WEBVTT - China's Commerce Ministry Says It's Evaluating US Trade Talks

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Welcome to the Bloomberg

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<v Speaker 1>Daybreak Asia podcast. I'm Doug Chrisner. So we're less than

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<v Speaker 1>twelve hours away from the US employment report. Bloomberg Economics

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<v Speaker 1>is expecting to see a solid net gain in nonfarm

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<v Speaker 1>payrolls of around one hundred and sixty five thousand. Also

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<v Speaker 1>a stable unemployment rate at around four point two percent.

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<v Speaker 1>And in a moment we'll get some insight from Bill Adams.

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<v Speaker 1>He is the chief economist at Comerica Bank. But we

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<v Speaker 1>begin in the Asia Pacific where this morning the Chinese

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<v Speaker 1>government said it's currently evaluating possible trade talks with the US.

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<v Speaker 1>The Commerce Ministry has said senior US officials have repeatedly

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<v Speaker 1>expressed their willingness to talk with Beijing about tariffs. Joining

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<v Speaker 1>me now is David Finnerdy. He is Bloomberg FX and

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<v Speaker 1>Rate strategists. David joining from our studios in Singapore. I

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<v Speaker 1>know it's a market holiday in China, David, so we're

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<v Speaker 1>not going to get any reaction action to this, but

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<v Speaker 1>it's a positive sign still, right.

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<v Speaker 2>Yeah, I think that's the key thing, any sign that

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<v Speaker 2>there's some negotiations be had, even tho It's very early

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<v Speaker 2>days and you certainly don't expect any deal to be

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<v Speaker 2>hashed out quickly. But I think any idea, any sign

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<v Speaker 2>that there will be negotiations to even start, will be

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<v Speaker 2>taken positively by the market. Obviously, you know that the

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<v Speaker 2>tarests between China and US are you know, well over

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<v Speaker 2>one hundred percent, and that's not good really for anyone

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<v Speaker 2>in terms of trade. So I think any resolution will

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<v Speaker 2>be the market will quite apply welcome that.

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<v Speaker 1>I thought it was very interesting that Japan's finance minister

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<v Speaker 1>said today that Japan's holdings of US treasuries could be

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<v Speaker 1>a card in Japan's trade negotiations with the US. I

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<v Speaker 1>think Japan currently has around one point one trillion dollars

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<v Speaker 1>in US treasuries. Is that a friendly way of making

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<v Speaker 1>a threat.

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<v Speaker 2>Well, it's certainly a shot across the bout, I think

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<v Speaker 2>they'd say, of course. And he did at the same

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<v Speaker 2>time say hey, whether we use or not as a

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<v Speaker 2>different thing. So but again, the fact that it's even

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<v Speaker 2>alluded to does sort of say hey, look, we do

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<v Speaker 2>have this card, and if need be, we will pay it.

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<v Speaker 2>Of Course, the catch to some degree is okay, if

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<v Speaker 2>you want to get with the treasure sor if you can,

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<v Speaker 2>it's like, well, where do you put that money? You know,

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<v Speaker 2>you have to put it somewhere, and certainly if you

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<v Speaker 2>be the obvious place to put it into. But again

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<v Speaker 2>it's not quite as deep and liquid market. It's certainly

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<v Speaker 2>a big market, but it's certainly not quite the treasury market.

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<v Speaker 2>So you know, the question I think the market will

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<v Speaker 2>go if you are going to shoot, say that you

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<v Speaker 2>are going to change holdings, and if you did know

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<v Speaker 2>to how much could you? But again, any reduction of

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<v Speaker 2>holdings is not going to be received as well by

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<v Speaker 2>the market if it was to happen. I mean, it

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<v Speaker 2>really feeds into the big question of moving forward. How

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<v Speaker 2>does the West or other countries keep funding US deficits

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<v Speaker 2>really at the end of the day, and if they

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<v Speaker 2>show an unwillingness to fund it to the same extent,

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<v Speaker 2>you know, it does create a pop for the US

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<v Speaker 2>at the moment. You know, historically the US has been

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<v Speaker 2>fine because it has these twin deficits and but the market, guys,

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<v Speaker 2>we don't mind. We were happy to fund them. But

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<v Speaker 2>if the question I think really has become in a

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<v Speaker 2>long term question is given how this trade's played out,

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<v Speaker 2>and we don't know how the remainder of Trump's presidency

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<v Speaker 2>will play out. But are we seeing a fundamental shift

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<v Speaker 2>in terms of how people view US assets for whatever

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<v Speaker 2>reason that that may be. And if there is a

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<v Speaker 2>change in dynamics saying okay, we're not quite as willing

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<v Speaker 2>to fund it as possible, then for the US economy

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<v Speaker 2>that would not be a positive.

