WEBVTT - Archegos Founder Bill Hwang Convicted, Powell Testimony Wraps 0:00:02.440 --> 0:00:10.480 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:10.520 --> 0:00:13.720 Daybreak Asia podcast. I'm Doug Krisner. You can join Brian 0:00:13.800 --> 0:00:16.640 Curtis and myself for the stories making news and moving 0:00:16.680 --> 0:00:19.560 markets in the Apec region. You can subscribe to the 0:00:19.600 --> 0:00:23.080 show anywhere you get your podcast and always on Bloomberg Radio, 0:00:23.320 --> 0:00:26.080 the Bloomberg Terminal, and the Bloomberg Business app. 0:00:27.280 --> 0:00:27.480 Well. 0:00:27.520 --> 0:00:30.600 Our Kago's Capital management founder Bill Huong has been found 0:00:30.640 --> 0:00:34.559 guilty of criminal charges stemming from his firm's collapse in. 0:00:34.560 --> 0:00:35.440 Twenty twenty one. 0:00:35.720 --> 0:00:39.080 Joining us now is our reporter on this story, Chris Dolmetz, 0:00:39.120 --> 0:00:43.600 who's a Bloomberg US legal reporter. So, Chris, what were 0:00:43.760 --> 0:00:47.400 the key factors here in the prosecution's case that led 0:00:47.440 --> 0:00:50.280 to this conviction? Do they go mainly by the name 0:00:50.360 --> 0:00:52.440 of William Tomita and Scott Becker? 0:00:54.000 --> 0:00:56.720 Yeah, pretty much, And you can you can say that 0:00:57.600 --> 0:01:01.240 Tomito was pretty much the nail and the coffin for 0:01:01.360 --> 0:01:06.640 Phil Uh. He testified over more than two weeks. He 0:01:06.800 --> 0:01:09.959 kind of laid out a real pattern and how they 0:01:09.959 --> 0:01:15.000 would manipulate the stocks and buying auctions before the before 0:01:15.080 --> 0:01:18.039 the market opening, and well that that you could buy 0:01:18.120 --> 0:01:21.280 before the market open and close to the clothes in 0:01:21.360 --> 0:01:24.520 order to douce the stocks and push the empire and 0:01:24.640 --> 0:01:27.400 you know, try to increase the valuation in stocks so 0:01:27.560 --> 0:01:29.959 that their their portfolio got bigger and bigger. 0:01:30.720 --> 0:01:33.880 What about the counter parties, Chris firms like Credit Suite 0:01:34.160 --> 0:01:36.319 and and UBS Group. 0:01:37.959 --> 0:01:41.400 Yeah, so those were you know, there were multiple witnesses 0:01:41.440 --> 0:01:43.880 from the counter party to laid out and kind of 0:01:43.959 --> 0:01:49.040 detail how you know, what they told them that final 0:01:49.080 --> 0:01:52.680 week and leading up to that final week, about their investments, 0:01:52.720 --> 0:01:57.120 about how much credit they had at other counterparties, and 0:01:57.560 --> 0:02:01.559 really you know, how spread thin they were during that time, 0:02:01.600 --> 0:02:07.680 which really the government laid out. Their theory was that 0:02:07.680 --> 0:02:11.720 that Quong and these and the CFO lied to the 0:02:11.760 --> 0:02:14.800 bank to get more credit in order to trade more 0:02:14.840 --> 0:02:17.080 and that was kind of key to the marketing opulation 0:02:17.200 --> 0:02:19.840 because they wouldn't have been able to trade in those 0:02:19.880 --> 0:02:24.120 sides had they not told the banks Bibbs about you know, 0:02:24.360 --> 0:02:27.679 how much investments they had, where those investments were, how 0:02:27.720 --> 0:02:31.040 liquid those investments were, and how much credit they had 0:02:31.080 --> 0:02:31.720 at the other bank. 0:02:32.480 --> 0:02:37.280 It's astonishing the demise of our Chagos ultimately fueling the 0:02:37.400 --> 0:02:41.359 demise of credit sueeze to think that one trader, one 0:02:41.440 --> 0:02:45.239 bad apple, whoever it is, could bring down a legendary 0:02:45.360 --> 0:02:49.240 Swiss bank. It really just seems to suggest that the 0:02:49.320 --> 0:02:52.239 regulators were asleep at the wheel or something like that. 0:02:54.040 --> 0:02:56.919 Yeah, there is definitely that fun of that. I mean, 0:02:57.000 --> 0:02:59.920 obviously there are many other factors and we didn't mind 0:03:00.040 --> 0:03:02.920 in credit sweep, but this is kind of one of 0:03:02.919 --> 0:03:06.440 the big dominoes that that started to change, that led 0:03:06.440 --> 0:03:10.840 those down call and you know, it kind of probably 0:03:11.040 --> 0:03:14.040 led regulators to trying to take a boat to look 0:03:14.080 --> 0:03:17.280 at some of these family offices and you know how 0:03:17.320 --> 0:03:21.320 they were investing. Really the way that was investing through 0:03:21.360 --> 0:03:26.120 these block transactions kind of concealed what he was actually doing. 