UBS On-Air

We recap the week that was and preview what you can expect in the week ahead. Featured is Danny Kessler, Asset Allocation Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Japan's Tokyo consumer price inflation was stable and generally unexceptional. Japan's consumer price inflation is entirely food and fuel - prices that the money printing of the Bank of Japan has little to no influence over. Printing money demonstratively does not create inflation - printing too much money does. The Tankan survey of business sentiment disappointed the consensus a little.

We discuss the macroeconomic environment, including whether a recession might be on the horizon, and how macro considerations, namely inflation, might translate to the Fed and their course for monetary policy. We also spend time on asset allocation for the current environment. Featured are Jason Draho, Head of Asset Allocation Americas with the UBS Chief Investment Office, and David Kelly, Chief Global Strategist with JPMorgan Asset Management. Host: Daniel Cassidy

Our conversation turns focus back to the emerging markets as my guest outlines how the economic landscape across the EM compares to that of the US, along with a look at where opportunities exist for EM investors and the investment implications to be mindful of. Featured is Alejo Czerwonko, Chief Investment Officer for Emerging Markets Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Our conversation revisits information technology as my guest offers mid-year reflections on group performance and outlines some key considerations relative to the group for a potential recession. Featured is Kevin Dennean, Technology and Communications Services Analyst Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Our discussion outlines the attributes that make a company or portfolio ‘sustainable', the evolution of ‘Governance' and how to invest in biodiversity. Featured are Amantia Muhedini, CIO Sustainable and Impact Investing Strategist Americas, UBS Chief Investment Office and Michelle Dunstan, Chief Responsibility Officer, AllianceBernstein. Host: Daniel Cassidy

Chief Investment Officer Mark Haefele and colleagues from around the world discussed the four possible market outcomes for the second half of the year, and how investors can build robust portfolios that protect wealth and generate yield.

German consumer price inflation is due; the state of North Rhine Westphalia showed a noticeable decline in its inflation number. Markets had been expecting inflation to increase nationally, so evidence of disinflation (even from just one state) is a surprise. Spanish consumer price inflation is also due.

An in-depth conversation about life, innovation and the future of finance with Chetan Tolia, Head of UBS Next - UBS's venture and innovation unit. In this discussion Chetan talks about his childhood in Kenya, his early exposure to tech and innovation, career lessons, and ultimately, his focus as the Head of UBS Next. To learn more visit www.ubs.com/digitalnext.

The economic calendar is full of central bankers tripping over themselves in their rush to get into the media spotlight. ECB President Lagarde will be speaking twice. The ECB's central bank forum is more likely to focus on longer-term considerations than immediate market concerns.

Following what has been a volatile first half of the year, our conversation focuses on four market scenarios that could play out over the course of the next six months and how to position your portfolio accordingly. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Russia is considered in default on an international bond payment due Sunday; this was expected, limiting market impact. G7 leaders are considering ways of imposing an oil price cap on Russia. Russian oil flows have shifted towards Asia. To capture those flows, the idea is that oil shipments could not be insured or financed by G7 companies if an oil price cap was breached.

Our conversation turns focus back to fixed income as my guests share their thoughts on the state of credit markets in a rising rate environment, how to think about positioning within the broader asset class, an outlook for rates and more. Featured are Alina Golant, Senior Credit Strategist Americas, and Leslie Falconio Head of Taxable Fixed Income Strategy Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Japanese May consumer price inflation was steady - the US style core calculation rose 0.2 percent year over year, meaning nearly all the inflation is food and fuel. This challenges those who point to money printing as the source of inflation - Japan's monetary base grew rapidly in the pandemic. Printing money does not create inflation. Printing too much money creates inflation. Money demand must always be considered.

Our conversation turns focus back to thematic investing as my guest highlights the long term investment themes on the radar of the Chief Investment Office and how these themes might be impacted by the current market environment. Featured is Michelle Laliberte, Thematic Investing Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Federal Reserve Chair Powell - the 21st century equivalent of former Fed Chair Burns - testified to Congress that the Fed was not trying to create a recession. That sounds suspiciously like forward guidance. The Fed has destroyed all credibility around forward guidance. The challenge is that recent extraordinary events have changed ordinary economic behavior.

Our conversation turns focus back to fixed income, though specifically preferred securities as my guest walks you through his recent publication which explains how investors in the space should think about positioning against a variety of market and economic scenarios. Featured is Frank Sileo, Senior Fixed Income Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

US Federal Reserve Chair Powell testifies to Congress. Powell's policy style is more the bumbling of former Fed Chair Burns than the shock and control of former Fed Chair Volcker. Inflation control today is less about wages and more about profits and pricing power. But the questions for investors are: Has consumer price inflation (or just gasoline prices) become the inflation target? With forward guidance trashed, why should anyone believe anything Powell says?

