WEBVTT - Man versus market: Powell and Adani Go it Alone 0:00:03.040 --> 0:00:06.960 Welcome to Bloomberg Opinion. I'm Ronnie Quinn. This week cats 0:00:07.080 --> 0:00:10.560 continue to jump out of backs. John Authors and Mark 0:00:10.640 --> 0:00:13.080 Grantfield on the f o MC meeting that may have 0:00:13.160 --> 0:00:17.000 invited back the Central Bank? Put later, how does the 0:00:17.079 --> 0:00:20.759 empire strike back? Over the years, About thirty percent of 0:00:20.840 --> 0:00:25.640 Adanni's financing is denominated in foreign currencies. They have borrowed 0:00:25.680 --> 0:00:29.920 extensively on the dollar market. They have also thought funding 0:00:30.080 --> 0:00:33.519 from foreign banks in the overseas expansion. Julie Ran on 0:00:33.560 --> 0:00:38.080 the outlook for Gotamadanni's Adanni Enterprises, the conglomerate responsible for 0:00:38.200 --> 0:00:41.960 so much of India's infrastructure central to its industrial growth, 0:00:42.320 --> 0:00:45.400 rocked by a short seller's report. First though to the 0:00:45.479 --> 0:00:53.559 f O m C and Bloomberg opinions. John Authors, so 0:00:53.640 --> 0:00:55.800 John is Michael Foley of Jake Morgan put in, Powell 0:00:55.880 --> 0:00:58.440 doesn't find the market. That's the old saw turned on 0:00:58.520 --> 0:01:01.440 his head. But that's exactly what happened. Where was Powell's 0:01:01.440 --> 0:01:03.279 hat costume? He said he needed to put it on 0:01:03.320 --> 0:01:06.400 and snarl, but he didn't. He needed to put on 0:01:06.440 --> 0:01:09.920 his hook costume. I think he probably tried to do 0:01:10.080 --> 0:01:12.480 some extent, but he didn't do a good enough job 0:01:12.600 --> 0:01:15.400 where I didn't hear very much of anything hawkish. Oh. 0:01:15.720 --> 0:01:20.600 I think he started out by making clear that they 0:01:20.680 --> 0:01:25.559 did expect to hike rates further. He made rather route 0:01:25.560 --> 0:01:29.600 like comments that the Fed's job wasn't done. He said, 0:01:29.640 --> 0:01:33.560 in as many words that we low from history that 0:01:33.640 --> 0:01:37.679 the risks from listening too soon are very serious, and 0:01:37.720 --> 0:01:39.399 it's not clear what you do about it if you 0:01:39.440 --> 0:01:42.080 make that mistake, whereas we know what we can do 0:01:42.120 --> 0:01:44.600 if we overtighten, we have tools to deal with that. 0:01:45.319 --> 0:01:49.680 So it's fairly clear to me that he meant to 0:01:49.800 --> 0:01:52.160 be hawkish. He was trying to do the kind of 0:01:52.200 --> 0:01:54.440 thing like you rightly said, I was suggesting that in 0:01:54.440 --> 0:01:56.880 a column he would need to do, which would sound really, 0:01:56.960 --> 0:02:02.520 really aggressive. He did, I think, make one awful mistake. 0:02:03.880 --> 0:02:07.400 And I don't know whether this was a simple flub 0:02:07.560 --> 0:02:10.680 or whether it's a Freudian slip to reveal his whole thinking. 0:02:11.240 --> 0:02:13.000 But when he was asked if he was bothered about 0:02:13.000 --> 0:02:18.919 financial conditions having eased since the last which is wrong. Yeah, 0:02:18.960 --> 0:02:24.680 exactly and so wrong that I suspect it wouldn't amaze 0:02:24.760 --> 0:02:28.240 me if he just admitted I misheard that question. And 0:02:28.919 --> 0:02:32.000 because what he absolutely had to say in that situation 0:02:32.200 --> 0:02:36.280 was yes, I'm worried that financial conditions have eased. They 0:02:36.360 --> 0:02:39.079 cannot carry on like this or otherwise we'll have to 0:02:39.160 --> 0:02:42.440 keep hiking. Or it was straightforward requirement of him from 0:02:42.480 --> 0:02:46.640 the text. And it just isn't true that the financial conditions, 0:02:46.800 --> 0:02:49.560 whether you use our Bloomberg measure with the Goldman Sax measure, 0:02:49.560 --> 0:02:52.919 which are the two most popular, but on any sensible measure, 0:02:52.960 --> 0:02:55.760 they are somewhat tighter than they were in December, and 0:02:55.840 --> 0:02:58.680 a lot sorry tighter. I just did the same thing. 