WEBVTT - Should the Fed Cut Rates... and Should You Cut Meat? 0:00:03.760 --> 0:00:07.200 Welcome to Bloomberg Opinion. I'm Vonnie Quinn. This week, the 0:00:07.400 --> 0:00:11.640 key concern usually is precisely when a curve re steepened 0:00:11.800 --> 0:00:14.480 rapidly to get back to zero. That's when you're about 0:00:14.560 --> 0:00:16.599 to get a re station. Not when you know that 0:00:16.640 --> 0:00:19.840 one is coming, but when it's actually here. Chief Rates 0:00:19.880 --> 0:00:23.440 Correspondent Garfield Reynolds on the signals Rates are sending investors 0:00:23.480 --> 0:00:26.160 about the economy, and it's kind of like a wee 0:00:26.160 --> 0:00:28.440 work way. It's kind of like sake it to you 0:00:28.520 --> 0:00:31.040 make it. Julie Ran on the latest to Danny concerns 0:00:31.080 --> 0:00:34.279 shaking the integrity of India investment. We also hear from 0:00:34.280 --> 0:00:37.519 the University of Georgia Stephen mim about the curious history 0:00:37.560 --> 0:00:41.279 of meat alternatives. First though, to Chief Rates Correspondent now 0:00:41.280 --> 0:00:44.600 Garfield Renalds and the markets topsy turvy week. Here's fed 0:00:44.680 --> 0:00:47.120 Jerry J. Powell at the Economic Tub of Washington, d C. 0:00:47.479 --> 0:00:50.360 The message we were sending at the fon C meeting 0:00:50.400 --> 0:00:55.280 last Wednesday was really that the disinflationary process, the process 0:00:55.280 --> 0:00:58.240 of getting inflation down, has begun, and it's begun in 0:00:58.280 --> 0:01:01.240 the goods sector, which is about a order of our economy. 0:01:01.280 --> 0:01:03.000 But it has a long way to go. These are 0:01:03.000 --> 0:01:07.440 the very early stages of disinflation. So the services sector 0:01:07.480 --> 0:01:11.560 really except for housing services, pardon me, is not really 0:01:11.560 --> 0:01:15.839 showing any any disinflation. So Garfield Powell had another opportunity 0:01:15.880 --> 0:01:17.959 this week to speak to the markets, and it felt 0:01:18.040 --> 0:01:21.160 like he didn't take any opportunity to correct the market 0:01:21.319 --> 0:01:24.000 or maybe deflect the market. He just said exactly what 0:01:24.040 --> 0:01:26.720 he has been saying. He's not making any effort anymore. 0:01:26.760 --> 0:01:29.520 Is he to talk down the market? Well, I think 0:01:29.680 --> 0:01:34.040 he is very conscious of the idea that he's got 0:01:34.080 --> 0:01:38.000 a very narrow path forward towards the situation where he 0:01:38.040 --> 0:01:41.560 gets inflation there without crashing the economy, and so he 0:01:41.600 --> 0:01:44.399 doesn't want to skip people too much as the way 0:01:44.440 --> 0:01:47.680 it comes across, and he's sort of willing to, as 0:01:47.680 --> 0:01:50.920 it were, talked, pass markets and just stick with this 0:01:51.000 --> 0:01:54.240 is what I see we need to do. How many 0:01:54.240 --> 0:01:57.360 times can he say he's determined to bring inflation down 0:01:57.720 --> 0:02:01.080 and then he doesn't want to repeat the mistakes. He 0:02:01.160 --> 0:02:04.559 said that that's part of the furniture, and he's also 0:02:05.120 --> 0:02:07.280 I mean, the method this week has been to let 0:02:07.640 --> 0:02:12.400 the other fair officials be the ones who really seeing 0:02:12.440 --> 0:02:15.839 the Hawkish chorus. It's amazing, and his deputies do all 0:02:15.840 --> 0:02:18.919 of that work these days, and not him so much. Well, 0:02:18.960 --> 0:02:21.360 I mean it's that we get part of FED speak, 0:02:21.400 --> 0:02:23.519 and that also the market is paying a lot of 0:02:23.560 --> 0:02:26.360 attention to it. The other fact that here is that 0:02:26.440 --> 0:02:28.720 you are have to all effort and see that is 0:02:28.760 --> 0:02:31.560 a committee. There is a range of views, and so 0:02:31.680 --> 0:02:36.359 quite possibly how themselves is somewhat less purekfish, somewhat more 0:02:36.360 --> 0:02:40.960 optimistic about potential to get a soft landing, you know, 0:02:41.000 --> 0:02:44.960 than some of his colleagues who are for whatever particular 0:02:45.040 --> 0:02:47.160 reasons where it comes to background, whether