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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Doug Krisner.

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Speaker 2: You can join Brian Curtis and myself for the stories,

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Speaker 2: making news and moving markets in the APAC region. You

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Speaker 2: can subscribe to the show anywhere you get your podcast

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Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the

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Speaker 2: Bloomberg Business app. Carlos Kusanov is with us. Carlos is

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Speaker 2: senior Asia economist at UBP. He is in our studios

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Speaker 2: in Hong Kong. Nice of you to join us. I

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Speaker 2: got to begin with the data that we looked at

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Speaker 2: on the Chinese economy over the weekend, this manufacturing PMI.

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Speaker 2: Maybe it wasn't surprising to you that we're going to

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Speaker 2: see continued weakness. How problematic is it though? For Beijing?

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Speaker 3: Good morning and thanks for having me so. Over the

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Speaker 3: weekend we saw much week manufacturing PMI numbers marking the

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Speaker 3: fourth month of consecutive declines. So it was not entirely

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Speaker 3: surprising because we have already seen it happen for three months.

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Speaker 3: It is problematic in the sense that China is looking

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Speaker 3: to achieve a five point zero percent growth target. And

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Speaker 3: we are far behind that number. Growth in the first

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Speaker 3: half was four point five, but of course that's only

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Speaker 3: because we had a very strong GDP print in the

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Speaker 3: first quarta. Growth slowed significantly to below four percent in

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Speaker 3: the second quarta. So the manufacturing PMI weighs quite a

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Speaker 3: bit on GDP and it was quite negative, suggesting that

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Speaker 3: pressures do persist and the government needs to do more

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Speaker 3: to alleviate those pressures.

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Speaker 2: If one of the things that struck me, both the

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Speaker 2: underlying input cost index and the output sub index showed

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Speaker 2: signs of deepening deflation. And I know we've talked about

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Speaker 2: the similarities between what Japan went through thirty years ago

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Speaker 2: and what China could be facing these days. Are we

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Speaker 2: at risk of seeing a really severe deflationary trap in

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Speaker 2: China right now?

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Speaker 3: That's right. So if you look at these subcomponents of

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Speaker 3: the PMI index, we saw weakness across the board, but

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Speaker 3: a lot of the declines, you know, marked declines across

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Speaker 3: two key subcomponents producer, the output price and the input price,

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Speaker 3: and that reflects two different things. The output price reflects

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Speaker 3: the fact that you have over capacity concerns in some

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Speaker 3: industrial sectors, and because demand is still very weak. You

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Speaker 3: have supply exceeding demand, and you have very negative factory prices.

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Speaker 3: It you know, in any economy, upstream prices trickle down

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Speaker 3: to consumer prices, and so the fact that you have

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Speaker 3: signs of deflation in upstream prices suggests that it's going

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Speaker 3: to be that much more challenging for China to reflate

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Speaker 3: its economy once again because you have the structural oversupply

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Speaker 3: of goods in the economy, very weak demand. And the

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Speaker 3: other subcomponent was the input price. Now that is not

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Speaker 3: entirely reflective of the domestic economy, but we did see

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Speaker 3: broad based US dollar weakness last month, and so the

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Speaker 3: cost of inputs decreased as a result of that. So

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Speaker 3: that is the other factor that was perhaps you know,

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Speaker 3: exacerbating inflationary pressures in the economy, but it isn't, you know,

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Speaker 3: undeniable that we are seeing over capacity and weak demand,

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Speaker 3: which is translating to structural this inflationary pressure. So not

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Speaker 3: quite Japan in my opinion, but it is going to

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Speaker 3: take a lot for China to reflate its economy in

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Speaker 3: this environment.

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Speaker 2: You look at the lack of positive sentiment and reflected

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Speaker 2: in the latest sales figures that we had on housing,

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Speaker 2: and you come away with the idea that this slump

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Speaker 2: and residential real estate is only deepening right now, so

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Speaker 2: the government, it would seem, has to take more action.

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Speaker 2: Wouldn't you agree with that?

