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Guy: Welcome to “MIM Cuts to the Chase” podcast series. I’m your host Guy Haselmann. Our guest today is Tani Fukui. Tani is an economist and part of the Market Strategy and Research team at MetLife Investment Management. We thought it would be a good idea to have Tani as our guest today to help us decipher the unusual and mixed economic data that is being reported and we’ll also hear outlook for 2023. Welcome Tani.
Tani: Thank you. It’s it nice to be here.
Guy: Let’s begin with the mixed signals, I mentioned. What is the state of the economy?
Guy: And companies? How are they fairing generally?
Guy: You have confirmed my assessment that the data is mixed. So after all this shakes out a bit, where do you think the economy is headed?
Guy: A post pandemic world has its own unique characteristics and yet it is further complicated by China’s Zero-COVID policy and the supply chain issues stemming from the Ukraine war. Let’s talk about the Fed and how they are dealing with all this.
Guy: Do you think the Fed will achieve 2% inflation anytime soon?
Guy: If you think the Fed cuts before inflation falls below 2%, is that because you believe we will have a recession and the Fed will react by cutting rate?
Guy: Would that scenario require fiscal support like what’s happened in the EU? A sort of hand-off from Monetary to Fiscal levers?
Guy: The recession that you are forecasting next year….what will that look like in terms of magnitude?
Guy: Do you have any advice for how investors should play this? The Fed has been hiking relentlessly all year and look to hike again in December. Yet, the forward market is pricing in small rate cut in 2023[i]. Does the market have this right or what should investors do in your opinion to prepare for 2023?
Guy: I think that gives us an excellent picture of what we might expect in 2023 and a good place to end. Thank you for sharing your thoughts and insights.
Tani: Thank you.
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iAccording to 2023 Fed Fund Futures.