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Speaker 1: Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Prisner,

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Speaker 1: coming up on today's episode at chat on Global Markets

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Speaker 1: with Will Rind, founder and CEO of Granite Chair's ETFs.

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Speaker 1: But we begin by looking at the reelection of Japanese

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Speaker 1: Prime Minister Shiguro Ishiba and his pledge to bolster investment

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Speaker 1: in both semiconductors and artificial intelligence. Joining us now from

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Speaker 1: our studios in Tokyo is Alistair Gail. He is japan

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Speaker 1: ECOGUV reporter for Bloomberg News. Thanks so much for making

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Speaker 1: time to chat with us. Ishiba was in a precarious position.

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Speaker 1: I think it's fair to say, going into this election,

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Speaker 1: how surprising is the outcome?

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Speaker 2: Well, Doug, it wasn't a surprise. We were expecting Ishaba

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Speaker 2: to win. That's mainly because his party is still the

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Speaker 2: largest party in parliament and in the recent election, you know,

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Speaker 2: they lost their majority, but they still have the most

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Speaker 2: members of parliament, so he was able to use that

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Speaker 2: to get voted in again and to cantinue as prime

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Speaker 2: minister here. If he hadn't passed that test then he

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Speaker 2: would have been the shortest serving prime minister since the war.

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Speaker 2: But he's clear that hurdle and now he looks ahead

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Speaker 2: to the major challenges he has on coming up with

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Speaker 2: economic stimulus and making his first foreign trip. Would expect

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Speaker 2: him to go to Apec in Peru and the G

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Speaker 2: twenty in Brazil soon.

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Speaker 1: Well, I'm glad you mentioned economic stimulus because after the win,

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Speaker 1: Isshuba pledged more than what amounts to sixty five billion

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Speaker 1: dollars worth of support for the semiconductor and artificial intelligence

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Speaker 1: industries in Japan that would be over the next decade.

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Speaker 1: That must have been surprising.

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Speaker 2: Yeah, we weren't expecting that in his press conference last night,

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Speaker 2: but it just shows that how much Japan feels that

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Speaker 2: that's an important part of its economic future and also

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Speaker 2: it's national security future. Of course, you know, talks about

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Speaker 2: semi conductors and AI these days or all wrapped up

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Speaker 2: in concerns about supply chains, about insulating countries from risk

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Speaker 2: from places like China, for example. So Ishaba said that

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Speaker 2: they wanted to invest sixty five billion US dollars over

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Speaker 2: the next ten years, and this will also help they

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Speaker 2: hope to boost economic growth, particularly in the less affluent

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Speaker 2: rural areas of Japan. There are two big semiconductor factories

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Speaker 2: already one in the south of Japan in Kumamoto and

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Speaker 2: one in the north in Hokkaido, and they want to

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Speaker 2: use those as a model for helping parts of the

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Speaker 2: country that maybe need a bit of a boost, bring

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Speaker 2: in more investment and put Japan back on the map

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Speaker 2: really when it comes to semiconductors. Of course, this is

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Speaker 2: an area that in the past Japan was very strong in,

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Speaker 2: but they've since lost their way and now it's really

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Speaker 2: a bid to try and put you know, Japan back

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Speaker 2: at the forefront of countries which are able to use

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Speaker 2: you know, cutting edge technology produce the kind of chips

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Speaker 2: that are needed in AI, and Japan sees that as

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Speaker 2: potential engine for growth going into the decades ahead.

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Speaker 1: What do we know about how this sixty five billion

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Speaker 1: dollars will be funded? Is there concern about that at all?

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Speaker 2: Well, he hasn't said much about it. He has said that,

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Speaker 2: you know, there won't be more bonds issued for this.

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Speaker 2: There's been some reporting in the Japanese press that the

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Speaker 2: government might be using some of their shareholdings in company

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Speaker 2: NTT to fund this. That hasn't been confirmed. Issuba said

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Speaker 2: yesterday that he needs to talk to all the relevant

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Speaker 2: ministries and relevant people to figure out the plan for

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Speaker 2: where the money's going to come from. But you know,

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Speaker 2: what he's hoping is that this will be the sort

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Speaker 2: of first down payment, if you like, and then you'll

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Speaker 2: have the private sector also chipping in, and he wants

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Speaker 2: to you know, exponentially increase the investment. But yeah, as

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Speaker 2: of right now, it's it's fairly unclear where this money

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Speaker 2: is going to come from.

