WEBVTT - Fed Uncertainty and Trade Pivots

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner,

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<v Speaker 2>US Markets whipsaud on conflicting signals as to whether President

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<v Speaker 2>Trump was considering firing fed Share J. Powell, and in

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<v Speaker 2>a moment we'll look at the Trump Powell controversy with

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<v Speaker 2>Rich Mullen. He is the CEO at Palace Capital Advisors.

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<v Speaker 2>But we begin this morning in the Asia Pacific. Joining

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<v Speaker 2>me now is Ekaterina Bigos, CIO for Asia ex Japan

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<v Speaker 2>Core Investments at AXA Investment Managers. Ekaterina joining from our

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<v Speaker 2>studios in Hong Kong. Thank you for making time to

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<v Speaker 2>chat with me. So we had the monthly activity data

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<v Speaker 2>for China earlier in the week and the figures on

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<v Speaker 2>industrial production beat forecast. I feel like this is a

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<v Speaker 2>story of Chinese exports, may be a little surprising in

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<v Speaker 2>that I don't know how much it's a traf story.

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<v Speaker 2>How are you viewing the Chinese export economy right now?

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<v Speaker 3>Well, I mean the Chinese explorer economy has done fairly

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<v Speaker 3>well through the spirit of uncertainty around tires. First of all,

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<v Speaker 3>I mean it was the escalation and the escalation which

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<v Speaker 3>I think was positive, but the key one was the

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<v Speaker 3>redirection of the trades to Asian and a lot of

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<v Speaker 3>it then from Asian actually ended up to be in US,

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<v Speaker 3>so I think redirection, so that the escalation and the

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<v Speaker 3>redirection has certainly provided easing on the impact that otherwise

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<v Speaker 3>would have materialized if those didn't happen, right, So I

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<v Speaker 3>think that's ultimately led to China still driving the growth

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<v Speaker 3>through the external part, which is the exports.

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<v Speaker 2>So markets have been dealing with the reality of this

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<v Speaker 2>US terraff regime for a couple of months. Now. Are

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<v Speaker 2>you surprised at how well economies and markets seem to

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<v Speaker 2>be holding up?

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<v Speaker 3>I think they ultimately comes down to the point that

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<v Speaker 3>I made earlier. I think the tire of delay, the

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<v Speaker 3>front loading that we've seen from some of the US

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<v Speaker 3>as well in other markets, and the transcripment, as I said,

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<v Speaker 3>through other economies that part of it ended in the US,

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<v Speaker 3>and just a general redirection for China and to other

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<v Speaker 3>markets has obviously provided a relief but also has supported

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<v Speaker 3>the growth for US in economies. So that resilience and

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<v Speaker 3>redirection that we've seen and certainly has benefited the US

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<v Speaker 3>in economy then other theme that obviously has been present

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<v Speaker 3>is the tex So tech is still alive and AI

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<v Speaker 3>and development, which has led to increased demand for chips,

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<v Speaker 3>which as in again is part of that supply chain

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<v Speaker 3>for chips, which has provided resilience as gone to the

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<v Speaker 3>second part of the year. I think that element related

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<v Speaker 3>to tire delay, the front loading and transhipment is going

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<v Speaker 3>to wind down, but I think the tech team is

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<v Speaker 3>still going to be present. But a combination of that

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<v Speaker 3>with probably deceleration of the onshore demand will probably have

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<v Speaker 3>a weaker growth in a broader Asia, including China. So

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<v Speaker 3>the broader view for China and Asia is decelerating growth

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<v Speaker 3>from here.

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<v Speaker 2>Well, I'm glad you mentioned the AI story because we've

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<v Speaker 2>been getting indications that the American government has lifted certain

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<v Speaker 2>restrictions export restrictions to some types of AI chips to

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<v Speaker 2>the Chinese market. I don't know if this indicates maybe

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<v Speaker 2>a little bit of movement in terms of overall trade negotiations,

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<v Speaker 2>but what do you think it means for the technology

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<v Speaker 2>industry on the mainland.

