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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Prisner.

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Speaker 2: President Trump is threatening to impose fifty percent tariffs on

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Speaker 2: goods from Brazil, and he cited Brazil's insidious attacks on

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Speaker 2: free elections. Earlier in the day, Trump unveiled a new

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Speaker 2: round of tariff demand letters sent to seven US trading partners.

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Speaker 2: And we'll take a look at the tariff story momentarily

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Speaker 2: with Deborah Elms. She is head of Trade policy at

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Speaker 2: the Heinrich Foundation. First, a look at cryptocurrencies, because today

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Speaker 2: bitcoin broke above one hundred twelve thousand for the first time.

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Speaker 2: For a closer look, I'm joined by Matthew Tuttle. He

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Speaker 2: is the CEO also the CIO at Tuttle Capital Management. Matthew,

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Speaker 2: thank you so much for making time to chat with me.

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Speaker 2: A lot of dynamics obviously playing out today. We can

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Speaker 2: talk about the tariffs, we can talk about the FED

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Speaker 2: minute and increased risk appetite reflected not just in this

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Speaker 2: new record high for the Nasdaq Composit, but obviously in

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Speaker 2: the rally in bitcoin today. Is the mood in markets?

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Speaker 2: Do you believe overly optimistic.

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Speaker 3: So I don't. And you know, I'm paying a ton

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Speaker 3: of attention to what Trump tweets, not about tariffs, but

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Speaker 3: what he tweets about markets. He warned everybody before Liberation

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Speaker 3: Day markets sold off. He told you to get in

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Speaker 3: at the bottom, told you to get in again. And

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Speaker 3: the other day he tweeted markets at all time highs.

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Speaker 3: We're going to keep them there. Certainly, we're extended, and

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Speaker 3: you know, in the short term we're due for some

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Speaker 3: sort of profit taking. But you know, until Trump says otherwise,

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Speaker 3: you know we're going to be optimistic here.

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Speaker 2: The other thing the President has indicated very clearly is

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Speaker 2: his desire for much more dubbish fedshairman, and that outcome

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Speaker 2: seems certain when fed Share J. Powell's term expires. So

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Speaker 2: the question is whether or not it's too much to

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Speaker 2: say that the next fed share is going to deliver

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Speaker 2: on lower rates immediately, or do you think that's a

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Speaker 2: bridge too far.

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Speaker 3: I don't. I think that is a prerequisite. I think

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Speaker 3: that's part of the split you're seeing in the FED

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Speaker 3: people jockeying for that position. I think whoever he brings

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Speaker 3: in will lower interest rates immediately, barring you know, something

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Speaker 3: obviously out of left field, or else they will get

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Speaker 3: the same storm that Powell is getting. You know, what

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Speaker 3: we don't know yet is how the bond vigilantes will

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Speaker 3: look at things. So you know, the Fed controls the

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Speaker 3: short term rates. Fed doesn't control the long term rates.

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Speaker 3: You know, we had five days in a row of

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Speaker 3: the ten year picking up until today, so you know

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Speaker 3: that that's a wild card. But I would certainly expect

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Speaker 3: whoever the next FED chairman is to be lowering rates

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Speaker 3: right away.

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Speaker 2: So I'm going to push back a bit here, ever

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Speaker 2: so slightly. Yes, the Fed does control the policy rate,

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Speaker 2: the Fed funds rate. It also has the ability to

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Speaker 2: expand the balance sheet, perhaps in a way of controlling

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Speaker 2: the yield curve. So do you think that there is

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Speaker 2: a bit of risk here under a new FED chairman,

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Speaker 2: a Duvish FED chairman, that we could see a little

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Speaker 2: more quantitative easing if yields don't cooperate in the way

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Speaker 2: in which the administration would like.

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Speaker 3: I mean, I certainly think that's what you're going to

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Speaker 3: see if that happens. You know, if the bond vigilantes revolt,

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Speaker 3: you know, say hey, look at the debt, if foreigners

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Speaker 3: aren't buying our debt, then yeah, I think there will

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Speaker 3: be a lot of pressure on the FED from the

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Speaker 3: President to you know, maneuver things around a little bit

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Speaker 3: so that he gets the interest rate regime he's looking for.

