Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Doug Krisner.
Speaker 2: You can join Brian Curtis and myself for the stories,
Speaker 2: making news and moving markets in the APAC region. You
Speaker 2: can subscribe to the show anywhere you get your podcast
Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the
Speaker 2: Bloomberg Business app. Carlos Kusanov is with us. Carlos is
Speaker 2: senior Asia economist at UBP. He is in our studios
Speaker 2: in Hong Kong. Nice of you to join us. I
Speaker 2: got to begin with the data that we looked at
Speaker 2: on the Chinese economy over the weekend, this manufacturing PMI.
Speaker 2: Maybe it wasn't surprising to you that we're going to
Speaker 2: see continued weakness. How problematic is it though? For Beijing?
Speaker 3: Good morning and thanks for having me so. Over the
Speaker 3: weekend we saw much week manufacturing PMI numbers marking the
Speaker 3: fourth month of consecutive declines. So it was not entirely
Speaker 3: surprising because we have already seen it happen for three months.
Speaker 3: It is problematic in the sense that China is looking
Speaker 3: to achieve a five point zero percent growth target. And
Speaker 3: we are far behind that number. Growth in the first
Speaker 3: half was four point five, but of course that's only
Speaker 3: because we had a very strong GDP print in the
Speaker 3: first quarta. Growth slowed significantly to below four percent in
Speaker 3: the second quarta. So the manufacturing PMI weighs quite a
Speaker 3: bit on GDP and it was quite negative, suggesting that
Speaker 3: pressures do persist and the government needs to do more
Speaker 3: to alleviate those pressures.
Speaker 2: If one of the things that struck me, both the
Speaker 2: underlying input cost index and the output sub index showed
Speaker 2: signs of deepening deflation. And I know we've talked about
Speaker 2: the similarities between what Japan went through thirty years ago
Speaker 2: and what China could be facing these days. Are we
Speaker 2: at risk of seeing a really severe deflationary trap in
Speaker 2: China right now?
Speaker 3: That's right. So if you look at these subcomponents of
Speaker 3: the PMI index, we saw weakness across the board, but
Speaker 3: a lot of the declines, you know, marked declines across
Speaker 3: two key subcomponents producer, the output price and the input price,
Speaker 3: and that reflects two different things. The output price reflects
Speaker 3: the fact that you have over capacity concerns in some
Speaker 3: industrial sectors, and because demand is still very weak. You
Speaker 3: have supply exceeding demand, and you have very negative factory prices.
Speaker 3: It you know, in any economy, upstream prices trickle down
Speaker 3: to consumer prices, and so the fact that you have
Speaker 3: signs of deflation in upstream prices suggests that it's going
Speaker 3: to be that much more challenging for China to reflate
Speaker 3: its economy once again because you have the structural oversupply
Speaker 3: of goods in the economy, very weak demand. And the
Speaker 3: other subcomponent was the input price. Now that is not
Speaker 3: entirely reflective of the domestic economy, but we did see
Speaker 3: broad based US dollar weakness last month, and so the
Speaker 3: cost of inputs decreased as a result of that. So
Speaker 3: that is the other factor that was perhaps you know,
Speaker 3: exacerbating inflationary pressures in the economy, but it isn't, you know,
Speaker 3: undeniable that we are seeing over capacity and weak demand,
Speaker 3: which is translating to structural this inflationary pressure. So not
Speaker 3: quite Japan in my opinion, but it is going to
Speaker 3: take a lot for China to reflate its economy in
Speaker 3: this environment.
Speaker 2: You look at the lack of positive sentiment and reflected
Speaker 2: in the latest sales figures that we had on housing,
Speaker 2: and you come away with the idea that this slump
Speaker 2: and residential real estate is only deepening right now, so
Speaker 2: the government, it would seem, has to take more action.
Speaker 2: Wouldn't you agree with that?