0:03:26.200 --> 0:03:28.639 And that's kind of seemed to the whole scheam is 0:03:28.720 --> 0:03:31.840 that if he was training of you know many do 0:03:32.240 --> 0:03:37.080 by buying securities, and his defense alleged that, you know, 0:03:38.120 --> 0:03:41.119 they argued that he was you know, he was long 0:03:41.160 --> 0:03:44.000 in these because he believed in these companies. He wasn't 0:03:44.040 --> 0:03:47.760 just trading to get the places higher. He thought these 0:03:47.880 --> 0:03:51.680 was a good investment. But in the end, you know, 0:03:52.320 --> 0:03:54.600 there were they were not that liquid and that was 0:03:54.640 --> 0:03:57.800 the problem because when when the margin call team during 0:03:57.800 --> 0:04:00.240 that last week he wasn't able to settle, and then 0:04:00.280 --> 0:04:03.680 that ultimately went denied. So if the regulators had been 0:04:03.720 --> 0:04:06.560 able to see that he was trading in regular styt 0:04:06.480 --> 0:04:09.640 of like a robo bog investor would do where they would, 0:04:10.640 --> 0:04:13.960 they would buy the shares and therefore have voting likes. Instead, 0:04:14.800 --> 0:04:17.200 the banks were the ones signing the shared All right. 0:04:17.120 --> 0:04:18.800 Chris, we'll leave it there. Thank you so much here 0:04:18.839 --> 0:04:23.200 for joining us. Chris Dolmach Bloomberg US legal reporter on 0:04:23.240 --> 0:04:29.680 the line. 0:04:30.680 --> 0:04:33.960 We're joined now by Eddie Lowe, chief investment officer of 0:04:34.080 --> 0:04:38.359 Maybank Group Wealth Management. Eddie, we can talk about j 0:04:38.600 --> 0:04:41.120 Powell and the Fed, but I wanted to talk about 0:04:41.200 --> 0:04:42.240 earnings for a moment. 0:04:42.960 --> 0:04:46.239 We got the sales. 0:04:45.120 --> 0:04:51.039 Numbers from TSMC yesterday, a second quarter of sales at 0:04:51.040 --> 0:04:55.039 the fastest pace since twenty twenty two. Now we will 0:04:55.040 --> 0:04:57.600 get the earnings next week, but at least this is 0:04:57.640 --> 0:05:00.719 an indication at some of the gains that we've seen 0:05:00.800 --> 0:05:05.520 in TSMC stock, you know, could be justified your thoughts 0:05:05.640 --> 0:05:08.440 on some of these leading players in the AI sphere. 0:05:09.640 --> 0:05:13.920 All right, well, if you look at the global equities 0:05:14.640 --> 0:05:17.720 performances year. It has been a stellar first half, and 0:05:17.920 --> 0:05:20.240 a lot of this is actually driven by earnings growth 0:05:20.680 --> 0:05:24.119 from the tech and AI related stocks, so the likes 0:05:24.160 --> 0:05:29.760 of TSMC and Video for example, And for US coming quarter, 0:05:30.200 --> 0:05:34.800 we do expect earnings growth to accelerate, especially for the 0:05:34.839 --> 0:05:39.240 SMP five hundred versus the first quarter. But we do 0:05:39.360 --> 0:05:44.160 highlight to our investors and clients that, hey, well, I 0:05:44.200 --> 0:05:46.960 think there are merits to focus on the tech sector, 0:05:47.839 --> 0:05:53.240 but let's not ignore the non tech sectors, because there 0:05:53.240 --> 0:05:55.919 are beneficiaries from the non tech sector from the progress 0:05:55.920 --> 0:05:59.440 and technology, and we are seeing signs of earnings growth 0:05:59.520 --> 0:06:03.960 broadening out beyond the tech sector. So given the fact 0:06:04.000 --> 0:06:07.279 that SMP five hundred equal weighted in terms of valuation 0:06:07.520 --> 0:06:10.320 is much more lower than SMB five hundred on a 0:06:10.360 --> 0:06:13.000 market cap data basis, we think their merits to look 0:06:13.080 --> 0:06:17.719 beyond the tech sector into other sectors including financials, energy, 0:06:19.080 --> 0:06:19.960 and industrials. 