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

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Speaker 2: Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner.

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Speaker 2: Today President Trump provided an update on ongoing trade negotiations,

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Speaker 2: and he said that he signed a deal with China

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Speaker 2: on Wednesday. Now, the President really didn't elaborate much, but

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Speaker 2: later we got a few details from Commerce Secretary Howard Lutnik,

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Speaker 2: who spoke earlier to Bloomberg's Balance of Power, and will

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Speaker 2: bring you that conversation in a moment or two. But

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Speaker 2: we begin with markets today, the S and P five

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Speaker 2: hundred flirted with an all time high. Now, much of

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Speaker 2: the focus was on a resumption of FED rate cuts.

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Speaker 2: We caught up earlier with the head of the San

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Speaker 2: Francisco Fed, Mary Daily. She told us it doesn't look

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Speaker 2: like tariffs will cause a big spike in inflation, and

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Speaker 2: now she's open to cutting interest rates in the fall.

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Speaker 3: It's both sides of our mandate that have really come

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Speaker 3: into frame since we brought inflation down from the really

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Speaker 3: high levels to something that's closer.

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Speaker 4: To our target.

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Speaker 3: Ultimately, we have to watch both sides and that's what

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Speaker 3: I'm doing. And then the fall looks promising for a

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Speaker 3: rate cut.

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Speaker 2: That's Mary Daily there, head of the San Francisco FED,

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Speaker 2: speaking earlier to Bloomberg. Joining me now is Rebecca Waalzer.

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Speaker 2: She is president at Wallser Wealth Management, and she is

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Speaker 2: here in our New York studio. Nice of you to

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Speaker 2: drop by. It's great to see you, as always.

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Speaker 1: Thank you, thanks for having me.

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Speaker 4: There seems to.

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Speaker 2: Be a lot of aggressive betting in the market right

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Speaker 2: now that we're going to get maybe as many as

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Speaker 2: three yeah, great cuts this year. How are you feeling

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Speaker 2: about what the Fed may deliver between now and let's

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Speaker 2: say December.

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Speaker 1: Yeah, we just saw that today.

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Speaker 5: Actually, Doug that the swaps market said maybe even a

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Speaker 5: third today, which was a little bit unusual. Listen, in

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Speaker 5: my opinion, I think Pal's hands and the board's hands

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Speaker 5: are tied until we at least get past July nine,

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Speaker 5: which is, you know, the tariff kind of due date

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Speaker 5: of getting these things resolved. We're getting alerts that Europe

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Speaker 5: is really getting closer to some kind of you know,

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Speaker 5: a policy tariff policy interchange with Trump administration. And of

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Speaker 5: course then we have the China situation, which is, you know,

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Speaker 5: unfortunately not nearly as far along as it should be,

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Speaker 5: you know, it's not going to stop at the fifty five.

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Speaker 5: That was just kind of a barometer trying to get

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Speaker 5: to July, and obviously they're not going to want tariffs

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Speaker 5: anywhere near that. So to Chairman Pal's defense, he can't

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Speaker 5: make policy in the absence of what's going to happen

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Speaker 5: after July nine, or after we get at least some

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Speaker 5: indication of how these these tariff and trade deals are

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Speaker 5: going to interact and play. And so from that perspective,

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Speaker 5: I understand why they're they're basically as such a small

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Speaker 5: percentage at least there was a small percentage of any

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Speaker 5: kind of cut for the July meeting, which would then

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Speaker 5: lead us obviously till September. If you think they're going

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Speaker 5: to get three dug and we don't start until September,

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Speaker 5: that's going to make it really tight, you know, because

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Speaker 5: you're going to have September, October, November, December, and it's

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Speaker 5: going to have to be almost to cut at every meeting.

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Speaker 5: So that almost would indicate to me that there's there's

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Speaker 5: systemic problems that would require recuts, and I just don't

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Speaker 5: see because of the animosity, unfortunately between President Trump and

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Speaker 5: the Federal Reserve at least with Powell. I don't see

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Speaker 5: Powe trying to assist necessarily with that aggressive of cuts

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Speaker 5: in the end of latter half of the year.

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Speaker 2: So he was already floating the idea of naming another

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Speaker 2: fed Shairman even before Powell's term expires in eleven months

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Speaker 2: from now exactly. I think it's fair to assume that

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Speaker 2: whoever it is, they're going to be more jubvish than

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Speaker 2: Powell has been. Could this potentially create a problem.

