NDTV Profit Chats With Peter McGuire, Fed Rate Cut Possible?
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00:00I'm joined this morning by Peter Maguire, who is the Chief Executive Officer of XM Australia.
00:04Peter, thanks so much as always for taking the time.
00:07Bit of a surprise, this GDP number.
00:10Of course, when you look at the numbers versus the last quarter, it looks good.
00:14But versus last year, there seems to be a bit of a moderation.
00:18What does that mean for monetary policy?
00:20Well, good morning, Alex.
00:23Greetings from Sydney.
00:24And probably a hotter print than what we expected.
00:26But when you're thinking about it, and you're looking at a forecast of 2%, we came in at
00:312.8.
00:32So in some ways, it was very, very strongly, I suppose, the growth over that last quarter.
00:38And when you're thinking of where we are as far as Fed rate policy and how they go to
00:42interpret that data, we're also conscious as far as the PCE and whether we've got to
00:48be at 2% before Fed Chair Powell says, yes, you're going to have a cut.
00:52So there's many moving parts to this.
00:55And I think it's going to be, again, a very interesting week ahead.
01:01So what does this mean for risk assets and the way that they've been moving?
01:04Of course, Treasury yields spiked a little bit after yesterday's sprint.
01:08They've broadly been heading lower in anticipation of the move lower by the Federal Reserve.
01:16What is your own estimation of how risk assets will move and how the Fed will move?
01:21Will it cut in September or will it push it further down the line?
01:24Well, a couple of things.
01:26First off, it's going to be, if you put your mind back to the last six elections since
01:312000, there's a very big chance, I think, that they won't do anything.
01:35It caused from a political interference.
01:37But then there's the other side, of course, are you going to see, I think, expectation
01:43from the market and the market has very much baked this in.
01:46So I feel as though that, yes, you'll see a rate cut and it'll probably be 25 basis
01:50points and it'll probably be in September.
01:52Now, as far as equity markets are concerned, you've seen a bit of a pullback as far as
01:56NASDAQ and certainly the S&P over the last week.
02:00Will that continue downdraft?
02:01I feel as though it's probably consolidate a little bit once we get through the end of
02:05this week.
02:06And then we've got to work ourselves closer to that election, which typically the last
02:11two months coming into an election period, you do see a sell off as far as equities.
02:18So from that perspective, when you're looking at the emerging markets as well and you watch
02:23India very closely as well, I know that for a fact, Peter, do you wait and watch?
02:31Is that the approach that you take?
02:33I think you've got to hedge.
02:34I think that's the first part.
02:35If a trader's not hedging, he's got to be very conscious or she's got to be conscious
02:39as far as any possible downdraft and take advantage of that.
02:43So you're hedging your position or at least cutting it square.
02:47The other side of it is what other asset classes do you put money into into treasuries
02:52or do you just sit on the sideline and appreciate what you've experienced over the last 20 or
02:57so months?
02:58And it's a time of consolidation.
03:00So many traders have a different viewpoint.
03:03And I feel as though you've got to, you know, fortune favours the brave, but you've also
03:07got to have your head screwed on as far as opportunity and there's some time to sit on
03:11the sidelines.
03:12That doesn't hurt you.
03:13Yeah.
03:14Thanks so much, Peter, for taking that time.
03:17Thank you.