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Speaker 3: I totally agree. I think they announced a package of

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Speaker 3: measures in April. At the time, it seemed like a

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Speaker 3: step in the right direction. The intent of that decision was,

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Speaker 3: of course, to sort of get the housing stimulus out

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Speaker 3: of the way for the July meetings, the third penum

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Speaker 3: that focuses on structural reforms, so they didn't want to

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Speaker 3: have to focus on housing. In hindsight, it's clear that

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Speaker 3: whatever the three hundred billions rescue package for the real

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Speaker 3: estate tector was insufficient, and they've also moved to alleviate

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Speaker 3: some of the macroprudential rules to basically facilitate people buying

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Speaker 3: houses and speculating in real estate in Tier one cities.

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Speaker 3: But that's not enough either, So they were Anecdotally, we

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Speaker 3: do hear that some luxury real estate developments in first

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Speaker 3: year cities like Shanghai have been sold within two weeks

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Speaker 3: of launching, but those you know that anecdotal evidence isn't

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Speaker 3: translating yet into system wide appreciation. So we are not

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Speaker 3: seeing home prices in first year cities stabilizing as a result,

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Speaker 3: so it remains anecdotal at this point in time. The

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Speaker 3: only way around it will be, you know, if they

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Speaker 3: inject enough liquidity into the system that you see a

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Speaker 3: recovery in consumption. And of course, you know, if first

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Speaker 3: year cities start to stabilize, people might be more inclined

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Speaker 3: to shift investments away from government bonds and ultra safe

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Speaker 3: options like high dividend stocks from state tone enterprises two

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Speaker 3: sort of slightly riskier, but you know, very traditional outlets

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Speaker 3: like real estate in first year cities. But sentiment is

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Speaker 3: still very weak, so we are not seeing that yet.

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Speaker 2: Yeah, no doubt about that. And one of the key

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Speaker 2: questions I think for Japan, given the fact that China

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Speaker 2: is such a large trading partner, to what extent is

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Speaker 2: the weak Chinese economy holding back Japan? Do you have

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Speaker 2: a sense of that?

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Speaker 4: I do.

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Speaker 3: Actually, we've priced this into the outlook. I think a

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Speaker 3: lot of exporters in Asia have benefited from stronger US

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Speaker 3: demand in the first half of the year. The expectation

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Speaker 3: now is that US demand is starting to normalize in

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Speaker 3: the second half of the year, we are going to

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Speaker 3: have positive growth, but we are seeing domestic consumption significantly

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Speaker 3: below two percent, and so with that should come phasing

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Speaker 3: out of that tailwind that Asian exporters including Japan, have

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Speaker 3: benefited from in the first half of the year. A

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Speaker 3: few months ago, the expectation was that, you know, the

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Speaker 3: China story, the recovery of you know, real estate prices

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Speaker 3: benefiting consumers, and then normalization and consumption in China, that

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Speaker 3: that should begin to kick in the second half of

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Speaker 3: the year, partially offsetting some of the weakness from the US.

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Speaker 3: But it is just going to take longer than that,

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Speaker 3: and so for all of the major exporters in the region,

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Speaker 3: including Japan, I think in the second half of the year,

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Speaker 3: external demand is going to be a net drag on

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Speaker 3: their economy.

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Speaker 2: Carlos, good stuff. Thank you so much for making time

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Speaker 2: to chat with us. Carlos Casanova. He is senior Asia

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Speaker 2: economist at upp. Anne Barry is with us. She has

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Speaker 2: founder also managing partner at Thread Needle. Joining us on

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Speaker 2: the line from here in New York City. It's been

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Speaker 2: too long. Thanks for making time to chat with us.

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Speaker 2: I hope you're doing well, I know you as an

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Speaker 2: expert when it comes to kind of private markets. We

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Speaker 2: can put that aside for the moment. Can you share

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Speaker 2: with me your view on what you see where public

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Speaker 2: markets are concerned right now?

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Speaker 4: Doug. It's great to be back, so thanks, thanks for

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Speaker 4: having me on. And I think this is a timely conversation, Doug,

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Speaker 4: because the markets have been such a roller coaster and

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Speaker 4: slightly unpredictable in terms of what kinds of news it's

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Speaker 4: rewarding and what kinds of news it's punishing at the moment, Doug.

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Speaker 4: So we took a look at last week. My expression

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Speaker 4: was no good beat went unpunished. Nvidia got punished in

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Speaker 4: the market despite the strong report, retailers did despite the

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Speaker 4: strong report. And it tells me that now is the

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Speaker 4: moment to really look for thematics, to look for fundamentals.

