WEBVTT - Markets Cautious Ahead of Impending US Tariffs

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

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

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<v Speaker 2>We had some weakness and US equities in the last

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<v Speaker 2>session as the market assessed the impact of the trade war.

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<v Speaker 2>And later we'll be joined by Gene Goldman. He is

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<v Speaker 2>the Chief Investment Officer at Satara Financial Group. But we

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<v Speaker 2>begin in Hong Kong where HSBC's Global Investment Summit has

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<v Speaker 2>just wrapped up. Joining me now is Villam Cells. He

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<v Speaker 2>is the Global CIO at HSBC Global Private Banking and Wealth. Vilm,

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<v Speaker 2>thank you so much for making time to chat with us.

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<v Speaker 2>There is so much conversation around tariffs, the economic impact

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<v Speaker 2>that they will likely have, principally whether or not these

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<v Speaker 2>tariffs will contribute to a higher level of inflation. I'm

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<v Speaker 2>going to imagine that you're trying to filter signal and

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<v Speaker 2>noise here, with the tariff conversation really mounting to a

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<v Speaker 2>lot of noise at this point. How are you able

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<v Speaker 2>to kind of find the signal in markets these days?

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<v Speaker 1>Well, it's what our clients try to do as well.

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<v Speaker 1>You mentioned the Global Investment Summit. We actually did a

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<v Speaker 1>poll of seven hundred of our clients across private and

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<v Speaker 1>retail banking, and what came out is that they see

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<v Speaker 1>you know, geopolitics as the number one driver of markets

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<v Speaker 1>fifty percent of clients. Then after that comes you know,

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<v Speaker 1>the fear of stackflation around twenty percent of clients. Then

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<v Speaker 1>luckily there are two positive drivers AI and you know, China,

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<v Speaker 1>and interestingly, very small percentage only that is concerned around

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<v Speaker 1>the debt pile in the US. So that's potentially positive news.

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<v Speaker 1>But I think, you know, just like clients, we don't

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<v Speaker 1>know where the next step is going to be from

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<v Speaker 1>the US administration. I do think the main impact of

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<v Speaker 1>the uncertainty and the rapid changes in policy that uncertainty

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<v Speaker 1>is leading to, you know, a likelihood of some businesses

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<v Speaker 1>and consumers taking away and see approach and therefore premium

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<v Speaker 1>go up, and you know, earning's growth and economic growth

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<v Speaker 1>expectations probably come down a little bit. So we've cut,

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<v Speaker 1>you know, two days ago, we cut our US equity

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<v Speaker 1>allocation from an overweight to neutral, taking advantage of the

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<v Speaker 1>bounds that we've seen over the last few days.

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<v Speaker 2>So is that solely based on valuation.

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<v Speaker 1>Not so much on valuation. I think the valuations obviously

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<v Speaker 1>have fallen quite significantly. For the Magnificent seven, they're way

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<v Speaker 1>below below the ten year average. For the for what

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<v Speaker 1>we call the Forgotten four hundred and ninety three, they're

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<v Speaker 1>about at the ten year average. So they're not yet

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<v Speaker 1>at a level where in and of themselves, low valuations

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<v Speaker 1>make people step in. But I do think the reason

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<v Speaker 1>for our move was rather twofold Number one, that that

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<v Speaker 1>lack of confidence can lead to revisions to growth and earnings,

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<v Speaker 1>and number two that investors are generally also not yet

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<v Speaker 1>underweight their confidence. Investor confidence is very low, but investor

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<v Speaker 1>positioning is not yet very low.

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<v Speaker 2>So are they favoring markets Let's say in Asia, I'm

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<v Speaker 2>thinking of Japan, perhaps even South Korea, China, maybe there

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<v Speaker 2>are opportunities now you mentioned kind of high technology. Where

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<v Speaker 2>is the bias favoring.

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<v Speaker 1>Exactly so, so the bias is towards Asia is also

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<v Speaker 1>the only region that we are overweighted at this point

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<v Speaker 1>in time. The enthusiasm is around China, in part because,

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<v Speaker 1>of course, the deep seek news has triggered that realization

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<v Speaker 1>that many people you know, didn't didn't seem to have them.

