YouSaid · the spoken record

Patrick Perret-Green

lines on the record: 125
first: 2024-06-06
most recent: 2024-06-06
sittings or episodes: 1
sources: podcast

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“Go, well, okay, that was quite interesting, but it's got no practical application whatsoever. That's what you keep on doing, you know, keep on learning. Well, the day I'm not interested in doing that is the day I know it's time for me to say adieu.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“War gaming for one away description. What do we do if this happens? What do we do if that happens? And you're correct. And that's, and if you are, that's when you really optimize things. Because you've already got a game plan. You're not going in blind. And a lot of the time the daily statistics and stuff, it's just noise. So I spent probably at least half my day just reading. Going back and forth, going right, okay. And then trying to come up. Often I find I'm just going down an empty rabbit hole.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“40 years at the 40 years at two and a half. So, but they're also very liquid, you know, so you have to, you either have to be very, very good at what you do. But it really is, they really are only for professional trainers and investors. I wouldn't, you know, not for the man in the street, but it's worth bearing in mind about these potential. So I come again, I keep on coming back to the whiteboard argument. Put up these various different ideas. They're in the background, and at some point they might become relevant. They might never happen. But it's always worth chucking, bouncing those ideas around.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Well, no, I mean, if I was an institutional investor, I was a pension fund manager in Japan, as I was talking about earlier on, I'd be actually looking to do a bit of liability management and start to buy some of those long-lotted bonds because, okay, even a declining population, that sort of rate return, given historic, you know, if we presume that Japanese inflation is probably going to stay, revert back to around zero. Then locking in a two and a half percent return is a prudent sensible thing in terms of managing my liabilities on a pension fund. So there are trades and there are investments and the two are very different. So if you're a liability, if you're a pension fund manager, yes, you absolutely should be looking at non-dated JTBs now”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“There are levels we saw pre GFC. We're in that sort of territory. JGBLY playing catch-up to those sorts of levels. So it's, you know, I hate it when people on Twitter, they put out a chart and you go like, okay, that's about a year. But let's just put it over the past 20 years.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, I don't dislike it. The price action's rubbish at the moment. So, you know, come back, I've had a few days off, you come back, you look at it, and you go like, oh, I watched the price section, I'll take it easy. I don't particularly want to sell it here. I do think we can talk about JTBs for JGBs for quite some time because you forget about 10 years, but even the long end has been going up the 30-year bonds. So I did ask about a month ago, is this going to be an anchor on global bond yields? And it has proved to be. But again, that is short-term noise. But when we look at, we'll get the chart for it as well. But when you look on the 20-year perspective, it just looks like JTB yields are actually last catching up with the rest of the world. So compared to where everything was in like 2006, 2007, so Bonnie in the UK and US, a large in Australia.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“equities to the parson week or two week and a half or Japanese equities that maybe the rest of the world should start paying attention to those and just got to be a little bit cautious and on that point I think I should up”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Rather than here we go. I mean, I had a nice call in sort of beginning of May because it was like the European Economic Surprise Index was a US economic surprise. Now you had treasuries at like 465 and the dollar was strong and they were just ignoring it and then we had that so we got a nice rally down at like 4.30 and here we are we've backed all the way up so you know that's quite a nice little two week trade but it's there's there isn't any big theme at the moment it's not like no this is a major turning point we're not in a super tanker point within markets i think that's the thing when you just get you know you don't sometimes you get on things things and just go right i'm going to go with this and stove it okay people in equities have gone with it and stayed with it but we're also getting divergences now which suggests that when you look at you know what's happened to chinese”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, but then by the middle of February, I was thinking, well, that's reasonable. We've had a good enough backup in yields. And okay, yields then went up higher than I thought they would be. And I know it's basically been, I call it, you have it in baseball as well. Basically, I'm batting for singles. Or you'd have a batting for hits. You know, I'm talking about a cricket analogy. We're batting for singles. We take a single run. You're getting your hit. And it's not you can't be going out looking for the home run. So it's much more of these that currency pair looks out of line versus interest rates. Maybe I'm going to get 1% or 2% out of that. That interest rate in, let's say, the UK versus US is looking either over an optimistic or excessively pessimistic given the divergences. So it's been much more of that sort of nip and nip and tuck type strategy.