0:06:20.080 --> 0:06:22.279 So, as I understand what you're saying, I mean these 0:06:22.440 --> 0:06:25.919 other industries would be big beneficiaries of the adoption of 0:06:26.000 --> 0:06:27.800 AI in their business models. 0:06:27.839 --> 0:06:32.000 Is that right, Well, we've believed that the adoption of 0:06:32.160 --> 0:06:36.440 AI could actually benefit a range of industries. Yes, so 0:06:36.640 --> 0:06:38.680 I think some of the sectors that mentioned just now, 0:06:38.839 --> 0:06:42.280 financial industrials, they are definitely prime beneficiaries. 0:06:43.320 --> 0:06:46.000 So financial is about the only sector really that has 0:06:46.120 --> 0:06:48.320 kind of matched tech in the S and P five 0:06:48.400 --> 0:06:52.440 hundred so far this year. The rest of the area's 0:06:52.560 --> 0:06:55.800 materials and industrials we've had some rallies, particularly in the 0:06:55.800 --> 0:06:58.719 first quarter, but it sort of died in the second quarter. 0:06:59.000 --> 0:07:00.880 Do you expect that to pick up anytime soon? 0:07:03.000 --> 0:07:08.880 Well, we are actually seeing a very interesting phenomenon acting 0:07:08.960 --> 0:07:10.920 in the first half performance of S and B five hundred, 0:07:11.040 --> 0:07:14.080 where no doubt, you know, the tech and air related 0:07:14.160 --> 0:07:17.600 sectors are the UH performers, But if you actually apply 0:07:18.720 --> 0:07:22.600 sector types from a month to month basics, we actually 0:07:22.600 --> 0:07:28.080 see variation in monthly leadership. For example, I think sometime 0:07:28.320 --> 0:07:30.400 in the earlier part of us QB we were actually 0:07:30.440 --> 0:07:35.400 advocating overweight in materials and energy sectors and that played 0:07:35.400 --> 0:07:38.720 out well. So at this juncture we thought that energy 0:07:38.880 --> 0:07:42.720 socks could be an interesting option because of the fact 0:07:42.720 --> 0:07:45.560 that it has actually somewhat like recently, plus the fact 0:07:45.640 --> 0:07:48.720 that it could serve as an interesting hatchickens lingering geoe 0:07:48.760 --> 0:07:52.640 political risks being in the Middle East or in Russia, Ukraine. 0:07:53.000 --> 0:07:56.160 How much of your thesis is predicated on the notion 0:07:56.200 --> 0:07:58.480 that we're going to get two FED rate cuts this year. 0:08:00.440 --> 0:08:03.800 We are actually off the view that we are going 0:08:03.880 --> 0:08:07.320 to get two weight cuts from the FAT this year. 0:08:07.520 --> 0:08:11.200 That is our base view. If you look at what 0:08:11.240 --> 0:08:15.640 Powell has said, he acknowledged progress and inflation, although still 0:08:15.640 --> 0:08:19.360 waiting for more evidence, but he did say that the 0:08:19.400 --> 0:08:21.320 FAT does not need to wait for CPI to hit 0:08:21.360 --> 0:08:24.400 two percent before the FAT will start cutting rates. And 0:08:24.440 --> 0:08:26.800 I think one thing to notice is that there are 0:08:26.880 --> 0:08:30.680 mountain signs of calling jobs market. Employment is taken higher 0:08:30.720 --> 0:08:33.600 to four point one percent, while due nonvoune pay rolls 0:08:33.640 --> 0:08:36.200 were slightly better than expected, but may pay rolls were 0:08:36.240 --> 0:08:42.320 actually significantly revised lower. So barring any significant upside surprises 0:08:42.320 --> 0:08:45.439 and inflation, we think that, you know, the soft job 0:08:45.480 --> 0:08:49.360 market could actually give FAT another reason to start cutting 0:08:49.400 --> 0:08:50.000 rates this year. 0:08:50.600 --> 0:08:52.319 So it seems like there are a couple of reasons 0:08:52.360 --> 0:08:55.160 why you see huge out performance of some of those 0:08:55.400 --> 0:08:57.400 top tech names that you say, you know, we should 0:08:57.679 --> 0:08:59.880 we should acknowledge, but we should look elsewhere as well. 0:09:00.360 --> 0:09:03.640 The two areas would be that until you get rate cuts, 0:09:03.679 --> 0:09:06.520 you're probably not going to see small caps and some 0:09:06.559 --> 0:09:09.640 of the mid caps perform. Well, you probably need to 0:09:09.679 --> 0:09:13.239 see growth, you know, which is trending lower now stabilized, 0:09:13.280 --> 0:09:15.040 and then start to kick back up. 0:09:15.400 --> 0:09:17.679 That's when you'd see those rally. And then you know, 0:09:17.720 --> 0:09:18.240 if you look at. 0:09:18.200 --> 0:09:22.240 The earnings from you just can't compare the earnings from 0:09:22.800 --> 0:09:25.480 average companies with what you see in tech. So you 0:09:25.520 --> 0:09:27.760 know they don't give trophies to everyone for a reason. 0:09:27.840 --> 0:09:30.280 The winners and get the trophies. 0:09:31.600 --> 0:09:34.920 Well, indeed, I think that is actually I would say 0:09:36.440 --> 0:09:39.360 I wouldn't. I hesitate that used to work hut mentality, 0:09:39.400 --> 0:09:43.400 But indeed there is actually a chase after the trophy 0:09:44.480 --> 0:09:47.880 companies because they have been delivering, That's no doubt about it. 0:09:47.920 --> 0:09:50.280 But I totally agree with you in the sense that 0:09:50.360 --> 0:09:56.120 mid cap space is actually looking increasingly attractive, especially if 0:09:56.520 --> 0:10:00.760 the big cup do materialize, which will help to stabilized 0:10:00.760 --> 0:10:04.840 the economy and also then helped to propel the earnings 0:10:04.840 --> 0:10:05.880 of such companies. 0:10:06.240 --> 0:10:09.760 Eddie, what are you hearing from clients right now, particularly 0:10:09.800 --> 0:10:14.480 those in Singapore about the risk that may be overhanging 0:10:14.600 --> 0:10:16.880 markets in the Asia Pacific right now? 0:10:18.320 --> 0:10:24.200 Well, we are, apart from you inflation, corporate earnings. One 0:10:24.360 --> 0:10:28.680 question we are getting quite faded is what happens if 0:10:28.760 --> 0:10:34.120 Trump were to win the election, the president election this 0:10:34.200 --> 0:10:37.720 time around? What happens if there's Trump two point zero? 0:10:38.840 --> 0:10:42.520 So because we did actually we certainly publish a note 0:10:42.520 --> 0:10:46.600 to talk about the potential implications of a Trump presidential win, 0:10:47.640 --> 0:10:51.079 especially when we's talking about imposing sixty percent terrorists on 0:10:51.200 --> 0:10:54.800 China and ten percent terrorists on the rest of the world. 0:10:54.960 --> 0:10:58.680 So I think that increased uncertainty could actually tenpen sentiment 0:10:59.120 --> 0:11:04.480 on Asia really assets. Now, having said that, this time 0:11:04.600 --> 0:11:08.480 round could be different, and we must note that Trump 0:11:09.000 --> 0:11:11.360 this is the second election. I mean, if Trumble the 0:11:11.400 --> 0:11:13.640 windows will be the second term, that would be a 0:11:13.880 --> 0:11:18.440 next election. So maybe perhaps he will be more willing 0:11:18.800 --> 0:11:23.000 to cut deals as a businessman with China and the 0:11:23.040 --> 0:11:27.280 other countries if it does serve the interest of the US. 0:11:27.920 --> 0:11:30.720 Eddie we talked about an opinion piece by Mentioning Pay, 0:11:31.000 --> 0:11:34.400 one of our columnists about how the US China relationship 0:11:34.440 --> 0:11:37.120 is probably worse than the Cold War. Never mind what 0:11:37.240 --> 0:11:39.679 he's getting at, but I'm curious, in your mind, do 0:11:39.679 --> 0:11:41.280 you see it as a competition If I'm in a 0:11:41.360 --> 0:11:43.560 race with someone or playing golf against somebody. You know, 0:11:43.679 --> 0:11:45.280 I don't think it's life and death. I just want 0:11:45.280 --> 0:11:47.480 to win. Is that what's happening between the US and 0:11:47.559 --> 0:11:51.040 China or is it sort of deadly survival type of stuff. 