- #HDFCBank tanks, drags #NiftyBank lower
- Asian Paints, ICICI Prudential Life to report earnings today
Find out where money is moving in the market today with Hiral Dadia and Agam Vakil on 'Hot Money'. #NDTVProfitLive
- Asian Paints, ICICI Prudential Life to report earnings today
Find out where money is moving in the market today with Hiral Dadia and Agam Vakil on 'Hot Money'. #NDTVProfitLive
Category
📺
TVTranscript
00:00 Markets at days low, downturn in the benchmarks continue for a second day on weak global cues
00:11 and the bearish sentiment further supported by a mixed December quarter performance by
00:16 Nifty Majors.
00:18 Meanwhile, mid-cap and small-cap indices declined.
00:23 However, outperformed benchmark indices Nifty Bank crashes nearly 4% now in trade, IT and
00:30 media stocks bucking the trend.
00:34 A dismal day of trade for HDFC Bank.
00:36 The stock plunges over 5% post Q3 numbers, losing over Rs 82,000 crore worth of market
00:43 cap in a single session.
00:47 And on our radar today, Asian Paints and ICICI Prudential are set to report their December
00:52 quarter numbers.
00:54 Stocks trade flat ahead of the number.
00:59 Today on NDTV Profit, we get your top voices from the World Economic Forum at Davos, where
01:05 top economists and corporates are speaking about the changing landscape of the business
01:11 world and global economy.
01:30 Hello and welcome.
01:31 This is Hot Money.
01:32 I am Agam Akhil and with me is Heeral Dadia, where we are looking at a lot of weakness
01:37 in markets right now, even as the benchmarks come off by around 1.6%.
01:43 A lot of that is on account of the entire banking index and the banking index, well,
01:50 that's down around well over 3.5%.
01:52 The last I checked, down 3.7% to be precise, trading their day's lows.
01:57 And this is a severe weakness as we speak, because what's really happening is that, well,
02:03 we are looking at a lot of weakness and on the whole, as far as the HDFC Bank is concerned,
02:11 that is currently also trending near day's lows.
02:14 Well, the question really is that can we expect at least a bout of short covering through
02:20 the course of the day?
02:22 That's something that we need to watch out for.
02:24 But well, we are looking at severe, severe weakness and to a certain extent, that may
02:29 have been compounded by the fact that it is also the weekly options expiry, which means
02:34 that a lot of traders out there may have been forced out of their long positions, thereby
02:40 precipitating well further shorts.
02:43 And that's where you have a lot of other momentum players who would have joined in the bandwagon
02:49 and sold even more and more.
02:51 And hence the kind of pressure that you are seeing as far as, well, HDFC Bank along with
02:55 the Nifty Bank is concerned.
02:57 Of course, we'll continue to track markets.
02:59 We don't have too much to speak for in the broader markets.
03:02 Broader markets are also falling, though not as much as the benchmarks, but well, the weakness
03:07 all the same.
03:08 And of course, as you can see on your screen, a lot of weakness on account of HDFC Bank.
03:14 On the whole, we are seeing, well, some amount of trouble seeping in.
03:20 The question really is whether or not we can in fact see some amount of recovery.
03:25 It's a question that perhaps could be answered towards the final hour of trade.
03:30 But for now, Hiral, bulls in trouble.
03:33 Absolutely, Agam.
03:34 The bulls are in trouble as we speak.
03:37 And no one really expected this to come this fast, a crash.
03:42 And Bank Nifty being down 4% is very interesting because whether it recoups this kind of cut
03:49 is what we need to wait and watch and see.
03:51 But let's just quickly pull up our Indigo on the screens.
03:54 We are picking up some commentary at the bottom of your screens right now as well.
03:58 What they have said currently is that the website has gone offline.
04:02 The mobile app and the contact center are also down and they're absolutely in flight
04:09 mode.
04:10 Now, that's something which is really interesting to hear, because what they've indicated is
04:15 that they're ensuring uninterrupted flight operations at all airports, which has been
04:20 a major concern right now with Indigo.
04:23 But overall, self baggage drop and digi Yatra will be unavailable as well.
04:28 And the passengers traveling during this period are requested to download and print their
04:34 boarding passes.
04:35 So some concerns coming in with regards to where Indigo aviation is concerned, they're
04:40 absolutely in flight mode.