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Speaker 5: I mean, you know, I think the Supreme Court tried

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Speaker 5: to dispel any kind of ambiguity with what authority President

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Speaker 5: Trump had around the appointment or the removal of Powell

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Speaker 5: by basically stating in an unsigned order that Powe was

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Speaker 5: not removable. And so then you can see that Trump

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Speaker 5: is reacting to that by stating, hey, let me rautle

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Speaker 5: your cage by giving you maybe some anominees already.

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Speaker 1: And I think that that's probably that's not good for us.

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Speaker 2: We need to be nine it if his success for

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Speaker 2: as a dove, what could that do?

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Speaker 1: I mean, that's a good point.

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Speaker 4: You know.

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Speaker 1: It's kind of similar to.

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Speaker 5: A lot of these CEOs and a lot of these

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Speaker 5: countries hedging tariff policy and what they should do with

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Speaker 5: their factories and their supply chains, because they're saying, what's

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Speaker 5: really going to happen.

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Speaker 1: In four years?

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Speaker 5: Right, So if you have a Trump naming a successor

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Speaker 5: to pal who is vastly different than POW, then you

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Speaker 5: are going to upset the markets because they're going to

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Speaker 5: know that whatever policy power puts in place is going

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Speaker 5: to be probably immediately turned around eleven months from now.

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Speaker 2: So you were talking about tariff policy as it relates

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Speaker 2: to July ninth, we're going to have this Commerce Department

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Speaker 2: investigation on the basis of national security issues and whether

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Speaker 2: or not they're going to be new tariffs on things

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Speaker 2: like pharmaceuticals, semiconductors, certain metal products, maybe even steel remains

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Speaker 2: an issue in terms of national security. We'll have to

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Speaker 2: wait and see. How are you feeling about how this

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Speaker 2: could feed into the equity market.

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Speaker 5: Well, I think that it absolutely would boost any argument

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Speaker 5: for ten pffs. And I think that's because the American

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Speaker 5: people just don't really have a great understanding dug of

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Speaker 5: how the coronavirus supply chain problem really happen.

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Speaker 1: With the biopharmaceutical products.

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Speaker 5: We get a lot of our materials for our pharmaceuticals

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Speaker 5: from China, and whether it's an intentional thing of because

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Speaker 5: of tariff policy, or if it's a you know, pandemic

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Speaker 5: thing because the shipping lanes are closed, whatever the case

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Speaker 5: may be, our country cannot be beholden to Asia and

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Speaker 5: specifically China for the health of our citizens. And I

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Speaker 5: think when Americans understand how desperately dependent we are, then

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Speaker 5: you are probably going to see, you know, I think

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Speaker 5: that the means to an end. Tariffs in and of

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Speaker 5: themselves are not good, but there are means to an end.

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Speaker 5: So if it's too cheap to make something over there,

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Speaker 5: but it's costing you national security, then it might cost

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Speaker 5: more over here.

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Speaker 1: But then we have it.

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Speaker 5: On our shores and we don't have to worry about shipping,

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Speaker 5: and we don't have to worry about all kinds of

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Speaker 5: you know, wars, any kinds of things like those things.

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Speaker 2: Does it surprise you that the equity market is trading

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Speaker 2: your record high right now?

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Speaker 1: It's such a dichotomy. Even if you look at.

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Speaker 5: The University of Michigan consumer sentiment right it plunged twenty

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Speaker 5: nine percent in the first four months. We don't usually

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Speaker 5: get a plunge that fast, that aggressively without a recession following.

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Speaker 5: It's always indicative in the last seventy nine years of

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Speaker 5: the survey of some kind of recession following. So to

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Speaker 5: get that the first part of the year and then

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Speaker 5: get these almost record highs, it is so mind boggling.

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Speaker 1: But really, doug what it is is it's almost a bifurcation.

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Speaker 6: Right.

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Speaker 5: You're seeing, well, we don't nowhere else to invest in

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Speaker 5: the world, and I know a lot of money has

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Speaker 5: left the United States, a lot of the hedge funds

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Speaker 5: of transferred money out and gone to Europe and those things.

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Speaker 5: But really what you saw at the beginning of the

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Speaker 5: year was a lot of you know, negativity around this

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Speaker 5: tariff policy.

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Speaker 1: It's going to cost more, we don't have.

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Speaker 5: The growth going into this year to sustain these tariffs,

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Speaker 5: and so the the but the end of the day,

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Speaker 5: investors return home and say, gosh, this is the best

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Speaker 5: place to be, even though this has problems too. So

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Speaker 5: it is really weird to see such a high market

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Speaker 5: and know that consumers still are very tenuous at best

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Speaker 5: about this economy.