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Speaker 2: One of the other things that was very interesting today

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Speaker 2: is the rally that we had in cryptocurrencies, and we

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Speaker 2: intraday had Bitcoin breaking above one hundred and twelve thousand

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Speaker 2: dollars for the very first time. A lot's going on here,

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Speaker 2: a combination of geopolitical uncertainty, maybe a little bit more

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Speaker 2: institutional interest, but I think the outlook for regulatory clarity

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Speaker 2: maybe changing a bit. I mean, next Wednesday we have

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Speaker 2: a House Oversight Subcommittee hearing on making America the Crypto

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Speaker 2: Capital of the World. How do you feel about crypto

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Speaker 2: broadly speaking?

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Speaker 3: I think at this point crypto is a must own

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Speaker 3: in investor portfolios. I think we're entering a golden age

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Speaker 3: of crypto. You know, we've never before had an administration

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Speaker 3: that's rapidly pro crypto, and I mean some of that

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Speaker 3: obviously is their own self interest. We'd never had a

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Speaker 3: crypto ZAR, and we have an SEC that is entirely

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Speaker 3: different than we've ever seen before. In crypto. And you

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Speaker 3: know this is coming from a guy who you know,

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Speaker 3: we've got a bunch of crypto ETFs, we filed for

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Speaker 3: a bunch more. We're dealing with an entirely different sec

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Speaker 3: than we've ever dealt with. You're seeing crypto treasury companies

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Speaker 3: come out now with mixed results. But you know, I

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Speaker 3: think that you know, I'm not surprised we hit new

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Speaker 3: eyes on bitcoin today. I would expect it to continue

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Speaker 3: to rise, and you know, and I would also expect

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Speaker 3: the same for a lot of the other real cryptocurrencies.

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Speaker 2: It seemed to move in lockstep with this rally that

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Speaker 2: we had in big cap tech today. So if you

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Speaker 2: had to come up with a strategy on how to

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Speaker 2: use a crypto ETF in a portfolio, would it be

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Speaker 2: as kind of a growth component? Are you looking to

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Speaker 2: hedge volatility with crypto? What's what's the use case here

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Speaker 2: in terms of a crypto ETF as a part of

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Speaker 2: a portfolio.

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Speaker 3: Yeah, not really a hedge. I mean a lot of

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Speaker 3: times crypto enthusiasts will say, oh, crypto's a hedge, and

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Speaker 3: then the market will sell off three percent and bitcoin

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Speaker 3: will sell off five You know, our definition of a

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Speaker 3: hedge is something that works every single time. Crypto will

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Speaker 3: work some of the time, it won't work all the time.

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Speaker 3: I think it's exposure to a diversified asset class, and

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Speaker 3: you know, obviously today not a diversified asset class, but

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Speaker 3: there are times when it is. And I think it's

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Speaker 3: also even more exposure to a theme that I think

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Speaker 3: is a dominant theme today and is likely to be

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Speaker 3: a dominant theme for quite some time. And so that's

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Speaker 3: why I think it really should be in your portfolio.

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Speaker 2: So let me understand how the market is functioning right now.

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Speaker 2: Is it primarily being driven still by the retail crowd

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Speaker 2: or our institutional players having greater influence these days.

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Speaker 3: So, you know, the retail crowd has been right on

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Speaker 3: this from the very beginning, buying the depth. The institutions

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Speaker 3: are being dragged in. They've got no choice. They can't

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Speaker 3: watch this market rally like this without them being involved.

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Speaker 3: So the higher we go, the more they're going to

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Speaker 3: need to get involved. So it's really at this point,

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Speaker 3: I mean, when you see a move like we saw

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Speaker 3: today and you know, and I haven't seen the breath

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Speaker 3: numbers or anything like that, but you know, we were

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Speaker 3: extended the market kind of took a breather for two

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Speaker 3: days in a row, and then you had a nice,

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Speaker 3: big up move. They tried to sell it off midday

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Speaker 3: and they couldn't. I got a figure. That's all hands

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Speaker 3: on deck at this point.

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Speaker 2: So what if you observed in the relationship between let's

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Speaker 2: use bitcoin as an example of a major crypto current

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Speaker 2: and see and the US dollar. What has that correlation

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Speaker 2: been like? And talk to me a little bit about

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Speaker 2: how you understand it and what it's telling you.