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Speaker 4: Bisector and I've got thoughts in a couple of them,

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Speaker 4: But the overarching point here is it's not about responding

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Speaker 4: to earnings anymore. It's about getting back to themes that

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Speaker 4: we can stand behind for the long run.

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Speaker 2: Does the narrative around a soft landing enter into this

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Speaker 2: thinking at all? Do you think is that a little separate.

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Speaker 4: I think it does enter into it because I think

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Speaker 4: it means that we are going to get rate cuts,

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Speaker 4: that perhaps we're a little bit deeper, a little bit faster,

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Speaker 4: doug than we had thought about before. And so when

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Speaker 4: I come back to these thematics, I asked myself, well,

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Speaker 4: which kinds of sectors stand to gain one from that

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Speaker 4: reduced long term rate outlook, and two from the good

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Speaker 4: secular trends and so software in the public markets one

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Speaker 4: area I've been looking at specifically at these names that

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Speaker 4: are one interest rate sensitive, but two where there's a

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Speaker 4: real thesis around providing one stop shop solutions, particularly for

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Speaker 4: medium and small sized enterprises, people like workday in sales,

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Speaker 4: sport and pallel to networks. So I've been spending a

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Speaker 4: lot of time looking at those businesses.

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Speaker 2: What do you think about software companies relative to the

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Speaker 2: AI story? Should we look at that together?

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Speaker 3: You know?

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Speaker 4: Do you and I talked about in the past, I've

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Speaker 4: been somewhat skeptical about the AI story, and I've certainly

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Speaker 4: had a perspective back to your opening line that in

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Speaker 4: the private market, AI valuations have been well into bubble

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Speaker 4: territory for a long time, and incidentally, I think the

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Speaker 4: recent roomored one hundred billion dollar valuation for open AI

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Speaker 4: falls into that bucket. So I've been skeptical. I've been

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Speaker 4: applying applying that skepticism to the public market. So the

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Speaker 4: kinds of companies I've been looking at again like the

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Speaker 4: workdays of sales forces, and also companies like trade Desk,

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Speaker 4: which is a digital marketplace for connected TV ads. These

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Speaker 4: are companies that at some point may benefit from AI

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Speaker 4: in terms of productivity to lift margins or in generative

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Speaker 4: AI to get the revenue generation up, but they're not

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Speaker 4: dependent on AI driving the increasing scale I expect them

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Speaker 4: to experience, so I think it's been quite important to

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Speaker 4: separate them.

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Speaker 2: I'm curious as to whether or not you think companies

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Speaker 2: the ones you've just described there these startups would be

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Speaker 2: more inclined to go to a larger player and for

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Speaker 2: that player to become acquisitive, rather than from the startup

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Speaker 2: to go to raise capital through an IPO. Is that right?

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Speaker 4: That's such a great question, and let's talk about IPOs.

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Speaker 4: Everyone thought at the beginning of this year, once we

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Speaker 4: saw Reddit go out into the market and IPO, once

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Speaker 4: we saw Rubric go out into the market, which was

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Speaker 4: in the spring of this year that Q four of

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Speaker 4: twenty twenty four would be the moment that the IPO

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Speaker 4: window opened up. And at the moment, to be honest,

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Speaker 4: there aren't signs quite yet that there's going to be

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Speaker 4: this blossoming of IPO activity that folks were expecting. It

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Speaker 4: feels as though electoral uncertainty is still squashing the IPO

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Speaker 4: market a little bit, and there's a little bit of

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Speaker 4: wait and see going on. So I do think that

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Speaker 4: there's a whole slew of privately held companies that have

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Speaker 4: got slightly impatient investors who pumped a lot of cash

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Speaker 4: into them in twenty twenty one twenty twenty two, who

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Speaker 4: are saying, look, you can't bank on an IPO outcome here,

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Speaker 4: Let's really go and try and get some synergies. Let's

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Speaker 4: sell to let's sell to a strategic and get a clean,

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Speaker 4: clean exit, rather than if you're an investor and you

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Speaker 4: wait for your portfolio company to go public, your subject

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Speaker 4: to lock up, so you have to sell down over time.

