Why AI Stocks Are Ignoring Bond Market Warnings

I THINK WE DO NOT HAVE ANY MORE FIGHTING AGAINST HUMANS. THERE WILL BE BIGGER ISSUES OF HUMAN AGAINST SUPER INTELLIGENCE. IF THE SUPER INTELLIGENCE BECOMES SO SMART. FROM BAD USAGE BY BAD HUMANS. THIS CAN BECOME SUPER DANGEROUS. EVEN AS ONE OF THE BIGGEST BELIEVERS WARNS OF THE DANGERS OF SUPER INTELLIGENCE, INVESTORS CONTINUE TO POUR INTO THE TRADE. IGNORING HIGH BOND YIELDS. WE ARE DIVING DEEPER INTO THE STORIES THAT MATTER WITH CRUCIAL CONTEXT AND SHARP ANALYSIS. ASIAN STOCKS ADVANCED AFTER SOFTER U.S. JOBS DATA. EASING CONCERNS THAT THE FED MIGHT NEED TO KEEP RAISING RATES. THERE HAVE BEEN GAINS ACROSS THE REGION. BOLSANARO FINISHES AHEAD OF LULA IN THE FIRST ROUND OF THE BRAZILIAN ELECTIONS. STRUGGLING TO CONVINCE INVESTORS DESPITE INDIA'S CLOSE TO 8% GROWTH RATE. RISING OIL PRICES AND RATE HIKE EXPECTATIONS CONTINUE TO WEIGH ON STOCKS. FROM SUPPLY CHAINS TO PRICING, EL NIÑO IS BECOMING A BUSINESS CHALLENGE FOR THE TEA AND COFFEE INDUSTRY. WE SPOKE WITH A COFOUNDER OF OUTSOURCING RISK, DISRUPTION, AND OPERATING A MORE FRAGMENTED GLOBAL ECONOMY. ♪ A SOFTER U.S. JOBS REPORT IS GETTING INVESTORS FRESH CONFIDENCE. THAT THE FED CAN SAMPLE THIS MONTH. THAT IS SENT TRADERS BACK INTO TECHNOLOGY STOCKS, SETTING THE TONE FOR TRADING ACROSS ASIA, WHERE JAPAN AND TAIWAN ARE LEADING GAINS. THIS IS MEAN MARKETS ARE NO LONGER WORRIED ABOUT BOND YIELDS WERE AT MULTIYEAR HIGHS. OUR MARKETS REPORTED JOINS US NOW. WHAT IS DRIVING THE LATEST A SPELL OF TECHNOLOGY OPTIMISM DESPITE RISKS FLASHING ON THE BOND MARKET? IT IS THE GROWTH OF THE TECHNOLOGY SPACE. VENDORS, BOND YIELD DEVELOPERS. IF WE HAVE A EARNINGS GROWTH IN THIS REALM, IT REALLY DOES NOT MATTER THAT MUCH. WE HAVE SEEN A LOT OF THAT IN JAPAN TODAY. WE HAVE COMMENTARY THAT AI DEMAND IS SKYROCKETING. WE HAVE OTHER SUPPLY CHAIN NAMES FALLING. WE SEE ALL OF THE PASSIVE COMPONENTS. SOFTBANK, THE BIG DELTA ON THE AI BOOM. SHAKING OFF SOME RECENT CREDIT CONCERNS. YOU CAN SEE HOW WIDESPREAD THE GAINS ARE. ACROSS ASIA. THAT IS LED BY STOCKS SPECIFIC NEWS. WE HAVE SPECULATION THAT TSMC WILL BE UNDERGOING A PROJECT. THEY SPEND SO MUCH MONEY DOWNSTREAM. WE ARE SEEING THE SIZE OF THE MOVES IN THE TECH SPACE. WE HAVE PRINTED CIRCUIT BOARD MATERIALS. VERY BIG COMPONENTS. FLIP THE BOARD AND WE CAN SEE THAT IT IS NOT ALL ONE WAY. WE DO SEE SOME DIFFERENTIATION IN THE MARKET. WE HAVE SEEN SINGLE STOCK VOLATILITY, OFTEN VERY HIGH. THAT MEANS IT IS ONLY TECH. IT IS NOT REALLY REFLECTED IN THE KIND OF PANIC THAT WE SAW IN JULY. A LOT OF THAT PANIC HAS COME OUT OF THE MARKET. WHAT IS FALLING OFF IS THE REST OF THE MARKET. HASLINDA: IT IS PROBABLY BRAVE TO SAY THAT BOND YIELDS DO NOT MATTER ANYWAY. WHERE IS THE STRESS FROM THE BOND MARKET SHOWING UP IN STOCKS? AND ABSOLUTELY MATTERS EVERYWHERE ELSE. WHETHER YOU ARE TALKING ABOUT CHINA OR INDIA OR FINANCIALS OR CONSUMERS. IT HAS COMPLETELY COLLAPSED. WE HAVE SEEN A LOT OF DECLINERS. UNDERNEATH A VERY HIGH THE LEADERSHIP OF TECHNOLOGY. THERE IS A LOT OF PAIN IN THE MARKET. YOU CAN SEE THE SECTOR BREAKDOWN OF THAT. CONSUMER NAMES ON THE WAY DOWN. THEY HAVE ALSO DRAGGED TO THE REST OF THE MARKET WITH IT. INCLUDING FINANCIALS THAT WERE BENEFITING EARLIER. REALLY STARTING TO CRACK ON THE ABILITY. YOU CAN FLIP THE BALL. THAT'S HOW IT WILL PLAY OUT. THE BIG MARKETS ARE REALLY