0:11:52.679 --> 0:11:57.440 Well, I would describe it as a strategic competition between 0:11:57.559 --> 0:12:02.760 the two superpowers on several fronts. I mean, on the 0:12:02.800 --> 0:12:06.240 military front, I think that's that's really something they are 0:12:06.280 --> 0:12:10.320 actually walking a lot on. But on the technology front, 0:12:10.840 --> 0:12:15.920 especially if you can see what the US has done 0:12:16.040 --> 0:12:20.319 in terms of trying to block the export of technology 0:12:20.920 --> 0:12:25.720 or semiconductor equipment to China to impede the progress in 0:12:25.840 --> 0:12:27.760 terms of semiconductor for China. 0:12:29.120 --> 0:12:31.600 Yeah, Eddie, thank you very much for taking the time 0:12:31.600 --> 0:12:34.200 to be with us. Eddie Low, CIO of Maybank Group 0:12:34.360 --> 0:12:46.199 Wealth Management. John Davey, founder and CEO and CIO a 0:12:46.240 --> 0:12:49.239 lot of hats there, had his story of portfolio advisors, 0:12:49.440 --> 0:12:51.920 So John, you better be good. That sounds like you've 0:12:51.960 --> 0:12:54.360 got a lot of responsibility there. Great to have you 0:12:54.360 --> 0:12:57.240 on the program, by the way. So look, people are 0:12:57.400 --> 0:13:01.040 still looking at this market for a broadening out of 0:13:01.120 --> 0:13:04.439 gains to kind of of declare it to be healthy, 0:13:04.600 --> 0:13:07.480 the rally healthy. So let's consider where we are. The 0:13:07.559 --> 0:13:09.960 S and P five hundred is up eighteen percent year 0:13:09.960 --> 0:13:13.240 to date. The equal weight is now up five percent. 0:13:13.880 --> 0:13:16.880 Now five percent halfway through the year is a pretty 0:13:16.920 --> 0:13:21.400 good gain. The eighteen percent is great, but that's mainly 0:13:21.440 --> 0:13:23.320 because of a secular growth story. 0:13:23.400 --> 0:13:27.080 AI. So is the market doing what it should be 0:13:27.160 --> 0:13:29.760 doing well? 0:13:29.840 --> 0:13:31.920 I mean, that's a good question. I mean everyone's trying 0:13:31.960 --> 0:13:34.200 to decipher, you know, what that you know, if that, 0:13:34.480 --> 0:13:38.320 if that is you know, the correct path for both 0:13:38.360 --> 0:13:40.559 those different sectors. I think the reality is that the 0:13:41.040 --> 0:13:44.319 economy is normalize and after pretty strong, you know, a 0:13:44.360 --> 0:13:46.840 couple of quarters. So we had a pretty good earning 0:13:46.880 --> 0:13:50.720 season here in Q you know, earlier this past quarter, 0:13:50.760 --> 0:13:54.000 earning's work up about nine percent. You know, I think 0:13:54.040 --> 0:13:56.440 what the market is looking for is a rate cut 0:13:56.679 --> 0:13:58.520 or two and here in the US at the end 0:13:58.559 --> 0:14:00.880 of the day, I think that's what it's going to enable, 0:14:01.520 --> 0:14:03.800 like the S and P four to eighty three, which 0:14:03.880 --> 0:14:08.560 is the non magt the non magnet seven stocks, in 0:14:08.679 --> 0:14:11.120 order for a to rally because as you mentioned, you know, 0:14:11.160 --> 0:14:13.600 the equoid S ANDP just hasn't really moved as much 0:14:13.600 --> 0:14:17.560 as the produ market, so you know, the markets are employing, 0:14:17.800 --> 0:14:21.360 you know, rate cut and step in December north of 0:14:21.400 --> 0:14:24.800 seventy percent probabilities. I think that's what we're going to 0:14:24.880 --> 0:14:27.720 need for the market to prod now because after last 0:14:27.760 --> 0:14:31.320 quarter strong earning season, that really didn't provide any sort 0:14:31.360 --> 0:14:32.760 of tailwind to the market. 0:14:33.040 --> 0:14:35.680 So the rate cut obviously would be predicated on the 0:14:35.720 --> 0:14:38.880 notion that there is a slower growth going on. Earning 0:14:38.960 --> 0:14:43.120 start tomorrow will hear from pepsi UH one of the names, 0:14:43.160 --> 0:14:45.640 Delta Airlines another, and then the big banks on Friday. 0:14:45.640 --> 0:14:48.560 Obviously that will be key. Is there the risk as 0:14:48.600 --> 0:14:51.280 these companies begin to report and then offer guidance on 0:14:51.360 --> 0:14:53.680 the future, that the street is going to have to 0:14:53.720 --> 0:14:58.480 adjust expectations of future earnings growth given a slower growth 0:14:58.600 --> 0:15:00.320 rate for the overall onomy. 