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Speaker 4: So I think a strategic sept just a strategic exit,

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Speaker 4: it is looking increasingly attractive.

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Speaker 2: We're a little more than two months away from the election.

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Speaker 2: How do you think that's entering into the thinking in

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Speaker 2: terms of people that are really playing this market right now.

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Speaker 4: It's such a good question, and one of the conversations

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Speaker 4: I'm having a lot with folks Doug is what does

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Speaker 4: the Harris trade look like versus the Trump trade? And

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Speaker 4: you know the moment in time when it looked as

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Speaker 4: though former President Trump and and Vice President his vice

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Speaker 4: president nominee J. D. Barns were getting traction. It looked

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Speaker 4: as though the market was stilling to double down on

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Speaker 4: things like energy and defense, classic sort of Trump or

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Speaker 4: Mark trade stock with Vice President Harris, Doug gaining momentum.

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Speaker 4: And we just had the Bloomberg voice over here on

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Speaker 4: your show that the Gats narrowing and the likes of Michigan.

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Speaker 4: It's getting a little uncertain because there isn't a clear

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Speaker 4: Harris trade yet. It's really unclear which sectors stand to

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Speaker 4: gain most from Vice President Harris becoming president and which

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Speaker 4: dand to lose because her policy position at the moment

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Speaker 4: seems to be business as usual, which doesn't really provide

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Speaker 4: a catalyst for much change, to be honest. So I

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Speaker 4: think it's we need to get a little bit closer

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Speaker 4: to the time.

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Speaker 2: I know you're going to be heading off to Germany soon.

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Speaker 2: Give me your sense of what that conversation is going

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Speaker 2: to be, like, what do you hope to discover when

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Speaker 2: you're in Berlin.

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Speaker 4: Well, I'm going to be talking to a lot of

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Speaker 4: CEOs there, Doug, of the global department stores, the likes

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Speaker 4: of Nordstrom, the lights of Carda Bay in Germany, the

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Speaker 4: likes of Central and Thailand. And one of the key

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Speaker 4: areas of dialogue is going to be what is the

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Speaker 4: state of the global consumer? And if we look at

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Speaker 4: what the US data has been saying. You cited the

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Speaker 4: inflation data now starting to come in where economists had expected.

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Speaker 4: But if you listen to the earnings calls we had

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Speaker 4: last week, there was a sense in the US at

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Speaker 4: least that the consumer is feeling pressured. We heard that

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Speaker 4: on the Abercrombie and Fitch earnings call. We heard that

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Speaker 4: on the Gap earnings call, we heard that on the

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Speaker 4: Coal earnings call, all saying we've had a run of

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Speaker 4: decent activity, but the consumer is really starting to feel

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Speaker 4: pressured and is shifting towards value. I'm really curious to

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Speaker 4: hear whether that trend, Doug is continuing in other markets

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Speaker 4: in Europe and in Asia as well. The second thing

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Speaker 4: I'm looking at is how much more digitization the retailers

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Speaker 4: are leading into. And I discussed when I went to

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Speaker 4: the similar conference last year. Last year, a big theme

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Speaker 4: is retail media, department stores and other retailers looking at

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Speaker 4: their email distribution list, their instore digital screens to find

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Speaker 4: inventory to sell for advertising. Really curious to see if

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Speaker 4: that's been gaining traction as we digitize more and more.

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Speaker 2: So I'm going to circle back to politics and try

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Speaker 2: to include it in our conversation around global retail right

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Speaker 2: now visa v tariffs. I mean, this is something that

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Speaker 2: Donald Trump is advocating. What would that mean to the outlook?

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Speaker 2: Do you think in the view of these global department

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Speaker 2: store CEOs, how would the notion of tariffs? How would

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Speaker 2: they respond? Do you think?

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Speaker 4: Well, it's certainly called added complexity when it's come to

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Speaker 4: supply chain management. And it's interesting because we saw today

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Speaker 4: that the Biden administration has been delaying announcements on China tariffs,

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Speaker 4: even though we've seen Canada step up to the plate.