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<v Speaker 1>You know, China has progressed quite rapidly in terms of

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<v Speaker 1>technological you know, evolution and everything that is related to that.

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<v Speaker 1>So that's into manufacturing, that's into internet, you know, consumer

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<v Speaker 1>leaders and so on. So that's the first leg driven

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<v Speaker 1>by people that added to their positioning and that enthusiasm

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<v Speaker 1>around technology. Now the next leg is and the debate

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<v Speaker 1>that we had at the conference was around how much

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<v Speaker 1>is the new stimulus to the consumer going to lead

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<v Speaker 1>to a broadening of that economic activity, because that is

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<v Speaker 1>then going to lead to a second leg. I think,

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<v Speaker 1>you know, website for the Chinese market.

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<v Speaker 2>Is there still a great deal of concern among your

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<v Speaker 2>clients about the health of the Chinese consumer? Maybe they

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<v Speaker 2>are healthy, but they are just the sentiment is so

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<v Speaker 2>weak right now. Is that a primary concern still?

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<v Speaker 1>So indeed, as I said, there is a debate around

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<v Speaker 1>that we are seeing the first inklings of the consumer

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<v Speaker 1>feeling that that a little bit better of retail spending

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<v Speaker 1>being supported, of discounting being less. So less discounts mean

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<v Speaker 1>a little bit more confidence from the part of the

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<v Speaker 1>consumer related you know, companies and so on. But it's

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<v Speaker 1>of course, you know, given the very low valuations, it

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<v Speaker 1>is that when you see those first inklings that people

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<v Speaker 1>want to get into it, and so we're seeing evidence

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<v Speaker 1>of hedge funds, for example, being you know, quite actively

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<v Speaker 1>looking for those opportunities as they expect that to be

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<v Speaker 1>the next leg driving the Chinese market higher.

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<v Speaker 2>Was there much in the way of conversation around money

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<v Speaker 2>moving out of Asia to Europe, money.

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<v Speaker 1>Moving out of the US into Europe, or US allocations right,

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<v Speaker 1>US portfolio allocations into Europe and also into Asia. So

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<v Speaker 1>you have that rotation continuing to take place, and I

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<v Speaker 1>think there is still scope for that to that to

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<v Speaker 1>take place, Asian investors do also want to allocate to Europe.

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<v Speaker 1>When I was here two months ago, I saw some

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<v Speaker 1>of the most pessimistic views on Europe, and now it's

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<v Speaker 1>much you know, more positive, obviously because of the dram

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<v Speaker 1>and package, but also the hope that even if it

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<v Speaker 1>is mainly defense, this is going to lead to more

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<v Speaker 1>R and D research and development that then can spill

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<v Speaker 1>over into more competitiveness for Europe. From a longer term perspective,

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<v Speaker 1>clearly people are underweight in Europe as well, squaring that position,

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<v Speaker 1>getting closer to benchmark and adding to it there as well.

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<v Speaker 1>In Europe, the question is going to be how much

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<v Speaker 1>other reforms are there going to be as well, because

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<v Speaker 1>obviously Europe needs to further integrate its capital markets and

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<v Speaker 1>especially create one single market for services. The hope is

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<v Speaker 1>that European leaders are going to use the collaboration on

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<v Speaker 1>defense to also then take initiative on other areas. That

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<v Speaker 1>is obviously we will need to see, but some people

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<v Speaker 1>are taking that as a positive and at least squaring

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<v Speaker 1>their positions, going back to neutral from an underway.

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<v Speaker 2>So the markets are painfully aware of the trade tension

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<v Speaker 2>between more Washington and Beijing, and we know that China

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<v Speaker 2>has been looking for new markets. Europe has represented a

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<v Speaker 2>key market for Chinese goods for some time, but I'm

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<v Speaker 2>curious as to whether or not people in China are

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<v Speaker 2>trying to fortify those relationships given the current tension between

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<v Speaker 2>Washington and Beijing.

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<v Speaker 1>So certainly what could could happen is that, you know,

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<v Speaker 1>when you have trade tariffs in certain from certain countries,

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<v Speaker 1>you can have trade diversion. So what that means is

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<v Speaker 1>that some Chinese goods could end up in Europe. And

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<v Speaker 1>this is one of the reasons why we expect, you know,

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<v Speaker 1>inflation in Europe to continue to be reasonably low. It's

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<v Speaker 1>one of the reasons as well. While we think there

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<v Speaker 1>are opportunities in the European bond market, European bond yields

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<v Speaker 1>have gone up significantly on the back of fears of

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<v Speaker 1>more supply from Germany, but those are now attractive level.