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Speaker 2: So what are you telling aliens when they ask is

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Speaker 2: there opportunity? Have you identified one corner of the market

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Speaker 2: where there is I.

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Speaker 5: Think that there's always opportunity right now, and you can

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Speaker 5: say that with absolute confidence because we are at the

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Speaker 5: beginning stages still of monetization of the Fourth Industrial Revolution.

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Speaker 5: So there is a ton of opportunity around AI, around robotics,

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Speaker 5: around blockchain technology and so crypto. So all of those

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Speaker 5: things are in their infancy and have a yet to

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Speaker 5: be fully monetized, which means that there is a long

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Speaker 5: runway for that, and that is not going to change

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Speaker 5: no matter who is the administration, no matter what the

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Speaker 5: terror policy is, no matter what's going on. So that

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Speaker 5: is an opportunity now it has yet to monetize, and

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Speaker 5: that does and so what happens if you think of

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Speaker 5: dot com before it monetized, it did come back down

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Speaker 5: and there's a massive pullback dot com crash. I'm not

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Speaker 5: suggesting that we might have that because we do have Nvidio,

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Speaker 5: We do have a lot of applications. You can see

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Speaker 5: you can type text messages now, your email now is

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Speaker 5: focused versus all because.

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Speaker 1: It's got AI in there.

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Speaker 5: So there are already it's already been monetized, but not

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Speaker 5: anywhere near to where we're going.

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Speaker 1: So there is opportunity, but it'll be on the longer term.

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Speaker 5: If we get into any kind of global war escalation

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Speaker 5: Doug and if these tarift policies really do become protections

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Speaker 5: of the United States where we have to really do

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Speaker 5: and change up supply chains, then you're going to see

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Speaker 5: equity global equity pullback.

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Speaker 2: You're not concerned about valuations. I think the Nasdaq one

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Speaker 2: hundred is around thirty one times earnings right now.

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Speaker 5: I am a thousand percent concerned about valuations. But this

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Speaker 5: is not a Trump trend or even a recent trend.

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Speaker 5: This trend goes back to two thousand nine global financial

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Speaker 5: crisis and really the United States changing from what I

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Speaker 5: would say, whatever monetary policy you want to say we

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Speaker 5: had before, to modern monetary theory. You can look at

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Speaker 5: the stimulus between monetary and fiscal from two thousand and

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Speaker 5: nine to and overlap lay that with the S and

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Speaker 5: P five hundred and you will see where the money went.

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Speaker 5: So these valuations have been propped up massively since the

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Speaker 5: global financial crisis.

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Speaker 2: What about opportunities offshore? Are you seeing any right now?

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Speaker 2: Particularly in Asia?

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Speaker 5: I mean, we think that there's a long term runway

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Speaker 5: in Asia but it's too risky for US right now

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Speaker 5: because of the fact that there's an animosity between Asia

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Speaker 5: and the West right now, and it's just Asia ex China.

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Speaker 2: What about Japan South Korea?

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Speaker 4: Sure?

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Speaker 5: Sure, But then I would say you have to worry

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Speaker 5: about Japanese their debt problem. I mean, they obviously have

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Speaker 5: the worst debt problem in the world, and so far,

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Speaker 5: using the carry trade, it's.

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Speaker 1: Been okay for them.

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Speaker 5: But if that unwinds at any time like we saw

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Speaker 5: August fifth of last year, then Japan's going to have

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Speaker 5: a massive problem.

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Speaker 2: Is India a market that you like?

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Speaker 1: India? Absolutely?

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Speaker 5: And they have a lot of natural resources, and they

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Speaker 5: absolutely have the population to sustain maybe new supply chains

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Speaker 5: that move out of China over to India, so I mean,

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Speaker 5: and they have the capacity as far as intellectual property

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Speaker 5: and their engineers. I mean, just an extremely smart population.

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Speaker 2: So if you think the market has got it wrong

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Speaker 2: in pricing in aggressive FED rate cuts, does that mean

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Speaker 2: that the bond market is over its skis to the

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Speaker 2: point where you would avoid the bond market right now?

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Speaker 1: I mean it's a little bit alarming to me.

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Speaker 5: How fast the two year, the three year, and even

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Speaker 5: the ten year has pulled back in just the last

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Speaker 5: ten days, and you have to say to yourself, what

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Speaker 5: is this that's happening underline?

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Speaker 1: You have to really look.

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Speaker 5: I mean, you know, Doug, I have come in here

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Speaker 5: multiple times our last year and half and said, look,

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Speaker 5: we have a global macroeconomic currency turnover that has begun

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Speaker 5: away from the dollar.