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“I mean, the people on the other side are people who are running the ETF are making the money, so you know what I'm saying is that overall, there's lots of stuff out there that makes you feel like quite uneasy at the moment. Maybe I'm just, you know. But I just think one has to stand back. I think this is, as I said at the very outset, it's trying to find a narrative. And I think we're at a point now where it is very confusing still. I would never know a time where so many people are sort of scratching their heads, really. You know, it's often quite usual when an interest rate's peak it can be extremely boring at times. So it's a lot of a lot of stuff I've been doing this year, apart from the start of the year when I was saying to my clients, no, expectations about interest rates have gone too far.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“The risk guys were doing it two years ago, and that was the time to do it. And by the time everyone knows about it, it's kind of over because there's no one left to join the trade. It's a sad thing to say. And, you know, in my much less experience than you, I've also observed that to some degree. Yeah, NVIDIA, those ETFs, I think they kind of kill you on the volatility because even if NVIDIA goes up, oh, I don't want to make the But if NVIDIA goes up. $10 and then goes down $10. If you own the video, you'll be flat, but you could lose money on these leverage things for a reason I don't fully understand. But you're basically short volatility. Of course, if NVIDIA goes to people on the other hand,”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“And you just go like. I mean, I've saved I've been in this business far too long and I've seen a man in the street basically. You know, whenever the man in the street thinks something's a good idea, it's normally not. And the rich guys are already heading out the door, scurrying off to the hills.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“I hedge fund first of all. Oh, you know, a hedge fund in ticket, but over what even, yeah. I mean, I see the sort of someone's promoting now. It's like the leveraged NVIDIA ETF.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“But what I'm saying is still the disruption system. I mean, you know, and if, but that's all very well and good, but if you're running a fund, you could not be running one the next day.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“The academic answer would be the Federal Reserve. And a lot of the major financial institutions are set up to borrow at the discount window, but it's a stigma. The practical answer is the federal home loan bank.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Where Funding access and I say that away around another to the normal world and it's like well where's your basic funding access? Your six months plan say your parents.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“So, you know, but again, If I was the chief risk officer A place. Well, I hate seeing that because then I'd have to be the gamekeeper, but I really love being a poacher. It's the idea of, you know, warrior risks of your book. I'm going to my pork pounding manager, my traders. Do you really know what you risk in your book is? I mean, okay, these are micro things. So we're getting very, very sort of hedgy specific type stuff.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Just like I was saying, people normalize March 2020 was exceptional. So in bond markets, it was horrendous. You had like literally things were going all over the place. Futures could be rallying or selling off and bonds could be selling off and futures rally. That's why the Fed came in and just bought like $700 billion of bonds a day. Memories fade. So that's over four years ago now. There's lots of people who actually started work since on the street and they didn't even know what the repo crisis was like in 2019.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Deposits that are checkable, instant liquidity. There's an argument that, I mean, you look at the ratios of reserves versus instantly available liquidity at banks, you could argue that they actually argue that banks actually need to keep more reserves. And what happens is in times like that, so even though ostensibly the pool of reserves is large, banks hoard those reserves. So they keep them on their balance sheet and they basically go, Well, actually, we're not lending our liquidity out to other people, we're just going to hoard it. So it's a big, the liquidity debate is a big one. And that's another, again, we call it, we should really call it a date. It's the final, I mean, I'd say that's the final thing to put on your whiteboard. Just be very, very aware about liquidity because at time, you know.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“But the world is just saying, I know, but the history, I have not seen one central banker or regulator come out and say, Given the size of the marketable treasury market, which is now twenty seven or twenty eight brilliant dollars, what is the adequate level of reserves for that? Which I think is far more relevant than talking about nominal GDP because debt as a percentage of GDP is so much greater. So we've got a greater pool of debt relative to an underlying pool of liquidity. So we look at those ratios and then we really asked, are you already getting to danger territory? So it was over time as reserves for. And there's another aspect of reserves that people don't give enough credence. Actually, the Fed has done some research on this as well. I think it was the Kansas Federal, St. Louis. And because of the rise in...”