are we done with the tightening cycle or set something we can ride with already at this point   clearly inflation is dropping and that  s been happening for a while the fed tonight is kind of 5050 i think the thing to look at after powell  s statement tonight is essentially where the market is expecting rate cuts because right now the market is telling us in may of next year we will get a rate cut that  s probably a little bit too optimistic i  d be surprised if powell came out and gave a dovish statement it  s nearly certain he will raise rates tonight but everyone will be looking at the press conference we seen inflation drop in the us australia europe uk last week so it is dropping everywhere but how do you actually quantify the lag effect of how we will get to 2 because that  s still a long way off yvonne in terms of what you are watching in the etf world flows where is the most conviction our bond still kind of a place to be thomas the answer that is yes but we have seen marginal shifting over the last couple of months early june we were talking to clients so we were at this investment piece rotating out of tech into broad economy us financials equal weighted s  p 500 energy etc we  ve seen a lot of flow going into those spaces and moving out of technology a little bit of sell the news story in terms of what  s happening with earnings essentially we have seen a big shift in equities over the last month which is something we haven  t seen for the entirety of the year fixed income in terms of secular trends will continue with rates the way they are but there has been chasing and us equities over the last month or two rishaad the discourse maybe how long interest rates to remain high what  s the positioning how has the positioning changed and the next is hawkish powell has see also changed the narrative thomas that  s a great question we will get to more color on that later what i  m looking at tonight is how the swaps market reacts to his statements around the make cut situation for us we can  t really see that happening we keep talking about higher for longer i think the market is way too dovish in their expectation for rate cuts and we will probably get a rate cut possibility of 5050 i think may next year start expecting rate cuts is way too early s  p 500 5 off alltime highs we were at that level when rates are at zero something is a little bit amiss david that  s a good point to make which wasn  t long ago china has a big part of the conversation a big day yesterday what  s your that for how long it lasts thomas the last couple of days have been short covering there  s been a lot of promises made from the bureau when the statements come out global investors need to position to not be as underweight in case they follow through and get really aggressive in terms of their monetary and fiscal expansion we are expecting fiscal stimulus and monetary stimulus in certain sectors of the market but broadly we are not expecting this huge credit growth we have seen in the past for us the second half i still think china will outperform most markets because of the valuations in the fact that investors have been so underweight as we said before i think global investors are not looking to china as the growth engine of the world or even of asia in the next years that will be in places like india or indonesia to summarize it is a shortterm tactical type of trade but optimistic for the second half rishaad if it will outperform in the second half of the year what will drive that and what would a faltering us economy mean for china given that you set on radio a short while ago the economic prospects are not as rosy for the us as investors and markets belief thomas i didn  t know you were listening in on that certainly if you look at the manufacturing data and even retail sales data and gdp projections for the us they are coming down earnings have been good but if you look at the earnings we have seen reporter and are recording this week it  s financials and tech which are very strong tailwinds financials more because they  ve come from a low base they  ve got deposits from smaller banks and interest rates and then tech you have this ai type of tailwind the second half into august we will see more from the real economy places like walmart target etc and see retail investors are doing to answer your questions i think the us economy is not quite as rosy as what is being position for at the moment and then where do you take a rotation into places like emerging markets in china where you kind of have the opposite situation the bulls have capitulated in the us the bears have capitulated i  m trying to take an opposite view from a tactical perspective david while we figure out the tactical and back to your earlier point that it  s not china maybe is the likes of indonesia and india the notion that the markets are doing well because china isn  t is that an accurate description of what  s going on or is that almost structural in your view indonesia and india thomas at the margin there has been rotation from china into places like india and indonesia but if you look at the portfolio and what they are benchmarked to china is a big proportion i think it  s more of a case of being over  overweight cash rotating into the us as opposed to taking that cash pile and putting it into india and indonesia i think india will grow indonesia will grow as a percentage of the benchmark but that  s a very longterm story i think it  s more sitting in cash and waiting to get redeployed at this point yvonne you mentioned japan in terms of the flows that you are seeing is this something that you think is more of a rotation out of china after this massive rally that leucine it is still possible to chase it or is it too late now thomas in the shortterm it is a little bit difficult to chase the rally we  ve seen this year it caught a lot of investors by surprise and we have seen significant inflows from foreign investors over the last couple of months if you look at what  s happening and was changing structurally if you just look at gdp growth over the next couple of years you will have three times the 10 year average in terms of gdp growth you are seeing structural changes there and changes in consumer sentiment and behavior but the rally has been very strong and very sharp and particularly moving into the boj decision on friday i think there is a high possibility that we see pullback but that will probably be bought by longerterm investors