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<v Speaker 1>So German bonds and actually UK guilts as well, you

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<v Speaker 1>know to us are are attractive because some of those

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<v Speaker 1>goods can and end up in the UK in Europe,

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<v Speaker 1>and therefore inflation should remain reasonably well behaved there.

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<v Speaker 2>So I'm curious in terms of topics at the HSBC

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<v Speaker 2>Global Investment Summit, how did artificial intelligence enter into the conversation,

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<v Speaker 2>particularly given the recent news on deep seek.

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<v Speaker 1>Well, it features everywhere, and we also obviously had a

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<v Speaker 1>lot of companies presenting in from the services industries, from

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<v Speaker 1>the manufacturing industries. All of them are saying that AI,

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<v Speaker 1>they are basically users of AI, and there are so

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<v Speaker 1>many different examples there they So the enthusiasm from our

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<v Speaker 1>clients has shifted from the AI enablers to the AI adopters,

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<v Speaker 1>and that is obviously leading to productivity grains across industries.

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<v Speaker 1>But one of the industries that really benefits from it

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<v Speaker 1>is the software industries rather than the hardware where that

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<v Speaker 1>has been hit because people feel that there is going

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<v Speaker 1>to be and fewer semiconductors needed to do the same tasks.

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<v Speaker 1>The software industry really is gearing up to develop all

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<v Speaker 1>of those applications for those different industries to really allow

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<v Speaker 1>them to use AI to develop new products, to develop

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<v Speaker 1>their customer services and so on.

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<v Speaker 2>We'll leave it there, Villain, thank you so much for

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<v Speaker 2>joining us. Villam sells there. He is the Global CIO

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<v Speaker 2>at HSBC Global Private Banking and Wealth. Joining us here

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

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<v Speaker 2>Asia Podcast. I'm Doug Chrisner. So we had some weakness

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<v Speaker 2>for US equities as the market considered the impacts of

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<v Speaker 2>the trade war. The consensus view on tariff seems to

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<v Speaker 2>be that they will lead to higher prices, fewer options

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<v Speaker 2>for consumers, and and fewer manufacturing jobs in the US.

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<v Speaker 2>For a closer look, now, I'm joined by Gene Goldman.

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<v Speaker 2>He is the CIO at Satara Financial Group. Gen's on

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<v Speaker 2>the line from El Segundo, California. Thanks for making time

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<v Speaker 2>to chat with us. Gene, Thanks so much. Doug, give

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<v Speaker 2>me your sense of where things stand right now in

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<v Speaker 2>terms of the tariffs having an impact on equity market

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<v Speaker 2>price section.

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<v Speaker 3>Yeah, First of all, it's a great question because clearly

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<v Speaker 3>the tariffs is the news de jore, basically the news

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<v Speaker 3>of the year. So for us, we're more optimistic than

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<v Speaker 3>I think the markets. You know, I do think tariffs

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<v Speaker 3>are going to create a lot of market volatility, and

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<v Speaker 3>we're seeing this already. But if we look at tariffs

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<v Speaker 3>and we say three things why, it won't be as

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<v Speaker 3>bad as the markets are worried about. Number one, I

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<v Speaker 3>do think, you know, President Trump of the administration continues

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<v Speaker 3>to talk about tariffs being retaliatory, not universal. That's a

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<v Speaker 3>very important point. I think. Second of all is that if

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<v Speaker 3>you look at other countries and their exposure to US

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<v Speaker 3>imports to their imports to the United States, it's a

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<v Speaker 3>greater percentage of those countries GDP than our country. Of course,

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<v Speaker 3>that leads room for negotiation. And third of all, if

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<v Speaker 3>we just use use twenty eighteen as a base case,

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<v Speaker 3>during the tariffs, then stocks fell from peak to trough

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<v Speaker 3>by about sixteen percent. But keep in mind we were

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<v Speaker 3>back to pre tariff levels by May of twenty nineteen,