Speaker 3: I totally agree. I think they announced a package of
Speaker 3: measures in April. At the time, it seemed like a
Speaker 3: step in the right direction. The intent of that decision was,
Speaker 3: of course, to sort of get the housing stimulus out
Speaker 3: of the way for the July meetings, the third penum
Speaker 3: that focuses on structural reforms, so they didn't want to
Speaker 3: have to focus on housing. In hindsight, it's clear that
Speaker 3: whatever the three hundred billions rescue package for the real
Speaker 3: estate tector was insufficient, and they've also moved to alleviate
Speaker 3: some of the macroprudential rules to basically facilitate people buying
Speaker 3: houses and speculating in real estate in Tier one cities.
Speaker 3: But that's not enough either, So they were Anecdotally, we
Speaker 3: do hear that some luxury real estate developments in first
Speaker 3: year cities like Shanghai have been sold within two weeks
Speaker 3: of launching, but those you know that anecdotal evidence isn't
Speaker 3: translating yet into system wide appreciation. So we are not
Speaker 3: seeing home prices in first year cities stabilizing as a result,
Speaker 3: so it remains anecdotal at this point in time. The
Speaker 3: only way around it will be, you know, if they
Speaker 3: inject enough liquidity into the system that you see a
Speaker 3: recovery in consumption. And of course, you know, if first
Speaker 3: year cities start to stabilize, people might be more inclined
Speaker 3: to shift investments away from government bonds and ultra safe
Speaker 3: options like high dividend stocks from state tone enterprises two
Speaker 3: sort of slightly riskier, but you know, very traditional outlets
Speaker 3: like real estate in first year cities. But sentiment is
Speaker 3: still very weak, so we are not seeing that yet.
Speaker 2: Yeah, no doubt about that. And one of the key
Speaker 2: questions I think for Japan, given the fact that China
Speaker 2: is such a large trading partner, to what extent is
Speaker 2: the weak Chinese economy holding back Japan? Do you have
Speaker 2: a sense of that?
Speaker 4: I do.
Speaker 3: Actually, we've priced this into the outlook. I think a
Speaker 3: lot of exporters in Asia have benefited from stronger US
Speaker 3: demand in the first half of the year. The expectation
Speaker 3: now is that US demand is starting to normalize in
Speaker 3: the second half of the year, we are going to
Speaker 3: have positive growth, but we are seeing domestic consumption significantly
Speaker 3: below two percent, and so with that should come phasing
Speaker 3: out of that tailwind that Asian exporters including Japan, have
Speaker 3: benefited from in the first half of the year. A
Speaker 3: few months ago, the expectation was that, you know, the
Speaker 3: China story, the recovery of you know, real estate prices
Speaker 3: benefiting consumers, and then normalization and consumption in China, that
Speaker 3: that should begin to kick in the second half of
Speaker 3: the year, partially offsetting some of the weakness from the US.
Speaker 3: But it is just going to take longer than that,
Speaker 3: and so for all of the major exporters in the region,
Speaker 3: including Japan, I think in the second half of the year,
Speaker 3: external demand is going to be a net drag on
Speaker 3: their economy.
Speaker 2: Carlos, good stuff. Thank you so much for making time
Speaker 2: to chat with us. Carlos Casanova. He is senior Asia
Speaker 2: economist at upp. Anne Barry is with us. She has
Speaker 2: founder also managing partner at Thread Needle. Joining us on
Speaker 2: the line from here in New York City. It's been
Speaker 2: too long. Thanks for making time to chat with us.
Speaker 2: I hope you're doing well, I know you as an
Speaker 2: expert when it comes to kind of private markets. We
Speaker 2: can put that aside for the moment. Can you share
Speaker 2: with me your view on what you see where public
Speaker 2: markets are concerned right now?
Speaker 4: Doug. It's great to be back, so thanks, thanks for
Speaker 4: having me on. And I think this is a timely conversation, Doug,
Speaker 4: because the markets have been such a roller coaster and
Speaker 4: slightly unpredictable in terms of what kinds of news it's
Speaker 4: rewarding and what kinds of news it's punishing at the moment, Doug.