0:15:01.480 --> 0:15:03.640 Yeah, I think the bar was set pretty low. So 0:15:03.720 --> 0:15:05.920 if you beat you know, last quarter, I think you 0:15:05.960 --> 0:15:08.760 were rewarded. So the expected you know, growth rate of 0:15:08.800 --> 0:15:12.680 this SMP, you know, per Bloomberg, you know your firm 0:15:12.760 --> 0:15:14.800 is you know eight and a half percent, So that's 0:15:14.840 --> 0:15:17.600 the highest since you know twenty twenty one. I think, look, 0:15:17.600 --> 0:15:20.200 I I you know, I'm in the States, and there's 0:15:20.240 --> 0:15:22.960 two things that really kind of kept the economy together. 0:15:23.040 --> 0:15:25.320 One you had a pretty good labor market and you 0:15:25.320 --> 0:15:28.920 had a very strong US consumer. The labor market is 0:15:28.920 --> 0:15:32.040 starting to, you know, weaken on the margin, and the consumer, 0:15:32.480 --> 0:15:36.080 I think after like four years of above elevated inflation 0:15:36.280 --> 0:15:39.440 is starting to get tapped out. So those two I 0:15:39.440 --> 0:15:42.520 think held the economy together, and those two things weakened 0:15:42.560 --> 0:15:44.880 on the margin is what you know, in the end 0:15:44.880 --> 0:15:46.400 of the day, is going to cause the FED. I 0:15:46.400 --> 0:15:49.600 think the cut rates. We have some pretty decent commercial 0:15:50.360 --> 0:15:52.960 real estate issues here in the US. You know, regional 0:15:53.000 --> 0:15:55.000 banks have lunt that a lot of money. So I 0:15:55.000 --> 0:15:57.640 wouldn't say even though the Max seven keeps going up 0:15:57.640 --> 0:16:00.360 and drives S and P, that isn't represent of the 0:16:00.400 --> 0:16:02.880 broader economy. So I do think that a lot of 0:16:02.920 --> 0:16:06.400 these indicties we look at are showing signs of softening, 0:16:06.880 --> 0:16:08.760 and you know, we're at the point in the cycle 0:16:08.760 --> 0:16:11.320 where the FED you know, needs to cut and would 0:16:11.320 --> 0:16:12.640 have cut in pro cycles. 0:16:13.680 --> 0:16:16.760 It's really hard to get a good strong read on 0:16:16.840 --> 0:16:19.080 this because you have a number of companies, a lot 0:16:19.080 --> 0:16:22.480 of companies that have vastly underperformed, and these are big 0:16:22.600 --> 0:16:26.680 name companies like Home Depot and PepsiCo and McDonald's. They're 0:16:26.760 --> 0:16:30.920 down here today some you know, either flat to down 0:16:31.360 --> 0:16:35.560 sixteen eighteen, twenty percent. Then you have other consumer facing 0:16:35.640 --> 0:16:41.000 companies like Apple, like Walmart, like Costco that are at 0:16:41.040 --> 0:16:44.680 all time highs. So I guess in the way there 0:16:44.720 --> 0:16:48.440 are some idiosyncratic stories and it's a stock pickers market. 0:16:50.800 --> 0:16:53.880 Yeah, I think that's that's all, you know, very valid point. 0:16:54.000 --> 0:16:56.760 You know, our point at a story advisors. You know, 0:16:56.800 --> 0:16:59.320 we're global investors, will multi asset. You know, we think 0:16:59.320 --> 0:17:01.920 there's a lot of opportunities. You know, emerging markets. Nobody 0:17:01.920 --> 0:17:05.520 talks about it. It's like people forgot about you know, China, India, 0:17:05.920 --> 0:17:08.919 you know em the MSAI Emerging market ETF is at 0:17:08.920 --> 0:17:11.040 a fifty two week high. It's up ten percent. 0:17:10.840 --> 0:17:11.360 Year to date. 0:17:11.800 --> 0:17:14.440 You know, you get that valuation buffer, right because these 0:17:14.480 --> 0:17:18.320 things traded much lower multiple compared to the SMP, which 0:17:18.359 --> 0:17:20.480 is at you know, twenty and a half forward earnings. 0:17:20.760 --> 0:17:23.280 So you know, we're just telling investors like look abroad, 0:17:23.359 --> 0:17:25.800 you know, there's a lot of interesting opportunities in Japan. 