It is quite interesting that if I look at the general positioning for the US e economy, 8 out of 10 economists or if I may say 9 out of 10 economists are bearish. But if I look at the US financial markets, S&P has rallied, Nasdaq is nearing at an all-time high and there seems to be quite a contrast in what currency is doing and versus what US markets are doing. So just connect the dots for our viewers.
Richard Yetsenga: Well, may I pick the two rather than the one. The dollar has been coming down. The US numbers have been soft. It began in April and May with the survey data, the PMIs and so forth over May into June and then probably into July, we have got the hard numbers which are coming down and validating what we have seen. We have got softer employment growth. The unemployment rate has not gone up very much, but that is in some ways a different story. We have got softer headline jobs growth in the US and the dollar has been coming down for a whole range of drivers. I think part of which is this unfolding slowdown in the US economy. I think you know that part of the picture to me is pretty clear and as we head into the second half of the year, we will see the US economy slow a bit more. No recession, but a slowdown.
Financial markets they always say are an indicator of what lies ahead. Are financial markets telling us that the tariff concerns which were there in the month of March, April, have they been discounted?
Richard Yetsenga: Possibly, they may have been discounted. The rate at which we have ended up with tariffs does not look like something which will be destructive to the US economy or in fact, the global economy. But they do look like they are going to contribute to higher input costs for US business and certainly some of that will get passed through to end consumers, that is the key reason the Fed is not easing already. I mean, our forecast for some time has been the Fed would deliver its next rate cut in September and that is a timing that I feel quite comfortable with. Without the tariffs, I suspect growth might have been a bit better, but more importantly, the Fed would be even more comfortable with the inflation story and probably would have been able to bring the numbers down a little bit more. Let us not also forget it is not just tariffs we are talking about in the US, but also the one big beautiful bill which is yet to pass through both houses of Congress, but that seems like where it is going, it is going to add to the deficit over the next couple of years. So, in that sense is also causing the Fed to stay its hand and be a little bit cautious.
Help us understand what are you pencilling in with respect to the rate cuts because, of late, the commentary that we are getting to hear from Fed spokesperson, they are saying that the rate cuts are possible later, this particular year a careful and a patient approach is appropriate at this point in time? Help us understand how do you connect the dots there?
Richard Yetsenga: I agree with the Fed, some rate cuts seem likely, a patient and careful approach seems the right approach when you are dealing with so many crosscurrents and in fact, the economy is not that weak. So, we have pencilled in September, December, and March for the next three rate cuts and at this stage that is all we have for the Fed. And look, I just like to keep reminding people particularly on days when the news flow seems particularly poor, no recession. It just does not look like we are in for a recession. And if it is a midcycle slowdown, that is something that policy can be responsive to and actually the economy can respond to the rate cuts when the growth slowdown is only modest.