0:02:59.000 --> 0:03:01.280 That wasn't a Freudian lip that I suspect might have 0:03:01.320 --> 0:03:04.120 been what held it, And they are considerably looser than 0:03:04.160 --> 0:03:06.560 they were in August before inflation began to come down. 0:03:06.680 --> 0:03:11.160 Maybe he was afraid to talk about the market again. 0:03:11.240 --> 0:03:15.240 This is the dangerous area where it's almost like we're 0:03:15.280 --> 0:03:21.160 getting into Freudian psychoanalysis of this one man's personality, or 0:03:21.200 --> 0:03:28.160 it's almost like a textual analysis, hypertextual it's it has 0:03:28.840 --> 0:03:31.760 There was one time when they changed one word in 0:03:31.840 --> 0:03:33.880 their communication from one meeting to the next, and I 0:03:33.919 --> 0:03:35.920 still let to write an eight hundred word column about it, 0:03:36.000 --> 0:03:37.840 And there was probably eight hundred words, right, that's the 0:03:37.840 --> 0:03:40.360 funny thing about the federal area. Yes, But I think 0:03:40.760 --> 0:03:45.360 in this case, perhaps the bottom line, and this may 0:03:45.360 --> 0:03:48.320 be the line that holds up, is that he did 0:03:48.400 --> 0:03:53.120 say that the FED would be data dependent in future. 0:03:54.000 --> 0:03:58.440 And if you're being data dependent, you cannot therefore be 0:03:58.520 --> 0:04:02.440 absolutely committing yourself to tightening and tightening and technique. There 0:04:02.520 --> 0:04:06.040 is another potential. Is there something the third is seeing 0:04:06.040 --> 0:04:08.880 about the economy that markets may be seeing but that 0:04:08.920 --> 0:04:12.640 we're not. Is it possible that er Powell is actually 0:04:12.640 --> 0:04:19.120 worried about a deeper recession. It's possible. It's possible. It's 0:04:19.120 --> 0:04:23.479 also possible for activities worried about overheating, that we have 0:04:23.839 --> 0:04:27.159 not a soft lending but no landing. We keep flying, 0:04:27.880 --> 0:04:30.240 which would be wonderful on many levels, except that it 0:04:30.240 --> 0:04:33.760 would mean inflation and still had been vanquished, and he 0:04:33.800 --> 0:04:36.760 would need to keep greats higher. And that's something we 0:04:36.760 --> 0:04:39.920 should pretty much all hope happens, except those of us 0:04:39.960 --> 0:04:44.040 who have invested in assets that require low interest rates, 0:04:44.360 --> 0:04:46.919 and for those of us that for the that that 0:04:47.000 --> 0:04:50.640 includes a huge junk of our clients, readers, and viewers, obviously, 0:04:50.880 --> 0:04:54.120 but that is a concern that does worry me if 0:04:54.160 --> 0:04:57.360 you look at again, this was perhaps unwise of him. 0:04:57.400 --> 0:05:01.240 Either this was unwise or it was his revealing his 0:05:01.960 --> 0:05:05.760 hands too clearly. He did make the point that inflation 0:05:05.880 --> 0:05:10.560 expectations have notably come under control, that they haven't become 0:05:11.880 --> 0:05:15.239 If anything, they have been re anchored, which is true. 0:05:15.320 --> 0:05:19.160 The FED Zone New York Fed Zone survey very clearly 0:05:19.160 --> 0:05:21.919 shows that. And he then made the point, what we 0:05:21.960 --> 0:05:23.920 don't want to do is cut too soon and then 0:05:24.040 --> 0:05:29.200 see expectations come unmoored again. But you could look at 0:05:29.279 --> 0:05:31.440 that more as some kind of a Freudian slip, or 0:05:31.560 --> 0:05:34.159 tell that he does actually think he's winning and that 0:05:34.240 --> 0:05:37.279 he can turn turn around quite soon. There was something 0:05:37.279 --> 0:05:40.159 else that jumped out of me. He teased the minutes, 0:05:40.320 --> 0:05:42.719 which was the strangest thing. He wouldn't talk about whether 0:05:43.080 --> 0:05:46.039 the committee had talked about pausing, what that would look like, 0:05:46.440 --> 0:05:48.160 how much they had talked about it. But he did 0:05:48.160 --> 0:05:49.640 say that there will be more detail in the minutes 0:05:49.640 --> 0:05:51.520 which come out in three weeks. Why wouldn't he go 0:05:51.560 --> 0:05:55.800 into details. That's that was an interesting one. He The 0:05:55.920 --> 0:06:01.640 last time that happened from memory was last year on 0:06:01.680 --> 0:06:03.640 the subject of how they were going to do qut 0:06:05.480 --> 0:06:10.360 and he said it was very similar to that that. Well, 0:06:10.400 --> 0:06:13.320 we did discuss qute and you'll be finding out more 0:06:13.360 --> 0:06:17.919 about that in the minute um. And that was generally 0:06:17.920 --> 0:06:21.159 regarded as quite a successful piece of signaling and communication. 