Thank you Michael, and welcome to this year's Shark Tank. My name is Noel Dixon, I'm a senior macro strategist here at State Street. Today I'll be presenting alongside my colleagues, Anthi Tsouvali, and Carlin Doyle. Our goal is to provide you what we think are the best trade ideas that can help you to navigate today's current market environment. So with that said I'll kick things off by going over what I think are some good opportunities within the commodity FX space. Before I begin I think it's important to provide some context. So up until this point when we look at FX performance, commodity FX performance relative to the commodity index as a whole, it's been lagging noticeably, and that's largely because a lot of the performance has been skewed towards the energy sector, and as you can imagine, although higher commodity prices have benefitted the terms of trade, it still has been a stress for consumers as well as households. Finally geographic location has also played a major role, and we think that's clearly evident when you look at the performance of commodity FX within the domestic aspect. So for example the NOK has been the worst performing commodity currency despite its prominence in the oil and gas space, and that's obviously because it's in close proximity to the Ukraine/Russia war. The second worst performer has been the AUD, and that's a function of it being the zero COVID policy emanating from China. As you know China is Australia's number one trading partner. The best performer has been the CAD, which is still down seven per cent, but nonetheless it's still the stronger performer. Now when we look at the three aspects of commodities, or the commodity sectors that impact DM commodity currencies the most, it falls under three categories, which is energy, as I mentioned earlier industrial metals, and precious metals. So when I look at energy, at the moment my bias is to the downside. I think that certainly the secondward [unclear word] down trend is still in place, but admittedly I have to acknowledge that in the short run we could see a floor as geopolitical risks have heightened, as well as the Biden administration has indicated that it plans to purchase oil below $80 using WTI as a proxy, to replenish the SPR. You can see that if you look at the right chart, investors, real money investors sort of share that same sentiment. Our flows have been increasing noticeably as they're probably buying into this narrative. Now with that said, when we look at the Fed model, the oil dynamic Fed model, what I do here on that chart on the left is I normalise it back to the lows back in April of 2020, and for the past 12 months, supply has been the dominant factor. So this looks at supply, demand, and speculation, as it contributes to the price of oil. As of late, that started to reach equilibrium and actually demand has slightly started to eclipse supply concerns. So my bet is that down the road, or in the near medium-term, demand destruction is going to be the prominent factor, as it relates to energy. Now when we think of industrial metals, we like to look at the Baltic Dry Index, that's a good leading indicator. That just indicates the price of shipping goods, and that's really come under pressure lately, and we think that'll persist. So we can likely see lower industrial metals, or base metal prices. When we look to the chart on the right, real yields are the biggest driver for precious metals. Right now real yields, if we look to the November low, using the US ten-year real yield, it's up about 270 basis points, which is a dramatic move in real yields and that's going to continue to hamper the price of precious metals. So with that backdrop, my highest conviction trade is going to be to go long dollar CAD. So if we look at it from a technical standpoint, it's really broken up to the topside, and I don't see anything really getting in its way in the near term. Obviously a lot of the gains and dollar CAD thus far, you could attribute a lot of it to the strength of the dollar, but I think equally it's what's going on fundamentally and domestically. For example, on this chart here, this shows the terms of trade where they really benefitted from a spike in the terms of trade earlier in the year, but that's obviously started to rollover, and it's becoming less of a tailwind that it once was, and I think it's starting to put pressure on the CAD. I think more importantly, the bigger story is what's been going on domestically. So if you've been monitoring it, the job losses for the past three months on average have been about 38,000 jobs that have been lost. When we look at the housing market, it's really fallen under pressure. So the Bank of Canada's rate hikes are really starting to take a bite here. You look at the CREA home price index, that's fallen about four consecutive months to multi-year lows. Then if we look at the last retail sales print, that came in below estimates in a meaningful way, and that has all filtered through to the CPI, or the inflation coming in softer than expected. If we look at inflation from a price-stat standpoint, month over month, it's actually on par with the ten-year average. What that means is that the Bank of Canada is least likely to go beyond what is priced into rate markets when we look at our one-year fors [unclear word]. Finally, from a positioning standpoint, investors will still overweight the CAD, and think it's roughly in about the mid-30s percentile. So that's obviously, that positioning is unfavourable to CAD as well. Now with that said, once the dust settles, when I think of a good RV trade, or a trade that sort of caught my attention, it would be the long AUDCAD cross. What attracted me to this is if we look at Australia, things have actually domestically started to improve marginally. Retail sales have stabilised, and a thing I like to look at is business conditions from a year over year perspective, and that's a good sort of leading indicator for the AUD. Now admittedly what's holding the AUD back now, as I mentioned earlier, is China and their zero COVID policy, but I do expect that over the next six-to-12 months that that will on the margin improve, and that should at least help with the 12 month change in say credit impulse, which is a good leading indicator for AUD. Finally what really caught my attention, or I think is the compelling aspect here, is the positioning. So for the AUDCAD cross, real money investors are underweight, roughly in the fifth percentile. They're starting to buy that cross, and we're trading close to the low, so I do think from a risk reward standpoint it can present an opportunity as the dust settles. So in summary, I think global central banks, constant pursuit of tighter financial conditions is going to continue to put pressure on commodity prices as a whole. I do think it presents an opportunity for dollar CAD; I think that for me is the highest conviction. Trade as I mentioned earlier, the chances of the Bank of Canada going beyond what rate markets are very low. So right now I have an interim target of about 140 and that'll go ultimately to about 145. AUDCAD, I think that could easily get back to 94. The compelling argument there is I think overall is the positioning and just where it's trading at the moment. So I'll end it there. Hopefully I convinced you to go short to CAD. For now I'll pass it on to Anthi Tsouvali to give her thoughts and thank you for your time. Cheers.

