george boubouras is managing director and head of research and investment advisory at k2 asset management it was good to have you with us we actually got a pretty weak manufacturing number not to mention the yield curve is the most inverted in years so why are you still cautiously optimistic especially a slight overweight in the us markets is your call right now george yes good morning thanks for having me on exactly the journey here today is that expectations are nowhere where they were last year the resilience and aggregate economic numbers and the resilience in the margins of large corporate and the resilience in the downgrades they are there but nowhere near as bad we are trying to buy 2024 and 2025 earnings with the premise that the recession will be a shallow technical recession again there is resilience in the labor market and the core inflation numbers putting some concern but generally we are quite content that this set of data is consistent that earnings will grow at a long pace in 2024 and to overlay all of that developed markets it is very clear that consumer and business sentiment is low and fatigued however the conditions are nowhere near as bad as the sentiment indicators a combination of those factors suggests there is more predictability and that earnings will grow in 2024 but less than people thought partly because the down growth in 2023 is not as bad as people thought shery banks will report next week what are your expectations on that front and how will that square off with the fact that markets seem to be chasing those rate cuts from the fed george very quickly on the hawkish tone people dont believe it the rate cuts will always be there and priced in i just think people need to be cognizant that the federal reserve and central banks in the west want to keep it elevated for a little bit longer to really nip inflation in the bud having said that  on corporate america they have been very successful in protecting their margins and aggregate passing on price raises where they can its about the margin of compression they have challenges in the second half of this year versus the first half they have been resilient enough and very quickly the rally is broadening out for corporate america we are looking for signs of continuation of that again 2023 is depressed earnings versus 2024 its just not going to be as bad as we thought therefore we are buying those 2024 earnings we like the predictability of that is nothing to reinforce any guidance would be appreciated but we dont think in aggregate it is as bad as people have made it out to be until just a couple of months ago haidi he also like japan it does seem broadly going forward that the goldilocks narrative will continue to support japanese equities where do you see over to hades george the japan runup he would probably take a little bit off the table we like southeast asia as a player gets china so you would probably take a bit off japan at the margin the underweights are europe and the uk but japan is always going to be a little bit of a volatility event japan is the beneficiary of the and the us for that matter definitely asia exchina is the place to be on the riskon and us equities as well haidi how is emerging markets exchina impacted by china do you see that diverging george since march 2021 the chinese created softening risk the fact that the production fixed cost investment has been going on for vietnam thailand indonesia the margins are  and austria is a buffer but they will be the beneficiaries structurally going forward that is the sort of lay we have been having then you go into the fixed income side will not play emerging markets fixed income we will be doing unsecured credit in the developing world versus highyield they are structurally better off than where they have been pretty much for a good decade or so china has its own problems they need to get domestic demand going for obvious reasons and deal with the property issues that they have had to address which are quite severe the slowdown in china needs to be addressed with more stimulus and i suspect beijing will have to come up with some fiscal monetary policy or solutions to address what is going on there but they have lost the finite capital there will be there for the longterm shortterm plays into china