Transcripts For BLOOMBERG Bloomberg 20240703 : vimarsana.com

Sectors and the negative. U. S. Futures also lower right now. S p 500 closed down through off session lows. Finance chairs also finance shares also down. This follows the Central Banks move to hold policy rates steady with officials trying to work out whether the stimulus they have is working. We have yields being up as well, 5. 09 for the twoyear, the 10 year 4. 36 . And oil having a bit of a breather, brent crude down 1 to 93 a barrel. Wti at 90. Going back to what we were hearing from the minister of finance out of china, the National Development and reform, this is what they have been saying. Talking about the economy, the cpi, to rebound, the country is not facing deflation and has not had deflation. The chinese economy is continuing its recovery in august, a curious statement here about the economic recovery being a treacherous one. But also saying that economic positivitys are increasing. This is what they were talking about when it came to the currency of the yuan. Another headline was that those shorting china will be proved wrong. Some people would perhaps like to differ on that. The pboc says they will use tools to keep liquidity ample, talking about the currency and how they have plenty of reserves and want to prevent adjustment in the yuan exchange rate. Lets get more on all of that and look ahead to the big event, the federal reserve. Lets take it over to rahul goetsch, as we were talking about china, lets hear your take on the uninvestible tag the country has. If we have seen stabilization, and at the officials are contending we are seeing a recovery, they are broadly positive. How does that move the dial . Rahul when we look at china, we look at all of the stress that no market is ever uninvestible. It is what is driving the fundamentals. If we see signs of stabilization in policy and the economy, whether it is to do with the Housing Market or impact on tech, then there will be options opportunities over the next few years because valuations have come to a point where there are going to be no improvement of returns. Rishaad this is against a backdrop of china being underweight that everybody is looking at the u. S. With valuations where they are, what is your take . Rahul investing between valuations and fundamentals is always an art and a science. One of the things you have to remember is that when people are investing in Global Markets, there is a sense that china it is 4 of Global Markets . You have Companies Like apple and microsoft that are in excess of that size. There is an argument for Global Fund Managers that you are balancing opportunities with the fact that from a riskmanagement point of view you have to be concerned about what is happening in the u. S. And developed markets. Rishaad you see this massive rally in the u. S. , but it is not exactly broadbased, it has been seven stocks that have been the key drivers. The s p equal weighted index is only up about how much is the Market Pricing in . And does it presents present an opportunity away from those midcaps . Rahul the answer in short is yes. Lets talk about the big seven, they have been the driver of a lot of performance this year. The reality, if you look at the index in the u. S. , there are a few hundred stars that are up more than the market. It is not just the big seven that have driven all of the returns. More recently when it comes to my get broadening, you have seen some signs of that picking up, versus if we looked at data for the First Six Months of the year. That is something that is a slight positive when looking forward. But i agree that when we look at the u. S. More broadly, you have to be looking at sectors outside of just of the big mega caps that are driving it. One thing i would caution is that, to some extent, there is an argument for understanding why mega caps have driven the rally. When you look at the amount of investment that needs to be put into things like ai investments, it is a lot of Capital Expenditure going out. And these are companies that have significant cash balances as well as generating free cash flow. I would caution that just because they have done well does not mean there is a reason they need to lag. Perhaps they are not as stretched as one might be considering. Rishaad moving from the u. S. Where we have seen the big rally, we are seeing a big rally in japan. We look at the bank of japan decision, through the lens of jgb and the yen, if we do get a move, it is a question of when and not if. On ultra low monetary policy, how does that play out for equities . Rahul i am not sure the market, when you look at broad commentary, has any agreement on that. It is probably when, not if, probably sometime in 2024. Look for companies that can still benefit. Even if you are a domestic committee, the benefit you are most likely to have his on the exchange rate. You look at Interesting Companies and sectors that have a Global Markets, the question we ask ourselves is, to the extent there is a negative impact on currency from what happens with the boj, can the earnings grow and absorb the potential compression impact multiple that might arise. Rishaad so there is that. If we did get a move on it, you could get swiped by a strengthening yen as a consequence. How do you mitigate that risk . Rahul exactly to my point, the moves in the yen can be pretty drastic. How we think about protecting against that is a mixture of things. To have exposure to domestic and international exposure. It comes back to when you do have international exposure, if you can find a company where you think the earnings are going to double over the next 35 years, that can absorb what is likely to have an currency happen in currency. That is how we try to make sure that you dont get sideswiped by the market and give up the