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<v Speaker 1>So, and I'm listening to you, I'm thinking of the

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<v Speaker 1>dollar's role in all of this, and so far in

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<v Speaker 1>the trade war, the dollar has suffered just a bit.

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<v Speaker 1>I mean on a relative basis. I understand that we're

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<v Speaker 1>still very strong and one of the benefits of being

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<v Speaker 1>the world's reserve currency, but the flows have clearly benefited

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<v Speaker 1>the end and the euro.

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<v Speaker 2>Right, Yes, definitely, I think you know, since if you

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<v Speaker 2>look at look to say, the Bloomberg Dollar Index, since

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<v Speaker 2>basically in the February, the trend's been down. Yes, for

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<v Speaker 2>dollars rebound did a bit over this week from the lows.

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<v Speaker 2>But I do think the key thing is, and I'm

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<v Speaker 2>saying i'll discuss them as contacts last night, is you've

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<v Speaker 2>seen a lot of say this, if you break down,

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<v Speaker 2>say you've got the macro fund the hedge fund community,

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<v Speaker 2>you have corports and you have real money funds. To

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<v Speaker 2>make it very simple, so we know the macro fund

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<v Speaker 2>community has been like, okay, it's self a dollar. Obviously

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<v Speaker 2>it's been a good trade. Its overall, say overall, because

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<v Speaker 2>obviously the short dollar yend got crushed yesterday, but overall

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<v Speaker 2>short dollar has been a good trade. But the quick

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<v Speaker 2>question is, okay, what a corport's move slower and real

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<v Speaker 2>money funds move even slower than that, And so these

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<v Speaker 2>two are beginning to come into play. They haven't really

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<v Speaker 2>come into player as much talking to all my contacts.

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<v Speaker 2>So I think the question is because it's like an

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<v Speaker 2>old tanker, particularly real money funds, it takes a long

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<v Speaker 2>time to make decision, but once that decision is made,

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<v Speaker 2>it's made. So they are discussions going on now talking

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<v Speaker 2>to the money funds of what they want to do,

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<v Speaker 2>how they want to allocate holding today, want to change

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<v Speaker 2>or not change, and so even and I said, this

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<v Speaker 2>isn't if because we don't know what plays. But if

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<v Speaker 2>they they say, you know, we are going to minimize

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<v Speaker 2>or cut back on our dollar holdings and this is

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<v Speaker 2>a long term play, then I think you've got another

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<v Speaker 2>big wave coming in on the dollar, which will add

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<v Speaker 2>pressure to it. So I think you've seen the macro

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<v Speaker 2>funds at play that sort of played out for the moment,

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<v Speaker 2>and our working to see what the corporates do and

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<v Speaker 2>what does real money funds do as well, and I

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<v Speaker 2>think we'll need a few more months before we see

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<v Speaker 2>what those decisions.

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<v Speaker 1>Are, So help me understand what that may mean for

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<v Speaker 1>the Bank of Japan. We had the meeting yesterday BOJ

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<v Speaker 1>holding that policy rated fifty basis points, not a big surprise,

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<v Speaker 1>and then policymakers saying afterwards that it's going to take

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<v Speaker 1>essentially longer than previously thought for the Bank of Japan

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<v Speaker 1>to hit its inflation target. Where do we go from

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<v Speaker 1>here in terms of BOJ tightening.

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<v Speaker 2>Well, I think certainly it was interesting that one thing

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<v Speaker 2>that raided did say he goes even where we've moved

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<v Speaker 2>our target for inflation, it doesn't mean rate hikes are

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<v Speaker 2>off the table. So the market obviously took how it

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<v Speaker 2>interpreted certain industry was okay, well, right, hikes off the table.

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<v Speaker 2>Certainly for Dolly Yen. What happened took into my trade

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<v Speaker 2>of contact yesterday was basically it wasn't people buying, It

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<v Speaker 2>was just the shorts. It was quite a well positioned

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<v Speaker 2>short position on dolly En, so those got squeezed out.