04:42 But operations in terms of travel are on track.
04:46 That is what has been indicated so far by the company.
04:49 The stock not seeing a major reaction yet up around two tenths of a percent.
04:55 But let's quickly welcome in our guest Rajesh Agarwal, research head at AUM Capital and
04:59 also the stocks that we will be watching out for in today's day of trade.
05:05 You have HDFC Bank on the back of earnings.
05:07 ICICI Lombard, L&T Tech, LTI Maintree, Polycab, as well as GMR Airports.
05:13 These are the stocks that will be in focus on hot money in today's day of trade.
05:17 But before I head across to Rajesh, let me get in my colleague Vishy, you know, in terms
05:22 of HDFC Bank.
05:24 We've already gone through the numbers, Vishy, clearly.
05:28 The stock has slumped.
05:30 Numbers are disappointing.
05:32 If you could help us now understand the qualitative aspect of it as to what has worked, what has
05:37 not worked and what is in store for the investors from here on.
05:42 As far as HDFC Bank's results, the third quarter results are concerned, the bank has shown
05:48 some amount of operational issues specifically with respect to their deposit growth.
05:53 Now, the deposit growth sequentially has been about 2%, which is significantly lower than
05:58 what the bank had given a trajectory for.
06:00 They've added about 40 or 1000 crore worth of deposits during this three-month period.
06:06 This is lower than the 1 to 1.5 lakh crore worth of addition guidance that was given
06:12 by the bank.
06:13 Similarly, on the branch network, the bank is adding about 800 to 1000 branches during
06:18 this financial year.
06:19 This is lower than the 1500 branches sort of trajectory that the bank had given in the
06:23 past.
06:24 So, considering these two things, you would look at the NIM number.
06:28 Now, the NIM number has remained flat on a quarter-on-quarter basis about 3.4%.
06:33 But what analysts are watching out for and what they are actually raising as concern
06:37 is the future levers for NIM growth.
06:40 Now, at this point in time, two quarters since the merger with HDFC Limited was completed,
06:44 one would expect that the net interest margin would come back into form.
06:48 The bank is used to a net interest margin of close to 4%.
06:51 So, this 3.4% is a bit of a fall from that level.
06:56 One would have expected that the NIM number starts to rise up again from the second quarter
07:00 after the merger.
07:02 That has not happened.
07:03 This remains stable and future trajectory also remains questionable right now because
07:07 as you go after deposits, you will start spending more on the interest expenses and that will
07:13 essentially mean that your NIM will not grow as fast as you would like to.
07:18 On the operational expenses front as well, the bank's cost to income ratio remains high,
07:23 elevated over 40%.
07:25 And that is something that the bank has been trying to explain that they will bring it
07:29 down to close to 35%, but that has not yet translated in terms of the numbers.
07:34 We have also had a slightly negative surprise on the provisioning front during the third
07:38 quarter where HDFC Bank has said that 1200 odd crore worth of provision was made, a contingent
07:43 provision was made for the AIF portfolio.
07:46 That's an investment book.
07:47 It's got nothing to do with asset quality, but there is an issue if a bank has an AIF
07:52 portfolio which is under question.
07:54 So, we need to see how that pans out over the rest of the financial year.
07:58 This is going to be interesting to wait and watch as well as to how the rest of the financial
08:02 year pans out and what's in store in terms of FY25 as well.
08:06 Rajesh, overall, what is your view on HDFC Bank in terms of the quarterly performance
08:12 and what would you advise investors to do?
08:15 Good afternoon, Indira.
08:16 Good afternoon, Adam.
08:18 We are very bullish on HDFC Bank for a longer term horizon.
08:23 By longer term, I mean at least two years down the line because as we all know, there
08:27 is a huge merger that has taken place and things to pan out in a positive way would
08:32 take some time.
08:34 Positive side is asset quality is stable.
08:36 There are subsidiaries like Lai, BBMC, Airgos, HDFC Securities, all are doing very well.
08:42 Q3 numbers were a bit disappointing and I am no doubt on that, but we should not forget
08:48 that the FAT rose by 33%.
08:52 NII, that's Net Interest Income grew by 24% and Net MBA went down to 0.31% from 0.33%.
