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GOOD MORNING. THIS IS "HORIZONS MIDDLE EAST AND AFRICA." RATE FRIGHT SELLOFF DEEPENS IN ASIA AS CHIP STOCKS PLUNGE AND FASTER THAN EXPECTED U.S. INFLATION FUELS CONCERN OVER FURTHER INTEREST RATE HIKES. A CONTAINER SHIP SINKS IN THE STRAIT OF HORMUZ. OIL IS TRADING SLIGHTLY LOWER. AND WE SPEAK EXCLUSIVELY TO LEBANON’S CENTRAL BANK GOVERNOR AT THE WORLD BANK MEETING IN BANGKOK. IT’S JUST GONE 8:00 A.M. ACROSS THE EMIRATES.

I’M ABEER. IT IS A TERRIBLE DAY FOR EQUITIES. IT IS CONNING A DAY WE SAW YESTERDAY THE PICTURE OF THE UNITED STATES, THE S&P TROPING MORE THAN 1P. NASDAQ MORE THAN 2 OPINION. SEMICONDUCTORS MORE THAN 4%. THAT IS SEEPING INTO THE ASIA SESSION. LOOK AT THAT. MSCI ASIA PACIFIC OVER 3% LOWER. THE KOSPI IN SOUTH KOREA, TRADING WAS HALTED ON THAT A FEW MOMENTS AGO. 20 MIN OS OF TRADE HALTED. THIS IS ALL WHAT WE SAW OUT OF THE UNITED STATES.

U.S. C.P.I. CAME IN HOTTER THAN EXPECTED. WE’LL DISCUSS THAT IN A MOMENT. LOOK AT OIL PRICES. THAT’S WHAT’S LEADING TO THE HOTTER THAN EXPECTED C.P.I. RANGE THIS MORNING. 1.6% LOWER, STILL AROUND 04 DOLLARS PER BARREL. OF COURSE WE HAVE HEARD FROM THE I.E.A. ABOUT THEIR -- ABOUT THE YIELD ON THE 10-YEAR NOTES ABOUT 5.1% AS OF NOW. DROPPING NINE BASIS POINTS, INVESTORS RETURNING TO THE SAFE HAVEN STATUS OF THE YIELDS AS C.P.I.

COMES IN HOTTER THAN EXPECTED IN THE UNITED STATES. AND NOW FOR A LOOK AT THE REDNESS WE’RE SIGH DOCTORS THE CLEAN THIS MORNING IN ASIA. WE’VE GOT ANTHONY STEVENS IN HONG KONG. ANTHONY, GOOD MORNING. WHAT ARE YOU LOOKING AT? ANTHONY: THE DEPTH OF THE PAIN YOU’RE SEEING IN THE A.I. SPACE THIS COMES AS THERE IS CONCERN AROUND GO FORWARD SPENDING FROM HYPERSCALERS GIVEN THE HIGHER POTENTIAL RATES ENVIRONMENT AND CONCERNS AROUND REVENUE AT OPEN A.I.

AND ANTHROPIC. YOU SEE THE DAMAGE HERE ACROSS THE BOARD, THEY’RE TALKING ABOUT HYNIX IN KOREA, ADNAN THUS IN JAPAN, OR EVEN COMPUTERS IN HONG KONG. THESE ARE HUGE TO THE DOWNSIDE. CHECKING OUT THE RISK LIMIT HERE’S. SEEING A LOT OF CUT, A LOT OF FOREIGN SELLING IN KOREA AS WELL AS THAT MARK GEESE A TRADING HALT CIRCUIT BREAKER. FLIP THE BOARD, YOU CAN SEE WHAT IS PERHAPS TRYING TO HOLD MARKETS WHERE THEY ARE. THAT’S THE DEFENSIVE SPACE.

YOU SEE FOOD AND BANKING HOLDING THE FORT. AND THE MUJI CHAIN OF STORES IN JAPAN THAT STANDS OUT AS RETAIL FAVORITE. THAT’S A REALLY NEGATIVE SIGNAL FOR RISK APPETITE AS A WHOLE. YOU SHOULD NOT HAVE A MARKET THAT’S DRIVEN BY FOOD AND TELCOS WHEN YOU HAVE SO MANY FAST-GROWING SEMICONDUCTOR NAMES. CLEARLY A HUGE AMOUNT OF WORRY ABOUT GROWTH STOCKS AND THE A.I. SPACE. ABEER: THANK YOU FAR MARKET UPDATE. IN SEPTEMBER, CONSUMER PRICES RISING AT THE FASTEST PACE IN FIVE MONTHS.