gains that you might make. Rishaad that brings me to your overall themes you are following. What are you looking at in the various Industry Groups . Rahul there is a little bit of value there, we are still of the belief that rates will likely be higher for longer. One area we have gotten more interested in is the energy sector. That has been a combination of what we have been seeing with opec, but also signs we are getting out of the u. S. Perhaps the incremental productivity in u. S. Shale is not as high as it used to be. It puts pressure on the cost curve moving upwards. If you incentivize companies to explore more, that would require Higher Energy prices. That is an area that has legs. We also like health care, it is a diversifier for the portfolio, more stable. And areas of equipment and bioprocessing, some of the covid overhang seems to be clearing up. Those areas are what we can look at without trying to spend too much time focusing on what the exact price of the u. S. 10 year should be. Rishaad that is something that everybody is pontificating over here as well. Rahul ghosh from t. Rowe price. The latest on the spat between india and canada over the murder of a seek sikh activist. And we will take a ride with the indonesian president as he lays down his visions for growth. Our exclusive interview with president joko widodo. Coming up. This is bloomberg. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Fabulous surroundings. But everyones looking at their phones for Financial Insights from merrill. Is he hailing a ride to the concert hall . No. Hes making sure his portfolio and retirement plans work in harmony. They want to adopt a child and build a new home. So theyre talking numbers with their merrill adviser. Shes not researching her next role. Shes learning how to handle market ups and downs without the drama. Personalized advice so impressive your money never stops working for you with merrill. A bank of america company. Only the new sleep number smart beds let you both yosleep at your ideals workinglevel of comfort. Rill. Your sleep number setting. And now, all of our new next gen smart beds have temperature benefits. Save 400 on the new sleep number c4 smart bed. Now only 1,499. Sleep next level. Shop now only at sleep number when it comes to getting your flu shot, cvs is pretty. Flex. Wanna schedule one online while prepping dinner . Gravy. Avoid the wait by scheduling for you. Or the whole crew. Or if you prefer to just pop in . Do you. And if you wanna even tack on a covid19 vaccine to your flu shot, feel free and speaking of free . Our flu shots are. Well. Free. Really . Yes, really. Healthier is getting a flu shot on your schedule. Cvs. Healthier happens together. Rishaad this is a look at the as yen asean, jakarta is one of the few markets in the Asian Pacific that is on the way up. An interestrate decision coming out of them in the session tomorrow. The malaysian market a bit down as a third day of falls for this index. Looking at the singapore market, just down. Manila, one of the worstperforming benchmarks in the world. We have the composite in jakarta moving to the upside, the indonesian president saying the economy they are can enjoy growth as high as 70 . He steps on next year after two terms in office. He is confident his successor can also achieve the growth targets. Speaking exclusively with haslinda almond, haslinda. I am very happy and the indonesian people are happy because our highspeed train is the only one in southeast asia. It is with this infrastructure that we can build a foundation of progress. And this will increase indonesias competitiveness. Last years imd Competitiveness Index survey showed our competitiveness increase. We need this, it is very important for our country to be able to compete with other countries. For logistics to be more efficient, it will have an impact on the welfare of the people. Haslinda it came at a high cost. 7 billion, is it worth it . Some people say it will take 40 years before you break even. President joko widodo mrt, lrt highspeed train should not be calculated by profit and loss. Do not count profit. What should be calculated is the benefit. Because of congestion, the country loses more than one hundred trillionrupia, Mass Transportation must be built to overcome congestion, for lucian and provide services for the community. If we compared with highspeed trains, these items provide net benefits for the people. Haslinda i want to touch on the economy. When we spoke in our first interview when you became president , you talked about an economy that will grow at 7 . Right now the gdp is far away, and we are in your final year of your presidency. Why have you failed to get to 7 . The target must be low, it will be too easy for our team. The target must be given as high as possible so there is a strong desire to achieve it. The Global Economic situation is not favorable. The readiness of domestic infrastructure to compete and attract investment is also not yet supportive. It must be resolved one by one. Infrastructure is resolved, investment Licensing Services are improved. If we can do this, there will be open investment, Many Industries will enter and build in indonesia. Reaching 67 is not difficult. I estimate it will happen in 20272028. It is because we just built a foundation. We have built 60 new airports, 18 new ports, 2040 kilometers of toll roads, dams have been completed. If infrastructure is completed, our competitiveness is strong. That is where our growth will jump up. Haslinda it has been nine years of your presidency, we are on the cusp of a leadership transition. Are you confident that your successor will continue with the plans and policies you have adopted . President joko widodo well it has been prepared, so that it sustains. Dont let every leader have their own vision, change