1 00:00:02,480 --> 00:00:10,440 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:10,520 --> 00:00:13,720 Speaker 1: Daybreak Asia podcast. I'm Doug Krisner. You can join Brian 3 00:00:13,800 --> 00:00:16,640 Speaker 1: Curtis and myself for the stories, making news and moving 4 00:00:16,680 --> 00:00:19,560 Speaker 1: markets in the APAC region. You can subscribe to the 5 00:00:19,600 --> 00:00:23,080 Speaker 1: show anywhere you get your podcast and always on Bloomberg Radio, 6 00:00:23,320 --> 00:00:26,120 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. 7 00:00:26,560 --> 00:00:29,920 Speaker 2: Joining us now is Katie Kaminski, chief research strategist and 8 00:00:30,000 --> 00:00:33,360 Speaker 2: portfolio manager at Alpha Simplex Group. To take a closer 9 00:00:33,400 --> 00:00:36,680 Speaker 2: look at markets, Well, Katie, it might be a lot 10 00:00:36,720 --> 00:00:39,040 Speaker 2: more comfortable for the bulls if we had more of 11 00:00:39,080 --> 00:00:42,720 Speaker 2: an escalator like rise here, but we've seen these rapid 12 00:00:42,800 --> 00:00:48,000 Speaker 2: rises making some people nervous. Drawing comparisons to the question 13 00:00:48,120 --> 00:00:52,440 Speaker 2: posed by Alan Greenspan in nineteen ninety six about irrational exuberance, 14 00:00:53,320 --> 00:00:55,360 Speaker 2: keeping in mind that even at that time that was 15 00:00:55,440 --> 00:00:57,520 Speaker 2: ninety six, and we didn't see the bottom fall out 16 00:00:57,600 --> 00:01:01,240 Speaker 2: until two thousand or so, how are you looking at 17 00:01:01,240 --> 00:01:04,600 Speaker 2: the rally that we've seen, How are you playing it well? 18 00:01:04,680 --> 00:01:07,920 Speaker 3: I think the challenge is everyone's looking for what could 19 00:01:07,959 --> 00:01:11,479 Speaker 3: go wrong, and so far, even what happened last week 20 00:01:11,560 --> 00:01:14,080 Speaker 3: with the Fed coming out somewhat dubbish. 21 00:01:14,520 --> 00:01:16,800 Speaker 4: There's not anything in sight. The only thing I can. 22 00:01:16,720 --> 00:01:20,280 Speaker 3: Think about is maybe inflation could throw a wrench in things. 23 00:01:20,319 --> 00:01:24,959 Speaker 3: But still things are looking pretty good and they continue 24 00:01:25,000 --> 00:01:26,080 Speaker 3: to just surprising. 25 00:01:26,760 --> 00:01:30,320 Speaker 1: So for the equity market, I'm wondering whether more gains 26 00:01:30,360 --> 00:01:32,720 Speaker 1: are kind of predicated on the notion that the market 27 00:01:32,800 --> 00:01:35,399 Speaker 1: must see rate cuts here in short order, and if 28 00:01:35,400 --> 00:01:39,000 Speaker 1: that doesn't happen, maybe that's the wave of disappointment that 29 00:01:39,120 --> 00:01:43,200 Speaker 1: brings the market down a bit. Raphael Bostic I guess saying, hey, 30 00:01:43,280 --> 00:01:46,679 Speaker 1: I'm looking for one cut this year, not three. So 31 00:01:46,920 --> 00:01:50,480 Speaker 1: is the risk that maybe we don't get as many 32 00:01:50,520 --> 00:01:52,559 Speaker 1: cuts and maybe they don't come soon enough. 33 00:01:53,960 --> 00:01:56,120 Speaker 3: Definitely, And I think if you've got to remember, at 34 00:01:56,120 --> 00:01:58,200 Speaker 3: the beginning of the year, we were having a lot 35 00:01:58,240 --> 00:02:01,680 Speaker 3: of people saying seven cuts. If you look at where 36 00:02:01,720 --> 00:02:04,840 Speaker 3: people are thinking now, it's still somewhat divided between two 37 00:02:04,960 --> 00:02:08,239 Speaker 3: or three. And I think the market has just been 38 00:02:08,440 --> 00:02:12,240 Speaker 3: happily hoping that, okay, this is going to happen. On 39 00:02:12,280 --> 00:02:14,720 Speaker 3: the other hand, the bond market, the signals have been 40 00:02:14,919 --> 00:02:19,360 Speaker 3: somewhat short, so that's suggesting slightly higher for longer and 41 00:02:19,400 --> 00:02:22,280 Speaker 3: maybe not as much easing as people might. 42 00:02:22,200 --> 00:02:26,359 Speaker 2: Think they SB five hundred at the moments about thirteen 43 00:02:26,400 --> 00:02:29,840 Speaker 2: to fourteen percent above it's two hundred day moving average. 44 00:02:30,240 --> 00:02:33,000 Speaker 2: That's a little on the extraordinary side. There's a number 45 00:02:33,040 --> 00:02:35,640 Speaker 2: of signals that are like that. Is that enough to 46 00:02:36,040 --> 00:02:40,000 Speaker 2: sell or just to pause putting in new money, or 47 00:02:40,040 --> 00:02:42,040 Speaker 2: to come up with some sort of edging scheme. 