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<v Speaker 3>I think it's positive and we've seen already the sector

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<v Speaker 3>taking that news in a very positive light, and I

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<v Speaker 3>think it just gives China more room to advance in

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<v Speaker 3>that technological the technological sphere, and ultimately I think is

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<v Speaker 3>positive as well because US is using this as a

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<v Speaker 3>way of negotiating and getting outcome from China to deliver

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<v Speaker 3>certain elements that are beneficial for the US. Again, the

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<v Speaker 3>level of chips or the high performance of the chips

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<v Speaker 3>that being allowed to be exported to China, They're not

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<v Speaker 3>the highest performance level of chips, which again puts them

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<v Speaker 3>still back and potentially advancing some sphere of that technological drive.

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<v Speaker 2>We heard recently from President Trump saying that he's likely

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<v Speaker 2>to impose tariffs on pharmaceuticals as soon as the end

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<v Speaker 2>of the month. Do you have a sense of the

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<v Speaker 2>ramifications of a move like that.

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<v Speaker 3>Yeah, and I think some of the company is, particularly

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<v Speaker 3>places like Singapore, stand to be impacted more India to

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<v Speaker 3>a certain degree, and I think it could have ramifications

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<v Speaker 3>for China. I think the broader pharma and biotech sector

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<v Speaker 3>just as a spillover, but I think the manufacturing per se.

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<v Speaker 3>I think the Singapore and India, I said the less

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<v Speaker 3>degree are likely to be more impacted. But certainly those

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<v Speaker 3>victorial tires we need to get prepared for. They will come.

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<v Speaker 3>Is a question of how they're going to get implemented,

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<v Speaker 3>because the aim for the US is to reshore some

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<v Speaker 3>of that activity back home, and it's a strategic move

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<v Speaker 3>which is likely to evolve as we go into the

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<v Speaker 3>second part of the year.

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<v Speaker 2>So Trump was also saying that he's recently reached a

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<v Speaker 2>deal with Indonesia. Imported goods the US from Indonesia will

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<v Speaker 2>face a nineteen percent tearoff. That seems maybe a little

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<v Speaker 2>high relative to what the market may have been expecting.

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<v Speaker 2>I think for Trump, what's more important is that US

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<v Speaker 2>exports moving into the Indonesian market will not be taxed.

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<v Speaker 2>How would you evaluate this deal?

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<v Speaker 3>I think ultimately is what is the perception of Indonesia.

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<v Speaker 3>Did they get the good deal out of that? And

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<v Speaker 3>the signs at the moment is that the Indonesian are

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<v Speaker 3>relatively happy in how the deal was negotiated. And again,

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<v Speaker 3>the previous tariffs would have been higher, so obviously it's

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<v Speaker 3>a desceleration from that. And I think if I had

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<v Speaker 3>to covet and kind of broaden and canvas the trade negotiations,

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<v Speaker 3>I think the market expectation is by enlarge that the

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<v Speaker 3>tariffs that were voiced in the past, were the kind

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<v Speaker 3>of the upper limit of it, and the majority of

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<v Speaker 3>the trading partners will get a lower rate, unless, of

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<v Speaker 3>course they they tried to impost tier from the US

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<v Speaker 3>and again escalation of tit for tat, which we've seen

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<v Speaker 3>in case of China. But I think market is that's

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<v Speaker 3>a positive sign because again the level is just lower

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<v Speaker 3>to what it was voiced in the past.

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<v Speaker 2>I'm curious about the degree to which you're looking at

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<v Speaker 2>the behavior of the dollar recently and guiding a lot

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<v Speaker 2>of the decision making that you're having to confront right now.

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<v Speaker 2>The dollar seems to have weakened a bit. I mean,

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<v Speaker 2>we're strong over the last several days, but I think

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<v Speaker 2>generally speaking, the trend has been to the weak side here.

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<v Speaker 2>I mean, talk to me a little bit about how

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<v Speaker 2>you understand that, particularly in light of what the Fed

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<v Speaker 2>may be doing between now and the end of the year,

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<v Speaker 2>and how that's influencing your decision making.

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<v Speaker 3>That's certainly, I mean, if you look at the beginning

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<v Speaker 3>of the year and the expectations that many cell side

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<v Speaker 3>and by side put in place, certainly was dollar strengthening

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<v Speaker 3>or dollar staying kind of range bound? The dynamics of

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<v Speaker 3>the dollar. There's one point to highlight hasn't been uniform.