it comes to 0:02:47.160 --> 0:02:51.040 their particular reason that they're looking at their far more 0:02:51.080 --> 0:02:54.080 concerned about just making absolutely sure that inflation is brought 0:02:54.080 --> 0:02:57.480 in the check. They're far more willing to take the 0:02:57.520 --> 0:03:00.240 punch bowl away. Well, as we speak to and your 0:03:00.320 --> 0:03:03.080 yield at three sixty five and change the two years 0:03:03.080 --> 0:03:05.720 at four or forty eight. So we have repriced a 0:03:05.840 --> 0:03:09.840 certain amount, but there's no wholesale repricing going on. Still, 0:03:10.000 --> 0:03:12.200 Why is that? Do you think? While there's a couple 0:03:12.200 --> 0:03:14.720 of issues going on, a mere one is as were mentioned, 0:03:14.880 --> 0:03:19.880 pow E's aiming very determinedly for a soft landing, and 0:03:19.960 --> 0:03:24.400 so a soft landing is seen as allowing for interstrections 0:03:24.480 --> 0:03:27.840 not yet too high, to come down soon around than 0:03:27.919 --> 0:03:30.160 later if they need to. But the other issue is 0:03:30.160 --> 0:03:33.600 there's such an enormous advertise US treasuries. Now some of 0:03:33.600 --> 0:03:37.840 that demand has come from tensions who define benefit. Tensions 0:03:37.840 --> 0:03:40.120 in the US have got about a trillion dollars to 0:03:40.160 --> 0:03:43.800 play with the circlus and so that they don't need 0:03:43.840 --> 0:03:45.800 to do anything other than just an income on it, 0:03:45.880 --> 0:03:48.040 so they're happy to buy treasuries. We saw a very 0:03:48.120 --> 0:03:50.640 very strong the amount of the ten year options this week. 0:03:50.720 --> 0:03:54.119 There is that undercurrent of demand for treasuries at these 0:03:54.200 --> 0:03:58.400 yields for long term buyers. At the same time, that's 0:03:58.480 --> 0:04:01.800 very short and we have people betting on the potential 0:04:01.800 --> 0:04:04.960 that defend takes the interest rate to six percent, and 0:04:05.040 --> 0:04:08.360 certainly the terminal rate pricing the general consensus that moved 0:04:08.440 --> 0:04:10.800 up as well. So you're seeing a market that is 0:04:10.840 --> 0:04:13.440 saying we're going to hedge against the potential of defend 0:04:13.560 --> 0:04:18.240 goes harder. In the longer term. We're confident that a 0:04:18.400 --> 0:04:20.880 three and a half percent to four percent yield on 0:04:20.960 --> 0:04:24.200 a ten year treasury is too good to miss out. 0:04:24.600 --> 0:04:27.080 You don't see that over the long term yields are 0:04:27.120 --> 0:04:31.479 going to move significantly higher and stay significantly higher for 0:04:31.600 --> 0:04:34.440 any long stretch of time. Yeah, I mean it's phenomenal. 0:04:34.480 --> 0:04:36.599 It's very hard to believe that that will actually happen 0:04:36.600 --> 0:04:38.360 when you see what the market is doing these days, 0:04:38.400 --> 0:04:40.119 but I guess it has to happen at some point 0:04:40.279 --> 0:04:42.320 now you mentioned it there, there has been lots of 0:04:42.360 --> 0:04:45.160 chatter and lots of options market movement pricing it will 0:04:45.160 --> 0:04:47.640 be great of six percent or even hired. Should we 0:04:47.760 --> 0:04:51.960 be seeing these types of tail risks priced in elsewhere though, Well, 0:04:52.000 --> 0:04:56.120 I mean definitely, because the concern has to be if 0:04:56.160 --> 0:04:58.040 you look a little bit further away from just the 0:04:58.120 --> 0:05:01.919 Treasury from itself, what impact if the Fed goes to 0:05:02.240 --> 0:05:05.240 five and a half or six percent or beyond on 0:05:05.320 --> 0:05:08.840 the wider world outside treasuries? What happens to tech stocks 0:05:08.880 --> 0:05:12.880 that have been very, very strong and a particular evaluations 0:05:12.920 --> 0:05:16.159 to earning spaces. What happens to the credit complex where 0:05:16.440 --> 0:05:19.919 corporate spreads have come in markedly and have continued to 0:05:20.000 --> 0:05:23.359 march in even as what's really gone on with government 0:05:23.400 --> 0:05:26.680 yields is they've sort of stabilized in their current range. 