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<v Speaker 2>Liquidity didn't help because in Asia a lot of markets

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<v Speaker 2>were closed yesterday for public holiday, so there was relatively

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<v Speaker 2>thin liquidity, so that exacerbated these moves. So it's been

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<v Speaker 2>a bit of a painful trade for those shorts, shall

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<v Speaker 2>we say. Having said that, I do think the question

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<v Speaker 2>you've got two parts of the equation versus Japan side

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<v Speaker 2>of the equation, and there's the US side of the equation,

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<v Speaker 2>and at the moment with Japan's side of the equation

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<v Speaker 2>to the BJ well they won't they The market's gone, okay,

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<v Speaker 2>we kicked that can down the road. Yes, it may materialize.

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<v Speaker 2>You did see the CPI coming strong for Japan. I

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<v Speaker 2>think if the earnings coming strong, there is a case

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<v Speaker 2>to say, look, there will be there is inflationary pressure

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<v Speaker 2>still there, so maybe they will.

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<v Speaker 1>Hike at some point this year.

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<v Speaker 2>But I think initially we go to the US side

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<v Speaker 2>of the equation with obviously the payroll report today, and

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<v Speaker 2>in that I'd heavily focus on the unemployment rate is

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<v Speaker 2>supposed to say the same at four point two. You know,

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<v Speaker 2>if it's does that, then I think the fact can say, look,

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<v Speaker 2>we said, well, we know hurried to hike was we

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<v Speaker 2>don't need to. If it does uptick the market, well

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<v Speaker 2>obviously is very happy to price some rate cuts as

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<v Speaker 2>we know. Then I think if it does uptick the market, go,

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<v Speaker 2>look at this pressure on it, we're going to run

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<v Speaker 2>with the growth side of the equation, not the inflation

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<v Speaker 2>side of the equation, and pricing more rate cuts, which

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<v Speaker 2>obviously would be dollar negative. So I think where it

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<v Speaker 2>goes from now, really today's payroll report is key.

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<v Speaker 1>So we were mentioning the positive developments when it comes

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<v Speaker 1>to US China trade and the possibility that we're going

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<v Speaker 1>to have some level of negotiation happening maybe in the

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<v Speaker 1>near term. We just don't know what does that mean

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<v Speaker 1>for the Chinese currency.

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<v Speaker 2>Yeah, it's interesting because certainly if you look at dollar,

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<v Speaker 2>you one it's being offshore, you won. It's basically been

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<v Speaker 2>in a pretty much very tight range really seven twenty

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<v Speaker 2>six to seven point thirty one, chopping around in that

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<v Speaker 2>range the yuan against the basket of currencies and see

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<v Speaker 2>if that's basket so has weakened so China's obviously played out.

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<v Speaker 2>Say look, we're not going to go weak and much

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<v Speaker 2>at the moment or gradually against the dollar, but we'll

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<v Speaker 2>have the weekend against the other markets to help support

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<v Speaker 2>our economy. Now, what is interesting, though, is we're starting

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<v Speaker 2>to see some interest and it is I say starting

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<v Speaker 2>so I wouldn't go heavily on it. We're starting some

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<v Speaker 2>interest in completing the macro fund community looking at downside

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<v Speaker 2>dollar yu wan so you know we'll cletely with like

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<v Speaker 2>put options or downside digital options or stuff like that.

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<v Speaker 2>So the market sentiment which initially was hey, we're going

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<v Speaker 2>for dollar y one higher. There was certainly the case

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<v Speaker 2>go before after Trump's election and even started this year.

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<v Speaker 2>Now it's sort of to neutral or now we're starting

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<v Speaker 2>to actually they think, actually it's going to not being

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<v Speaker 2>dollar on everything could be dollar you one positive. I

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<v Speaker 2>do say these are initial signs though, but it is

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<v Speaker 2>interesting that you are seeing the change of sentiment in

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<v Speaker 2>terms of where do you want maybe headed This idea

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<v Speaker 2>of the one is going to take the seven forty

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<v Speaker 2>against the dollar, not that it won't, but those they're

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<v Speaker 2>not quite you're not hearing though, that sort of noise

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<v Speaker 2>as much nowadays as you were say a month ago.