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Speaker 3: Yeah, I mean, what it's telling me is that bitcoin

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Speaker 3: is uncorrelated with the US dollar. So you know, it

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Speaker 3: also gives you as an investor, some protection from a

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Speaker 3: falling dollar. And you know, and because we've had a

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Speaker 3: falling dollar, that's a lot of you know, the the

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Speaker 3: interest I mean certainly not all. I mean, a lot

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Speaker 3: of the things we talked about are are maybe more important.

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Speaker 3: But it's a lot of the interest you've had in

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Speaker 3: money moving into crypto, but also money moving into gold.

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Speaker 3: You know, gold is another one.

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Speaker 2: Uh.

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Speaker 3: You know, gold recovered a little bit today. It had

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Speaker 3: a bad couple of days, but gold has been on

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Speaker 3: a rampage as well. And I think in a lot

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Speaker 3: of ways the gold trade and the crypto trade have

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Speaker 3: been the same.

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Speaker 2: So is there an inverse correlation between let's say bitcoin

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Speaker 2: and the dollar that, in your view has shown consistency

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Speaker 2: for a while.

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Speaker 3: Some consistency, you know, more consistency there with gold, some

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Speaker 3: consistency with bitcoin. The problem with bitcoin is there are

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Speaker 3: so many other factors, and you know, and that comes

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Speaker 3: into gold to to an extent, but there's so many

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Speaker 3: different factors, you know, I wouldn't look at it as hey,

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Speaker 3: every time the dollar goes down, bitcoin.

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Speaker 2: Is going to go up.

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Speaker 3: But there is a strong inverse correlation there, and it

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Speaker 3: makes sense. People are looking for alternative currencies to store

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Speaker 3: their money, and you know, and they've not been really

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Speaker 3: interested in going into intermediate term or longer term treasuries.

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Speaker 3: They've been putting money in bitcoin. They've been putting money

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Speaker 3: in goal.

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Speaker 2: Matthew will leave it there, Thank you so very much.

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Speaker 2: Matthew Tuttle there. He is the CEO also the CIO

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Speaker 2: at Tuttle Capital Management. On the line from Greenwich, Connecticut

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Speaker 2: here on the Daybreak Asia podcast. Welcome back to the

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Speaker 2: Daybreak Asia Podcast. I'm Doug Chrisner. President Trump unveiled a

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Speaker 2: new round of tariff demand letters today sent to seven

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Speaker 2: US trading partners, and of those seven, only one. The

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Speaker 2: Philippines ranks among America's top fifty trading partners. A rate

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Speaker 2: there of twenty percent set for goods from the Philippines.

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Speaker 2: And then later in the day, Trump threatened to impose

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Speaker 2: fifty percent tariffs on goods from Brazil. He cited the

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Speaker 2: treatment of former Brazilian president Jaiir Balsonaro, and Trump called

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Speaker 2: on Brazilian authorities to drop charges against Balsonaro over an

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Speaker 2: alleged coup attempt. Well, then we heard from Brazil's current president,

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Speaker 2: Luisi Ignacio Lula da Silva. He said any measure to

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Speaker 2: raise tariff's unilaterally will be answered in light of the

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Speaker 2: Brazilian law of economic reciprocity. So for a closer look

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Speaker 2: at the tariff story, we caught up with Deborah Elms.

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Speaker 2: She is head of trade policy at the Heinrich Foundation.

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Speaker 2: She spoke with Bloomberg TV host Heidi Stroud Watson Cherry

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Speaker 2: on Now. Heidi asked the first question about US tariff

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Speaker 2: policy broadly and for Brazil in particular, since Brazil runs

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Speaker 2: a trade deficit with the US.