0:05:26.880 --> 0:05:29.840 So if the FED goes to five point two five, 0:05:29.920 --> 0:05:32.960 five point five, five point seven five in the longer term, 0:05:33.040 --> 0:05:35.640 somebody who bought a ten year yield at this level 0:05:35.720 --> 0:05:38.760 might well decide that they're going to be okay. They 0:05:38.800 --> 0:05:41.039 just need to write out the short term pain. But 0:05:42.240 --> 0:05:45.159 those other markets, they don't have that luxury. And I 0:05:45.200 --> 0:05:48.200 haven't even mentioned what would go on with junk bonds. Yeah, 0:05:48.240 --> 0:05:50.080 it's phenomenal when you think about it. I mean, what 0:05:50.240 --> 0:05:52.599 should be happening now in order to prepare for a 0:05:52.720 --> 0:05:54.880 world that's like that? Or do all of these other 0:05:54.920 --> 0:05:58.560 markets assume one of two options that everything is smooth 0:05:58.600 --> 0:06:00.760 and fine and hunky dorry and this plenty of demand 0:06:00.800 --> 0:06:03.760 for all of the products made by these tech companies, 0:06:03.960 --> 0:06:06.719 or there's going to be a massive recession. Yeah, yeah, 0:06:06.800 --> 0:06:08.800 and the and the I mean the question of the 0:06:08.839 --> 0:06:12.400 massive recession too is mostly down to what goes on 0:06:12.440 --> 0:06:14.880 with inflation and what goes on with the FED fight 0:06:15.040 --> 0:06:18.760 against the inflation. And if inflation continues to come down 0:06:19.240 --> 0:06:22.640 smoothly and at a barely rapid pace, then even if 0:06:22.680 --> 0:06:25.400 you don't get the FED rate cuts later on in 0:06:25.440 --> 0:06:27.520 the year that people are looking for, I think you'll 0:06:27.520 --> 0:06:30.039 get a soft landing for the economy. You might get 0:06:30.080 --> 0:06:32.400 some pain for those people who bought ten year bonds 0:06:32.400 --> 0:06:35.040 at three and a half per cent, but that won't 0:06:35.200 --> 0:06:38.880 really hurt the wider world. The big risk is if 0:06:38.920 --> 0:06:42.720 you get inflation staying elevated, or if you get something 0:06:42.839 --> 0:06:45.440 in the way that inflation is coming down that still 0:06:45.480 --> 0:06:48.720 concerns the FED. The FED goes higher than people are 0:06:49.080 --> 0:06:53.840 expecting it and stays there the longer, that could cause 0:06:54.600 --> 0:06:57.200 that recession that we're talking about. So the other part 0:06:57.200 --> 0:06:58.920 of this, and the FED chair mentioned it has mentioned 0:06:58.960 --> 0:07:01.080 a few times now, is this is inflation, and that's 0:07:00.920 --> 0:07:03.680 the stickier side of things, and it also accounts for, 0:07:04.040 --> 0:07:07.479 you know, more of the bokers than goods inflation. It's 0:07:07.520 --> 0:07:10.280 not coming down. How on earth could we possibly get 0:07:10.280 --> 0:07:11.800 a rate cut by the end of the year. Game 0:07:11.800 --> 0:07:15.120 out the scenario where we do go one, Well, that's 0:07:15.160 --> 0:07:17.120 always been one of the conundrums because if you do 0:07:17.200 --> 0:07:20.600 get a you know, equities have been rallying on the 0:07:20.760 --> 0:07:23.600 idea that the Fed is soon started done with rates 0:07:23.720 --> 0:07:26.440 best we can tell. There are some other issues as well, 0:07:26.480 --> 0:07:28.960 but that's certainly been paral the narrative. There will soon 0:07:29.000 --> 0:07:31.600 be done hiking, and it will be ready to cut 0:07:32.240 --> 0:07:35.520 at the first sign of trouble, the way that pal 0:07:36.080 --> 0:07:41.240 did before the pandemic teen when they raised rates and 0:07:41.360 --> 0:07:43.480 said that they were determined to keep raising them, but 0:07:43.520 --> 0:07:46.559 then once the economy wobbled while, they cut them again. 