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<v Speaker 3>It's not just a dollar weakness across the board. Is

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<v Speaker 3>dollar weakness against various economies. We've seen that against the

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<v Speaker 3>Euro because, of course we've seen as part of the

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<v Speaker 3>tariff's escalation is the uncertainty of US assets has been

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<v Speaker 3>in the spotlight, so investors looked increasingly to diversify away

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<v Speaker 3>from US into other markets, and Europe, despite DCB being

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<v Speaker 3>ahead of the FED, was a key beneficiary of that

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<v Speaker 3>inflows also from Asia. What we've seen a trend that

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<v Speaker 3>we've seen again materializing this year is that the hedging

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<v Speaker 3>costs for Dollar assets is still prohibitive relative to European assets,

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<v Speaker 3>and we've seen Asian investors starting from hedge bases and

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<v Speaker 3>diversification need bases to move into assets away from US

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<v Speaker 3>into Again, this is not a structural shift away from US,

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<v Speaker 3>but this is a diversification drive that is materializing.

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<v Speaker 2>When you look at South Asia versus the Northern Asian economist,

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<v Speaker 2>and I'm thinking principally of Japan and South Korea, what's

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<v Speaker 2>the contrast here.

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<v Speaker 3>Yeah, the different dynamics that are driving those economy there's

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<v Speaker 3>some Ultimately tariffs is again impacting both economies. But one

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<v Speaker 3>part that is challenging for Japan at the moment, as

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<v Speaker 3>we've seen, is obviously policy or fiscal policy, which has

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<v Speaker 3>brought a lot of attention from the investors, particularly on

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<v Speaker 3>the thirty year jgb's fields elevating higher. And again, what

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<v Speaker 3>is Japan government conflicted with at the moment is economy

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<v Speaker 3>that is emerging out of kind of this stagnation but

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<v Speaker 3>is not yet thriving. It needs a support, a support

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<v Speaker 3>when the monetary policy is normalized and the fiscal policy

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<v Speaker 3>does not have room, so they would have and they

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<v Speaker 3>should use some element of support, but again the room

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<v Speaker 3>is limited, and we've seen obviously the elections that are

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<v Speaker 3>coming up in Upper House on the twentieth of July

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<v Speaker 3>kind of putting a lot of pressure on the JGBS

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<v Speaker 3>because of that need to provide additional fiscal stimulus, which

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<v Speaker 3>again the room is limited. When it comes to Koreas,

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<v Speaker 3>certainly the dynamics related to tyres. Of course, tech is

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<v Speaker 3>part of the theme that has kept career resilient. And

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<v Speaker 3>in Korea what we had is a lot of political

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<v Speaker 3>instability and also you can say by and large. Korea

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<v Speaker 3>has a lot more fiscal room unmonitored room to support

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<v Speaker 3>the economy, so slightly different dynamics macrodynamics between the two economies.

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<v Speaker 2>Ekaterina will leave it there, Thank you so very much.

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<v Speaker 2>Ekaterina bigos Cio for Asia ex Japan Core Investments at

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<v Speaker 2>Axa Investment Managers. Joining from our studios in Hong Kong.

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<v Speaker 2>Here on the Daybreak Asia Podcast. Welcome back to the

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<v Speaker 2>Daybreak Asia Podcast. I'm Doug Krisner. President Trump is denying

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<v Speaker 2>that he intends to fire Fetcher J. Powell. Late this morning,

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<v Speaker 2>a White House official told us the President was likely

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<v Speaker 2>to oust Powell soon. However, a short while later, President

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<v Speaker 2>and Trump said he has no plans to fire the

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<v Speaker 2>FED share and he said he was only discussing it

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<v Speaker 2>in concept during a closed door meeting with House Republicans.

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<v Speaker 2>So when the dust settled, it seems as though the

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<v Speaker 2>market was looking through this episode as political theater. Nonetheless,

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<v Speaker 2>the race is on to find a successor to Powell.

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<v Speaker 2>We have learned that ANYC director Kevin Hassett is an

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<v Speaker 2>early favorite. Here is Bloomberg's and Marie hor Dern.

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<v Speaker 4>This is someone that he would be willing to cut rates,

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<v Speaker 4>and he's telling people inside and outside the administration that

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<v Speaker 4>he would like the job. The President also said yesterday,

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<v Speaker 4>which I thought was really interesting, that Scott Bessett is

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<v Speaker 4>still an option, but he's not his top option because

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<v Speaker 4>he liked the job he's doing at Treasury. And we've

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<v Speaker 4>been talking about that really for weeks. If the President

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<v Speaker 4>was going to pull the Treasury secretary to move him

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<v Speaker 4>over to the FED, this would create almost another problem

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<v Speaker 4>and a huge hole for the president.