0:06:21.200 --> 0:06:23.680 They didn't want to hit people with everything all at once. 0:06:24.920 --> 0:06:28.599 I guess that's why. I guess, if you wanted a 0:06:28.680 --> 0:06:31.880 logical explanation, maybe it is that, in fact, they are 0:06:32.080 --> 0:06:36.080 feeling more dubbish than he wanted to let on today today. 0:06:37.279 --> 0:06:40.440 But it's also possible that they're actually more hawkish than 0:06:40.520 --> 0:06:42.960 he wanted to let on to day. Honestly, it was. 0:06:43.040 --> 0:06:45.560 It was quite a strange news conference talked to us 0:06:45.560 --> 0:06:48.520 about it wasn't the yield curve with saw the tenure 0:06:48.560 --> 0:06:51.440 yield come down from above three or around three below 0:06:51.480 --> 0:06:54.400 three or four. That was quite the move. It was 0:06:54.440 --> 0:06:56.560 a bit, I mean, that was more easying right there. Yeah, 0:06:56.560 --> 0:07:01.280 And well and the two year and yes, I mean 0:07:01.400 --> 0:07:05.960 cats continue to jump out of bags if you or 0:07:06.000 --> 0:07:08.960 if you if you want another version. You did see 0:07:09.040 --> 0:07:13.760 a significant weakening for the dollar. So the euro briefly 0:07:13.800 --> 0:07:17.559 got above one dollar ten cents for the first time 0:07:17.960 --> 0:07:20.480 since I think April of last year. And you know, 0:07:20.600 --> 0:07:22.920 obviously there's a very big deal with the ECB coming 0:07:23.000 --> 0:07:26.720 up to see whether that gets confirmed. That does ease 0:07:26.840 --> 0:07:29.320 conditions a little. You can see that as some kind 0:07:29.360 --> 0:07:33.160 of counteract because it does make it easier for people 0:07:33.200 --> 0:07:36.760 to sell stuff abroad exactly. Does also, however, hype up 0:07:36.760 --> 0:07:39.800 inflation a bit more makes important more expense, which is 0:07:39.800 --> 0:07:42.680 another reason why you wonder why he said that, why 0:07:42.720 --> 0:07:46.160 he did what he did. Javin Morgan, just to return 0:07:46.520 --> 0:07:49.520 sees one more basis point. Hikeers do a lot of 0:07:49.560 --> 0:07:52.400 people and then hold. But Jaf Morgan says, hold for 0:07:52.480 --> 0:07:55.120 a year. As you see conditions right now, would it 0:07:55.200 --> 0:07:57.120 take a year of holding to get rates inflation and 0:07:57.160 --> 0:08:02.800 the economy and to balance That's frankly been the scenario. 0:08:02.960 --> 0:08:06.800 I have been expecting a year of holding. If you 0:08:07.080 --> 0:08:12.080 remember back when Ben Bernanke stopped his hiking campaign that 0:08:12.120 --> 0:08:14.800 had gone on for years, started by green spanning eighty six, 0:08:16.080 --> 0:08:18.720 they kept the rate as I think it was five 0:08:18.760 --> 0:08:21.160 and a quarter five and a half, which is actually 0:08:21.240 --> 0:08:23.680 not at all dissimilar to way not too far away here. 0:08:24.040 --> 0:08:28.160 They kept rates there for over a year again and 0:08:28.200 --> 0:08:32.920 then everything fell apart because of the financial crisis. But 0:08:33.160 --> 0:08:37.120 that was one precedent. There's certainly no sign of the 0:08:37.240 --> 0:08:41.240 kind of ridiculous speculative activity going on in the economy 0:08:41.480 --> 0:08:45.120 now that there was then, and so less apparently risk 0:08:45.160 --> 0:08:49.280 of a really major accident resulting. So I don't think 0:08:49.320 --> 0:08:53.160 that's outlandish. I do think myself. And this is where 0:08:53.160 --> 0:08:55.600 I agree with J. Powell. It's just if I'm reading 0:08:55.640 --> 0:08:57.760 what he wants to do correctly, he should have said 0:08:57.800 --> 0:09:01.439 this louder and emphasized it more, or you do need 0:09:01.480 --> 0:09:04.480 to leave rates up there for a while. Otherwise