you know were talking during the break that you think that ecb and what they said this week was a big deal or the forward guidance that theyre likely to continue hiking rates by 50 basis points for several further meetings is a risk because if you look at the inflation dynamics in europe theyre different to the inflation dynamics in the us its much more supply side driven in europe namely food and energy and the remedy for that is not necessarily interest rate hikes its about supply side measures or encouraging investment in those key sectors and so its effectively likely to further exacerbate the downturn economically and it may not necessarily resolve the main sources of inflation so what would be the trade is it something you can trade on as far as thats concerned because while perhaps it might be a policy error well find out in hindsight it looks like rates are still going to go up well theres two angles that we may look at whose currency so euro dollar of the euro weakness early part of the year was a big trade weve seeing quite a sharp reversal of that now and that may well continue because ultimately its a function of rate differentials with the us and if the ecb is hiking at a faster pace it laps the fed early next year then theres greater bid fall for european yields that ethics is one to watch the second thing is european equities had a good third quarter and a good start to this fourth quarter that can reverse now because not only have you got a stronger euro which removes the tailwind of weaker currency for imported earnings but also this concern around a sharper slowdown for domestic economic factors which also hits the earnings outlook for european companies like weve seen massive gyrations now were seeing some repricing as well across asset classes when you take a look at the movements are theyre reflecting enough the hawkish ness pretty much across central banks around the world if you look at the global equity markets top down you could argue that market risk premiums still too low when you combine the messages that came out of the ecb as well as the fomc earlier this week so there is the prospects of further volatility in equity markets over the coming months but at the same time if inflation data continues to moderates dont be surprised if the tone of the messaging changes in meetings early next year as well so what is the best hedge against vol its a really great question i mean ultimately youre looking for parts of the market which are under invested have their own macro drivers which are generally constructive and in times gone by performed reasonably well during periods of either stagflation or just outright inflation then you go back to the energy in the commodities complex which actually also gets another capitalistic chinas reopening as a result of a removal of zero cove it measures really gathers pace mark i want to talk to you about something that you brought up here and some of your research that youve sent us and this is a risk thats not too obvious to markets dollar liquidity drying up right as you know central banks tighten theres also a mechanical aspect to this right how does that obviously apart from maybe a stronger dollar how does that else how might that bite investors i mean ultimately shrinking dollar liquidity globally is bad for all financial assets because most financial assets of note are denominated in a dollar based currency and that withdrawal of liquidity puts a strain on financial asset prices and ultimately what that means is it will go to places which give you the highest risk adjusted yields or the highest risk adjusted return and so that starving of liquidity means that youre going to see a wider dispersion of financial returns across the different asset classes back to the earlier point as well thats tied us together floating rates what do you do with that yeah i mean floating rates is a good diversify in an environment where interest rates are rising where inflation is not coming down very very quickly from a high base and given that the that the bonds effectively price and the rates are priced off of the base rate plus the spread if that base rate keeps rising then they should perform reasonably well the other point is that weve got this divergence opening up between what the fed is telling it and the market is going to do namely a terminal rate of about 5 percent no rate cuts next year its always the market pricing current is for a terminal at about four point eighty five percent with at least 50 or 60 basis points of rate cuts in the second half of next year that divergence if ultimately gets closed by the market moving towards the fed should be supportive of floating rate notes rand in terms of valuations there theres still room there is what youre saying that hasnt been fully priced yet maybe stagflation next year just very quickly well lets see if the fed is right to the market is wrong then yes there is upside