China Finally Delivers What Market Wanted | Markets in 3 Minutes

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Bloomberg Dec 9 18:02 · 22.6k Views

Anna Edwards, Guy Johnson, Kriti Gupta, and Paul Dobson break down today's key themes for analysts and investors on "Bloomberg: The Opening Trade."

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Transcript

  • 00:00 Paul, nice to have you with us because we've heard these headlines this morning from China,
  • 00:03 European futures popping higher, in particular in France as a result of this,
  • 00:08 a commitment to further fiscal stimulus in all areas.
  • 00:12 How much of A game changer is this or not, Paul?
  • 00:16 Yeah, good morning, Anna.
  • 00:18 It's certainly what the market had been hoping for and waiting for
  • 00:21 in terms of some signs of real policy deliverance here from the Chinese authorities.
  • 00:27 We remember we had that big run up
  • 00:29 a month, six weeks ago and then we started to lose it a little bit of steam in China's markets because people were asking, well, is there going to be follow through?
  • 00:35 Are we really going to see
  • 00:37 signs of stimulus now what we're hearing a commitment to a looser monetary policy, fiscal support,
  • 00:42 efforts to prop up both the stock market and the housing market.
  • 00:46 That's what the market has been waiting for, all those boxes
  • 00:49 checks more or less.
  • 00:49 And then this sets the tone for
  • 00:51 the Central Economic work conference discussions which will start
  • 00:55 pretty much straight afterwards as we understand it.
  • 00:57 So the market will be wanting to see more follow through, more delivery, more details.
  • 01:01 But at the moment
  • 01:02 we've got a gains in the equities market and particularly corporate bonds have been getting ready for this.
  • 01:06 We've seen some parts of that market yields falling for 20 days in a row.
  • 01:10 People liking it on the right side, people liking it on the fiscal side as well.
  • 01:14 So double whammy there.
  • 01:17 Paul, How skeptical are investors though?
  • 01:19 We've got the talk, do we have the walk?
  • 01:24 I think that the the market will certainly want to believe it
  • 01:27 and, and pricing the good news,
  • 01:30 certainly there's been a great deal of reticence, but it's gotten to the point where it feels like, you know,
  • 01:35 something really had to be delivered.
  • 01:37 We've had quite a lot of incremental measures along the ways and now more of a package is what the market has been hoping for.
  • 01:43 It's hard, right?
  • 01:44 You know, it's hard to know with certainty whether we will get that delivery and whether it will be enough.
  • 01:48 There's been a lot of disappointment.
  • 01:49 There's been a lot of false starts already in the market and a lot of
  • 01:52 investor disinterest as well.
  • 01:54 So not the entire market engaged,
  • 01:56 but if it does really catch wind, then it could start to gain a lot more traction and momentum because
  • 02:01 valuations are so low across the market.
  • 02:05 Paul, we had a different Paul on the show earlier talking to us about the fact that this kind of
  • 02:10 idea of a of
  • 02:11 a Trump administration could give China license to ease further.
  • 02:15 Do you agree with that?
  • 02:18 Trump administration could do all sorts of things.
  • 02:21 Who would want to be a forecaster in financial markets for next year, Chrissy?
  • 02:24 It's going to be very difficult.
  • 02:26 I think what's really interesting is you see more and more strategists putting out these notes saying, what are the curveballs, What could we get wrong?
  • 02:31 What could be the surprises next year?
  • 02:33 So everything's kind of out there.
  • 02:35 More rate cuts certainly
  • 02:36 possible, but on the other hand, you know, people even talking about the US might need to tighten again in the second-half of the year depending on the inflation outlook.
  • 02:43 So it's very uncertain at the moment in terms of where we're going to get, where we're going to see how it's going to,
  • 02:49 you know, kind of rebound across the rest of the markets as well.
  • 02:52 So
  • 02:53 people
  • 02:54 having to stick with their game plan for now,
  • 02:56 but there's going to be lots of uncertainty and wobbles along the way.