00:00Let's get more on the market implications of all this as well, once we do get that information and confirmation that Kevin Warsh could be the next Fed chair.
00:07Fiona Yang, Asia X Japan Equities Fund Manager at Invesco, joins us now.
00:11Fiona, it's great to have you on the program.
00:14The market reaction seems to be more the dollars bid up, yields are picking up a little bit here, stocks are falling.
00:21There is a bit of concern that he might be more hawkish than what was initially priced in on who the next Fed chair is going to be.
00:28What overall is your reaction to this?
00:34I think definitely given what's going on right now, there's a lot of uncertainty on the U.S. dollar trend as well as the interest rate environment and market, given how much it has run in 2025, no one really likes uncertainty.
00:48So if you look at the trend, 2025 might be a year of the tide lift off both.
00:53But 2026, I think it will be a year of dispersion.
00:57We will really need to act so as to pick the winners out of all of all this positive sentiment.
01:04So, I mean, if we're talking about a Fed that might be a bit more, I mean, leaning a little more hawkish than dovish, I'm just wondering what does that mean for, you know, this year of really deciphering what the winners are going to be?
01:20You know, before it was saying that, you know, it would have been EM Asia that would benefit from a slightly more dovish Fed.
01:27But what happens now?
01:29You know, if we start to see that, you know, interest rate cuts are being priced out of this market more, what would that mean for risk assets moving forward?
01:36Yeah, so I think, as I mentioned earlier, there will be a lot of uncertainty because this trend that we were betting on throughout 2025 might reverse this year.
01:48You know, the growth assets that have done extremely well, like the AI trend have benefited from the interest rate cut environment.
01:55Emerging market Asia equities have benefited from weakening U.S. dollar as well as a lower interest rate, allowing the central banks across Asia to really act on this lower rates environment to create a cyclical upturn for their economy through cutting local rates.
02:12So with the potentially more dovish Fed, a lot of this could actually reverse.
02:20We will have more clarity within the next 12 to 24 hours.
02:25And that's that's my take on that.
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