ECB President Lagarde spoke yesterday (not news) reiterating the ECB will raise rates 0.25% in July (also not news) and raise again in September (not really news). Unlike the Fed, the ECB has not torn up forward guidance. The plan to manipulate bond yields was justified as monetary policy needs to be evenly transmitted across the Euro area. Even transmission does not happen in other monetary unions (e.g., the US or the UK), but those monetary unions also have fiscal unions.

French President Macron's party lost its national assembly majority. The party will still be the largest, so cohabitation (president and prime minister of different parties) seems unlikely. A better analogy would be to the US situation, with the president needing to build a shifting coalition of support to get legislation passed. The far right party of former presidential candidate Le Pen increased support. Periods of economic structural change tend to lead to people looking for economic scapegoats, encouraging prejudice politics.

Three central banks have delivered policy decisions in the past 24 hours. The Bank of Japan left policy unchanged—given the legacy of years of disinflation pressures this is not necessarily a surprise, but the yen weakened anyway. The Bank of England delivered a quarter-point increase in rates. Why not more? The bank was early to start tightening, and Prime Minister Johnson is presiding over the biggest tax grab in nearly 70 years. The world is not just about monetary policy.

The US Federal Reserve raised rates 0.75%. This was not a “Volcker Shock” (taking control with a clear strategy). It was more a “Burns Bumble” with external pressures undermining credibility and coherence. For investors, it likely signals volatility.

Our conversation outlines bi-partisan efforts in motion to address gun control, offers some takeaways from the recent Summit of the Americas and updates on the progress of the Jan 6 hearings. Featured is Shane Lieberman, Federal Affairs Manager, UBS US Office of Public Policy. Host: Daniel Cassidy

We continue with our sector conversations and revisit real estate investment trusts, also known as REITs as my guest provides a performance update and provides a set-up for the second half of the year. Featured is Jon Woloshin, Real Estate and Lodging Analyst Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The Federal Reserve meets today. Whether the Fed decides to raise rates by 0.5ppt or 0.75ppt makes little difference to the second half decline in inflation. A 0.75ppt increase may still be a policy error because it breaches the first rule of social media: ‘don't feed the trolls'.

Join Elizabeth Cribbs, Senior Strategist on the Family Advisory and Philanthropy Services team, in a discussion with Danielle M. Reyes, President and CEO of the Crimsonbridge Foundation. The Crimsonbridge Foundation, founded by Gabriela Smith, is dedicated to investing in transformative and scalable solutions with a focus on education, leadership and capacity building. Crimsonbridge takes a strategic and entrepreneurial approach to philanthropy to create social change. Danielle has over 25 years of experience in leading and designing innovative philanthropic programs and partnerships. She provides insights on when the right time is to hire a professional to partner for your family's philanthropy, and how to think through living and leaving your legacy.

Head of Advanced Planning, Ann Bjerke, and Senior Wealth Strategists Joyce Crivellari, Catherine McDermott, and Rebecca Sterling reflect on the latest report from the Women's Segment and discuss planning strategies that are especially relevant for women today.

As turbulence in the market continues, we examine the latest Modern Retirement Monthly publication which outlines what retirees can do during a market downturn. Featured are Ainsley Carbone, Total Wealth Strategist Americas and Justin Waring, Investment Strategist Americas with the UBS Chief Investment Office. Host: Daniel Cassidy

Markets face a serious inflation problem, namely pundits desperately inflating their Federal Reserve forecasts. Consumer price inflation data was higher than expected, but the Fed does not, with good reason, focus on CPI. A quarter of US CPI is in disinflation or outright deflation - in areas where Fed policy has an impact. May producer price inflation data is due; the consensus expects stability. The Fed is likely to be more measured than manic in this week's policy tightening.

Our conversation recaps the recent inflation data and market response - plus, we preview what to expect from the June FOMC meeting and explain how to position your portfolio for the current environment. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The Fed has a classic dilemma. Inflation is mainly driven by either prices it cannot control (commodity related) or prices no one pays (owners' equivalent rent, which is signalling a rising price of home ownership when most US home owners pay a lower price than two years' ago). Many prices the Fed can influence are in disinflation or outright deflation (over 3% of the CPI basket has year-on-year deflation). The Fed's dilemma is how much more deflation to create in prices it can control, to offset the inflation in prices it cannot control.

Hear thoughts on the May CPI print and other macro data points of interest from the past week, along with a preview of the June FOMC meeting. Featured is Brian Rose, Senior Economist Americas, UBS Chief Investment Office.

Our conversation revisits equity investing as my guest will walk you through an outlook for the second half of the year and speak to how you should consider positioning your equity portfolio accordingly. Featured is David Lefkowitz, Head of Equities Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Chinese May export data was stronger than expected. The COVID restrictions in China cannot be presented as a lockdown, as whatever the damage to the domestic economy the export sector has experienced nothing like the problems of 2020. Furthermore, global goods supply continues to grow as global goods demand is slowing.