STRUGGLING HERE. THEY CONTINUE TO SLIDE. HASLINDA: THEY HAVE BEEN TRYING TO FIND THAT CATALYST FOR SOME TIME NOW. WE HAVE YIELDS AT MULTI-DECADE HIGHS. TEXAS SO WHAT. THEY ARE GROWING BY 50%. WE ARE TALKING ABOUT 70% EARNINGS GROWTH. THEY WILL GROW AT TRIPLE DIGITS. YOU ARE TALKING ABOUT NVIDIA AT THE EPICENTER. LOTS OF CLIENTS HAVE BEEN ASKING. HOW CAN IT BE A BUBBLE? COMPARE THAT TO THE POSTER CHILD OR THE INTERNET BOOM. CISCO. THAT WAS BEFORE THE COLLAPSE. TRADING AT 100 TIMES. THERE ARE STILL TAILWINDS HASLINDA:. THE QUESTION IS DO YOU GO ALL IN? THAT HAS BEEN THE TRICK FOR A LOT OF PEOPLE. YOU STILL DO THAT RIGHT NOW? THIS IS WHAT WE CALL IT BARBELL. OVER A MARKET CYCLE. NOT RELEVANT. THERE IS A LOT OF VOLATILITY. THEY CAN REALLY CONTROL THE OVERALL VOLATILITY. ON THE OTHER END OF THE PORTFOLIO. THEY CAN GIVE YOU CONSISTENT INCOME. AT YIELDS OF 5%. IT IS VERY INTERESTING. HEDGE FUNDS ARE THE OTHER. HASLINDA: BEFORE WE TALK ABOUT FIXED INCOME OF THE OTHER ASSET CLASSES, IS THERE A YIELD LEVEL THAT WOULD EVENTUALLY BREAK IT? > I THINK IT IS ALREADY BREAKING. A LARGE PART OF THE EQUITY MARKET. IF YOU ARE GROWING IN SINGLE DIGITS, YOU'RE VULNERABLE. HASLINDA: YOU TALK ABOUT HOW THE FIXED INCOME MARKETS ARE PRETTY INTERESTING. THE ABSOLUTE YIELD IS NORTH OF 5%. YOU ARE GETTING NORTH OF 6%. TO ME THAT IS IN THE LAST TWO DECADES. WE LIKE IT AS A STABILIZER OF RETURNS FOR THE ENTIRE PORTFOLIO. HASLINDA: SO LOCK IT IN AS QUICKLY AS POSSIBLE? WE WORRY IN THE FUTURE. THE MATURITY. WE THINK THAT IS THE SWEET SPOT. DO NOT GO THAT LONG. THE U.S. TREASURY WILL HAVE TO ISSUE A LOT OF BONDS. HASLINDA: ARE YOU NOT TAKING NOTICE OF THE MESSAGING OR THE WARNING THAT IS BEING SENT BY THE BOND MARKET? IF YOU TAKE A LOOK AT JUNK-BONDS, THE CHUNKY IS TO ONE'S HAVE A VOLATILITY. IT IS SOMETHING WE ARE NOT SEEING SINCE THE CRISIS. THE WAY TO POSITION OURSELVES IS THROUGH QUALITY. IN THE FIXED-INCOME SPACE. WE LIKE INVESTMENT GRADE. IF YOU WANT TO HAVE A LITTLE BIT MORE YIELD. THIS WILL BE THE SWEET SPOT. THAT IS WHERE THEY ARE LITTLE BIT MORE EXPOSED. THE BEST IN CLASS TECHNOLOGIES. HASLINDA: OIL PRICES REMAIN ELEVATED. WHY IS THAT NOT IMPACTING SENTIMENT? THAT IS A GOOD QUESTION. IN THE PAST WHENEVER THERE HAS BEEN A CRISIS, THE TRANSMISSION OF VOLATILITY IS THROUGH THE OIL PRICE. TODAY IT HAS GONE UP. WE HAVE NOT YET SEEN A MAJOR BANK ON FINANCIAL ASSETS. TECHNOLOGY WAS THE DRIVER. BECAUSE OF THE EARNINGS. WE ARE OF THE BELIEF AS WELL THAT AI IS DISINFLATIONARY IN THE LONG TERM. WHAT THE CENTRAL BANKS ARE DOING TODAY IS REALLY TO TACKLE AND CURB THE SHORT-TERM PRESSURES. WE DO SEE ANOTHER RATE HIKE OVER THE NEXT SIX MONTHS. BEFORE THE FED PICKS UP THE INTEREST RATE CYCLE. AI WILL BE DISINFLATIONARY. THERE IS THAT OUTPUT PRESSURE ON RATES. BUT I DON'T THINK WE ARE FAR AWAY FROM THE PEAK. HASLINDA: HANG TIGHT. MORE AHEAD. WITH THE CHIEF INVESTMENT OFFICER AT DBS GROUP. STILL TO COME, THE BRASILIA ELECTION DEFIES THE POLLS. THERE WILL BE A RUNOFF LATER THIS MONTH. ♪ ♪ HASLINDA: WELCOME BACK. CLAUDIO BOLSONARO HAS A SURPRISE LEAD OVER HIS OPPONENT IN THE BRAZILIAN PRESIDENTIAL ELECTION. WITH CONSERVATIVE ALLIES DOMINATING. HE TAPS THE DAY BY TAKING ABOUT 47% OF THE VOTE. WITH COUNTING AND NEARLY COMPLETE. THEY WILL FACE A RUNOFF ON OCTOBER 25. CLOSING THE GAP COULD PROVE DIFFICULT FOR THE VETERAN PRESIDENT. MORE THAN 20 