Live on Bloomberg TV

00:00This is such a complex picture now when it comes to how market is pricing in what is going on in China. Even before the protest activity, which might be long lived or might be short lived. There was a complexity to how we trade Chinese assets because as infection rates increase over the winter, we look to see how the authorities were going to respond to that. This was already really complicated and now things just got more. So yeah. So that's a very important point to make. Even before these protests, the opening path was going to be long and hard. It's not like the rest of the world that, you know, hey, even if China said, okay, we're going to reopen that, it would be smooth. Remember, they spent several years, almost three years now telling the country that the Covid is so dangerous that they need to keep the country locked down. And the best example is that city that was rumored to be at the forefront reopening a few weeks ago. There were protests there at the forefront of reopening. There weren't celebrations. And I think that's a story that, yes, many people are protesting about how Covid is being handled, but it's not like the people are the broader population is convinced that they want full reopening. And I think that this shows the story here is very nuanced. It'll take a lot of management and it's not binary either way. It's going to continue to be something it's going to be with us for the next year in an ebb and flow situation. Okay. So it's going to be complicated. We wait to see how this current uncertainty plays out on the streets in China. Meanwhile, international markets respond. We're seeing some weakness in U.S. futures a little bit here in Europe as well. We see it in commodities. We see it in treasury markets. We see it in effects. This all makes sense, I suppose, this initial knee jerk negative response in risk assets. Yes, it's about the uncertainty, so uncertainty is higher, the lack of clarity, that means you've got to cut your risk. And then further, as we get extra volatility, that means risk limits are further impaired because your leverage gets cut back. Just from simple var metrics, forward var calculations. So it makes sense that you've got a risk aversion shift. It is not clear to me that the ultimate conclusion of this will be negative. We don't yet know how the government's going respond. We don't know how long these protests are going to last. Maybe they'll kind of wear themselves out very soon. Maybe they'll persist. But either way, you've got to assume that the government is going to react to try offering something to the populace to make them happier. And this isn't this isn't a poor third world country that's running out of resources. It's a country, a government with incredible wealth, incredible resources. They've got tools to act. It's just how do they use them best in a situation that is locked down? There's not a demand for credit. So providing stimulus can't be used. Now, we be debating internally how this guy and I will say that Sophia Haut de Costa, who's our chief China correspondent for Bloomberg News, is a little bit more bearish. I mean, we've tend to be aligned this year on China. We take a divergent view here. And she makes the point that there is no good path for China is going to go back to your original point that the reopening was never going to be easy even before these protests. This just makes it even more complicated. That said, I think that ultimately this puts more pressure on the government to either support the markets or support the economy or help the reopening. And I think that it might end up being a marginal positive after the volatility. Yeah, absolutely. I noticed that Goldman Sachs now attributing a 30 percent chance to opening earlier than April with all the risks and advantages that that might include. Will that we'll watch to see if that comes to pass. And remember, you can get up to date analysis and insight from Mark and the rest of the markets, 19 and then you go. Is the function t's on your plane back to having? No.

No schedule data available.

Markets Live: China Protests, Impact on Risk Appetite

Mark Cudmore and Anna Edwards break down today's key themes for analysts and investors on "Bloomberg Markets Europe." (Source: Bloomberg)

More From Bloomberg Markets
All episodes and clips