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<v Speaker 1>David, Thank you so much. David Finnerty there, Bloomberg, EFX

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<v Speaker 1>and rat Strategist. Joining from Singapore here on the Daybreak

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<v Speaker 1>Asia podcast. Welcome back to the Daybreak Asia Podcast. I'm

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<v Speaker 1>Derek Krisner. The US equity market was hired today for

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<v Speaker 1>an eighth straight session, helped by gains in both Meta

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<v Speaker 1>and Microsoft. However, after the bell, Apple and Amazon delivered

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<v Speaker 1>some disappointment. Apple said that sales in China were worse

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<v Speaker 1>than expected. The company is also warning the tariffs will

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<v Speaker 1>increase cost in the current quarter by nine hundred million dollars.

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<v Speaker 1>Then there's Amazon forecasting operating profit in the current quarter

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<v Speaker 1>that was a little disappointing, and the companies saying the

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<v Speaker 1>tariffs and trade policy may cause consumers to pull back

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<v Speaker 1>on their spending. So it's clear that tariffs are beginning

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<v Speaker 1>to bite. The question is whether this is going to

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<v Speaker 1>be reflected in tomorrow's report on April employment. Joining me

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<v Speaker 1>now for a look at the data is Bill Adams,

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<v Speaker 1>a senior VP also chief economist at Comerica Bank, on

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<v Speaker 1>the line from Dallas, Texas. Bill, thank you for making

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<v Speaker 1>time to chat with me. Is it too soon for

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<v Speaker 1>the impact of the tariffs to manifest in tomorrow's employment data?

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<v Speaker 2>Hi, Doug, I.

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<v Speaker 3>Think we'll start to see some of the effect of

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<v Speaker 3>the tariffs in the April jobs numbers. I think in

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<v Speaker 3>the month of April, businesses we're trying to figure out

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<v Speaker 3>what the changes in tariffs actually were, of course, and

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<v Speaker 3>then starting to think through how that would affect their

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<v Speaker 3>profit expectations, their revenue expectations, and their needs for the

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<v Speaker 3>next three, six and twelve months. So I'm expecting the

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<v Speaker 3>data to show that while businesses didn't make big layoffs

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<v Speaker 3>during the month of April, they probably slow rolled the

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<v Speaker 3>pace of hiring, and so I'm expecting nonfarm payroll jobs

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<v Speaker 3>to rise a relatively blackluster one hundred and fifteen thousand.

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<v Speaker 1>In the month. So we also had today activity from manufacturers.

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<v Speaker 1>This is the isms manufacturing PMI. It eased by about

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<v Speaker 1>three tenths of a point. We've got a reading of

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<v Speaker 1>forty eight seven. Obviously, that indicates contraction what's going on

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<v Speaker 1>with a manufacturing economy from your point of view.

0:11:36.880 --> 0:11:39.559
<v Speaker 3>So I think you have to draw a distinction here

0:11:39.640 --> 0:11:44.400
<v Speaker 3>between surveys which look pretty scary right now versus hard data.

0:11:44.440 --> 0:11:47.160
<v Speaker 3>Where As you just pointed out with the jobs report,

0:11:47.240 --> 0:11:50.160
<v Speaker 3>we don't have very much at hand yet. Surveys are

0:11:50.200 --> 0:11:52.800
<v Speaker 3>pointing a lot of pointing to a lot of anxiety

0:11:53.040 --> 0:11:57.880
<v Speaker 3>and a lot of increased caution due to expectations for

0:11:57.920 --> 0:12:00.560
<v Speaker 3>the impact of terrorists, but also who really knows where

0:12:00.880 --> 0:12:04.480
<v Speaker 3>teriff rates are going to settle out in another week

0:12:04.559 --> 0:12:08.360
<v Speaker 3>or another month, And so the ism saying that businesses

0:12:08.400 --> 0:12:14.440
<v Speaker 3>are reducing production, businesses are slowing hiring, businesses are seeing

0:12:14.600 --> 0:12:17.400
<v Speaker 3>higher input costs. But we'll just have to wait until

0:12:17.440 --> 0:12:20.959
<v Speaker 3>we get hard data on producer prices to see how

0:12:21.040 --> 0:12:24.960
<v Speaker 3>much of that increase in input costs is just expectations