0:07:46.880 --> 0:07:49.280 So there's an expectation that would do that again. The 0:07:49.280 --> 0:07:53.120 difficulty is inflation is still way too high for the 0:07:53.120 --> 0:07:56.360 Fair to countenance rate cuts. So if you're going to 0:07:56.400 --> 0:07:58.600 get rate cuts later this year, even from where we 0:07:58.640 --> 0:08:01.040 are now, if the Fair stop where it is now 0:08:01.280 --> 0:08:03.200 and then ends up cutting rates by the end of 0:08:03.240 --> 0:08:06.600 this year, that has to be a recession in order 0:08:06.600 --> 0:08:10.120 for them to do that, because the inflation rate is 0:08:10.200 --> 0:08:13.000 just too high. Yeah, I mean, Stephen Major has always 0:08:13.040 --> 0:08:16.200 had this idea of why would have fed overhike in 0:08:16.280 --> 0:08:17.920 order to have to cut again. Why wouldn't it just 0:08:18.040 --> 0:08:20.240 hiken off and stay there for a while and then 0:08:20.440 --> 0:08:24.120 cut eventually sometime maybe, So, I'm not sure why that 0:08:24.360 --> 0:08:27.320 isn't more popular of a view. Well, I think the 0:08:27.360 --> 0:08:30.640 point there is a central banks do tend to overreact. 0:08:30.720 --> 0:08:34.600 They definitely overreacted to the pandemic, and also two previous 0:08:34.800 --> 0:08:38.160 episodes of recessions, so they take rate lower and do 0:08:38.320 --> 0:08:41.160 more than than might actually have been wise, and then 0:08:41.200 --> 0:08:44.240 you end up overcharging the economy as it comes back 0:08:44.320 --> 0:08:47.520 up out of recession. And now there's the concern that 0:08:47.520 --> 0:08:50.560 they will overdo it in that way. In the opposite way, 0:08:50.720 --> 0:08:53.640 they will keep rates too high for too long because 0:08:53.679 --> 0:08:56.720 of their worries about inflation. Garfield, Where in the market 0:08:56.720 --> 0:08:59.839 are you looking for signs or clues or some kind 0:08:59.840 --> 0:09:02.920 of thinking as to what direction sentiment might be taking. 0:09:03.400 --> 0:09:06.640 I think the credit space is very much an area 0:09:06.840 --> 0:09:10.600 that is interest there. You know, that's a little bit 0:09:10.840 --> 0:09:14.440 slower twitch, so to speak, than than the equities market, 0:09:14.520 --> 0:09:17.640 which can flip up and down far more readily. So 0:09:17.920 --> 0:09:20.720 what's going on there? If you do start to see 0:09:20.760 --> 0:09:24.319 signs that spreads widening back out, I think that would 0:09:24.320 --> 0:09:28.079 be a very concerning sign that would becoming an If 0:09:28.160 --> 0:09:31.720 spreads there can stay where they are again, that would 0:09:31.720 --> 0:09:36.560 also be potentially welcome. I also think that, you know, 0:09:36.840 --> 0:09:39.679 a major concern would be if we've got a sudden 0:09:40.080 --> 0:09:44.640 re steepening of the yield, we've got an inverted yield. 0:09:44.880 --> 0:09:48.440 It's just lasted longer this current inversion than the two 0:09:48.480 --> 0:09:53.439 thousand era inversion, so the seven era inversion which presage 0:09:53.520 --> 0:09:58.640 the global financial crisis. So and it's very unusual to 0:09:58.679 --> 0:10:00.720 have an inversion this long doubt that would be a 0:10:00.760 --> 0:10:04.040 recession at the end. But the key concern usually is 0:10:04.080 --> 0:10:07.640 precisely when a yield curve re steep and rapidly to 0:10:07.679 --> 0:10:10.280 get back to zero. That's when you're about to get 0:10:10.280 --> 0:10:12.720 a recession, not when you know that one is coming, 0:10:13.000 --> 0:10:15.560 but when it's actually here. So if we see it 0:10:15.760 --> 0:10:20.760 rapid repricing where ten year yields come up fast and 0:10:20.960 --> 0:10:24.600 two year yields don't, or two year yields come down 0:10:24.800 --> 0:10:27.800 and ten year yields don't, so we get at resteepening 0:10:27.880 --> 0:10:32.240 back towards zero, that's when you might actually get some 0:10:32.400 --> 0:10:36.960 brief rallies in equities and credits on hopes that we're 0:10:37.000 --> 0:10:40.440 getting an end of the fair hiking cycle. But that's 0:10:40.440 --> 0:10:43.079 actually usually when the recession is just going to hit. 0:10:43.160 --> 0:10:45.120 So that would be a very dangerous time and date. 0:10:45.400 --> 0:10:49.520 Bloomberg Chief Rates correspondent to Garfield Reynolds. Next, Shulie Ran 0:10:49.559 --> 0:10:53.440 on the latest in India's Adanni crisis. This is Bloomberg opinion. 0:10:54.000 --> 0:10:57.079 You're listening to Bloomberg opinion. I'm Vonnie Quinn. Now to 0:10:57.160 --> 0:11:00.520 go to Madonni, one of India's biggest industrial time icons. 