Speaker 4: So we took a look at last week. My expression
Speaker 4: was no good beat went unpunished. Nvidia got punished in
Speaker 4: the market despite the strong report, retailers did despite the
Speaker 4: strong report. And it tells me that now is the
Speaker 4: moment to really look for thematics, to look for fundamentals.
Speaker 4: Bisector and I've got thoughts in a couple of them,
Speaker 4: But the overarching point here is it's not about responding
Speaker 4: to earnings anymore. It's about getting back to themes that
Speaker 4: we can stand behind for the long run.
Speaker 2: Does the narrative around a soft landing enter into this
Speaker 2: thinking at all? Do you think is that a little separate.
Speaker 4: I think it does enter into it because I think
Speaker 4: it means that we are going to get rate cuts,
Speaker 4: that perhaps we're a little bit deeper, a little bit faster,
Speaker 4: doug than we had thought about before. And so when
Speaker 4: I come back to these thematics, I asked myself, well,
Speaker 4: which kinds of sectors stand to gain one from that
Speaker 4: reduced long term rate outlook, and two from the good
Speaker 4: secular trends and so software in the public markets one
Speaker 4: area I've been looking at specifically at these names that
Speaker 4: are one interest rate sensitive, but two where there's a
Speaker 4: real thesis around providing one stop shop solutions, particularly for
Speaker 4: medium and small sized enterprises, people like workday in sales,
Speaker 4: sport and pallel to networks. So I've been spending a
Speaker 4: lot of time looking at those businesses.
Speaker 2: What do you think about software companies relative to the
Speaker 2: AI story? Should we look at that together?
Speaker 3: You know?
Speaker 4: Do you and I talked about in the past, I've
Speaker 4: been somewhat skeptical about the AI story, and I've certainly
Speaker 4: had a perspective back to your opening line that in
Speaker 4: the private market, AI valuations have been well into bubble
Speaker 4: territory for a long time, and incidentally, I think the
Speaker 4: recent roomored one hundred billion dollar valuation for open AI
Speaker 4: falls into that bucket. So I've been skeptical. I've been
Speaker 4: applying applying that skepticism to the public market. So the
Speaker 4: kinds of companies I've been looking at again like the
Speaker 4: workdays of sales forces, and also companies like trade Desk,
Speaker 4: which is a digital marketplace for connected TV ads. These
Speaker 4: are companies that at some point may benefit from AI
Speaker 4: in terms of productivity to lift margins or in generative
Speaker 4: AI to get the revenue generation up, but they're not
Speaker 4: dependent on AI driving the increasing scale I expect them
Speaker 4: to experience, so I think it's been quite important to
Speaker 4: separate them.
Speaker 2: I'm curious as to whether or not you think companies
Speaker 2: the ones you've just described there these startups would be
Speaker 2: more inclined to go to a larger player and for
Speaker 2: that player to become acquisitive, rather than from the startup
Speaker 2: to go to raise capital through an IPO. Is that right?
Speaker 4: That's such a great question, and let's talk about IPOs.
Speaker 4: Everyone thought at the beginning of this year, once we
Speaker 4: saw Reddit go out into the market and IPO, once
Speaker 4: we saw Rubric go out into the market, which was
Speaker 4: in the spring of this year that Q four of
Speaker 4: twenty twenty four would be the moment that the IPO
Speaker 4: window opened up. And at the moment, to be honest,
Speaker 4: there aren't signs quite yet that there's going to be
Speaker 4: this blossoming of IPO activity that folks were expecting. It
Speaker 4: feels as though electoral uncertainty is still squashing the IPO
Speaker 4: market a little bit, and there's a little bit of
Speaker 4: wait and see going on. So I do think that
Speaker 4: there's a whole slew of privately held companies that have
Speaker 4: got slightly impatient investors who pumped a lot of cash
Speaker 4: into them in twenty twenty one twenty twenty two, who
Speaker 4: are saying, look, you can't bank on an IPO outcome here,
Speaker 4: Let's really go and try and get some synergies. Let's
Speaker 4: sell to let's sell to a strategic and get a clean,
Speaker 4: clean exit, rather than if you're an investor and you
Speaker 4: wait for your portfolio company to go public, your subject
Speaker 4: to lock up, so you have to sell down over time.