you 0:09:04.600 --> 0:09:08.480 get into these logical self contradictions that you know that 0:09:08.679 --> 0:09:13.080 inflation will come down if rates stay high for a while, 0:09:13.440 --> 0:09:16.240 So why don't you preempt the rates coming down, with 0:09:16.280 --> 0:09:19.959 the result that inflation won't come down either. I therefore 0:09:20.440 --> 0:09:23.760 this I have more confidence about than the other things, 0:09:24.000 --> 0:09:29.240 unless there is a very much worse tumble into all 0:09:29.280 --> 0:09:33.640 out recession than currently seems likely. Because of course, the 0:09:33.679 --> 0:09:35.960 whole idea of a soft landing taking hold is because 0:09:36.400 --> 0:09:38.720 a lot of the data has suggested things are better 0:09:38.760 --> 0:09:42.160 than that's been fine. Yeah, then why would you reduce rates? 0:09:42.360 --> 0:09:45.600 They're historically not that high at all. There's still only 0:09:45.679 --> 0:09:49.839 just above inflation. Yeah, No, that's a great point. If 0:09:49.920 --> 0:09:54.160 something goes wrong, then they bring them down, as happened 0:09:54.200 --> 0:09:57.160 of course with Ben Banankey in dramatic style in two 0:09:57.240 --> 0:10:01.760 thousand and seven. But absent that, in which case you 0:10:01.920 --> 0:10:06.240 probably don't want to be holding stocks right now. Absently that, 0:10:06.640 --> 0:10:11.160 I think you expect to. I think one of my 0:10:11.200 --> 0:10:14.360 favorite economists predicted that the fit funds rate was going 0:10:14.400 --> 0:10:17.840 to grow roots at five and a quarter percent under Bernanke. 0:10:18.920 --> 0:10:22.280 And it did, and it wasn't that difficult to spot. 0:10:22.320 --> 0:10:25.280 There was just unless you have a clear reason to cut, 0:10:25.600 --> 0:10:28.679 you don't want to. And that's where I still think 0:10:28.800 --> 0:10:31.080 the market is wrong. But we will live in length. 0:10:31.760 --> 0:10:35.160 Bloomberg Opinions, John Author is there. We get more perspective 0:10:35.160 --> 0:10:37.560 on the central bank triple wammy this week in a 0:10:37.640 --> 0:10:41.600 moment from Mark Cranfield m Live Global strategist out of Singapore. 0:10:41.920 --> 0:10:44.880 You're listening to Bloomberg Opinion. I'm Vonnie Quinn. We get 0:10:44.880 --> 0:10:48.360 more perspective now on this week's central bank triple wammy. 0:10:48.720 --> 0:10:52.520 Here's Mark Cranfield m Live Global macro strategist out of Singapore. 0:10:53.120 --> 0:10:56.640 Mark Garfield Reynolds are Chief Asia Rates correspondent, talked about 0:10:56.640 --> 0:10:58.720 the fact that there actually might be a central bank 0:10:58.800 --> 0:11:01.200 put in the market again, that that might have been 0:11:01.280 --> 0:11:04.400 invited back this week. Do you agree with that interpretation. 0:11:05.040 --> 0:11:07.520 It's probably a bit strong, but it's certainly people are 0:11:07.559 --> 0:11:11.599 getting more confident that the major center banks that have 0:11:11.679 --> 0:11:14.520 fed with the inn CenTra Bank and the Bank of England, 0:11:15.400 --> 0:11:19.160 they get they themselves seem to believe that the inflation 0:11:19.240 --> 0:11:21.559 cycle is turning for the better, that is to say 0:11:21.600 --> 0:11:24.439 that inflation is falling, and they seem to be having 0:11:24.440 --> 0:11:27.240 a stronger conviction that that's the case. And obviously traders 0:11:27.240 --> 0:11:30.920 are taking heart from the one outlier, could be the 0:11:30.960 --> 0:11:34.000 Bank of Japan a lot with the pain and who 0:11:34.080 --> 0:11:36.240 has chosen as the next Bank of Japan chief And 0:11:36.280 --> 0:11:38.320 we probably know that in the next couple of weeks. 