00:00> > NEWSMAKERS AND MARKET MOVERS, THIS IS "THE PULSE WITH FRANCINE LACQUA." JOUHMANNA: GOOD MORNING AND WELCOME IN TWO "THE PULSE." PRESIDENT TRUMP SAYS HE IS PREPARED FOR A LEGAL FIGHT WITH THE FED GOVERNOR LISA COOK AFTER HE MOVED TO OUST HER FROM HER POST FOLLOWING ALLEGATIONS THAT SHE FALSIFIED MORTGAGE DOCUMENTS. AND REORDERED AS THE PRESIDENT ABOUT THE LEGAL BATTLE AHEAD. > > LISA COOK, HER LAWYER SAID THEY ARE GOING TO BE FILING A LAWSUIT CHALLENGING EAGLE ACTION. WHAT IS YOUR RESPONSE? PRES. TRUMP: SHE SEEMS TO HAVE HAD AN INFRACTION AND SHE CAN'T HAVE AN INFRACTION, ESPECIALLY THAT INFRACTION BECAUSE SHE IS IN CHARGE -- IF YOU THINK ABOUT IT, MORTGAGES AND WE NEED PEOPLE THAT ARE 100% ABOVEBOARD. IT DOESN'T SEEM LIKE SHE WAS. JOUHMANNA:: JOINING ME NOW IS OUR CHIEF ASIA CORRESPONDENT ROSALIND MATHIESON. HOW IS THIS ALL GOING TO PLAY OUT? HOW IS THIS LEGAL BATTLE LIKELY TO PLAY OUT BETWEEN PRESIDENT TRUMP, THE TRUMP ADMINISTRATION, AND LISA COOK AND HER LAWYERS? > > AS YOU ARE HEARING FROM HER LAWYERS, THEY PLAN TO FILE A LAWSUIT AGAINST HIM. WHAT THAT INITIALLY WILL LOOK LIKE IS AN INJECTION ADJUSTER CALLED A HALT TO FIRE HER WHILE THIS LITIGATION PLAYS OUT. NO CHARGES HAVE ACTUALLY BEEN FILED AGAINST HER. ALTHOUGH THERE IS THE HINT OF A DOJ INVESTIGATION. SHE DENIES ANY WRONGDOING IN THESE ALLEGATIONS THAT HAVE BEEN MADE AGAINST HER ABOUT HER MORTGAGES. THIS COULD PLAY OUT FOR QUITE A WHILE IN THE LITTLE -- LEGAL SPHERE AND WITH RAMIFICATIONS BEYOND JUST HER OWN CASE, ESPECIALLY IF IT GETS TO THE SUPREME COURT. WHAT IS THE VIEW OF THE SUPREME COURT WITH INSTITUTIONS IN THE U.S. AND THE ABILITY TO FIRE PEOPLE FOR CAUSE AND WHAT DOES BECAUSE LOOK LIKE AND WHAT ARE THE PROTECTIONS PEOPLE APPOINTED TO THESE INSTITUTIONS? VERY IMPORTANT FOR HER OWN CASE BUT POSSIBLY VERY IMPORTANT FOR MANY OTHER OFFICIALS IN THE U.S. ADMINISTRATION. WE COULD SEE A BIT OF A PROTRACTED LEGAL CASE GOING ON. DONALD TRUMP SAYS HE WILL ABIDE BY THE COURT DECISION BUT HE IS PREPARED TO CONTINUE EITHER WAY. THE FED ITSELF SAYING ALSO THEY WILL ABIDE BY ANY LEGAL DECISION. INTERESTINGLY IN THEIR STATEMENT YESTERDAY, NOTING LONG 10 YEARS AT THE FED, THE APPOINTMENT PROCESS, DESIGNED TO ENSURE FED INDEPENDENT SO THEY CAN MAKE THEIR DECISIONS BASED PURELY ON THE ECONOMIC CIRCUMSTANCES FOR THE BEST OF THE U.S. PEOPLE. A BIT OF A NUDGE FROM THE FED IN THEIR STATEMENT. THE QUESTION IS, DOES AN INJUNCTION COME AS SOON AS TODAY? AND HOW MANY WEEKS OR MONTHS ARE WE LOOKING OUT FOR THE LEGAL PROCESS? JOUHMANNA: AND THEN ALSO ANOTHER BLOOMBERG STORY WE HAVE UP THIS MORNING ABOUT THE PRESIDENT ALSO LOOKING TO EXERCISE POTENTIALLY FURTHER INFLUENCE OVER THE SELECTION OF THE REGIONAL PRESIDENT'S AS WELL. IT IS CREEPING. LET'S ALSO GO BACK TO ANOTHER ONE OF THE BIG STORY TODAY AS WELL WHICH IS THOSE 50% HIGHER TARIFF RATES HAVE BEEN APPLIED TO INDIA. HOW MUCH OF A BLOW IS IS GOING TO CONSTITUTE FOR THE INDIAN ECONOMY? > > INDIA IS A LARGELY DOMESTIC CONSUMPTION STORY FOR ITS ECONOMY, BUT THE U.S. IS ITS BIGGEST EXPORT MARKET. THIS IS OBVIOUSLY GOING TO BE A BLOW TO MANY LABOR-INTENSIVE SECTORS, PARTICULARLY OF THE ECONOMY, INCLUDING JEWELRY FOR EXAMPLE, TEXTILES, SOME SECTORS ARE PROTECTED LIKE CHIPS BUT IT WILL HIT SOME OF THOSE LABOR-INTENSIVE PARTS OF THE MARKET. WE COULD SEE AN IMPACT ON INDIA'S ECONOMY FROM THERE. ALSO LOTS OF KNOCK ON EFFECTS. EVEN IF THIS ISSUE IS RESOLVED FAIRLY SOON, ALTHOUGH IT DOES NOT SEEM IT WILL HAPPEN, -- HAPPEN IN ITALY, TARIFFS, DOWN. IF YOU'RE LOOKING TO SHIFT FROM CHINA AND MAYBE TO INDIA, DO YOU NOW RECONSIDER? IF YOUR FACTOR ALREADY OPERATING IN INDIA, YOU SO THOSE PLANS DOWN? THERE CAN BE A LOT OF KNOCK ON EFFECTS ON THE INDIAN ECONOMY THAT BUSINESS DECISIONS, LOCATIONS, EXPANSION, AND SO ON THAT WILL COME OUT OF THIS. THERE'S ALSO THE BIG EFFECT WHICH IS ON THE U.S.-INDIA RELATIONSHIP. OBVIOUSLY, THIS HAS BEEN A BLOW TO THE INDIAN LEADER MODI. HIS STATUS AT HOME. DOES HE RECALIBRATE HIS RELATIONSHIPS AWAY FROM THE U.S.? THAT COULD BE A LONG-STANDING CHANGE FOR INDIA THAT GOES BEYOND ANY KIND OF IMPACT ON THE ECONOMY IN THE SHORT TERM. JOUHMANNA: WE'RE ARE GOING TO UNPACK ALL OF THIS LATER WITH A GUEST ON OUR SHOW. ROSALIND MATHIESON, THANK YOU SO MUCH. ONTO THE OTHER BIG EVENT OF TODAY, NVIDIA IS SAID TO DELIVER A HIGHLY ANTICIPATED EARNINGS REPORT TODAY, GIVING AN UPDATE ON THE ARTIFICIAL INTELLIGENCE SPENDING BOOM. ANALYSTS ESTIMATE THE BIGGEST FIRE OF AI HARDWARE ARE STILL INVESTING HEAVILY IN NEW GEAR. HOWEVER, DIMMING THE EXCITEMENT IS CONFUSION OVER HOW MUCH BUSINESS NVIDIA WILL ACTUALLY BE ABLE TO DO IN CHINA. THE SPRING IN ROBERT LEE FROM BLOOMBERG INTELLIGENCE IN HONG KONG. IT SEEMS MARGINALLY HIGHER, UP HALF A PERCENT, I GUESS THE CALM BEFORE THE STORM BECAUSE EARNINGS REPORT IS LATER TODAY. HOW MUCH OF A DRIVER DO YOU THINK NVIDIA'S COMMENTARY AROUND CHINA IS GOING TO BE? > > OK, I THINK YOU SAID IN YOUR PRELUDE, HIGHLY ANTICIPATED RESULTS BUT PROBABLY WE SAID THAT