MILLION PEOPLE DID THIS. 28 MILLION PEOPLE, ACTUALLY. I WOULD LIKE TO TELL THESE PEOPLE THAT VOTING IS NECESSARY. YOU ARE DECIDING THE FUTURE OF THE COUNTRY. HASLINDA: FOR MORE, OUR BRAZIL COUNTRY CHIEF JOINS US NOW. I THINK IT WAS ALWAYS GOING TO BE A CLOSE RACE. LULA WAS SUPPOSED TO HAVE THE EDGE. WHAT HAPPENED HERE? WE ARE ASKING OURSELVES THE SAME THING. WE HAD THREE POLES. THEY ALL SHOWED THE GAP WAS VERY NARROW. WE WERE EXPECTING THE SELECTION TO GO TO A RUNOFF. WHICH IS HAPPENING THREE WEEKS FROM NOW. I THINK THIS GIVES A VERY GOOD INDICATION GIVES A VERY BIG BOOST TO THE RIGHT WING IN BRAZIL. FOR ALL OF HIS ALLIES. ACROSS THE COUNTRY. THEY ALSO GOT VERY STRONG VOTING TODAY. WE ARE TALKING ABOUT GOVERNORS ACROSS BRAZIL. IN SEVERAL STATES. SENATORS INCLUDING HERE. THE BIGGEST POPULATION IN THE COUNTRY. OVER 40 MILLION PEOPLE. TWO OF THE SENATORS ELECTED ARE HIS ALLIES. AT THE END OF THE DAY IT HAS BEEN A VERY LONG TIME FOR US HERE IN BRAZIL. IT IS FAIR TO SAY THIS WAS IT VERY STRONGLY FOR THE RIGHT. HASLINDA: A LONG DAY INDEED FOR YOU. . HE TALKED ABOUT THE STRENGTHS OF THE BRAZILIAN RIGHT-WING MOVEMENT. WHAT IS REALLY DRIVING THAT? THAT IS A GOOD POINT. THERE HAS BEEN A LOT OF DISCUSSION ABOUT HIS CLOSE TIES WITH PRESIDENT TRUMP. THE FORMER PRESIDENT WAS IN THE U.S. FOR OVER TWO YEARS. HIS FATHER WAS THE PRESIDENT IN 2023. HE WAS CONVICTED LAST YEAR BY THE SUPREME COURT FOR IN ATTEMPTED TO. WHEN HE ACTUALLY DID DIE THE RESULTS OF THE PREVIOUS ELECTION THAT HE LOST. WE HAVE A SCENARIO THAT PUTS HIM MUCH CLOSER TO THE U.S. THAN WHAT WE HAD BEFORE. IF YOU LOOK AT THE REGION, IF YOU LOOK AT THE YEAR SO FAR IN LATIN AMERICA, WE HAD ELECTIONS IN COLUMBIA, CHILE, PERU. IN ALL OF THIS PLACES THE WINNERS WERE FROM THE RIGHT WING. THEY WERE CLOSE TO TRUMP. THERE IS A LARGE BLUE BELT INCREASING. THIS IS VERY GOOD NEWS FOR PRESIDENT TRUMP. AND FOR ALL OF THAT IS EXPECTING TO SEE CHANGES IN THE REGION. HASLINDA: INTERESTING POINT. I WANT TO BRING IN CHINA BECAUSE IT IS THE LARGEST TRADING PARTNER FOR BRAZIL. WHAT COULD THAT MEAN IN TERMS OF THEIR RELATIONSHIP? I THINK THAT IS ONE OF THE MAIN QUESTIONS THAT WE NEED TO ASK. HIS LEAD GIVES US A VERY GOOD INDICATION THAT HE WILL BE THE FAVORITE TO GET THE VOTES THAT DID NOT GO TO EITHER CANDIDATE. WE HAD BOTH OF THEM EXPECTED TO GO TO A RUNOFF. WE HAD SEVERAL OTHER CANDIDATES THAT GAINED LESS THAN 4% OF THE TOTAL VOTES. THOSE CANDIDATES ARE LEAVING FOR THE RIGHT AS WELL. HE IS EXPECTED TO LURE A LOT OF THOSE VOTES. AT THE END OF THE DAY IF WE SEE ANY INDICATION GOING THE WAY IT IS EXPECTED, WE SHOULD ASK WHAT IS HIS STANCE TOWARD CHINA? LU HAS BEEN A STRONG LEADERLA. HE IS VERY CLOSE TO CHINA. HE IS VERY CLOSE TO PRESIDENT XI . HE HAS BEEN MAKING THAT VERY CLEAR OVER RECENT YEARS. FLAVIO HAS GIVEN A VERY CLEAR INDICATION THAT HE IS A PRO-TRUMP. HE IS MUCH CLOSER TO THE U.S. ADMINISTRATION. HE CANNOT BE ENTIRELY AGAINST CHINA. IT WILL BE INTERESTING TO SEE IF HE TAKES A MORE NEUTRAL STANCE TOWARD CHINA THEN HIS FATHER DID OR IF HE WILL TAKE IT MUCH MORE AGGRESSIVE APPROACH AS PRESIDENT TRUMP WOULD PROBABLY LIKE TO SEE. HASLINDA: IT IS ALL ABOUT HOW INVESTORS ARE READING THIS ELECTION. WHAT SHOULD WE BE WATCHING FOR WHEN THE BRAZILIAN MARKETS OPEN ON MONDAY? GIVEN THE SURPRISE AFFECTS WE ARE DEALING WITH RIGHT NOW, MOST MARKET PLAYERS WERE LOOKING FOR A