0:11:01.120 --> 0:11:04.959 Since short seller Hindenburg Research published its report alleging market 0:11:05.000 --> 0:11:08.680 manipulation and fraud on the part of Adani Enterprises, market 0:11:08.679 --> 0:11:11.920 repercussions have been picking up speed with the flurry of 0:11:12.080 --> 0:11:16.000 support of activity from India's billionaires, less support of activity 0:11:16.040 --> 0:11:20.240 from bondholders, credit rating agencies and index providers, not much 0:11:20.280 --> 0:11:23.240 of any support at all from India's government. In fact, 0:11:23.400 --> 0:11:27.120 parliament was suspended for five days after pandemonium broke out, 0:11:27.400 --> 0:11:30.880 the opposition wanting to debate the crisis, the legislature wanting 0:11:31.000 --> 0:11:34.280 not to. I got up with Bloomberg opinions. Shulely Wren 0:11:34.400 --> 0:11:36.800 on what comes next and what a Donni can do 0:11:36.920 --> 0:11:41.079 to stave off a wholesale crisis. So, Shuly, let's get 0:11:41.080 --> 0:11:45.000 the update on Adanni. We know that things deteriorated for 0:11:45.160 --> 0:11:49.920 several sessions. Are things stabilizing now a little bit? Especially 0:11:50.000 --> 0:11:53.679 a Dani dollar abound. A Dannie group has just slightly 0:11:53.720 --> 0:11:57.120 shy of a billion dollar abound outstanding, And starting from 0:11:57.200 --> 0:11:59.920 late last week, what we saw was that credit hatch 0:12:00.000 --> 0:12:03.560 funds and distressed. The special situations funds were scooping in 0:12:03.880 --> 0:12:07.680 to buy on it. Now, why is ADONNI and the 0:12:07.760 --> 0:12:10.480 various bonds that they can buy associated with various companies 0:12:10.559 --> 0:12:14.680 attractive or distressed investors are not you know, regular dead 0:12:14.760 --> 0:12:18.280 or equity investors. Well, they are so called them special 0:12:18.320 --> 0:12:21.480 situations funds in that they see those big corporate events 0:12:21.520 --> 0:12:23.960 and they try to progress on that. Well, a lot 0:12:24.000 --> 0:12:27.280 of credit hedge funds saw was that ADONNEI Group does 0:12:27.400 --> 0:12:30.920 have good assets, especially Adonne reports, and they feel that, 0:12:31.200 --> 0:12:34.360 you know, even if there are juderos at the headquarters 0:12:34.440 --> 0:12:37.679 at the holding company with this kind of subsidiaries, they 0:12:37.679 --> 0:12:40.840 are backed by good assets. That's why those quite offense 0:12:40.880 --> 0:12:43.720 as buying. Also at this point these bums are yielding 0:12:43.800 --> 0:12:46.760 at the over ten percent. What kind of a signal 0:12:46.840 --> 0:12:50.240 does this send in terms of confidence? I think it's 0:12:50.320 --> 0:12:53.800 more a shift of hands in the investor base. I mean, 0:12:53.920 --> 0:12:58.439 before the whole Kingdomberg show so report, ADONNEI bonds and 0:12:58.520 --> 0:13:01.199 most of them will actually believe were not investment grade 0:13:01.240 --> 0:13:03.680 and they were. They were only offering like three to 0:13:03.760 --> 0:13:07.240 five percent coupon rates. And with the short seller report out, 0:13:07.320 --> 0:13:10.839 all the allegations of corporate governors inside the trading a 0:13:10.840 --> 0:13:15.000 lot of bleach long ovatements were selling and instead those 0:13:15.360 --> 0:13:19.360 high ye more speculative, more with taking hatchments are coming. 0:13:19.400 --> 0:13:22.480 So I think it's a change in investor base for 0:13:22.600 --> 0:13:25.560 Adani at this point. Can we read anything about whether 0:13:25.679 --> 0:13:29.120 it means that there is more confidence in Adani's survival 0:13:29.320 --> 0:13:33.160 or his thriving, let's say, or less confidence. I think 0:13:33.400 --> 0:13:36.079 rather than speaking of a confidence, it's it's more the 0:13:36.280 --> 0:13:40.040 kind of part of following that capital markets now demanding 0:13:40.120 --> 0:13:43.600 for Adani before because of it, it's green energy ambition, 0:13:43.840 --> 0:13:46.839 et cetera, and it's pushed to help India fast track 0:13:46.920 --> 0:13:50.600 