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Speaker 4: Yeah, I mean, I think the big answer at the

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Speaker 4: moment is that while the April second tariffs were problematic

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Speaker 4: because they used a really misguided formula, at least there

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Speaker 4: was a formula. This latest batch of letters that Trump

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Speaker 4: is sending out really make no sense at all. Some

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Speaker 4: countries have gone down, some countries have gone up. There's

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Speaker 4: absolutely no justification for either up or down, or even frankly,

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Speaker 4: staying the same. And so the result of that is

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Speaker 4: complete confusion over what are us goals and what are

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Speaker 4: us objectives? With the exception of the Brazil letter, every

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Speaker 4: other letter has been identical. And so again for trade partners,

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Speaker 4: what are you supposed to do with that? You've suddenly

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Speaker 4: been given a new number, and it's not based on

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Speaker 4: anything you either have or haven't done. It's not whether

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Speaker 4: you've been there, you haven't been there, you tried hard.

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Speaker 5: You did it.

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Speaker 4: It's completely random at this point.

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Speaker 6: And maybe it is the strategy of throwing everything at

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Speaker 6: the wall and seeing what sticks. Right, everything's on the

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Speaker 6: table under this new approach. But I do wonder does

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Speaker 6: that mean if you're a trading partner you might also

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Speaker 6: be thinking, well, what's the point in negotiating? Because he

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Speaker 6: says one thing, he might mean another. Something could change

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Speaker 6: in the next hour or day, all weeks anyway.

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Speaker 4: Yeah, I think that's been the question from the beginning

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Speaker 4: with this second version of the Trump administration. What is

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Speaker 4: it that they're looking for? And even if you gave

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Speaker 4: that to Trump, would he be satisfied with that? And

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Speaker 4: would he be satisfied with whatever you gave him for

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Speaker 4: more than five minutes? And I think the longer this

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Speaker 4: goes on, the more likely it is that trade partners

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Speaker 4: will say, well, we tried, we did take this seriously.

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Speaker 4: We spent a huge amount of time, effort, money, resources,

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Speaker 4: and we ended up with almost exactly what we got

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Speaker 4: at the outset. And so we are going to dial

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Speaker 4: back our participation in these discussions and we'll just sort

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Speaker 4: of see what happens. But I think it is problematic

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Speaker 4: because these numbers that the Trump administration is throwing out

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Speaker 4: are huge. I mean, we would have said at the

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Speaker 4: beginning of this that ten percent was outrageous. Remember that

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Speaker 4: US tariffs in December were just over two percent, so

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Speaker 4: ten percent would have been a massive increase in tariffs.

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Speaker 4: And now we're looking at numbers easily between twenty and

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Speaker 4: forty and Brazil just got handed fifty So these are

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Speaker 4: numbers that in any other world we would be completely

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Speaker 4: flabbergasted to be discussing at all, and now we seem

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Speaker 4: to be sort of discounting them as just the price

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Speaker 4: of doing business.

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Speaker 5: So let's talk a little bit about because, as Heidi mentioned,

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Speaker 5: this is a country that runs a trade deficit with

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Speaker 5: the United States, have had a traditionally very strong partnership

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Speaker 5: with the United States. And at the same time, now

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Speaker 5: President Trump singling out Brazil for fifty percent tariffs could

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Speaker 5: almost look politically motivated, given that he's also talking about

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Speaker 5: former President Jaior Bolsonaro. I mean, isn't this interference using

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Speaker 5: economic tools to politically interfere in other countries' domestic politics

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Speaker 5: and doing it so overtly. What's the message that he

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Speaker 5: sends to other countries?

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Speaker 4: Well, I think it's deeply problematic. Remember that the official

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Speaker 4: justification for these tariffs is an Emergency Economic Powers Act,

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Speaker 4: which says that there is an economic emergency that needs

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Speaker 4: to be resolved, and Trump is arguing that tariffs are

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Speaker 4: the solution to this, to this set of economic emergencies,

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Speaker 4: And it is hard to figure out what kind of

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Speaker 4: economic emergency is plaguing the US Brazil relationship. Shots that

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Speaker 4: you need a fifty percent terror. I think we already

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Speaker 4: have this particular justification under dispute in the court system

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Speaker 4: in the US. Two courts have found against it. It's

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Speaker 4: now in an appeals process. We'll see what happens. But

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Speaker 4: I think, most alarmingly, if I was Brazil, the letter

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Speaker 4: also indicated that they are going to start a different

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Speaker 4: kind of trade process with Brazil, called a Section three

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Speaker 4: oh one of Unfair Trade Practices, And if that happens

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Speaker 4: and goes forward, then no matter what takes place in

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Speaker 4: these court cases under AEPA, there is still justification for

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Speaker 4: treating Brazilian trade very differently in the future, and that

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Speaker 4: can be extraordinarily long lasting and damaging.

