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00:00SEVERE, ALSO WITH SENTIMENT ACROSS THE REGION, AND THERE IS A POSSIBILITY THAT UNLIKE THE VERY SHORT REBOUND WE SAW IN SENTIMENT AFTER CHARLIE HEBDO, THIS COULD BE SOMETHING THAT IS MORE PROLONGED. AND THAT COULD WEIGH ON SENTIMENT. EARLY ON IN THE SEGMENT, YOU HAD SOMETHING ABOUT TERRORISM IN PARIS FALLING, SO I THINK THIS COULD BE A WEIGHT ON SENTIMENT AND ON GROWTH, AND AN ANALOGY MIGHT BE WHAT WINTERS IN THE U.S. DUE TO FIRST QUARTER GROWTH, AND IT HAS AN IMPACT, BUT FROM A MARKET POINT OF VIEW, I WOULD THINK ONE OF THE AREAS ITS MONETARY POLICY, BECAUSE THAT IS THE FIRST RESPONSE TO SLOWER GROWTH. ADDITIONAL STIMULUS. I WOULD EXPECT THAT TO COME FROM MONETARY POLICY, AND THAT DIVERGENCE IS OBVIOUSLY WHAT HAS BEEN FACTORED INTO EUROPE, BUT I WOULD EXPECT THAT TO BE SOMETHING THAT WOULD PLAY A PART HERE, AS WELL. JOE: ONE COUNTRY BENEFITING IS RUSSIA. U.S., EUROPE, AND RUSSIA ARE NOW PERCEIVED TO HAVE A CLEAR ENEMY. PEOPLE HAVE BEEN BUYING THE RUBLE. DO YOU BUY THE BULLISH STORY ON RUSSIA RIGHT NOW? KARTHIK: THERE ARE TWO W FACTORS, AND ONE IS THE RUSSIA -- THERE ARE TWO FACTORS, AND ONE IS RUSSIA. THE ODDS OF LIFTING SANCTIONS GOES UP AT THAT POINT. THE U.S. PROBABLY WILL NOT, SO I THINK UNDER THOSE CIRCLES AS IS, THERE IS A SENSE THAT -- SO I THINK UNDER THOSE CIRCUMSTANCES, THERE IS A SENSE -- ANY PROSPECT OF RESTORING CAPITAL MARKET ACCESS TO RUSSIAN CORPORATIONS AT SOME POINT NEXT YEAR WOULD HELP. AT THE SAME TIME -- ALIX: AND HAVE WE SEEN THAT REFLECTED SO FAR? IT SEEMS LIKE THE CAPITAL MARKETS HAVE ALREADY PRICED THAT INTO SOME EXTENT. WOULD YOU AGREE? KARTHIK: WHEN YOU COMPARE THE EARLY PART OF THE YEAR, WHEN THE CURRENCIES WERE GOING THE SAME DIRECTION, AND NOW SEEING IT DECOUPLED FROM THE RUBLE, -- ONE OF THE INTERESTING THINGS HERE IS THIS IS IN PART BECAUSE OF PUTIN'S EXTRA NARES POPULARITY. WE MIGHT NOT LIKE IT OVER HERE, BUT ALL OF THE DEVALUATION, THAT IS NOT BEING INDEXED, SO YOU HAVE A BUDGET THAT IS PRETTY AUSTERE IN REAL TERMS. JOE: ANOTHER ECONOMY UNDER STRESS RIGHT NOW IS EGYPT. OBVIOUSLY, THERE WAS THE PLANE THAT WENT DOWN. TERRORISM. HOW MUCH STRESS IS THE CURRENCY GOING TO BE UNDER? KARTHIK: THEIR RESERVES ARE TINY, $14 BILLION, AND THEY HAVE HAD A SERIES OF DEVALUATIONS, AND WE THINK THERE IS MORE TO COME, AND PART OF IT IS TOURISM, BUT ANOTHER PART OF THE STORY IS WE THINK -- WELL, ONE OF THE INTERESTING MARKET ISSUES IS THAT THE OIL MARKET IS TREATING THIS PRIMARILY AS A DEMAND SHOCK, NOT A SUPPLY SHOCK, AND THEY -- SAUDI ARABIA, IT LIMITS THE AMOUNT OF LARGESS. THEY CAN DISTRIBUTE. AND THERE IS A LIMIT TO AMOUNT -- THE AMOUNT OF AID THEY CAN GIVE, AND WE THINK THIS IS GOING TO CONTINUE INTO NEXT YEAR. ALIX: WHAT IS THE SINGLE BIGGEST RISK YOU SEE? KARTHIK: THERE ARE -- I WOULD SAY THE BIGGEST ONE, AND THE ONE THE MARKETS HAVE NOT PRICED FOR IS SIGNIFICANT U.S. INFLATION THAT IS HIGHER THAN EXPECTED. I THINK THAT IS SOMETHING THAT WILL HAVE VERY SIGNIFICANT KNOCK ON EFFECTS, AND FOR EUROPE ITSELF, THE IDEA OF SOMETHING -- OF TERRORISM BEING SOMETHING HOMEGROWN AS TO THE PERSISTENT WEIGHT ON SENTIMENT -- THAT IS SOMETHING THAT ALSO HAS TO BE TAKEN INTO ACCOUNT, BECAUSE IT WEIGHS ON INTER-EUROPEAN RELATIONS. JOE: THANK YOU FOR JOINING US. KARTHIK: A PLEASURE. ALIX: WILL CONSUMERS GO

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