EVERY QUARTERLY RESULTS FOR NVIDIA. THE STOCK IS TRADING VERY CLOSE TO AN ALL-TIME HIGH. AS YOU SAID IN THE PREMARKET, TRADING UP. I THINK THAT INDICATES A VERY HIGH LEVEL OF EXPECTATION BAKED IN. SOME SIGNIFICANT EXPECTATIONS OUT THERE IN THE MARKETS. TO AVOID THE INEVITABLE PROFIT-TAKING, WHICH IS SOMETHING WE TYPICALLY SEE POST RESULTS WITH NVIDIA, THE COMPANY REALLY NEEDS TO DELIVER A MAJOR SURPRISE IN REPORTED NUMBERS ARE GUIDED SIMPLY PUT. AS YOU SAID IN YOUR PRELUDE, THE H20, SPECIFIC CHIP THAT PRESIDENT TRUMP MORE RECENTLY ALLOWED THE COMPANY TO CONTINUE EXPORTING INTO CHINA, I THINK A LOT OF THE DISCUSSION IN THE DEBATE IS CLEARLY GOING TO BE ABOUT THAT. JOUHMANNA: MOST DEFINITELY. A LOT OF FOCUS ON THE H20 CHIP AND MARGINS. AT LAST WITH THE CEO OF OPENAI SAM ALTMAN STARTED TO WARN MAY BE AI'S ENTERING INTO BUBBLE TERRITORY. IT FEELS THERE IS SUB OUT THERE IS ABOUT THEIR TURNING A BIT MORE CAUTIOUS ON VALUATIONS AT THIS JUNCTURE. HAVE WE REACHED PKI EUPHORIA -- PEAK AI EUPHORIA? > > I WAS HAD THERE BEEN A NUMBER OF EXTERNAL FACTORS THAT HAVE DRIVEN SENTIMENT AND NASDAQ AND THE U.S. MARKETS RECENTLY AND THE MAIN ONE BEING EXPECTATIONS ON FED RATE CUTS. SO NOT NECESSARILY DRIVEN BY ANY ADDITIONAL POSITIVITY ON THE FUNDAMENTAL OUTLOOK. CONTRARY TO THAT, SAM ALTMAN HAS MADE STATEMENTS ABOUT THE SECTOR BEING A POTENTIAL BUBBLE TERRITORY. I THINK MANY PEOPLE WOULD POTENTIALLY AGREE WITH THAT. AND THERE WAS ALSO AN M.I.T. REPORT I THINK ABOUT A WEEK AGO WHICH BASED ON A SURVEY OF U.S. COMPANIES THEY HAD DONE, ONLY 5% WERE MAKING ANY REAL RETURN ON THEIR INVESTMENT IN AI, 95% WERE MAKING NO RETURN WHATSOEVER. THIS IS A POINT THAT WE HAVE COME BACK TO AGAIN AND AGAIN AT BLOOMBERG INTELLIGENCE. IT IS THE COMPANIES PROVIDING THE INFRASTRUCTURE, THE CHIPS, CLOUD COMPUTING SERVICES WHICH ARE BEING USED TO TRAIN THESE MODELS TO DEVELOP NEW APPS. IT IS INFRASTRUCTURE PROVIDERS THAT ARE MAKING THE MONEY AT THE MOMENT, TO STATE THE OBVIOUS. AT THE END OF THE DAY, THE SOFTWARE COMPANIES CANNOT CONTINUE TO SPEND BILLIONS OR TENS OF BILLIONS OF CAPEX IF THEY HAVE NO VISIBILITY ON MAKING A COMMERCIAL RETURN. I THINK INCREASINGLY, THE MARKET IS RIGHTFULLY FOCUSED ON THE OUTLOOK FROM MONETIZATION SECTOR BECAUSE IT MAKES NO ECONOMIC SENSE WHATSOEVER -- I'M NOT PICKING ON MICROSOFT -- BUT FOR MICROSOFT TO BE SPENDING SOMETHING LIKE $85 BILLION ON THIS YEAR, AGAIN, IF THERE IS AN A RETURN ON INVESTMENT IN THE FORESEEABLE FUTURE. SO THE MONETIZATION ARGUMENT RETURN TO INVESTMENT, KEY ISSUES THAT INVESTORS IN THE SECTOR NEED TO CONTINUE TO FOCUS ON. JOUHMANNA: THAT 5% NUMBER THAT YOU MENTIONED REALLY STOOD OUT TO ME. ROBERT LEA, THANK YOU SO MUCH FOR THE PREVIEW INTO NVIDIA. AN IMPORTANT DRIVER SENTIMENT LATER. FOR MORE IN THE MARKETS, JOHN, NOW, THE CIO FOR MULTI-ASSET NEWBERGER. THERE IS SO MUCH TO DISCUSS AND WE WILL TALK ABOUT VALUATIONS BUT I WANT TO MAYBE START WITH THE BIG TOPIC OF THE LAST COUPLE OF DAYS WHICH IS THE MOVES OUT OF THE TRUMP ADMINISTRATION, PRESIDENT TRUMP TO PERHAPS INFRINGE ON THE FED CENTRAL-BANK INDEPENDENCE, TARGETING LISA COOK, OUR OWN STORY OVERNIGHT LOOKING -- SAYING HE'S LOOKING TO EXERT MORE INFLUENCE OF THE APPOINTMENT OF SOME OF THESE RESIDUAL PRESIDENTS AS WELL. HOW DO THINK THIS IS GOING TO PLAY OUT IN TERMS OF PREMIUM AND THE ACTUAL RISK PREMIUM THAT U.S. INVESTORS ARE GOING TO LOOK FOR IN SOME OF THESE FINANCIAL ASSETS? > > THANK YOU AND GOOD MORNING. THE PERSPECTIVE FIRING OF THE FED'S COOK WOULD BE THE FIRST TIME IN OVER A CENTURY WE HAVE SEEN SOMETHING LIKE THAT HAPPEN. I THINK AS YOU COVERED IN YOUR REAL A MOMENT AGO SEEMS TO BE CHALLENGE LEGALLY BY COOK'S LEGAL TEAM. I WOULD SAY IN THE BIG PICTURE, UNCERTAINTY PREVAILS AND THE QUESTION AT THAT INDEPENDENCE IS VERY REAL. SHOULD THE TERMINATION STAND, FOR EXAMPLE. TRUMP WOULD BE ABLE TO APPOINT ANOTHER GOVERNOR AND WOULD THEREFORE HAVE APPOINTED FOUR OF THE SEVEN BOARD SEATS. THERE IS ALSO THE QUESTION AROUND THE REGIONAL BANKS WHICH IS OF COURSE IMPORTANT BECAUSE FIVE OF THE 12 REGIONAL BANK PRESIDENT SET ON THE FOMC. AND EVERY FIVE YEARS, THESE 12 EGGS COME UP FOR APPROVAL AND THAT IS HAPPENING IN THE FIRST QUARTER OF NEXT YEAR. THERE ARE SOME FAIRLY SIGNIFICANT POTENTIAL SHIFTS HAPPENING UNDER THE HOOD AT THE FED. I THINK IT IS IMPORTANT TO SAY BEFORE WE TALK ABOUT MARKETS THAT WHILE THIS COULD RESHAPE THE FOMC MORE BROADLY, I DON'T THINK IT SHIFTS NECESSARILY THE NEAR TERM BALANCE ON RATE CUTS. COOK HERSELF IS A DOVE SO DOESN'T REALLY SHIFT THE BALANCE ON RATE CUTS PER SE. WHAT WE HAVE SEEN FROM MARKETS IS A WEAKER DOLLAR, STRONGER GOLD. THE REAL ACTION HAS BEEN IN BONDS AND LUNG DATA YIELDS WILL BE HIGHER WITH CONSIDERABLY SUPER CURVES AS SHORT RATES HAVE FALLEN. THE U.S. 30-YEAR IS BACK AROUND 4.95, A WHISK FROM 5%. THE PARTS OF THE CURVE THAT MOST OF US HAVE BEEN WATCHING, THE 1030, 530, ALL STUPOR SINCE 2021. -- STEEPER SINCE 2021. 