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Speaker 1: You mentioned the upcoming summits. We have two APEC and

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Speaker 1: the G twenty. Obviously, the Prime Minister will be in attendance,

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Speaker 1: the President elect Trump will not be in attendance, The

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Speaker 1: lame duck US President Biden will be. But I'm sure

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Speaker 1: a lot of the conversation is going to focus around

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Speaker 1: President elect Trump. I'm curious about the reaction in Japan

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Speaker 1: to the US election.

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Speaker 2: Well, like most places, you know, there's a lot of

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Speaker 2: interest in Trump coming back as president. You know, Japan

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Speaker 2: has a close alliance with the US. It considers the

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Speaker 2: US to be one of its best friends in the world.

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Speaker 2: And when Trump was president last time around, of course,

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Speaker 2: here in Japan, the Prime Minister Shinzo Abe formed a

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Speaker 2: close personal relationship, and you know, the ties between the

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Speaker 2: two countries were pretty good. Trump of course has his

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Speaker 2: wish list for countries like Japan and for other allies.

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Speaker 2: You know, he wants Japan to be spending more on defense.

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Speaker 2: He feels that the weakness of the yen is unfair

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Speaker 2: for US exporters. So you know, there's some trepidation about

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Speaker 2: to know will there be demands from Trump as he

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Speaker 2: comes back into the presidency. Ishuba does not have the

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Speaker 2: kind of diplomatic experience and you know, you might say

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Speaker 2: the sort of personal charisma, if you like, of Shinzo Abbe,

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Speaker 2: But you know, we have to see how he handles

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Speaker 2: the meeting with Trump. We do expect that to happen,

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Speaker 2: by the way, sometime after the G twenty, we know

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Speaker 2: that Japanese government officials are now trying to make arrangements

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Speaker 2: for a meeting. Potentially that could happen if Ishiba stops

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Speaker 2: in the US on the way back from South America.

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Speaker 2: But this will be closely watched. So how can Ishuba perform?

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Speaker 2: Will they be demand immediate demands from Trump? How will

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Speaker 2: Ishuba handle that? You know, in his press conference yesterday

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Speaker 2: he did say that, you know, Japan and the US

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Speaker 2: should not butt heads. You know, they should look for

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Speaker 2: areas where they can create mutual benefits. You know, Japan

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Speaker 2: does want the US milie to remain in this part

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Speaker 2: of the world. The US has large military bases here.

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Speaker 2: So it's important for Japan to kind of get off

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Speaker 2: on the right foot with the incoming president, and I'm

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Speaker 2: sure she will be looking to do that as of

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Speaker 2: when he has the meeting with Trump.

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Speaker 1: One of the issues during the presidential campaign was the

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Speaker 1: proposed acquisition that Nippon Steele would make of US Steel.

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Speaker 1: I think that Kamala Harris, the Vice president when she

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Speaker 1: was the Democratic candidate, was against that deal, so too

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Speaker 1: was President elect Trump during the campaign. Can we fairly

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Speaker 1: say that that deal is dead in the water.

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Speaker 2: I mean you would think so. But you know, just

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Speaker 2: in the last few days, we've had Nippon Steele saying

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Speaker 2: that it hopes now with the election out of the way,

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Speaker 2: that there can be some progress on this. So, you know,

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Speaker 2: from this side of the of the Pacific, you know,

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Speaker 2: there is still some hope that you know, an agreement

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Speaker 2: can be reached. You know, you've had people in the

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Speaker 2: government here saying, well, the reason for the US resistance

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Speaker 2: to this, you know, both by candidate Harris and now

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Speaker 2: President elect Trump is domestic politics and hopefully once the

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Speaker 2: election is out of the way, things will look a

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Speaker 2: bit different. But we're not seeing any indication of that.

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Speaker 2: So there is hope here, but I'm not sure whether

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Speaker 2: that hope has too much kind of basis in reality.

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Speaker 2: We'll have to see, you know, what the President elect

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Speaker 2: says about that, but so far, you know, no indications

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Speaker 2: that there's any progress.

