James Knightley, chief international economist at ING, joins us now down here on the trading floor of the big board to kick things off here on taking stock.
Thanks for being here.
Pleasure.
So despite all the chop, despite all the volatility, a very strong take today, and despite how uncertain things have been as of late, we're still really just within a few small percentage points of all-time high.
It might not feel like it, but James.
What are you seeing as you look up and you see a really strong tape today?
The US economy is still in really good shape.
Unemployment is low.
Demand is pretty strong, and investment in tech especially is still going crazily strong.
So we've got a decent fundamentals.
It's just about how long this crisis in the Middle East lasts and how big a dent sentiment that actually provides.
We heard from Treasury.
Secretary Scott Besson today, he says the US is allowing Iranian oil tankers to pass through the Strait of Hormuz.
It seems like whenever there's good news out of the Straits, we see oil come down and stocks rally, and then the opposite is true as well.
What are some of the geopolitical developments you'll be paying attention to, especially at the Strait of Hormuz to give investors here in the US some sense of what the next few weeks look like?
Yeah, well, I mean we're listening to the president and he's trying to get this naval coalition through which would actually provide real substance, real global backing for this idea of getting the straits open, and if that can.
Come to fruition that will give a lot more confidence, I think, and that would be a real catalyst to get oil prices that much lower, which we really do need to see.
Yes, we got a lot of stuff going on this week.
We've got a whole bunch of household earnings reports to get through.
We got a lot of economic data.
We also have day one of the FOMC policy meeting kicking off tomorrow.
We get Jerome Powell's press conference.
And the announcement for the March meeting on Wednesday afternoon, but you and I were talking earlier.
It's not just the central bank here in the US.
Let's go around the world.
Talk to me what central banks around the world are looking at for a busy few days.
That's right.
I mean we've got the Federal Reserve here in the US, we've got the ECB, Bank of England, Bank of Canada, even Australia.
So there's a whole raft of central banks coming through.
And in general we're looking for no change.
We're looking for, you know, almost words of confidence from the central bankers around the world, say, look, we've got things sorted, we can get it through this, no problem at all.
The one central bank that's probably going to be quite interesting is Australia, and the story there is inflation's already pretty hot, and they produce lots and lots of gas, so they've got no real problems.
So if you're looking for one central bank that could surprise, could hike, it'll be them.
Yeah, of course, a little bit of a difference.
For the US Fed is that we have a dual mandate to consider.
A lot of other central banks don't.
With an eye on Jerome Powell's second to last meeting, what are your expectations?
You may look to hear the chairman answer at that press conference.
Of course we also got a dot plot projection.
We only get 4 of those here, so we'll learn a little bit more about the thinking of the FOMC.
Yes, that's right.
So at the moment, you know, we're looking at an environment where there is a little bit of concern about inflation.
But also we've got to remember there's the jobs story.
In the February jobs report wasn't great.
We lost 92,000 jobs.
There were downward revisions as well.
So you've got the jobs side which would argue perhaps for rate cuts, the inflation side perhaps argue for rate hikes.
So of course Jerome Powell's going to go right through the middle and indicate nothing's happening for a little while yet.
Yes, of course, I'm sure he's going to be peppered with questions on politics and the court case in front of the Supreme Court, the dismissal case of Lisa Cook.
I expect him to be.
Disciplined messenger as he always is.
Before I let you go, any other big catalysts on your radar you're paying attention to you think investors might also pay a little bit more attention to here?
Well, we're looking at the investment side for the US.
The really interesting story is about business Capex.
For me, you know, we've got business Capex tied to tech AI that's growing 25% year on year.
All other business Capex has actually fallen for five quarters in a row, so my slight concern.
About the US growth story, the lack of breadth to it.
We're so tech focused.
I'd ideally like to see a little bit more broadness to that.
Yes, that's a really good take.
All right, James Knightley, chief international economist at my man, thanks for being here to kick off the broadcast.
Great to have you.
We'll do it again soon.