09:01 And valuations are on a very extremely attractive footing, I would say, when you compare it
09:06 to historical averages of HDFC Bank.
09:09 This is a bank which is going to report 80,000 odd crores of profit from next year onwards
09:15 and around $50 billion of loan every year and with a very high risk management and credit
09:24 underwriting.
09:25 We should not be concerned about one quarter or two quarter or three quarter numbers because
09:30 a merger of this size takes some time to establish and I think any long term investor looking
09:36 for a time horizon of 12 to 18 months should go ahead and buy.
09:39 So, 1,500 would be a very, very attractive level to accumulate the stock.
09:45 Okay.
09:46 Well, that's as far as HDFC Bank goes and under pressure for now to say the least and
09:52 a little bit of an understatement.
09:54 But we move on to ICICI Lombard and the third quarter profits jumped 22%.
10:01 But it did fall short of analysts' expectations and we spoke to the company in terms of what
10:06 we can expect going forward.
10:07 They did speak about the motor segment.
10:10 This is what they had to say.
10:11 Listen in.
10:12 I think if you look at new vehicle sales across categories, whether it is private car, whether
10:19 it is two wheeler or for the matter of fact, commercial vehicles, I think we are seeing
10:25 a lot of positive momentum getting played out.
10:28 A lot of it is also to do within the context of the festive demand as well as rural pickups.
10:34 So, across the three categories, insofar as the market momentum is concerned, that's looking
10:38 very, very positive.
10:40 Well, that's as far as what the management has to say about the company.
10:45 And at the moment, we are seeing an advance of around 6.5% as we speak.
10:52 That's on ICICI Lombard.
10:55 The question really is that if market participants do like this one, where do we go from here
11:01 and what do we do?
11:02 So, Rish, your view on ICICI Lombard in general and also perhaps your overall view on the
11:07 general insurance space as well.
11:09 How are you looking at things?
11:11 See, ICICI Lombard's numbers were very good.
11:15 Pat rose by 22% revenue by around 15%.
11:18 Even the solvency ratio increased.
11:21 Numbers were very exciting, I would say, and we have a target of around 1600 rupees in
11:26 the next six months or so.
11:28 As far as the entire space is concerned, we are more bullish on the PSU side where we
11:33 like GICRE, which is on a very strong footing, giving out good numbers, the ratios are good,
11:40 and even the valuations are very attractive when we compare to other non-life insurance
11:45 players.
11:46 So, we would first recommend going forward, buying in GICRE, and the second one would
11:52 be ICICI Lombard in the pecking order.
11:55 Right.
11:56 So, that's with regards to where the insurance sector is concerned as well.
12:02 Agam, interesting moves that are coming in the BFSI space, absolutely, right?
12:07 Yeah, 100%.
12:08 BFSI, fortunately for today, there's been a lot of pressure as far as the BF space is
12:17 concerned.
12:18 I, on the other hand, is bucking the trend and hopefully it keeps and balances things
12:23 out when we continue to keep an eye on not just the general insurance theme, but also
12:27 on the life insurance theme.
12:29 But on that note, we slip into a short break, but on the other side, we get you a lot more
12:34 in terms of stocks.
12:35 Stay tuned in.
12:35 [MUSIC]
12:45 [MUSIC]
12:55 [MUSIC]
13:05 [MUSIC]
13:15 [MUSIC]
13:25 [MUSIC]
13:35 [MUSIC]
13:45 [MUSIC]
13:55 [MUSIC]
14:05 [MUSIC]
14:15 [MUSIC]
14:40 [MUSIC]
15:05 [MUSIC]
15:30 [MUSIC]
15:55 [MUSIC]
16:20 [MUSIC]
16:30 Welcome back.
16:36 You're watching Hot Money.
16:37 Let's shift focus to L&T Technology.
16:39 Now, the company reported numbers.
16:41 It's interesting to see how the company has reaffirmed its revenue growth guidance as
16:46 well, the stock is seeing gains of 2.5%.
16:48 In fact, we did speak to the company's managing director and CEO, Amit Chadha, to understand
16:54 the rationale behind the same and what's in store.
16:56 First, let's listen in to a bite of that conversation.
16:59 We've been continuing to have deal wins over the last few quarters on a consistent basis.
