well im guessing well chinas a big part of the story the fed as well the strong dollar what whats whats whats dominating your conversations with clients these days right now most of the focus remains on inflation on what the path of inflation is going to look like what thats what thats going to mean for the fed how how much fed hikes are we gonna have to see what the terminal rate will be that really has been the key focus especially with just how many surprises weve had the last number of months in terms of upside surprise on inflation figures and just after everyone thought that inflation had peaked and was going to begin to decelerate you see another another upside surprise in core inflation that really has been the dominating factor for markets and made up our client conversations so did this week change anything for you at all alex in your clients you know is there a sense that its going to be higher for longer and what does this mean when it comes to asset allocation yeah i would say that it has id say the combination of jackson hole or the fed reiterated its hawkish stance and then this this data point of course is only one month of data point but just seeing how much markets have have repriced really all all the way along along the curve it did remove some of the expectations that we were really past this peak in fed hawkishness and for us we had long expected inflation to to remain somewhat of a problem that wages could be sticky that rates might have to stay higher higher for longer so that has put us in a bit more of a cautious position from an asset allocation perspective for sophie kamaruddin we still like we silly bonds over equities and particularly now with the rise in rates we see them as as more attractive its a much more attractive entry point right now where in the fixed income universe thats quite thats quite diverse there well focus on on high quality credits so high quality ie at the shorter end of the spectrum just because the yields have moved up a lot so youre getting equity like returns without taking a significant amount duration risk but we actually do even look at longer dated bonds just because of the downside protection you get in your portfolio if we do see a recession the 10 year tenure yields are likely to fall substantially from current levels so we think that offer somewhat of a downside protection to a portfolio but alex im just looking at correlations they really snap back quite significantly and everythings moving a lot tighter with each other these days how useful are bonds as a as a hedge to your other point at this point in time not cash for example yeah front sure shorter and yields have become a bit more of a gamble because theyre moving quite theyre moving with a lot of volatility around inflation prancing around fed and fed policy expectations longer dated we do think that if we were to face and we are we are likely to face an economic downturn if we are to face a recession that those correlations would revert back to the long term trend and you would see longer term yields drop because historically historically recessions have been disinflationary so we do think it offers some recessionary protection but youre right at the moment right now with real yields on the rise everything has been down the dollar has really been the only thing that has outperformed if we see real yields continue to rise continued volatility at the front end it does make for a difficult backdrop particular for say a 60 40 investor yeah lets talk about the 60 factor here whats going to take for you to maybe be a bit more bullish when it comes to equities what signs are you looking for that maybe we reached a bottom so well likely have to see well i could see further downgrades to earnings expectations thats thats the key thing that were looking for we do think growth is going to be weaker next year i think theres still quite a bit a wide range of how weak and whether or not we tilt into recession but we dont yet think that earnings expectations have accounted for that weaker growth outlook so as we see earnings expectations come down and valuations reprice a bit a bit lower than well see that is a more positive sign that we can turn a more positive one of your other favorites at least or one of the few favorites at least you have in the chinese equity market clean energy and tech hardware how strongly do you feel about that conviction yet despite despite the headwinds in china from covid zero policies and from the property sector and we have had a fairly cautious outlook on growth and likely remain that way for next year there have still been some pockets that have that have done well both from a real hard data perspective and as well from a market perspective we do think that theres going to be continued stimulus and support for tech hardware particularly areas where china is trying to achieve selfsufficiency semiconductors are quite dominant in the supply chain the battery supply chain its hard to find its hard to find pockets where valuations are attractive but we think over the over the longer term that these still these these are good places to invest