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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 Charlie Pellet.

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Speaker 2: Doug Chrisner has the week off. On today's episode, reaction

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Speaker 2: to Saturday's federal election in Australia. Prime Minister Anthony Albanisi

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Speaker 2: shocked Australia by securing a historic win in that election.

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Speaker 2: Now the question is whether he will use that mandate

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Speaker 2: to push through tough measures to overhaul the nation's economy.

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Speaker 2: We bring you a roundtable discussion with amp's Diana Mussina

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Speaker 2: alongside Andrea Carson, professor at Latrobe University. But first President

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Speaker 2: Trump says he is willing to lower tariff's on China

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Speaker 2: because the levies are now so high that the world's

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Speaker 2: two largest economies have essentially stopped doing business with each other.

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Speaker 2: And for a look at how market sort of digesting

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Speaker 2: the comments, we heard from Kerry Craig, global market strategist

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Speaker 2: of JP Morgan Asset Management. He spoke with Bloomberg Shrry

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Speaker 2: On and Heidi Stroud Watts.

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Speaker 3: Kerry, great to have you with us. There's been a

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Speaker 3: lot of question marks about the job that Fetchair Powell

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Speaker 3: is doing given the focus of President Trump right now

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Speaker 3: this week. What are we expecting when it comes to

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Speaker 3: the first rate decision and what do you think the

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Speaker 3: policy path will look like as we continue to hear

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Speaker 3: all this criticism and pressure coming from President Trump.

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Speaker 4: Har Good morning, Herdi Well. I think the fit of

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Speaker 4: Reserve and Chair Howell has phey thick skin when it

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Speaker 4: comes to the criticism. It's nothing that they're not used

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Speaker 4: to regarding the policy path. Again, I think this week's

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Speaker 4: meeting will be not necessarily a non event, but certainly

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Speaker 4: no meeting change that would see rates be adjusted to

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Speaker 4: this meeting. There is no statement of economic projections which

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Speaker 4: will give us new forecasts, so I think the messaging

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Speaker 4: will be relatively consistent with what we've heard before, focusing

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Speaker 4: on the incoming economic data to really assess the weakness

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Speaker 4: given what we've seen the survey data, and again a

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Speaker 4: focus on thinking about the performance of the labor market

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Speaker 4: as well given the feds dual mandate around full employment,

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Speaker 4: as well as assessing implications for inflation. So I think

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Speaker 4: the feed will be limited in terms of forward guidance,

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Speaker 4: reassessing and re establishing that view that they have room

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Speaker 4: to move should they need to, but again our view

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Speaker 4: is that they'll be basis towards supporting growth and looking

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Speaker 4: through that inflation that does appear a little bit more

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Speaker 4: and so we still see them cutting rates potentially three

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Speaker 4: or four times this year. The timing of that is

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Speaker 4: a little bit up for grabs, but we do think

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Speaker 4: they could start in June.

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Speaker 3: How do you assess the state of the US economy

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Speaker 3: right now, given, of course the data that we got

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Speaker 3: last week, whether it's the FASTS preferred inflation gage or

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Speaker 3: also the jobs numbers, and what are the implications for

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Speaker 3: US assets And we've seen significaticant pressure given the potential

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Speaker 3: of growth being hit because of all of these trade tensions.

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Speaker 4: I mean, yeah, obviously the week first quarter numbers for

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Speaker 4: growth bringing forward a lot of that imports from the

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Speaker 4: terrif's trying to front run that. They may get some

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Speaker 4: pullback on that, and the second quarter numbers that come back,

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Speaker 4: but more a lift in growth. But certainly that's when

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Speaker 4: we start to see some of the economic damage being

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Speaker 4: done from these higher prices coming through, as well as

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Speaker 4: the downshift and both consumption and the corporate outlooks. So

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Speaker 4: I think the second quarter numbers won't say a massive

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Speaker 4: bounce in terms of the rise in GDP, and we

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Speaker 4: do get them, but certainly, you know a bit better

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Speaker 4: than the negative numbers that we've had in the first quarter.

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Speaker 4: And I think the other economic deity you've seen come

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Speaker 4: through take the non farm payrolls last week or the

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Speaker 4: Jolts numbers, they're alreally only capturing the first couple of

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Speaker 4: weeks of April when we only had that initial announcement

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Speaker 4: from the US government, and so you haven't really seen

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Speaker 4: the data already capture that weakness that may start to transpire.