3.05, THE HIGHEST SINCE LATE 2022 WHEN WE HAD A VERY DIFFERENT SET UP. HE FED HIKING AGGRESSIVELY, INFLATION ABOVE 6%. BONDS HAVE REACTED QUITE STRONGLY. THOSE MOVES TO US LOOK JUSTIFIED. JOUHMANNA: SO LET ME PICK UP -- SINCE YOU MENTIONED THE MOVE IN FIXED INCOME, THERE SEEMS TO BE A DISPARITY BETWEEN WHAT FIXED INCOME MARKETS ARE PRICING IN RIGHT NOW, WHICH IS SOMEWHAT OF A STAGFLATIONARY SCENARIO, SLOW DOWN OF THE U.S. ECONOMY COMBINED WITH POTENTIALLY HIGHER INFLATION DOWN THE TRACK VERSUS WHAT IS BEING PRICED INTO EQUITY MARKETS, WHICH IS GOOD OLD DAYS GOLDILOCKS, VERY STRONG CORPORATE EARNINGS. WHICH ONE OF THESE NARRATIVES IS CORRECT? > > I THINK THAT IS A GREAT QUESTION AND SOMETHING WE HAVE BEEN WRITING ABOUT AND TALKING ABOUT QUITE A LOT BECAUSE I WAS A BIG PICTURE, ONE OF THE STRIKING DISCREPANCIES IN RISK PREMIUM THAT ACTUALLY HAS PERSISTED SINCE JUST BEFORE LIBERATION DAY, SINCE THE FIRST OF APRIL, HAS BEEN THIS DISPARITY BETWEEN FIXED INCOME -- PARTICULARLY LONG-DURATION GOVERNMENT BONDS AND EQUITY MARKETS AS YOU SAY -- AND WE JUST TALKED ABOUT THE MOVES AT THE LONG END OF THE U.S. BANK IN CREASING CAUTION. I THINK WHAT HAS BEEN INTERESTING, PARTICULARLY THROUGH THE LAST FEW WEEKS OF EARNINGS BUT ALSO THE MACRO DATA, EACH OF THESE OPPOSING MOVES IF YOU WILL HAVE GARNERED SUPPORT IN RECENT WEEKS. BY THE MARKETS FROM SOME OF THE POLICY WE HAVE JUST BEEN TALKING ABOUT AND EQUITIES FROM REMARKABLY STRONG EARNINGS. NOW, WHAT WE HAVE BEEN DOING WITH THIS IS REALLY TAKING A BARBELL APPROACH, IF YOU WILL. CORNERS OF FIXED INCOME THAT PERHAPS OVERCOMPENSATE FOR THE RISKS AROUND GROWTH AND INFLATION, AREAS LIKE U.S. TIPS CURVE, THE BELLY OF THE INFLATION PROTECTED CURVE, CREDIT BONDS, EMERGING-MARKET, LOCAL BONDS WE HAVE BEEN LEANING IN. WE HAVE ALSO BEEN TAKING ADVANTAGE OF SOME AREAS OF EQUITY MARKETS. U.S. TECH FOR EXAMPLE WHERE WE WERE TALKING JUST A MOMENT AGO AROUND NVIDIA. EXCEPTIONALLY STRONG EARNINGS THAT WE WANTED EXPOSURE TO BUT ALSO AREAS LIKE EUROPE, JAPAN, AND PARTS OF EMERGING MARKETS. EUROPE AND JAPAN KEY SECTORS LIKE BANKS WE THINK LOOK REALLY GOOD HERE AND SO WE HAVE HAD SOME EXPOSURE. JOUHMANNA: LET ME BRING IT BACK TO WHAT YOU ARE PSYCHED ABOUT EQUITIES VERSUS FIXED INCOME. THIS PHENOMENON OF PERHAPS THE TWO DIFFERENT INSTRUMENTS SIGNALING A DIFFERENT TYPE OF ECONOMY. IS THAT TRUE ALSO IN OVERSEAS MARKETS AS WELL? DO YOU SEE THIS VERY TIGHT EQUITY RISK PREMIUM VERSUS A HIGHER BOND RISK PREMIUM BEING PLAYED OUT FOR EXAMPLE IN EUROPE? > > I THINK WE SEE THE HIGHER BOND RISK PREMIUM MORE BROADLY. WE COULD TALK ABOUT FRANCE IF YOU LIKE. THERE ARE THINGS THIS SIDE OF THE POND AS WELL THAT HAVE DRIVEN FIXED INCOME PREMIUM. DURATION PREMIUM. WHEN WE LOOK AT SPREADS, THEY ARE VERY TIGHT. I THINK FIXED INCOME SIDE OF THINGS, THE GOVERNMENT BOND SIDE OF THINGS, HAS BEEN SIMILAR. OF COURSE THE DIFFERENCE HAS BEEN ON THE EQUITY SIDE WHERE EQUITY RISK PREMIUM IS VERY TIGHT IN THE U.S., VERY MUCH LED BY SOME OF THOSE TECH STOCKS OF THE MAG SEVEN STOCKS. IN EUROPE, WE HAVE SEEN LESS OF THAT AND SO WHEN YOU COMPARE VERY BIG PICTURE FROM EQUITY RISK PREMIUM VERSUS FIXED INCOME RISK PREMIUM COME THE DISCONNECT LOOKS A BIT INTENSE IN EUROPE, FOR EXAMPLE, THEN IN THE U.S. BUT THERE IS THIS DISCONNECT WHICH I THINK IS AN IMPORTANT POINT TO MAKE. JOUHMANNA: YEAH, VERY VALID OBSERVATION. MAYA BHANDARI, ALWAYS GOOD TO TALK TO YOU. THANK YOU FOR COMING ON THE SHOW. COMING UP, PRESIDENT TRUMP'S CRUSHING 50% TARIFF ON INDIAN GOODS TAKES EFFECT. WE SPEAK TO THE CHIEF INDIA ECONOMIST AT -- NEXT. THIS IS "BLOOMBERG." ♪ JOUHMANNA: THE U.S. HAS SLAPPED A CRUSHING 50% TARIFF ON SOME INDIAN GOODS, DOUBLING THE EXISTING 25% DUTY THAT WAS IMPLEMENTED ON AUGUST 7. JOINING ME NOW IS SHUMITA DEVESHWAR OF TS LOMBARD. GOOD MORNING. THIS 50% TARIFF RATE SOUNDS LIKE A VERY HIGH NUMBER. IT IS THE HIGHEST TARIFF RATE APPLIED TO ANY ASIAN ECONOMY AND YET A LOT OF THE GROWTH IN INDIA IS STILL DRIVEN BY DOMESTIC DEMAND, ABOUT 60% OF THE ECONOMY FROM WHAT I HAVE READ. SO HOW MUCH OF AN ACTUAL ECONOMIC IMPACT ARE THESE HIGHER TARIFF RATES GOING TO HAVE ON THE INDIAN OUTLOOK? > > IN TERMS OF THE OVERALL IMPACT, IT IS ACTUALLY QUITE LESS. ESTIMATED AROUND 0.5% TO 0.8% OF GDP. GIVEN THAT INDIA'S ECONOMY IS STILL IN A REVIVAL PHASE WHERE PRIVATE INVESTMENT HASN'T REALLY PICKED UP, CONSUMPTION HAS BEEN A BIT OF A WORRY. OVER THE LONGER TERM, MANUFACTURING IS PART OF GDP HAS STAGNATED. THIS IS QUITE A BIG WORRY BECAUSE THE U.S. IS, AFTER ALL, INDIA'S LARGEST EXPORT MARKET. JOUHMANNA: YEAH, SO THE REASON THAT THESE TARIFFS HAVE DOUBLED FROM 25% TO 50% IS BECAUSE PRESIDENT TRUMP UNHAPPY WITH INDIA CONTINUING TO BUY RUSSIAN OIL. THE LATEST NUMBERS SUGGEST INDIA CONTINUES TO IMPORT ABOUT 1.5 MILLION BARRELS A DAY. AT THE PRIME MINISTER IS PRETTY DEFIANT. THERE ARE NO SIGNS ARE LOOKING TO FIND ALTERNATIVE SOURCES. BUT SHOULD THEY DECIDE TO GO DOWN THAT ROUTE, HOW PEACEABLE IS A REALLY FOR INDIA TO FIND ALTERNATIVE -- HOW FEASIBLE IS IT REALLY FOR INDIA TO FIND ALTERNATIVE SOURCES OF ENERGY? > > ABOUT