0:11:38.360 --> 0:11:42.280 But certainly as far as the Europeans, in the Americans 0:11:42.360 --> 0:11:46.760 concern that the center banks are acting much more favorably 0:11:47.280 --> 0:11:50.319 rewards risk assets than they were just a few months ago. 0:11:50.800 --> 0:11:53.120 And it was quite a surprise, particularly from the Federal 0:11:53.160 --> 0:11:56.439 Reserve right because we were anticipating that Powell would have 0:11:56.480 --> 0:11:58.920 to come out and at least school the market a 0:11:58.920 --> 0:12:01.959 little bit, if not out right slapped the market. Back, 0:12:02.600 --> 0:12:05.520 and he didn't. He actually said, you know, we're seeing 0:12:05.520 --> 0:12:08.640 some progress, and the market took it that way and rallied, 0:12:08.720 --> 0:12:11.480 I mean some of the industries rallied at least for once. 0:12:11.520 --> 0:12:14.240 It seemed like the market actually took him out his word. Yeah, 0:12:14.280 --> 0:12:18.000 I think he may regret using the word disinflation. I 0:12:18.080 --> 0:12:20.800 think that might be a bit premature, and that certainly 0:12:20.840 --> 0:12:24.360 sparked a lot of electivity in markets, particularly in the 0:12:24.400 --> 0:12:28.640 equity market. He could considering that the inflation numbers are 0:12:28.679 --> 0:12:32.000 still running something in the United States and it's been 0:12:32.040 --> 0:12:36.440 a gradual process of unwinding that and it's still the 0:12:36.520 --> 0:12:39.960 major issue for him to address. And he has also 0:12:40.000 --> 0:12:42.760 said that there's more rate heights to come, so he 0:12:42.920 --> 0:12:45.200 may be getting a little bit of head of himself 0:12:45.240 --> 0:12:48.080 there and he may have chosen better wording than that, 0:12:48.320 --> 0:12:50.800 And for the time being, it's got the market very excited. 0:12:50.840 --> 0:12:53.280 Of course, we've got lots of data coming up between 0:12:53.280 --> 0:12:55.439 now and the next meetings, so it's not going to 0:12:55.480 --> 0:12:57.640 be one way traffic by any means. There's going to 0:12:57.679 --> 0:13:00.559 be some bumps along the road, and we're going to 0:13:00.640 --> 0:13:02.480 hear more from other Fate speakers as well. They could 0:13:02.840 --> 0:13:05.760 push back. Some of the more hawkish members of the 0:13:05.800 --> 0:13:09.080 Federal Reserve, they want to push against that a little bit. 0:13:09.160 --> 0:13:12.760 They don't want markets getting overconfident. Before I said, has 0:13:12.800 --> 0:13:15.480 really finished their job of getting weights to where they 0:13:15.480 --> 0:13:17.599 want them to. Well, interestingly, we had a couple of 0:13:17.679 --> 0:13:20.319 high profile people signal this in advance. So we had 0:13:20.400 --> 0:13:23.680 Paul Krueman saying, you don't want to give any room 0:13:23.760 --> 0:13:26.920 for inflation to come roaring back. We had muhammadil Area 0:13:26.920 --> 0:13:29.640 and at some point also talking about how this is 0:13:29.679 --> 0:13:31.319 a time where the fat has to be very, very 0:13:31.400 --> 0:13:34.360 very careful. It really didn't seem like Powell was being 0:13:34.400 --> 0:13:37.160 that careful the other day. I think that that probably 0:13:37.200 --> 0:13:40.240 tells you more about who trades us listening to than 0:13:40.320 --> 0:13:42.960 anything else. I think, with all due respect to those 0:13:43.080 --> 0:13:47.160 kinds of pundits, I think traders have learned, especially during 0:13:47.200 --> 0:13:49.480 the process of the past couple of years and trying 0:13:49.480 --> 0:13:52.520 to train inflation, as far as that they is concerned, 0:13:52.520 --> 0:13:54.760 there's only really one band accounts. That's your own power, 0:13:55.120 --> 0:13:56.880 and you have to listen to what he says and 0:13:56.920 --> 0:13:59.160 look at what he does. And equally in other central 0:13:59.200 --> 0:14:01.480 branks as well, I think people have realized that you 0:14:01.559 --> 0:14:03.600 have to take the head of the central bank, and 0:14:03.640 --> 0:14:06.360 your senior people take them much more seriously and give 0:14:06.400 --> 0:14:08.520 a lot more weight to what they have to say 0:14:08.600 --> 0:14:12.760 than any outside voices. You may come across the ten 0:14:12.800 --> 0:14:15.520 Your yield dropped a below three forty from above three fifty, 0:14:15.520 --> 0:14:18.000 and we saw some other moves across the curve as well. 0:14:19.000 --> 0:14:21.120 Is there any chance that the third is a little 0:14:21.120 --> 0:14:24.720 concerned about recession, that that's why we're seeing lower rates. 