Speaker 4: So I think a strategic sept just a strategic exit,
Speaker 4: it is looking increasingly attractive.
Speaker 2: We're a little more than two months away from the election.
Speaker 2: How do you think that's entering into the thinking in
Speaker 2: terms of people that are really playing this market right now.
Speaker 4: It's such a good question, and one of the conversations
Speaker 4: I'm having a lot with folks Doug is what does
Speaker 4: the Harris trade look like versus the Trump trade? And
Speaker 4: you know the moment in time when it looked as
Speaker 4: though former President Trump and and Vice President his vice
Speaker 4: president nominee J. D. Barns were getting traction. It looked
Speaker 4: as though the market was stilling to double down on
Speaker 4: things like energy and defense, classic sort of Trump or
Speaker 4: Mark trade stock with Vice President Harris, Doug gaining momentum.
Speaker 4: And we just had the Bloomberg voice over here on
Speaker 4: your show that the Gats narrowing and the likes of Michigan.
Speaker 4: It's getting a little uncertain because there isn't a clear
Speaker 4: Harris trade yet. It's really unclear which sectors stand to
Speaker 4: gain most from Vice President Harris becoming president and which
Speaker 4: dand to lose because her policy position at the moment
Speaker 4: seems to be business as usual, which doesn't really provide
Speaker 4: a catalyst for much change, to be honest. So I
Speaker 4: think it's we need to get a little bit closer
Speaker 4: to the time.
Speaker 2: I know you're going to be heading off to Germany soon.
Speaker 2: Give me your sense of what that conversation is going
Speaker 2: to be, like, what do you hope to discover when
Speaker 2: you're in Berlin.
Speaker 4: Well, I'm going to be talking to a lot of
Speaker 4: CEOs there, Doug, of the global department stores, the likes
Speaker 4: of Nordstrom, the lights of Carda Bay in Germany, the
Speaker 4: likes of Central and Thailand. And one of the key
Speaker 4: areas of dialogue is going to be what is the
Speaker 4: state of the global consumer? And if we look at
Speaker 4: what the US data has been saying. You cited the
Speaker 4: inflation data now starting to come in where economists had expected.
Speaker 4: But if you listen to the earnings calls we had
Speaker 4: last week, there was a sense in the US at
Speaker 4: least that the consumer is feeling pressured. We heard that
Speaker 4: on the Abercrombie and Fitch earnings call. We heard that
Speaker 4: on the Gap earnings call, we heard that on the
Speaker 4: Coal earnings call, all saying we've had a run of
Speaker 4: decent activity, but the consumer is really starting to feel
Speaker 4: pressured and is shifting towards value. I'm really curious to
Speaker 4: hear whether that trend, Doug is continuing in other markets
Speaker 4: in Europe and in Asia as well. The second thing
Speaker 4: I'm looking at is how much more digitization the retailers
Speaker 4: are leading into. And I discussed when I went to
Speaker 4: the similar conference last year. Last year, a big theme
Speaker 4: is retail media, department stores and other retailers looking at
Speaker 4: their email distribution list, their instore digital screens to find
Speaker 4: inventory to sell for advertising. Really curious to see if
Speaker 4: that's been gaining traction as we digitize more and more.
Speaker 2: So I'm going to circle back to politics and try
Speaker 2: to include it in our conversation around global retail right
Speaker 2: now visa v tariffs. I mean, this is something that
Speaker 2: Donald Trump is advocating. What would that mean to the outlook?