FOUR YEARS AGO, RUSSIA WAS A TINY PERCENTAGE ON THE RUSSIAN OIL -- THE RUSSIAN OIL WAS A TINY PERCENTAGE OF INDIA'S OIL BASKET. IT ISN'T THAT DIFFICULT TO GRADUALLY REVERSE THE DEPENDENCE THAT INDIA HAS NOW ON RUSSIAN OIL, WHICH NOW MAKES UP ABOUT 35% OF INDIA'S IMPORT BASKET. THERE'S BEEN A RAPID ESCALATION IN RUSSIAN OIL IN THE LAST THREE YEARS. THE POINT REALLY HERE IS THAT PRIME MINISTER MODI CAN'T REALLY BE SEEN TO BUCKLING UNDER EXTERNAL PRESSURE. THE MORE PUBLIC THIS IS MADE THAT THESE TARIFFS ARE BEING IMPOSED AS A PUNISHMENT TO INDIA FOR THE RUSSIAN OIL IMPORTS, THE HARDER IT IS GOING TO GET TO REVERSE. I THINK THAT RIGHT NOW BOTH SIDES ARE REALLY DIGGING THEIR HEELS IN. THIS ALSO COMES IN THE BACKDROP OF TRADE NEGOTIATIONS THAT HAVE STALLED BECAUSE THE U.S. WANTED GREATER ACCESS TO INDIA'S SECTOR THAT THE GOVERNMENT WILL NOT OPEN UP FOR THE U.S. BECAUSE IT NEEDS TO PROTECT ITS FARMERS. SO ALL OF THIS COMES IN THE BACKDROP -- I THINK TWO THINGS. ONE, THE TRADE NEGOTIATIONS CONTINUE WHICH SEEM TO HAVE STALLED RIGHT NOW. THERE WAS A U.S. DELEGATION THAT WAS EXPECTED TO COME TO INDIA AT THE END OF AUGUST AND THEY POSTPONED THAT VISIT. AND THE SECOND IS WHAT HAPPENS WITH RUSSIA AND UKRAINE AT THAT LEVEL THAT IF THINGS -- IF THERE IS A TRUCE, THIS 25% AS FAR AS THE RUSSIAN OIL ENERGY IS CONCERNED, GOES. I DON'T THINK INDIA IS GOING TO PUBLICLY SAY, OH, BECAUSE OF THE IS PRESSURE, WE'RE GOING TO STOP BUYING RUSSIAN OIL. JOUHMANNA: YOU DESCRIBED THAT SAY HALF A PERCENT HIT TO GDP, WHAT ARE THE OPTIONS POLICYMAKERS HAVE TO SHORE UP GROWTH AND HELP THE PARTS OF THE ECONOMY THAT HAVE BEEN HIT THE MOST AND HOW DOES THE RECENT REFORM PLAY INTO THAT? > > WE HAVE SAID INDIA REFORMS WHEN HIS BACK IS UP AGAINST THE WALL. IT SEEMS TO BE AN INSTANCE OF THAT. REFORMS THE PRIME MINISTER HAS ANNOUNCED TERMS OF -- JUST RATIONALIZING THE TAX SYSTEM, MAKING IT EASIER TO DO BUSINESS. THE RECENT ANNOUNCEMENT THAT THE PRIME MINISTER HAS MADE AS FAR AS THE TAXATION POLICIES ARE CONCERNED, IS SEEN AS REKINDLING THAT REFORM MOMENTUM WHICH HAD BEEN WANING QUITE SIGNIFICANTLY SINCE ACTUALLY MODI'S SECOND TERM. THIS IS A POSITIVE MOVE BECAUSE WHETHER THE U.S. PRESSURE WAS THERE OR NOT, THE BASIC TRUTH IS THAT WE NEED TO REFORM AND WE NEED TO INCREASE THE IMPLEMENTATION OF REFORMS IF INDIA HAS EVEN THE ASPIRATIONS OF GROWING AT A PERCENT WHETHER THE U.S. IS PART OF THAT -- IF THE U.S. EXPORT MARK IS PART OF THAT STRATEGY OR NOT. HOPEFULLY, TO SOME EXTENT, THE ECONOMIC DAMAGE AS WELL AS KEEP INVESTORS -- THAT THINGS ARE MOVING, REFORMS ARE HAPPENING. JOUHMANNA: QUICK FINAL QUESTION FROM ME, DOES THIS CONSTITUTE THE REVOKE WILL DAMAGE TO THE U.S. -- YOUR REVOCABLE U.S.-INDIA RELATIONSHIP? > > THE HEADLINE, THAT IS WHAT IS BEING MADE. AS I MENTIONED, AS LONG AS A TRADE NEGOTIATIONS CONTINUE, AS LONG AS THERE IS SOME MOVEMENT FORWARD, I THINK -- ACTUALLY, THE POSITIVE THING IS INDIA HAS REALLY ADOPTED A CONSOLATORY TONE. WE HAVE BEEN TRYING TO TALK, TRYING TO SAY, LOOK, WE CAN'T DO EVERYTHING ON YOUR TERMS. WE NEED TO PROTECT OUR FARMERS. THERE ARE CERTAIN SECTORS WE NEED TO BE PROTECTIVE ABOUT. SO AS LONG AS THAT -- THE TALKS CONTINUE, I THINK THAT IS POSITIVE. THERE IS A LOT OF -- JOUHMANNA: THAT IS KEY. > > AS LONG AS INDIA MAINTAINS A BALANCE TONE -- JOUHMANNA: WE ARE GOING TO LEAVE IT THERE. THANK YOU SO MUCH. SHUMITA DEVESHWAR, CHIEF INDIA ECONOMIST AT TS LOMBARD. COMING UP, WE WILL BE TALKING ABOUT FRENCH ASSETS WHICH HAVE CONTINUED TO WOBBLE THE STABILIZING TODAY AFTER PRIME MINISTER BAYROU CALLED A CONFIDENCE VOTE. DETAILS, NEXT. ♪ JOUHMANNA: GOOD MORNING AND WELCOME TO "THE PULSE." THESE ARE YOUR TOP STORIES. PRESIDENT TRUMP SAYS HE IS READY FOR A LEGAL FIGHT WITH FED GOVERNOR LISA COOK AFTER SHE REJECTS HIS MOVES TO REMOVE HER. INVESTORS BRACE RESULTS FROM THE MOST VALUABLE COMPANY, NVIDIA'S EARNINGS ARE A KEY TEST OF WALL STREET'S FAITH IN THE AI BOOM. PLUS, A CRUSHING 50% U.S. TARIFF ON INDIAN GOODS TO PUNISH THE COUNTRY FOR BUYING RUSSIAN OIL. OVER IN EUROPE, FRENCH ASSETS HAVE RECOVERED SOMEWHAT AFTER RECENT STRUGGLES AS A LATEST POLITICAL INSTABILITY AND DANGERS THE NASCENT ECONOMIC RECOVERY. THIS AFTER PRIME MINISTER BAYROU CALLED A CONFIDENCE VOTE THAT COULD TOPPLE THE GOVERNMENT. THAT'S GET MORE FROM PARIS. CAROLINE, THIS CAME AS A SHOCK TO MARKETS. HAS THERE BEEN ANY PROGRESS, ANY DEPARTMENT ON THE POLITICAL FRONT IN THE LAST 24 HOURS THAT COULD PERHAPS MOVE THINGS IN FAVOR OF BAYROU? > > KNOW, WE ARE SLIGHTLY SEEING RECOVERY ON THE MARKETS AFTER TODAY'S ON THE CAC 40 BUT WE ARE NOT RELEASING ANY PROGRESS ON THE POLITICAL FRONT AT THIS STAGE. WE STILL HAVE THE PARTY SAYING THEY WILL VOTE AGAINST CONFIDENCE OF BAYROU AND WE HAVE HAD THEM MATHEMATICALLY ALMOST IMPOSSIBLE FOR FRANCOIS BAYROU TO SURVIVE THIS VOTE OF CONFIDENCE SEPTEMBER 8. THE LIKELIHOOD OF HIS GOVERNMENT TO FALL IS PRETTY HIGH. HE IS GOING TO SPEAK AT FRANCE'S BIGGEST LOBBY TOMORROW AND WILL TRY TO DO THE CHARM OFFENSIVE TO TRY