0:14:25.640 --> 0:14:28.760 That's traders. That's not the face ye curve that you 0:14:28.840 --> 0:14:32.560 see his traders hedging, and it's not a particularly expensive 0:14:32.600 --> 0:14:35.680 way of doing it. So if you think that the 0:14:35.800 --> 0:14:37.960 fad is not going to be able to achieve a 0:14:38.120 --> 0:14:40.080 soft landing, if it's going to be more like a 0:14:40.120 --> 0:14:43.840 hard landing, the traders to take a defensive position through 0:14:43.880 --> 0:14:47.920 the yield curve is not too bad, particularly through derivative space. 0:14:48.400 --> 0:14:52.160 You can do that without a huge cost, especially if 0:14:52.200 --> 0:14:54.840 you're hedging it, say by being long equities or short 0:14:54.880 --> 0:14:57.120 the US do as well. So if you don't want 0:14:57.120 --> 0:15:00.920 a portfolio approach, it's not too bad. So really, what 0:15:01.000 --> 0:15:03.000 that's telling you is there's a number of people who've 0:15:03.040 --> 0:15:06.880 got portfolio bets as a kind of insurance in case 0:15:06.960 --> 0:15:09.240 the FED has made a mistake. I think we'll see 0:15:09.280 --> 0:15:11.920 that to get brantually get unwound, because I think one 0:15:11.920 --> 0:15:13.880 thing you can rely on is that when the FAID 0:15:13.920 --> 0:15:16.920 tell you they want to hold short term interest rates 0:15:17.000 --> 0:15:20.400 high for a long period, that is probably exactly what 0:15:20.440 --> 0:15:23.400 they need. So even if whether they stop rates at 0:15:23.400 --> 0:15:25.800 five percent or five and a half percent, once they 0:15:25.840 --> 0:15:28.840 get there, they don't plan to drop rates. I think 0:15:28.880 --> 0:15:31.000 that is the part which is probably the market has 0:15:31.000 --> 0:15:32.600 probably got wrong, is that there's going to be a 0:15:32.640 --> 0:15:35.840 rate cup this year. That's extremely unlikely. That process will 0:15:35.920 --> 0:15:37.680 slowly come out of the market. It's not going to 0:15:37.760 --> 0:15:40.080 come out all in a rush, because we've got a 0:15:40.080 --> 0:15:43.359 few head meetings to come, and gradually people will realize 0:15:43.760 --> 0:15:45.600 they can take the said that their words, they're going 0:15:45.640 --> 0:15:49.280 to hold rates. From where you stand right now, how 0:15:49.320 --> 0:15:51.240 long would the third have to hold rates for? Is 0:15:51.280 --> 0:15:55.480 it possible to even prognosticate? I think they intend to 0:15:55.480 --> 0:15:57.160 do it for the rest of this year, at least 0:15:57.840 --> 0:15:59.800 that is their aim. But we've seen in the party 0:15:59.840 --> 0:16:02.840 look previous cycles, particularly say for example, after the Internet 0:16:02.840 --> 0:16:07.160 double burst in the early two thousands, but took quite 0:16:07.160 --> 0:16:09.280 a while before they changed their hill rates for a 0:16:09.320 --> 0:16:13.280 long time. Then they finally moved about a year after 0:16:13.320 --> 0:16:15.440 the bubble burst. But when they did start to move, 0:16:16.040 --> 0:16:18.520 they cut rights quite quickly, and there was a series 0:16:18.560 --> 0:16:21.920 of weight cuts. So that probably means that if the 0:16:21.960 --> 0:16:24.920 equality er performs, if we do get the kind of 0:16:25.040 --> 0:16:28.480 hard slowdown which is possible, or we get a slowdown 0:16:28.480 --> 0:16:31.240 which that they thinks is too extreme, and maybe in 0:16:31.240 --> 0:16:33.960 the first quarture of next year, you'll start to see 0:16:34.400 --> 0:16:36.760 the rates coming down, and when they do, they'll probably 0:16:36.760 --> 0:16:39.640 be a succession as they cut after that. Mark. Did 0:16:39.680 --> 0:16:41.560 you find it odd that when Powell was asked about 0:16:41.560 --> 0:16:45.040 the discussion around the pause, that he wouldn't go into detail, 0:16:45.120 --> 0:16:47.080 but that he teased the minutes. He said, the minutes 0:16:47.120 --> 0:16:48.960 coming out in three weeks will tell you a lot more. 0:16:49.400 --> 0:16:52.440 Why make traders and investors wait for the minutes to 0:16:52.520 --> 0:16:54.480 hear more about the pause? Why