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<v Speaker 2>That is Bloomberg's and Marie hor Dern in the Washington

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<v Speaker 2>Let's get some reaction to all of this now from

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<v Speaker 2>Rich Mullen, he is founding partner and CEO at Palace

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<v Speaker 2>Capital Advisor's Riches on the line from just outside Boston,

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<v Speaker 2>thank you for making time to chat with me. What

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<v Speaker 2>did you make of this whole episode today, Rich, I

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<v Speaker 2>think we've got.

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<v Speaker 1>Some more gamemanship, quite frankly, I mean, we've seen this

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<v Speaker 1>in the behavior out of Trump and the tariffs. I

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<v Speaker 1>know that this is a far more dangerous game to

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<v Speaker 1>be playing, but I really feel it's unlikely that Trump

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<v Speaker 1>would fire the FED chair. I mean, we'd be extremely

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<v Speaker 1>destabilizing to the markets. We saw that. When the announcement

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<v Speaker 1>was out, I think the S and P dropped forty

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<v Speaker 1>or fifty points. There was a spike in gold, and

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<v Speaker 1>then on the denial, all that kind of reverse then

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<v Speaker 1>seemed to the market found a little solace in it.

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<v Speaker 1>I think that, you know, Trump is not unaware that

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<v Speaker 1>this would be an extremely negative event for the markets.

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<v Speaker 1>You know, there's no secret that Trump follows the markets

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<v Speaker 1>very very closely. You know, if he were, you know,

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<v Speaker 1>to fire the FED chairman right now, I think you'd

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<v Speaker 1>see the gold sore, you'd see a massive spike in

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<v Speaker 1>interest rates, and obviously it would affect the equity market.

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<v Speaker 1>You know, I really kind of feel like this is

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<v Speaker 1>the game that he's playing here is we've seen the

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<v Speaker 1>dollar depreciate considerably. You know, there's it's kind of pick

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<v Speaker 1>your adventure here watching the markets respond to Fed's to

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<v Speaker 1>the Trump administration's policy. You know, we're seeing this depreciation

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<v Speaker 1>in the dollar, and Trump administrations made no bones about

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<v Speaker 1>it that the weaker dollar is something that they favor.

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<v Speaker 1>You know, is really supportive of the country's industrial fabric.

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<v Speaker 1>It encourages exports, it may offset some of the damage

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<v Speaker 1>that you know, the economy's feeling are potentially fearing, I

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<v Speaker 1>should say, from the tariffs. But I think it's a

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<v Speaker 1>it's a remote situation that the FED that Trump would

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<v Speaker 1>fire the FED President Powell right now, especially with ten

0:12:53.120 --> 0:12:54.640
<v Speaker 1>months left in his term.

0:12:55.000 --> 0:12:58.439
<v Speaker 2>I mentioned that a leading candidate to become the FED

0:12:58.480 --> 0:13:01.599
<v Speaker 2>share when Powell's term is over next to May, is

0:13:01.679 --> 0:13:05.360
<v Speaker 2>Kevin Hasset, one of the President's longest serving economic aids.

0:13:06.040 --> 0:13:09.080
<v Speaker 2>Are you concerned in a scenario such as that where

0:13:09.320 --> 0:13:12.400
<v Speaker 2>maybe the Fed's independence would be at risk?

0:13:13.800 --> 0:13:16.320
<v Speaker 1>I am. I mean, I think, you know, appointing a

0:13:16.360 --> 0:13:18.679
<v Speaker 1>dubbish successor, which I don't know whether you could label

0:13:18.760 --> 0:13:23.160
<v Speaker 1>the Hazzard like that. You certainly could label him as

0:13:23.240 --> 0:13:28.440
<v Speaker 1>perhaps you know, a shadow of Trump's you know, impact

0:13:28.480 --> 0:13:31.000
<v Speaker 1>on the on the FED. But I think that would

0:13:31.040 --> 0:13:33.520
<v Speaker 1>also have the same effect. It might not be as dramatic,

0:13:33.520 --> 0:13:36.880
<v Speaker 1>but it would gradually continue to weeken. The dollar, bond

0:13:36.920 --> 0:13:40.280
<v Speaker 1>prices would would I think, you know, yields would continue