the vision, every change of leader changes the orientation, so we end up starting from the beginning. We already have medium and longterm development plans. It includes the development of a new capital city, energy transition, industry down streaming and optimization of infrastructure. If the plans are in place this is indonesias vision toward indonesia 2045. Haslinda you are meeting President Biden in november, what will be our priorities in your conversation . President joko widodo with regard to the jejp, i will bring this up again. Second, indonesia wants to obtain a special tax credit for ev batteries so we can enter the u. S. Market. And indonesia is pushing for the Critical Minerals agreement with the u. S. To be signed soon. If this is granted, of course this is good for indonesias product that will be able to enter the large u. S. Market. Rishaad the indonesian president joko widodo speaking exclusively to bloomberg. Other stories we are looking out for. Chinas top diplomat pledging to strengthen the coordination between russia as they lay the groundwork of the Leader Meeting of the leaders in beijing. Vladimir putin will visit china next month for a forum and i meeting with president xi jinping. U. S. Commerce secretary ray mondo says there is no evidence that chinese phone maker huawei can make advanced chips at scale. She was upset that they raised the phone during her chip last month. Washington has opened an investigation into the chip export controls on the country. A default looming for Country Garden with bondholders left in the dark. An update that is on your way next. Next. This is bloomberg. Rishaad Country Garden is in focus, there is some optimism, but again that has been dissipated because the developers past an initial deadline to pay dollar bond interest. But to creditors tell bloomberg they have yet to perceive to receive the money. For Country Garden, this keeps on going, the dollar coupon came and went. And essentially, they are fiddling around with a timetable of their debt. The onshore bond extension offers some breathing room. We have been seeing Country Garden repaying the dollar bond coupons. It shows the developer has the will to avoid a default. And with the upcoming coupon payment, i am not too concerned, it is still a small amount. The company has a record of trying to repay within the grace. Within the grace period. The dollar bond is coming due towards the end of this year. Those are sizable maturities. It does not help one Country Garden is facing a lot of challenges. Rishaad it is not a big sum of money. How close is it to default. Kristy you can see that it is facing tight liquidity at the moment. Rishaad we have seen a range of stimulus measures come in. The ministry of finance, perhaps stabilization or a slight recovery taking place amongst property. What is the overall. Are we seeing that . Kristy the relaxation of mortgage rules and restrictions in larger cities. We were in shanghai last week. We see some of the projects, suburban ones, doubling of traffic. It is specific to certain locations. If you look at the data, september sales are down versus august despite a similar measure. We think the government will likely need to step up its stimulus efforts to try and recover. Given the structural changes to demand and supply, it will be more difficult versus 2009 and 2015 down cycles. Rishaad thank you so much for that. A look at Country Garden and the wider Property Market Real Estate Developers in china. We have chinese equities in focus. Part of that is what we have been talking about. A downward draft, no change in the loan primary. Left the one and fiveyear rate on rate unchanged. We have the drip drip of stimulus measures, perhaps not doing much to restore confidence. It has hit these markets hard. We have heard from the pboc and the ministry of finance, talking about how the economic positivitys are increasing. Talked about do not short china, it is not in your interest, that was a warning. This is not adding anything for the investor, which is still beleaguered. We have the fed coming up. If you look at the hsi,. 6 down, it has declined this year nearly 10 . The property gauge is down 27 and training within a striking distance of what we saw in october. Rishaad cloud by indicating a fallback at the start of the session. You are watching india focus with bloomberg markets, a look at the key stories as markets there in india return from their public holiday. A big day for ipos, shares of after its initial public offering. We have ipos of Signature Global india and sai silks will also open for sale. And the reserve bank options off billions of tbills. We are looking also at the rupee. Coming off of these record lows we have been witnessing, we have hit a record low. 83 rupees. Some of this is down to crude prices easing before the fed policy decision. And dont forget the Rising Oil Prices mean further deterioration in the countrys current accounts which affects the rupee. A little bit of respite for the currency as we see oil on the way down, rent crude down. 9 , wti down two thirds. Another thing affecting sentiment may well be the fallout from canadas allegation against india. The government denies the assassination of a prominent sikh leader. Guest this is an ugly standoff between two countries. It is not just a bilateral issue, it will become a multilateral issue as well. The developments over the last 48 hours are thus, canada has accused india of interfering in its sovereign issues by aiding the assassination of a canadian citizen who india refers to as a terrorist. The canadian Prime Minister has said that they have credible evidence and the investigation is ongoing. India has called these allegations absurd, denying it has had any hand in the deaths in the death. We have heard from canadian allies, the