Thank you very much Noel. I do agree with you that we're going to see demand slow down, that probably there is a floor to oil, but leave it to the ever optimistic, equity strategist to tell you how he believes that oil prices are going to go up. Let's take it from the beginning. I do understand that it's very scary times. If you look at the chart on the left you see that energy sector has gone up a staggering 45 per cent, compared to the overall market. I'm sure that most of you are thinking, oh wow, I need to take back some profits, where am I going to go from there. Of course it's a very, highly uncertain environment with interest rates going down. I'll have to admit it, the supply/demand dynamic is not as attractive as it was a few months later, and of course Noel talked about that as well. I think that where I want to focus more is that demand has not been fallen off a cliff, we're talking about a slowdown, but we're not talking about still a distraction or contraction of earnings. The labour market is still going very strong, and consumer and corporates have on an aggregate cash on their balances. I want to focus more on what I think is the upside, that we still think are going to be supply side constraints, and I think what's happened in the last decade or so, is that companies have underinvested in energy. We hear that a lot, and especially from OPEC, when they talk about the industry they stress out that it's very hard for them to put supply back into the market, and that stems from the fact that they've underinvested for such a long time. As I said it's not easy to see that capacity comes in if needed. On the other hand you have governments around the world, and specifically the US, where they have the issue of trying to lower the energy bill for consumers. So what they do, especially in the US, they tapped into their strategic petroleum reserve, and they're pumping about, just in the US, one million barrels per day, which is a lot. As you can see there, the SPR has gone down significantly. So what is going to happen in a few months is that is going to pull back, the programme is ending, but at the same time they're going to have to start replenishing that. So they'll have to come into the market, by provide the floor there. They've actually talked already that they're thinking of replenishing the fund below $80 per barrel, and we have crossed that line. So we should see some demand coming from that. I think that where does the future lie, you can see that the future expect that there's going to be a tightening in supply. You see that we're still in backwardation, we're far from being in a contango, so the expectation is that supply is going to tighten further. A lot of that stems around the heightened geopolitical risk, and everything that we hear about Russia, and the extreme, and the tension between Europe and Russia. Let's assume it's an exercise, I don't think that's the best case, but if we assume that Russia will take from the market the 30 per cent of their production that they currently supply Europe, over the next year-and-a-half, look at the difference between supply and demand, and even if they do ten per cent, or 20 per cent, still we're talking about oil reaching at least $100 or $120. So there is still a lot of potential and I think that there is risk on the upside and not the downside, as Noel argued. Also I think that what we forget most of the time, is that we're talking about stocks here, it's equity, so fundamentals have been very, very strong. What happened since the last energy crisis in 2015 and 2016, is that companies, and management teams, actually learned their lesson. Back then they were splurging money, they were going into a lot of projects that were not profitable. They have learned since then, so their capital location decisions have been much, much better, and they're very careful, and their core structure has been very lenient, very efficient, and that's why you see that profitability, and when we're looking at margins, when we're looking at return on equity, has been very good improving and rising, and it's much better than the overall market. I think that in times when we see high inflation, and a lot of uncertainty, there are certain things that we look at. We prefer companies that exhibit profitability, and their margins are high. Also they have very strong, free cashflow. Look how energy companies have done in the recent months. If you look at the right chart, the light blue line, free cashflow generation has been superb and superior to any other sector. So that means that they're healthy, they can withstand the shock further, and they can also pay back shareholders. They can pay in terms of dividend yield, in terms of buy-back share programmes. So they return to the shareholder, and that's why it's a very good diversifier. Historically we've seen that in similar times in the cycle, if you had commodities in energy in your portfolio, performance has been very good. So it's a very good diversifier in your multi-asset portfolio. Then of course Noel has also talked about that. It has a very strong behavioural support. Over the last year there's massive buying of energy, and what has happened over the last year-and-a-half is that the investors managed to close the big underweight that they had, and now they are building an overweight position, but it's yet to be extreme. If we compare it on the left chart, the double line which is energy, to the light blue line that is IT, which is the largest overweight position, you see that still energy is below that extreme. Also if we look at the history, it's far below, it's probably one third of the positions that we saw right before the financial crisis which was the peak of energy position. It's the same thing when we're looking at valuation. I'm not going to lie, valuations are full. If we look at our favourite metrics which is the cyclical adjusted PE, it screams as expensive, because it's more than the ten-year average, but look at the history. If we compare the valuation now, compared to other parts of the cycle where oil prices were higher, then it can get much more expensive. So with that, why you should buy energy, and of course vote for me, is because we think that oil restrictions could persist. The sector has very strong fundamentals, so improving margins, free cashflows, it can be a very good diversifier, it offers high yield, which is very good at the time being, and valuation and position are not extended. So I would all advise you to find these decrease in prices as a buying opportunity for energy. Thank you very much. With that I'll pass it to Carlin to talk to you about EM FX.