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Speaker 1: Alistair, thank you so much for making time to chat

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Speaker 1: with us. Alistair. Gail is japan ECOGV reporter for Bloomberg,

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Speaker 1: joining us from our studios in Tokyo here on the

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Speaker 1: Daybreak Asia podcast. Joining us, who is Will Ryant. He

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Speaker 1: is the founder and CEO of Granite Cheers ETFs, normally

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Speaker 1: based in New York. Today Will is in the Line

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Speaker 1: city of Singapore. Thanks for making time. I'm sure it's

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Speaker 1: a busy schedule for you today, and i'd like to

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Speaker 1: get your reaction when you woke up and you look

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Speaker 1: at some of the price action that happened here in

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Speaker 1: the States, the reemergence of what seems to be a

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Speaker 1: Trump tray that is still intact. What do you make

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Speaker 1: of this?

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Speaker 3: No, absolutely, the animal spirits have certainly been reawakened, and

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Speaker 3: it's a return to risk on in the most sort

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Speaker 3: of exuberant way. Really, we've seen a huge rally from

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Speaker 3: a number of sectors. Bear in mind that you know

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Speaker 3: we were at or near all time highs anyway before

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Speaker 3: the election, but this has just added the so called

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Speaker 3: fuel to the fire, and bitcoin prices racing to all

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Speaker 3: time highs, Tesla and anything elon Musk related, the AI stocks,

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Speaker 3: the big tech stocks, the banking stocks, the industrial stocks,

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Speaker 3: and you know here we are over six thousand on.

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Speaker 1: The S and P. So to the extent that we've

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Speaker 1: arrived at this level pretty quickly, does that concern you

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Speaker 1: at all? Has the market kind of broadened out enough

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Speaker 1: to support this move? Do you think?

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Speaker 3: Well, I think it's just too early to tell, because

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Speaker 3: we've only been a few days, and so for that reason,

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Speaker 3: then yes, it's probably an element caution here that this

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Speaker 3: is some exuberant activity based upon the win and the

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Speaker 3: anticipation of what might come. But of course we don't

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Speaker 3: know what the actual policies are going to be and

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Speaker 3: probably won't know until some time. But for this particular point,

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Speaker 3: everything including, like you said, the broadening out of the market,

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Speaker 3: meaning the small cap stocks as measured by indexes such

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Speaker 3: as the Russell two thousand also benefiting here. It's not

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Speaker 3: just some of the large cap sectors.

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Speaker 1: There seems to be a little concern in the bond

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Speaker 1: market about the possibility that a lot of the economic

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Speaker 1: policy is from the president elect may contribute to maybe

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Speaker 1: a little bit of inflationary pressure. Maybe I'm being too

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Speaker 1: kind here because if you look at some of the

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Speaker 1: price action on the evening of the election, we had

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Speaker 1: yields spiking here in the US, more so at the

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Speaker 1: long end, although to be fair, right across the curve

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Speaker 1: things were elevated. Is that a sign to you maybe

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Speaker 1: that's a little troubling.

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Speaker 3: Yeah, I think so. I think it's in part this

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Speaker 3: idea that the big sort of question mark, you know,

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Speaker 3: hanging over the new Trump presidency is about the policy

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Speaker 3: or the economic policy more broadly, but specifically, I think

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Speaker 3: as far as investors is concerned, how the tariffs will

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Speaker 3: play into this, and so I think in part what

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Speaker 3: we've seen is a rise in the dollar. Clearly, the

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Speaker 3: dollar has moved up significantly along with yields, and so

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Speaker 3: the ten year sitting at four point three sent something

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Speaker 3: at the moment, and I think that is telling you

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Speaker 3: that there is concerned that if the tariff policies are

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Speaker 3: enacted in a way that starts to bring inflation back

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Speaker 3: into the market, the bond markets are reflecting that.

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Speaker 1: I'm curious about the conversations that you're having there in Singapore.

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Speaker 1: What is the most common question that you're fielding right now.