into the next generation South Korea. Global friends were willing 0:13:50.640 --> 0:13:53.960 to lend money to Adani a very very cheap rate, 0:13:54.320 --> 0:13:57.920 and these days no longer they are treated more like 0:13:58.080 --> 0:14:02.319 a high risk bat. Now oak Tree, Davidson, Kempernor or 0:14:02.360 --> 0:14:04.680 some names we know well have been buying up some debt. 0:14:05.240 --> 0:14:08.160 Explained to us why they're comfortable buying up a Dannie dead. 0:14:08.400 --> 0:14:11.840 They're very experienced. I mean, Auktree has been in both 0:14:11.840 --> 0:14:14.880 fums have been in China. Everground groups and their China's 0:14:14.920 --> 0:14:18.080 other conglomerates such as unit groups before right, So they 0:14:18.120 --> 0:14:21.840 are compared to Blee Chips, Long Only, Credit, fung Way 0:14:21.880 --> 0:14:26.360 more experienced with the emerging markets conglomerates and their cross 0:14:26.440 --> 0:14:31.240 shareholdings and also served Shenanigans, so they feel very comfortable 0:14:31.320 --> 0:14:33.840 going to this. Do they tend to stay for the 0:14:33.920 --> 0:14:36.200 long hole? Or what happened when it came to China 0:14:36.240 --> 0:14:40.000 Everground Group. They can be in for the quite a 0:14:40.000 --> 0:14:43.360 long hole, and they are quite tenacious. I mean Auctree 0:14:43.480 --> 0:14:47.560 famously gave a loan to China Everground Group and then 0:14:47.680 --> 0:14:50.880 when the developer he folded on that loan. They basically 0:14:51.760 --> 0:14:54.760 sees a big plot of land in in Hong Kong 0:14:54.840 --> 0:14:57.280 last year and they sold it and they're the Cubodian 0:14:57.360 --> 0:14:59.880 loan plus interest. So they can be quite a nation, 0:15:00.240 --> 0:15:04.120 hard nosed and demanding. Now you actually write that Adoni 0:15:04.240 --> 0:15:06.240 needs to take a leaf out of soft Bank and 0:15:06.280 --> 0:15:09.800 Folsons playbooks, explain what you mean by that? Actually, so 0:15:09.960 --> 0:15:12.960 right now, I think there's a lot of market uncertainty 0:15:13.120 --> 0:15:17.040 around the Adonny's ability to tap on to the different 0:15:17.040 --> 0:15:20.560 financing channels. Like Adoni, it's just like Vision and soft 0:15:20.560 --> 0:15:24.000 Bank because they have very diversified funding channels with Adoni 0:15:24.080 --> 0:15:28.080 over came from global banks and another seven eight percent 0:15:28.600 --> 0:15:31.360 coming from the dollar bond market. And I think what 0:15:31.440 --> 0:15:34.160 they need to do is trying to sell some assets, 0:15:34.200 --> 0:15:37.840 because they should change the narrative from a liquidit tea 0:15:37.920 --> 0:15:41.840 quench to credit analysts saying wait a minute, Adoni has 0:15:41.960 --> 0:15:43.960 very good assets, and they do. They have a lot 0:15:44.000 --> 0:15:46.640 of top tier ports in their for instance, right, So 0:15:47.000 --> 0:15:50.320 if they can show that their assets worth quite a 0:15:50.320 --> 0:15:53.600 lot of money in the marketplace, the credit analysts narratives 0:15:53.600 --> 0:15:56.480 couldn't change. And another thing they could do, and that's 0:15:56.520 --> 0:15:59.520 being done with a lot of Asia's biggest conglomerates, is 0:15:59.560 --> 0:16:02.760 that they try to buy back some bonds, just like 0:16:02.800 --> 0:16:05.320 what people do with stox, right, just to boost the 0:16:05.400 --> 0:16:08.520 market confidence because once you buy by some bounds, the 0:16:08.600 --> 0:16:10.720 bond market will be open and there's a lot of 0:16:10.760 --> 0:16:14.480 money in that. Now a Dannie husband preparing some payments, right, 0:16:14.520 --> 0:16:17.760 what is he doing there? How is that working? So 0:16:17.920 --> 0:16:20.720 it is a sign that global banks are having cod feet. 0:16:20.840 --> 0:16:23.880 I mean the so called pre payments really was basing 0:16:23.920 --> 0:16:27.160 margin courts from global banks like City Group, Torture Bank, 0:16:27.240 --> 0:16:29.800 JP Morgan, and they've been a little bit never So 0:16:30.040 --> 0:16:33.040 that's a big problem for Adonney because over fifteen cent 0:16:33.240 --> 0:16:37.080 