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Large should fed reserves because it comes out and says, oh, it's at least 10% GDP. Okay, nominal GDP. That's margin of safety or whatever.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Look at three banks. It's the non banks, which are the problems. This is the lending out there. So basically your pension fund gets hit because everyone's gone into, I want private equity, I want unlisted assets. But it's a major issue for the financial stability board and if you likes the IMF as well, I've written about it. So there's a broad, even the extent of leverage within markets. So we talk about the basis trade. And, you know, the whole US liquidity argument about what happens with things. So we go back to September 19 when we had the repo crisis because the Fed was overly complacent about the underlying amount of liquidity that a market required to finance things. So we'll drag you on now, but for example, there's a big debate about how”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“I said, no. Yeah. No, okay, that's an extreme example. But overall, I mean, I'm just saying, you know, people have to keep a close eye on liquidity. They've got all this stuff at repo. We've got all the tightening up and stuff at T plus 1. We've seen various issues with banks at times.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Basically a huge amount of FX trading is a basis trade, a de facto basis trade. So there's lots of multiple trillions of positions built up, but all around the arbitrage or nicking little Metzau. How much is actually pure directional is debatable? I'd say a tiny, actually disappointing portion of FX exposure is actually directional. Most of it is vulgarized and things like that. The question is, what happens when Bol turns up? And that's the other interesting question, because global ethic bowls are very low, they fallen quite a lot. We talk about people talk about VIX, even move the interest rate volatility is also coming off. No, so I'm going to finish off now. We talk about these hypothetical questions, the whiteboard. What do you put up on the whiteboard and say things that we have to watch out for?”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Well, no, it was just road retreat. That's what I'm saying because basically, you know, I can borrow a spa, but to buy dollar CNH, but the forward's still lower. So it's, I mean, it's much of a much just to me. There's just like people who are guys out there who are the experts in this and they're arbitraging everything away and doing these trades. But like basically think about it as you hear about the base.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Everything's priced. So I tend to be eyed away, you're paying your option premium either way. I tend to be much, I'm much more of a Luddite. I just tend to go in and do spot and literally do my overnight funding. I know I'm going to pay money. There's always a cost to carry.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Good for Chinese earnings expectations. So, Patrick, the forward, the current Yuan to the dollar is 7.27. The forward rate is 7.08. So you're bullish on the dollar against the Chinese yuan. What do you like more? Selling a one-year put at 708 at the money or buying a one-year call at the money at”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Good part of the mid teens, so they were very boring, they could disappoint a little bit. I mean, again, as I said at the end, it's not my core strength. If China does go down the route, it could fear it might, then I think that's hard to think that that's good news for global equity and certainly earnings expectations.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, from a practical perspective. But always on the treasury, they've always met the cap. So it's like a practical element. And ultimately over time, as they did back in 2014, 2017, 2018, the whole intention was when they stopped doing balance sheet reduction, they kept it going with the NBS. So the whole idea was we don't want to, we don't implicitly feel good about having credit on our balance sheet and we just want to have pure treasuries. They keep on failing to get back there and they always will. My point being is there's still reasonable executive or balance sheet reduction in the background. Maybe you could just actually situation where equity's just go sideways and bore the head out of everybody. They did. Certain periods of time”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Well, because they're still talking about their earnings growth. So what you could find is don't let's not forget. I mean, everyone's going, oh, the Fed has tapered. But the reality is they've only done it on treasuries. And it was a very practical reason for that. So they're still going to be training liquidity over time. And if the housing activity picks up and interest rates fall and mortgage activity picks up, prepayments pick up, so therefore the mortgage portfolio goes off quicker. At the same time, they're cutting, they reduce down from six up to 60 billion a month to 25 billion. There's a very good reason why they chose 25. It's because later on this year, we've only got just over 25 billion maturing some months because of the nature of this open market holdings of US treasuries.