not talk about it 0:16:54.520 --> 0:16:58.400 this week? He probably wants to make sure that he 0:16:59.360 --> 0:17:03.640 doesn't give any wrong impression that people can suddenly jump upon. 0:17:04.280 --> 0:17:08.040 There is probably a consensus has probably formed within the 0:17:08.119 --> 0:17:10.760 Federal Reserve, and he probably wants to make sure that 0:17:10.800 --> 0:17:14.040 everybody is on the same page. Exactly what that kind 0:17:14.040 --> 0:17:15.880 of sense as if the other wants a front run 0:17:16.720 --> 0:17:19.320 any opinions on that, and he doesn't. He knows that 0:17:19.400 --> 0:17:22.200 when he's when he speaks in public, there's always the 0:17:22.280 --> 0:17:25.000 risk of people misinterpreting what he has to say. Is 0:17:25.040 --> 0:17:28.200 particularly when the headlines are triggered that are then read 0:17:28.280 --> 0:17:33.160 by AI machines and by other trading systems, which will 0:17:33.240 --> 0:17:36.840 immediately react to certain words in headlines. So if he 0:17:37.760 --> 0:17:40.840 sends out something that has the word pausing it, you 0:17:40.920 --> 0:17:43.560 can probably think of an extreme reaction in markets, which 0:17:43.600 --> 0:17:46.240 he doesn't want to see. He wants people to see 0:17:46.280 --> 0:17:48.760 the full message, not just one or two words. He 0:17:48.840 --> 0:17:51.119 wants them to understand if the fact I've had the 0:17:51.160 --> 0:17:53.840 full discussion on a pause, he wants you to know 0:17:53.960 --> 0:17:58.159 exactly what that discussion was. That's such an interesting point. Finally, 0:17:58.560 --> 0:18:00.600 anything surprising to you out of the e c B 0:18:00.760 --> 0:18:03.119 or b E. I think if it was a surprise, 0:18:03.240 --> 0:18:06.240 it was that the ECB was able to be so 0:18:06.560 --> 0:18:09.080 clear on what they said more or less told you 0:18:09.200 --> 0:18:11.679 that for the next meeting, they're very confident they're going 0:18:11.720 --> 0:18:14.960 to raise rates fifty basis points again, which is unusual 0:18:15.400 --> 0:18:18.000 to project that far. Into the future and they've given 0:18:18.600 --> 0:18:21.200 markets certainly a reasonable hint that that there could be 0:18:21.240 --> 0:18:23.800 the last one in the series. The Bank of England 0:18:23.840 --> 0:18:26.160 also seems to have given very good guidance that they're 0:18:26.240 --> 0:18:30.000 very close to finishing. They possibly have finished with great 0:18:30.040 --> 0:18:32.680 heights as well. That's a lot more than central banks 0:18:32.720 --> 0:18:36.560 have been telling us for some times. So that's why 0:18:36.640 --> 0:18:39.000 you've seen a strong reaction. For examples, you look in 0:18:39.000 --> 0:18:41.600 the French change market. The euro is very strong against 0:18:41.640 --> 0:18:44.480 the pound because people are now assuming that the rate 0:18:44.560 --> 0:18:48.440 differential between euro yields and spelling years could narrow quite 0:18:48.920 --> 0:18:52.880 significantly over the next few months. That's probably not something 0:18:52.960 --> 0:18:57.000 that people expected before. This week and Live micro strategist 0:18:57.080 --> 0:19:00.680 Mark Cranfield, they're out of Singapore statues and Shulei Wren 0:19:00.840 --> 0:19:03.680 joins next on the incredible story of a Donnie Group 0:19:03.840 --> 0:19:07.200 fighting the short seller. This is Bloomberg Opinion. You're listening 0:19:07.200 --> 0:19:10.760 to Bloomberg Opinion. I'm Vonnie Quinn. Now to the incredible 0:19:10.840 --> 0:19:15.159 story of Hindenburg Research versus the Indian industrialist tycoon. Go 0:19:15.280 --> 0:19:18.080 to Madonnie's a Donni Group. Over the course of a 0:19:18.119 --> 0:19:21.680 handful of trading sessions, Hindenburgh's allegations that a Donnie Group 0:19:21.760 --> 0:19:25.400 is pulling off the largest Cohn incorporate history percolated through 0:19:25.480 --> 0:19:28.520 markets and caused a Donnie Group shares and bonds to 0:19:28.600 --> 0:19:32.320 take a severe tumble Bloomberg opinions. Shuli ran As followed 0:19:32.400 --> 0:19:35.040 Asia nation builders for some time, as well as the 