u. K. , the u. S. , and even australia. All of them expressing concern about these allegations and seeking a speedy and complete speedy completion of the investigation. As you already understand, this cannot the best way for me to put this is this is a very deltek very delicate diplomatic line. There are people involved, trade ties involved, and large investment ties involved as well. Rishaad lets bring in canadians have billions of dollars of investments in indian assets. Does this have any bearing on what happens next from a market standpoint . Guest ashley said, probably the first benefit of this would be on the investment, on the market side, the stock markets. Cpp, the biggest pension fund, they have 21 Million Dollars worth of investments in indian companies. There might be pressure on Pension Funds and canadian Investment Funds invested in india to pair their investment. We can see the fallout on the stock they own, which ranges from banks, i. T. Companies, and a host of startups. The first impact might be on the stock market, where they are invested through tens of companies they have whole stocks in. Menaka do we know of any act channel talks between india and canada, or with the other allies . This event comes on the heels of the g20 summit. It does mark some of the diplomatic accolades that Prime Minister modi was able to get. Guest absolutely right, india has portrayed itself as the leader of the global south. We have seen how he pulled through the communique, which was not expected, at the g20. We are not very sure about what channels they have opened up. We have been reading about reports, how the issue has been flagged earlier. But it was not discussed during that time. What we are picking up is the government is trying to buy some time to see how the opposition parties are reacting to the allegations. The parliament is on special session and Prime Minister modi promises to make it a historic one. They do not want tomorrow this they do not want to mar this with allegations coming from canada. But they are preparing something to fight back all of the allegations. Rishaad what about the parliamentary session . It was quite stark, there was not any reference. Guest yesterday there was no reference at all. We have been hearing buzz that there could be some kind of a statement by the foreign minister. Yesterday we saw early in the morning the ministry of Foreign Affairs with a rebuttal to the accusations. After that, it was all drama in the parliament, it moved to a new building. Anja there was akey bill, we had heard the Prime Minister speak a couple of times. Everyone was engrossed in the shifting of the Parliament Building and the new bill. And the opposition probably did not get their head around to talk or think about the accusations. Just to mention, this issue has been there for quite some time. The Main Opposition Congress had to deal with it with the former Prime Minister. Probably they are trying to keep their head up to try to think about a strategy. Rishaad thank you so much. Menaka, stay with us please, a lot more in regards to sugar, as prices are surging. We will be talking exclusively to the executive chairman of shree renuka sugars, atul chaturvedi. This is bloomberg. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh schedule one for you. Or the whole crew. Plus, theyre free. Really . Healthier is getting a flu shot on your schedule. Cvs. Healthier happens together. Rishaad just about the start of the cash session, a move to the downside being confirmed by what we have in terms of premarket. We are looking at commodities, focusing in on sugar prices which have been rising sharply, hitting 12 year highs. Concerns about Production Growth globally slowing down. India is the worlds secondbiggest producer, but developing el nino conditions could mean lower yields. Lets speak to atul chaturvedi, executive chairman of shree renuka sugars. You say there are going to be hiccups in the sugar story, can you expand . Atul as far as the world is concerned, the sugar available will be taxed this year. Despite the fact the brazilians are harvesting a fantastic crop. The problem is actually in india and thailand. India, in the past always had a high surplus. For the past two years, india has exported Something Like 17 million tons of sugar. Which means the carryover is relying on india. Now that has gone and india is not practically on a twomonth stock position scenario. That is resulting in sugar prices moving northwards. And what we are also seeing in spite of production going up, the consumption has kept pace. Consumption this year could be closer to 190 million tons. Whether you compare it to consumption postcovid, consumption in the world has gone up. Rishaad i want to get your take on whether the monsoon season in india has affected your yields. Atul in fact, and all of these last few years, we had a hard time in the state of august. They are two major sugar producing states. Our fear is the production in these two states would come off quite a bit, they are major contributors to the sugar production. But overall, indian production this year is likely to be much lower than what it was last year. And that is getting reflected in the domestic values, which are inching up. I would not say they are on the boil, but it is inching up a bit. Menaka what is the outlook on where prices are headed in india . As well as the export outlook for indian producers. Atul sugar, as a sector in india, is highly regulated. They might end up a little, reflecting the values and data available. As a company, we want to have exports open because the data is huge between domestic and international values. Being rational, i think india is going to err on the side of caution, and that is largely because inflation is not only a dirty word, but india will be staring at