AND CONVINCE EXECUTIVES THAT IS BUDGET PLANS ARE THE BEST WAY FOR FRANCE. THE HEAD WAS SPEAKING MY FRENCH METER THIS MORNING, ACTUALLY SAYING HE IS AGAINST HIMSELF THE IDEA OF SCRAPPING TWO BANK HOLIDAYS, THAT IT IS NOT FAIR TO ASK FRENCH PEOPLE TO WORK TWO EXTRA DAYS WITHOUT BEING PAID ANYMORE. AT THIS STAGE, I WOULD SAY IF FRANCOIS BAYROU SURVIVES ON SEPTEMBER 8, IT IS CLEARLY A MIRACLE -- UNLESS, THE SOCIALIST BACKTRACK. THEY ARE SUPPOSED TO PRESENT AN ALTERNATIVE BUDGET OF THE WE CAN. JOUHMANNA: IF HE LOSES THE CONFIDENCE VOTE, WHAT IS NEXT? AND FOR INVESTORS AND FRENCH ASSETS, HOW MUCH IS IT GOING TO CHANGE THE STATUS QUO? FRANCE IS ALREADY ON A FISCAL CONSOLIDATION PATH. > > THAT'S RIGHT. THIS QUESTION OF WHAT IS NEXT IS WHAT IS ON EVERYBODY'S MIND IN THE POLITICAL SPECTRUM. THE MARKET WHICH IS UP AND AT THIS STAGE WE HEARD FROM -- PARTICIPANTS AT THIS STAGE WE HEARD FROM, IF THE SITUATION DOESN'T IMPROVE, THAN THE SPREAD BETWEEN THEIR FRIENDS ON THE GERMAN TENURE BONDS COULD ACTUALLY INCREASE FROM AROUND 80 BASIS POINTS PRETTY HIGH TODAY TO 100 BASIS POINTS. CLEARLY, WE SHOULD SEE MORE PRESSURE ON FRENCH BONDS. THE QUESTION OF WHAT IS NEXT, OF COURSE WE HAVE HEARD FROM THE NATIONAL RALLY SAYING THEY ARE CALLING FOR NEW STEP LEGISLATIVE ELECTIONS -- SNAP LEGISLATIVE ELECTIONS BECAUSE THAT IS SOMETHING PRESIDENT MACRON COULD CALL. IT HAS BEEN MORE THAN A YEAR SINCE THE LAST SNAP ELECTIONS. IN THE FORMER PRIME MINISTER AND HEAD OF MACRON'S MPS THE NATIONAL ASSEMBLY SAYING THIS MORNING IT HE DOES NOT BELIEVE NEW SNAP ELECTIONS ARE THE WAY TO GO. THAT IF THE PROBLEM CANNOT BE SOLVED BY THE NATIONAL ASSEMBLY, EVEN WITH A NEW FRAGMENTED PARLIAMENT, THE PROBLEMS ARE GOING TO REMAIN THE SAME WE HAD THE FISCAL PATH OF FRANCE IS GOING TO REMAIN CHALLENGING. AND THE FRENCH DEFICIT IS STILL EXPECTED TO BE ABOUT 5% THIS YEAR AND IS NOT EXPECTED TO GO DOWN UNLESS THERE ARE ALL OF THE SAVINGS PROPOSED BY THE CURRENT GOVERNMENT. JOUHMANNA: MEANWHILE, FIXED-INCOME INVESTORS ARE FOCUSED ON THE TENURE O.A.T. VERSUS -- LET'S SEE IF THEY OR TAKE. THANK YOU SO MUCH. FROM U.K. PRIME IS TO RELIST TRUST SAYS THE COUNTRY'S ECONOMY IS IN A DOOM LOOP CYCLE OF HIGHER TAXES, LOWER GROWTH, AND HIGHER DEBT. SPEAKING ON THE PODCAST, SHE WEIGHED IN ON THE BANK OF ENGLAND AND DONALD TRUMP'S APPROACH TO THE FED. > > I THINK THE BANK OF ENGLAND NEEDS TO BE ACCOUNTABLE TO POLITICIANS. I THINK THE CURRENT SYSTEM DOES NOT WORK. THIS IS WHY I'M SO PATHETIC TO WHAT DONALD TRUMP SAYING ABOUT THE FED. IF MONETARY POLICY IS INCREDIBLY IMPORTANT. IT DETERMINES THE ALLOCATION OF ASSETS WITHIN SOCIETY. WHAT WE HAVE SEEN WITH BRITAIN, PEOPLE WHO HAVE PROPERTY, WHO HAVE CAPITAL HAVE DONE VERY WELL OUT OF THE LOW INTEREST RATES THAT THE BANK OF ENGLAND AND THE EASY MONEY THE BANK OF ENGLAND HAS CREATED OVER THE PAST 15 YEARS. JOUHMANNA: YOU CAN LISTEN TO THE FULL INTERVIEW WITH FORMER EK PRIME MINISTER LIZ TRUSS. SOME FUND MANAGERS SAY RETURNS ON EMERGING MARKET ASSETS ARE SAID TO POWER AHEAD OF THEIR DEVELOPED PEERS. THEY HAVE MOVED IN LOCKSTEP SINCE PRESIDENT TRUMP UNLEASHES TARIFF BLITZ IN APRIL. ANALYST SAY A PIVOT AWAY FROM U.S. INVESTMENTS AND MORE CONSERVATIVE FISCAL POLICIES IN EMERGING NATIONS ARE LIKELY TO DRIVE THAT OUTPERFORMANCE. LET'S DISCUSS THE OUTLOOK WITH COHEAD OF EMERGING MARKETS CORPORATE DEBT AT 91. GOOD TO HAVE YOU WITH US. INTERESTING TO TALK ABOUT OR FISCAL CONSOLIDATION TAKEN PLACE THESE DAYS. WHO WOULD HAVE THOUGHT THAT IS THE NEW PARADIGM? LET ME START OFF WITH THE HERE AND NOW WHICH IS THE MORE DOVISH TONE THAT THE FED CHAIRMAN JEROME POWELL TOOK AT JACKSON HOLE WE HAD HOW MUCH OF A POTENTIAL TAILWIND COULD THAT BE FROM BROADER EM ASSETS ARE ON THE ROAD? THE FACT THE FED IS TURNING MORE DOVISH? > > A PLEASURE TO BE WITH YOU. JUST ON THAT POINT, I THINK A DOVISH FED IS UNMITIGATED LEAK A POSITIVE FOR EM IN TWO WAYS. ONE, IF THAT DOVISHNESS THESE TO MORE MODERATION IN THE U.S. DOLLAR, A WEAKER DOLLAR IS BULLISH FOR EM MORE BROADLY. A LOT OF EM RISK ASSETS, INCLUDING THE CORPORATE ASSET CLASS AND EMERGING-MARKET EXTERNAL SOVEREIGN BONDS BENEFIT FROM FED EASING. JUST AS ALL FIXED ASSETS TO. THAT ENVIRONMENT WHERE EM ECONOMIES HAVE BEEN NAVIGATING THIS INTENSE JOE POLITICAL, HAVING -- JOE POLITICAL, HAVING A CRISIS ALREADY IF YOU LIKE. I THINK THIS SETS US UP FOR A GOOD PERIOD. JOUHMANNA: SO YOU ARE AND EMERGING-MARKET SPECIALISTS SO YOU UNDERSTAND THE PLAYBOOK BETTER THAN ANYONE ELSE OF WHAT HAPPENS WHEN THE GOVERNMENT TRIES TO INTERVENE OR EXERT PRESSURE ON THE CENTRAL BANK. THERE ARE CASES OF ARGENTINA, TURKEY WE CAN SPEAK TO. WHAT DO YOU SEE HAPPENING IN THE U.S. IF THIS MOVE OUT OF THE TRUMP ADMINISTRATION INTERFERE MORE WITH FED POLICYMAKING CONTINUES? > > WE ARE IN AN UNPRECEDENTED TIME. FOR A LONG TIME WE HAD THIS LABEL OF EMERGING AND DEVELOPED MARKETS. I THINK MAYBE RIGHT NOW WE NEED A NEW PHRASE FOR THIS. MAYBE THE RIGHT WORD IS CONVERGING MARKETS. WE ARE SEEING A LOT OF TIME IF YOU LIKE, TENETS OF