STRONGER PRINT LIFTED EXPECTATIONS FOR ANOTHER FEDERATE HIKE THIS YEAR, PUSHING TREASURY YIELD LOWER AND STOCKS LOWER AS. WE HERE IS WHAT OUR GUESTS SAY THAT THE LATEST NUMBERS MEAN FOR THE FED AND THE U.S. ECONOMY.

EVEN IF THEY DON’T MOVE THIS MONTH, THE BROADER DIRECTION IS UP. AND I THINK ONE HIKE IS NOT REALLY THE AMOUNT OF MEDICINE THE ECONOMY NEEDS.

WE’VE GOT AN INFLATION PROBLEM. IRAN, IMMIGRATION AND TARIFFS. THIS HAS NOT BEEN CAUSED BY THE FEDERAL RESERVE. IT’S NOT THE FEDERAL RESERVE’S UPON. THEY CAN’T FIX IT.

FAIRLY BROAD-BASED INFLATIONARY PRESSURE. ACROSS THE ECONOMY, SERVICES AND GOODS BOTH UP. IT’S JUST CONFIRM TAG REAL WAGES ARE FALLING.

HIGHER RATES ARE BENEFICIAL EXCEPT IF HIGHER RATES ARE BAD FOR THE ECONOMY. THAT HAS OTHER ISSUES. WE’LL MAKE MORE MONEY.

WHERE IS THE CHAIRMAN ON THIS? WE THINK CHAIRMAN WARSH WANTS TO HOOK AND WANTS TO HIKE QUICKLY. ABEER: JOINING US NOW TO CARRY ON THE CONVERSATION, NANETTE. GOOD MORNING. GOOD TO HAVE YOU HERE ON SET WITH US. LET’S START WITH WHAT WE’VE BEEN TALKING ABOUT OVER THE PAST FIVE MINUTES. C.P.I. PRINT. WHAT DOES THE FEDERAL RESERVE THEN DONE IN OCTOBER?

I THINK IT RAISES THE POSSIBILITY THAT THE FEDOROV RAISES AT THE END TESTIFY MONTH INSTEAD OF DECEMBER. WE WERE OF THE VIEW THAT THIS WOULD DEFINITELY BE ANOTHER RATE HIKE FOR THE REST OF THE YEAR. BUT IT MAY BE TAKING IT FORWARD. AS A RESULT OF THESE C.P.I. NUMBERS. ABEER: DOES THAT MANE THEY RAISE TWICE IN 2027? OR IN OCTOBER, POSSIBLY HOLD IN DECEMBER?

I THINK THE LATTER IS WHAT WE OUGHT TO BE EXPECTING. THE U.S. FED IN OUR VIEW IS NOT ON A RATE HIKING CYCLE. IT IS TAKING INTEREST RATES SLIGHTLY UP. WE FEEL THERE IS GOING TO BE A PLATEAU IN FED RATES.

LET’S TALK ABOUT YIELDS FOR A SECOND. WE’RE SEEING MODERATION IN BENCHMARK NOTICE. ABOUT 10 BASIS POINTS LOWER. BUT OVERALL THE STORY, THE MACRO STORY CONTINUES TO BE ELEVATED YIELDS NOT JUST IN THE U.S. BUT GLOBALLY. THE I.M.F. AS A MATTER OF FACT WARNING THAT THIS COULD BE THE BIGGEST FISCAL PROBLEM GOING FORWARD. WHAT DO YOU MAKE OF THE MOVES THAT WE’RE SIGH CROSS GLOBAL YIELDS?

NOBLE YIELDS HAVE RESPONDED ACTUALLY TO MUCH BETTER GROWTH THAN WHAT EVERYBODY EXPECTED ON THE BASIS OF COMPLICATED GEOPOLITICS. WE OURSELVES HAVE BEEN UPGRADING OUR GROWTH EXPECTATION THE WHOLE TIME AND REAL YIELDS IN THE U.S. BUT ELSEWHERE HAVE MOVED UP IN REFLECTION OF THE MUCH BETTER GROWTH AROUND. SO IT IS VERY WELL SUPPORTED, THIS MOVE UP IN RATES. BUT WHAT WE KNOW FROM PAST MID TERM ELECTIONS IS THAT MARKETS REWARD IN SOME SENSE SHARED POWER ACROSS LEGISLATIVE AND EXECUTIVE BECAUSE OF THE CHECKS AND BALANCES THIS PUTS ON FISCAL POLICY IN PARTICULAR.