17:07 Last two quarters, all the segments have grown sequentially for us, and you can see it's
17:13 fairly secular growth, and therefore we are fairly comfortable with that 17 to 18.5.
17:19 There is a certain comfort in that 17.5++ range, and we are working towards the rest
17:25 of it, and that's why we are retaining our guidance and we continue to work on it.
17:29 The quarter is still in play.
17:31 Right, so that's with regards to L&T Technologies.
17:34 Rajesh, overall, what's your view on L&T Technologies taking into consideration the
17:39 way Q3 numbers have been overall as well, from Tier 1 to Tier 2 companies so far, what
17:45 would your recommendation be?
17:48 We have a whole recommendation at this point of time because of the kind of run-up it has
17:53 seen in the recent past.
17:55 But if it falls around Rs.4,800-5,000 at our level, that time it would be a good point
18:01 to accumulate.
18:02 The numbers have been quite exciting, I would say.
18:04 Margins have improved and the deal wins have been very good in the last two quarters.
18:08 And the best part is there is growth across sectors, across verticals of the company.
18:13 And the future looks good considering the fact that the management has continued with
18:19 their guidance.
18:20 So I think buying around a lower level would be a good strategy to pay into this.
18:24 For a long-term portfolio, it's a hold.
18:27 All right, so we move on and talk about the aviation space.
18:30 And while we have addressed interglobe aviation through the course of the day, my colleague
18:34 Pragati is joining us to give us more details after the latest updates and in terms of what
18:40 she has made from her sources.
18:42 Pragati, what do you have for us?
18:44 Good afternoon.
18:45 Hi, Agam.
18:46 Good afternoon.
18:47 You're absolutely right.
18:48 So as we have already reported and flashed on our screens for our viewers, IndiGo's website
18:52 is down.
18:53 In fact, not just website, the mobile app, contact center, all are offline.
18:56 And what is being flashed on the screen is that we are on flight mode.
19:00 That is the message that is coming from IndiGo to all the customers.
19:04 Now, while the official message says that they are ensuring uninterrupted flight operations
19:11 and people can go to the airport, self baggage drop counters and all, they will not be available
19:16 and they've been asked to carry a printed format of the boarding pass.
19:20 Sources have told us that there's nothing much to worry about as this entire offline
19:25 that the system has gone.
19:27 It's a part of the regular upgradation process.
19:30 There's nothing else to worry about.
19:32 While we understand that lately there has been a lot of times when IndiGo has made headlines,
19:37 as of now, sources are confirming to us that there's nothing to worry about.
19:40 It's a part of the regular upgradation that is happening.
19:43 In fact, even for the staff, that is the IndiGo staff who travels there, even for them, the
19:49 systems are entirely offline.
19:50 They are not able to access it.
19:52 Sources have also told us that as of this morning, the internal communication system
19:58 that IndiGo has for the staff, especially the pilots, that was also put offline from
20:04 about 7 a.m. to 11 a.m.
20:06 And that was also a part of the upgradation.
20:08 While the upgradation has happened, the internal system for the pilots is now working again
20:15 and they are able to get all the updates for their flying, for their schedules and other
20:21 things.
20:22 However, for the customers, it is still offline and sources are telling us that while even
20:27 IndiGo has not communicated an exact time, according to them and the knowledge that they
20:32 have internally, it might last till at least today afternoon.
20:37 So we don't know as to when it will come back online, but it is expected that it will last
20:42 at least till afternoon.
20:44 So we'll bring you more updates as we have them.
20:47 Prakriti, thank you so much for getting us all the news around Interglobe Aviation with
20:52 the latest, of course, updates in this case and a lot more challenges lay ahead for India's
20:58 largest aviation company.
20:59 But Rajesh, your quick view on Interglobe Aviation, there's been a severe backlash,
21:04 at least on social media and not without reason, of course, with the kind of problems that
21:10 the company has faced of late.
21:13 That said, keeping all these things aside, your view on this particular counter?
21:18 At this point of time, considering the valuation, I think it's overstretched.
21:22 One should book profit, not to forget the fact that crude has started inching up at
21:27 any moment.
21:28 A crude beyond $85-$90 would be a problem with aviation companies as a whole.
21:34 As far as Interglobe, that IndiGo is concerned, I think at this point of time, one should
21:39 sell, buy again at around $2700-$2800.