NARROW GAP BETWEEN THE CANDIDATES. MARKETS EXPECT BOLSONARO TO BE MUCH MORE HAWKISH WHEN IT COMES TO FISCAL ADJUSTMENTS. WE ARE EXPECTING A RALLY IN THE CURRENCY IN THE MORNING. A JUMP OF FOUR STOCKS IN A WAY THAT JP MORGAN EXPECTS GAINS OF 6%. IT IS A VERY LIQUID CURRENCY. WE KNOW TOMORROW MORNING IN A FEW HOURS AS IT OPENS. HASLINDA: WE WILL KNOW SOON ENOUGH. THANK YOU SO MUCH FOR YOUR TIME. AND FOR STAYING UP WITH US. OUR BRAZIL COUNTRY CHIEF. WHAT ARE YOUR THOUGHTS ON WHAT IS HAPPENING IN BRAZIL? MIGHT THAT HAVE EXPLANATIONS -- IMPLICATIONS? WHAT IS PROPELLING THE MARKET IS SEMI CONDUCTORS. THE ENTIRE MARKET OUTLOOK WOULD NEED SOME CATALYSTS. NOW WE ARE FACING HEADWINDS COMING FROM A STRONGER U.S. DOLLAR. TO THE EXTENT THAT THERE IS THAT NOT MUCH CAPITAL COMING INTO THIS LOCAL REGION. GOING BACK TO THE HEAVY WEIGHTS OF THE U.S. MARKET. WE NEED THEM TO BECOME STABILIZED. IF THE FED WOULD SLOW DOWN THE RATE HIKES, I THINK THAT WOULD BE INDEED SOMETHING FOR EMERGING MARKETS. HASLINDA: IT WAS NOT TOO LONG AGO THAT WE WERE TALKING ABOUT THE REALLOCATION OF CAPITAL. ESPECIALLY FROM THE U.S. TO THE REST OF THE WORLD. WHAT HAPPENED TO THAT STORY? IT HAS HAPPENED IN SELECTED SECTORS. TO SOME EXTENT I WOULD SAY SPECIFIC COUNTRIES WITHIN THE REGION HAVE THESE POLICIES. THAT HELPED THE MARKET A FAIR BIT. BANKS DID VERY WELL ON THE BACK OF THIS. WE NEED TO LOOK AT LOCAL MARKETS. MARKET VALUATIONS ARE TOO CHEAP. WE NEED CATALYSTS. RATES ARE COMING BACK DOWN. AT THE LOCAL LEVEL WE NEED TO SEE MORE OF THIS. HASLINDA: WE CAN CONTINUE TO TALK ABOUT THE DOMINANT DOLLAR. THERE HAS BEEN A LOT OF FEAR. THAT IS WHY WE THINK GOLD HAS A PLACE. THIS TREND OF CENTRAL BANKS BUYING OF GOLD HAS IN THE WAY IT ENDED. THE DOLLAR WILL ALWAYS BE AROUND. HASLINDA: IF YOU ARE BETTING ON EMERGING MARKETS, WHICH ONES IN PARTICULAR? WHERE WOULD YOU BE INVESTING? RIGHT NOW WE ARE SEEING INDIA AND INDONESIA BEING PRETTY LACKLUSTER. WE HAVE YET TO SEE STRONG POLICIES. THIS IS THE BARBELL APPROACH. ON THE OTHER DIVIDEND YIELDING STOCKS. THIS IS REALLY A GROUND FOR THAT. IF YOU A DOLLAR-BASED INVESTOR, YOU PUT THAT INTO U.S. DOLLARS. HASLINDA: BEFORE YOU GO, LET'S TALK ABOUT THAT INDONESIAN REPEAT. LET'S TAKE A LISTEN. OK, ACTUALLY WE DO NOT HAVE IT. WE DID TALK ABOUT HOW IT HAS REMAINED AT 18,000. EMERGING MARKET CURRENCIES HAVE BEEN REWARDED. HASLINDA: THANK YOU SO MUCH FOR YOUR TIME. KEEP IT HERE. ♪ WE DECIDED TO RELEASE ITS STRATEGIC STOCKS OF DIESEL AND CRUDE OIL. THEY WILL MEET IN THE COMING HOURS AND DAYS. SO AS TO BE ABLE TO RELEASE UP TO 100 MILLION BARRELS OF DIESEL AND CRUDE OIL. WOULD>> ALL THE RUSSIAN EXPORTS OF DIESEL ARE SHUT DOWN IN THE CHINESE IS THAT WE ARE NOT GOING TO THE LITTER ANYMORE DIESEL -- DELIVER ANYMORE DIESEL AND YOU STILL HAVE A REDUCTION OF DIESEL FLOWS IN THE GULF, WE ARE RESTORING THOSE BUT IT TAKES TIME. THIS IS COMMON SENSE. THIS WILL DRIVE DIESEL PRICES DOWN. HASLINDA: THE FRENCH PRESIDENT AND THE U.S. ENERGY SECRETARY ON THE RELEASE OF EMERGENCY DIESEL FUEL SUPPLIES. HERE'S A LOOK AT HOW MARKETS STAY AT RIGHT NOW. THEY ARE GETTING A BOOST FROM HOPES THAT THE FED WILL PAUSE RATE HIKES. GROWING EXPECTATIONS FOR HIGHER INTEREST RATES. STOCKS ARE STRUGGLING DESPITE THE ECONOMY EXPANDING. IN INDIAN MARKET THAT IS SO RELIANT ON OIL. THAT IS A BIG NEGATIVE. ACTUALLY TRANSITIONING FROM DOING THIS. THEY STARTED