elections in 45 months. Menaka are you seeing any cutback in ethanol diversion given the carbon situation with inflation and domestic prices . Atul it will all boil down to what the ethanol values are. The government has to announce the price for ethanol for the current season as far as sugar is concerned. If the price is right, and as an industry we are expecting an increase, then we do not see ethanol production coming down. It could actually go up. But if the government doesnt do that and sugar prices remain on the boil, we could see a hiccup. As far as production in the country is concerned. I will not put a number on that today. We are waiting a reaction on the new season. Rishaad do you see a trend in terms of climate, where perhaps it is going to be affecting indias position as a huge sugar producer and perhaps decreasing yields as we get to climate change. Atul i wont, on that today. I wont comment on that today. But they have strong system, there is no issue. Production is absolutely on track. But the problem areas what we are also seeing is that the resurgence of sugar production coming up in southern india. Overall i think we dont need to fear too much as far as the future of sugar in the country. I would go to the extent of saying that our Prime Minister committed 20 lending by 2025. We would like sugar to be called the energy sector. Rishaad how much upside do you see in terms of at the end of the year, where will sugar prices be . Atul i dont see it sugar prices going up to much. In early november, it could take time to hit the market. This is also the festival season months. Indians love to splurge during the festivities. I am sure menaka can confirm that. [laughter] menaka well im off. [laughter] rishaad atul chaturvedi from shree renuka sugars. The 10 year bond yield for japan, the jbg yielding. 729. It grows one basis point. We have it now and 7. 729 there as well. It is also because of betterthanexpected trade data. That is a look on what is going on there, lets look at what we have coming up. A full market check, looking to the hong kong close for lunch session. Plenty more on the way, this is bloomberg. Rishaad a look at keith schwartzman, the blackstone executive, the European Growth engine is showing signs of slowing, he says. He talked to us exclusively in paris outlining the risks he sees and the stickiness of inflation. Europe is slowing down, it is pretty clear that there were certain countries, for example germany, where growth is slightly negative. France today, we have an expansion of our office here, and francis doing the best of the european countries. I think it has been the biggest beneficiary of brexit. The government has done a great job making france attractive, paris attractive. But as the central bank continues to raise Interest Rates, no one knows when these things stop, it is certainly suppressing growth. It is a reasonable expectation for europe over the next year to have muted performance. Does the ecb need to stop soon and fear of an fear of a recession . That is up to christine, not me, inflation is still pretty high here. You cant stay at that level. The central bank typically would do what it needs to do to lower that. One source of support for europe that we do not have his china. We came into the year thinking china would be huge source of global growth, now we are hoping for more largescale stimulus. Have your assumptions about china changed . They did change, i was in china in april. My expectation was there would be a rapid bounceback. But what i found was that people had had a tough time over the last 3. 5 years. They had a real estate crisis for a while. That became more pronounced as they had to meet maturities. The Chinese People tend to put 80 percent of their savings into real estate, so that takes away confidence when real estate goes down. No one likes spending a lot of money as their net worth is going down, it is not how humans work, whether they are chinese or any other place. It is difficult for china in the face of that to have the rapid growth rates we are having. Europe has been a big exporter to china. And china has provided over the last 10 years or so, before covid, half of the worlds growth. What does the opportunity look like for blackstone in china . I think most people, including the chinese, are taking a waitandsee type of approach. One of the things with china is they often make mistakes, but they typically dont continue making them. They dont have a lot of pride in wrong decisions. They are practical, so it is a matter of time before they make the appropriate adjustments and start growing again. In the shortterm, i think it is going to be difficult. Rishaad the blackstone ceo talking to us. Just about two hours and six minutes away from inflation data out of the u. K. Inflation has been much stickier than other parts of the world. That is tomorrow. This is what it looks like, a future bank of england hike. The outlook darkening since june, it is bolstering the case that we have 14 Interest Rate hikes beginning to take effect. However inflation is likely to have risen for the First Time Since february from the previous month with cpi at 7 inflation year on year, 6 in july. These are all estimates, of course. Retail Price Inflation is going to be coming out. Looking at the hong kong market. In the doldrums once again. Overall we are looking ahead to the interestrate decision coming out of the federal reserve, that is out in 14 hours from now. Just over 14 hours. We are seeing volumes low but no one is prepared to take on risk. The yen is under pressure, japan 10 year yield is the highest level we have seen since 2014. Perhaps people are positioning ahead of the boj. With the way the yield curve can actually move and what they can tolerate. 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