0:13:40.280 --> 0:13:45.360
<v Speaker 1>to rise, and certainly gold and would would also assume

0:13:45.480 --> 0:13:47.600
<v Speaker 1>it's a cent in that scenario. So I think you

0:13:47.720 --> 0:13:50.240
<v Speaker 1>really have to be careful. I think that the the

0:13:50.320 --> 0:13:55.040
<v Speaker 1>Fed's independence is paramount here and I think you have

0:13:55.080 --> 0:13:56.839
<v Speaker 1>to rely on the fact that this is a pro

0:13:57.160 --> 0:14:00.400
<v Speaker 1>business administration, and I think there's still a lot of

0:14:00.440 --> 0:14:04.840
<v Speaker 1>gamesmanship here, So I think any sort of replacement to

0:14:05.200 --> 0:14:08.560
<v Speaker 1>Powell has to be looked at, and I believe will

0:14:08.559 --> 0:14:09.439
<v Speaker 1>be through that lens.

0:14:09.800 --> 0:14:12.960
<v Speaker 2>Nonetheless, if you look at let's say, today's PPI report,

0:14:13.000 --> 0:14:15.600
<v Speaker 2>which kind of reinforces the case for FED rate cuts

0:14:15.640 --> 0:14:18.960
<v Speaker 2>this year, I know that there's been some debate about

0:14:18.960 --> 0:14:21.040
<v Speaker 2>the impact of tariffs and whether or not they will

0:14:21.080 --> 0:14:24.400
<v Speaker 2>indeed be inflationary, But at this point where you said,

0:14:24.800 --> 0:14:27.040
<v Speaker 2>is there the risk maybe that the FED is a

0:14:27.040 --> 0:14:28.400
<v Speaker 2>little behind the curve.

0:14:28.920 --> 0:14:31.120
<v Speaker 1>I think it's a little early to tell, and I

0:14:31.200 --> 0:14:32.760
<v Speaker 1>think what we need to see is some of this

0:14:33.520 --> 0:14:36.200
<v Speaker 1>play out. I mean, we don't really know necessarily in

0:14:36.200 --> 0:14:39.960
<v Speaker 1>my opinion, with the start and stops of the tariffs.

0:14:40.280 --> 0:14:42.760
<v Speaker 1>You know, it's our opinion here that tariffs are you know,

0:14:42.880 --> 0:14:44.960
<v Speaker 1>take typically two months or so to show up in

0:14:45.000 --> 0:14:48.680
<v Speaker 1>inflation numbers, not seeing that in space certainly, and then

0:14:48.720 --> 0:14:50.800
<v Speaker 1>a quarter or two to show up in the economy.

0:14:51.240 --> 0:14:55.640
<v Speaker 1>So you're right, I mean today, yesterday's PPI was a

0:14:55.640 --> 0:15:00.960
<v Speaker 1>bit benign and certainly you know, lower than expected, but

0:15:01.280 --> 0:15:05.720
<v Speaker 1>the CPI came in a little bit hotter, you know,

0:15:05.760 --> 0:15:08.600
<v Speaker 1>at ex Food and Energy it was actually a little

0:15:08.600 --> 0:15:13.560
<v Speaker 1>bit cooler. So we're not seeing the effects of tariffs

0:15:13.600 --> 0:15:16.960
<v Speaker 1>play out, you know, certainly to the degree that people

0:15:16.960 --> 0:15:21.080
<v Speaker 1>had expected in the inflation numbers. I've been looking at

0:15:21.120 --> 0:15:23.280
<v Speaker 1>the jobs market, you know, I've been kind of looking

0:15:23.320 --> 0:15:26.640
<v Speaker 1>at We all know that this economy's consumer driven, right,

0:15:26.920 --> 0:15:28.560
<v Speaker 1>and we're starting to see a little bit of slack

0:15:28.720 --> 0:15:32.760
<v Speaker 1>and softening in the jobs market still though, you know,

0:15:32.800 --> 0:15:35.560
<v Speaker 1>you can trast that with what the banks reported today.

0:15:35.880 --> 0:15:39.480
<v Speaker 1>The consumers alive and well swiping away if you will,

0:15:39.760 --> 0:15:43.840
<v Speaker 1>at cards delinquencies and cards card balances are up, at

0:15:43.840 --> 0:15:46.520
<v Speaker 1>delinquencies aren't. So there's a you know, a bit of

0:15:46.560 --> 0:15:48.880
<v Speaker 1>a mosaic here of a lot of different moving parts,

0:15:48.960 --> 0:15:51.280
<v Speaker 1>and I think it's a little early to draw some conclusions.

