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00:00The highest print on core CPI since 1982. The confluence of this. Mortgage rates at 7 percent. Inflation at six point two percent. Six point six percent. How much of a headwind is it to the outlook for the U.S. economy? That start there and then would pivot to stocks? I think I think the first one. Nice to hear back on the show. I think they let the inflation sort of go out of homes. The Fed and the central banks. And I think now they need. There needs to be a significant economic damage. If they have to control inflation because infrequent has its own flow. So as you said, the rents don't go down like a drop. Similar is the case with inflation. It's a more sort of sticky number, which is going to take around some kind of a major sort of event or major of policy measures in order for inflations to go down. So what does that do to the risk? And I said it's no the debate, not just about 75 basis points next month, but also in December, another 75 basis points. I mean, do we begin to talk about 100 basis point Volcker style move? Is that not gonna become part of the lexicon over the next 10 days? Probably, yes. Markets will be talking about and when we were talking over the nominal rate, I think 5 percent was kind of thing that we were seeing that it's read too much. And now I think the markets are talking about the dominant rate in the range of four point seventy five percent to around 5.5 percent. That's where we are looking at it. So, yeah, I wouldn't be surprised. But right now we are looking at 75, but they're on their December. Seventy five is very much on the cards and we might continue it in Flagstaff off three as well. Now in the space of 11 minutes, we baked a cake. It's called the volatility cake. The two point six percent implosion in equities. It'll come now in just a moment. And the rally of two point four percent from sell everything to buy everything, five percent. We have not seen a turnaround day like this since 1990. In 1990 was my first year as a trainee stockbroker. So taught me three why we sold everything and then bought everything. I think the markets were obviously looking at the inflation numbers and the only possible reason and we were all on it is back. They said that probably the inflation has peaked, so that probably is the market. But one thing is for sure, this kind of wild swing is not the last time we are seeing probably this year we might see much more. So I think we have to brace for the very high volatility and we will have to brace ourselves for that. It's interesting you say that a recession in itself will not be enough to bring inflation dying. So you're looking for a double negative punch of a recession. Qualify that for me. And the scale you're not talking about five and a half percent. Rates need to be both those toxic elements. I think I think there needs to be because first of all, I think the Fed targeted rate of 2 percent is is, I think, beyond the picture. So there will probably not be able to achieve it. So we are talking about a target rate of around 3 percent or so. So that's where I think they will have to work on a serious economic damage, actually. So then the consequence of that is Jamie Diamond says another 20 percent. I want to make sure that I'm quoting correctly easily another 20 percent, another 6 trillion. And a soft landing is unlikely. His gut tells him four and a half to five percent. With the combination you've just outlined, is there another 20 percent downside in stocks? And was that a fool's pardon that the market got yesterday? A squeeze, a short interest squeeze? Probably. Probably, yes. And we might see the most important thing I think we'll have to see is the corporate earnings that will come. So that was back room, back in the. And I think still, in my view, the analysts still have not big been the kind of economic changes that are happening in their estimate, especially for 2023. So once we see with the banks coming in very soon and the fourth quarterly earnings, I think we will then see what the analyst expectations are, how the expectations are changing. I think we are still a bit more optimistic on the earnings. Okay. And just finally, to close off on credit, you're negative on credit, but how much more of an explosion or depth charge will there be in credit spreads? Will it be minimal or will it be quite a substantial move on investment grade spreads? It can. It can be it can be a good sort of move on both sides. And again, we are sort of drifting investment rules or what are you? Because right now you are you can get easily a four to six per cent having some commercial paper prejudice and it's appears to be in. But then again, we are much more sort of preferring the defensives rather than the hybrid.

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Hasan: Inflation Not Going Away Soon

Faisal Hasan, CIO and Head of Asset Management at Al Mal Capital, discusses the latest set of US CPI data, recession concerns and his asset management strategy. He speaks with Manus Cranny on "Bloomberg Daybreak: Middle East." (Source: Bloomberg)

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