00:00Risks, of course, are myriad. Which ones do you think the market is not fully appreciating at the moment?
00:07The supply shock and the impacts on economic fundamentals and therefore asset prices in short.
00:12The markets were complacent going into this war.
00:15Right now there seems to be still a degree of complacency that things will be resolved swiftly enough
00:19and that the supply shock will be modest enough that once we see a resolution,
00:25and that's a huge if at this point in time, things will be sort of back off to the races
00:28and effectively stocks can be sort of bought again with confidence.
00:32I don't see any evidence just yet that we're seeing the downgrades in earnings expectations
00:36that will probably come through because of the supply shock.
00:40We're only just starting to see interest rate expectations shift.
00:43And this is coming at a time at least for Wall Street that was relying heavily on a rotation trade
00:47into cyclicals
00:48that was underpinned by a belief in resilient economic growth and a very tired tech trade
00:53which has more or less traded sideways for five or six months.
00:55So this looks like potentially the beginning of a significant drawdown.
00:59Of course, it all depends on the war.
01:01But things at this point in time look a little bit bearish to my eyes.
01:04Where would you be putting money with looking at gold set for the worst week in six years?
01:09Do you think that provides an attractive entry point if you think that there are sort of fundamentals that are
01:14still intact there?
01:17Not yet, but I think we'll see gold continue to drop and it will provide an extraordinary buying opportunity
01:26once I think it gets closer to the low fours, perhaps the high threes.
01:30And that's because gold is really trading as a derivative of interest rate expectations
01:33which still needs to be sort of priced for interest rate hikes or at least fewer rate cuts in the
01:38United States.
01:38And there is a mechanical drag on the gold price at the moment from the stronger US dollar
01:43which is because of effectively liquidity, positioning as well as the mechanical buying of US dollars
01:50that happens when oil prices climb.
01:51So I don't think this is going to play out.
01:53This downside pressure on gold is going to continue to play out.
01:56But eventually it's going to provide a very good entry opportunity for gold,
02:00especially because this crisis only magnifies the fact that we're in a very divided, multipolar, unstable world
02:08where the US is less reliable and that's ultimately what's underpinning the bull case for gold.
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