00:01Mark, we have been preoccupied by software stocks, the supposed losers from the AI trade.
00:08Today we get to preoccupy once more with data.
00:11There was retail sales yesterday, came in a little weaker than expected.
00:14How are you setting things up for the jobs report later on today?
00:19Yeah, I think we've got the jobs report today and we've got CPI later on this week.
00:23On the back of retail sales, I'm slightly worried, we've talked about this a bit,
00:27that I think that the data is going to have a little bit of a stagflationary whiff about it.
00:31As I said, I actually, I'm generally pretty bullish on global growth this year.
00:35And so I think this phase passes, but I think that's the dynamic we get this week
00:38between retail sales, the jobs report today and CPI Friday.
00:42So in terms of markets reaction to that, maybe it's a little bit more into next week.
00:46But I think that stagflationary idea is going to worry people a little bit.
00:49See ongoing steepness in the yield curve as a result.
00:53Something we've talked about this week, I've been shocked by the strength in long-end bonds.
00:57I'm on the back foot there, but I don't see that kind of sustaining.
01:01Maybe in the short-term long-end bonds do OK if we get very weak data today.
01:05But I think that the secondary move, once we get CPI and into next week, will be steepness again.
01:10And because of that, I still think the dollar probably stays under pressure.
01:12And I reckon the dynamic is not great for stocks and risk assets.
01:17OK, yeah, to your point, Mark, good morning.
01:19The dollar down, the Bloomberg dollar index, at least down two tenths of a percent.
01:22We're seeing a rally for the Japanese yen up seven tenths of a percent.
01:24Is this a short squeeze for the yen, Mark?
01:27What do you make of the trading action around the FX space, particularly in Japan?
01:33Yeah, what's happened in the yen is really remarkable because it's, you know, quite contrary to what most people expected.
01:41You know, it's one of those things where a short squeeze starts developing its own narrative.
01:46I'm seeing increasing reports come out from the sell side kind of explaining this as the big material shift in
01:52the yen.
01:53Now, we know that always the last six years, the macro community is dying to get on the long yen
01:58trade.
01:59They've called 20 of the last zero big turns in the yen.
02:03And, you know, this could be another one.
02:05What I found in these dynamics is they can last for some period of time.
02:09So even though the yen may go back into a lot, you know, it's been in a depreciation trend for
02:13the last six years, it can get rallies that last for a couple of months.
02:17And it kind of feels like that might be the dynamic here where people are excited, partially because people are
02:22expressing it via dollar yen and dollar has its own bearish scenarios.
02:26Personally, I think that the dollar weakness is the much longer term sustainable one.
02:31But I think people will see more dollar yen downside in the short term.
02:34Mark, how do you feel about the broader price action?
02:39I'm hating it.
02:40I'm feeling really grumpy at the moment, Guy.
02:43I get grumpy when I don't feel I understand what's going on.
02:46You know, it goes back to being when you're trading and you're making money, you're calling things right and you
02:51start calling more things right because you start seeing it clearly.
02:53When you lose money, you get defensive, you start making poor decisions, you get cortisol in your brain.
02:58It's the same in the seat now.
02:59You feel responsible for the kind of the calls you make.
03:01At the moment, things aren't making sense to me.
03:03And I find when things aren't making sense at the moment, and it's not because I'm losing money because I
03:07don't have a P&L anymore.
03:09It feels that that's when things are feeling more dodgy and you get more dislocations.
03:13Now, those dislocations can go in either direction.
03:16But given the backdrop of the data expectations we get and the rotation we're seeing in tech stocks, I am
03:21worried that equities have a big move downside in the next couple of weeks.
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