A US retailer declared for Team Transitory on inflation, predicting price discounting to reduce excess inventory. US consumer spending shifting away from durable goods was also noted. This emphasizes that the extraordinary goods demand of 2021 could not last, that strong supply and a “tomato ketchup” effect has led to supply exceeding demand, and that when demand falls inflation or (in this case) price levels will fall. This is definitely not stagflation.

US April trade data is not a major focus for markets, but reinforces the background story that global supply chains are producing record amounts of goods, and still increasing output. That supply has been diverted into inventory building as demand for goods has slowed. However, some retailers have been talking about overstocking.

With much of Europe on holiday, the data calendar is a desolate wasteland of nothing. Things are so quiet even European Central Bank President Lagarde is not speaking in public. However, the Financial Times is reporting that the ECB intends to set up a market-fixing mechanism to prevent Euro members' government bond yields from rising too aggressively. The ECB statement on Thursday will be closely watched.

We recap the week that was, including the May jobs report, thoughts on the inflation picture and a preview of the week ahead. Featured is Brian Rose, Senior Economist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The US employment report has been out of fashion for the past two years. First it was Covid case numbers, then it was consumer spending driven by pandemic savings which made employment a secondary concern. Now the employment report is hip and trendy and back in fashion, much like economists.

Our conversation revisits the emerging markets as my guest explains why patience is key for investors in 2022, what the set-up for the second-half of the year looks like and how to position your portfolio accordingly. Featured is Alejo Czerwonko, Chief Investment Officer for Emerging Markets Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The US Federal Reserve's Beige book is a survey (albeit better quality than many other surveys) and should be treated with caution. However, anecdotes are starting to signal the expected economic moderation. Demand is slowly normalizing, as are pricing pressures. Some areas are starting to see a softening of the labor market. This is where the focus is likely to be in the second half of the year—job security prevents precautionary savings rates rising, which helps prevent a more severe economic downturn. Firms may slow hiring, but it seems unlikely many will resort to firing.

Investor sentiment is fragile and markets are expected to remain choppy until we have greater clarity on the 3Rs - rates, recession and risk. Chief Investment Officer Mark Haefele and colleagues from around the world discuss growth and inflation scenarios as well as favored portfolio exposures considering current volatile and uncertain markets.

Advanced Planning Senior Wealth Strategists, Brad Dillon and Joanna Morrison give insights as to what makes planning for LGBTQ couples unique and highlight specific examples from their new whitepaper, Planning for the LGBTQ family.

The US Federal Reserve releases its Beige Book of economic anecdote - the economist's version of ‘Hello' magazine. The evidence is hearsay, and some of the responses may be carefully stage managed to present a certain image, especially in politically polarized times. Labor market tightness will be of interest, with reports of some companies overhiring, as will the normalization of consumer demand.

The EU has agreed to ban seaborne oil imports from Russia, with pipeline imports allowed on a temporary basis, ‘temporary' is undefined. Oil is not perfectly fungible, but if Russia does not ship oil to Europe it can ship oil elsewhere. However, there is a reduction in the global demand for oil from Russia, which will likely increase the Russian price discount.

China has started easing some of its Covid restrictions. Those Shanghai-based manufacturers that are not already operating can reopen from Wednesday. The easing is mainly an issue for domestic demand - Chinese exports continued to grow during the restrictions. However, some international companies produce in China for Chinese consumption so the easing has relevance for some global equities. The next focus is whether policy will offer adequate support to Chinese consumers.

US personal income and consumption data is due—reminding investors it is normally a bad idea to go short the hedonism of the US consumer. However, patterns of consumption are changing, with demand for certain durable goods slowing significantly. That matters to Asian exporters and to US inflation. The inflation data today is expected to confirm March as the inflation peak—remember that year-over-year rates say as much about last year's price level as they do about this year's price level.

A timely conversation with insights into the current environment for fixed income investing and considerations when it comes to allocation within the asset class. Featured are Leslie Falconio, Head of Taxable Fixed Income Strategy Americas, UBS Chief Investment Office, and Ken Shinoda, Portfolio Manager at DoubleLine Capital. Host: Daniel Cassidy

The minutes of the Federal Reserve meeting did not tell economists anything they did not already know, economists are omniscient, we just hide it very well. The Fed is set to raise rates by 0.5ppt at the June and the July meetings. The minutes are consistent with a range of policy options thereafter, but a slower pace of tightening seems the most likely course.

We continue our conversation on the municipal market and examine recent performance trends, portfolio themes to consider, a near-term outlook for the asset class and more. We also spotlight the implications of surging travel demand to airports. Featured is Kathleen McNamara, Senior Municipal Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The Federal Reserve minutes are due, covering the most clearly communicated rate hike in modern history. A commitment to a measured pace of tightening and an awareness of slowing inflation and slowing growth should be evident. There may be some interest in what happens after the summer, with Fed President Bostic implying a pause may be possible.