of their total financing came from global banks. Local banks 0:16:37.160 --> 0:16:41.120 also financed. Obviously, you suggest that perhaps Adanni can convince 0:16:41.200 --> 0:16:43.520 local banks to lend more, maybe take the place of 0:16:43.560 --> 0:16:46.560 some of those foreign banks. Well, that has to be 0:16:46.640 --> 0:16:49.240 the case if they want to continue growing at that page. 0:16:49.560 --> 0:16:53.680 I mean with their China's distress comoberates case, domest banks 0:16:53.720 --> 0:16:56.480 have coming like in the case of Fusion, for it's 0:16:56.520 --> 0:17:00.320 a huge private equity operator. And we'll have and was 0:17:00.440 --> 0:17:03.720 when the dollar bound sending channels were being closed, uh, 0:17:03.880 --> 0:17:07.240 domestic banks, they were giving out the syndicated loans to 0:17:07.480 --> 0:17:10.520 Fusion and that's that's what happened in their China space. 0:17:10.760 --> 0:17:13.880 So what we want to see is if India's stair 0:17:13.920 --> 0:17:17.200 own banks are willing to step in place of global back, 0:17:17.600 --> 0:17:21.480 does a journey end up smaller after this? No matter what? Now, Oh, 0:17:21.520 --> 0:17:24.480 I think it has to. And I apologize for using 0:17:24.520 --> 0:17:27.200 this kind of extreme example. It's kind of like we 0:17:27.359 --> 0:17:30.280 work right, Um, it's kind of like fake it till 0:17:30.320 --> 0:17:33.280 you make it. And what happens is that assume as 0:17:33.320 --> 0:17:35.840 the Adanne and then they have said that Adanney Ports 0:17:35.880 --> 0:17:39.320 were instance, they're going to have their capital expenditure spending. 0:17:39.600 --> 0:17:43.320 So as soon as you scale backing ambition, that also 0:17:43.400 --> 0:17:46.520 means that your stock valuation will not be as high 0:17:46.520 --> 0:17:50.359 as before, because before investors were buying into a groowth options, 0:17:50.359 --> 0:17:52.600 they were buying into a core option. And now people 0:17:52.680 --> 0:17:55.919 see that the court doesn't have much back so Downey 0:17:55.960 --> 0:17:59.760 stocks will be just treated like any normal port operator 0:18:00.400 --> 0:18:04.399 or you know, energy operator. We did see some credit 0:18:04.480 --> 0:18:07.520 ratings downgrades, but not on everything truly. Will there be 0:18:07.560 --> 0:18:10.520 more coming? I think, I mean so far, like there 0:18:10.640 --> 0:18:13.639 is not much right, but they're quite rating agencies. They 0:18:13.680 --> 0:18:15.840 are very very careful and they must be watching this 0:18:16.080 --> 0:18:19.760 very carefully because there is reputation risk ethpeic for them 0:18:19.760 --> 0:18:22.680 as well, especially if Adoni Bounds are trading at the 0:18:22.720 --> 0:18:25.400 fifty cents on the dollar, and if you say, oh, 0:18:25.440 --> 0:18:28.040 you know, you're investment grades, that's not a good look 0:18:28.160 --> 0:18:31.000 for the ratings agencies. And I think Adanie has to 0:18:31.040 --> 0:18:34.200 be very very careful to keep its investment grade rating. 0:18:34.320 --> 0:18:37.200 I mean when Adani reports, for instance, they said they're 0:18:37.240 --> 0:18:41.520 going to lower the leverage ratios, which ratings agencies like 0:18:41.640 --> 0:18:45.040 movies and essidently look at all of that doesn't actually 0:18:45.080 --> 0:18:47.760 address some of the other concerns, and the Hindenburger reports 0:18:47.840 --> 0:18:51.120 such as these entities based in Mauritius, for example, will 0:18:51.160 --> 0:18:54.600 any of that get addressed? On the some manipulations that 0:18:54.720 --> 0:18:59.560 it's very hard to prove definitively if Adani insiders are 0:18:59.680 --> 0:19:03.320 manif relating the stocks. I mean that Hindenberg, we caught 0:19:03.359 --> 0:19:05.760 a lot of it constential right. For instance, if you 0:19:05.920 --> 0:19:09.920 have a two billion dollar so called India Opportunity rese 0:19:10.000 --> 0:19:14.960 funds and billion is invested in a few Adonny stocks, 0:19:15.040 --> 0:19:17.280 it is a little bit sketchy. I mean, are you 0:19:17.320 --> 0:19:20.480 saying that India has no other opportunities other than the 0:19:20.560 --> 0:19:23.280 few Adonne stocks. Having said that, how do you prove 0:19:23.320 --> 0:19:26.800 definitively that that money actually came from the Adamy time. 0:19:26.880 --> 0:19:28.680 I think it's going to be very hard to prove. 