Speaker 2: Do you think in the view of these global department
Speaker 2: store CEOs, how would the notion of tariffs? How would
Speaker 2: they respond? Do you think?
Speaker 4: Well, it's certainly called added complexity when it's come to
Speaker 4: supply chain management. And it's interesting because we saw today
Speaker 4: that the Biden administration has been delaying announcements on China tariffs,
Speaker 4: even though we've seen Canada step up to the plate.
Speaker 4: I'll give you a really specific example, Doug, for how
Speaker 4: I've seen this create complexity. I'm involved in a manufacturing
Speaker 4: business and a client came to us recently and off
Speaker 4: for a quote for us to provide a certain kind
Speaker 4: of product, and we really had to go back and say, well, look,
Speaker 4: if we source from China, which is what this client
Speaker 4: is used to, then, given where the tariffs have been
Speaker 4: and where they could go, that's going to force us
Speaker 4: into producing one price level to them, which could force
Speaker 4: them to go to another geography completely to go and
Speaker 4: source a coming to us in the US. And so
Speaker 4: we're having to double down on the work on looking
Speaker 4: at other places in Asia, other places in South America
Speaker 4: to provide components for that particular client. So I do
Speaker 4: think it's going to add more and more complexity to
Speaker 4: supply chains, which shifted a lot under the Trump administration.
Speaker 4: If there's a second wave of that, Doug, I think
Speaker 4: it's going to add perhaps a little bit of a
Speaker 4: delay around the fight against inflation that's been going fairly
Speaker 4: well in recent months.
Speaker 2: Last question before I let you go, and I'm going
Speaker 2: to ask you to respond at about twenty seconds here,
Speaker 2: and maybe that's a little unfair. No matter Trump or
Speaker 2: Harris is the bet for greater reshoring.
Speaker 4: The bet is the greater restoring, no matter which one.
Speaker 2: Absolutely all right, Always a pleasure and take good care.
Speaker 2: I hope to see us soon. And Barry is founder.
Speaker 2: I'm also managing partner at Thread Needle. Joining us here
Speaker 2: Barbara and Bernard founder and the CIO at Windcrest Capital.
Speaker 2: She joins us from the Bahamas. Thanks for making time
Speaker 2: to chat with us. I got to go back to
Speaker 2: what we learn Friday with that PCE. It seems to
Speaker 2: me like inflation is really under control. I think the
Speaker 2: FED is comfortable with that notion. Now they pretty much
Speaker 2: have telegraphed a rate cut for September. The key question
Speaker 2: is whether or not there is going to be a
Speaker 2: pickup in the degree to which the labor market has
Speaker 2: been deteriorating. That may determine the magnitude of easy going forward.
Speaker 2: Talk to me about your view on the US jobs market.
Speaker 2: How well do you think it's holding up?
Speaker 1: Well? Thanks so much for having me on this evening.
Speaker 1: I think you know it has held up in The
Speaker 1: FED is obviously very dependent on data, so I think
Speaker 1: the US jobs report later this week will be very instructive.
Speaker 1: I mean, when you think about what's priced in I
Speaker 1: think sixty five bits of cuts by year end, and
Speaker 1: so whether that number changes that your guess is as
Speaker 1: good as mine at this point.
Speaker 2: So are you pretty much in the soft landing camp
Speaker 2: then that the FED has been successful in avoiding recession.
Speaker 1: Well, I think what we have right now is sort
Speaker 1: of a Goldilocks type scenario right where the soft landing
Speaker 1: narrative is certainly building momentum, and you know, you have
Speaker 1: dissinplation trend right that, coupled with the price hikes that
Speaker 1: are you know, that are being called for in September,
Speaker 1: has just given a lot of complacency. So that's my
Speaker 1: bigger concern as a more micro investor than a macro investor.