48 00:02:43,000 --> 00:02:45,960 Speaker 3: Well, I think that's a challenge, is that We've been 49 00:02:46,000 --> 00:02:49,640 Speaker 3: saying that for since even February. I was thinking as well, 50 00:02:49,639 --> 00:02:52,240 Speaker 3: but it just keeps going. And so I think the 51 00:02:52,360 --> 00:02:55,919 Speaker 3: challenge is you never know how much farther rally can extend. 52 00:02:56,560 --> 00:02:59,720 Speaker 3: And as you start to see that concentration those high signals, 53 00:03:00,000 --> 00:03:02,520 Speaker 3: people are starting to capitulate a little bit. And you 54 00:03:02,600 --> 00:03:05,880 Speaker 3: see that a little bit this week, people thinking maybe 55 00:03:06,240 --> 00:03:08,079 Speaker 3: maybe it's not a time to get in. 56 00:03:09,200 --> 00:03:11,000 Speaker 4: And I think it's going to depend. 57 00:03:10,639 --> 00:03:13,400 Speaker 3: On you know, really, if there's nothing in the way, 58 00:03:13,600 --> 00:03:16,120 Speaker 3: and so far, if we do see cuts, it looks 59 00:03:16,160 --> 00:03:16,560 Speaker 3: that way. 60 00:03:16,840 --> 00:03:19,520 Speaker 1: How are you feeling about megacap tech. We were just 61 00:03:19,600 --> 00:03:23,240 Speaker 1: outlining the story about the regulatory risk right now as 62 00:03:23,280 --> 00:03:26,240 Speaker 1: Europe is concerned. How are you feeling about the big 63 00:03:26,400 --> 00:03:27,919 Speaker 1: US megacap tech names. 64 00:03:28,880 --> 00:03:31,440 Speaker 3: Well, this is one that I think is even more 65 00:03:31,760 --> 00:03:33,120 Speaker 3: of an extreme examples. 66 00:03:33,200 --> 00:03:36,800 Speaker 4: I know that concentration in those names and. 67 00:03:36,840 --> 00:03:39,720 Speaker 3: Just crowding in those positions is something that people are 68 00:03:39,760 --> 00:03:43,120 Speaker 3: really paying attention to right now, just because you haven't 69 00:03:43,160 --> 00:03:48,560 Speaker 3: seen momentum indicators and concentration since times like the tech bubble. 70 00:03:48,720 --> 00:03:53,120 Speaker 3: And that's something that makes everyone nervous because there are 71 00:03:54,200 --> 00:03:57,760 Speaker 3: going to be headwinds to those particular names at some point, 72 00:03:57,880 --> 00:04:00,240 Speaker 3: and I think that people are starting to wonder, you know, 73 00:04:00,320 --> 00:04:02,120 Speaker 3: is it a time to hedge, is it time to 74 00:04:02,200 --> 00:04:05,600 Speaker 3: maybe not move in further in those names. 75 00:04:06,440 --> 00:04:11,920 Speaker 2: It's pretty interesting that you have industrials and materials and 76 00:04:12,160 --> 00:04:16,360 Speaker 2: energy and financials that are actually year to date or 77 00:04:16,360 --> 00:04:19,200 Speaker 2: at least over the last month or so, you know, 78 00:04:19,240 --> 00:04:22,600 Speaker 2: they've they've advanced more than even tech. And when you 79 00:04:22,640 --> 00:04:26,000 Speaker 2: look at semiconductors, I think there's this notion that semiconductors 80 00:04:26,160 --> 00:04:30,960 Speaker 2: just racing to the upside. But XSD, which is an 81 00:04:31,040 --> 00:04:35,720 Speaker 2: equal weight ETF on semiconductors, is actually flat year to date, 82 00:04:36,080 --> 00:04:39,400 Speaker 2: which is pretty extraordinary. So I guess that reinforces the 83 00:04:39,440 --> 00:04:42,640 Speaker 2: idea that it's it's Nvidia, and it's TSMC and a 84 00:04:42,640 --> 00:04:45,800 Speaker 2: few others that have shined, but it also shows you 85 00:04:45,839 --> 00:04:49,760 Speaker 2: that there may be some opportunities elsewhere that at least 86 00:04:50,080 --> 00:04:51,600 Speaker 2: look like it could be exploited. 87 00:04:51,680 --> 00:04:55,320 Speaker 3: Now, Yeah, and I think people really latched on some 88 00:04:55,360 --> 00:04:58,320 Speaker 3: of the key names, but then other as you've seen 89 00:04:58,360 --> 00:05:02,080 Speaker 3: sort of a rising tide, there's also been more interesting 90 00:05:02,120 --> 00:05:05,920 Speaker 3: opportunities outside of those names, given sort of how concentrated 91 00:05:06,279 --> 00:05:10,080 Speaker 3: many investors are in those particular names. So in effect, 92 00:05:10,160 --> 00:05:13,840 Speaker 3: even though as you said, the equal weighted names are flat, 93 00:05:14,200 --> 00:05:17,239 Speaker 3: you're still seeing stuff outside of some of those already 94 00:05:17,600 --> 00:05:22,320 Speaker 3: heavily concentrated positions that people are really watching. But you know, 95 00:05:22,360 --> 00:05:24,560 Speaker 3: some of those things on the periphery might be catching 96 00:05:24,640 --> 00:05:27,560 Speaker 3: up with some of the opportunities given the strength of 97 00:05:27,600 --> 00:05:28,480 Speaker 3: the equity market. 