0:19:35.119 --> 0:19:38.119 dollar bond traders they tend to attract. She joined for 0:19:38.200 --> 0:19:42.399 some perspective. So, Shuli, this is an insane story and 0:19:42.640 --> 0:19:45.560 it's picked up steam. First of all, tell us how 0:19:45.720 --> 0:19:50.800 much does a Dannie Enterprises depend on outside investors? Quite 0:19:50.840 --> 0:19:54.440 a bit? Surprisingly so, Adannie has been very good at 0:19:54.600 --> 0:19:58.760 having on two global investors well their industrial adventure. For instance, 0:19:58.800 --> 0:20:01.400 they're doing a lot of in energy stuff like going 0:20:01.520 --> 0:20:04.760 hydrogen so and so forth. So over the years, about 0:20:04.840 --> 0:20:09.760 thirty percent of Adanni's financing is denominated in foreign currencies. 0:20:10.080 --> 0:20:13.479 They have borrowed extensively on the dollar bank market. They 0:20:13.560 --> 0:20:17.920 have also thought something from foreign banks in their overseas expansion. 0:20:17.960 --> 0:20:22.040 So quite a bit. At first glance, it didn't seem 0:20:22.160 --> 0:20:25.639 like this was going to hurt Adanni too much, this 0:20:25.800 --> 0:20:30.400 Hindenburgh research report. Perhaps the Adanni Enterprises group was too 0:20:30.480 --> 0:20:32.800 big for something like this to actually have an impact. 0:20:33.320 --> 0:20:37.280 Now it seems like it might actually succeed. Adani had 0:20:37.320 --> 0:20:40.080 to pull a share sale for example, explained to us 0:20:40.200 --> 0:20:43.760 what you see going on? To be honest, I was 0:20:43.920 --> 0:20:46.959 very surprised because I have been covering, you know, Chinese 0:20:47.000 --> 0:20:50.080 conglomerates for a decade as a journalist and then what 0:20:50.359 --> 0:20:53.320 we've seen, which China's h and a group unbound and 0:20:53.600 --> 0:20:56.760 kinda ever ground group. Yeah, like all these companies they 0:20:56.840 --> 0:20:59.879 had a received their short sellers reports for years, right, 0:21:00.000 --> 0:21:02.720 they didn't humble. The only humble that when the political 0:21:02.800 --> 0:21:05.840 wind in Beijing change, you know, like when China decided 0:21:05.880 --> 0:21:08.600 to crack down on private enterprises that did a lot 0:21:08.680 --> 0:21:12.639 of overseas skills a China fell in one when China 0:21:12.880 --> 0:21:16.600 was doing the real estate developer cracked China Evergrand group here. 0:21:16.920 --> 0:21:19.399 So I was, to be honest, very surprised. And I 0:21:19.480 --> 0:21:22.000 will have to say that it says something about the 0:21:22.119 --> 0:21:24.760 Indian market as a capital market. I mean, China is 0:21:24.880 --> 0:21:29.000 very opaque. Foreign investors basically play the Beijing's game, right, 0:21:29.040 --> 0:21:32.480 They basically play along with Beijing's political agenda, where it 0:21:32.600 --> 0:21:37.359 seems they have more sway when it comes to Indian companies, 0:21:37.720 --> 0:21:40.560 so I was quite surprised. And also adone has quite 0:21:40.560 --> 0:21:44.600 a bit of oversees something I'm talking about thirty percent. Now, 0:21:44.800 --> 0:21:47.480 how similar is the Adani story to the likes of 0:21:47.720 --> 0:21:50.960 China Evergrand other companies like that. It's not really a 0:21:51.040 --> 0:21:55.240 public company, but we're seeing a different public market reaction. Yeah, 0:21:55.720 --> 0:21:58.840 it's interesting because in many ways they're very similar. Right. 0:21:58.920 --> 0:22:03.720 They're very heavy leverage, thether conglomerates using perhaps one cash 0:22:03.840 --> 0:22:09.240 called subsidiary to fund new business ventures of other business arms. 0:22:09.600 --> 0:22:12.160 So it's one humble the others work for as well. 0:22:12.400 --> 0:22:16.119 They are also very much family one, right, Like of 0:22:16.359 --> 0:22:21.000 the shares are held by company insiders, brothers, sisters, everyone 0:22:21.200 --> 0:22:23.320 is in it. So in many ways they are very similar. 0:22:23.560 --> 0:22:27.199 But I think Adani is a bit more international than 0:22:27.280 --> 0:22:30.000 the Chinese ones in that, you know, like they have 0:22:30.200 --> 0:22:33.720