0:15:51.600 --> 0:15:53.560
<v Speaker 1>You know, let's just talk about the market. You know,

0:15:53.640 --> 0:15:58.400
<v Speaker 1>while it's trading at fairly fully priced, if not rich valuations,

0:15:58.680 --> 0:16:01.680
<v Speaker 1>you still have Nvidio four trillion dollar company growing at

0:16:01.760 --> 0:16:04.720
<v Speaker 1>sixty nine percent. Somebody spending money.

0:16:04.440 --> 0:16:06.840
<v Speaker 2>Yeah, most definitely. But you mentioned the banks. I'm glad

0:16:06.880 --> 0:16:09.920
<v Speaker 2>you did, because some of this trading revenue data that

0:16:09.960 --> 0:16:12.920
<v Speaker 2>we got today from the likes of Goldman Sachs, Bank

0:16:12.960 --> 0:16:16.760
<v Speaker 2>of America, Morgan Stanley. That's very, very impressive performance.

0:16:17.440 --> 0:16:19.080
<v Speaker 1>Yeah, I mean you can you could tie that right

0:16:19.120 --> 0:16:21.080
<v Speaker 1>to volatility. You know, if you think about the fact

0:16:21.120 --> 0:16:25.600
<v Speaker 1>that you know, we started the year in the market

0:16:25.600 --> 0:16:28.040
<v Speaker 1>in the s and P five hundred, you know, making

0:16:28.120 --> 0:16:33.200
<v Speaker 1>all time highs in February, followed by our Liberation Day

0:16:33.240 --> 0:16:37.760
<v Speaker 1>pullback of twenty plus percent, and then a subsequent bounce

0:16:38.440 --> 0:16:42.280
<v Speaker 1>and now sitting again at new highs. All that plays

0:16:42.880 --> 0:16:47.640
<v Speaker 1>a great music to the traders on the desk? Is

0:16:47.720 --> 0:16:51.640
<v Speaker 1>that volatility? Is it really? I think enhances an exacerbased

0:16:51.640 --> 0:16:52.280
<v Speaker 1>trading revenues.

0:16:52.400 --> 0:16:55.880
<v Speaker 2>We also had the fed's Page Book Survey today. Economic

0:16:55.880 --> 0:17:00.560
<v Speaker 2>growth activity, according to the FED, increased slightly between late

0:17:00.600 --> 0:17:05.560
<v Speaker 2>May and early June, but a level of uncertainty remained elevated,

0:17:05.880 --> 0:17:09.119
<v Speaker 2>and that is contributing to this ongoing caution on the

0:17:09.160 --> 0:17:11.840
<v Speaker 2>part of businesses. We're talking about the tariff story here.

0:17:12.280 --> 0:17:15.080
<v Speaker 2>Do you think it's an urgent matter now that the

0:17:15.160 --> 0:17:19.600
<v Speaker 2>administration really needs to resolve these trade deals before things

0:17:19.800 --> 0:17:24.240
<v Speaker 2>kind of progress further and maybe deteriorate confidence to a

0:17:24.240 --> 0:17:25.159
<v Speaker 2>greater degree.

0:17:25.640 --> 0:17:27.879
<v Speaker 1>I really do I mean, I started off the conversation

0:17:27.960 --> 0:17:30.200
<v Speaker 1>by saying that I think there's a lot of gamesmanship

0:17:30.240 --> 0:17:32.399
<v Speaker 1>going on here. You know, I think, you know, the

0:17:32.480 --> 0:17:35.400
<v Speaker 1>art of the deal right is seemingly in play every

0:17:35.440 --> 0:17:38.359
<v Speaker 1>single day with the with the current administration. But I

0:17:38.400 --> 0:17:41.840
<v Speaker 1>do think that, you know, with this heightened level of

0:17:41.920 --> 0:17:45.400
<v Speaker 1>uncertainty and corporation's failure to do any sort of long

0:17:45.520 --> 0:17:48.560
<v Speaker 1>range planning, I think the longer that that goes on,

0:17:49.119 --> 0:17:51.800
<v Speaker 1>I think it could have a you know, kind of