FREE MARKETS AND CAPITALISM BEING, IF YOU LIKE, RE-EXAMINED, RECONSIDERED. ONE OF THE KEY PILLARS IS THE INDEPENDENCE OF THE CENTRAL BANK RATED I THINK WITHIN EM, SPEAKING FROM OUR OWN EXPERIENCE, WE HAVE SEEN MANY EPISODES WHERE THE INDEPENDENCE IS CHALLENGED IT USUALLY LEADS TO A PERIOD WHERE CERTAINLY RISK PREMIA RISES. IN THE LONG ARC OF HISTORY, WE THINK THE PRINCIPLES OF THAT INDEPENDENCE ARE WELL UNDERSTOOD. WE CAN'T REALLY COMMENT ABOUT WHAT THAT MEANS FOR THE U.S., BUT IT CERTAINLY IS ECHOING AND AN UNCOMFORTABLE WAY FOR THOSE OF US WHO HAVE SPENT A LOT OF TIME IN IN EM SAYING, I THOUGHT THIS WASN'T REALLY SOMETHING YOU COULD SEE IN THIS PART OF THE MARKETS. JOUHMANNA: I HAVE SEEN THIS STORY PLAY OUT BEFORE COME ALL OF INVESTORS ARE SAYING -- SPEAKING OF SOME OF THESE ECONOMIES, EARLIER ON THE SHOW WE WERE TALKING ABOUT THE 50% TARIFF RATE BEING APPLIED ON INDIAN EXPORTS TO THE U.S. HOW HAVE SOME OF THE LARGEST EM ECONOMIES, THE ASIAN ECONOMIES, HELPED OR MANAGED TO DEAL WITH THE IMPACT OF THE TARIFFS THE U.S. HAS A? HAVE THEY BEEN MORE RESILIENT THAN YOU EXPECTED? > > I THINK THE IMPORTANT THING IS TO TAKE A STEP BACK AND CONSIDER EMERGING MARKETS ARE, BROADLY SPEAKING, 84, 85 COUNTRIES. YOU HAVE A MUCH MORE DIVERSE UNIVERSE TO PICK AND CHOOSE FROM . WHILE IT IS TRUE SOME COUNTRIES HAVE FALLEN UNDER THE SPOTLIGHT SUCH AS BRAZIL AND INDIA LATELY, OTHER COUNTRIES, FOR EXAMPLE CHINA AND MEXICO, HAVE DEALT WITH THOSE TARIFFS BOTH NOW AND IN THE PREVIOUS TRUMP ADMINISTRATION WITH MORE APLOMB. LEAVING ASIDE THE IMMEDIACY OF THE HEADLINES AND THE WEATHER RISK ASSETS AND SOMETIMES REACT, IN THE END, I A LOT OF THE DEVIL IS IN THE DETAIL. WHEN THAT IMPLEMENTATION HAPPENS, IT IS OFTEN NOT AS THAT IS IT MAY SEEM AT FIRST GO. THE SECOND IS THERE ARE MANY EM ECONOMIES AND SOME OF THE MORE RECENT JOINERS TO THE EM UNIVERSE SUCH AS COUNTRIES IN THE MIDDLE EAST LIKE EVEN SAUDI WHICH ARE CURRENTLY IN THAT 10% BASIC CAMP OF TARIFFS WHICH IS AFFECTING MORE BROADLY THE DEVELOPED WORLD. I THINK IN EM, YOU DEFINITELY HAVE A LOT OF DISPERSION, A LOT OF OPPORTUNITIES TO PICK AND CHOOSE AND THERE WILL BE WINNERS AND RELATIVE LOSERS IN THAT AS WELL. JOUHMANNA: SOLIS TICO THE WINNERS AND LOSERS. YESTERDAY WE DID A SEGMENT ABOUT GLOBAL CREDIT SPREADS AND HOW HISTORICALLY TIGHT THEY ARE. IN SOME CASES YOU HAVE TO GO BACK TO 1995 RIOS INVESTMENT TO GET TO THIS LEVEL OF CREDIT TIGHTNESS. WHERE DO YOU FIND OPPORTUNITIES AND IN AN ENVIRONMENT LIKE THIS? ARE YOU NERVOUS ABOUT HOW TIGHT SOME OF THESE CREDIT SPREADS ARE TRADING DURING SOME OF THE UNCERTAINTIES THAT ARE YET TO COME IN THE NEXT FEW MONTHS? > > GREAT QUESTION. I THINK LIKE MANY OTHER FIXED INCOME MANAGERS, IT IS DIFFICULT FOR US TO MAKE A STRONG CASE FOR SPREADS BECAUSE MATHEMATICALLY LOOKING AT THE HISTORY, WE ARE AT ALL-TIME FOR MANY ASSET CLASSES. WHAT GIVES US COMFORT IS RELATIVE VALUATION CAP BETWEEN US AND OUR DEVELOPED MARKET PEERS REMAINS INTACT. SO WHEN YOU CONDITION THAT RISK BY BUCKET -- FOR EXAMPLE, IF WE LOOK AT THE SAME RATE FROM THE SAME DURATION, ARE GETTING MORE SPREAD, MORE YIELD IN MANY EMERGING MARKET LOCATIONS, PARTICULARLY THE SALE WITHIN THE CORPORATE CREDIT ASSET. IF YOU LOOK AT WIDER CREDIT METRICS LIKE RETURN OF LEVERAGE OR YOU BID THE -- EBITDA, CARPETS REMAIN ATTRACTIVE. FUNDAMENTALLY, THEY ARE SOUND. I THINK WHAT BELIES THIS -- THE PEAK IN SPREADS IS THE YIELDS VERY ATTRACTIVE FOR THE CURRENT SET UP. AT 5.5% FOR EMERGING-MARKET CORPORATE INVESTMENT GRADE CREDIT AND 8% FOR EMERGING-MARKET HIGH-YIELD CORPORATE CREDIT AND 6.5% FOR THE BLEND, THIS IS A VERY ATTRACTIVE INVESTMENT DESTINATION GIVEN THE GLOBAL CONTEXT WHERE EVERYTHING IS EXPENSIVE, EVERYTHING IS TIGHT AND SO IN THAT CONTEXT AGAINST THE GLOBAL GROWTH OUTLOOK AND FEARS OF GLOBAL INFLATION, I THINK WE ARE IN A GOOD PLACE. JOUHMANNA: YEAH, SO ALL IN GUILT IS WHAT YOU'RE LOOKING AT. FINAL QUESTION BECAUSE WE'VE BEEN TALKING ABOUT THE STEEPENING OF THE U.S. YIELD CURVE, ARE YOU HEDGING AGAINST YOUR LONGER DURATION EXPOSURE IN THE PORTFOLIO TO ACCOUNT FOR THAT STEEPENING OF THE U.S. YIELD CURVE? > > THIS IS A BIG DISCUSSION WE HAVE BEEN HAVING WITH OUR CLIENTS BECAUSE THE BEHAVIOR OF LET'S SAY U.S. TREASURIES HAS CHANGED A NUMBER OF TIMES DURING THE CURRENT YEARS. THE REGIME UNDER WHICH IT OPERATES HAS ALSO BEEN CALLED INTO QUESTION. IN PRIOR PERIODS OF CRISIS WOULD BE LONG U.S. DURATION HAS BEEN A SAFE HAVEN, HAS BEEN A PORTFOLIO HEDGE RISK AS A CLASS LIKE OURS. HOWEVER, IN THE MOST RECENT PERIOD OF DISTRESS LESS THEY ARE LIBERATION DAY IN EARLY APRIL, WE SAW A SYNCHRONIZED SELLOFF BOTH IN TREASURIES AS WELL AS THE DOLLAR -- AT LEAST BRIEFLY. THAT GIVES US PAUSE. WE ARE TRYING TO ESTABLISH WHAT THE REACTION FUNCTION OF THESE SO-CALLED HEDGES ARE DEPENDING ON THE SOURCE OF THAT NEXT CRISIS AREA SO IF THE CATALYST IS, FOR EXAMPLE, LET'S SAY AN ATTACK ON FED INDEPENDENCE, THAT HEDGE MIGHT NOT WORK THAT WAY WE EXPECT. THAT IS WHAT WE HAVE BEEN SPENDING A LOT OF TIME