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<v Speaker 3>So yes, there's gonna be uncertainty. Es. Yes, there's gonna

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<v Speaker 3>be lots of market volatility, but we do think it's

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<v Speaker 3>gonna be a little bit less expected. In today's announcement

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<v Speaker 3>about tariffs, it's just more rhetoric really focusing on the

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<v Speaker 3>fact that it's going to be retaliatory and less universal. Yes,

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<v Speaker 3>there are going to be ratifications. I do think that

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<v Speaker 3>you know, consumers may not spend as much on car

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<v Speaker 3>or may maybe you know, they're still going to buy cars,

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<v Speaker 3>but maybe just not buy as many cars. But I

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<v Speaker 3>do think, you know, there's very lack of response from

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<v Speaker 3>so far from the EU, you suggesting maybe potentially more negotiations.

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<v Speaker 3>And you know, if you think about the ratifications, US

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<v Speaker 3>auto exports to the United States are not going to

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<v Speaker 3>be wiped out because it's going to take some time

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<v Speaker 3>for US production to ramp up. Also, demand performed auto

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<v Speaker 3>is fairly priced in elastic and then really a twenty

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<v Speaker 3>five percent tariff doesn't necessarily wipe out the cost advantage

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<v Speaker 3>of lower cost exporters. And what we're seeing, especially we

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<v Speaker 3>saw from Mexico today, we could see a weakening of

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<v Speaker 3>foreign currencies versus the dollar. So I know that the

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<v Speaker 3>tariff uncertainty creates volatility, But I think the good news

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<v Speaker 3>is that we think will be less than the markets

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<v Speaker 3>have anticipated.

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<v Speaker 2>But when you consider where the FED is in all

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<v Speaker 2>of this, I mean there are policy ramifications as well.

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<v Speaker 2>We heard from the head of the Boston FED this afternoon,

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<v Speaker 2>Susan Collins. She was saying, it looks inevitable that tariffs

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<v Speaker 2>will boost inflation, and for that reason, it's likely appropriate

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<v Speaker 2>to keep rate steady for longer. So when you consider

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<v Speaker 2>the fact that we may be in a new regulatory

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<v Speaker 2>regime on monetary policy, is not going to impact the

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<v Speaker 2>equity market at all.

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<v Speaker 3>Yeah, so we go to the FED. Okay, So if

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<v Speaker 3>you think about the FED first and foremost, one of

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<v Speaker 3>our key themes coming into twenty twenty five was that

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<v Speaker 3>the FED would not be a good friend. The FED

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<v Speaker 3>would not cut rates as much as the Marcus anticipated.

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<v Speaker 3>And if you look at the FED, you know the

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<v Speaker 3>FED is seeing fairly pretty good economic growth, stocks somewhat

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<v Speaker 3>close to all time highs, a pretty good labor market,

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<v Speaker 3>but they're seeing above target inflation. So even regardless of

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<v Speaker 3>the tariff uncertainty, I still think they're going to be

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<v Speaker 3>on the sideline for some time. We think the FED,

0:13:16.200 --> 0:13:18.760
<v Speaker 3>regardless of what happens, cuts rates only once or maybe

0:13:18.800 --> 0:13:21.280
<v Speaker 3>not at all for this year. But the good news,

0:13:21.400 --> 0:13:24.960
<v Speaker 3>going back to the market's sort of ramifications, we do

0:13:25.040 --> 0:13:27.200
<v Speaker 3>think that returns this year are going to be good

0:13:27.240 --> 0:13:29.480
<v Speaker 3>but not great. And what I look at is the

0:13:29.520 --> 0:13:32.960
<v Speaker 3>fact that the economy is, you know, we have modest

0:13:32.960 --> 0:13:37.080
<v Speaker 3>economic growth, we have moderating inflation, we have a pretty

0:13:37.120 --> 0:13:40.480
<v Speaker 3>okay labor market, and we also have double digit earnings

0:13:40.559 --> 0:13:43.640
<v Speaker 3>growth expected for the markets. And the other bonus point

0:13:43.679 --> 0:13:46.240
<v Speaker 3>is that the FED is not going to be raising rates.