Speaker 1: But yeah, we all know what complacency and consensus can
Speaker 1: back fire very quickly, and we saw that at the
Speaker 1: beginning of August and then you know, the market just
Speaker 1: roared back. So a the thing that concerns me is
Speaker 1: these Teflon like qualities because I don't think they're normal.
Speaker 1: And September has historically been a very volatile market month
Speaker 1: in the markets, so I don't think it's any time
Speaker 1: to be complacent in here. But what changes that, Like,
Speaker 1: what's a catalyst right, That's that's the harder question. And
Speaker 1: I feel like right now the market's just sort of fidgeting,
Speaker 1: if you will, with trying to find the next big
Speaker 1: theme to take it higher. We're at all time high,
Speaker 1: is essentially right, So how does the market go up
Speaker 1: another twenty five percent from here? And if you think
Speaker 1: about what has led to the gains in the market
Speaker 1: over the last few years, it's always been thematic. Right.
Speaker 1: We had the tech platforms and they were just the
Speaker 1: best model ever, so crowded. Then obesity drugs and everyone
Speaker 1: piled in, and then of course this year you had
Speaker 1: Ais you know, saved the day and everyone thought, wow,
Speaker 1: all these productivity gains. Of course, the markets can go
Speaker 1: on forever, my fear, although those have all worked in
Speaker 1: their great themes. Right, But the expectations for growth and
Speaker 1: all of those themes are high, and so are the valuations.
Speaker 1: So as a value investor, what I tend to think
Speaker 1: is overpriced right now is growth.
Speaker 2: Is there some degree of concern about the election maybe
Speaker 2: looming over the market. I'm not saying that that could
Speaker 2: be the catalyst to create the kind of second guessing
Speaker 2: that you're talking about to say that the market would correct.
Speaker 1: Great, it's a great question, right, And what we've seen
Speaker 1: is a month in politics is a long time. Yeah,
Speaker 1: you know, six weeks ago, the Trump trade was doing
Speaker 1: so well, and you know, and then Biden stepped down
Speaker 1: and Camela's you know, support has has truly been remarkable,
Speaker 1: that grounds fall, that she's got behind her, and so
Speaker 1: who knows. I don't have a crystal ball, but so
Speaker 1: I wouldn't I wouldn't place bets based on you know,
Speaker 1: I wouldn't invest based on the outcome of an election.
Speaker 1: I think that's certainly somewhere. I don't have an edge.
Speaker 2: Yeah, but if you look at economic plans, Kamala Harris
Speaker 2: what she would like to accomplish through her economic agenda,
Speaker 2: and whether that means that tax hikes, virtue that, you know,
Speaker 2: whatever is a part of the tax code right now
Speaker 2: in terms of those Trump tax cuts would not be extended.
Speaker 2: President or Vice President Harris has basically said that that
Speaker 2: she would like to be able to do more I
Speaker 2: think on the fiscal side. And then former President Trump
Speaker 2: is talking about the issue of tariffs is a way
Speaker 2: of combating a lot of the the export favoritism maybe
Speaker 2: that China enjoys, right, now do you think that either
Speaker 2: one of those things could spell trouble for the bond market?
Speaker 1: Well, the ironies, I think they're both inflationary, like higher taxes, terroriffts.
Speaker 1: Those are all inflationary at a time when you've got
Speaker 1: a very data dependent FED. So if you have higher inflation,
Speaker 1: our rate's going to come down as much as being
Speaker 1: priced in. So that's where the politics will matter. But
Speaker 1: you know, again, people say things and do things differently,
Speaker 1: and I think we would just have to wait to
Speaker 1: see on that one. But they're both definitely inflationary, which
Speaker 1: is a risk to the narrative that rates are coming down.
Speaker 2: Where are you finding opportunity in markets these days? Barbara?
Speaker 1: So, I think if we carry on in a Goldilock scenario,
Speaker 1: what will happen is this very narrow rally will broaden out.
Speaker 1: So if you look at the S and P five
Speaker 1: hundred twenty times next year's earnings, you compare that to
Speaker 1: the equal weight at SMP, which is trading at sixteen times. Right.