UNDERPERFORMING. OIL BECOMES THE BIGGEST RISK. CHINA IS VERY CHEAP. THEY WILL OFFER HUGE EARNINGS GROWTH. THE OIL PROBLEM IS BECOMING WAY BIGGER. IT IS NOT HAVING THE EFFECT ON THE PRICE. IT WAS THE BIGGEST WEEKLY FALL IN ABOUT 25 YEARS. IT LOOKS LIKE THIS IS BECOMING MORE ENTRENCHED. MORE DOWNSIDE. THIS BECOMES A TRADE ON THE BIGGEST OIL PRICES. THIS IS NOT THE CASE. HASLINDA: INTERESTING BECAUSE RETAIL INVESTORS HAVE PROPPED UP THE MARKET. WHAT ARE THEY DOING RIGHT NOW? THE MONEY REMAINS VERY STRONG. THE HEADLINE INDEXES ARE REALLY WEAK. THAT IS WHERE THE MONEY IS GOING. THAT IS A SPECIFIC MARKET. THE EASIER BETS ARE HEADLINE COMPANIES WHICH ARE PART OF FUTURES. THAT BECOMES A BIT OF A WORRY. THAT HAS BEEN A BELLWETHER OF INDIA STORY. THEY STILL DID THAT. THE STOCK HAS BEEN FLAT. IT IS NOT GOING ANYWHERE. OTHER CHALLENGES AS WELL. EARNINGS WERE NOT DRIVING THE STOCK. WHICH IS USUALLY THE CASE. HASLINDA: VALUATIONS REMAIN QUITE ELEVATED. THAT IS PART OF WHY PEOPLE ARE SO RELUCTANT TO DIP THEIR TOES AND BY INDIAN STOCKS. INDIA WOULD RANK LOWER. THAT IS GIVING GREAT EARNINGS. THEY HAVE OVERPOWERED KOREA IN THE LAST QUARTER. IT IS A BIT OF A RURAL MARKET. MORE RESERVES HAVE BEEN BUILT OVER THE YEAR. INDIA IS UNDERPERFORMING. WE REALLY NEED THIS OIL PRESSURE TO GO OFF. HASLINDA: THE ASSUMPTION IS THE IRAN WAR WILL END AT SOME POINT. YOU MAY WANT TO PICK UP SOME OF THESE INDIAN STOCKS. THEY HAVE GREAT VALUE. ABSOLUTELY. THERE ARE ABOUT 300 MILLION PEOPLE WHO HAVE SIGNIFICANT INCOMES IN INDIA. THERE IS THIS MONEY GETTING ROTATED. THAT REMAINS VERY STRONG. HE CAN MAKE ITS MOVE TO THE UPSIDE. YOU NEED THESE OIL PRESSURES. INDIA IS ALSO MAKING ITS EFFORT IN TERMS OF THE AI STORY. THERE ARE ROBOTIC AI BETS. A LOT OF THIS IS BEING CREATED IN ENERGY. JUST LIKE WHAT HAPPENED IN CHINA. THIS WILL MAKE A LOT OF DATA CENTER RELATED BETS IN INDIA. THESE THINGS WILL COME INTO BEING WITH THE MAIN PROBLEMS ARE OVER WITH. BEFORE THAT THERE IS SO MUCH ELSE. HASLINDA: THE MAIN PROBLEM ARRAIGNS OIL PRICES. THANK YOU. THOUSANDS OF PEOPLE RALLIED IN MUMBAI AND NEW DELHI ON FRIDAY. THEY WANT THE RESIGNATION OF THE CHIEF INDIAN ELECTIONS COMMISSIONER. THOUSANDS WERE ARRESTED. THEY CLAIM FURTHER PROTESTS THIS WEEK. WHAT REALLY IS THE LATEST ON THESE PROTESTS? THE LATEST AS THEY ARE CONTINUING. UNLIKE WHAT WE HAVE SEEN IN THE PAST. THIS IS NOT THE CASE. THE PROTESTS HAVE BEEN CONSISTENT. PEOPLE HAVING COMING OUT IN THE STREETS. COMMUNITY PARTNERS ARE BRINGING OUT THEIR SUPPORTERS. THERE HAS BEEN CONSISTENTLY DETAINED AND LET GO. THE GOVERNMENT IS HAVING QUITE A TOUGH TIME. TO HANDLE THESE COUNTED PROTESTS. THAT IS WHERE IT IS NOW AT THE MOMENT. TOMORROW IS A BIG DAY. THEY ARE EXPECTED TO MARCH. DEMANDING HIS RESIGNATION. THAT WILL BE A BIG DAY. TOMORROW IS WHEN YOU WILL SEE HOW THESE POLITICAL PARTIES ARE PUTTING THEIR FULL WEIGHT BEHIND THIS. THAT IS WHAT WE ARE WAITING AND WATCHING FOR. HASLINDA: WE ARE ALSO WATCHING FOR THE REACTION FROM THE INDIAN GOVERNMENT. HOW ARE THEY TAKING THIS? THE GOVERNMENT REACTION HAS BEEN QUITE MUTED IN A WAY. THE REASON FOR THAT IS THE ELECTION COMMISSIONER'S OFFICE IS NOT A CONSTITUTIONAL POST. THE GOVERNMENT CANNOT COME OUT AND DEFEND IT. WHAT WE HAVE SEEN IS THE PARTY COMING OUT AND TRYING TO DEFEND THE ELECTION COMMISSIONER. TRYING TO PULL DOWN THE OPPOSITION'S ALLEGATIONS SAYING THAT