0:12:25.040 --> 0:12:29.800
<v Speaker 3>and emotions rather than hard numbers and big shares of

0:12:29.880 --> 0:12:34.280
<v Speaker 3>input costs rising. I think I do expect to see

0:12:34.320 --> 0:12:37.160
<v Speaker 3>a slower pace of manufacturing growth, if not a decline,

0:12:37.360 --> 0:12:40.080
<v Speaker 3>in the next couple of months, and I think we're

0:12:40.240 --> 0:12:44.040
<v Speaker 3>likely to see a pullback and demand, especially for capital equipment,

0:12:44.120 --> 0:12:46.000
<v Speaker 3>in the next three to six months because of that

0:12:46.080 --> 0:12:50.600
<v Speaker 3>same more cautious approach causing businesses to stretch out their

0:12:50.640 --> 0:12:55.199
<v Speaker 3>capax plans and to just be a little more cautious

0:12:55.240 --> 0:12:58.200
<v Speaker 3>in their usage of cash. In the next couple of

0:12:58.200 --> 0:12:59.960
<v Speaker 3>months while they figure out what's going on.

0:13:00.200 --> 0:13:02.000
<v Speaker 1>So the other day, as you know, we got the

0:13:02.040 --> 0:13:04.920
<v Speaker 1>first print on first quarter GDP. A little bit of

0:13:04.960 --> 0:13:08.079
<v Speaker 1>a contraction here. Some of that may have been skewed

0:13:08.200 --> 0:13:12.560
<v Speaker 1>by heavy imports sales of a lot of merchandise coming

0:13:12.600 --> 0:13:15.839
<v Speaker 1>into the US to avoid tariffs. But do you think

0:13:15.880 --> 0:13:18.120
<v Speaker 1>there's a risk now that we're going to see another

0:13:18.400 --> 0:13:21.760
<v Speaker 1>or a downward revision to that first quarter GDP print.

0:13:22.080 --> 0:13:25.280
<v Speaker 3>It wouldn't surprise me, to be honest, My forecast going

0:13:25.320 --> 0:13:28.200
<v Speaker 3>into the release of the first estimate was for a

0:13:28.240 --> 0:13:31.559
<v Speaker 3>one point four percent annualized contractions. So I'm kind of

0:13:31.760 --> 0:13:33.920
<v Speaker 3>my bias is to be anchored to what I thought

0:13:33.920 --> 0:13:36.720
<v Speaker 3>I was going to get. But we'll see in the revisions.

0:13:37.040 --> 0:13:39.480
<v Speaker 3>I think in the second quarter we're likely to see

0:13:39.760 --> 0:13:42.920
<v Speaker 3>a strong rebound in GDP and maybe see that sustained

0:13:42.920 --> 0:13:46.079
<v Speaker 3>into the third quarter because that huge rush to get

0:13:46.120 --> 0:13:49.040
<v Speaker 3>goods on shore ahead of the higher tariffs is going

0:13:49.080 --> 0:13:52.600
<v Speaker 3>to drop off, and imports are going to be much

0:13:52.760 --> 0:13:56.480
<v Speaker 3>much much lower come May and June and July and August,

0:13:56.800 --> 0:14:01.160
<v Speaker 3>and so that will translate into a swinged of the

0:14:01.200 --> 0:14:07.400
<v Speaker 3>trade deficit in a more favorable kind that the numbers

0:14:07.440 --> 0:14:10.920
<v Speaker 3>will look better for GDP. At the same time, final

0:14:10.960 --> 0:14:14.240
<v Speaker 3>demand for business spending and consumer spending was pretty good

0:14:14.240 --> 0:14:17.200
<v Speaker 3>in the first quarter. I think those components of GDP

0:14:17.960 --> 0:14:19.880
<v Speaker 3>are likely to slow in the second.