21:42 Well, there you have it.
21:44 That's your view on Interglobe Aviation.
21:46 But on that note, it's time to get into another break.
21:49 But we'll be right back.
21:50 And with hot money, stay tuned in.
21:53 [MUSIC PLAYING]
21:56 [MUSIC PLAYING]
22:00 [MUSIC PLAYING]
22:03 [MUSIC PLAYING]
22:07 [MUSIC PLAYING]
22:10 [MUSIC PLAYING]
22:14 [MUSIC PLAYING]
22:18 [MUSIC PLAYING]
22:22 [MUSIC PLAYING]
22:26 [MUSIC PLAYING]
22:30 [MUSIC PLAYING]
22:35 [MUSIC PLAYING]
22:38 [MUSIC PLAYING]
22:42 [MUSIC PLAYING]
22:46 [MUSIC PLAYING]
22:50 [MUSIC PLAYING]
22:54 [MUSIC PLAYING]
22:58 [MUSIC PLAYING]
23:03 [MUSIC PLAYING]
23:06 [MUSIC PLAYING]
23:10 [MUSIC PLAYING]
23:14 [MUSIC PLAYING]
23:18 [MUSIC PLAYING]
23:22 [MUSIC PLAYING]
23:26 [MUSIC PLAYING]
23:31 [MUSIC PLAYING]
23:34 [MUSIC PLAYING]
23:38 [MUSIC PLAYING]
23:42 [MUSIC PLAYING]
23:46 [MUSIC PLAYING]
23:50 [MUSIC PLAYING]
23:54 [MUSIC PLAYING]
23:59 [MUSIC PLAYING]
24:02 [MUSIC PLAYING]
24:06 [MUSIC PLAYING]
24:10 [MUSIC PLAYING]
24:14 [MUSIC PLAYING]
24:18 [MUSIC PLAYING]
24:22 [MUSIC PLAYING]
24:27 [MUSIC PLAYING]
24:30 [MUSIC PLAYING]
24:34 [MUSIC PLAYING]
24:38 [MUSIC PLAYING]
24:42 [MUSIC PLAYING]
24:46 [MUSIC PLAYING]
24:50 [MUSIC PLAYING]
24:55 [MUSIC PLAYING]
24:58 [MUSIC PLAYING]
25:02 [MUSIC PLAYING]
25:06 [MUSIC PLAYING]
25:10 [MUSIC PLAYING]
25:14 [MUSIC PLAYING]
25:18 [MUSIC PLAYING]
25:23 [MUSIC PLAYING]
25:26 [MUSIC PLAYING]
25:30 [MUSIC PLAYING]
25:34 [MUSIC PLAYING]
25:38 [MUSIC PLAYING]
25:42 [MUSIC PLAYING]
25:46 [MUSIC PLAYING]
25:51 [MUSIC PLAYING]
25:54 [MUSIC PLAYING]
25:58 [MUSIC PLAYING]
26:02 [MUSIC PLAYING]
26:06 [MUSIC PLAYING]
26:10 [MUSIC PLAYING]
26:14 [MUSIC PLAYING]
26:19 [MUSIC PLAYING]
26:22 [MUSIC PLAYING]
26:26 [MUSIC PLAYING]
26:30 [MUSIC PLAYING]
26:34 [MUSIC PLAYING]
26:38 [MUSIC PLAYING]
26:42 [MUSIC PLAYING]
26:47 [MUSIC PLAYING]
26:50 [MUSIC PLAYING]
26:54 [MUSIC PLAYING]
26:58 [MUSIC PLAYING]
27:02 [MUSIC PLAYING]
27:06 [MUSIC PLAYING]
27:10 [MUSIC PLAYING]
27:15 [MUSIC PLAYING]
27:18 [MUSIC PLAYING]
27:22 [MUSIC PLAYING]
27:26 [MUSIC PLAYING]
27:30 [MUSIC PLAYING]
27:34 [MUSIC PLAYING]
27:38 [MUSIC PLAYING]
27:43 [MUSIC PLAYING]
27:46 [MUSIC PLAYING]
27:50 [MUSIC PLAYING]
27:54 [MUSIC PLAYING]
27:58 [MUSIC PLAYING]
28:02 [MUSIC PLAYING]
28:06 [MUSIC PLAYING]
28:11 [MUSIC PLAYING]
28:14 [MUSIC PLAYING]
28:18 [MUSIC PLAYING]
28:22 [MUSIC PLAYING]
28:26 [MUSIC PLAYING]
28:30 [MUSIC PLAYING]
28:33 [MUSIC PLAYING]
28:36 [MUSIC PLAYING]
28:40 [MUSIC PLAYING]
28:44 [MUSIC PLAYING]
28:48 [MUSIC PLAYING]
28:52 [MUSIC PLAYING]
28:56 [MUSIC PLAYING]
29:01 [MUSIC PLAYING]
29:04 [MUSIC PLAYING]
29:08 [MUSIC PLAYING]
29:12 [MUSIC PLAYING]
29:16 [MUSIC PLAYING]
29:20 [MUSIC PLAYING]
29:24 [MUSIC PLAYING]
29:29 [MUSIC PLAYING]
29:32 [MUSIC PLAYING]
29:36 [MUSIC PLAYING]