0:19:28.920 --> 0:19:33.200 Bloomberg Opinions Shuli Ren Stay tuned next on Bloomberg opinion. 0:19:33.200 --> 0:19:35.320 It's one thing if you get to have access to 0:19:35.400 --> 0:19:39.320 protein and me and your alternative is no protein like 0:19:39.359 --> 0:19:41.959 the seventeen hundreds, and in that case, the Americans are 0:19:42.000 --> 0:19:44.879 better off. At this point, you'd be hard pressed argued 0:19:45.119 --> 0:19:47.720 consuming two hundred and sixty four pounds of meat per 0:19:47.760 --> 0:19:51.840 person per year is inherently a healthy thing. It's especially 0:19:51.840 --> 0:19:54.919 given the alternatives. The University of Georgia history professor and 0:19:54.920 --> 0:19:59.200 Bloomberg Opinion columnist Stephen men this is Bloomberg Opinion. You're 0:19:59.200 --> 0:20:02.800 listening to Bloomberg Opinion. I'm Vonnie Quinn. Alternative meats are 0:20:02.840 --> 0:20:06.120 now firmly out of fashion. Beyond meat is down seventy 0:20:06.160 --> 0:20:09.399 four percent year over year, even having had a thirty 0:20:10.040 --> 0:20:13.680 rally so far this year. Kellogg just announced it's pulling 0:20:13.680 --> 0:20:16.120 its plan to look at selling its plant based division, 0:20:16.200 --> 0:20:19.680 which includes the meat substitute incog Meato, and that thanks 0:20:19.680 --> 0:20:23.159 to plummeting valuations. It turns out this happens once in 0:20:23.160 --> 0:20:25.640 a while, going all the way back to the colonial era, 0:20:26.119 --> 0:20:28.760 I spoke with the University of Georgia history professor and 0:20:28.760 --> 0:20:32.960 Bloomberg Opinion columnist Stephen mim So. Stephen, in the colonial era, 0:20:33.080 --> 0:20:36.000 according to your research, Americans ate what an average of 0:20:36.080 --> 0:20:39.520 two hundred pounds of meat a year, and now we're 0:20:39.560 --> 0:20:41.760 at two hundred sixty four pounds of meat a year 0:20:41.800 --> 0:20:44.359 on average, which is quite surprising. But in the interim 0:20:44.359 --> 0:20:46.680 there has been a lot of variation, So just explained 0:20:46.680 --> 0:20:50.200 to us why on Earth, going back to the colonial era, 0:20:50.760 --> 0:20:53.560 Americans had that kind of meat and were able to 0:20:53.560 --> 0:20:55.560 eat as much as two hundred pounds of meat a 0:20:55.640 --> 0:20:58.200 year on average, right, well, at least after they got 0:20:58.200 --> 0:21:00.960 through the initial starvation your hit. Yes, it took a 0:21:00.960 --> 0:21:06.000 little while, but absolutely so. The colonial era is pretty unusual, 0:21:06.280 --> 0:21:09.880 and that Americans living in these rural places on farms 0:21:09.920 --> 0:21:15.119 were astonishingly well fed relative to basically almost all the 0:21:15.160 --> 0:21:17.960 rest of the world, so that whenever Europeans would come, 0:21:18.400 --> 0:21:20.240 they were struck by the fact that they were eating 0:21:20.320 --> 0:21:22.800 meat three times a day, you know, by contrast at 0:21:22.800 --> 0:21:24.880 the time it's like two or three times a week 0:21:25.160 --> 0:21:27.399 in Europe. At this point it was because they were 0:21:27.400 --> 0:21:29.640 living on farms and they were able to raise animals, 0:21:29.640 --> 0:21:31.360 But wouldn't that have been the case in Europe too. 0:21:31.800 --> 0:21:35.400 It was, But the one thing about the colonists is 0:21:35.480 --> 0:21:37.879 that the kind of fertility of the land and the 0:21:37.920 --> 0:21:40.760 productivity of it relative to Europe, which had been farmed 0:21:40.800 --> 0:21:43.840 for millennia, was much higher, and there was a lot 0:21:43.880 --> 0:21:47.120 more space to have grazing animals, so you could have 0:21:47.160 --> 0:21:51.280 a much easier time of it. Raising livestock, it turns 0:21:51.280 --> 0:21:54.600 out eating livestock. So Americans were really kind of noteworthy 0:21:54.640 --> 0:21:58.000