0:17:51.840 --> 0:17:54.959
<v Speaker 1>a deleterious effect going forward, and maybe even a negative

0:17:54.960 --> 0:17:57.240
<v Speaker 1>feedback loop. I mean, listen, we're in the midst of

0:17:57.280 --> 0:17:59.159
<v Speaker 1>earning season right now, and I think we're going to

0:17:59.160 --> 0:18:01.560
<v Speaker 1>get some clarity on that as to what these companies

0:18:01.600 --> 0:18:04.080
<v Speaker 1>are seeing, what they're able to do, how they're able

0:18:04.080 --> 0:18:07.439
<v Speaker 1>to project going forward, and maybe some insight is to

0:18:07.760 --> 0:18:11.640
<v Speaker 1>how they're kind of preparing or planning for this uncertainty.

0:18:11.920 --> 0:18:14.439
<v Speaker 2>Are you focused more on what's going on in the

0:18:14.440 --> 0:18:17.160
<v Speaker 2>States or are you looking for opportunities offshore right now?

0:18:17.160 --> 0:18:19.639
<v Speaker 2>Do you want to be diversified a little bit in

0:18:19.680 --> 0:18:20.480
<v Speaker 2>foreign markets?

0:18:22.720 --> 0:18:27.200
<v Speaker 1>We've been moving up our allocation to the international markets.

0:18:27.520 --> 0:18:33.399
<v Speaker 1>The national markets Europe in particular have had a prolific gain.

0:18:33.760 --> 0:18:36.160
<v Speaker 1>And you know, you can contribute that to a bunch

0:18:36.200 --> 0:18:39.600
<v Speaker 1>of different things, but certainly the effects of some of

0:18:39.640 --> 0:18:43.560
<v Speaker 1>the trade policy or Trump trade policies, and also the

0:18:43.600 --> 0:18:47.720
<v Speaker 1>mandate for increased defense spending that's going on over there.

0:18:48.000 --> 0:18:51.760
<v Speaker 1>But I think you're seeing some of the trade policies

0:18:51.760 --> 0:18:55.440
<v Speaker 1>and the Trump administration policies play out in Europe. I think,

0:18:55.880 --> 0:18:59.359
<v Speaker 1>you know, europe x age is up about nineteen percent,

0:18:59.480 --> 0:19:02.960
<v Speaker 1>So I mean there's a market rally over there that

0:19:03.920 --> 0:19:07.640
<v Speaker 1>we're attending to. Certainly in our allocations, we don't think

0:19:07.680 --> 0:19:10.160
<v Speaker 1>it's a blip. We think it's somewhat of a secular

0:19:10.240 --> 0:19:13.240
<v Speaker 1>move as a result of some of these policies taking

0:19:13.240 --> 0:19:17.320
<v Speaker 1>hold over there. So that is certainly I think the

0:19:17.320 --> 0:19:20.040
<v Speaker 1>focus of our portfolios right now.

0:19:20.119 --> 0:19:22.199
<v Speaker 2>Okay, Rich, well leave it there. Very good. Thank you

0:19:22.240 --> 0:19:24.800
<v Speaker 2>so much, Rich Mullin. He is founding partner also the

0:19:24.840 --> 0:19:28.639
<v Speaker 2>CEO at Palace Capital Advisors. On the line from just

0:19:28.720 --> 0:19:33.960
<v Speaker 2>outside Boston here on the Daybreak Asia podcast. Thanks for

0:19:34.000 --> 0:19:38.639
<v Speaker 2>listening to today's episode of the Bloomberg Daybreak Asia Edition podcast.

0:19:38.960 --> 0:19:42.080
<v Speaker 2>Each weekday, we look at the story shaping markets, finance,

0:19:42.440 --> 0:19:45.520
<v Speaker 2>and geopolitics in the Asia. Pacific. You can find us

0:19:45.560 --> 0:19:49.720
<v Speaker 2>on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere

0:19:49.760 --> 0:19:52.879
<v Speaker 2>else you listen. Join us again tomorrow for insight on

0:19:52.920 --> 0:19:57.040
<v Speaker 2>the market moves from Hong Kong to Singapore and Australia.

0:19:57.480 --> 0:19:59.960
<v Speaker 2>I'm Doug Chrisner, and this is Bloomberg.

0:20:02.800 --> 0:20:02.840
<v Speaker 3>He