TRYING TO UNDERSTAND. JOUHMANNA: IT IS NOT AN EASY ENVIRONMENT. ALAN SIOW, THANK YOU, REALLY GOOD TO CHAT TO YOU FROM NINETY ONE. BLOOMBERG ANALYSIS IS FOUND XI JINPING HAS OUSTED ALMOST 1/5 OF THE GENERALS WHOM HE PERSONALLY APPOINTED SINCE TAKING POWER IN 2012. FOR TODAY'S BLOOMBERG BIG TECH, SENIOR EDITOR RICHARD FROST JOINTS ME FROM HONG KONG. THIS IS QUITE A SIGNIFICANT NUMBER, 20% OF THESE MILITARY OFFICIALS HAVE BEEN PURGED, DISAPPEARED, MISSING. WHAT IS BEHIND THE PURGE? > > LET'S NOT FORGET, THESE ARE GENERALS XI JINPING HIMSELF APPOINTED. IN TERMS OF EXACTLY WHY THESE GENERALS HAVE DISAPPEARED, CHINA IS USUALLY FAIRLY OPAQUE ABOUT THAT. IT IS TYPICALLY RELATED TO CORRUPTION BUT JUST TO GIVE ONE EXAMPLE, THE SECOND HIGHEST RANKING MILITARY OFFICER FROM THE WORLD ONLY LEARNED HE HAD DISAPPEARED BECAUSE HE DID NOT TURN UP FOR AN ANNUAL TREEPLANTING CEREMONY THAT THE MOST SENIOR GENERALS DID. THAT WAS BACK IN APRIL. SO -- BUT THIS HAS BEEN SOMETHING THAT HAS CHARACTERIZED XI JINPING'S PRESIDENCY. THE PREVIOUS TWO CHINESE PRESIDENTS DIDN'T INVESTIGATE ANY GENERAL SO THERE IS OBVIOUSLY SOMETHING THAT HE IS WORRIED ABOUT AND WHETHER IT IS CORRUPTION OR POWER, IT IS NOT QUITE CLEAR. JOUHMANNA: YEAH. SO XI IS CURRENTLY SERVING HIS THIRD TERM IN OFFICE AND POSSIBLY PREPARING FOR A FOURTH TERM. IS THERE ANY TALK ABOUT WHO HIS POTENTIAL SUCCESSOR COULD BE? AND DO THESE MOVES ACTUALLY LEAD THE GROUNDWORK FOR FURTHER INSIGHT INTO WHO HE MAY BE LOOKING TO CHOOSE AS A SUCCESSOR? > > YOU'RE ASKING SOME VERY BIG QUESTIONS. THERE IS ABSOLUTELY NO SIGN OF A SUCCESSOR RIGHT NOW FOR XI JINPING. THERE IS A VERY POWERFUL JURY COMMISSION WHICH HE IS HEAD OF AN EFFECT THERE IS NORMALLY SEVEN SIT ON THAT. THERE ARE ONLY FOUR BECAUSE SOME OF THEM HAVE BEEN TAKEN OUT PRESUMABLY BY XI. IT IS THROUGH THAT PATH THAT PREVIOUS PRESIDENTS OF CHINA HAVE COME. SO WERE THERE TO BE SOMEONE UNEXPECTED GO IN, THAT MY BE AWAY. THE PARTY HAS THIS BIG MEETING COMING UP LATER NEXT MONTH WITH A MAP OUT THE NEXT FIVE YEARS ECONOMIC PLAN AND ALSO THEY SORT OF MOVE PERSONNEL AROUND. SO THAT WOULD BE THE NEXT POSSIBLE OPPORTUNITY TO FIND OUT WHETHER THERE MIGHT BE A POTENTIAL SUCCESSOR. BUT RIGHT NOW -- JOUHMANNA: INTERESTING. > > RIGHT NOW THERE IS LITTLE SIGN. JOUHMANNA: GIVEN HIS PURGE ABOUT 20% OF THE MILITARY GENERALS, IS IT GOING TO HAVE ANY KNOCK ON EFFECTS ON CHINA'S MILITARY PREPAREDNESS? DOES IT FOLLOW THROUGH MILITARILY? > > IT IS NOT ENTIRELY CLEAR WHY HE IS DOING THIS. OBVIOUSLY, IT DOESN'T LOOK GREAT FOR A MILITARY'S PREPAREDNESS IF THE MOST SENIOR GENERALS KEEP GETTING TAKEN OUT, PARTICULARLY THOSE HE RECENTLY APPOINTED. EXACTLY WHAT HE IS CONCERNED ABOUT, MAYBE IT IS THE SCALE OF CORRUPTION IN THE MILITARY AND HE IS WORRIED THAT THE MILITARY, WHICH LET'S FACE IT, HASN'T FOUGHT IN ANY CONFLICTS SINCE THE 1970'S, ISN'T TESTED AND ISN'T READY FOR ANY BROADER WAR, WHETHER IT IS A INVASION OF TAIWAN OR JUST DEFENDING ITSELF AGAINST SOMETHING ELSE. THE SORT OF I GUESS THE POSITIVE ANGLE WOULD BE THAT WHILE ROOTING OUT CORRUPTION, HE MAKES THE MILITARY MORE EFFICIENT AND IMPROVES IT. THE CONCERN IS, PARTICULARLY I WOULD THINK AMONGST MORE SENIOR MILITARY OFFICIALS, IS THAT THE FEAR OF BEING TAKEN OUT MEANS IF THEY ARE AWARE OF ANY SHORTCOMINGS OR DEFECTS IN EQUIPMENT, THEY ARE UNLIKELY TO COME CLEAN ABOUT IT. IN FACT, MORE LIKELY TO HIDE IT BECAUSE THEY DON'T WANT TO BE OUSTED OR INVESTIGATED FOR CORRUPTION. LIKE MUCH OF CHINA'S GOVERNANCE AT THAT LEVEL IS QUITE OPAQUE. JOUHMANNA: YEAH, FASCINATING INSIGHT, RICHARD FROST. HIGHLY RECOMMEND READING TODAY ON THE TERMINAL. COMING UP, WE HAVE A HOT STORY FOR YOU. WHEN IT COMES TO COOLING THE SUMMER COMMUTE, LONDON IS LAGGING BEHIND OTHER GLOBAL CITIES. WE WILL BRING IT THE DATA NEXT. THIS IS "BLOOMBERG." ♪ JOUHMANNA: WELCOME BACK. WHEN SUMMER ARRIVES, OFFICE WORKERS OFTEN COMPLAIN ABOUT HOW HOT IT CAN BE ON PUBLIC TRANSPORT. A BLOOMBERG COMPARISON OF FIVE GLOBAL FINANCIAL CENTERS SHOWS SWEATY COMMUTERS IN THE U.K. CAPITAL HAVE A RIGHT TO FEEL JEALOUS OF SOME OTHER CITIES. JOE HAS MORE ON OUR HOT DATA STORY. I HAVE TO SAY I WAS IN LONDON AROUND THE TIME OF THE HEAT WAVE IN THE SUMMER. THE UNDERGROUND WAS ABSOLUTELY SWELTERING. HOW DOES LONDON AND THE LONDON COMMUTE COMPARE TO OTHER MAJOR CITIES AROUND THE WORLD AT PEAK SUMMERTIME? > > YOU GOT INEXPERIENCE A LOT OF FOLKS HERE HAVE TO SUFFER THROUGH EVERY DAY. LOOK, SUMMERS IN THE U.K. ARE GETTING SUPER HOT. WE ARE ON TRACK RIGHT NOW ACCORDING TO THE U.K. MET OFFICER, PROBABLY THE HOTTEST SUMMER ON RECORD. WE ARE TRACKING AS HOT AS IT HAS EVER BEEN. THIS IS SOMETHING CITIES AROUND THE WORLD ARE HAVING TO DEAL WITH, HOTTER SUMMERS, LONGER DURATION HEAT WAVES, MORE EXTREME TEMPERATURES. AT THE HIGHS GETTING HIGHER, THE LENGTH OF THESE HOT SPELLS LASTING LONGER. CITIES THAT HAVE TRANSPORT HAVE DEALT WITH THIS IN VERY DIFFERENT WAYS. AND THE EXPERIENCE OF THOSE COMMUTES IS QUITE A BIT DIFFERENT IN DIFFERENT PLACES. JOUHMANNA: ONE OF