BECAUSE THE OPPOSITION HAS BEEN USING THE ELECTION AS A RESULT TO DO THIS. IS IT MAKING AN IMPACT? IT DOES NOT LOOK LIKE THAT. GIVEN THE NUMBER OF PEOPLE WE ARE SEEING. COMING UP FOR THE PROTESTS. ESPECIALLY THE STUDENTS. HASLINDA: WHAT CAN BE EXPECTED IN THE COMING DAYS? THAT IS A VERY INTERESTING QUESTION. IT ALL DEPENDS ON HOW MUCH THE OPPOSITION IS ABLE TO DO SOMETHING TOMORROW AND ONWARDS. A SHOW OF STRENGTH ON THE STREETS. IT DEPENDS ON HOW MUCH THE OPPOSITION IS ABLE TO MOBILIZE. HOW MANY PEOPLE THEY CAN BRING IN. WHAT KIND OF PROBLEMS THEY CAN CREATE FOR THE GOVERNMENT AND THE CHIEF ELECTION COMMISSION. HAVING SAID THAT WITH THE OPPOSITION IS SAYING, THE FACT THAT HUNDREDS OF THOUSANDS OF PEOPLE HAVE BEEN TAKEN OFF THIS LIST. THEY HAVE BEEN DISENFRANCHISED. THEIR SENSES THAT IS OUT RAGES ON THE GROWING. IF HE GROWS, MORE AND MORE PEOPLE ARE LIKELY TO SWING FOR THE OPPOSITION. THAT IS WHAT THE OPPOSITION IS SAYING. HASLINDA: THANK YOU. OUR INDIA GOVERNMENT REPORTER. BLOOMBERG HAS LAUNCHED A DEDICATED DIGITAL EXPERIENCE FOR INDIA. SUBSCRIBERS CAN VISIT IT ONLINE. FOR EXCLUSIVE REPORTING. COMING UP NEXT, THE COFOUNDER JOINS US TO DISCUSS THEIR BOLD EXPANSION PLANS AND WHETHER CLIMATE DISRUPTIONS CONSTRAINED SUPPLIES OF LUXURY TEAS AND COFFEES. KEEP IT WITH US. ♪ HASLINDA: WELCOME BACK. YOUR MORNING COFFEE OR TEA MAY COST MORE AS A POWERFUL EL NIÑO DISRUPTS COPS FROM BRAZIL TO VIETNAM TO INDIA TO SHARE LONGER. WE LOOK AT WHY CLIMATE CHANGE IS ONCE AGAIN BECOMING A DRIVER OF INFLATION. TEA AND COFFEE IS VERY SUSCEPTIBLE TO THIS. TELL US WHAT IS HAPPENING TODAY. LIKE ANY CROP, TEA AND COFFEE ARE PARTICULARLY SENSITIVE TO CHANGES IN WEATHER PATTERNS. ESPECIALLY DRYNESS AND WETNESS. EXCESSIVE DRYNESS CAN DAMAGE DROP -- COPS. EXCESSIVE WETNESS ON THE OTHER HAND CAN ALSO CAUSE CHERRY BLOSSOMS TO FALL OFF AND DAMAGE CROPS AND CURRENT YIELDS. EL NIÑO ON TOP OF THE EXISTING CLIMATE CHANGE IS REALLY JUST LOADING THE DICE FOR MORE EXTREME SCENARIOS AND REALLY STRETCHING OUT THE POSSIBILITIES OF ALL HIS EXTREMES. HASLINDA: WE ARE ALREADY SEEING THESE DRY CONDITIONS APART PARTS OF SOUTHEAST ASIA. INDONESIA, VIETNAM. HOW IS IT PLAYING OUT? IN INDIA, TO TAKE ONE REGION, THE MONSOON HAS BEEN OVERALL BELOW AVERAGE. 13% BELOW NORMAL. IF WE ZOOM IN ON PARTICULAR REGIONS, THE DEFICITS HAVE BEEN EVEN MORE PRONOUNCED. THAT IS REALLY TAKING A TOLL ON TEA. WE HAVE SEEN ESPECIALLY DRY CONDITIONS FROM JUNE ONWARDS. IN ADDITION TO EFFECTING COFFEE CROPS, IT IS REALLY FANNED THE WILDFIRE SITUATION. IT IS THE WORST IN MANY YEARS. CAUSING HAYES CONDITIONS TO SPREAD REGIONWIDE. IT IS REALLY THAT DRYNESS THAT EL NIÑO IS EXACERBATING. WITHIN THE SEASON AS WELL WE CAN SEE EXTREME RAINFALL ON PARTICULAR DAYS OR WEEKS. GOING FROM OVERALL DRYNESS TO EXTREME WETNESS IN SHORT TIME. HASLINDA: IT IS NOT JUST ABOUT THIS EASE OF THE SEASONS AHEAD. IN TERMS OF BEING CAP ON CROP QUALITY AND QUANTITY, WHAT IS EXPECTED? EXTREME DROUGHT CAN AFFECT THE STRUCTURAL HEALTH OF THE DISEASE COFFEE CROPS. AND TEA PLANTATIONS. IT IS NOT JUST THIS ONE SEASON WE ARE LOOKING AT WITH POTENTIALLY CURRENT YIELDS AND QUALITY BUT ALSO THE SEASONS AHEAD. IF WE LOOK AT DECISION-MAKING, IF THEY ARE SEEING THIS HEIGHTENED VOLATILITY REALLY AFFECTING THEIR ABILITY TO MAKING MONEY, THEY MAY CHOOSE TO GROW SOMETHING ELSE. THAT CAN AFFECT THE OVERALL AVAILABILITY