0:17:25.920 --> 0:17:29.919 Nobody you know, again, everyone wants to be infactuated at 0:17:29.920 --> 0:17:32.080 the max seven, but there's a lot of opportunities even 0:17:32.080 --> 0:17:34.640 in the you know, commodities market. You know, we're big 0:17:34.680 --> 0:17:37.600 proponents of real assets. If you look at silver, it's 0:17:37.640 --> 0:17:39.720 up twenty nine percent year to date, gold is up 0:17:39.760 --> 0:17:42.760 fourteen percent. You wouldn't think that precious metals would be 0:17:42.880 --> 0:17:45.920 doing good, you know, when the SMP is up so much. 0:17:45.960 --> 0:17:48.720 But I think you know, investors see that there is 0:17:48.760 --> 0:17:50.960 a week in an economy and that's typically when you know, 0:17:51.000 --> 0:17:53.399 precious metals would do well, along with the fact that 0:17:53.400 --> 0:17:54.560 they're inflation hedges. 0:17:55.080 --> 0:17:58.320 So it seems as though a story of portfolio advisors 0:17:58.400 --> 0:18:01.119 uses a lot of quantitative rest. Can we get away 0:18:01.119 --> 0:18:03.280 from that for a moment and talk about the election 0:18:03.359 --> 0:18:06.120 and whether this, with all the uncertainty that we've been 0:18:06.160 --> 0:18:08.080 dealing with as a part of the current news cycle, 0:18:08.119 --> 0:18:09.560 that there is a risk of a lot more in 0:18:09.600 --> 0:18:11.879 the way of volatility between now and November. 0:18:14.160 --> 0:18:17.720 Yeah, Elections, you know typically result in higher volatility. You know, 0:18:17.760 --> 0:18:20.040 I would say that, you know, the kind of the 0:18:20.480 --> 0:18:24.000 Republican winners stocks, right, there's baskets of stocks that kind 0:18:24.000 --> 0:18:27.240 of benefit from you know, Republican victory. You know, they've 0:18:27.240 --> 0:18:30.280 been rallying, you know significantly. You know, if you look 0:18:30.320 --> 0:18:33.200 at Mexico, how Mexico's doing. I think our conclusion, our 0:18:33.240 --> 0:18:36.439 story is regardless of who wins, I think we're going 0:18:36.480 --> 0:18:40.360 to still be having like deficit issues. So we do 0:18:40.520 --> 0:18:43.160 like owning real assets. We do like continue to own 0:18:43.240 --> 0:18:47.160 gold because I don't see that I see higher inflation 0:18:47.280 --> 0:18:50.679 regardless of who wins. But you certainly expect higher volatility. 0:18:51.080 --> 0:18:52.600 You know that's going to start to pick up in 0:18:52.640 --> 0:18:56.760 September October. I think there's some you know, lower volatility 0:18:56.960 --> 0:18:59.639 here in the States because of like the Gamma profiles, 0:18:59.640 --> 0:19:04.280 which is keeping realized volatility low. So implied volatility has 0:19:04.320 --> 0:19:07.679 to track realized volatility. So you know, that's kind of 0:19:07.840 --> 0:19:10.480 you know, a technical issue, but no doubt if you 0:19:10.560 --> 0:19:14.240 start seeing you know, if there's a change in a republic, 0:19:14.359 --> 0:19:16.880 the Democratic Party, that will lead to more and certanty. 0:19:16.960 --> 0:19:19.119 More in Certanty will lead to higher volatility. 0:19:20.119 --> 0:19:21.800 I'm hearing from a lot of guests that you know, 0:19:21.840 --> 0:19:26.600 doesn't really matter too much that money is chasing equities 0:19:26.600 --> 0:19:30.960 here because of earnings, upward revisions and such. Are there 0:19:30.960 --> 0:19:34.040 some themes somewhere in there other than the ones you mentioned, 0:19:34.560 --> 0:19:38.520 particularly in the high tech area, that you like, where 0:19:38.560 --> 0:19:43.040 you're seeing companies raise their earnings projections. 0:19:43.720 --> 0:19:45.560 Well, that's the funny thing is that if you look, 0:19:45.600 --> 0:19:48.040 I mean, we've had a pretty strong broaden out of 0:19:48.080 --> 0:19:52.320 this earnings recovery. And usually when you've got an earnings recovery, 0:19:52.840 --> 0:19:55.960 that usually leads to you know, investors kind of rotating 0:19:55.960 --> 0:19:58.880 away from defensives. So I look at like the MAC 0:19:58.960 --> 0:20:02.400 seven as a very defense to play. You know, these 0:20:02.400 --> 0:20:06.359 are like high cash flow producing companies, but if you 0:20:06.400 --> 0:20:09.480 have more earnings growth, you know, there's a lot more opportunities. 