THE ISSUES WITH THE LONDON UNDERGROUND IS SOME OF THE OLDER INFRASTRUCTURE IS QUITE LITERALLY CREAKING INFRASTRUCTURE. SO WHAT OPTIONS DO CITIES LIKE LONDON HAVE IN TRYING TO ADAPT IF THEY CAN'T INSTALL AIR CONDITIONING? > > THAT IS A REALLY GREAT POINT. IF YOU LOOK AT THE SUBWAY COMMUTE IN TOKYO, BEIJING, THEY'VE GOT AIR-CONDITIONED SUBWAY CARRIAGES, AIR-CONDITIONED PLATFORMS. THEY ARE ABLE TO BLOW IN THIS SORT OF REFRIGERATED AIR. IT IS NOT QUITE AIR CONDITIONING, BUT MANAGES TO BRING ON THE TEMPERATURE A LITTLE BIT. IN BEIJING, THEY HAVE SUBWAY CARRIAGES THAT ARE EVEN COLDER FOR BUSINESS PEOPLE THAT HAVE TO WEAR JACKETS AND SUITS OR TIGHTS, MORE FORMAL BUSINESS ATTIRE EVERY DAY. A LOT OF THOSE SYSTEMS COME AS YOU HINTED AT, REBUILT IN THE LAST SEVERAL DECADES -- WERE BUILT IN THE LAST SEVERAL DECADES, NOT A CENTURY AGO LIKE LONDON'S UNDERGROUND OR A CENTURY AGO LIKE PARTS OF THE PARIS METRO. WE SEE THE SUBWAY SYSTEMS WITH THE REALLY OLD AND THE DEEP, NARROW TUNNELS BUILD A CENTURY AGO, REALLY VICTORIAN ERA ARCHITECTURE IN THESE PLACES, STRUGGLING TO ADD AIR-CONDITIONING AND TO KEEP THOSE SYSTEMS COOL. THAT IS INCREASING AS IT GETS HOT AND GETS HOTTER OUTSIDE BUT ALSO THESE SUBWAY SYSTEMS THEMSELVES ADD HEAT TO THE TUNNEL. SURPRISINGLY, NONE OF THE HEAT COMES FROM JUST PUTTING THE BRAKES ON THE SUBWAY CARS THEMSELVES. JOUHMANNA: THE BIGGEST IRONY OF IT ALL IS I FINALLY FELT COOLER TEMPERATURE-WISE WHEN I CAME BACK TO DUBAI AFTER MY LONDON BREAK. JOE WERTZ, THANK YOU SO MUCH. THIS IS OUR TOP STORY OF THE DAY AND IT HAS TO BE THE TOP STORY OF THE DAY BECAUSE THE INTERNET HAS LIT UP AFTER TAYLOR SWIFT AND TRAVIS KELCE ANNOUNCED THEIR ENGAGEMENT. IT IS A LOVE STORY, EVERYBODY. THE NEWS HAS ALREADY CAUSED A BETTING BOOM ON SEVERAL WEBSITES AND SPARKED CERTAIN ARTICLES OF THE COUPLES CLOTHING TO SELLOUT. WHILE IT IS THE TALK OF THE TOWN AS VIEWERS IN RICHARDSON WOULD SAY, WHAT DOES IT -- WHAT STOOD OUT TO YOU? THE STAGE, DRESS, FLOWERS, ALL OF IT? > > A NUMBER OF THINGS STOOD OUT TO ME BUT DEFINITELY THE FIRST THING THAT CAUGHT MY EYE WAS THAT RAIN. EXPERTS ARE SAYING IT IS AN EIGHT TO 10 CARAT DIAMOND. INTERESTING THING I THINK HERE IS THAT REPORTERS ARE SAYING IT WAS BOUGHT FROM A COMPANY THAT SPECIALIZES IN ETHICAL GEMSTONES. SO IT IS A LOVE STORY FOR TAYLOR SWIFT BUT IS IT A LOVE STORY FOR THE DIAMOND INDUSTRY THAT HAS ALREADY SEEN A LOT OF TALK IN THE INDUSTRY OF THIS GROWING FEAR AROUND THE LAB DIAMOND MARKET AND ETHICALLY SOURCED DIAMONDS? WE SAW EARLIER THE SUMMER DEBEERS. IT IS THOUGHT PERHAPS TAYLOR SWIFT COULD SET A TREND PERHAPS OF ETHICALLY SOURCED STONES. THERE'S A LOT TO SEE THE DIAMOND MARKET IN THE JEWELRY MARKET MORE BROADLY. THAT IS SOMETHING THAT CAUGHT MY EYE FROM THE ANNOUNCEMENT. JOUHMANNA: NOT JUST THE DIAMOND MARKET. SHE IS A VERY, VERY SAVVY BUSINESSWOMAN. EVEN THE DRESS SHE WAS WEARING WAS SOLD OUT WITHIN MINUTES. WHAT ARE THE POTENTIAL COMMERCIAL OPPORTUNITIES FOR THIS COUPLE? > > I WAS AT THE OPPORTUNITIES ARE ENDLESS. PROBABLY JUST DOWN TO THE COUPLE THEMSELVES IN TERMS OF HOW MUCH THEY WANT TO COMMERCIALIZE THIS OPPORTUNITY. YOU MENTIONED THE DRESS FROM THE RALPH LAUREN. BUZZ ABOUT OTHER ITEMS OF CLOTHING SHE WAS WEARING INCLUDING A WATCH, HER SANDALS. THERE ARE PEOPLE TRYING TO GET THEIR HANDS ON ALL OF THOSE ITEMS. IF THERE'S ONE THING WE DO KNOW ABOUT TAYLOR SWIFT, SHE DOESN'T REALLY DO ANYTHING BY ACCIDENT. I THINK WE SHOULD ALL BE LOOKING AT THE TIMING OF THIS ANNOUNCEMENT CREATE A COMES SHORTLY AFTER SHE ANNOUNCED ANOTHER STUDIO ALBUM. AND ALSO TRAVIS KELCE THIS MORNING ANNOUNCING A PARTNERSHIP WITH AMERICAN EAGLE. SO PERHAPS THE COUPLE WILL BE LOOKING TO KINDA MAXIMIZE THE BUSINESS OPPORTUNITIES WITH REGARDS TO THIS ANNOUNCEMENT. JOUHMANNA: LOVE IT. I TOP STORY OF THE DAY. COMING UP, WE WILL BE SPEAKING TO THE CEO OF VOLVO CARS ON TARIFFS, PRODUCTION PLANS LIE THAT 10:40 A.M. LONDON TIME. THIS IS "BLOOMBERG." ♪

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Trump Slaps 50% Tariffs on India, Raising Tensions With Modi | The Pulse 8/27/2025

US President Donald Trump imposed a crushing 50% tariff on Indian goods to punish the country for buying Russian oil, upending a decades-long push by Washington to forge closer ties with New Delhi. The new tariffs, the highest in Asia, took effect at 12:01 a.m. in Washington on Wednesday, doubling the existing 25% duty on Indian exports. In other news, the Trump administration is reviewing options for exerting more influence over the Federal Reserve’s 12 regional banks that would potentially extend its reach beyond personnel appointments in Washington, according to people familiar with the matter. It follows Trump’s move to oust Fed Governor Lisa Cook. Today's guests: Maya Bhandari, Neuberger Berman CIO for Multi-Asset EMEA, Shumita Deveshwar, TS Lombard Chief India Economist, Alan Siow, Ninety One Emerging Markets Corporate Debt Co-Head (Source: Bloomberg)

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