00:00What do you think? Is the market overestimating the likelihood of Fed easing this year?
00:06Well, yes, if you look at just the data.
00:09For example, I mean, we're going to get fourth quarter GDP this week,
00:12but the GDP now cast is tracking something like 3.6%.
00:16This really doesn't sound like, you know, the US economy is in need of easing, right?
00:21And also the inflation, yes, it's a little bit less than expected,
00:24but it's still 2.5% on the core print.
00:26So from a cyclical perspective, actually, the Fed does not really need to ease.
00:30But the market still has this easing bias because of a variety of other reasons.
00:35So for us, in our view, the dollar still should remain soft due to this other policy uncertainty.
00:41Yeah, I was going to ask you, do you think, you know,
00:46when you try to figure out, Joey, the path of the US dollar,
00:49do economics matter at this point in time?
00:54Yeah, you know, when we think about a dollar, we use like this framework,
00:57quite a simple framework, but it's basically cyclical, structural, political.
01:00So at any point in time, you know, one factor or another might be more important.
01:05It just so happens that right now the political and structural factors
01:08probably matter more than the cyclical factors.
01:12So then what is the direction then that you're expecting for the greenback this year?
01:19Right.
01:20So we're saying that, you know, we think that the dollar should still remain under pressure
01:23because of these two other legs of the triangle, the political and the structural factors.
01:27For example, there's still all this talk about diversification away from the dollar
01:32or hedging of the dollar assets.
01:34So these are structural forces that will keep a lot of the positioning more on the short dollar side.
01:38But of course, as mentioned earlier, the cyclical forces are such that actually
01:41the dollar could still remain roughly supported.
01:43So all in all, we see dollar in this like range bound,
01:46but probably more on the lower end of the recent range.
01:51Does the weakness in the dollar mostly explain, Joey, the strength in the Japanese yen?
01:56It's where I want to get to here.
01:59You know, the rally seems to have come too fast, too soon.
02:05What do you do with the yen now?
02:06Do you fade this rally?
02:10I think the yen has some domestic situation going on as well.
02:15So recently, the election seems to have ushered in this narrative that, you know,
02:20with more of this majority, supermajority actually.
02:24So the government does not need to make any more political compromises.
02:27And so that reduces the likelihood of fiscal slippage.
02:31So that is a good news for the Japanese yen.
02:34However, our view is that, you know, going longer term, we actually still do not know how this
02:38government thinks about fiscal policy, about even monetary policy post-election.
02:43So I think there is still a lot of uncertainty that we need to get through.
02:47And, you know, time will tell whether there really is more fiscal consolidation or fiscal
02:51discipline coming in.
02:52So that's the second thing I hope to hear, to be clear.
02:52I'm going to see if you're not.
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