98 00:05:28,839 --> 00:05:31,360 Speaker 1: Katie, I'm very curious to get your take on the macro. 99 00:05:31,480 --> 00:05:34,920 Speaker 1: Today's data was a little disappointing. New home sales unexpectedly 100 00:05:35,000 --> 00:05:37,320 Speaker 1: down in February for the first time in three months. 101 00:05:38,160 --> 00:05:41,400 Speaker 1: The manufacturing data from the Dallas FED was a little 102 00:05:41,440 --> 00:05:45,320 Speaker 1: soft after some stability in the month of February. How 103 00:05:45,360 --> 00:05:47,320 Speaker 1: do you see the overall economy right now? 104 00:05:48,360 --> 00:05:50,880 Speaker 3: Well, I mean, I think you're seeing it go back 105 00:05:50,880 --> 00:05:54,440 Speaker 3: and forth because you've seen also inflation data tacking up 106 00:05:54,480 --> 00:05:57,480 Speaker 3: some at the same time, so it's making things a 107 00:05:57,560 --> 00:06:00,640 Speaker 3: little bit confusing, and I'm sure a lot of investors 108 00:06:00,640 --> 00:06:03,440 Speaker 3: are taking the data that we're seeing today and saying, well, 109 00:06:03,520 --> 00:06:05,520 Speaker 3: maybe this could be the sign that we might have 110 00:06:05,560 --> 00:06:09,440 Speaker 3: worst data ahead. I think it's still very mixed. The 111 00:06:09,480 --> 00:06:15,159 Speaker 3: economy looks reasonably good, but there's kind of mixed data 112 00:06:15,200 --> 00:06:17,479 Speaker 3: on both sides depending on what you're looking at. And 113 00:06:17,520 --> 00:06:21,160 Speaker 3: I think that's why it's so hard to tell what's 114 00:06:21,240 --> 00:06:23,440 Speaker 3: going to happen next. Is that a lot of things 115 00:06:23,480 --> 00:06:26,000 Speaker 3: look pretty good, and then occasionally you get things that 116 00:06:26,040 --> 00:06:29,200 Speaker 3: make you pause and say, well, is this the thing 117 00:06:29,240 --> 00:06:31,760 Speaker 3: that's going to start an acceleratory move where we have 118 00:06:31,839 --> 00:06:34,520 Speaker 3: to start worrying about really how strong valuations are in 119 00:06:34,560 --> 00:06:37,800 Speaker 3: equity markets already, and we have to worry about inflation 120 00:06:37,960 --> 00:06:41,600 Speaker 3: and possibly lower growth, which is the worst scenario, I'd say. 121 00:06:42,600 --> 00:06:46,160 Speaker 2: I see you have a few notes here on Japanese stocks, 122 00:06:46,520 --> 00:06:48,400 Speaker 2: so maybe we can talk for just a moment on 123 00:06:48,520 --> 00:06:51,919 Speaker 2: that we've had a good run, a very good run. 124 00:06:52,720 --> 00:06:57,120 Speaker 2: There is some indication from Japanese media that domestic Japanese 125 00:06:57,360 --> 00:07:01,640 Speaker 2: are finally just now going next long Japanese stocks and 126 00:07:01,720 --> 00:07:04,920 Speaker 2: for the past twenty odd years they were net short. 127 00:07:05,839 --> 00:07:09,600 Speaker 2: Is that part and parcel in why Japanese stocks can 128 00:07:09,680 --> 00:07:10,240 Speaker 2: still run? 129 00:07:11,560 --> 00:07:13,000 Speaker 4: I mean, that's definitely one reason. 130 00:07:13,120 --> 00:07:15,880 Speaker 3: But I think the biggest thing that I've been watching 131 00:07:15,920 --> 00:07:19,320 Speaker 3: this week is really what's happened with the boj and 132 00:07:19,360 --> 00:07:22,440 Speaker 3: the fact that you know, if you still see policy, 133 00:07:22,800 --> 00:07:26,240 Speaker 3: even though they announced a massive pizot, the market is 134 00:07:26,240 --> 00:07:30,040 Speaker 3: still already sort of not that concerned yet. 135 00:07:29,880 --> 00:07:31,120 Speaker 4: That we're going to see a change. 136 00:07:31,120 --> 00:07:34,680 Speaker 3: So you're still seeing positive signs and equity markets despite 137 00:07:34,720 --> 00:07:38,480 Speaker 3: that change. And the yen continues to weaken as well 138 00:07:38,520 --> 00:07:42,680 Speaker 3: despite some of these changes, So with you know, still 139 00:07:42,800 --> 00:07:46,600 Speaker 3: very low rates, it's still been a positive inflow for 140 00:07:46,720 --> 00:07:52,240 Speaker 3: international investors. Maybe that's just another tailwind that's going to 141 00:07:52,480 --> 00:07:54,800 Speaker 3: push Japanese equities up even more. 142 00:07:54,800 --> 00:07:57,760 Speaker 4: They've been one of the bigger movers this year. 143 00:07:58,680 --> 00:08:01,080 Speaker 1: Katie very quickly about twenty twenty seconds. Are you still 144 00:08:01,160 --> 00:08:04,000 Speaker 1: favoring the US over other markets on the equity side 145 00:08:04,080 --> 00:08:04,440 Speaker 1: right now? 146 00:08:05,360 --> 00:08:08,960 Speaker 3: We're seeing that, yes, especially versus em and China and 147 00:08:09,080 --> 00:08:12,920 Speaker 3: Hong Kong. But this is definitely something that you are 148 00:08:12,960 --> 00:08:16,320 Speaker 3: seeing some ketchup in Europe and other places as well. 149 00:08:16,400 --> 00:08:18,520 Speaker 4: So you know, it's a little bit of a rotation. 