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Speaker 3: I think the you know, to be honest with you,

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Speaker 3: it's all about Trump and all about the US economic story,

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Speaker 3: and so everybody wants to know what the US investor

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Speaker 3: or the US on the ground view is about this

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Speaker 3: and whether it can be sustained, and you know, any

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Speaker 3: kind of information that might help investors here recalibrate portfolios

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Speaker 3: that may have had exposure to some of the let's

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Speaker 3: call them the Trump trades, and then obviously some exposure

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Speaker 3: to things that may not do as well. So definitely

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Speaker 3: it's all about that, to a lesser extent, about China

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Speaker 3: and the role that China plays in this. There was

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Speaker 3: some disappointing numbers coming out from China over the weekend

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Speaker 3: around the stimulus. Those that were potentially looking for China

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Speaker 3: to react by enacting a big stimulus, but left a

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Speaker 3: bit disappointed by the policy that China's taken and at

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Speaker 3: the moment doesn't seem to be injecting fresh growth into

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Speaker 3: the economy more just sort of shuffling existing debts around.

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Speaker 3: And then of course some of the inflation data from

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Speaker 3: China was a little bit more disappointing. So in the

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Speaker 3: region it's a bit of a mixed bag. But everybody

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Speaker 3: looking to what's going to happen in the US.

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Speaker 1: So is there concern I mean, you mentioned the disappointing

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Speaker 1: inflation data for China, more like deflation when you look

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Speaker 1: at factory gate prices. Is that a big concern for

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Speaker 1: people that do business with China, those companies based in Singapore, Well.

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Speaker 3: It is, And you know, I think for the investor

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Speaker 3: which I'm talking to, you know, for the most part,

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Speaker 3: people that are stock market investors, and obviously these days

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Speaker 3: people can go anywhere they want to get the best

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Speaker 3: returns on their capital. And I think, you know, as

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Speaker 3: we know, it's probably no great secret that people are

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Speaker 3: largely avoiding the Chinese market because of the lackluster performance

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Speaker 3: that has delivered over the last sort of a couple of

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Speaker 3: years and really have pivoted to the extent they weren't

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Speaker 3: already in the US market very much towards the US

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Speaker 3: as that's been the great source of returns for investors,

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Speaker 3: and I think the view currently is that that will

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Speaker 3: only get better, and therefore people are looking to exploit

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Speaker 3: that by not just necessarily the big tech stocks, but

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Speaker 3: thinking about all the other areas that potentially could benefit

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Speaker 3: under Trump.

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Speaker 1: So we know that Shiguru Ishiba, the Prime Minister of Japan,

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Speaker 1: has now received support from parliament to stay in the job,

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Speaker 1: and right after that win, he went out and pledged

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Speaker 1: more than sixty five billion dollars worth of support for

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Speaker 1: the semiconductor industry and the artificial intelligence industry in Japan

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Speaker 1: over the next decade. Does that cause you maybe to

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Speaker 1: take a closer look at what some of the is

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Speaker 1: happening in technology and the trades that are associated with

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Speaker 1: that trend in Japan?

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Speaker 3: Yes, absolutely, And you know, Japanese market really over the

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Speaker 3: last let's call it a few years, has been one

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Speaker 3: of the bright spots in Asian markets. Now, of course

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Speaker 3: people will argue that that's as much a currency story

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Speaker 3: as anything else, but can't ignore the fact that the

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Speaker 3: Japanese equity returns have really been a bright spot in

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Speaker 3: Asian markets where we've had lackluster performance, to put it politely,

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Speaker 3: from China, the Hong Kong market, the Korean market. So

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Speaker 3: the Japanese market is definitely one which has done well,

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Speaker 3: and I think, you know, by and large, will be

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Speaker 3: fined under a Trump presidency. Obviously, Japan a key ally

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Speaker 3: of the United States. There's some technology that that shared

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Speaker 3: between the two, so I think that the Japanese equity

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Speaker 3: market will be fine.

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Speaker 1: So when you look at global markets these days, will

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Speaker 1: where do you want to be most exposed.

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Speaker 3: To be honest, And again it's a bit of a

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Speaker 3: home bias, of course, but the US market, I think

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Speaker 3: that really is such an exciting story at the moment,

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Speaker 3: and you know, maybe at the moment it's probably more

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Speaker 3: bluster than anything else, but the potential for the deregulation story,

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Speaker 3: all these things that are being talked about under a

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Speaker 3: Neutron presidency, I think could be really exciting for markets,

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Speaker 3: And at the moment, markets are taking it at you

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Speaker 3: taking it as read that that will be the case.

