Let's get to our guests. It is commal three Kumar president at three Khmar Global Strategies three. It's almost never. In fact, it is never that you see a sitting president in Brazil lose. So this is quite a big deal and it's a huge victory for the left with Lula getting back in. What do you think it means
for the economy going forward? Um? I think Brian I was quite a sanguine about either candidate winning because both Snaro in the last few years has been good for business and Lula during his two terms was unexpectedly positive for private business. They thought that as a Worker's Party leader, he would lead to more of socialist policies and that you the economy would go down instead. It was a golden period for the Brazilian economy during the Lula presidency
for two terms. Keep in mind that it was only during his successor Dilma russof who was hand chosen by him, by the way, that everything went downhill. So I here is the real crux. It doesn't matter who wins, but the loser has to accept his defeat. And a question now is is Bolsonaro going to accept it? Is military going to accept it, and do we have a peaceful transfer of power? That to me is much more important
than which candidate wins. And I'm very happy with the Lula victory, just as I would have been with the Boldsonaro victory. Absolutely, And you know that that's smarks smacks of some other country as well, where perhaps other getting presidents don't like to accept the verdict of the people. But in this case it would be getting to the old Quentin Hogs saying of if democracy change anything, they
abolish it. Does it have market implications? Though it may have market implications tomorrow rich in the sense that markets I think had a marginal preference for Boldsonaro over Lula, so you may see Monday perhaps Tuesday. Uh, the developments lead to a drop in the market value. But if you give three months or six months, and when again, when Lula takes off is at the beginning of the new year, assuming the transfer is smooth, things are going
to be much better off after all. Okay, so it hasn't been much of the big macros stories, So let's get to that. We got the FED meeting this week in the b o E, so it's going to be pretty interesting week. The latest data doesn't seem to be showing that inflation is cooperating. Inflation is not cooperating at all, Brian. And you see that core inflation is at forty year highs, and the Federal Reserve's favorite price measure, the PC deflator core is also accelerated in the most recent months in
the data released a few days ago. So there is no reason to pivot. The only reason to pivot is because they want to help the stock market all they are worried about a systemic failure. Sure it, give us, you know, a sense of this market or should I say market participants almost trying to force the Federal Reserve to pivot. Give us your sense, because I think you
just wrote a paper essentially saying pivot. Just lose that thought, right, That's what I put out this Saturday race, And I believe that it would be wrong to pivot at this stage. The story about a pivot started out with the Wall Street Journal article about nine days ago suggesting a few members of the Federal Reserve were actively looking to either slow down the rate of increase in the interest rate or even to end it in early twenty twenty three.
But here is the problem. Inflation rate has not come down the code, inflation rate has accelerated, some measures are at their forty year high. What is the basis for pivoting when the Chairman has said repeatedly that he is using inflation to be his principal objective. The problem I see is that they are worried about a systemic failure. They look at what happened in London with the pension funds. They're afraid there might be a repeat of that, and they simply don't want to go ahead with it. My
answer is, yes, it may happen. The problem is they were so wrong in forecasting inflation in one again and again calling it transitory, and at the same time boosting the balance sheet, keeping the interest rate near zero. That is what has increased the risk. It is not what they're doing right now. But let's talk about how much damage is being done, because it seems the US economy is pretty resilient, the labor market is hanging in, their growth is not falling off a table. Inflation is bad
if it causes harm. If it doesn't cause harm, is it so bad? That's a great question, Brian. But let me put it to you this way. Inflation is causing a lot of harm. May not be for equity holders, may not even be for bond holders. But if you are a wage earner, your wages are increasing significantly slower than overall inflation. And some components, especially for people who are low and middle income, the food at home category, the rent category, which are much more important than other factors,
they have increased more than the overall index. So is inflation causing a lot of harm. Yes. The reason why you see the Democrats are on are on the defensive before the November eight term elections is that inflation matters. And it used to be that said that inflation is something only wealthy people worry about. Not really, it actually affects the poor. And that is what you're seeing reflected in political terms. Brian. Yeah, it might be why we
saw Lula get elected. Rish absolutely gives a sense of you know, uh, this final sales to domestic private entities going down here as well, that's what you've been looking at. And this is coming from the Bureau of Economic Analysis here. You know, this is something where we had It's not I'm gonna quote here, it's but it is not what Jerrem Powell meant in recent press Conspan he admitted there
would be some pain as the FED titaned. Uh. He did say, though at his press conferences, I think twice, at least twice in his press conferences, that there will be pain in terms of the FED tightening and the impact that has felt on the economy. The pain he talked about was probably more oriented towards higher unemployment rate, which hasn't happened yet, but it is starting to happen.
Rich in terms of a private spending by companies and private spending by households, that's the number you're referring to, which slowed down to a crawl in the latest number, latest figures which were published for the third quarter. Now, the issue is when you have done that and the the part is slowing down, they should not be surprised. After all, that's what higher and higher interest rates are going to do, and that's the way, by destroying demand
is how they're going to bring down the inflation rate. Now, if on the middle they switch over and say, hey, we did too much, we're not going to worry about inflation anymore, he's going to repeat the errors of the nineteen seventies which perpetuated inflation. Alright, final question, is at the end of the pro growth reform period in China. I think it is at least for the next year to two years. Brian I would say yes, it is much more a consolidation of political power by the president
rather than support the private markets. Alright, Comal Shrie come out that joining is just going through the Federal Reserve. What happens the next and of course commercially come out is President come out both strategies and getting his take on the markets and more.