150 00:08:19,520 --> 00:08:22,040 Speaker 2: Yep, all right, Katie, thank you for joining us. Kati Kaminski, 151 00:08:22,160 --> 00:08:33,040 Speaker 2: chief research strategist portfolio manager at Alpha Simplex Group. The 152 00:08:33,160 --> 00:08:36,960 Speaker 2: US and the UK have accused China of cyber attacks 153 00:08:37,000 --> 00:08:40,680 Speaker 2: and stealing voter data. Joining us now is Jamie Tarabey, 154 00:08:40,840 --> 00:08:44,400 Speaker 2: who is a Bloomberg cyber security reporter and one of 155 00:08:44,440 --> 00:08:47,800 Speaker 2: the reporters on this story. Jamie, thank you for joining us. 156 00:08:48,240 --> 00:08:51,760 Speaker 2: So these sanctions in particular are leveled against two of 157 00:08:51,800 --> 00:08:57,160 Speaker 2: the individuals as well as a company in Wuhan in China. Now, 158 00:08:57,400 --> 00:09:00,719 Speaker 2: these are not individuals that have been apprehended, right, presumably 159 00:09:00,720 --> 00:09:06,440 Speaker 2: there's no recourse for doing so, is what is the 160 00:09:06,520 --> 00:09:09,120 Speaker 2: recourse that the US has to address this? 161 00:09:10,600 --> 00:09:13,800 Speaker 5: Well, with a lot of these cases, you know, the 162 00:09:13,920 --> 00:09:18,840 Speaker 5: US is also you know, you know, launched charges against 163 00:09:18,960 --> 00:09:20,400 Speaker 5: Russian hackers as well. 164 00:09:20,400 --> 00:09:21,600 Speaker 6: It's really more. 165 00:09:22,559 --> 00:09:26,440 Speaker 5: Outing these people show displaying the connection that they have 166 00:09:26,800 --> 00:09:29,400 Speaker 5: with the state security. 167 00:09:28,920 --> 00:09:30,480 Speaker 6: Apparatus in China. 168 00:09:30,520 --> 00:09:35,240 Speaker 5: In particular, the company that was sanctioned by Treasury worked 169 00:09:35,280 --> 00:09:38,560 Speaker 5: as a so there's a front company where these men 170 00:09:39,080 --> 00:09:44,280 Speaker 5: allegedly worked and used the network there to set off 171 00:09:44,280 --> 00:09:49,480 Speaker 5: their compromises and their hacking campaigns. So a large part 172 00:09:49,520 --> 00:09:52,960 Speaker 5: of this is it's cosmetic in a way, but it 173 00:09:53,040 --> 00:09:56,800 Speaker 5: also really kind of The Chinees are very sensitive to 174 00:09:57,320 --> 00:10:00,319 Speaker 5: any allegations of cyber attacks. 175 00:09:59,840 --> 00:10:01,880 Speaker 6: They come out, and we're very. 176 00:10:03,640 --> 00:10:06,800 Speaker 5: They were very, very unhappy with the actions that the 177 00:10:06,920 --> 00:10:10,480 Speaker 5: US and the UK and New Zealand and Australia took 178 00:10:10,520 --> 00:10:15,360 Speaker 5: today and they said that without valid evidence, the US 179 00:10:15,400 --> 00:10:19,239 Speaker 5: has jumped to an unwarranted conclusion and made groundless accusations 180 00:10:19,280 --> 00:10:22,400 Speaker 5: against China. They say it's completely irresponsible and a total 181 00:10:22,400 --> 00:10:25,640 Speaker 5: distortion of facts, and that in fact, the US itself 182 00:10:25,760 --> 00:10:28,680 Speaker 5: is the origin and the biggest perpetrator of cyber attacks. 183 00:10:28,720 --> 00:10:35,400 Speaker 5: So it's becoming a growing show of force by the 184 00:10:35,520 --> 00:10:38,440 Speaker 5: US and its allies, but it's also serving a greater 185 00:10:38,679 --> 00:10:43,720 Speaker 5: wedge and increasing tensions between the China and Western countries. 186 00:10:44,200 --> 00:10:46,520 Speaker 1: Yeah, we had the British Prime Minister a Rishis Sunak 187 00:10:46,559 --> 00:10:51,920 Speaker 1: warning that basically saying that China is increasingly assertive and 188 00:10:52,120 --> 00:10:55,200 Speaker 1: this is kind of an epic defining challenge. What do 189 00:10:55,240 --> 00:10:58,160 Speaker 1: we know about the level of sophistication in terms of 190 00:10:58,160 --> 00:11:01,320 Speaker 1: the hacking that's being used these days compared with some 191 00:11:01,400 --> 00:11:03,439 Speaker 1: of the hacking that we've reported on previously. 