AND SO OFTENTIMES, MID TERM ELECTIONS HAVE BEEN FOLLOWED BY A DECREASE IN YIELDS. THIS IS ALSO WHAT WE EXPECT THIS TIME AROUND. SO FOR MANY FIXED INCOME INVESTORS LOOKING AT CURRENT YIELDS ACROSS THE BOARD IS ATTRACTIVE. ABEER: WE HAVE SEEN A TELLOFF, IT WAS TERRIBLE FOR TECH STOCK, SAW THAT STARTING IN THE UNITED STATES YESTERDAY. DO YOU THINK THIS IS A VALUATION RESET IN WHAT ARE YOU LOOKING FOR HEADING INTO THE EARNINGS SEASON?

WE THINK EARNINGS WILL BE STRONG. THE AMPLE I. DEPLOYMENT IS ONLY AS A START. THIS IS AN INVESTMENT PEOPLE BOOM THAT HAS A LOT OF FIRING POWER. IT DOES HAVE THE POTENTIAL TO CONTINUE THERE UNTIL 2030, UNTIL EVERY SECTOR, EVERY SERVICE, EVERY MANUFACTURING AREA, WHERE A.I. IS BRINGING GAINS AND PRODUCTIVITY IS GOING TO BE FULLY EQUIPPED. THIS IS A VERY STRONG TREND. I THINK AT THIS MOMENT, MARKETS LIKE SOUTH KOREA, FOR EXAMPLE, THAT ARE VERY VOLATILE AND THAT EXPERIENCE THEREFORE SOME VERY STARK MOVES OFFERING OPPORTUNITIES TO INVESTORS FOR THIS LONG-TERM VIEW THERE.

AND IF YIELDS ARE GOING TO COME DOWN OVER THE COURSE OF NEXT YEAR, THIS IS HELPFUL. TO TECHNOLOGY STOCKS. ABEER: BUT OVERALL THE EQUITIES PICTURE IS ROBUST. I SAW YOUR LATEST RESEARCH, YOU POINT OUT EQUITIES ARE STILL ARE BUST DESPITE WHAT WE ARE SEEING IN TERMS OF THE ENERGY SURGE OUT OF THE MIDDLE EAST AND THE OVERALL RATES PICTURE. WHAT WOULD CHANGE THAT NARRATIVE?

I THINK WHERE WE SEE RISKS IS IF EARNINGS ARE STARTING TO REALLY PLATEAU AND MOVE DOWN. DISAPPOINT EXPECTATIONS. TAKE A LOOK AT THE MSCI. THE EXPECTATION IS STILL FOR A STRONG EARN CYCLE NEXT YEAR. IT WON’T BE AS EXTRAORDINARY AS THIS YEAR BUT IT’S STILL GOING TO BE STRONG. SO ANYTHING THAT IS CHANGING THAT PICTURE IS POSSIBLY GOING TO WORRY INVESTORS. BUT A LOT OF VALUATION HAVE REALLY NORMALIZED AND THERE’S HEADROOM FOR EQUITY MARKETS TO ABSORB THAT.

ABEER: THE FISCAL SITUATION IN FRANCE. WHAT’S THE LATEST THERE?

I THINK FRANCE AND FRENCH SPREADS HAVE ABSOLUTELY CAUGHT UP WITH THE FUNDAMENTALS OF FRANCE. THEY’RE NOT VERY GOOD. WHEN YOU’RE RUNNING BUDGET DEFICITS NORTH OF 5% AND HAVE NO GROWTH, WHICH IS THE CASE OF FRANCE, OBVIOUSLY, THERE IS GOING TO BE A MARKET REACTION HERE. AND FRANCE, BECAUSE OF THE POLITICAL DIVISIONS, HAS NOT REALLY BEEN ABLE TO PASS A FISCAL PLAN, A CONSOLIDATION PLAN THROUGH PARLIAMENT. THAT MAY CHANGE DEPENDING ON THE ELECTION OUTCOME.

BUT MARKETS ARE PRICING IN RISK HERE. SO MUCH SO THAT FRANCE IS TODAY HAVING SPREADS THAT ARE NORTH OF WHAT ITALY HAS AND GREECE HAS AND WE THINK PROBABLY THERE’S ALSO EXAGGERATION THERE. SO IF GLOBAL YIELDS COME DOWN IN THE NEXT YEAR, I THINK ALSO THERE’S GOOD CHANCES THAT FRENCH YIELDS