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Speaker 4: I'll give you a really specific example, Doug, for how

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Speaker 4: I've seen this create complexity. I'm involved in a manufacturing

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Speaker 4: business and a client came to us recently and off

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Speaker 4: for a quote for us to provide a certain kind

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Speaker 4: of product, and we really had to go back and say, well, look,

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Speaker 4: if we source from China, which is what this client

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Speaker 4: is used to, then, given where the tariffs have been

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Speaker 4: and where they could go, that's going to force us

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Speaker 4: into producing one price level to them, which could force

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Speaker 4: them to go to another geography completely to go and

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Speaker 4: source a coming to us in the US. And so

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Speaker 4: we're having to double down on the work on looking

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Speaker 4: at other places in Asia, other places in South America

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Speaker 4: to provide components for that particular client. So I do

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Speaker 4: think it's going to add more and more complexity to

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Speaker 4: supply chains, which shifted a lot under the Trump administration.

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Speaker 4: If there's a second wave of that, Doug, I think

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Speaker 4: it's going to add perhaps a little bit of a

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Speaker 4: delay around the fight against inflation that's been going fairly

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Speaker 4: well in recent months.

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Speaker 2: Last question before I let you go, and I'm going

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Speaker 2: to ask you to respond at about twenty seconds here,

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Speaker 2: and maybe that's a little unfair. No matter Trump or

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Speaker 2: Harris is the bet for greater reshoring.

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Speaker 4: The bet is the greater restoring, no matter which one.

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Speaker 2: Absolutely all right, Always a pleasure and take good care.

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Speaker 2: I hope to see us soon. And Barry is founder.

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Speaker 2: I'm also managing partner at Thread Needle. Joining us here

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Speaker 2: Barbara and Bernard founder and the CIO at Windcrest Capital.

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Speaker 2: She joins us from the Bahamas. Thanks for making time

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Speaker 2: to chat with us. I got to go back to

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Speaker 2: what we learn Friday with that PCE. It seems to

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Speaker 2: me like inflation is really under control. I think the

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Speaker 2: FED is comfortable with that notion. Now they pretty much

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Speaker 2: have telegraphed a rate cut for September. The key question

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Speaker 2: is whether or not there is going to be a

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Speaker 2: pickup in the degree to which the labor market has

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Speaker 2: been deteriorating. That may determine the magnitude of easy going forward.

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Speaker 2: Talk to me about your view on the US jobs market.

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Speaker 2: How well do you think it's holding up?

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Speaker 1: Well? Thanks so much for having me on this evening.

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Speaker 1: I think you know it has held up in The

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Speaker 1: FED is obviously very dependent on data, so I think

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Speaker 1: the US jobs report later this week will be very instructive.

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Speaker 1: I mean, when you think about what's priced in I

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Speaker 1: think sixty five bits of cuts by year end, and

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Speaker 1: so whether that number changes that your guess is as

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Speaker 1: good as mine at this point.

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Speaker 2: So are you pretty much in the soft landing camp

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Speaker 2: then that the FED has been successful in avoiding recession.

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Speaker 1: Well, I think what we have right now is sort

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Speaker 1: of a Goldilocks type scenario right where the soft landing

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Speaker 1: narrative is certainly building momentum, and you know, you have

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Speaker 1: dissinplation trend right that, coupled with the price hikes that

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Speaker 1: are you know, that are being called for in September,

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Speaker 1: has just given a lot of complacency. So that's my

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Speaker 1: bigger concern as a more micro investor than a macro investor.

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Speaker 1: But yeah, we all know what complacency and consensus can

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Speaker 1: back fire very quickly, and we saw that at the

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Speaker 1: beginning of August and then you know, the market just

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Speaker 1: roared back. So a the thing that concerns me is

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Speaker 1: these Teflon like qualities because I don't think they're normal.

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Speaker 1: And September has historically been a very volatile market month

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Speaker 1: in the markets, so I don't think it's any time

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Speaker 1: to be complacent in here. But what changes that, Like,

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Speaker 1: what's a catalyst right, That's that's the harder question. And

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Speaker 1: I feel like right now the market's just sort of fidgeting,

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Speaker 1: if you will, with trying to find the next big

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Speaker 1: theme to take it higher. We're at all time high,

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Speaker 1: is essentially right, So how does the market go up

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Speaker 1: another twenty five percent from here? And if you think

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Speaker 1: about what has led to the gains in the market

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Speaker 1: over the last few years, it's always been thematic. Right.