192 00:11:04,320 --> 00:11:09,280 Speaker 5: What's very interesting about this campaign is something that the 193 00:11:09,400 --> 00:11:13,120 Speaker 5: Chinel General in the US merritcaland had said that this 194 00:11:13,280 --> 00:11:16,000 Speaker 5: was a campaign that had been done fourteen years. 195 00:11:15,720 --> 00:11:19,079 Speaker 6: Ago and other than the normal kind. 196 00:11:18,920 --> 00:11:25,320 Speaker 5: Of espionage, Chinese hackers hyperportedly not only compromised networks but 197 00:11:25,520 --> 00:11:28,280 Speaker 5: were what they call living off the land, So they 198 00:11:28,320 --> 00:11:33,240 Speaker 5: were basically sitting in these systems undetected for years, and 199 00:11:33,320 --> 00:11:37,160 Speaker 5: they were in areas that were very critical to the 200 00:11:37,280 --> 00:11:43,080 Speaker 5: UK national security, the US national security critical infrastructure, and 201 00:11:43,200 --> 00:11:46,880 Speaker 5: doing it in a way where the theory goes that 202 00:11:47,040 --> 00:11:50,640 Speaker 5: if there were to be tensions arising in the South 203 00:11:50,800 --> 00:11:56,079 Speaker 5: China Sea, that the hackers could activate the infiltrations into 204 00:11:56,840 --> 00:12:02,000 Speaker 5: the networks of US critical infrastructure and energy, tech, telecommunications, etc. 205 00:12:02,360 --> 00:12:04,319 Speaker 6: You name it, and keep the. 206 00:12:04,280 --> 00:12:08,000 Speaker 5: Country distracted from what's going on in the South China 207 00:12:08,080 --> 00:12:11,199 Speaker 5: Sea and swart any attempts by. 208 00:12:11,080 --> 00:12:13,720 Speaker 6: The US and its allies to go and help Taiwan, 209 00:12:13,760 --> 00:12:14,400 Speaker 6: for example. 210 00:12:14,480 --> 00:12:17,640 Speaker 5: So what we've seen here, what we've seen with Russia 211 00:12:17,679 --> 00:12:20,320 Speaker 5: with the Solo wind Tech, is that both of these 212 00:12:20,360 --> 00:12:24,839 Speaker 5: adversaries have been playing the long game and it's really 213 00:12:24,920 --> 00:12:28,679 Speaker 5: taking a whole of house effort to confront it and 214 00:12:28,720 --> 00:12:31,880 Speaker 5: to really name it, and that's not something that they've 215 00:12:31,920 --> 00:12:33,960 Speaker 5: been doing a very long time. So that's something that 216 00:12:34,000 --> 00:12:36,000 Speaker 5: we're actually seeing a lot more of too. 217 00:12:36,800 --> 00:12:39,599 Speaker 2: And it's very interesting that we say that officials of 218 00:12:39,679 --> 00:12:43,760 Speaker 2: the White House were targeted, members of Congress and agencies 219 00:12:43,800 --> 00:12:46,960 Speaker 2: including the Justice Department, as well as all these other 220 00:12:47,840 --> 00:12:52,640 Speaker 2: issues like dissidents and companies. As far as you know, 221 00:12:53,280 --> 00:12:57,439 Speaker 2: was there any seeking of ransom or any request for 222 00:12:57,480 --> 00:13:00,440 Speaker 2: a change in activities or did the you this in 223 00:13:00,480 --> 00:13:00,960 Speaker 2: any way. 224 00:13:02,360 --> 00:13:06,800 Speaker 5: So that's the difference with this particular campaign because they 225 00:13:06,800 --> 00:13:09,400 Speaker 5: don't want to draw attention to themselves. So the whole 226 00:13:09,440 --> 00:13:13,240 Speaker 5: point is not locking up systems. The Russian hackers, the 227 00:13:13,320 --> 00:13:16,600 Speaker 5: Russian associated hackers who've been behind a lot of these 228 00:13:17,160 --> 00:13:20,640 Speaker 5: really prolific ransomware attacks that we've been seeing over the 229 00:13:20,679 --> 00:13:23,160 Speaker 5: last couple of years, they're in it for the money. 230 00:13:23,880 --> 00:13:27,400 Speaker 5: The hackers in this campaign and the Russian hackers in 231 00:13:27,440 --> 00:13:30,800 Speaker 5: the Slown's campaign, they're in it for the espionage. 232 00:13:30,880 --> 00:13:33,800 Speaker 6: They're in it for the sabotage in the long term. 233 00:13:34,679 --> 00:13:37,320 Speaker 1: So I know that you primarily focus on kind of 234 00:13:37,360 --> 00:13:40,600 Speaker 1: cyber security and cyber warfare, but if you had to 235 00:13:41,240 --> 00:13:44,360 Speaker 1: kind of look at where US China relationships are now 236 00:13:44,400 --> 00:13:47,240 Speaker 1: as a result of this discovery, what do we make of. 237 00:13:48,960 --> 00:13:51,760 Speaker 6: You know, it's it's a challenge. 238 00:13:51,960 --> 00:13:56,560 Speaker 5: I think the UK has a particularly sensitive relationship. 239 00:13:55,880 --> 00:13:59,360 Speaker 6: With China because of its position regarding. 