0:13:46.280 --> 0:13:49.040
<v Speaker 3>So in that type of environment, the market historically does

0:13:49.120 --> 0:13:51.360
<v Speaker 3>good but not great. That's why our target for the

0:13:51.400 --> 0:13:54.000
<v Speaker 3>SMP is still about six to eight percent for the year,

0:13:54.120 --> 0:13:56.800
<v Speaker 3>or about sixty three hundred from where it is right now.

0:13:56.960 --> 0:14:00.760
<v Speaker 2>So beyond just kind of giving me the technicals and

0:14:00.800 --> 0:14:04.040
<v Speaker 2>where the overall market is going to be in your view,

0:14:04.360 --> 0:14:07.160
<v Speaker 2>what are the themes underneath that forecast? I mean, are

0:14:07.480 --> 0:14:10.880
<v Speaker 2>you buying specific industries or sectors of the market right

0:14:10.920 --> 0:14:11.880
<v Speaker 2>now and selling others?

0:14:12.240 --> 0:14:14.960
<v Speaker 3>Sure so coming in So keep in mind, coming into

0:14:14.960 --> 0:14:17.520
<v Speaker 3>the correction, we weren't surprised by the correction. We've been

0:14:17.520 --> 0:14:20.080
<v Speaker 3>saying we expected the correction for some time. We were

0:14:20.080 --> 0:14:22.320
<v Speaker 3>just surprised it took so long for the market to

0:14:22.360 --> 0:14:25.280
<v Speaker 3>actually have a crection. So with that in mind, we

0:14:25.360 --> 0:14:27.200
<v Speaker 3>had sort of a I guess I call it. I

0:14:27.280 --> 0:14:29.600
<v Speaker 3>know it's opening day for baseball, but really using a

0:14:29.640 --> 0:14:34.080
<v Speaker 3>basketball analogy, we were investing, like Shack SAJAQ, a little

0:14:34.080 --> 0:14:38.040
<v Speaker 3>bit biased towards small and midcaps, bias towards healthcare, bias

0:14:38.080 --> 0:14:42.400
<v Speaker 3>towards alternatives, and bias towards quality names. What we're doing now,

0:14:42.880 --> 0:14:45.760
<v Speaker 3>especially with this market pullback we're around, we're looking to

0:14:45.800 --> 0:14:48.880
<v Speaker 3>boost some of our beta within our portfolio. So broadly speaking,

0:14:48.960 --> 0:14:53.280
<v Speaker 3>we're reducing our liquid alternatus exposure in favor of global equity.

0:14:53.600 --> 0:14:57.480
<v Speaker 3>We're also from a positioning standpoint, we continue to be

0:14:57.560 --> 0:15:02.520
<v Speaker 3>overweight value versus growth, continue to be avoid SmallCap in MidCap.

0:15:02.560 --> 0:15:04.920
<v Speaker 3>We do think that market breath will continue to widen.

0:15:05.160 --> 0:15:07.400
<v Speaker 3>And then from a sector standpoint, our favorite sector is

0:15:07.440 --> 0:15:10.280
<v Speaker 3>continue to be healthcare. You know healthcare, you have so

0:15:10.320 --> 0:15:15.359
<v Speaker 3>much advances in biotech and personalized medicine and telehealth solutions

0:15:15.560 --> 0:15:20.520
<v Speaker 3>really revolutionizes patient care. And we also like financial services

0:15:20.720 --> 0:15:24.440
<v Speaker 3>higher yields, somewhat of a steepening yield curve sort of

0:15:24.480 --> 0:15:28.120
<v Speaker 3>the economy not being as bad as the markets think.

0:15:28.320 --> 0:15:31.880
<v Speaker 3>We think take that into consideration. Healthcare and financials will

0:15:31.880 --> 0:15:34.480
<v Speaker 3>be a great opportunity in this environment. The sector that

0:15:34.520 --> 0:15:38.000
<v Speaker 3>we would avoid that we are really scared about energy.

