Q: You are saying that eventually the way this decoupling will play out will be triggered off by a big fall in the dollar?

A: That is what I am saying that the biggest loser in this game if I have to say how does all these losses in the US get transmitted out, if the dollar doesn’t fall, you are transmitting it out to the savers who are holding the bonds and 50% of US bonds are held by foreigners including the Japanese and the Chinese and the Middle East countries. No-one is so foolish to realize longer-term this is a game which has to end and you cannot be printing USD 1-2 trillion of fresh currency every year without spooking someone.

Like in our markets, it is usually not the largest holders who cause a run, so when our markets correct it is not a capital or a fidelity which comes in, it is the marginal trader who says, “I don’t want to be here anymore, I want to get out and I don’t care if the price falls 30%.” You probably get moves of that nature from some unexpected source, which maybe triggers in the mind of the Chinese, what are we doing because we don’t need to continue exporting. In any case the trade balanced with the US is shrinking because they are importing less. So we are not gaining by this higher purchase scheme anymore and all the Investor Owned Utilities (IOUs) which we are sitting on are actually getting worthless by the day. It maybe in our best interest because we have a current account surplus, we have a budget surplus, the currency is fairly stable and if we float it, it may just accelerate our growth in the world. So my bet is that that is how things will play out longer-term. Now whether it takes three-six or twelve months for that to happen but directionally that is where the market is heading.

Q: What is the second half of 2009 looking like to you? First half has run beyond anybody’s expectations, what is in store for the second half you think?

A: First half was where people realized that the cardiac arrest scenario where the world is going to die and therefore global trade comes to an halt. That period has gone behind you and therefore you have come back to some semblance of business as normal and therefore you went from completely killed prices for assets to prices which are fairly reasonable. Now until you get certainty on what is going to happen to currencies and what is going to happen to interest rates, how do you build out cashflow streams for businesses that you intend to value. So for markets to run significantly ahead from here unless they get into very speculative forever, you need to be clear about what is going to happen about earnings.

Therefore a lot of this move- we have held the view also that this is a large bear market rally because you are not able to see earnings beyond a certain point taking markets up and while the classic theory is that markets start a bullish phase in the middle of the recession, you get P/E expansion but then you see earnings coming through as well and you can fairly see those earnings coming up in advance because there is either spare capacity of pricing power at the other end of the tunnel.

I don’t think honestly if you probe people and ask them that they can see that. Therefore my sense is at some point people will get into disillusionment that the green shoots are not green shoots, the recovery is going to take longer in the world and therefore what we have paid is probably a bit ahead of itself and maybe we need to wait and market then either goes sideways or it corrects before you have then the game changing move where you know this is the bet that one can take and this is the trend which is going to last for the next three-five years.

So it is possible that you get a one last kind of move up followed by disappointment but again these are things no-one knows and one will have to see at how it plays out.