So go long and EM FX carry basket. Oh yes. So partly the reason behind this suggestion is the returns themselves. So if you had gone long, basket of EM carry back in November 2020, the orange line, you'd basically be flat now. It could have been a lot worse, let's face it. If you'd gone long, let's say EM hard currency bonds, or perish the thought EM equities, you'd be in a lot of trouble. Yes, okay, zero returns, but what's the worst that could have happened. You would have been flat. The best that could happen is at least you'd get some diversity in your portfolio. So that in itself is good enough, and of course that juicy carry will continue, and it's there. Okay, yes, we know that short-term US interest rates are going up, so maybe the carry advantage isn't there so much now, but actually if you look at the average carry, by the way and I've tried not to cheat, you'll notice the average carry there… By the way I've excluded both Turkey and Russia. If I'd included them, it would have looked even better, but this, no, I have been honest and I've taken out the currency which either is impractical to trade, or the one that's illegal. That return itself is still quite nice and healthy. It's not just a theoretical idea, because if you look here, what I've done is a correlation between our EM FX flows over 20 days and correlated that with a ranking of yield. Actually as you can see here, for the first time in whatever that is, just over a year, year-and-a-half, those flows are correlating. So EM investment managers are buying EM currencies. Now why is that? Are they all loopy as me, or is there something behind this? Well, lets face it, if you look at volatility, believe it or not volatility is not actually that historically very high, despite what the world has had to deal with, with China slowdown, Ukraine war, all the other palavers that have been going on. Actually, historically, volatility really isn't that high. Moreover, let's zoom in, cleverly, to the latest period, you can see since June/July, actually EM historical vol, three-month vol, has actually declined. So despite fears about US interest rates, despite the two Ps, Powell and Putin, both of them have had very little impact actually on historical volatility. In addition to that, correlations. Here is an average pair-wise EM correlation across 18 currencies, and actually you can see that's actually been declining to near historical lows, which we last saw prior to the outbreak of COVID. That's not bad. Combine the two together, carry to vol ratios are actually very impressive. What I've got here, again trying not to cheat, is I've looked at the average EM carry to vol ratio, taking out Russia and Turkey, on the dark blue line you can see that's actually shot up lately. Compare that with the average over the last 20 years, which is the light blue line, and I've stuck in as well, Turkey and Russia just to compare, you'd actually have a better carry to vol, better risk/return ratio, by excluding Turkey and Russia, going long carry to vol, and that's even improved over the course of this year. Now why is that? Well, partly because I think this, here. So despite Putin's shenanigans, oil prices, and even natural gas prices, have not gone stratospheric, which I think we should all be very, very grateful for, for whatever reasons. Demand, supply, de de de de de, being able to put him in his box, who knows, but for whatever reason, those prices have not gone exponential which were, I think, all can be happy. What that has had an impact on of course, is the fact that inflation is becoming less so much of a stress ball amongst everybody really. Even economists, that wonderful febrile, slightly eccentric group of people of which I have the pleasure to be, are finally beginning to get it right with their forecasts. In other words, so this usual mean reverting series of inflation surprises is actually going down and is becoming normal. So economists are getting used to it. What this all means is that inflation which has been something