0:20:09.680 --> 0:20:12.720 There's something like one hundred and sixty companies in SMP 0:20:12.840 --> 0:20:15.560 that have had twenty five percent earnings growth, so you 0:20:15.600 --> 0:20:18.800 should be brought in out of your portfolio. You know, 0:20:18.840 --> 0:20:22.679 the ECO way to SMP is you know, fifteen sixteen 0:20:22.760 --> 0:20:25.720 p racial seventeen p racial, so you get a little 0:20:25.720 --> 0:20:29.080 bit of like a discount compared to like the broader SMP. 0:20:29.240 --> 0:20:30.760 And then if you go into like you know, things 0:20:30.760 --> 0:20:33.720 like Japan emerge market, so you can lower it pretty significantly. 0:20:34.160 --> 0:20:36.840 But you know, I would definitely be rotating out of 0:20:37.280 --> 0:20:40.080 you know, those heavy Max seven stocks. They've had a 0:20:40.080 --> 0:20:42.600 tremendous run, and you know, these things never stay at 0:20:42.640 --> 0:20:44.480 the top of the dux forever John. 0:20:44.560 --> 0:20:44.879 Thank you. 0:20:44.960 --> 0:20:57.600 John Davey, founder CEO CIO at Estorio Portfolio Advisories. Joining 0:20:57.680 --> 0:21:00.359 us in our studio is far some discussion of tech 0:21:00.440 --> 0:21:04.400 is Lad Savov, Bloomberg Tech Editor to field questions from 0:21:04.440 --> 0:21:07.920 dug and myself. Lad, thank you very much for coming in. 0:21:08.400 --> 0:21:11.000 So a couple of stories here, definitely getting some attention. 0:21:11.440 --> 0:21:15.960 Apple looking to ship some ninety million iPhone sixteen devices 0:21:16.000 --> 0:21:18.159 in the latter half of this year, that said to 0:21:18.160 --> 0:21:21.120 be a ten percent pickup on some of the previous models. 0:21:21.359 --> 0:21:26.920 And then TSMC's second quarter sales up forty percent. Forty percent, Lad, 0:21:27.280 --> 0:21:30.359 that was the fastest patience twenty twenty two. Now a 0:21:30.400 --> 0:21:33.720 lot of investors are worried that we might see a slowdown. 0:21:33.840 --> 0:21:37.800 Here you have an example from TSMC that sales are 0:21:37.800 --> 0:21:40.359 actually going up. Still, what do you make of it? 0:21:40.640 --> 0:21:44.080 Well, that's right, Brian, for TSMC is kind of the 0:21:44.080 --> 0:21:47.240 bottom of the funnel when it comes to ODAI excitement 0:21:47.280 --> 0:21:50.040 and AI boom. When you think about Nvidia and is 0:21:50.080 --> 0:21:53.240 skyrocketing shape price, Well, Nvidio only has one supplier and 0:21:53.280 --> 0:21:57.520 that's TSMC. Nobody makes the Nvidia AI accelerates. Is that 0:21:57.720 --> 0:22:01.919 are the vang god of the aiboom other than TSMC. 0:22:01.960 --> 0:22:04.280 That's a great position to be in. And when you 0:22:04.320 --> 0:22:09.120 look at people signally some quotion about Nvidia and about 0:22:09.160 --> 0:22:12.000 its future growth prospects, Well, I don't see the same 0:22:12.000 --> 0:22:15.040 thing with TSMC, because whoever succeeds in Vidia is most 0:22:15.160 --> 0:22:18.280 likely to go and be TSMC's customer. Again, so it's 0:22:18.320 --> 0:22:20.840 just an ongoing thing. And to the point with Apple 0:22:20.920 --> 0:22:23.920 and it's rising prospects for an next generation of iPhone. 0:22:24.119 --> 0:22:25.520 Guess who makes Apple chips? 0:22:26.560 --> 0:22:31.520 I guess that's TSMC, same company. Yeah, So the commonality 0:22:31.560 --> 0:22:35.440 here is the AI trade and Apple has been very 0:22:35.480 --> 0:22:40.600 ambitious in designing a program that would be compatible with 0:22:41.160 --> 0:22:44.080 only Apple devices. Do you think Apple is going to 0:22:44.119 --> 0:22:47.080 really stand apart? One of the things about this company 0:22:47.119 --> 0:22:49.640 that may be late to the game when certain trends 0:22:49.760 --> 0:22:53.119 establish themselves, but they have a real good track record 0:22:53.160 --> 0:22:57.640