0:14:19.680 --> 0:14:22.360
<v Speaker 1>Quarter and third quarter. So we had yields down across

0:14:22.400 --> 0:14:25.160
<v Speaker 1>the treasury curve today. I think the two year was

0:14:25.200 --> 0:14:28.440
<v Speaker 1>off about nine basis points. That's a pretty sizable move

0:14:28.720 --> 0:14:30.880
<v Speaker 1>if you look at what the swaps market is telling

0:14:30.960 --> 0:14:34.240
<v Speaker 1>us right now, the first quarter point rate cut from

0:14:34.280 --> 0:14:37.040
<v Speaker 1>the Fed is fully priced in for July, not June,

0:14:37.120 --> 0:14:41.320
<v Speaker 1>but fully priced in for July. And interestingly, today we

0:14:41.400 --> 0:14:44.360
<v Speaker 1>heard from the Treasury Secretary Scott Bessen who was saying

0:14:45.120 --> 0:14:48.040
<v Speaker 1>that what the bond market right now is telegraphing is

0:14:48.080 --> 0:14:50.600
<v Speaker 1>that the Fed ought to be lowering interest rates. Would

0:14:50.640 --> 0:14:51.280
<v Speaker 1>you agree with that.

0:14:52.000 --> 0:14:55.480
<v Speaker 3>The Fed isn't a pickle. On the one hand, it

0:14:55.480 --> 0:14:58.280
<v Speaker 3>does look like the job market is likely to weaken

0:14:58.360 --> 0:15:00.640
<v Speaker 3>your term. On the other hand, inflations head at higher

0:15:00.720 --> 0:15:03.160
<v Speaker 3>and so they're being pulled in opposite directions by the

0:15:03.160 --> 0:15:06.360
<v Speaker 3>two parts of their mandate. I think it is somewhat

0:15:06.440 --> 0:15:10.280
<v Speaker 3>reasonable to think that between a rock and a hard place,

0:15:10.320 --> 0:15:13.000
<v Speaker 3>the FED will choose to support the job market, since

0:15:13.360 --> 0:15:16.960
<v Speaker 3>there's a good case to be made that the inflation

0:15:17.080 --> 0:15:20.120
<v Speaker 3>from higher tariffs will be a one off, especially if

0:15:20.120 --> 0:15:22.320
<v Speaker 3>the labor market is weaker a year from now than

0:15:22.320 --> 0:15:26.680
<v Speaker 3>it is today, and that means less negotiating power for

0:15:26.760 --> 0:15:31.320
<v Speaker 3>workers to ask for raises and to cause that inflation

0:15:31.440 --> 0:15:35.720
<v Speaker 3>increase to persist. But the FED doesn't like to be

0:15:35.800 --> 0:15:39.120
<v Speaker 3>cutting with inflation rising. The FED will be very unhappy

0:15:39.680 --> 0:15:43.520
<v Speaker 3>to cut given that consumer and business inflation expectations have

0:15:43.600 --> 0:15:46.480
<v Speaker 3>picked up in the last couple of months, and the

0:15:46.520 --> 0:15:49.600
<v Speaker 3>bar for the FED to ease is considerably higher right

0:15:49.640 --> 0:15:52.920
<v Speaker 3>now than it would be in a more normal economic shock,

0:15:53.160 --> 0:15:56.040
<v Speaker 3>which brings down prices as well as brings down hiring.

0:15:56.160 --> 0:15:59.280
<v Speaker 3>So I think, yes, my call is for the FED

0:15:59.280 --> 0:16:01.240
<v Speaker 3>to ease in the next couple of months. But I

0:16:01.280 --> 0:16:04.280
<v Speaker 3>think if my forecast misses, it's more likely that the

0:16:04.280 --> 0:16:07.440
<v Speaker 3>FED cuts rates by less than I'm forecasting, and I'm

0:16:07.480 --> 0:16:09.400
<v Speaker 3>looking for three quarters of a percent and cuts by

0:16:09.400 --> 0:16:11.120
<v Speaker 3>the end of the year, to be clear, I think

0:16:11.120 --> 0:16:13.480
<v Speaker 3>it's more likely that I miss by seeing less rate

0:16:13.520 --> 0:16:15.240
<v Speaker 3>cuts than that than by seeing more.

0:16:15.360 --> 0:16:18.120
<v Speaker 1>Without getting into too much politics, how do you feel

0:16:18.120 --> 0:16:20.920
<v Speaker 1>about the Treasury Secretary weighing in on what the FED

0:16:20.920 --> 0:16:21.400
<v Speaker 1>should do.