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. And the stock market could interpret that as a soft landing. For example, 2015, people refer to it as a mid-cycle slowdown, there was a recession in some manufacturing cyclical industries, but the US economy did not enter a recession. Likewise, I think we've had a slowdown from very high rates of growth to less high rates of growth. And the market, as well as inflation has fallen at the same time. So real growth has actually been positive and been getting more positive. And the stock market has interpreted that very favorably. So do you think this scenario, which it sounds like your base case of sluggish growth, but as well as falling inflation, do you think the stock market will interpret that as a soft landing as it has over the past year and a half?”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Hopefully, if that's the case, well, then the logical thing is another China is another downside for potential downside force on global interest rates as well. And I don't, to my mind, markets have sort of got a bit about it at the moment. And they shouldn't be because it's, I mean, that would feed through to global equities as well because it means pressure on margins for many, many industries. And correspondingly, not just margins, but investment and everything based on it. So everyone's going about tech and AI and stuff like that. But if we're not doing so well, we're not going to be investing so much. I'm talking about the Great Recession. Maybe it's just going to be back to mediocre growth. Moderate inflation.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“That stopped the Fed and eventually they hiked by 25 basis points in the December of 2015. And then the following year, there was other events like Brexit and stuff like that. In 2016, the only hike by another 25, despite having again forecasted, well, no, we're at that point. We're at a different stage of the cycle where rates are up at the highs. We're at the end of the tightening cycle.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“The one year forward rate would be 3% lower, but But overall, let's keep it straight. Let's talk about vanilla. Where do you think the spot rate's going to be? So let's say Dollar China goes to seven fifty seven seventy. It's a nasty deflationary shock for the rest of the world. And you should get people to go back. In 2015, when they did devalue, you go back to the start of the year. And at the beginning of 2015, the Fed was thinking, you know, we race because under Bananca they'd already started doing projections. They thought they were going to raise rates by about 1% over 2015. Then eventually data was a bit softer. Then China devalued initially in July, August of 2015.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“But it's all works out in the math. So it's, I mean, even when you're training options, basically you do an option, you probably delta hedge it. So you're going to have some, you're going to have some funding exposure. It's not just nearer funding exposure.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“You know what I mean Pour anything hot, and it just melts. It's nothing. So, you know, all that training, that on the job training, that interaction, that's where you really learn your stuff when you're getting going. And, you know, it's working from home. I mean, I suppose the best thing I read about working from home recently was if you're working from home, you're 35% more likely to be made redundant. Now, some people may think that's horrible, but you know, if I'm running a business, no, I won't bums on seats. You in the door, okay, trading flows are different. They basically, as soon as they could, they were back in five days away. But overall, that mentality, that being in the room, and it doesn't matter where you are, that being in the room, it's good for one, it's good for one.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“I run my own business, it's a bit different. If I was working with somebody, then yeah, I mean, I was running inside of business. No, I will, you know. There's a lot of effects of how do you, I mean, as I told, I was very passionate, I'm passionate believer in training and mentoring and being people are. And it was one of the air parts of my, you know, when I worked for big banks that gave me actually. Some of the greatest satisfaction. How do you expect young people to start their careers, spending most of their time working at home, when you walk into an office, you're effectively as useful as a chocolate teapot?”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“A normal word, is it? After a very disruptive, unusual experience which basically just threw a wrench in the engine and disrupted everything. So data spews out, it's all incoherent. All these other multiple factors like excess monetary stimulus, excess physical stimulus, wars, the whole shebang. And it does feel like overall we just people are getting back to normal. We're going back to work. No, you can't work from home anymore.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“And then, if you translate that across. So if China does go, well, actually, are you better off doing it in like Aussie dollar or kiwi dollar, which not so much kiwi dollar, but let's say Aussie dollar hypothetically, because it's much, it's very widely traded. And you've got greater depth. So you use it as a proxy. What do I use as a proxy? Well, that's the way we're working in sort of that sort of FX world. But I'm trying to get across is just finishing off. Yeah, people, I think, are too relaxed about the China impact overall. I think overall, more broadly, we are normalizing.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“A huge amount of the business is done in options, so it's on the strikes and all that sort of stuff. Again, I'm not an options expert. I have an idea. And then I'll go to the guy who actually knows his Vegas and his. Betas and all Gammas, he's like, you know, all that sort of stuff. I'll leave, you know, I'll go and ask the professional about what's the best way to structure that and where's the value in, is it a corpse spread or whatever it is? Is it a volt trade? But overall.