240 00:13:58,960 --> 00:14:03,880 Speaker 5: Hong Kong, and I know that, you know, obviously it's 241 00:14:04,160 --> 00:14:06,679 Speaker 5: it's it's something that the White House has come up 242 00:14:06,720 --> 00:14:09,200 Speaker 5: and said a lot in terms of being able to 243 00:14:09,320 --> 00:14:12,400 Speaker 5: have relationships in the dialogue with Beijing. 244 00:14:12,760 --> 00:14:13,800 Speaker 6: This isn't going to help. 245 00:14:13,880 --> 00:14:18,000 Speaker 5: It's certainly going to make them a little less inclined 246 00:14:18,040 --> 00:14:19,520 Speaker 5: to partake in talks. 247 00:14:19,800 --> 00:14:22,160 Speaker 6: But when when China is. 248 00:14:22,200 --> 00:14:24,840 Speaker 5: Unhappy with the US, the ripple effect of that is 249 00:14:24,840 --> 00:14:26,120 Speaker 5: felt elsewhere in the world. 250 00:14:26,360 --> 00:14:29,280 Speaker 6: It's done the ways where it's got a wide. 251 00:14:29,480 --> 00:14:32,240 Speaker 2: Yeah, help them all right, Jamie, thanks for joining us, 252 00:14:32,320 --> 00:14:37,240 Speaker 2: Jamie Terabey Bloomberg cybersecurity reporter. China did dispute the claims. 253 00:14:37,280 --> 00:14:42,040 Speaker 2: A Foreign Ministry official called the UK accusations disinformation and 254 00:14:42,080 --> 00:14:46,880 Speaker 2: said a Chinese embassy spokesman in Washington said the US 255 00:14:46,920 --> 00:14:49,400 Speaker 2: always jumps to conclusions. This has been burned. 256 00:14:56,120 --> 00:14:59,040 Speaker 1: Let's get to Singapore now. Stephanie holts Jen is with us. 257 00:14:59,040 --> 00:15:01,680 Speaker 1: She is the CI for the APAC at Deutsche Bank 258 00:15:01,760 --> 00:15:05,960 Speaker 1: International Private Bank from our studios in the Line City, Stephanie. 259 00:15:06,040 --> 00:15:07,960 Speaker 1: Nice of you to stop by. I hope you're doing well. 260 00:15:08,720 --> 00:15:10,720 Speaker 1: When you look at the American market, if we can 261 00:15:10,840 --> 00:15:15,280 Speaker 1: start there, can you justify these lofty valuations? 262 00:15:16,960 --> 00:15:21,320 Speaker 7: Yes, I think, you know, we have a good justification 263 00:15:21,480 --> 00:15:24,680 Speaker 7: to be trading at a premium, given there's a lot 264 00:15:24,720 --> 00:15:27,760 Speaker 7: of drive coming from you know, these structural trends around 265 00:15:27,840 --> 00:15:31,240 Speaker 7: artificial intelligence. You know, of course we are you know, 266 00:15:31,280 --> 00:15:34,640 Speaker 7: as we're making new highs and highs, we're getting to 267 00:15:34,680 --> 00:15:37,320 Speaker 7: a point where but this has been the case for 268 00:15:37,400 --> 00:15:40,120 Speaker 7: quite a while now where actually it would look like 269 00:15:40,160 --> 00:15:42,720 Speaker 7: that and the correction is overdue. But it's very difficult 270 00:15:42,760 --> 00:15:45,280 Speaker 7: to see in the very short term what would be 271 00:15:45,280 --> 00:15:45,960 Speaker 7: the trigger for that. 272 00:15:47,120 --> 00:15:51,120 Speaker 2: So I'm looking at the graph of the queues and 273 00:15:51,200 --> 00:15:54,560 Speaker 2: from November it's of twenty nine percent. Seems like a lot. 274 00:15:55,040 --> 00:15:58,400 Speaker 2: But then I'm looking here at the AQUI. Okay, that's 275 00:15:58,400 --> 00:16:00,960 Speaker 2: the all country world index, that's basically all the stocks 276 00:16:00,960 --> 00:16:03,400 Speaker 2: in the entire world in there, right, and it's up 277 00:16:03,440 --> 00:16:06,120 Speaker 2: twenty two percent. You know, if you look at the graphs, 278 00:16:06,160 --> 00:16:08,840 Speaker 2: they look almost the same. So it's a it's an 279 00:16:08,880 --> 00:16:11,880 Speaker 2: interesting phenomenon. It speaks to I think and if you 280 00:16:11,880 --> 00:16:15,080 Speaker 2: look at industrials and materials and you know, this is 281 00:16:15,160 --> 00:16:20,280 Speaker 2: just a really big global rally inequities. Maybe it's spawned 282 00:16:20,360 --> 00:16:23,560 Speaker 2: by you know, the severe losses we saw in twenty 283 00:16:23,600 --> 00:16:26,200 Speaker 2: twenty two where stocks were down you know, twenty five 284 00:16:26,200 --> 00:16:29,720 Speaker 2: percent or twenty seven percent, something like that, but it 285 00:16:29,720 --> 00:16:33,800 Speaker 2: seems like it's more than just irrational exuberance for AI 286 00:16:34,360 --> 00:16:35,720 Speaker 2: in the United States. 287 00:16:37,240 --> 00:16:40,400 Speaker 7: I agree, yes, and I think the rest of the 288 00:16:40,400 --> 00:16:43,640 Speaker 7: globe is, you know, likewise driven by some of these components. 