OF THESE CROPS. AND MAKE THE JOB OF TRADERS MORE DIFFICULT AS THEY HAVE TO SOURCE MORE OF THE SUPPLIES FROM ELSEWHERE. HASLINDA: OUR BLOOMBERG WEATHER REPORTING. WE THANK YOU FOR THAT. OUR NEXT GUEST RUNS A LECTURE ET COMPANY. THEY HAVE OPENED THEIR LARGEST BOUTIQUE GLOBALLY. JOINING US EXCLUSIVELY, THE COFOUNDER. GOOD TO SEE YOU AGAIN. ALWAYS GOOD TO SEE YOU. WE ARE TALKING ABOUT EL NIÑO AND THE IMPACT ON T QUALITY AND SOURCING. THIS STARTED A COUPLE OF YEARS AGO. THIS ISSUE ABOUT THE WEATHER AND CLIMATE CHANGE EVERYWHERE. FOR US IT IS A VERY BIG DIFFERENCE BETWEEN DEMARCATED AND THE NICHE MARKET THAT WE HAVE. FOR THE NICHE MARKET, THE GARDENS ARE MUCH SMALLER. THEY ARE VERY PROTECTIVE. MUCH MORE THAN THE LARGER ONES. WE ARE NOT REALLY AFFECTED DIRECTLY. WE ARE VERY CONSCIOUS ABOUT WHAT IS HAPPENING. THIS IS WHY WE ARE LOOKING FOR THIS VERY CLOSELY WITH ALL THE PLANTERS TO MAKE SURE WHAT IS HAPPENING. THE MOST IMPORTANT FOR US IS TO HAVE THE SUPPLIES OVERALL. WHEN WE SEE SOMETHING HAPPENING WE FOCUS ON THE REGION. THIS IS WHY WE HAVE CONFIDENCE THAT WE CAN ALWAYS DELIVER TO OUR CONSUMERS THE SAME QUALITY WHEREVER HASLINDA: HASLINDA: CLIMATE CHANGES. YOUR SUPPLY CHAINS ARE PRETTY MUCH INTACT? IS IT COSTING YOU MORE TO MAINTAIN THAT? ABSOLUTELY. THE COST IS ALWAYS INCREASING. WE WANT TO MAKE SURE WE KEEP THE COST OF THE SAME. NEVER HAVE A VERY BIG JUMP IN THE PRICING. THIS IS WHY WE FEEL IN THE FUTURE TO MAKE SURE TO HAVE THESE TYPE OF QUALITIES TO MAINTAIN THE RELATIONSHIP WITH ALL THE PARTNERS VERY CLOSELY TO SEE WHAT IS HAPPENING AND WHAT WILL HAPPEN IN THE NEXT SEASONS. HASLINDA: YOU TALK ABOUT HOW YOUR SUPPLY CHAINS ALL OF THE WORLD. YOU HAVE SOURCES FROM ALL OVER THE WORLD. WE HAVE SEEN GYRATIONS ACROSS MARKETS. IS THAT IMPACTING THE WAY YOU LOOK AT YOUR BUSINESS? DEFINITELY FOR US THE MOST IMPORTANT IS THE QUALITY THAT WE CAN DELIVER TO THE CONSUMERS TODAY. YOU KNOW THE CONSUMERS TODAY ARE MUCH MORE DIFFICULT TO HAVE ALL THE SAME TASTE QUALITY. THE BATTLE WHAT HAPPENS. I DON'T CARE ABOUT CLIMATE CHANGE OR WHATEVER. THIS IS WHY OUR ROLE HIS LEG TO HAVE THIS KIND OF CONNECTIONS THAT EVERY DAY WE MAKE SURE WHAT WE CAN DELIVER TO THE CLIENTS. HASLINDA: HOW MUCH IS IT COSTING YOU? FOR A SEA INCREASE IN THE LAST COUPLE OF YEARS WAS ABOUT 18% MORE THAN BEFORE. AT THE SAME TIME WE HAVE SEVEN PRODUCTS THAT ARE AT THE SAME PRICE. LIKE THE ONES FROM AFRICA. THEY'RE QUITE CONSISTENT PRICING. IN JAPAN THE PRICE WAS GOING UP A COUPLE OF TIMES BECAUSE OF THE SUCCESS OF MACHO AND ALL OF THIS. THIS IS WHY WE DON'T REALLY FOCUS ON ONE COUNTRY. THIS IS WHY WE HAVE THIS LARGE OPPORTUNITY TODAY TO BUY FROM ALL OF OUR MARKETS. HASLINDA: WHAT ARE YOU SEEING IN TERMS OF THE MAN? WHERE YOU SEE THE STRONGEST DEMAND? THE DEMAND IS GROWING EVERYWHERE THE WORLD. THE NEW GENERATION WITH ALL THE SOCIAL MEDIA AND INFORMATION THIS MAKES THEM MUCH MORE CURIOUS. THEY WANT TO UNDERSTAND MORE ABOUT IT. WE CAN SEE THIS DEMAND GROWING LIKE IN CHINA. THE NEW GENERATION. THEY ARE EXTREMELY INTERESTED. WE MUST UNDERSTAND WHAT THIS NEW GENERATION WANTS. BUILDING SOMETHING VERY UNIQUE. ABOUT THE EXPERIENCE. THIS IS WHY WE ARE ALWAYS CREATING A NEW TREND. A NEW DEMAND. THIS IS WHAT THE NEW GENERATION WANTS. THEY WANT SOMETHING WHERE THE TEA HAS ITS OWN HERITAGE. YOU CAN MAKE IT MUCH MORE DESIRABLE. HASLINDA: IT IS INTERESTING THAT