the US is backed up, hugely backed up. So the supply chain shocks are not only in China. US ports have their own issues. So when I hear, say, American companies complain about supply chain issues in China, that’s not the only factor. It’s US ports catching up. It’s US ports that are delayed and so on and so forth.

 

So I don’t think we’re done with this. In fact, it may get a little bit worse because the holiday season is coming up in a few months. And if we think supply chains are backed up now, they may get even worse going into, say, October and November, especially to import into the US.

 

PS: I mean, some are even saying that this could even go on to, quarter 1, ’22 or even the likes of semi cons.

 

TN: Oh, absolutely. Semiconductor supply chains are incredibly complex. So for them to get out of these issues, there are multiple layers of issues that have to be reconciled, and it could easily be Q1 ’22 by the time we’re out of this.

 

WSN: All right. Thank you for your time. There was Tony Nash. CEO of Complete Intelligence, giving us his views on where world markets are hitting. And I think the interesting point is that, look, the bullish trend is here to stay as long as the Feds just keep rates where they are. Plus, of course, there are expectations with regards to the US stimulus plan on the infrastructure bill. Right. Which I think is now going through the House. And apparently there’s something like 700 amendments that the Republicans want this document through the Max.

 

PS: I know, but I think they are optimistic. I hope to prove this call in October, but Tony does point relatively bleak picture for the short term. September. October is also seasonally weak in the US and also the stimulus packages or end or swim September. Very interesting. What he’s saying about the Fed is not likely to say much about tapering for the next six months as well.

 

WSN: Yeah.

I mean, if you look at where markets are right. The S&P 500 is up 20%. The Nasdaq are almost close to 19%. The Dow Jones is 16%. If I was a fund manager, I would do nothing. In fact, I might be tempted to lock in my games. Right. Because the year is almost coming to a close. Do I want to take on more risk for the potential return of two? 3%, maybe not. So we might be heading into quieter months for at least one or two, maybe towards year end, and then we might see some book closing.

 

But till now, maybe everyone’s just taking a bit of a breather. Look at markets, at what kind of corporate earnings will be coming out, and let’s see where the politicians are up to.

 

PS: And I wonder whether there’s an opportunity to reallocate to other markets in Europe where you see some value and even Southeast Asia as well in the midterm long term as well, for sure.

 

WSN: I’m sure Financiers already considering the Strategic allocation for 2022 Actually and rotating into markets that perhaps did not do as well this year. Stay tuned. BFM 89.9.

Categories
Podcasts

Consumer Sentiment Will Dampen Outlook

Corporate earnings are pretty much in line with expectations — where are stocks heading now? And what about the Congress-approved stimulus package, will that help the market this year? Also, with the rising Covid cases again in the US and China, how will this affect the two countries? Both countries have drastically low consumption. How much effect does one have to another? Lastly, will crude continue on the downtrend?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/consumer-sentiment-will-dampen-outlook on August 17, 2021.

 

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Show Notes

 

WSN: The business station BFM 89 nine good morning is 07:00 Tuesday, the 17 August and you’re listening to the morning run. I’m Wong Shou Ning and joining me in the studio this morning is Philip See. In the meantime, how are markets, Philip? Because I think it’s a bit of a red day.

 

PS: Yes, it was a red day, but actually the down SMP hit record higher up 3% other than the SEC was down 2%. Now if you cross over to Asia pack, it was also, as you said, a red day. Nikkei was down one 6% hunting negative 8%. Although in Shanghai marginally up zero 3%. Singapore was down 6%. Back home, a BNI interesting development went down quite a bit but recovered a bit to basically just be down 2% yeah.

 

WSN: Actually, I would have to say the LCI did better than expectations. The ring it actually initially weakened, but it’s somewhat recovered to the US dollar 4.2370. The currencies are always the first thing that gets hit, but against the pound is 5.8651 and against the sin dollar is 3.1250. Whether there’ll be continued weakness over the next two days is going to be a question Mark. We have to bear in mind that foreign are holding for equities is probably an all time low at 20%. Something will be asking Alexander Chia, regional head of research at RHB at 915 later on this morning.

 

So do tune in. But in the meantime, we’re going to find out where global markets are hidden with Tony Nash, CEO of Complete Intelligence. Good Morning Tony, thanks for speaking to us again. Now, US markets, despite a bit of a wobbly start, they seem to recover. They’re at their peaks and corporate earnings pretty much in line with expectations, although this week I think it’s going to be a heavy week for earnings. Now, which direction do you think stocks are set to trade ahead of the fat minutes that are supposed to be out this week?

