Transcripts For BLOOMBERG Bloomberg 20240706

Us a bit of support. A little bit of strength on the yen. The bank of japans yield curve control may not impact the markets which some are expecting, so do not expect any great strength. Crude oil, and opec meeting coming up. Yvonne you have the dollar sinking the most in two months so there was this fed commentary about how it looks like what the fund is leaning towards is a positive or a skip in june. That is helping lift overall the risk move. Even china, you take a look at the rally we are seeing in the hang seng. The extreme bearishness is coming off a little bit now. Rishaad yesterday if we wanted to go to the advice of the hang seng in 2018, you would need to have an 18 improvement. But ecb inflation. Christine lagarde has a bit more wiggle room, came in at 6. 1 inflation. Compared with pakistan yesterday, 37. 97 . Yvonne yikes. But the euro story will be interesting. If they are also close to a positive we heard from some of the ecb officials that may be the next few hikes are going to be more marginal. What does that do for eurodollar . We certainly saw the weakness of late, but the dollar weakness story trumping that. Now there are questions on the tightening we have seen across em. Rishaad and em, we saw sri lanka yesterday, a different case altogether, but so much wiggle room it seems for the Central Banks in this part of the world. They are cutting before the fed and already pausing as well. And Interest Rates are only at 2 . Quite something. Yvonne it is an ongoing discussion whether it is a hike, skip, or pause for the fed in june. That is affecting the macro movers and it is mostly green across the screen this morning. We have been seeing recovery in china and the Hong Kong Markets, risk assets overall doing this. Commodities are breathing a sigh of relief that we are not just focused on this recovery story that is fluttering in china. Rishaad indeed. As Federal Reserve officials consider whether to hike, pause, or skip the next meeting, the may u. S. Jobs report may help them. Kathleen hays is in new york. We have the indicators and the jobs report coming. What is the difference between a pause and a hike, and why do fed officials insist on using everything as an exercise of obvious asian obfuscation. Kathleen my impression is a pause in hiking rates indicates that you are not going to hike for a while because you think you might not hike rates again, but when you skip, it means we need time to think this over and get more numbers because we think we may have to hike again. That is Kathleen Hays interpretation. Payrolls, look at this. Another slow down. Some 200,000. We know for the past 12 months, the miss has been consistently to the upside. A gain of 90 500,000 is not a week jobs report. A gain of 195,000 is not a weak jobs report bid even if the average earnings on wages are lower, that is better to have a somewhat lower pace because or. 4 yearoveryear is down from the highs, but it is about two times higher than what wages used to rise before the pandemic. Overall you can say a report that is cooling off a bit, but the fed wants to depend on a weaker job market that will help bring down demand, suit inflation. Soothe inflation. This one will not make a big impact. Yvonne do you think this data will sway the doves in a direction today . There is a push for a pause button in june now. Kathleen in terms of the numbers themselves, it is interesting to me over the past four to six weeks, many fed officials when they have been speaking say that there are three more big reports, we will keep our minds open, watch the data before the june meeting. That is one job support and two Inflation Reports. This report does not seem to make much difference, especially when some people are intent knowing what they are going to do, and that is one of the people who has been calling for the pause, calling for whatever you want to collect, and that is Patrick Harker from the philly fed. For the first third day in a row, he said this. We should be moving meeting by meeting, so we need to look through that as well. There are other forces happening with the revision on the wages and so forth. It gets me to think we should at least hit the stop button for one meeting. Kathleen phil dudley formerly worked at the fed, saying that they will posit this meeting, perhaps with one or two more hikes bid he says perhaps powell will see the wages and payroll gains. Lets see more from this historic perspective and you can see cpi, one of the two main inflation gauges in the u. S. Has come down to 4. 9 . The average Hourly Earnings yearoveryear have spiked up during the pandemic and stayed steady. They are not getting much lower. Bloomberg economics says for jay powell, he is ready for a pause and is focused on the Downside Risks, especially when it comes to tighter credit conditions. We do not know how much turmoil will affect this. So if anything makes a difference, it will probably be the Inflation Report coming up. Yvonne Kathleen Hays, are Global Economics and policy editor joining us. Lets bring in joshua crabb, head of asiapacific equities at robeco. Do you think at the end of the day the fed is not done yet when it comes to cooling inflation . Joshua you see different opinions from even people at the fed, and that is because you have mixed data coming up. You have the jobs data, but also the unit cost is slow, and that is why the fed is deliberately stepping back. If we look to prevolker, which is the last time was on this activity, you saw the mistake of backing up too early, and as Inflation Expectations become more embedded, we have a bigger problem longterm, and that is why the fed is playing this cautiously. That being said, we are closer to the end than the beginning on the short end of the cycle, but we think there are probably lingering issues and we see that in the labor market. If you work in finance or technology seeing the headline job cuts all the time, but for bluecollar labor, there is a strong backdrop. Rishaad when volcker did it, he was still cutting rates two months before inflation. We have had to peek inflation and surely we did have peak inflation because things carried on, so the mystery is why we are not seeing this biting as much as it should be . Joshua that is the question. There is still a lot of slack in certain parts of the economy. China has been surging back, issues in places from a command perspective, so the last aspects have slacked despite we do have seen from the supply chain, so that is a bit of why we have not seen that issue. This becomes the problem and it is never the headline thing. It is the wage expectation that gets built into the process. You get a higher rage wage, the prices are expected to go up. Yvonne if we are getting close to the end of this tightening cycle, how much does asia benefit from this . Are there equity markets that you think can thrive now that the fed is closer to a cut . Joshua one of the questions i always get is, what would be the best thing that could happen for asian markets . The u. S. Gets the recession over and done with and then we see them move forward. If you look at valuations in asia, they are as close to cheap as they can get. We are pricing in a recession for the rest of the world, while the u. S. Is not. We have seen assets in asia trading very cheap, all of this on expectations around china. Of course the reopening has meant that we have expectations for that market. We see positive markets even in korea, where we saw Companies Like Memory Companies trading further while ai was getting a better trade elsewhere in the world. Rishaad we got a lot of treasury issues coming up. There is a fear that will suck liquidity out of the system. We still have qt going on. Looking at the money supply, negative growth, we have had that since december. These are all pointing to tightening and very illiquid credit conditions. Is this something the fed has been taking care of because it has been doing their job in some ways . Joshua i am not an asian equities person, but for a long period of time rishaad it would affect the global economy. Joshua but you also remember the role of velocity. We have been pumping money into the system for a long time and nothing is happening. We experience a sub shoot. Now what we are seeing is money supplies coming up from inflation and that velocity is starting to pick up. For me, the bigger concern is what we have seen from the u. S. At the smaller commercial banks being in a tight liquidity situation. They find a lot of smes and smes are a big funder of the u. S. Yvonne there are so many alternatives out there beyond china. Are you still looking at china . We just have Goldman Sachs saying we are staying overweight because of the fact that valuations are not close to those moves yet. At this point, earnings recovery could happen in the second half, and there is extreme bearishness when it comes to sentiment this morning. Joshua we think china is at an interesting junction. It is cheap, we certainly like certain parts, and this is a question of keeping an eye on cheap companies, looking at expectations getting low that even against the backdrop, they can move down on the market. We think selectively those opportunities are coming. On the 60 reopening, there was less of that around, but now there is. What is important here is asia is more than china. I mention some of the opportunities in korea tec, japan another great story, and it is not reliant on the global economy. It has been valued for a long period of time, access balance sheets, Shareholder Activism and what is happening recently with the tsc, we see catalysts unlock that. Asean, people topic talk about decoupling, but that will be a beneficiary for places like asia. Rishaad it is interesting how one thing can make a big difference, and we talked about the new boss of tsc coming in last year. They have credit values responsive to shareholders, and that has changed the game. But how long does that go on for . Joshua they breeze up over a long period of time. We are still a long way off from the 1990s when value came around fukushima and you have seen Foreign Investors move the markets. There are a lot of cheap companies and we are seeing announcement after announcement around these companies doing dividends, buybacks, lifting our oes. It ebbs and come a but we think it will be a positive backdrop for an extended time. Yvonne how should i look at ai right now . What will benefit the sectors you get specifically . Joshua ai is an interesting topic area. It is one of those buzz topics right now. Nvidia clearly you saw these huge jumps in that, but i look back at where we can make money out in asia. And we have seen a number of laggards in the memory space or places like that. That is where the disconnects happen because if we will see this huge increase, we are going to require more aspects like memory coming through as well. That is where we are trying to take opportunities. Rishaad i love that, the lawsuit brought against the lawyer who used chatgpt to come up with a summation of the cases, the fabricated court cases. It was thrown out, of course. Joshua we will not have chatgpt in the courtroom soon. [laughter] yvonne i hope not. Rishaad joshua crabb, head of asiapacific equities at robeco. We are checking on the pentagon as it looks towards a deal with elon musk and starlink services. The u. S. Has praised the role of starlink terminals and watch they have played in ukraine as they are seen as vital for kyivs civilians and military. A shanghai official request musk to boost his investments during his trip to china this week. He had a midnight appearance at shanghais tesla facility. He met with several senior officials including she qin gang. And taiwan and the u. S. s trade agreement is opposed by beijing. The statement of the agreement is a crucial step towards an expected freetrade agreement between the island and the u. S. It is the first concrete action after an Initiative Last year that beijing says violates the one china policy. Yvonne still ahead, u. S. China tensions will take center stage at the annual defense dialogue beginning today. More with the director general of the International Institute for strategic studies. Plus, the ceibs european president joins us to discuss the studies from the mainland. This is bloomberg. We go to the senate floor this evening in d. C. Where we are expected to hear this vote taking place when it comes to the debt ceiling deal. It cleared in the house yesterday. We will see if it does the same in the senate. It was an overwhelming yes yesterday in terms of that debt ceiling deal. You are starting to hear those votes. Rishaad we have got votes on various different amendments. We had the 314117 votes to pass it in the house. And jain says they are interested in investing further in Adani Enterprises following that hindenburg short sellers attack. As we look at the adani side, this is what we feel has helped us add values for appliances. There is a lot of disconnect from time to time. As things do not happen every so often. They are rare, and our view is that they need to be bigger when you talk about these outsized opportunities. And the Supreme Court verdict was a clear case that there was not really anything there. Most of the things, the allegations had been investigated before, and it just confirmed rvus based on our own market view that we have added since, so it is any a meaningful position amongst others. You have had said that adani has some of the best assets in the country. Are some of those units you have been increasing your stakes in . I am doing a little bit injustice if i do not mention the management because the assets are the number one bond out of there. The question is, how come gautam has been able to accumulate these assets and run them effectively . So we like ports, transmission assets, and india needs that too. It is very hard to execute sometimes when the entities it is not easy to execute for various reasons. And if you look at the history of these assets before, there is nobody who has been able to do it at this size and scale and i am still blown away that if you look at the results of the reported numbers, they are fantastic numbers. The airport reported numbers, transmission reported numbers. In any world, these would be very good numbers, so these are the kind of assets we own. We have added one new position, which is purely in the market. We have explored now more than four companies. What about the risks from the indian market regulators probe . How do you see that . There is no perfect company, so risk is always there. If you look at france, they nationalized utilities and force the utilities to eat up and not allowing them to pass through. Let me do an interesting comparison. If you look at all the Chinese Companies listed in the adr form in the u. S. , you do not own anything. You have no ownership of those assets. There is risk in that. The Education Companies disappeared in china. They have been confiscated in europe. If you look at german utility, they bankrupted the german government. That is part of doing business investing wise. That is risk in every area. It is not unique to this or anything else. How do you see the stock market in india performing against china in the longterm . If you look at the corporate Earnings Growth, if i were to ask you what is the corporate Earnings Growth for the last 10 years, msci india versus msci china, most people would not imagine that corporate earnings in india has been far better in dollar terms than the msci china. So if you believe corporate earnings drive stock prices like we do, i do not see why Indian Markets would not outperform the chinese equity markets. Because the Regulatory Risk in china is tremendous. We have seen that. Yvonne we have got gq g partners chairman and Investment Officer rajiv jain there. We have plenty more ahead. This is bloomberg. Rishaad quite a day. We saw yesterday we were going up on the hang seng but they managed to go below the gain line by the end of the session. 3. 1 up essentially, looking at what is going on out of the 76 stocks on the hsi, just two are down. Alibaba leading the charge in terms of fixed market followed by tencent and meituan. Group also having a broadbased move higher, and is it a relief rally . I guess we will find that out. Yvonne and i wonder if the u. S. Jobs report will help or hurt things just given that we have seen a resilient labor market. Doesnt actually move the dow in a fed pausing narrative does it actually move the dow in a fed pausing narrative . Shanghai moves up two point 5 as we count down to that opecplus meeting in vienna. Coming up, concerns over the u. S. And chinas growing rift. Or getting underway in singapore and we get the prospects of easing tensions with so. I know you and george were struggling with the possibility of having to move. Hows that going . We found a way to make bathing safer with a kohler walkin bath. A kohler walkin bath provides a secure, spalike bathing experience in the comfort of your own home. A kohler walkin bath has one of the lowest stepins of any walkin bath for easy entry and exit. It features textured surfaces, convenient handrails for more stability, and a wide door for easier mobility. Kohler® walkin baths include two hydrotherapies whirlpool jets and our patented bubblemassage™ to help soothe sore muscles in your feet, legs, and back. A kohlercertified installer will install everything quickly and conveniently in as little as a day. They made us feel completely comfortable in our home. And, yes, its affordable. I wish we would have looked into it sooner. Think i might look into one myself. Stay in the home and life youve built for years to come. Call. To receive 1000 off your kohler® walkin bath. And take advantage of our low Monthly Payment financing. Rishaad good dollar. I mean, we have had it up for three weeks, but the jobs report. Yvonne basically we are on course to snap three weeks of losses for the gains of the dollar, just given the slump we saw overnight in the bloomberg dollar index. It was the biggest low we have seen in one or two months. On this fed pause narrative. Things have been looking good for the dollar up until yesterday. We were on course to snap those gains. This is where the peak in the dollar we will see. Rishaad slightly weaker at the moment, but adding to the biggest drop in more than two months. Yvonne certainly helping lift the risk move in asia to the gmm this morning, and most risk assets stocks benefiting from this. Hsi, hsc i, we are seeing more than 1 gains after what has been a horrible week when it comes to hong kong stocks. Rishaad even when we had a positive start yesterday, we ended up negative. Alibaba up over 5. 5 percent, likewise tencent leading the charge with those chinese stairs shares listed. Of have a look at the first word news and tricky kicks off and we kick off with the Philadelphia Fed president harker saying that the fed should skip the june hike at the next meeting. He says incoming data will determine whether additional tightening is needed. I do believe that we are close to the point where we can hold rates in place and let Monetary Policy do its work. Bring inflation back to the target in a timely manner. Along this path, i projects that we will see this year with real gdp coming in a bit over 1. 1 . Rishaad lets have a look at these socalled brics nations, asking the bank to provide guidance on how i potentially new shared currency might work. This could shield member countries from the impact of sanctions. They discuss how they can win greater influence and challenge the u. S. , but it did not reach further conclusions. The use of alternative currencies was among the top talking points. Republican senator is asking for an investigation into whether the tiktok ceo made false claims in data practices. Tiktok says they are confident in their ceos testimony. That is your first word news. Yvonne President Biden is seeking better relations with china as fears mounted that washingtons rivalry with beijing may escalate into conflict. Ties have been icy for months. Here is what the president had to say. The United States does not seek conflict or competition with china. China and the United States should be able to Work Together when they can and solve global challenges like climate, but we are prepared for vigorous competition. We will stand up for our interests, for our friends, and for our values. Yvonne meanwhile despite all that, you are seeing Business Leaders continue to head to the mainland. Elon musk ended his visit to china with a midnight visit to his shanghai factory. There was a plea from Top Party Officials for musk to invest more in chinas top Financial Capital. Rishaad lets get more with stephen. According of china to these western leaders continues. We have also had tim cook and mercedes there. We also had the boss of nvidia as well. Stephen and again we talk about the luxury maker lvmh in a minute as well, but it seems to be the trend of the day right now as china now has a full quarter plus of opening and there are signs of economic weakness. So you have to determine whether it is the horse pulling the cart or the cart pulling the horse. Is it china wooing Business Leaders to invest more . It is probably both. It is the ties of u. S. Business leaders visiting china and where they can get their best bang for their buck for a time when china was closed for three years and the prospects are not looking good right now with economic indicators. Elon musk one of the most highprofile leaders of business. He is the worlds richest man again this week. He went to the shanghai factory late thursday, Late Wednesday night midnight, left yesterday after 2. 5 days of meeting just about every top senior Government Official he could. We do not know if he met with xi jinping, but he did meet with the commerce secretary, the top i. T. Regulator, and the foreign minister, as well as the head of the chinese battery maker catl. And again he met with the Shanghai Party bus boss, who is keen for cooperation with tesla to continue and increase. He wants tesla to build more capacity in its electrical vehicle plant as well as electric storage. And it is the same thing. Jamie dimon who we spoke to a couple of days ago, he did not say the names of the leaders he talked to, but we know he also met with the Shanghai Party boss, who basically implored jamie dimon to try to get more Global Financial institutions to come to chinas Financial Capital of shanghai. Yvonne you mentioned lvmh. Bernard arnault could be heading over to china. Obviously the luxury sector would like to have a faster recovery to the chinese consumer, and we have seen these luxury stops taking a hit. Stephen we can bring up the stock trades of these big ones including lvmh because they did get a big pop up in the First Quarter off expectations that per capita biggest shoppers of luxury, the chinese would come back in force. Now it has petered out, and the chinese by and large are not going abroad as well, so that limits their spending. Asia generated 84 of lvmhs value in 2022 and that is why Bernard Arnault is likely going to china sometime this june to see what the mood is on the ground and see if he can get that revenue backup. Rishaad stephen engle, our chief Asian Correspondent asia correspondent. A spiral towards conflict. The shangrila dialogue conference in singapore bridges the u. S. And china but may also further highlight the rift. We get more with the director general of the International Institute for strategic studies. Thank you for joining us. The old calculus is and i am talking about taiwan and the tensions surrounding the island. The old calculus is when the price of war becomes part less than the price of peace, wars occur, and with decoupling, the risk of war continues to go down because beijing continues to have less to lose. John i would not analyze the Regional Security market quite in that way. I do not think the peoples republic of china wants to invade taiwan. They have said often that they want a peaceful reunification. There is a risk that if their blockades on taiwan become more aggressive, than the military could curve and the United States has been clear that the one china policy is one to which the u. S. Still holds. In the economic, political domain, there is risk of decoupling, there is a risk of conflict there. In the big question for those who are interested in the political economy of the region is where did derisking sit on the spectrum . We know that business as normal on the one side is not possible, but on the other side a full decoupling is not good. Will derisking move closer to decoupling . That will be the economic focus on the region. There is concern about an accident in the air to which the United States affected fully pointed and that is why direct conversation between the United States and china is important in the military domain. Yvonne in chinas eyes, derisking or decoupling are basically the same thing. I wonder, the new defense chief is in singapore, itd his first meeting since he took the post. What message do you think he will bring after ejecting rejecting that meeting with lloyd austin . John generally attending his first shangrila dialogue, the chinese are here knowing they need to engage with a variety of different defense ministers both from the region and outside the region. It is certain that the general will be reinstating the chinese position on what its core interests are in the region and he will assert that chinas intentions in the area are entirely peaceful. He might refer to the global curie initiative that president xi has mentioned in the past goebel Security Initiative that president xi has mentioned in the past. And he might reiterate from last year that china wants a peaceful reunification with taiwan, but if there is a decision for you for taiwan to acquire nuclear weapons, china will not hesitate to defend its core interests. It will be interesting to see what questions come from the floor not from the europeans or europeans americans, but from and the fact that the United States and china are not having regular defense dialogues. Rishaad john, what would it take to ratchet these tensions down and get a working relationship, a proper working relationship between washington and beijing . John what it would take to restore a proper ablation between washington and beijing in the military sphere proper relation between washington and beijing in the military sphere are on different levels. There were 250 different conversations between the u. S. Military and china last year, and now it is down to seven or eight. It is not just important that two defense ministers speak to each other, but also the head of the china command will speak to the indopacific commander and at levels further down, there is an Information Exchange and reassurances given that movements in the region have no aggressive intent. Unfortunately the chinese point of view is if you create these guardrails, it might make the United States too confident about stability of the area at a time when there are tough relations between the two countries. Therefore they are talking apart as to the importance of dialogue in building that military measure. Yvonne the u. S. Seems to have been at least trying to strengthen these regional alliances. The news we have seen recently of cooperating with japan and south korea, opening up bases in the Pacific Island nations, the philippines as well being asked on military facilities. You are starting to see battle lines being formed and a china that is getting more isolated now. John it is certainly clear that a variety of different arrangements are being generated. Who would have thought three years ago that the third biggest defense spender in the world in a couple of years could be japan . Japan has decided it needs to be able to assist its defensive partners and itself. The philippines is now engaging much more with japan and with the United States on a variety of quad type arrangements that are nascent or already being formed in the region. This is an indication of the requirement that Southeast Asia in particular feels not to engage in multiple strategic headings. The more partners you have, the more exercises you conduct, the more dialogue you have, perhaps is safer for the region. China as opposed to what it calls the small circles, but these small circles have been formed by concern that the two big powers in the region are not having enough conversations, so those in the regions need to find their own ways to defend. Yvonne joshua crabb, thank you john chipman, thank you for joining us, the director general of the International Institute for strategic studies. Bringing you back to the live pictures out of washington, d. C. , and the senate vote is taking place on the debt ceiling deal. 60 votes is what is needed to pass this, so we will see how the votes are trickling in and how they fare coup given fare given the overwhelming support on the house floor yesterday. It looks like we could be at the end. Rishaad lets move on quickly and what we have coming up next because president xi has asked to boost chinas educational system and attract more international students. The european president of the ceibs joins us next with his views. Yvonne chinese president xi jinping has called on top officials to do more to boost the global influence of the countrys education system. He wants worldclass universities offering courses to meet the nations strategic needs but also to attract foreign students. Lets get more with dominique turpin, european president of ceibs. It is three years of covid zero. We have talked about ratcheting tensions with the west as well. How do you think that is impacting International Interests in Business Schools in china . Dominique during covid, it was very difficult to move students from one area to another. It was a big challenge. Now china is not putting up, but remember the foreign students coming to china is still relatively small. I was talking with the president of one of the universities, and they used to have 10,000 foreign students. Now they have about 1000. When i talked to the deans in schools or universities in china, we see the same thing. Rishaad how do we get students back, the foreign students back . Dominique the easiest way is to create more scholarships because when students are being offered their studies partly paid by some institutions, it makes it more attractive. I also believe that given the a canonic economic importance of china, there are still significant numbers of people who want to come and study here. But it is true the context is different from what it was five or 10 years ago. Yvonne what is it like . Everyone wants to get an mba, but the environment when it comes to jobs is looking dire too. We have banking layoffs, tech as well. What is the hiring environment looking like in china right now . Dominique it is challenging, obviously. And the phenomena is worldwide, not just china. Most mba candidates need to take a test, and you see that the data we are getting from the tests is that the numbers of students taking this test has been increasing for a couple of years, even before covid. Maybe also because it is easier for a student to get the job if they have a specialized master, so you see the demand for specialized masters increasing. Maybe also it is due to the fact that when you are 25, you do not necessarily have the working experience to have a general management job. You often start with rishaad sorry, i will interrupt you because the senate is getting ready to pass this debt limit deal. Thats bring the footage we have at the moment. It is at the moment apparently being passed by the senate. This of course is designed to suspend the debt ceiling and limit federal spending. We could well get the final passage of this bill on the president s desk ahead of that monday deadline for the government to run out of money. We have got that, but dominique, let me ask you about the last three years and what you have said about people being more specialized in their masters making you change your syllabus. Dominique it is true and also the Business World is rishaad because of what has happened. Dominique exactly, and Business People are quite conservative. There are concerned about digital transformation, ai, chatgpt. Also brandnew innovation models, transformation of industry. Now we do not talk much about the Automotive Industry but the mobility industry. It is clear when you have a oneyear mba to back all these new topics in a few months is a challenge. The numbers have schooled out so using new technology to ask the students to study the classic topics like accounting, marketing, to go through the fundamentals by themselves. And when they come on campus, we can go into that specialization. The technology has had a huge impact on how we teach todays students. And they themselves are used to this new technology. Rishaad thank you so much. Dominique turpin, european president at ceibs. We have the senate having the votes to pass the debt limit deal, the vote is ongoing. We will have more on this after this short break. 5hour energy. Think of it as 5second coffee. For when you wake up too late to make it. Or you dont have time to wait in line for it. Or youre just too busy for a coffee break. 5hour energy. The 5second coffee. Oh booking. Com, im going to somewhere, anywhere. A beach house, a treehouse, honestly i dont care find the perfect Vacation Rental for you booking. Com, booking. Yeah. Rishaad 10 52 in the evening in washington, d. C. , and upper house of congress, the senate, voting on the debt limit bill. Apparently they have enough votes to pass it, but even now, the votes are still being counted. Of course, this is designed to get the fiscal position sorted out, suspend the debt ceiling, and limit spending. Yvonne it means we do not have to talk about it anymore, which is a welcome relief. Rishaad then we get the Federal Reserve. Yvonne that is the bread and butter for us. It has all been baked in that this will basically go through, but certainly when it comes to the political framework and what this means, is this a win for President Biden given his reputation for pragmatism and working with party lines and also working with Kevin Mccarthy as the House Speaker . Rishaad indeed, there has been pushed back some republicans against this House Speaker. At the moment we have 63 yeas and 36 nays. Yvonne a reminder you can watch episode one of the new directions series this weekend. We look at Southeast Asia amid rising u. S. China tensions. The regulations that americans put out last october attempted to stop china getting access to almost any advanced semi conductors at all. Haslinda whether it is decoupling or derisking, it is about diversifying. Semi conductors have become such an indispensable part of our life, demand coming from iot, from renewable energys is just spectacular. You have got to look at the whole ecosystem and the supply chain, and that is potentially the greatest opportunity for us. I do not think there are any regulations that can resist and hold and stop us from this weakness. Haslinda how do you see this playing out and what would be the key issues for you . The u. S. And china finding a way to get along together, then the future is very bright. As long as cool heads prevail, i think we could see incredible value over the next 10 to 20 years. Yvonne you can tune into new directions on saturday and sunday at these times. You do not want to miss it. Rishaad we look at equity markets and they are liking this news. In fact, the hang seng now increasing its rally today. It has got legs, 3. 3 up now as asia is giving this more of a thumbs up. More coming up in the next hour of Bloomberg Markets. upbeat music awww. Awww. Awww. Nope. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. And your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com yvonne almost 11 00 a. M. In hong kong, singapore, and shanghai. Welcome to Bloomberg Markets asia. Rishaad hong kong tech stocks leading the rally in asia putting hang seng index back on the brink of a bear market. Investors waiting for the u. S. Jobs reports as there is a likelihood of the fed skip in june. The passing of the debt those in congress is also helping sentiment. Veteran fund manner manager is telling bloomberg while he will continue investing in india. Adani downplaying political and Corporate Governance risks. Yvonne the dollar dropping. Fed trimming their bets as well. That is helping it to left all Risk Appetite and assets is morning. Really even seeing quite a sizable recovery on this relief rallied in asia. We are up to percent, likely to continue at this pace to avoid the bear market. We could argue market has been oversold. Morgan stanley also basically goldman saying relatively overweight in those markets. We just had can allow saying can draw saying it is hard to drop the overweight stance. We are not quite at cycle lows. He is thinking earnings recoveries could happen in the second half. Extreme bearishness in sentiment he said may be going too far. Rishaad lets get to the debt vote. This is the biggest story. The Senate Passed that bill and it will raise suspend the debt ceiling until 2025 and cut the deficit, at least that is the hope. It should be now sent to President Bidens desk which means the u. S. Will avert potentially huge disaster when it comes to a default on its debt obligations. Have really kicked the issue out until after the 2024 election. Lets get the reaction on the u. S. Futures. Positivity and a little bit of negativity creeping in there. There we go. We also have got the bond markets and focus. Yvonne the treasury rally we saw because there is the growing narrative that we are seeing here that maybe the fed is ready to pause. We are stabilizing a little bit. Yields are up one basis point higher in terms of the 10 year but we are still talking about 361 this morning. Whether to hike, pause, or skip. U. S. Jobs report will be coming out as well later on on friday in the u. S. Lets get to Kathleen Hays joining us from new york. We had that jolts data, the adp. What do you think the payroll numbers will tell us the labor market . Katheen if the forecasts come anywhere near true, it will show as a labor market that has moderated a bit, that is showing some signs of i wouldnt even quite say cooling off but is still pretty solid numbers. There 95,000 is the x 195,000 is the payroll number expected for may. Well be down 50,000 from april. However, the number is still considered fairly healthy. For the fed to think the economy is really cooling off, labor markets really getting weaker, you have to see that 100,000 or less. If that is still a number that is holding in. The past several months, all the surprises have been on the upside and employment remain near a 50 year low, and we will see average Hourly Earnings on a monthly basis, wages coming and its at a fairly strong, moderate. Yearoveryear not moving because the base effects are keeping it at a level that is about double what wages average Hourly Earnings were averaging before the pandemic. So, i would say this is the Credit Report that is keeping with the jolts numbers. Job openings and Labor Turnover showing the number of vacancies rising suggesting more employers have jobs to fill. Does that sound like a weak labor market . Not quite yet. Rishaad kathleen, we got joe biden, the president saying he is looking forward to signing the debt limit as soon as possible. That gives a bit of clarity for the Federal Reserve in terms of the fiscal side, but looking back again at this jobs report, could actually make the difference between that pause or indeed hike . Katheen probably not scared at what you heard from the likes of fed officials like jim bullard is actually it was chris waller who was asked how the debt limit ceiling debate and what was going to happen was affecting has taking his thinking for Monetary Policy for what comes next and he said i am not inking about it because i think it will pass. That is my assumption. The amount of tightening that you would get from the reduction in spending is going to play out over a long time. That is a medium to longterm story. It is not the story for right now. It seems to me that right now fed officials, i get the feeling a lot of them are pretty close to making up their minds, including Patrick Harker who was president of the Federal Reserve bank of philadelphia who said again today that he is ready for the skip, the pause. It is time to do it. We shouldnt be reacting meeting by meeting, measurement by measurement. That is not good policy either. I think we need to look through a lot of that. There are other forces that are happening that are with the revision on the wages and so forth that get me to think it is time to at least hit the stop button for one meeting and see how it goes. Katheen we have been hearing from bill dudley in an earlier interview, former federal yes or will be a pause in june and one or two more rate hikes because the fed is not going on inflation yet. He quotes things that jay powell said in the last bus conference about wages. Look at the cpi blue line has come down from 9 yearoveryear to 4. 9 . It seems to have leveled out. The average Hourly Earnings are stuck. They are plateaued around 4. 5 . That is the kind of thing that dudley thinks will be important to the fed and important to jay powell, but more importantly, powell seems to be more concerned about Downside Risk right now and ready like the others who want to say time to sit back, see what happens next, and if it is time to really stop hiking rates or maybe get back on that path again. Rishaad Kathleen Hays they are, Global Economics and policy editor. Like at the viewers of roger. Good to see you. What is your reaction . It was 63 36 in favor of passing the bill. It removes a wall of worry for the time being. Thank you for having me back. You drag me away from my desk this as a vote was starting. I was coming over and i was thumbing it on my iphone to see the numbers coming in. Glad that it is now done. We can now move on to other things. That was a wall of worry that is now out of the way. Lets move forward. Lets look forward to the next potential leading indicator which is tonight as kathleen has been talking about 195 is expectation for the job stated tonight. Lets see whether that may have a bearing on what rate trajectory is going to look like. The market is sort of wavering around one cut, potentially not in june sorry one raise in july. That is moving around quite a lot. We are basically saying flat from here and then moving towards the end of the year. We will start to see cuts. The market is moving around a bit. Job stated today is very important but the other part that is incredibly important is the inflation statistic which you just put up which has flatlined over the past few weeks. If the trajectories down towards 3. 5 by the end of the year which is what we are projecting, that may support the case for those cuts coming through by the end of the year. It is very interesting to note that what was being looked at in terms of cuts lets say a month ago, which was potentially 2, 3, or for cuts by january has been scaled back and maybe now only one or two. This is moving around a lot and we need to keep vigilant on the data coming through and moving parts. Today, we have positive. The Hong Kong Market has reacted strongly and that will be a part of it. Yesterday, we had amber rainstorms in hong kong and blight root bright blue skies. Lets see how that plays out. Yvonne if we are expecting cuts may be at the end of the year which some still argue may be a little bit too optimistic, what does that mean for rates then . Yields could be heading lower from here . Robert absolutely. That is basically what everybody is worried about. One of the things that is very important for our clients is what that means for returns for fixed income securities. We look forward and cast our mind forward, not just over the next three or four months but when youre forward, two years forward, and our analysis tells us that treasuries should do extremely well. We look forward on the 24 month view from the peak of the rates cycle as we move into the cuts. We dont wait for the cuts to start. When we know they are about to start cutting, then we could increase our allocations for clients to fixed income. I could see very good returns between 1525 percent on the twoyear forward field. From the treasury that is a fantastic return. Clients are interested in that and lots of other things to do but in terms of the call fixed income allocation, rebuilding the core fixed Income Portfolio allocation, is potentially an extremely interesting time. Rishaad bonds have rallied weird you get the yield plus appreciation and that is the key here. When does the yield curve start to normalize . Robert i think we look into 2024 obviously there are a lot of moving parts that feed into that. Ultimately, what we have seen with the expectations changing about what the rate cycle is going to look like literally changing every single day, we look at the inversion of the yield curve and how that would inflate. Rishaad it steepened overnight. Robert absolutely. We are trying to look through the shortterm pricing dynamics and to think about were directionally the market will go on a 12, 18 to 24 month view. That gives us more comfort that we will be in good shape for fixed income allocations for our clients. Yvonne what about Ig Investment grade. Every guest talks about that. Are we in a sweet spot . Robert absently. Fixed income overweight is concentrated concentrated in investment. We look at bank loans, highyield, and some of the yields are very high. Bank loans 9 , some highyield are 7 or 8 which looks attractive on paper. We are staying with the moment. However, there is one thing on the horizon which is starting to look interesting was our clients are asking about. What happens when the dollar starts to weaken . What does that mean for other components of the fixed income by from . What does that mean . Rishaad what does it . Robert emerging debt looks interesting. That is positive in asia from equity stand point. Dollar weakening historically highly correlated by better performance from asian equity markets but also a potential entry point into emerging market, which people have been relatively nonconstructive on recently. Rishaad i want to pick up on what you mentioned that you see us going toward rate cuts towards the end of the. That would probably take place because of the Economic Conditions which warrant it. If you look at earnings projections, they dont seem to be really at the moment negative. Are you optimistic about what is coming up . Robert we disagree with that. I will be candid about it. We think they are too optimistic. We are extremely concerned they are far too high for the second half of this year. They have room to come down and that is our central view at the moment. We dont quite understand why the street is still as optimistic as it is given the backdrop that we have. We think we are going to see earnings pain which is why we adjust our growth trajectory for the balance of this year and into 2024. That will have a bearing not just in the u. S. But around the world as well. We are thing about the impact on growth this year and seeing changes their in our projections whilst europe is looking stronger and maybe potentially less growth in the second half from the u. S. In 2024, starting to pick up. Compare and contrast that with china, we are still at 5. 8 for this year and saying for next year potentially coming down to about 4. 5. Again, lots of moving parts. Interesting to analyze it but the growth trajectory i think certainly from an earnings perspective in the u. S. , earnings estimates look to optimistic in our view. Yvonne roger bacon, had investment had investment for asia. Lets get to vonnie quinn in new york. First came during the ceos trip to china this week, the first since the pandemic began. Along with the midnight appearance at shanghais tesla facility. He met with several senior officials including qin gang. The pentagon has inked a deal with spacex and starlink services. The u. S. Has praised the role starlink terminals have played in ukraine as they are seen as vital for kyivs civilians and military. Taiwan and the u. S. Have signed the first part of a trade agreement that has strong opposition from beijing. The statement of the agreement is a crucial step towards an expected freetrade agreement between the island and the u. S. It is the first concrete action under and Initiative Last year that beijing says violates the on the china principle. A republican senator is calling on the department of justice to investigate whether tiktok ceo shou chew made false statements to congress about his data privacy practices. Marco rubio highlighted a recent forbes report that claims tiktok stored personal Financial Information of u. S. Users on servers in china. Tiktok says the company is confident in the accuracy of chews testimony. Global news powered by more than 2700 journalists and analysts in over 120 countries. Im vonnie quinn and this is bloomberg. Yvonne still had this hour, indias russian oil imports hit record highs last month, but the lopsided elation ship is leaving russia with an excess of rupees weird we will have a closer look later on this hour. Rishaad you cute partners putting billions of dollars into adani group. The cio telling us why he is already adding to those that. Adding to those bets. 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 yvonne massive rally you are seeing in hong kong this morning. What a good way to wrap up a turbulent week. Hstech up 4. 5 . Hang seng up 3 . We could be avoiding that there market and entering into one by the end of this. Shanghai doing quite well with the csi up 1 . Msci china we will watch and see how it plays out. Property names doing well this morning. Still with us as roger bacon, head of investments or ultrahigh net worth asia at city Global Wealth investments. The rally has been it been bad news and more bad news and extreme bearishness right now. What is the risk reward in china right now . Robert theres a lot of pessimism out there. Every commentator we see and every company thinking about their Strategic Investments in china at they will dial back. Theres is certainly a lot of pessimism out there. I think the market is reflecting that. We are talking to our clients about what they do with their interest in china equity exposures these are important topics. It is not all bad news. We talked about the growth trajectory and the debt levels, these are parental concerns perennial concerns. From a valuation perspective things are starting to look very interesting. What we see in china equity investing many times over the last 50 years is the point of maximum negativity, big opportunities that becomes the biggest. That does not necessarily mean you solve the problems that have caused the original negativity, but at some point, people say enough is enough. This looks like outright capitulation and valuations and we will put placeholder assets in and take it through to five your view. Then suddenly, you see a massive rally. We have seen it many times in this market of the last 50 years. I am not suggesting it starts tomorrow but it is out there. Women talk to clients about it, there is when we talk to clients about it there is the fear of missing out factor. They are not ready to pull the trigger gets. The pessimism israel but the reality is the pessimism is real. Rishaad the pboc could also have stimulus but would it work and be fit for purpose and be able to ultimately get the economy out of the morass that isnt right now given not just the data but the ongoing housing slump, which ultimately is perhaps the single most important thing because of not just the wealth effect but lifting nonfinancial debt according to some up to 300 to gdp. Roger investors are quite greedy. They are looking for a magic bullet that will solve all of his problems overnight. Many of these are not new issues and have been issues for many years. It is a question about what stimulus is available, what is meaningful, what can move the needle, and what is more about rhetoric but perhaps well have less market impact. That is ultimately the challenge we have. People are expecting something to come. They dont know what it looks like and how pervasive and broadbased it is going to be but there is a skepticism that tools are in the toolkit to fix where we are at the moment. We have seen this a few times in the past and then suddenly, there is a policy surprise. What that policy surprise might look like we dont know, hence why it is a surprise but the reality is they have a lack of tools and toolkits. Some are obvious and some less obvious. They are not unaware of what is going on. They are not unaware of this sentiment change that is happening. Rishaad that does not mean they are aware. Roger our view is it will be something coming that they will need to react to this, provide support to the market, provide positive indications to private companies who are worried about their ongoing investment in the market. Yvonne why wait for that rebound when i have so much momentum going on in other parts of asia right now . Japan is a clear example of what we are saying. Roger clearly that is very important. You see massive flows going into the japan market of the last two weeks. Supported for the first time in many years by some really fundamental positives from a macro policy backdrop. Just looking at return on equity framework that is being created by Tokyo Stock Exchange where companies dont have sufficient profitability, concrete steps now to try to improve the earnings trajectory, the r. O. E. Of these companies. These are new things in japan. Rishaad very quickly, you talked about the pboc. The bank of japan has a toolkit that is gathering dust. They need to do something about it and they are worried about opening pandoras box. Roger has the toolkit been temporarily locked and about to be unlocked . You did a great survey on this where you are comparing market abuse of what the bank market views of what the bank of japan will do versus economists. Economists believe there could be tightening in some sort of shift within the yield curve control framework. The markets suggest they are not entirely convinced about that and in the meantime, equities continue to move up and foreign flows are dramatic into japan and rishaad that tells all. Thats all we have time for. We had to take a break. Sorry about mixing my metaphors. Roger bacon, head of investments in asia ultrahigh network at city Global Wealth investments. Yvonne plenty more ahead. This is bloomberg. The biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . Rishaad back with Bloomberg Markets. A quick check of the latest business flash headlines. Pelletier ceo says new ai develop mens at his company are so powerful that he is not sure if they should be offered to some customers. Pelletiers stock has been on a run for weeks after the company describe demand for ai products as being unprecedented in spite of the lack of a Pricing Strategy and only a few specifics. Usually we wait and have to go out and find people. Now we have customers especially in the u. S. Congress every day. You said demand is huge. Can you quantify it . We have had a number of inbound calls in a year that we usually have in a year and a month. We are offering things are so powerful that in reality i am not sure we should even sell this to some of our clients. Rishaad boeing is confident it can restore its standing in china as it looks to restart deliveries of 737 max aircraft after a fouryearold. The Ceo David Calhoun says the Chinese Market is large enough to support company as well as rival airbus and local planemaker commack. Yvonne lets look at msci china. It is lifting all sectors on the back of what we have seen in this dollar drop in the fed pause narrative. You are seeing real estate is the outperformer as well as consumer stocks which have been hit as of late here. We are looking at the biggest movers inside china. Tech catching a you bid catching a huge bid neared oriental 10 . This is bloombe rishaad that is mumbai. It is 31 degrees celsius as we count down to the start of the trading day, just over 15 minutes to go. It is time to have a look at the key stories that investors are watching out for in the country. The reserve bank of india said to release bank credit data. We also have the home minister and defense minister set to speak at the Times Network india academic conclave and bloomberg learning that apple is working on plans to expand and revitalize its retail chain aiming to push deeper into the country. Yvonne also china to. Lets bring in menaka doshi. Lets start on the apple story. What more do we know right now . I am reporting off the back of the reporter who put out the exclusive story for bloomberg. It is an interesting retail plan and i will focus on what you pointed out. India versus china. We are only two stores in india both barely a month old. China has more than 40 stores so there is no comparison. It is interesting to note that in the bloomberg exclusive story , apple is expected to add three more stores to india over the course of the next three years. One is near at in 2025 and another in delhi and a promenade mall which is an upscale luxury goods mall. That is in between between six and another in central mumbai in 2027. It seems to sink with apples plan to expand production in india. Remember expansion and production will also mean they can cell phones here is an india slightly cheaper than they currently are because the duties will be lower to some extent. It seems like apple is trying to align to strategies, manufacturing in india and retail strategy. We have spoken of the potential for apple sales to improvements in this country. There are minuscule smartphone sales. We discussed that a lot when the stores were launching. They are growing rapidly. The last financial year, apple did billion dollars in revenue and sales and that was 50 more than the previous year. Definitely a growing market in india. Interesting to see both those strategies, manufacturing and retail coming together is in some ways. The only point i would like to make it as i can see the store expansion is mostly focused on mumbai and delhi, the two richest cities in the country of course but i am surprised that they have left bengaluru out which is the capital of the country and i imagine they would love to have an apple store there. Rishaad they would. Lets move to the politicking as well with rahul gandhi who is at the moment, the former president of the congress party, and former member i should say of the indian parliament. We wont get into why but he has been making noises. Menaka he has been making some noises. And staying in the news all through now. Two things to note here. His visit comes just weeks before Prime Minister modis first state visit to the u. S. , and that is going to be a headline grabbing one in terms of Prime Minister modi and his interactions with the diaspora in the u. S. Which we have known from past instances are not are largescale events. His interactions with President Biden, the state dinner. It is going to be a headline grabbing one. At this point in time, a few weeks before that, gandhi seems to be making headlines about his u. S. Trip. He is on a visit to three cities in the u. S. , san francisco, d. C. , and new york. He is playing but the victory and victim card if i may put it that way. His party has just come off a very strong victory in the state of karnataka, and you pointed out he has lost his membership of the parliament at this point in time. These are both things he is discussing besides lampooning the Prime Minister a wee bit which is humorous to some and not humorous to the bjp. Has been making fodder for Gray Television debate here in the country but he has been pointing out one point interesting which is that he thinks that there is increasing unity amongst medical opposition parties here in india. He might be being optimistic but election season is on. Fully. Rishaad just hold that thought because we are talking about the oil market with opec now preparing to meet in vienna this week. We have members grappling with a divided oil market on top of that india is one importing cheap russian oil and they have set another record with the amount that they have actually brought in, nearly 2 billion barrels 2 Million Barrels a day i should say coming in from russia. That is 15 more than the previous high in april. Our asia oil trading reporter joins us new delhi. Monica is still with us. Menaka 65 a barrel is an interesting price given that crude has been over the last couple of months. Let me put that question to the reporter. Increasing purchases from russia no surprises there. Rakesh we are looking at very dramatic oil markets these days as he pointed out. It centered on the opec meeting which is happening this weekend. One of the key issues that will be big on the mind of Oil Producers is despite the prices in april we are still thing oil prices down 13 this year. One of the key reasons is will exports have been booming. The key giant asian markets have been lifting the orders. India saw the imports at 1. 9. 6 1. 96 barrels a day. It is very impressive considering it is just 2 of indias imports. Menaka you pointed out this is all the status coming in just before the opec meeting over the weekend. How are the other suppliers going to view this increasing share that russia occupies in indias crude basket . Rakesh it is surprising to see that indias voracious appetite for russian crude is coming and traditionally suppliers and others. The shares are going down to 596,000 barrels a day which is lower. The markets will defend the appetite and because of lockdowns induced by the covid outbreak. Now indias demand is growing and we are seeing saudi share in the oil basket going considerably down. The final thing is it does not bother saudi arabia much because it has other markets and trade lines have shifted. They supplying volumes to europe. We have to see where it goes. Yvonne rakesh sharma, asia oil trading reporter joining us from new delhi for that story. A big question is what will they do with all that money . The russians have basically a accumulated rupees here because of these deals. Rishaad they cant i suppose get interest on its. Yvonne it is 1 billion each month in ruby assets here. Does the impact of the trade relationship in any way . We have the opec meeting also. Rishaad Bloomberg News along with writers and the wall street journal were not allowed to go there. We have not been invited theres no reason why but from people inside suggesting that saudi arabians do not want major news organizations to be attending. They are feeling as opposed with oil prices and it does not support the budget. The need to be a bit higher than that. Yvonne whether they are going to see another cut is still up for debate given the drawn down in oil prices and china recovery that seemingly looked worse, especially when we look at the numbers coming from china in terms of oil demand. As a pmi number change her view that maybe they do need another cut or should they wait and see as Goldman Sachs to see how the cuts that they have been fomented a few months ago how they do take effect . Is it going to have a big impact on the market . Rishaad absolutely. We go to the driving season properties in the u. S. As well. Lets have a what is going on now in new york. Lets get to vonnie quinn for the first word news. The u. S. Has passed legislation to suspend the debt ceiling ending the threat of default. Phil was modi 40 through 63 36 following hours of negotiations and goes to President Biden for final sign off. The compromise between democratic and republican lawmakers will see constraints on Government Spending to the 2024 election. It does end of worst standoff over the u. S. Debt ceiling in a dozen years. The Philadelphia Fed president Patrick Harker says the u. S. Central bank should skip raising rates this meeting. He told a virtual gathering of economists that the fed should not be reacting meeting by meeting, emphasizing the incoming data will determine whether additional tightening is needed. Patrick i do believe that we are close to the point where we can hold rates in place and let Monetary Policy do its work to bring inflation back to the target in a timely manner. Along this path, i project we will see modest growth this year with real gdp coming in a bit low 1 . The brics nations asking the blocs speciallycreated bank to provide guidance on how a potential new shared currency might work. This includes how it could to shield the member countries from the impact of sanctions. The bloc convened earlier to discuss how it could win greater influence and challenge the u. S. While it did not reach firm conclusions, the use of alternative currencies was among the prominent talking points. Global news powered by more than 2700 journalists and analysts in over 120 countries. Im vonnie quinn and this is bloomberg. Rishaad all right, and looking now at the adani group as a get a major endorsement from a major investment conglomerate that has a proven track record. Yvonne we will have details coming up. This is blue. This is bloomberg. 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. Yvonne live shots out of mumbai this morning. Looks like we could be seeing a decent rally in empty shares here. Just following this asia risk rally we are seeing on the back of this seemingly dovish comments we are hearing from the fed of late. We will talk about gq g. The firm as an interested in investing further in Adani Group Companies after plowing 2. 5 million into the india conglomerates unit following the short seller hindenburgs attack. Rishaad our reporter spoke with shery on. As we look at the adani side, this is what we feel has helped us add value for our clients. There is a live disconnect him time to time. These things do not happen every so often. They are rare. Our view is we need to bet bigger when we do get these outsize opportunities. The Supreme Court verdict was a clear case that there was not anything there. Most of the allegations have been investigated before, and it just confirmed our views based on our own work. We have added since. It is a meaningful position, but it is one of the positions amongst others. Sherry you said that adani has some of the best possible infrastructure assets in the country. Our those leonids that you have been increasing your stakes in . I am doing injustice if i dont mention the management because the asset did not say anything about one bond out of nowhere. The question is how come one time has been able to accumulate these assets and run them very effectively . We like the airport and ports and transmission assets. India needs that to too by the way. It is hard to execute sometimes when the entities of government cannot make it easy for various reasons. You do it you do need private on for an order to execute assets. If you look at the history of these assets before, there is nobody really who has been able to execute at the size and scale and im still blown away how little attention is paid for the fact that you look at the results and reported numbers they are fantastic numbers. Enterprise, transmission, these are in any world very good numbers. These are the assets we own. In fact, we have added one new position, which is purely in the market and we have not talked about it publicly yet. We have exposure to now more than four companies. Sherry how much of your bets and adani groups success actually depends on domestic politics and who is in power as well . Rajiv that is a little bit of a misnomer a wrong perception because some of the assets were started a long time ago. If you look at the port it was started in the 90s. In fact, if you look at the investments that they have, in some cases they have more investment in state run by the opposition party. Rajasthan has more investments. This is a common misperception. What is not a thing is execution and profitability profitable growth that this demonstrates. Im not complaining because that is what we got this opportunity. Adani ports are selling at 15 times forward earnings. They have 25 of the port capacity in india. There is no a business theres no other business that could be globally at 15 times earnings of that size and growing at mid to high teens. Sherry what about the risks indias market regulators not to mention this week deloitte flagged information gaps for adani ports. How do you see that . Rajiv there is no perfect company. Risk is always there. If you look at france, they basically nationalized utilities and force the utilities to not allow a path through. Let me do an interesting comparison. If you look at all the chinese openings that are listed in the u. S. , they are vip structures. You dont own anything. We have owned these assets. You have no ownership of assets. There is risk in that, right . The Education Companies disappeared in china. They have been assets confiscated in your. German utilities basically bankrupt the german government. Part of doing business investing wise, there is risk in every area. It is not unique to this or anything else. Sherry how do you see india stock market performing versus chinas longterm . Rajiv i think it is interesting. If you look at the corporate Earnings Growth, if i asked you what is the corporate Earnings Growth for the last 10 years, msci india versus msci china, most of the people would not imagine that corporate earnings in india have been far better. This is msci india in dollar terms and msci china. If you believe corporate earnings of drive stock prices like we do, i dont see why five years out indian equity markets will outperform the chinese equity markets because the Regulatory Risk in china is tremendous. We have seen that. Rishaad that is rajiv jain with our very own shery ahn. The nifty thing positivity, not quite as flamboyant as hong kong is today with a just trading around 4 plus right now. We have adani shares because in light of what rajiv jain had to say there. Positivity with regards to currently taking place. Yvonne 2. 5 billion when it comes to what they are spelled spending on five Adani Group Stocks and smarts. Is it enough to lift assets here . For more lets bring in menaka doshi and pr sanjai in mumbai. Tell us more about these investments. How significant are they . The gqg investment, they have total 100 billion under management to 100. Adani group is one of the key with the partners. In march, they invested 1. 9 billion and over time they have increased to 2. 5 billion and increased in the company. We understand have added one more position. Apart from full companies that part bought stake in march, they have taken one more position, added lumber company. We are not sure what that company is. Rajiv jain said that they had picked up stake. The market value is around 3. 5 billion. The important thing is he is still keen to invest in new offerings of adani and two of Adani Companies have taken a distortion to rates funds and we are expecting one more. Adani green energy will also raise funds. Definitely gqg will take part in that is what we understand. Menaka you spoke to him about his entire india portfolio and he does have investments in his fund and his fund has investments in other Companies Like the state make of India State Bank of india. Adanis position is a huge concentration to his portfolio, almost one fourth of his portfolio in india seems to be invested in adani. Is he looking to further invest fresh money in other businesses in the country to be able to bring that concentration down . Pr actually, one of the key points were rajiv jain was insisting that adani group is just one among his portfolio. Total exposure of gqg to indias is 20 to 30 billion. Adani is just 2. 5 billion. He would be definitely adding. He was keen on what we understand is investing in healthcare and i tsx. He is bold overbite infrastructure and kept on harping on how the execution is done by the management for adani and cited his biggest points there. He was referring to one key point where Adani Electricity has done double its profit since acquisition from the infrastructure. He is keen on of instructor assets infrastructure assets which is needed for the country. He is big on infrastructure and we would see gqg partners will be investing more in income. They would be adding more positions in Adani Group Companies as well. Rishaad bloomberg Senior Editor menaka doshi and our conglomerates reporter pr sanjai in mumbai. We had towards a hong kong lunch break in eight minutes to go before that. Hang seng index up over 3. 5 . Hshares for 4. 2 to the upside. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh rishaad you can watch episode one of new directions, our series with chair premieres series looking at Tech Ambitions and opportunities for Southeast Asia amid u. S. China tension spared yvonne cisco, and international subdued for strategic studies weigh in with our very own haslinda. The regulations the americans put out last october attempted to stop china getting access to almost any advanced semiconductors at all. Whether its decoupling or derisking, it is about diversifying and semiconductors have become such an indispensable part of our life. Demand coming from iot, demand coming from Renewable Energies is just spectacular. Youve got to look at the whole ecosystem and the supply chain. I think that is potentially the greatest opportunity for asean. I dont think theres any single regulations that can resist and hold and stop us from doing business. Haslinda how do you see this playing out and what would be the key issues for you . The u. S. And china could find a way of getting along together reasonably well, then the future is pretty bright. As long as cool heads prevail in all of this, i think asean see incredible value over the next 20 10 to 20 years. Rishaad you can tune into new directions on saturday and sunday at these times. Markets, absolute here at the moment. We have not seen the hang seng like this since the first of march and similarly for the hshare index and Property Companies amongst every Industry Group which is up. Yvonne for percent gains for the biggest movers in asiapacific. We are watching the ed space in china and delivery numbers are looking robust. It certainly is a fed narrative that is really helping the markets. Softbank upgraded from jeffreys on the arm tail. Markets overall are pretty much a sea of green this morning. Rishaad that is it spared we have chinese stocks lifting the asiapacific to the upside. Up next, bloomberg daybreak middle east. Okay. Ill work on that. Save 50 on the sleep Number Limited Edition smart bed. Plus, free Home Delivery when you add an adjustable base. Only at sleep number. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, its affiliates, or its employees