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Speaker 1: The d dollarsation even of China.

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Speaker 5: Is so rapid and so fast that that is the

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Speaker 5: long term concern is that how are we as Americans

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Speaker 5: going to escape ultimately this and yet still not be

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Speaker 5: the sole superpower that has the total four x currency reserves,

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Speaker 5: Like we never are one hundred percent, but we were

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Speaker 5: so much higher than we are now. So that's the

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Speaker 5: bigger play is what is macroeconomically globally going to be

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Speaker 5: going on with currency? And do we even need a

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Speaker 5: reserve currency more now that we can buy directionally chain

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Speaker 5: trade with central bank digital currencies.

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Speaker 2: Rebecca, thank you so much for joining us. Rebecca Waltzer there,

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Speaker 2: she is the president at Walser Wealth Management, joining here

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Speaker 2: in New York on the Daybreak Asia podcast. Welcome back

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Speaker 2: to the Daybreak Asia Podcast. I'm Doug Chrisner. Earlier today,

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Speaker 2: Commerce Secretary Howard Lutnik told us the US and China

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Speaker 2: finalized a trade framework reached last month during talks in Geneva.

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Speaker 2: He made the remarks late Thursday during an appearance on

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Speaker 2: Bloomberg's Balance of Power radio and TV program. Here's part

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Speaker 2: of the secretary's conversation with Bloomberg's Joe Matthew and Kaylee Lines.

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Speaker 7: Secretary, I'm really interested in exploring the relationship between the

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Speaker 7: tax bill and tariffs. If you can maybe take us

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Speaker 7: by the hand here, does the tax bill only work

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Speaker 7: when you have the revenue coming from tariffs? And we're

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Speaker 7: of course having this conversation as we walk ever closer

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Speaker 7: to July ninth, the deadline here for the reciprocals. If

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Speaker 7: the bill alters anymore, does the tariff program need to

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Speaker 7: change with it?

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Speaker 4: Not at all.

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Speaker 6: The tariff program is in the power of the presidency, right.

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Speaker 6: Congress has given the president the power to work on

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Speaker 6: these towers to set these tariffs.

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Speaker 4: So that's presidential power.

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Speaker 6: So what's really interesting is this big, beautiful bill does

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Speaker 6: not count the eighty eight billion dollars of tariff revenue

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Speaker 6: we've received, and now we're earning up to thirty billion

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Speaker 6: a month in tariff revenue so far, and as you

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Speaker 6: get to July ninth, that number is only going to

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Speaker 6: go higher.

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Speaker 4: We're going to announce a.

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Speaker 6: Whole bunch of deals over the next week or so,

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Speaker 6: and then we're just going to send letters out to

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Speaker 6: everybody who's responded to us, put them in the right category.

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Speaker 4: And awful go.

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Speaker 6: So there's going to be tens of billions per month,

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Speaker 6: and that it's not included in the bill. So when

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Speaker 6: they talk about the deficit, when they're talking about the bill,

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Speaker 6: they're only talking about the things that that bill touches.

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Speaker 6: The extra four hundred or five hundred billion dollars a

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Speaker 6: year that the tariffs bring in, the new tariffs bring in,

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Speaker 6: that just doesn't count for the bill.

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Speaker 4: But of course, of course that Kaiosh counts for America.

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Speaker 8: Secretary, you just said that you're going to announce a

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Speaker 8: whole bunch of deals over the course of the next

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Speaker 8: week with what countries, And does that include the China

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Speaker 8: deal the President suggested was signed yesterday? What is that?

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Speaker 4: So the China deal? We inked the deal.

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Speaker 6: You remember, we had a trip to Geneva and then

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Speaker 6: that was being slow played. We got back together in London,

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Speaker 6: and that deal was signed and sealed two days ago.

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Speaker 4: President just said it just the other just you know,

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Speaker 4: I don't know, fifteen minutes ago.

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Speaker 6: And then he also suggested that we are, of course

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Speaker 6: at the very close finish line with India. Of course,

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Speaker 6: the way these deals happen is their Prime Minister and

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Speaker 6: their parliament have to approve it, and the President likes

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Speaker 6: to close these deals himself. I mean, he's the deal maker.

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Speaker 6: He loves to close it. I think we have deal

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Speaker 6: after deal after deal. The President's going to make his calls.

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Speaker 6: He's going to decide exactly the finishing touches on them,

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Speaker 6: and then what we're going to do is we're going

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Speaker 6: to lay out a structure of all the different kinds

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Speaker 6: of tariff arrangements with different countries. Right there are countries

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Speaker 6: with huge deficits, there are countries that are balanced. We're

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Speaker 6: going to set that all up and get that ready

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Speaker 6: for July ninth.