289 00:16:43,640 --> 00:16:46,040 Speaker 7: You know, you look at the semiconductor space for instance, 290 00:16:46,280 --> 00:16:49,760 Speaker 7: but of course the lot of other you know, growth markets, 291 00:16:49,840 --> 00:16:53,880 Speaker 7: especially here in Asia that also have their very specific 292 00:16:53,960 --> 00:16:57,680 Speaker 7: own stories. To justify your relly, what. 293 00:16:57,680 --> 00:16:59,960 Speaker 1: Are the stories that you're referring to. What do you 294 00:17:00,080 --> 00:17:02,120 Speaker 1: really see that that's appetizing. 295 00:17:03,160 --> 00:17:05,639 Speaker 7: Well, I think about a month ago a little bit 296 00:17:05,680 --> 00:17:08,040 Speaker 7: more than that, I think I was also here talking 297 00:17:08,080 --> 00:17:14,440 Speaker 7: about our overweight back into China for select sectors there, 298 00:17:14,560 --> 00:17:19,520 Speaker 7: especially every sector that is supported by government initiatives like 299 00:17:19,600 --> 00:17:25,359 Speaker 7: consumer discretionary green energy, also you know, technology, etc. Now 300 00:17:26,080 --> 00:17:28,960 Speaker 7: you know, we've seen you know, good rally to start 301 00:17:28,960 --> 00:17:31,080 Speaker 7: with and then a bit of sideways movement. And I 302 00:17:31,080 --> 00:17:33,920 Speaker 7: think we had a big litmus test on Friday when 303 00:17:33,920 --> 00:17:37,719 Speaker 7: we saw the currency weekend and how that informed equity. 304 00:17:37,800 --> 00:17:40,280 Speaker 7: So I'm getting more cautious on that front. But I 305 00:17:40,320 --> 00:17:43,359 Speaker 7: think I was referring to opportunities we saw here in Asia, 306 00:17:43,400 --> 00:17:45,399 Speaker 7: and of course, you know I have not mentioned Japan. 307 00:17:45,480 --> 00:17:48,320 Speaker 7: I haven't mentioned India yet, but I thought India maybe 308 00:17:48,320 --> 00:17:50,679 Speaker 7: the sorry China may be the more controversial at this 309 00:17:50,720 --> 00:17:52,359 Speaker 7: moment in time to talk about. 310 00:17:52,240 --> 00:17:55,640 Speaker 2: Bloom Bloomberg Economics had to report out saying that China's 311 00:17:55,720 --> 00:17:59,240 Speaker 2: high tech sector could rival real estate as a lead 312 00:17:59,359 --> 00:18:02,960 Speaker 2: driver in the economy by twenty twenty six. Yeah, by 313 00:18:02,960 --> 00:18:05,520 Speaker 2: twenty twenty six. I mean that that's pretty interesting. I mean, 314 00:18:05,800 --> 00:18:08,120 Speaker 2: it's scary when you know what's happening with real estate, 315 00:18:08,160 --> 00:18:11,760 Speaker 2: but in terms of the waiting in the economy that 316 00:18:11,880 --> 00:18:15,680 Speaker 2: tech is there, it speaks to you know, the growth 317 00:18:15,720 --> 00:18:18,879 Speaker 2: of those companies. So break down a little bit about 318 00:18:18,880 --> 00:18:21,359 Speaker 2: your interest and where you find maybe some pockets of 319 00:18:21,480 --> 00:18:22,359 Speaker 2: particular interest. 320 00:18:23,680 --> 00:18:26,720 Speaker 7: Well then again, I you know, maybe that is you know, 321 00:18:26,760 --> 00:18:28,520 Speaker 7: given that, I get a bit more cautious around the 322 00:18:28,560 --> 00:18:32,000 Speaker 7: technical opportunity. I just want to make sure. You know, 323 00:18:32,080 --> 00:18:35,119 Speaker 7: the takeaway is that most probably will have to you know, 324 00:18:35,160 --> 00:18:36,760 Speaker 7: be on the sidelines for a little bit and wait 325 00:18:36,800 --> 00:18:41,480 Speaker 7: for sentiment to be restored, because the reaction function on 326 00:18:41,520 --> 00:18:44,080 Speaker 7: the back of a weaker currency was too negative for 327 00:18:44,200 --> 00:18:46,560 Speaker 7: my taste. You know, it could have been a positive 328 00:18:46,600 --> 00:18:51,240 Speaker 7: one also in regards to equities, you know, performing better 329 00:18:51,280 --> 00:18:53,879 Speaker 7: because there would be more competitiveness around some of the 330 00:18:53,880 --> 00:18:56,600 Speaker 7: export led sectors. But it wasn't. You know, it's a 331 00:18:56,720 --> 00:18:59,920 Speaker 7: show of non confidence at the moment still in regard 332 00:19:00,160 --> 00:19:03,080 Speaker 7: to allowing more volatility into the market. But the longer 333 00:19:03,160 --> 00:19:06,600 Speaker 7: term structural trends we see, of course, are all around greening, 334 00:19:07,480 --> 00:19:10,600 Speaker 7: green energy, greening the economy living more sustainabily. This is 335 