29:40 [MUSIC PLAYING]
29:44 [MUSIC PLAYING]
29:48 [MUSIC PLAYING]
29:52 [MUSIC PLAYING]
29:57 [MUSIC PLAYING]
30:00 [MUSIC PLAYING]
30:04 [MUSIC PLAYING]
30:08 [MUSIC PLAYING]
30:12 [MUSIC PLAYING]
30:16 [MUSIC PLAYING]
30:20 [MUSIC PLAYING]
30:25 [MUSIC PLAYING]
30:28 [MUSIC PLAYING]
30:32 [MUSIC PLAYING]
30:36 [MUSIC PLAYING]
30:40 [MUSIC PLAYING]
30:44 [MUSIC PLAYING]
30:48 [MUSIC PLAYING]
30:53 [MUSIC PLAYING]
30:56 [MUSIC PLAYING]
31:00 [MUSIC PLAYING]
31:04 [MUSIC PLAYING]
31:08 [MUSIC PLAYING]
31:12 [MUSIC PLAYING]
31:16 [MUSIC PLAYING]
31:21 [MUSIC PLAYING]
31:24 [MUSIC PLAYING]
31:28 [MUSIC PLAYING]
31:32 [MUSIC PLAYING]
31:36 [MUSIC PLAYING]
31:40 Thanks for tuning into WorldView.
31:43 I'm your host, Neeraj Shah.
31:45 Our guest today is the Global Head of Macro and Strategic Asset
31:48 Allocation at Fidelity International.
31:50 His note on Outlook 2024, he writes that the base case for 2024
31:56 is a cyclical recession.
31:58 Amongst other things, one of the more important things to my mind
32:01 that he's writing is that while the other factors have been accounted--
32:04 this is not his writing, but I'm saying that while the other factors
32:07 have been accounted, his view on how there is going to be a likely
32:11 pickup in refinancing needs at a time of credit tightening
32:15 across the board is something that might be all pervasive
32:18 for all corporations across the world.
32:20 Let me welcome in on the show Salman Ahmed.
32:22 Thank you so much for taking the time out and being with us.
32:25 Thank you, Neeraj. Thank you for having me.
32:27 Pleasure is entirely ours.
32:28 Salman, so let's start with this particular aspect
32:32 and that's the-- I mean, on WorldView.
32:35 And what is your base case because you're not present for scenarios,
32:40 but I would like to start with the base view.
32:42 Sure. So basically, we're thinking as we go into 2024,
32:47 and in fact, now we are in 2024 over the last few days.
32:51 So we think that ultimately the end of the cycle will be a cyclical recession.
32:57 But the path to get to that cyclical recession passes through soft landing,
33:01 which is the regime we are in right now.
33:03 In fact, the Fed's signal pivot, if you will, in December was a big step
33:10 in that direction where they started embracing the soft landing narrative itself.
33:16 But we think that this regime of soft landing will take time to dissipate,
33:20 but ultimately it will go into a cyclical recession,
33:25 especially for the US economy, as you rightly mentioned,
33:28 as refinancing has come through because they have been quite subdued in 2023.
33:33 So soft landing now and then cyclical recession later is our base case.
33:38 A bit of the Fed first before I get to the economic implications thereof.