0:16:22.040 --> 0:16:26.560
<v Speaker 3>The independence of the FED is really an anchor of

0:16:26.600 --> 0:16:30.240
<v Speaker 3>the US financial system and by extent, the US economy,

0:16:30.320 --> 0:16:33.120
<v Speaker 3>and so I think it's important that the FED be

0:16:33.280 --> 0:16:36.800
<v Speaker 3>independent and that actors both within the United States and

0:16:36.800 --> 0:16:40.440
<v Speaker 3>outside of the United States understand the Fed's independence. Now,

0:16:40.480 --> 0:16:43.200
<v Speaker 3>I will say I still am very confident that the

0:16:43.240 --> 0:16:47.240
<v Speaker 3>FED does have independence in setting monetary policy. And I

0:16:47.280 --> 0:16:52.360
<v Speaker 3>think the institutional supports of the Fed's independence in the

0:16:52.480 --> 0:16:56.280
<v Speaker 3>US system are very strong. They're still in place despite

0:16:56.360 --> 0:16:59.560
<v Speaker 3>the noise that you're here in the headlines, and I

0:16:59.600 --> 0:17:03.760
<v Speaker 3>think Chair Powell in particular has a lot of credibility

0:17:04.640 --> 0:17:08.879
<v Speaker 3>across Washington that allows him to tune out the noise

0:17:08.920 --> 0:17:12.760
<v Speaker 3>and focus on the fence dual mandate for stable prices

0:17:12.800 --> 0:17:16.120
<v Speaker 3>and for maximum employment and to set interest rates according

0:17:16.119 --> 0:17:16.800
<v Speaker 3>to that bill.

0:17:16.800 --> 0:17:19.920
<v Speaker 1>Do you have a view on how effective this tariff

0:17:19.960 --> 0:17:24.920
<v Speaker 1>policy may be in reshoring American manufacturing is if that's

0:17:24.960 --> 0:17:28.080
<v Speaker 1>the ultimate goal, do you think it's likely to succeed?

0:17:28.760 --> 0:17:32.360
<v Speaker 3>I think for tariffs to cause American businesses to make

0:17:32.400 --> 0:17:36.280
<v Speaker 3>a big shift towards reshoring, businesses have to be confident

0:17:36.359 --> 0:17:39.080
<v Speaker 3>that tariff rates are going to stay high over the

0:17:39.119 --> 0:17:43.520
<v Speaker 3>longer run, and so I would I think if we

0:17:43.600 --> 0:17:48.560
<v Speaker 3>see legislation that bakes tariff revenue into the ten year

0:17:48.600 --> 0:17:54.680
<v Speaker 3>projection for fiscal revenues and the fiscal balance depends on tariffs,

0:17:54.960 --> 0:17:57.879
<v Speaker 3>then businesses are more likely to say, aha, I guess

0:17:57.920 --> 0:18:02.120
<v Speaker 3>this is a permanent shift to make decisions accordingly than

0:18:02.119 --> 0:18:05.440
<v Speaker 3>if tariffs continue to be exclusively something that comes out

0:18:05.440 --> 0:18:08.760
<v Speaker 3>of the executive branch and which could change under a

0:18:08.840 --> 0:18:09.840
<v Speaker 3>change in administration.

0:18:10.200 --> 0:18:12.320
<v Speaker 1>Bill Thank you so much, Bill Adams. There. He is

0:18:12.400 --> 0:18:16.240
<v Speaker 1>Senior VP, also chief economist at Comerica Bank. On the

0:18:16.280 --> 0:18:19.480
<v Speaker 1>line from Dallas, Texas here on the Daybreak Asia Podcast.

0:18:22.160 --> 0:18:25.520
<v Speaker 1>Thanks for listening to today's episode of the Bloomberg Daybreak

0:18:25.680 --> 0:18:29.040
<v Speaker 1>Asia Edition podcast. Each weekday, we look at the story

0:18:29.119 --> 0:18:33.480
<v Speaker 1>shaping markets, finance, and geopolitics in the Asia Pacific. You

0:18:33.520 --> 0:18:37.600
<v Speaker 1>can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,

0:18:37.720 --> 0:18:40.760
<v Speaker 1>or anywhere else you listen. Join us again tomorrow for

0:18:40.880 --> 0:18:44.359
<v Speaker 1>insight on the market moves from Hong Kong to Singapore

0:18:44.760 --> 0:18:48.560
<v Speaker 1>and Australia. I'm Doug Chrisner, and this is Bloomberg