0:15:38.080 --> 0:15:40.680
<v Speaker 3>We think energy it's one of the best performing sectors

0:15:41.120 --> 0:15:45.200
<v Speaker 3>this year. But energy worry worries us because significance supply

0:15:45.320 --> 0:15:48.360
<v Speaker 3>where a record levels of exports, record levels of drilling

0:15:48.640 --> 0:15:50.400
<v Speaker 3>and all of a sudden, you know, Joe baby drill

0:15:50.680 --> 0:15:52.880
<v Speaker 3>puts more pressure where's the oil going to go? And

0:15:53.240 --> 0:15:55.960
<v Speaker 3>you have Sali Arabia the UAE both have come out

0:15:55.960 --> 0:15:59.120
<v Speaker 3>recently and said, hey, if oil prices served, we will

0:15:59.160 --> 0:16:01.480
<v Speaker 3>be ready to put more supply on the market. Not

0:16:01.520 --> 0:16:02.880
<v Speaker 3>a good sector for us to be in.

0:16:02.960 --> 0:16:05.200
<v Speaker 2>Some of the recent sentiment data that we have seen

0:16:05.240 --> 0:16:08.400
<v Speaker 2>on the US consumer has been very weak, and I'm interested, Jean,

0:16:08.840 --> 0:16:11.400
<v Speaker 2>to get your take on how you see the health

0:16:11.440 --> 0:16:13.160
<v Speaker 2>of the American consumer right now.

0:16:14.240 --> 0:16:16.000
<v Speaker 3>We definitely know. One of our other themes was that

0:16:16.040 --> 0:16:18.560
<v Speaker 3>the economy was moderating, we called the Great Moderation, and

0:16:18.600 --> 0:16:21.440
<v Speaker 3>definitely the economy is definitely slowing down. We just don't

0:16:21.440 --> 0:16:24.160
<v Speaker 3>see a recession. We think recession warriors are very overblown.

0:16:24.600 --> 0:16:26.880
<v Speaker 3>Keep in mind, in January it was the coldest January

0:16:26.920 --> 0:16:29.800
<v Speaker 3>since nineteen eighty eight. We also had a very extended

0:16:29.840 --> 0:16:31.880
<v Speaker 3>flu season, so a lot of the weakness that we

0:16:31.880 --> 0:16:36.320
<v Speaker 3>saw in January really affected weather related industries like construction,

0:16:36.560 --> 0:16:39.840
<v Speaker 3>like services like hospitality, And keep in mind it's also

0:16:39.960 --> 0:16:43.160
<v Speaker 3>January and February. Consumers tend to spend a little less

0:16:43.160 --> 0:16:46.600
<v Speaker 3>money after the post holiday season. We are seeing February

0:16:46.680 --> 0:16:49.280
<v Speaker 3>data and March data come in a little bit better

0:16:49.360 --> 0:16:51.840
<v Speaker 3>than expected, and that's a good good sign for us.

0:16:52.000 --> 0:16:54.320
<v Speaker 3>We saw some p andis come out earlier this week

0:16:55.040 --> 0:16:58.400
<v Speaker 3>on the services side, well above expectations. So you take

0:16:58.440 --> 0:17:01.520
<v Speaker 3>this into consideration, just don't see a recession anytime soon,

0:17:01.560 --> 0:17:03.280
<v Speaker 3>at least for this year. And I think that's an

0:17:03.320 --> 0:17:07.000
<v Speaker 3>important connection because if you think about that, a correction

0:17:07.160 --> 0:17:10.000
<v Speaker 3>is a normal part of investing once every thirteen months

0:17:10.119 --> 0:17:12.520
<v Speaker 3>or so. We just don't see a bear market because

0:17:12.520 --> 0:17:15.920
<v Speaker 3>corrections are when markets are worried about a recession. Bear

0:17:16.040 --> 0:17:18.800
<v Speaker 3>markets occur when we actually have a recession. And we've

0:17:18.840 --> 0:17:22.159
<v Speaker 3>only had three bear markets with out a recession nineteen

0:17:22.240 --> 0:17:25.720
<v Speaker 3>sixty two, nineteen eighty seven, and then twenty twenty two.

0:17:25.960 --> 0:17:27.720
<v Speaker 3>So we just don't see a recession. We just don't

0:17:27.720 --> 0:17:28.600
<v Speaker 3>see a bear market.

0:17:28.800 --> 0:17:32.560
<v Speaker 2>So your investment ideas seem focused primarily on the equity side,

0:17:32.560 --> 0:17:34.639
<v Speaker 2>at least that's what I've heard so far. I'm curious

0:17:34.680 --> 0:17:37.760
<v Speaker 2>as to whether you're finding opportunity in the fixed income

0:17:37.800 --> 0:17:38.440
<v Speaker 2>space at all.