of a shock, surprise element to everybody for much of this past year, is becoming less of an issue. For that I think that's why we're seeing a lot less carry to vol; better carry to vol should I say. Again, what we should also look at here is positioning as well, because obviously if everyone is already long risk, there's no point in going in, but actually if you look, and here I've broken down our EM FX holdings by region, yes, the likes of Latin America is still pretty, very much underweight, but if you look at EM Asia, and EM EA, actually what we've seen is it's way off its lows, and we're starting to see those positions gradually beginning to be built back up again. Now you can look at this in two ways. You could say, well, perhaps everyone's pricing in an absolute disaster in Latin America and it's never going to get better. Or you can say, well this is an opportunity that everyone is really underweight, the likes of Brazil and Mexico, perhaps for a good reason, or perhaps because they've just ignored the fact that some of these currencies have got juicy carry. In EM Asia in particular, by the way, one of the reasons why that line has gone up is partly because, the orange line, is because flows have been going back into the likes of Indonesia and India recently. Again that is not consistent with the risk of scary view. If we break apart some of these currency, both flows and holdings, can I draw your attention, ooh can I use my laser? Ah yes, there we go. You see up here in the top right-hand side, so that's currencies where investors are overweight and they're building. So look at that triple whammy of RND, Turkey, and HUF. So investors are overweight in those currencies, and they're building on them. So this is an amazing strategy that they're seeing value, or whatever, or just pure carry, that those positions are there. I also like this section down here, the South East section, the bottom right. That one is where investors are underweight, and they are buying. So here's where the opportunities are, where you don't have the big positioning risk. Again I point out the likes of India, Mexico. What else have we got down there, zloty as well. These are the basket cases which everybody hates, the bottom South West corner, where everybody doesn't like, and they're building in underweight. Actually a lot of it is the safe Asians. So what we think of as being traditionally the safe havens, the likes of Korean one, investors don't like. They're underweight and they're selling. So that really is the good news. The good news is that there's light positioning, carry works, we've got juicy carry, inflation is not so much of a problem, volatility is low, carry to vol is up. What's not to like. Thank you very much.

Okay, if we could open the poll. Come on. You have to be up here. Are we opening the polls so people can vote? There we go. Oh so you already had a head start Carlin, look at that. Was that rigged, that's fantastic, I love that, okay. Yes, unfortunately we can't get Noel back, so we've got another speaker joining us remotely in a sec, but we'll just wait a little bit and see if… So this is an interesting test of optimism in the room isn't it.

It is, isn't it.

Goodness me. Okay. You see Anthi, you're catching up there. Okay, that's interesting.

Oh it's going to be tight.

Oh it's very close. It's very close. So you'll notice that Short Sterling wasn't one of the recommendations but to be fair we have been Short Sterling all year to be fair. In fact we took, hit take profit in Sterling again just recently. Look at that. Okay. So there is still some optimism there.

Well, Sterling is emerging markets, no.

Oh yes, actually should Sterling, that would be a good question, should Sterling be included in the EM currency basket? Thank you. Well, there you go. There was me worried that today we'd all be a bit too gloomy, but there we go. The trade of the day is emerging market currencies. Thank you Carlin. Thank you both. That's it. Great. Thank you to Noel as well.

Thank you.