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Speaker 1: We had the tech platforms and they were just the

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Speaker 1: best model ever, so crowded. Then obesity drugs and everyone

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Speaker 1: piled in, and then of course this year you had

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Speaker 1: Ais you know, saved the day and everyone thought, wow,

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Speaker 1: all these productivity gains. Of course, the markets can go

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Speaker 1: on forever, my fear, although those have all worked in

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Speaker 1: their great themes. Right, But the expectations for growth and

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Speaker 1: all of those themes are high, and so are the valuations.

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Speaker 1: So as a value investor, what I tend to think

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Speaker 1: is overpriced right now is growth.

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Speaker 2: Is there some degree of concern about the election maybe

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Speaker 2: looming over the market. I'm not saying that that could

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Speaker 2: be the catalyst to create the kind of second guessing

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Speaker 2: that you're talking about to say that the market would correct.

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Speaker 1: Great, it's a great question, right, And what we've seen

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Speaker 1: is a month in politics is a long time. Yeah,

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Speaker 1: you know, six weeks ago, the Trump trade was doing

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Speaker 1: so well, and you know, and then Biden stepped down

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Speaker 1: and Camela's you know, support has has truly been remarkable,

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Speaker 1: that grounds fall, that she's got behind her, and so

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Speaker 1: who knows. I don't have a crystal ball, but so

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Speaker 1: I wouldn't I wouldn't place bets based on you know,

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Speaker 1: I wouldn't invest based on the outcome of an election.

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Speaker 1: I think that's certainly somewhere. I don't have an edge.

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Speaker 2: Yeah, but if you look at economic plans, Kamala Harris

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Speaker 2: what she would like to accomplish through her economic agenda,

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Speaker 2: and whether that means that tax hikes, virtue that, you know,

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Speaker 2: whatever is a part of the tax code right now

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Speaker 2: in terms of those Trump tax cuts would not be extended.

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Speaker 2: President or Vice President Harris has basically said that that

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Speaker 2: she would like to be able to do more I

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Speaker 2: think on the fiscal side. And then former President Trump

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Speaker 2: is talking about the issue of tariffs is a way

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Speaker 2: of combating a lot of the the export favoritism maybe

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Speaker 2: that China enjoys, right, now do you think that either

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Speaker 2: one of those things could spell trouble for the bond market?

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Speaker 1: Well, the ironies, I think they're both inflationary, like higher taxes, terroriffts.

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Speaker 1: Those are all inflationary at a time when you've got

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Speaker 1: a very data dependent FED. So if you have higher inflation,

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Speaker 1: our rate's going to come down as much as being

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Speaker 1: priced in. So that's where the politics will matter. But

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Speaker 1: you know, again, people say things and do things differently,

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Speaker 1: and I think we would just have to wait to

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Speaker 1: see on that one. But they're both definitely inflationary, which

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Speaker 1: is a risk to the narrative that rates are coming down.

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Speaker 2: Where are you finding opportunity in markets these days? Barbara?

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Speaker 1: So, I think if we carry on in a Goldilock scenario,

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Speaker 1: what will happen is this very narrow rally will broaden out.

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Speaker 1: So if you look at the S and P five

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Speaker 1: hundred twenty times next year's earnings, you compare that to

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Speaker 1: the equal weight at SMP, which is trading at sixteen times. Right.

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Speaker 1: So I think what lower rates will do is bring

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Speaker 1: money into sectors and geographies that have underperformed during this

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Speaker 1: higher rate environment. And when I think of what's underperformed,

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Speaker 1: I really think it's emerging markets and capital intensive industries,

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Speaker 1: and the anomaly there is, you know, a very capital

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Speaker 1: intensive industry is mining. So I think lower rates help that,

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Speaker 1: and we have been able to identify opportunities where not

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Speaker 1: only is the stock cheap, but it has a catalyst

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Speaker 1: and then you have hopefully this tailwind of lower rates

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Speaker 1: and hopefully the economy continuing to grow. Of course, the

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Speaker 1: numbers we just got out of China this morning are

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Speaker 1: always worrying for commodities investors because that it tends to

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Speaker 1: be the tail that wigs the commodity job. But if

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Speaker 1: I just give you an example of how b up