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Speaker 4: So we do expect the growth outlook to get a

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Speaker 4: lot softer in the coming quarters in the US, and

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Speaker 4: the market is kind of looking through that. They're saying, well,

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Speaker 4: we've passed the peak in this tariff narrative. We're hearing

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Speaker 4: more around potential trade deals. We're seeing some small adjustments

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Speaker 4: to these tariffs that have been now and the effective

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Speaker 4: tariffs coming down, and so perhaps they're looking through this

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Speaker 4: and seeing some lighted into the tunnel. For US, there's

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Speaker 4: still a long way to go in terms of those

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Speaker 4: trade negotiations where that tariff may end up and the

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Speaker 4: prospects for further tariffs to be announced at the sectorial

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Speaker 4: level as we've heard. So we're still a little bit

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Speaker 4: cautious on that, given we have seen a big bounce

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Speaker 4: in the market and the valuations have gone back up

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Speaker 4: across equities, given that we're going to see a lot

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Speaker 4: more weakness in the economy is still to come, and

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Speaker 4: I think that's still to be reflected a lot of

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Speaker 4: the earnings growth from US corporates.

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Speaker 1: When you look at global diversification, where are you seeing opportunities.

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Speaker 4: At the moment? I think there's a case of thinking

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Speaker 4: around the dynamics of growth internationally. Obviously, the US has

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Speaker 4: been a front and center for many investors. Given performance

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Speaker 4: of the last couple of years, I think we still

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Speaker 4: view US as having some really good, high quality companies,

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Speaker 4: and so we wouldn't shy away from it completely, taking

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Speaker 4: a more of a neutral view. But if we look

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Speaker 4: towards Europe a little bit more, if we look towards Japan, yes,

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Speaker 4: they are countries that are going to be impacted by

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Speaker 4: tariffs to degree, but we can see quite a strong

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Speaker 4: consumer story coming through there. In Japan, we can see

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Speaker 4: a bit more of reflation in that economy, and we're

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Speaker 4: also looking towards Europe, where we're seeing you know, the

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Speaker 4: prospects of more fiscal support coming through. We're seeing ECB

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Speaker 4: cutting rates, financial conditions loosening, which should boast growth or

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Speaker 4: at least offset that drag from trade growth coming through.

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Speaker 4: I'm thinking about valuations that have again have moved up

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Speaker 4: in Europe, but still relative basis looking fairly attractive, both

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Speaker 4: to their own history and a little bit more towards

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Speaker 4: the US.

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Speaker 1: For Australia, it's often been talked about, particularly in larch

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Speaker 1: of the trade war, as being sort of a haven market.

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Speaker 1: Does that become more appealing now that we've had that

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Speaker 1: resounding re election result.

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Speaker 4: Yeah, you've had two months of outperformance of US equities

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Speaker 4: over Australian equities, a third month of our performance as

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Speaker 4: relatively rare. But I think when we look at the

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Speaker 4: Australian market more broadly, we still take a relatively defensive stance,

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Speaker 4: given that those second order effects are particularly you know,

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Speaker 4: significant down growth or downshift and growth around the world

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Speaker 4: still transpire. But you know, again it's a market where

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Speaker 4: you have high income, which is attractive in these kind

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Speaker 4: of times where you do have policy continuity. Now that

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Speaker 4: we've got the outcome the election, and perhaps more so

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Speaker 4: given the strength of that outcome. And you've also seen,

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Speaker 4: you know, a consumer base that's still rising given some

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Speaker 4: of the impacts of falling inflation, easing policy rates and

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Speaker 4: rising real household incomes all being quite supportive for the

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Speaker 4: outlook here. So the austrain market has done very well.

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Speaker 4: I think valuations are worth watching completely. I mean, some

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Speaker 4: of those more defensive sectors. And again I think if

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Speaker 4: we're looking at this train market, we'd expect it to

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Speaker 4: be one that's probably doing a little bit bitter than

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Speaker 4: we had expected the start of the year. But again

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Speaker 4: the earnings growth numbers aren't especially strong here and those

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Speaker 4: valuations have started to rise back up a little bit.

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Speaker 1: Kerry always growth to chat with your co Corow Global

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Speaker 1: Bocket Strategies at Jopiemalk and Asset Management.

