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00:00It is now caveat emptor. You really have to be careful don't you know. Good morning. Glad to be back in the studio. Thank you. Well we had actually been fairly cautious on the outlook for four Chinese stocks anyway going back as far as February. Now what basis start was actually more driven by caution on on Chinese economic momentum. Not not a terrible outlook but Chinese. China is clearly the first economy to pick out from the re-opening trade. Slightly tighter macro policy as well. So we didn't think we were going to be terrible outlook but just better places to to take risk around markets. And clearly we had to worry about OK more based around the financial sector wanting to control and to control the leverage the debt issue there. But clearly some worries around there some uncertainty there. Now I didn't predict this but this clearly as you say adds to it. I think it's as we just heard through the segment there will clearly be people who start thinking about bottom fishing here after declines. You've seen that will always happen. But all of you really is you know it's probably too early. It's probably not something you need to get ahead of and try and absolutely call the bottom at least not as an as an asset allocator. So the uncertainty is high. You know so we stay cautious and probably don't. That's right. It does seem as though state owned enterprises are the winners in all this. To some extent as well. But I want to get to that. And also I used to view seeing peak growth yet in China in your view. Well I think you have to be very careful. People get very confused about levels and growth rates and acceleration. So we've for a while held the view that we're going to see a sort of series of rolling peaks in growth in the global economy throughout this year. So China bounced back first. And it's it's so it's fast. The growth rate already is behind it. The US will get GDP later this week. We'll see that for the second quarter. The US growth is going to pick out. Europe is going to pick in the third quarter. Japan is probably going to be the fourth place effects as well. Exactly. And what our view is that. Yes sure. Okay. Growth is going to slow down but it is going to stay extraordinarily strong. We are talking about growth rates that are maybe double peak maybe in trend maybe not quite double trend and well into next year. So yes you're picking out but is still incredibly strong by by historical standards. Patrick David here. I just want to I guess a follow up on that. When you talk about the US and you mentioned GDP coming out this week we also had the Fed one of the big stories overnight in New York. You had real yields falling. I think it was a 10 year the most negative if that's even a phrase that was negative on record negative one point one percent. What does that tell you about the bond markets outlook on growth and how does that dovetail into things like earnings for example. I think it's it's a great question. I think that is actually one of the key question if not the the key question to grapple with the markets. What what is the bond market actually telling us about the growth outlook if anything. Because everyone's looking at these technical distortions that everyone wants wants to try talking about lots of people having been short treasuries but we don't have a good model. How many basis points how many basis points that were that that is worth. But it clearly seems to be a bit of a contradiction here in terms of worrying about the Fed tightening too early and then having very very low real yield. So at the end of the day for us actually the clearest conclusion on that as you probably still want to be long risk and that's an easier or better way to take risk than being short duration or being short bonds because the distortions there are kind of little bit hard to explain. Is the Fed going to tolerate that a chart like that. And this collapse in yields in the long end. Are they going to have to dial back some of those hawkish rhetoric that we got in the last meeting. Well look I'm I'm not sure entirely if they got more dovish at this meeting that this is going to actually actually bring bring yield yields up either. So it's it's a tricky line. I think they look at the fundamentals and there's a lot of crosscurrents in the fundamentals at the moment as well. You've got these inflation ratings that are still very high even if you think a lot is transitory if you look at what's driving it. And then you've got the worries about Delta spreading in in the US now. So you know they also have growth concerns. So it's pretty evenly balanced around this around this meeting. I would say I don't think they wanted the last meeting to be seen as hawkish as it was. So you probably think they want to avoid that this time. I was looking at some we were atop convection cause you're still overweight. Europe Japan. I had someone people talking about that. The next cyclical story. What are you seeing there. I mean what are people who are looking on that market in particular. I think we're sort of seeing a repeat on Japan off of the mistake that people made with Europe maybe three or four months ago. People saw Europe was slow to get going with the vaccination. And I think a lot of people haven't really gone with the news that Europe is actually caught up with the. US in that sense but performance has sort of reflected in you seeing European growth pretty strong. I think Japan is kind of that just three four months later. There were even later. But you know they have got their act together with the vaccinations. So you know that that's a sort of pretty simple story. At some point you're going to see that in the data. But it's also cheap. So you know looking back it fundamentally is also pretty cheap market is highly cyclical highly geared into the global trade cycle. So you know and people haven't got it. People really don't like Japan. So you know that that's one that once again we're going to get to the Olympics for us. I guess. I see.

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JPMorgan Asset Management: Cautious On China Stocks

JPMorgan Asset Management Global Multi-Asset Strategist Patrik Schowitz says he has been cautious on Chinese equities, driven by a mix of waning economic momentum and relatively restrained policy. He was speaking with Yvonne Man, David Ingles and Rishaad Salamat on "Bloomberg Markets: Asia." (Source: Bloomberg)

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