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“They can do the trade, somehow do it in options, they can do it. A lot of it's so much of the FX market's done in options these days.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Your bear on the Chinese Yuan CNY CNH RMB, however people want to put it, it's very similar to Chinese currency. I gather being long the dollar and basically borrowing Chinese yuan to buy US dollar assets is a positive carry trade because the US has higher interest rates than yeah but”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so for the Chinese to come around, look, look at the yen, don't go ask about our currency. We've got plenty of political. Arguments that you can get away with”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“I think one has to be extremely careful about it. And overall, I mean, it depends what currency place you put against. You just put it against, is it against Aussie Yen or is it something like that? Because the yen has already done so much. And this is another factor for the Chinese. They look at the yen and they look at those charts. You know, you can look at JB yields, which are going out like that, seeing Chinese government bond yields, which are going down like that. And the yield differential is an all-time record low and yet CNHNY is at the highest level since 2008.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Concert used to wine by my Australian colleagues when I work for a large Australian bank. You have to remember that the population of Australia is just that of a large city in China.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“I think one year, one year, one year in OIS is around about 60 basis points at the moment. If that goes to 1% and the overnight rates, the Magnitude 200 go, Haiki, bang, here he was. Oh, that nonsense 10 or rubbish nonsense. Actually, we might take interest rates to 75 basis points to 1%. Then that could be the, you know, at the same time, you've got easing elsewhere. So that's when you get this sort of thing. So for me, I know particularly yen trade recommendations at the moment because it's not really, I'm much more comfortable with the signals on CNH and therefore rolling into that either not so much things like because I ran Asia rates and FX strategy when I was at city. So you look at like Korean one versus yen as a very high correlation. But then you look at other, you know, so it's things like the Aussie and the Kiwi. And if China goes, they just get ultimately they get spanked. I mean, they like to think themselves as separate nations, but it's like.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Japan would be quite significant. But in FX terms, that would have a big move for this. Because when they're all FX players, they're very much short-end focused in terms of, it's all about overnight and funding. So it's the overnight shifts, then all of a sudden that's the danger.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“But the narrative, the popular narrative, they're still buying bonds and stuff like that. But so it's not a thing I'm keeping a very close eye on because the Bank of Japan balance sheet starts, if it does start to come off, then at the edges, these marginal effects. So for me here, being long done a dollar yen is basically picking up pennies in front of a steamroller, you can get paid for it, it might go nicely for a few days. But if you get either, let's say the hypothetical payroll number or cracking on US data or something like that, and correspond oppositely. Bank of Japan goes, actually, we're just going to raise short term rates given we've got 30 year yields in two and a quarter, 40 yields of two and a half, 10 years at 110, raising overnight rate to fifty or seventy five.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“I get care of yesterday. We're talking about rates getting back closer to two. So if Japan's at one, which they should, you know, that's where they should be. I don't think short rates at one and have a more flatter yield curve would be particularly disruptive. But I do feel like with Euro yen above 170 and dollar yen, we could talk about there's still printing money, but actually the other thing I'm keeping a close eye on is the Bank of Japan's balance sheet, which is no longer expanding. So when they talk about HAGVs, it's merely reinvestment. It's stopped in Japan. There's a bit of narrative out there. So you say Bank of Japan's buying bonds. When you see that headline, they're not really buying bonds. They're not a net buyer.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, but those interest rate differentials are narrowing quite rapidly. Okay, still need rates to go up at the front end. But when you look at longer data deals, so I still go back to those longer data yields in JGBs. Well, 15 year, 15 Japan, or JGBs, off 30 odd basis points over bunts. So I'm a Japanese investor. Why on earth do I want to own Bunts or European fixed income here? Or US fixed income for that matter when I, you know, if I'm on a hedge basis? I suppose the question is whether we're looking at Japan, when does Japan cease to become the funding currency of choice using CNY or CNH as a funding currency is not really practical, but is it going to be the euro? So if European rates, so we see a lot of stalk about, okay, even the hawks are talking about the possibility of three cups this year. And there's a lot of other stuff talking about that. ECB's own projections.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT