WEBVTT - Asheesh Chanda on the Markets (Radio)

0:00:00.120 --> 0:00:02.560
<v Speaker 1>Let's get to us. She's chat our guest for the

0:00:02.600 --> 0:00:05.880
<v Speaker 1>half hour. She is founder also the CEO at Crystal.

0:00:05.960 --> 0:00:09.600
<v Speaker 1>He joins from Singapore. Thanks for being with us. We're

0:00:09.720 --> 0:00:12.200
<v Speaker 1>still trying to kind of look at the fallout from

0:00:12.200 --> 0:00:15.280
<v Speaker 1>this employment report. We've talked about the overall job growth.

0:00:15.520 --> 0:00:19.560
<v Speaker 1>Wage growth was also much above forecast, so they're obviously

0:00:19.800 --> 0:00:22.640
<v Speaker 1>inflationary pressures building on that front. We're going to get

0:00:22.640 --> 0:00:25.159
<v Speaker 1>the CPI data this week. We also have from the

0:00:25.239 --> 0:00:28.000
<v Speaker 1>Chinese perspective, a lot of inflation numbers we're going to

0:00:28.080 --> 0:00:31.640
<v Speaker 1>be sorting through midweek. Are we near peak inflation right now?

0:00:31.720 --> 0:00:33.080
<v Speaker 1>Or do you think we have a while to go?

0:00:34.920 --> 0:00:36.800
<v Speaker 1>But it looks like we have a while to go,

0:00:37.080 --> 0:00:39.000
<v Speaker 1>and a lot of data is going to come out

0:00:39.040 --> 0:00:41.800
<v Speaker 1>this weekend next that will give us some indicators. But

0:00:41.960 --> 0:00:44.520
<v Speaker 1>even if the data is let's say, a good wollatial

0:00:44.920 --> 0:00:46.680
<v Speaker 1>on either side, and just like you have the non

0:00:46.760 --> 0:00:51.600
<v Speaker 1>Bompado's much much above expectations, I still think the Fed

0:00:51.760 --> 0:00:54.120
<v Speaker 1>is on its course to achieve close to a four

0:00:54.200 --> 0:00:57.120
<v Speaker 1>per cent bind of the year. So certified BP seems

0:00:57.120 --> 0:00:59.920
<v Speaker 1>like a done deal. Inflation does not seem to be

0:01:00.000 --> 0:01:02.640
<v Speaker 1>well under control. Yes, you will have the base effect

0:01:02.680 --> 0:01:06.480
<v Speaker 1>coming in, you will have certain energy items probably tapering

0:01:06.480 --> 0:01:08.600
<v Speaker 1>a bit in terms of inflation. But I don't think

0:01:08.600 --> 0:01:11.039
<v Speaker 1>we're out of the words yet. Do you have a

0:01:11.080 --> 0:01:13.840
<v Speaker 1>sense of about when we might be out of the woods?

0:01:13.840 --> 0:01:15.720
<v Speaker 1>When do you think inflation might peak? Where do you

0:01:15.760 --> 0:01:19.679
<v Speaker 1>see that funds right settling? So I think that the

0:01:19.760 --> 0:01:21.960
<v Speaker 1>right course of action or what the FED is probably thinking.

0:01:22.000 --> 0:01:24.640
<v Speaker 1>And this is a guess. What make is that as

0:01:24.720 --> 0:01:27.720
<v Speaker 1>you have a few rate hikes or certified PP coming in,

0:01:28.040 --> 0:01:30.080
<v Speaker 1>it takes a quarter or two for the effects to

0:01:30.080 --> 0:01:32.640
<v Speaker 1>seep in. So I think when you see the Q

0:01:32.920 --> 0:01:36.039
<v Speaker 1>three results coming in, when you see the base effect

0:01:36.120 --> 0:01:39.199
<v Speaker 1>coming in, it's likely to be Q four and that's

0:01:39.240 --> 0:01:42.560
<v Speaker 1>when you could see a solid sign of inflation tapering.

0:01:43.080 --> 0:01:45.280
<v Speaker 1>And that's the only way you would have a FED

0:01:45.760 --> 0:01:49.320
<v Speaker 1>slowing down the pace of hikes. So I would say

0:01:49.360 --> 0:01:52.360
<v Speaker 1>that seventy five fifty is what the FED may be

0:01:52.480 --> 0:01:55.320
<v Speaker 1>thinking to achieve a four percent rather than seventy five

0:01:55.360 --> 0:01:57.840
<v Speaker 1>centive and go about bob Board. And yet we have

0:01:57.920 --> 0:02:01.440
<v Speaker 1>this inversion in the treasury curve which would imply that

0:02:01.520 --> 0:02:05.160
<v Speaker 1>we're dealing with an impending recession. How do you square

0:02:05.200 --> 0:02:09.959
<v Speaker 1>the two Clearly the bond market is saying that the

0:02:10.000 --> 0:02:12.560
<v Speaker 1>FED is going to go overboard because they are predicting

0:02:12.600 --> 0:02:16.320
<v Speaker 1>that FED is likely to not have inflation under control

0:02:16.360 --> 0:02:19.080
<v Speaker 1>and hit the brakes very hard. So while there is

0:02:19.080 --> 0:02:21.440
<v Speaker 1>a segment of the market at least the equities market

0:02:21.800 --> 0:02:24.040
<v Speaker 1>is looking at the Goldilocks is back kind of scenario

0:02:24.600 --> 0:02:27.760
<v Speaker 1>because you think that FED is engineering a good soft landing.

0:02:28.400 --> 0:02:30.360
<v Speaker 1>But there is the bond market saying that, no, the

0:02:30.360 --> 0:02:33.040
<v Speaker 1>FED has it wrong. Neither do they health control over inflation,

0:02:33.280 --> 0:02:35.680
<v Speaker 1>and if they do manage to get some control over it,

0:02:35.880 --> 0:02:38.360
<v Speaker 1>recession will be staring in our face. So they're clearly

0:02:38.360 --> 0:02:41.400
<v Speaker 1>sending up very different message than the equities. All right,

0:02:41.520 --> 0:02:43.560
<v Speaker 1>So where do you put money to work in this environment?

0:02:43.639 --> 0:02:45.760
<v Speaker 1>Is there anything out there that's flashing a bye for

0:02:45.800 --> 0:02:49.560
<v Speaker 1>you right now? So clearly short term bonds. We know

0:02:49.639 --> 0:02:51.519
<v Speaker 1>that the rate is likely to be somewhere in the

0:02:51.560 --> 0:02:53.519
<v Speaker 1>three and after four percent by the end of this year,

0:02:53.560 --> 0:02:56.680
<v Speaker 1>and that's probably likely to happen, So so short term

0:02:56.680 --> 0:02:59.800
<v Speaker 1>bonds is the safest play to go for. But otherwise

0:03:00.040 --> 0:03:02.680
<v Speaker 1>on that also you still need to keep an exposure

0:03:02.720 --> 0:03:05.720
<v Speaker 1>to commodities, maybe lower than before, but definitely need to

0:03:05.760 --> 0:03:09.119
<v Speaker 1>be in as an inflation hedge, and she Sho want

0:03:09.120 --> 0:03:11.480
<v Speaker 1>to turn our attention now to China and particularly that

0:03:11.840 --> 0:03:14.840
<v Speaker 1>very impressive trade data we head out over the weekend.

0:03:14.880 --> 0:03:19.480
<v Speaker 1>Exports growing eight hundred one billion dollar trade surplus. A

0:03:19.480 --> 0:03:21.959
<v Speaker 1>lot of hyperens though in China. How sustainable does this

0:03:22.040 --> 0:03:26.799
<v Speaker 1>look to you? So we have big advocators of value

0:03:26.840 --> 0:03:29.079
<v Speaker 1>coming out of China in terms of investing in their

0:03:29.120 --> 0:03:31.680
<v Speaker 1>great markets there. Having said that, the data that has

0:03:31.720 --> 0:03:33.560
<v Speaker 1>come out it is quite positive on the on the

0:03:33.600 --> 0:03:36.320
<v Speaker 1>export side, and on imports it's a bit lower. It's

0:03:36.360 --> 0:03:39.640
<v Speaker 1>just a signal of front loading of orders given the

0:03:39.680 --> 0:03:44.360
<v Speaker 1>COVID related lockdowns that we're seeing there. But clearly there

0:03:44.560 --> 0:03:47.680
<v Speaker 1>is a positivity to the economy that could come out

0:03:47.720 --> 0:03:51.480
<v Speaker 1>after the October Congress that happens there. However, there is

0:03:51.600 --> 0:03:54.560
<v Speaker 1>the geopolitical risks that is overshadowing it. There is the

0:03:54.640 --> 0:03:58.680
<v Speaker 1>whole mortgage related cloud that is also over there. But

0:03:58.800 --> 0:04:01.880
<v Speaker 1>we think that for October you would see or you

0:04:01.920 --> 0:04:05.080
<v Speaker 1>should see policy actions that would give a very positive

0:04:05.360 --> 0:04:08.240
<v Speaker 1>momentum to the economy. So what are you singing then

0:04:08.560 --> 0:04:13.400
<v Speaker 1>or predicting in the way of stimulus. So it's tough

0:04:13.440 --> 0:04:16.040
<v Speaker 1>to say what exactly do they come out with, because

0:04:16.080 --> 0:04:20.680
<v Speaker 1>they have kind of underwhelmed from the market expectations. But

0:04:20.839 --> 0:04:24.480
<v Speaker 1>clearly a stimulus that leads to clearing of the clouds

0:04:24.480 --> 0:04:29.560
<v Speaker 1>on the mortgage crisis and showing more easy stands is

0:04:29.600 --> 0:04:32.320
<v Speaker 1>something that may be needed and that's what the market

0:04:32.320 --> 0:04:35.960
<v Speaker 1>would look for. But as the uncertainty goes away, you

0:04:36.040 --> 0:04:39.200
<v Speaker 1>would see that the focus will come on valuations and

0:04:39.400 --> 0:04:43.120
<v Speaker 1>from a value perspective, it would look very attractive. So

0:04:43.160 --> 0:04:44.760
<v Speaker 1>where do you put money to work? In China? Are

0:04:44.800 --> 0:04:47.560
<v Speaker 1>there any particular sectors or stocks that look appealing to

0:04:47.560 --> 0:04:50.640
<v Speaker 1>you at the moment. So we'll go with the broad

0:04:50.680 --> 0:04:54.000
<v Speaker 1>index names, you know, the China ashes, rather than specific

0:04:54.040 --> 0:04:57.839
<v Speaker 1>in tech or so. Of course avoiding property is prudent,

0:04:58.120 --> 0:04:59.920
<v Speaker 1>but going with the broad index names is what we

0:05:00.000 --> 0:05:02.840
<v Speaker 1>it would typically stick to. So much of the conversation

0:05:02.880 --> 0:05:07.400
<v Speaker 1>has been around technology as well at Taiwan, the semiconductor industry.

0:05:07.440 --> 0:05:10.760
<v Speaker 1>That's also a part of the South Korea story. Would

0:05:10.800 --> 0:05:13.919
<v Speaker 1>you be tempted to put money away from China in

0:05:14.160 --> 0:05:16.480
<v Speaker 1>certain pockets of the a pack that had to deal

0:05:16.560 --> 0:05:20.719
<v Speaker 1>with technology, particularly the semiconductors, rather than some of the

0:05:20.760 --> 0:05:25.160
<v Speaker 1>hardware names. It's definitely tempting, but we don't know whether

0:05:25.240 --> 0:05:27.200
<v Speaker 1>this is going to be just a short term trend

0:05:27.279 --> 0:05:30.479
<v Speaker 1>or a short term nijor reaction in the technology space.