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Speaker 5: Then, as a country leader that's negotiating with the United States,

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Speaker 5: do you see this as a four year blip. Can

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Speaker 5: you just get over the weather, through the crises right

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Speaker 5: now and try to get to the other side, or

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Speaker 5: is this going to be a more long term issue?

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Speaker 5: If President Trump is representative of what the Republican Party

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Speaker 5: has now become.

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Speaker 4: I think that is of course a giant question that

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Speaker 4: every leader is asking themselves how long is this going

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Speaker 4: to be? And clearly a lot of the commentary is

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Speaker 4: suggesting that the goal is to just play for time

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Speaker 4: to do whatever it takes. Play for time. You know,

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Speaker 4: a week's extension, a month's extension, six weeks extension. As

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Speaker 4: long as you keep kicking this can down the road,

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Speaker 4: it'll be fine. But I think that's also problematic because remember,

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Speaker 4: these tariffs are enormous. Twenty to forty percent across the

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Speaker 4: board for many trade partners, is really extremely problematic. And

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Speaker 4: so you can say we're just going to pretend, or

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Speaker 4: we're going to play, or we're going to extend. But

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Speaker 4: if that doesn't happen, then all of a sudden, you're

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Speaker 4: facing very high tariffs that have real economic consequences for

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Speaker 4: your domestic economy. Those are people's jobs, those are livelihoods.

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Speaker 4: That's businesses that may have to close as a result

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Speaker 4: of these incredibly high tariffs implemented extraordinarily quickly. And so

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Speaker 4: I think that the challenge, as always for leaders, is well,

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Speaker 4: what if anything could I do And if I could

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Speaker 4: do that, would I do so? And if I did

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Speaker 4: it and I got an agreement, how long would it last?

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Speaker 4: And so I think these are all questions that are

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Speaker 4: still in the minds of every trade partner and will

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Speaker 4: be for some time.

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Speaker 5: To come, especially perhaps India. Could they be next in

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Speaker 5: the firing line? We thought that India was safe and

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Speaker 5: then the agreement would come after the UK Vietnam and

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Speaker 5: the Geneva Framework with China. But now if you lump

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Speaker 5: India together with the rest of bricks, and then you

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Speaker 5: threaten on the additional ten percent anything that has been

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Speaker 5: negotiating until now, does it even make sense? What's a point?

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Speaker 4: Well, I think it's a great question. And if you

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Speaker 4: want a poster child for this, I would say look

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Speaker 4: at South Korea, which has a free trade agreement with

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Speaker 4: the United States that was painfully renegotiated under Trump's first administration,

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Speaker 4: and in spite of that, and in spite of a

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Speaker 4: lot of effort on the part of their government since

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Speaker 4: April second, they actually got hit again with a twenty

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Speaker 4: five percent tariff yesterday in one of these letters. So

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Speaker 4: I think it does make you question the value of

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Speaker 4: any agreement or commitment. However, the alternative is, well, what

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Speaker 4: if we actually succeed, What if we get the outcome

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Speaker 4: we're looking for and we're then somehow safe for at

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Speaker 4: least a longer period of time and maybe for the

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Speaker 4: duration of Trump's term. That's a gamble that every government

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Speaker 4: has to decide whether they're prepared to accept or not.

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Speaker 5: The ELM's always good to have you with us, head

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Speaker 5: of Trade policy at the Heinrich Foundation, of course, talking

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Speaker 5: about all of these tariff implications with the threats coming

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Speaker 5: from President Trump.

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Speaker 2: Thanks for listening to today's episode of the Bloomberg Daybreak

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Speaker 2: Asia Edition podcast. Each weekday, we look at the story

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Speaker 2: shaping markets, finance, and geopolitics in the Asia Pacific. You

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Speaker 2: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,

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Speaker 2: or anywhere else you listen. Join us again tomorrow for

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Speaker 2: insight on the market moves from Hong Kong to Singapore

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Speaker 2: and Australia. I'm Doug Chrisner and this is Bloomberg. M

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Speaker 2: hmm