Speaker 1: So I think what lower rates will do is bring
Speaker 1: money into sectors and geographies that have underperformed during this
Speaker 1: higher rate environment. And when I think of what's underperformed,
Speaker 1: I really think it's emerging markets and capital intensive industries,
Speaker 1: and the anomaly there is, you know, a very capital
Speaker 1: intensive industry is mining. So I think lower rates help that,
Speaker 1: and we have been able to identify opportunities where not
Speaker 1: only is the stock cheap, but it has a catalyst
Speaker 1: and then you have hopefully this tailwind of lower rates
Speaker 1: and hopefully the economy continuing to grow. Of course, the
Speaker 1: numbers we just got out of China this morning are
Speaker 1: always worrying for commodities investors because that it tends to
Speaker 1: be the tail that wigs the commodity job. But if
Speaker 1: I just give you an example of how b up
Speaker 1: some things have been in that sector. We like copper
Speaker 1: because we think the energy transition tailwinds are undeniable and
Speaker 1: we like the demand supply asymmetry there. But if you
Speaker 1: look at a stock like twenty nine Medals, which is
Speaker 1: an Australian listed primarily copper producing company, share price has
Speaker 1: fallen from three dollars and sixteen cents in April of
Speaker 1: twenty two to thirty seven cents now. And part of
Speaker 1: that was just a force of nature. They had a
Speaker 1: flood in one of their two minds, and so if
Speaker 1: you look at that on a normalized basis earnings, and
Speaker 1: you think, well, lightning doesn't strike twice. You know, do
Speaker 1: you have a self help story here with a new
Speaker 1: CEO who's highly incentivized and it has a lot interests
Speaker 1: that are aligned with ours. He's making great progress in
Speaker 1: terms of addressing the uncertainties in the stock, whether it's
Speaker 1: the additional equity raise or debt restructuring or timing an
Speaker 1: amount on insurance payout claims. You still have one of
Speaker 1: their two minds, which is producing, so it's not like
Speaker 1: there's no cash flow. And so you look at twenty
Speaker 1: twenty four being a transition year, twenty twenty five reflecting
Speaker 1: earnings that the mind that is in production right now
Speaker 1: early twenty twenty six were being told the mind that's
Speaker 1: out of production due to this you know, historical flood
Speaker 1: if you will coming back on online, and then in
Speaker 1: twenty twenty seven you get a full year of operations
Speaker 1: at both minds. So what I like to do is,
Speaker 1: I think time is one of the few arbitrages left
Speaker 1: in investing, and if you can have a longer time horizon,
Speaker 1: you can sort of assess the company on a normalized
Speaker 1: earnings basis. So I look at a company like that
Speaker 1: that used to trade on seven times EBITDA on twenty
Speaker 1: twenty one and now it's on you know, one point
Speaker 1: eight times f YO two earnings, and that's not an
Speaker 1: evy to EBITDA basis. So if it only went back
Speaker 1: to half of the ebit donald well that it used
Speaker 1: to trade on, you have over one hundred percent outside.
Speaker 1: So those are kind of examples of trades where I
Speaker 1: feel like I have a margin of safety, where I've
Speaker 1: got a tailwind at my back with a structural earnings growth,
Speaker 1: and I see green shoots in copper price markets. So
Speaker 1: that's I think you have to get creative right now.
Speaker 1: It's a tricky market.
Speaker 2: I think we can.
Speaker 1: I don't know what the next big trend is, so
Speaker 1: I've got to be micro and find self help stories.
Speaker 2: Okay, we'll leave it there, Barbara, It's always a pleasure.
Speaker 2: Barbara and Bernard, founder CIO at Windcrest Capital, joining from
Speaker 2: the Bahamas. This has been the Bloomberg Daybreak Asia podcast,
Speaker 2: bringing you the stories making news and moving markets in
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