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Speaker 7: So it sounds to me, Secretary, correct me if I'm

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Speaker 7: wrong as I listen to you, that we either get

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Speaker 7: eighty eight deals announced in the next two weeks or

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Speaker 7: there's going to be action one way or the other

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Speaker 7: by this administration that July ninth will be conclusive.

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Speaker 4: If there's no deal, here's the.

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Speaker 1: New recick world tariff?

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Speaker 4: Is that right, of course? So what we're going to

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Speaker 4: do is we'll announce some deals. But basically the deals

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Speaker 4: we're going to announce are the are.

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Speaker 6: Sort of the head of the class, the structural spot

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Speaker 6: in the line, and then all the other countries will

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Speaker 6: fit behind those categories. Right, So we're going to do

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Speaker 6: tom ten deals, put them in the right category, and

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Speaker 6: then these other countries will fit behind. So you'll have

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Speaker 6: South American deals and you'll have African deals. You'll have

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Speaker 6: it all structured and set up, and that's the model

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Speaker 6: how you do leadership. And we will put these people

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Speaker 6: in their proper buckets on July ninth. So those who deals,

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Speaker 6: we'll have deals, and everybody else who's been negotiating with us,

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Speaker 6: they'll get a response from us, and then they'll go into.

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Speaker 4: That package and July ninth will go forward.

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Speaker 6: And as the President said, if people want to come

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Speaker 6: back and negotiate further, they're entitled to, but that tariff

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Speaker 6: rate will be set and off will go.

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Speaker 8: Where does Europe fall in that sequence, mister Secretary, There

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Speaker 8: was reporting from Politico today that the European Commission has

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Speaker 8: received the latest offer from the US. Are you expecting

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Speaker 8: that offer to potentially be accepted by next week?

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Speaker 4: I think that Europe has done an excellent job. They

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Speaker 4: are working hard.

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Speaker 6: They remember it was a very very slow process, if

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Speaker 6: you remember, and the President put out a truth. Kind

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Speaker 6: of motivated them. With that truth, as Donald Trump is

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Speaker 6: capable of doing, they came to the table.

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Speaker 4: Then they started negotiating. They really put it on the table.

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Speaker 4: And I'm actually I've become optimistic.

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Speaker 6: I think if you had asked me three weeks ago

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Speaker 6: before that truth, I would have said no way. But

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Speaker 6: since that truth by the President, I really feel I'm optimistic.

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Speaker 6: I think we could get a dealed now. Europe will

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Speaker 6: be right at the end. But you got to remember

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Speaker 6: there are largest trading partners. To the fact that they

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Speaker 6: come at the very end makes some sense. It's deep,

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Speaker 6: it's complex, but I'm kind of optimistic now. I wasn't

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Speaker 6: optimistic three weeks ago, but now since the President got involved,

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Speaker 6: I'm pretty optimistic.

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Speaker 7: Actually, how about that fascinating secretary before you leave US?

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Speaker 7: I just went to trump Card dot Gov says trump

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Speaker 7: Card is coming. It's still on the way, when does

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Speaker 7: this happen? How many will you sell when this is

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Speaker 7: finally available? You've been saying that the phone's ringing off

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Speaker 7: the hook. Here where are they coming from?

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Speaker 4: All?

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Speaker 6: Right? Our waiting list, right, and we've got a sort

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Speaker 6: of a filtered waiting list where we go in and

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Speaker 6: make sure the emails.

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Speaker 4: Are correct, the people are correct.

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Speaker 6: Seventy five thousand people online at five million each. Right,

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Speaker 6: we're talking just under four hundred billion dollars with the

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Speaker 6: people online waiting for.

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Speaker 4: It to go live.

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Speaker 6: So obviously our focus is the big beautiful bill, and

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Speaker 6: once the big beautiful bill comes off.

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Speaker 4: We're going to go with the Trump Card.

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Speaker 6: And I'm really really excited for our objectives.

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Speaker 4: That has two things.

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Speaker 6: Both it'll bring in hundreds of billions of dollars to

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Speaker 6: reduce the deficit of the United States of America, and

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Speaker 6: it brings in great entrepreneurs into America and they'll build

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Speaker 6: our economy as well, so you get a double positive

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Speaker 6: from the Trump card.

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Speaker 2: That's Commerce Secretary Howard Lutnik there speaking with Bloomberg's Joe

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Speaker 2: Matthew and Kaylee lines Here on the Daybreak Asia podcast.

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

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

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

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

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

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

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