00:19:10,600 --> 00:19:13,840 Speaker 7: where the government is putting funds in. They are also 336 00:19:14,200 --> 00:19:17,280 Speaker 7: tackling consumer sentiment. You know, you're hampered down by property, 337 00:19:17,720 --> 00:19:21,280 Speaker 7: by the property market, and we've seen that there's a 338 00:19:21,320 --> 00:19:24,040 Speaker 7: good support coming in for consumers to be able to 339 00:19:24,119 --> 00:19:29,159 Speaker 7: go back and buy into consumer discretionary And then of course, 340 00:19:29,400 --> 00:19:31,760 Speaker 7: as I said already, the IT sector and high tech, 341 00:19:31,800 --> 00:19:34,920 Speaker 7: as you just mentioned, we're seeing a huge you know, 342 00:19:35,840 --> 00:19:38,439 Speaker 7: reshaping of the economy to be a leader in that space. 343 00:19:38,960 --> 00:19:42,119 Speaker 1: Is it possible that China in a short period of 344 00:19:42,160 --> 00:19:45,280 Speaker 1: time can get where it needs to be, let's say, 345 00:19:45,280 --> 00:19:50,439 Speaker 1: on the semiconductor side, to put all of that aspirational drive. 346 00:19:51,119 --> 00:19:53,560 Speaker 1: When it comes to technology, you need the semis. I 347 00:19:53,560 --> 00:19:56,760 Speaker 1: mean that's kind of foundational. We were talking earlier about 348 00:19:56,760 --> 00:19:59,680 Speaker 1: the ft saying that Beijing has adopted new guidance to 349 00:19:59,720 --> 00:20:03,480 Speaker 1: limit the use of certain AI microprocessors or US made 350 00:20:03,480 --> 00:20:08,200 Speaker 1: microprocessors not necessarily related to AI per se. But I'm 351 00:20:08,240 --> 00:20:13,199 Speaker 1: wondering about the restrictions that maybe China is imposing on 352 00:20:13,280 --> 00:20:16,040 Speaker 1: itself and at some point it will come back to 353 00:20:16,080 --> 00:20:18,680 Speaker 1: buy it, but perhaps not. How do you see that? 354 00:20:19,720 --> 00:20:23,480 Speaker 7: Well, I think overall everybody has the every country would 355 00:20:23,480 --> 00:20:26,000 Speaker 7: have these aspirations to be a bit more self sufficient 356 00:20:26,040 --> 00:20:28,560 Speaker 7: around the topic, to be able to sustain a growth 357 00:20:28,560 --> 00:20:32,359 Speaker 7: trajectory that is built on the new technology space. But 358 00:20:32,440 --> 00:20:35,520 Speaker 7: we all know that we'll take time, and you know, 359 00:20:35,640 --> 00:20:38,360 Speaker 7: especially I think in China, where you have a bit 360 00:20:38,359 --> 00:20:41,160 Speaker 7: more of a safeguarding to start it. But I think 361 00:20:41,160 --> 00:20:43,399 Speaker 7: Europe is not too far off as well in regards 362 00:20:43,440 --> 00:20:46,800 Speaker 7: to that. You know, it won't be able to lead 363 00:20:46,840 --> 00:20:49,200 Speaker 7: an imminent because that was the start of your question 364 00:20:49,640 --> 00:20:51,720 Speaker 7: kind of recovery. 365 00:20:52,200 --> 00:20:54,760 Speaker 2: I'm a little curious about some areas that we haven't 366 00:20:54,760 --> 00:20:56,679 Speaker 2: talked about too much. We talk a lot in this 367 00:20:56,720 --> 00:20:59,960 Speaker 2: program in China and Japan and also the US market. 368 00:21:00,800 --> 00:21:04,000 Speaker 2: What about South Korea? Is there anything happening in South 369 00:21:04,080 --> 00:21:05,600 Speaker 2: Korea that attracts you at the moment? 370 00:21:06,080 --> 00:21:10,520 Speaker 7: Yeah, you go ahead, the semi space, Yeah, you know, 371 00:21:10,560 --> 00:21:13,400 Speaker 7: it's also the semi space driving the story. So this 372 00:21:13,440 --> 00:21:15,440 Speaker 7: is a very encouraging one for South Korea. 373 00:21:16,440 --> 00:21:19,040 Speaker 1: Doug all right, Stephanie, thank you so much for making 374 00:21:19,080 --> 00:21:22,280 Speaker 1: time for Stephanie Holtz, a yen who is with a 375 00:21:22,359 --> 00:21:25,199 Speaker 1: Deutsche Bank International Private bank. 376 00:21:25,840 --> 00:21:29,280 Speaker 2: This is the Bloomberg Daybreak Asia podcast, bringing you the 377 00:21:29,320 --> 00:21:32,800 Speaker 2: stories making news and moving markets in the Asia Pacific. 378 00:21:33,040 --> 00:21:36,200 Speaker 2: Visit the Bloomberg Podcast channel on YouTube to get more 379 00:21:36,240 --> 00:21:40,040 Speaker 2: episodes of this and other shows from Bloomberg. Subscribe to 380 00:21:40,080 --> 00:21:43,879 Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen 381 00:21:44,160 --> 00:21:47,359 Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the 382 00:21:47,359 --> 00:21:48,640 Speaker 2: Bloomberg Business app.