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Speaker 1: some things have been in that sector. We like copper

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Speaker 1: because we think the energy transition tailwinds are undeniable and

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Speaker 1: we like the demand supply asymmetry there. But if you

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Speaker 1: look at a stock like twenty nine Medals, which is

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Speaker 1: an Australian listed primarily copper producing company, share price has

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Speaker 1: fallen from three dollars and sixteen cents in April of

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Speaker 1: twenty two to thirty seven cents now. And part of

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Speaker 1: that was just a force of nature. They had a

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Speaker 1: flood in one of their two minds, and so if

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Speaker 1: you look at that on a normalized basis earnings, and

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Speaker 1: you think, well, lightning doesn't strike twice. You know, do

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Speaker 1: you have a self help story here with a new

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Speaker 1: CEO who's highly incentivized and it has a lot interests

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Speaker 1: that are aligned with ours. He's making great progress in

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Speaker 1: terms of addressing the uncertainties in the stock, whether it's

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Speaker 1: the additional equity raise or debt restructuring or timing an

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Speaker 1: amount on insurance payout claims. You still have one of

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Speaker 1: their two minds, which is producing, so it's not like

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Speaker 1: there's no cash flow. And so you look at twenty

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Speaker 1: twenty four being a transition year, twenty twenty five reflecting

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Speaker 1: earnings that the mind that is in production right now

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Speaker 1: early twenty twenty six were being told the mind that's

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Speaker 1: out of production due to this you know, historical flood

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Speaker 1: if you will coming back on online, and then in

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Speaker 1: twenty twenty seven you get a full year of operations

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Speaker 1: at both minds. So what I like to do is,

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Speaker 1: I think time is one of the few arbitrages left

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Speaker 1: in investing, and if you can have a longer time horizon,

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Speaker 1: you can sort of assess the company on a normalized

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00:23:43,119 --> 00:23:45,840
Speaker 1: earnings basis. So I look at a company like that

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00:23:45,840 --> 00:23:48,119
Speaker 1: that used to trade on seven times EBITDA on twenty

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00:23:48,160 --> 00:23:51,199
Speaker 1: twenty one and now it's on you know, one point

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00:23:51,240 --> 00:23:55,119
Speaker 1: eight times f YO two earnings, and that's not an

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00:23:55,119 --> 00:23:58,000
Speaker 1: evy to EBITDA basis. So if it only went back

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00:23:58,080 --> 00:24:00,520
Speaker 1: to half of the ebit donald well that it used

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00:24:00,520 --> 00:24:03,120
Speaker 1: to trade on, you have over one hundred percent outside.

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00:24:03,680 --> 00:24:07,720
Speaker 1: So those are kind of examples of trades where I

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00:24:07,760 --> 00:24:10,920
Speaker 1: feel like I have a margin of safety, where I've

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00:24:10,920 --> 00:24:14,760
Speaker 1: got a tailwind at my back with a structural earnings growth,

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00:24:14,840 --> 00:24:18,800
Speaker 1: and I see green shoots in copper price markets. So

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00:24:20,240 --> 00:24:23,120
Speaker 1: that's I think you have to get creative right now.

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00:24:23,119 --> 00:24:24,640
Speaker 1: It's a tricky market.

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Speaker 2: I think we can.

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00:24:26,200 --> 00:24:28,320
Speaker 1: I don't know what the next big trend is, so

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00:24:28,640 --> 00:24:33,360
Speaker 1: I've got to be micro and find self help stories.

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Speaker 2: Okay, we'll leave it there, Barbara, It's always a pleasure.

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Speaker 2: Barbara and Bernard, founder CIO at Windcrest Capital, joining from

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Speaker 2: the Bahamas. This has been the Bloomberg Daybreak Asia podcast,

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Speaker 2: bringing you the stories making news and moving markets in

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00:24:47,359 --> 00:24:51,240
Speaker 2: the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube

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00:24:51,280 --> 00:24:54,639
Speaker 2: to get more episodes of this and other shows from Bloomberg.

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Speaker 2: Subscribe to the podcast on Apple, Spotify or anywhere else

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Speaker 2: you listen, and always on Bloomberg Radio, the Bloomberg Terminal,

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Speaker 2: and the Bloomberg Business app.

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Speaker 3: M