HE TALKED ABOUT GROWTH IN CHINA WHEN CONSUMPTION IN CHINA IS ACTUALLY LACKLUSTER. WHAT IS IT IN TERMS OF DEMAND GROWTH? IS THAT THE YOUNGER GENERATION THAT IS DRIVING THAT DEMAND? ABSOLUTELY. THIS GENERATION HAS AN AMAZING POTENTIAL. THEY HAVE DEEP POCKETS. FULLY GENERATIONS DID NOT HAVE MUCH. THIS NEW GENERATION HAS DEMAND. THEY ARE MUCH MORE DEMANDING. THEY WANT TO KNOW ABOUT THE QUALITY EIGHT. THEY LIKE TO TRY NEW ONES. THEY WILL COME AFTER A COUPLE OF MONTHS TO SEE IF YOU ARE THE SAME OR IF THIS IS JUST MARKETING. THIS IS WHAT WILL SURVIVE VERY STRONGLY OVER THE LAST 20 YEARS. DEMAND IS GROWING EVERY YEAR. THE TESTS WE KEEP THE CONSISTENCY AND QUALITY. THIS IS A NEW CREATION. WE HAVE 70 OTHER PRODUCTS THAT TALK ABOUT IT. THIS MAKES CONSUMERS VERY CURIOUS ABOUT WHAT IS HAPPENING. WHAT IS THIS LIKE? THAT IS WHY WE FEEL LIKE THE NEW MARKET IN CHINA. HASLINDA: CAN YOU QUANTIFY THE GROWTH YOU ARE SEEING IN CHINA AND EUROPE? WHAT KIND OF EXPECTATIONS WILL YOU HAVE? I FEEL I CHINA HAS AMAZING POTENTIAL. BECAUSE FIRST OF ALL THEY ARE BORN WITH A CUP OF TEA. THEY DISCOVERED DIFFERENT TDS. HASLINDA: 60'S PRESENT -- 40% GROWTH? IS THAT POSSIBLE? IS IT'S VERY EASY TO MAKE IT HAPPEN. FOR EUROPE WE SEE A NEW GENERATION IS MUCH MORE CURIOUS. HAVING TEA CEREMONIES IN THE TRADITIONAL WAY. MUCH MORE FRIENDLY AND EASY TO DO IT. HASLINDA: INDIA ALSO HAS A TRADITION. ABSOLUTELY. WE HAVE STORES IN INDIA. WE ARE AMAZED BY THE DEMAND IN INDIA. HASLINDA: 40% GROWTH FOR INDIA? I THINK I WOULD SAY THE SAME AS CHINA FOR US. MAYBE 25% GROWTH. HASLINDA: HOW IS THAT SHAPING HOW YOU INVEST FOR THE NEXT SEVERAL YEARS? FOR US WE NEVER STOP INVESTING. CREATING DEMAND AND NEW PRODUCTS , CREATING THIS VERY BIG FLAGSHIP STORE, IT IS AN INVESTMENT. AT THE SAME TIME WE ARE GROWING WITH OUR INVESTMENTS. THAT MEANS THAT WHEREVER WE INVEST, WE ARE VERY HAPPY WITH THESE INVESTMENTS. THE TURNOVER IS VERY FAST. ONCE YOU CREATE SOMETHING THAT IS NEW IN THE MARKET THAT ATTRACTS OLDER CLIENTS AROUND THE WORLD, YOU CAN GROW REALLY FAST. HASLINDA: THERE IS ALSO COMPETITION FROM SPECIALTY COFFEE SHOPS. ARE YOU BURNING MORE CASH TO STAY COMPETITIVE? HONESTLY WE NEVER LOOKED AT THIS AS COMPETITION. WE CREATE THE TREND. WHEN WE DO THAT, THE MOST IMPORTANT THING IS TO LOOK FORWARD. WE PROVIDED INSPIRATION FOR OTHERS. THAT IS WHY THE LAST 20 YEARS WE HAVE SHAPED THIS KIND OF CATEGORY TO MAKE SURE THAT MAYBE IT IS A NEW AREA FOR THE TEA AND COFFEE BUSINESS. HASLINDA: ARE YOU PROFITABLE? WE ARE PROFITABLE. ABSOLUTELY. WE HAVE A SYSTEM TO MAKE SURE OF THE QUALITY. NO DOUBT ABOUT IT. WE MIX EVERYTHING TOGETHER. YOU DON'T JUST BUY I.T. YOU BUY AN EXPERIENCE. THAT MEANS CLIENTS ARE WILLING TO ADD SOME MORE MONEY FOR THE NOVELTIES THAT CAN HAVE. THEY ARE WILLING TO PAY MORE TO HAVE ALL OF THIS EXPERIENCE. HASLINDA: BEFORE WE LET YOU GO, THERE ARE CONCERNS ABOUT INFLATIONARY PRESSURES IN THE MARKETS. SOME ARE TALKING ABOUT A RECESSION. HOW ARE YOU POSITIONING THE BUSINESS? WE ARE AFFORDABLE LUXURY. THAT MEANS ANYONE CAN AFFORD TO BUY TEA OR COFFEE FROM OUR GROUP. THEY ARE NOT DISPLAYING TEA. THEY ARE BUYING HISTORY. SOMEBODY THINGS IN ONE PRODUCT. HASLINDA: GREAT HAVING YOU ON THE SHOW. BEFORE WE GO HERE'S A LOOK AT TOMORROW'S SHOW. RAY DALIO WILL BE JOINING US TO DISCUSS IT SURGING BOND YIELDS ARE A WARNING SIGN. DO NOT MISS THAT. THIS IS BLOOMBERG. ♪