33:44 Did you make too much of the minutes that got released recently?
33:49 And you know, Fed officials often do what they do best,
33:52 which is confuse people because the comments are all over the place.
33:56 They are very conflicting in nature.
33:58 And what happens in the meeting at times gives a slightly different impression
34:04 from what the minutes might show as well.
34:07 So are you of the belief that the base case that the market has
34:10 or the dot plot is showing is what the turnout will be?
34:14 And do you have a sense of when the Fed easing starts off?
34:18 Is it earlier in the year? Is it later in the year?
34:20 Is it difficult to say?
34:22 So I completely firstly agree that they are good at creating confusion into the markets.
34:28 And if you look at the forecasting record of the dot plot,
34:31 because the dot plot moves around a lot itself, is not that great.
34:35 But where the dot plot is important is that it gives us a signal about the Fed's reaction function.
34:43 So the reaction function is basically based on the meeting.
34:47 And then obviously the minutes are a bit, you know,
34:50 reeling back some of the dimension which came out is that we will change the stance,
34:55 you know, well before inflation reaches 2 percent, their 2 percent target.
35:01 So that's something which I think is the most important message from it.
35:06 But yes, there is noise around that message you mentioned.
35:10 So our thinking is that they don't cut in March because as they are signaling this dovishness,
35:16 you know, financial conditions are easing so that in the short term may strengthen the data.
35:22 So they may have to go later, but may have to go more dramatically because of this refinancing,
35:29 because of the lag effect of tightening a monetary policy.
35:32 So we are not in the March camp. We think that March is too soon.
35:36 And we think they will reel back from that initial thinking which came through.
35:40 But ultimately, they will pivot and they will cut once they see signs of weakness in growth, especially.
35:46 Got it. So how do, OK, how do asset classes react to this possibility of soft landing first?
35:55 And maybe they come to a realization that eventually it's a cyclical recession.
35:58 But since they have to cross the soft landing patch first, how do you think asset classes,
36:03 both on the fixed income side as well as the equity side, react to the soft landing scenario that it unfolds,
36:10 whether it unfolds in the first half or sometime early second half?
36:14 So we saw in December a very big rally in everything. So bonds rallied, equities rallied.
36:20 So that's where you see the soft landing narrative being priced in very quickly.
36:25 We have seen some reversals to that at the start of the year.
36:28 I think that's more to do with positioning and technical correction and liquidity is being low as well.
36:33 But that's the kind of environment where, you know, you see basically equities being supportive and bonds, you know, being supported as well.
36:41 So we think that can continue, although December rally was very strong and happened very, very quickly.
36:48 You may see, as I mentioned, some corrections around that.
36:51 But ultimately, we think that equities can become more richer.
36:55 And then once that, you know, valuations become completely disconnected, where the path of the economy is,
37:00 that's where I think the vulnerability starts to take place.
37:03 But right now, it's much more to do with positioning and technicals after a very strong rally,
37:07 which was led by the soft landing narrative we saw in December.
37:11 So, Net Salman, for what you are saying also is that much of what we saw post the COVID lows of 2020,
37:20 which is central banking action and central banking tones driving what risk assets do, that continues well into 2024.
37:29 There might be a disconnect between what the economy is doing,
37:32 but the risk assets will effectively move to the tune or the march of what the Fed and other central bankers are saying and doing.
37:40 I completely agree with that assessment.
37:43 And that's what we, you know, calibrate in our policy responses to these different scenarios.
37:49 And we saw that in December, how the market latched on to the Fed's supposed pivot.
37:55 So 2024 is another year where policy is going to be very important.
37:59 We have elections, of course, later in the U.S., especially in November.
38:05 That's going to increase the political noise.
38:08 Policy is going to be, again, come under a lot of scrutiny.
38:12 So this is going to be a year of politics and policy.
38:15 So the two Ps are going to be very important for markets.
38:18 Got it. There is also this growing permanence of geopolitics in our lives, whether we like it or not.
38:25 I mean, 2022 was one conflict.
38:28 2020, 2023 is two. God forbid.
38:32 But 2024 might even see three of South China Sea or a larger conflict within the Middle Eastern region as well,
38:39 because of the Israel-Hamas war maybe broadening out as well.
38:43 Do these demands,