0:05:30.560 --> 0:05:32.560
<v Speaker 1>We still think that the U s pictech is well

0:05:32.600 --> 0:05:35.839
<v Speaker 1>positioned despite all the rate hikes, and that's where I

0:05:35.839 --> 0:05:38.480
<v Speaker 1>think buying going dips is likely to continue. So would

0:05:38.560 --> 0:05:41.000
<v Speaker 1>rather go safe that we have clarity on the monetary

0:05:41.040 --> 0:05:44.760
<v Speaker 1>policy actions and inflation. We have, of course seen some

0:05:45.200 --> 0:05:49.160
<v Speaker 1>fairly active Chinese military drills around Taiwan following the visit

0:05:49.200 --> 0:05:53.359
<v Speaker 1>of House Speaker Nancy Pelosi. How does the balance of

0:05:53.640 --> 0:05:56.920
<v Speaker 1>excuse me, risks here look to you? Is it? Are

0:05:56.920 --> 0:05:59.200
<v Speaker 1>there any risks for markets for growth or does this

0:05:59.480 --> 0:06:04.520
<v Speaker 1>just look like domestic political cyber rattling. No, there's definitely

0:06:04.560 --> 0:06:08.000
<v Speaker 1>geopolitical risk that one has to keep in mind. But

0:06:08.160 --> 0:06:12.800
<v Speaker 1>given the priorities that the Chinese government would have, I

0:06:12.839 --> 0:06:15.799
<v Speaker 1>would think that the importance to these should be lowered.

0:06:16.320 --> 0:06:19.599
<v Speaker 1>I wouldn't comment on any any political moves that could

0:06:19.680 --> 0:06:23.320
<v Speaker 1>happen at per se, but hoping that whatever is the

0:06:23.400 --> 0:06:26.840
<v Speaker 1>impact of this is limited to certain import items or

0:06:26.880 --> 0:06:31.080
<v Speaker 1>certain export items from Taiwan and stays there. The domestic

0:06:31.120 --> 0:06:33.880
<v Speaker 1>story in China has always been I think a concern

0:06:33.960 --> 0:06:36.280
<v Speaker 1>for people that play the equity market on the mainland,

0:06:36.320 --> 0:06:39.799
<v Speaker 1>I mean very soft kind of consumer participation. You mentioned

0:06:39.800 --> 0:06:42.040
<v Speaker 1>that the difficulty with the property market is being a

0:06:42.040 --> 0:06:46.080
<v Speaker 1>contributor to that fact. Are you sensing a turn in

0:06:46.080 --> 0:06:51.839
<v Speaker 1>in consumer sentiment or at least consumer behavior in China. Yeah,

0:06:51.880 --> 0:06:54.720
<v Speaker 1>the domestic demand definitely has taken a double blow, both

0:06:54.720 --> 0:06:58.640
<v Speaker 1>in terms of property as well as coordulated effects. And

0:06:59.000 --> 0:07:01.760
<v Speaker 1>as the policy gets a bit easier on the COVID

0:07:01.839 --> 0:07:05.240
<v Speaker 1>side as well as any physical stimulus comes helping the

0:07:05.320 --> 0:07:08.680
<v Speaker 1>property sector, that's where we think the sentiment could improve,

0:07:08.960 --> 0:07:10.960
<v Speaker 1>but we're still at least three to four months away

0:07:11.000 --> 0:07:14.080
<v Speaker 1>from that happening very quickly. Is she short's your cash

0:07:14.120 --> 0:07:18.080
<v Speaker 1>allocation like at the moment? So instead of cash, we

0:07:18.120 --> 0:07:20.760
<v Speaker 1>prefer holding short term in western grade bonds because that's

0:07:20.760 --> 0:07:24.440
<v Speaker 1>going to give you a lot more return banko back

0:07:24.480 --> 0:07:28.280
<v Speaker 1>than anything else. Alright, as she ship Chanda, founder and

0:07:28.520 --> 0:07:31.280
<v Speaker 1>CEO at Crystal, Thanks so much for joining us here

0:07:31.360 --> 0:07:32.960
<v Speaker 1>on Bloomberg Daybreak. Asion