 

TN: Well, ahead of the minutes. I think we’ll continue to see more of the same. The Fed is really in charge of markets now. We’ve seen earnings come in really stellar over the last few weeks, and we’ll continue to see that for ’23, ’22 earnings. But we’re expecting three earnings really to come in a little flat. We’ve started to see some people say that their revenues are down and to issue some earning warnings. I wouldn’t say before Wednesday, but I would say over the next few weeks we expect to see more rotations going on. We’ve seen rotations away from tech over the last few weeks and we expect to see some defensive rotation in the next couple of weeks, consumer cyclicals utilities, consumer staples, utilities, health care and so on.

 

PS: Do you think the stimulus packages that were approved by Congress will add a bit of steam going forward?

 

TN: Well, I think the infrastructure package is going to take ten years, really, that’s going to be spent over a decade. They’re going to claim that it’s going to be spent quickly, but it can’t really. And plus, it’s less than half a trillion dollars or something like that. So that money trickled out over ten years or something. I think there’s a rule of thumb for infrastructure is in. It has a 1.6 times economic impact. So let’s say it was 300 or $500 billion. It would be 1.5 times that impact on the economy.

 

So it will have a decent impact. It will just be spent over a protracted period of time. There are the budget cap battles coming up over the next two to three months in the US. So there’s a real expectation that a lot of the stimulus that the Congress has planned may not necessarily be approved because of the budget cap discussions that are coming up.

 

WSN: Meanwhile, Tony, I want to look at the relationship between US and China because we do know that the China themselves are battling the Covid crisis again and the recovery the data seems to be faltering in terms of how strong the economy is. How related are both these countries?

 

TN: Yeah. The worrying part about China right now, of course, COVID and a lot of the issues there. But we’re also seeing ports really start to really slow down. A lot of the throughput factories slow down, and it’s really concerning. So despite the red upgrades we’ve seen over the last several years about the US and China, they are really important trade partners, and their economies are really, really tied. So when we see a dramatic slowdown in China that affects everybody in Asia, it affects the US. When you see a slowdown in the US, it affects China. It affects Europe. So we don’t want to see a slowdown in China, seeing the resurgence of COVID and the impact on the economy. There is not good for anybody. Least of all US.

 

And so we still have a lot of supply chain issues globally, partly owing two COVID slowdown in China, Japan, Korea, elsewhere. Right. So we don’t want to see this. We will see restrictions in the US, not code restrictions, but restrictions to supply chains because of issues coming out of China again. And so this is bad all around. And we want China to succeed. Everyone wants China to succeed. So they’re in a boat together.

 

PS: But, yeah, in a double whammy. Right. China consumptions spent sentiment is at an all time low. And also US consumption sentiment is also registering a drastic drop in August. What does this mean for the US dollar and treasuries?

 

TN: No. Right. So with the US, we have inflationary pressure. We have pressure, workforce pressure. It’s been hard to fill spots. And companies we also have the central government stimulus is wearing off. And so with all three of those things happening, it’s a really rough period for consumers. And for companies. So we had what’s called the New York Fed Manufacturing Index come in today and excel from a a month reading is 43. This month’s reading is 18. Anything above zero is grow. So it’s still growing, but it’s slowed down dramatically. Companies, manufacturing companies are seeing things slow down. This is because of things like new orders. Slowing down. Shipments are slowing down. Orders that are on hold are rising. Consumers and manufacturers have started to feel it dramatically in August.

 

WSN: Okay. And the other thing we want to ask you about is oil, which is related to consumer behavior. I have noticed that Brent crude is $69 a barrel. WTI dropped to $67 per barrel. It’s been three days of declines. What are your expectations in terms of all prices? Is this the beginning of a downward trend?

 

TN: We’ve included is kind of range trading for a few months. I think just today, OPEC announced that they’re going to deny Biden’s request to increase their output because of peer pressure and all prices. So we think that Cuba bounce between saying mid 60s and the 70s somewhere in that range for quite some time. If we do see things and trying to get worse, if we do see more coded lockdowns and restrictions, and of course, we see downside there. I’m hoping, although the rate of recovery is slowing down, our hope is that it stays positive.

 

Okay, that way will contingency pressure on cure prices, but it will be in a range because OPEC still have something like 6 million barrels a day sitting on the sidelines, so they can always come in to add additional resources to reduce prices if needed.

 

WSN: All right. Thank you for your time. That was Tony Nash, CEO of Complete Intelligence, BFM 89.9.