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Speaker 1: You mentioned Tesla earlier, and I'm curious given the change

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Speaker 1: in administrations and the change in policy, whether or not

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Speaker 1: you would be a little bearish on some of the

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Speaker 1: green energy trade going forward.

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Speaker 3: I think that's been the gut reaction certainly out of

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Speaker 3: the gate, that it's been very much a you know

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Speaker 3: esg if you will stocks that have been feeling the

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Speaker 3: heat versus the more traditional fossil fuel based stocks getting

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Speaker 3: the lift from that. But I I perhaps would make

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Speaker 3: one sort of observation that Elon Musk, of course playing

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Speaker 3: this role. We don't know exactly what it is officially,

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Speaker 3: but regardless of any official titles, seems to be the

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Speaker 3: case that he has some major influence, certainly over President Trump.

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Speaker 3: And you know, Elon Musk is somebody that benefits or

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Speaker 3: has talked extensively about climate change and of course running

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Speaker 3: electric vehicles, and you know, somebody who very much believes

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Speaker 3: in that. So I wouldn't I wouldn't think that it

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Speaker 3: would be necessarily a complete right off for some of

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Speaker 3: the the green energy But at the moment, people are

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Speaker 3: really just calibrating what exactly who are going to be

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Speaker 3: the winners and who are the losers under Trump.

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Speaker 1: So you created granted shares ETFs and I'm curious is

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Speaker 1: whether or not any of the moves that you're seeing

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Speaker 1: happening right now on the policy side are causing you

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Speaker 1: to consider maybe the creation of a new ETF.

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Speaker 3: That's right, I mean, I think it's probably a little

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Speaker 3: bit early for us to think about that. I mean,

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Speaker 3: we're certainly in the same boat as most investors, which is,

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Speaker 3: you know, we're now looking at the transition period before

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Speaker 3: Trump obviously gets in office, and keen be listening to

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Speaker 3: anything that is communicated that might stand for an official

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Speaker 3: sort of policy or guide at least to official policy

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Speaker 3: as to what that might mean for markets. I think

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Speaker 3: at the moment it's fairly clear from the stocks or

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Speaker 3: the sectors that have rallied the ones that will probably

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Speaker 3: do well regardless. But I think broader than that, it's

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Speaker 3: still of a wait and see.

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Speaker 1: I think a fair amount of the gains that we

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Speaker 1: have seen recently on the equity side has to do

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Speaker 1: with the notion that the FED is going to be

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Speaker 1: accommodate of now they've charted a path. Maybe now some

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Speaker 1: of that is in doubt or the extent to which

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Speaker 1: the FED is going to begin easing or continuing to

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Speaker 1: ease at a rate that maybe is going to be

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Speaker 1: a little slower than the market had previously expected. Where

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Speaker 1: are you on how the FED enters into this conversation.

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Speaker 3: I think at the moment no different from obviously where

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Speaker 3: I was before the election, which was I felt that

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Speaker 3: we would get the twenty five basis point cut this month,

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Speaker 3: which obviously just happened last week, and another twenty five

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Speaker 3: basis points at the December meeting. And I think that

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Speaker 3: the reason for that was or is that FED wants

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Speaker 3: to be very measured and communicate the climb down and

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Speaker 3: rates well, and as they've done. And I think some

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Speaker 3: of the comments last week from Jerome Powell specifically around

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Speaker 3: his position perhaps indicate to you that he's not going

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Speaker 3: to change his view, at least in the short term,

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Speaker 3: just because the election. I think next year will be

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Speaker 3: the key in terms of what happens to rates next year.

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Speaker 3: But of course it's probably a bit early to say,

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Speaker 3: we'll have to keep an eye on what bond yields

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Speaker 3: are doing and what the dollar is doing.

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Speaker 1: Well, we'll leave it there. Thanks so much for joining us,

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Speaker 1: will ryand as founder also the CEO at Granted Chair's ETF.

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Speaker 1: Will Is normally based in New York, today we reached

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Speaker 1: him in Singapore. Will thanks so much. This is Bloomberg

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