0:17:38.680 --> 0:17:42.920
<v Speaker 3>Sure, fix inc them. Broadly speaking, we like fixing them,

0:17:43.000 --> 0:17:46.560
<v Speaker 3>especially high quality, especially treasuries. You know, you think with

0:17:46.720 --> 0:17:48.719
<v Speaker 3>yields about you know, one and a half to two

0:17:48.760 --> 0:17:51.960
<v Speaker 3>percent over inflation, they're pretty attractive. We continue to see

0:17:52.040 --> 0:17:55.200
<v Speaker 3>strong foreign ownership with treasuries. You know, they're driven by

0:17:55.200 --> 0:17:58.480
<v Speaker 3>better yields, by the stronger dollar, and there's a huge

0:17:58.480 --> 0:18:02.439
<v Speaker 3>retail demand for bonds, and so for our perspective, and

0:18:02.440 --> 0:18:04.720
<v Speaker 3>we do think the tenure treasury is pretty close to

0:18:04.760 --> 0:18:07.639
<v Speaker 3>the max I mean, the tenure Treasury tends and max

0:18:07.720 --> 0:18:10.840
<v Speaker 3>out around sort of that year over year us GDP

0:18:11.119 --> 0:18:13.960
<v Speaker 3>nominal rate. It's about five percent, So we're pretty close

0:18:14.000 --> 0:18:16.840
<v Speaker 3>to that upper end range on our end. The area

0:18:16.840 --> 0:18:19.040
<v Speaker 3>that within fixing them that we do worry about though,

0:18:19.040 --> 0:18:21.360
<v Speaker 3>would be high yield, high yielding. Again, we don't see

0:18:21.400 --> 0:18:23.679
<v Speaker 3>a recession, but we'll worries about high yield is that

0:18:23.840 --> 0:18:28.600
<v Speaker 3>high yield spreads are so narrow right now, pricing in

0:18:28.680 --> 0:18:31.760
<v Speaker 3>everything being exactly perfect, and we don't think everything will perfect.

0:18:31.760 --> 0:18:33.240
<v Speaker 3>We think there'll be some bumps. And you know, you

0:18:33.280 --> 0:18:36.520
<v Speaker 3>saw corporate bankruptcies increase a little bit lately. But at

0:18:36.560 --> 0:18:38.120
<v Speaker 3>the end of the day, we don't see a recession.

0:18:38.440 --> 0:18:42.639
<v Speaker 3>But high yield spreads are pricing and everything being super blissful,

0:18:42.880 --> 0:18:44.879
<v Speaker 3>like a perfect game on opening day, and we just

0:18:44.920 --> 0:18:45.439
<v Speaker 3>don't see that.

0:18:45.480 --> 0:18:47.479
<v Speaker 2>All right, We'll leave it there, Gene. It's always a pleasure.

0:18:47.520 --> 0:18:49.080
<v Speaker 2>Thank you so much. Gene Goldman.

0:18:49.119 --> 0:18:49.280
<v Speaker 3>There.

0:18:49.320 --> 0:18:52.760
<v Speaker 2>He is the CIO at Satara Financial Group, joining from

0:18:52.760 --> 0:18:58.600
<v Speaker 2>El Segundo, California. Here on the Daybreakasia Podcast. Thanks for

0:18:58.640 --> 0:19:03.280
<v Speaker 2>listening to today's episode of the Bloomberg Daybreak Asia Edition podcast.

0:19:03.600 --> 0:19:06.720
<v Speaker 2>Each weekday, we look at the story shaping markets, finance,

0:19:07.080 --> 0:19:10.159
<v Speaker 2>and geopolitics in the Asia Pacific. You can find us

0:19:10.200 --> 0:19:14.400
<v Speaker 2>on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere

0:19:14.400 --> 0:19:17.520
<v Speaker 2>else you listen. Join us again tomorrow for insight on

0:19:17.560 --> 0:19:21.720
<v Speaker 2>the market moves from Hong Kong to Singapore and Australia.

0:19:22.119 --> 0:19:24.600
<v Speaker 2>I'm Doug Prisoner and this is Bloomberg