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Speaker 2: Welcome back to the Daybreak Asi of podcast Time Charlie

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Speaker 2: Paladin for Doug Chrisner, who is off this week. Prime

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Speaker 2: Minister Anthony Albanis he won a significant victory for his

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Speaker 2: center left Labor Party, becoming the first Australian leader to

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Speaker 2: win consecutive elections in over two decades. For some analysis,

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Speaker 2: we heard from Diana Mussina, Deputy Chief economist at AMP.

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Speaker 2: She was joined by Andrea Carson, professor of Political Communication

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Speaker 2: at Latrobe University, and they spoke with Bloomberg, Scherryon and

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Speaker 2: Heidi Stroud Watts.

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Speaker 1: Really great to have he both along with us and

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Speaker 1: Andrew set off with you in terms of kind of

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Speaker 1: trying to make sense of exactly what happened over the weekend,

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Speaker 1: because it was interesting Abenez.

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Speaker 3: He didn't exactly.

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Speaker 1: Style himself as the anti Trump the way that we've

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Speaker 1: seen from the likes of mc connee, for example in Canada,

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Speaker 1: but clearly the sort of global one sertgy, the trade wore,

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Speaker 1: some of the sort of cultural war politics were at

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Speaker 1: play here.

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Speaker 3: Yeah, that's right.

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Speaker 5: It was a very stable type of campaign, Urban ezy

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Speaker 5: favored hope over fear, and it was in times of

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Speaker 5: global turmoil that you've pointed to with the trade war,

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Speaker 5: not to mention the war in Ukraine and the Gaza strip.

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Speaker 5: This was the time I think for Australians to seek stability,

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Speaker 5: and that's what they've got with Anthony Albanezi.

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Speaker 3: So then what does this win mean for the broader

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Speaker 3: markets given that he wasn't necessarily a surprise, but just

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Speaker 3: how much of a landslide. The outcome was, how will

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Speaker 3: investors be taking this city.

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Speaker 6: I don't really think that there's too much of an

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Speaker 6: implication for markets here, especially not in the long term.

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Speaker 6: I mean in the short to medium term. I guess

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Speaker 6: that the fact that the Labor Party has a majority

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Speaker 6: in both houses or in the Senate if you include

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Speaker 6: the Greens as well, then it will make it easier

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Speaker 6: for them to pass some of their policies. But some

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Speaker 6: of those policies may not necessarily be seen as business friendly.

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Speaker 6: For example, the high attacks on larger superannuation balances, and

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Speaker 6: the Coalition party is generally seen to be a bit

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Speaker 6: more friendly to businesses. So if we did see coalition

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Speaker 6: when maybe markets could have rallied a bit more under

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Speaker 6: that situation. But to be honest, there's not really too

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Speaker 6: much here in terms of the implications for markets. The

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Speaker 6: more important thing will be what the Reserve Bank does

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Speaker 6: at its next meeting, which is coming up soon.

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Speaker 1: And to that point, I guess with such a strong mandate,

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Speaker 1: perhaps Labor has less pressure for bigger fiscals spending. Obviously,

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Speaker 1: the campaign was run on the cost of living, inflation

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Speaker 1: and the property crisis.

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Speaker 4: Right.

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Speaker 3: Does that take the pressure.

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Speaker 1: Off the RBA to be able to do what it

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Speaker 1: needs to.

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Speaker 6: Do well to be fair? I guess both sides of

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Speaker 6: politics were running with quite large spending campaigns. I was

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Speaker 6: quite surprised that even if the Coalition was going out

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Speaker 6: there so strongly with all these plans for large spending measures.

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Speaker 6: So for the Reserve Bank, I really think that they

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Speaker 6: will be watched. They obviously have been watching the inflation

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Speaker 6: data quite closely. We just got the March quarter figures.

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Speaker 6: That is really what's key to them. When they're going

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Speaker 6: to meet and think about their next policy move, they

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Speaker 6: take into account what the government does in terms of

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Speaker 6: the implications for interest rates once we see a change

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Speaker 6: in any spending measure. So if the Labor Party was

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Speaker 6: to change its current spending measures, or if it was

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Speaker 6: to announce new policies, that's what the Reserve Bank would

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Speaker 6: move on. But we know what was announced in the budget.

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Speaker 6: That's what the outlook for fiscal spending is going to

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Speaker 6: be in the next six to twelve months. We know

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Speaker 6: that the government sector is still going to be at

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Speaker 6: a very large share of the economy is currently at

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Speaker 6: a record high. It's probably going to stay there, maybe

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Speaker 6: move down a little bit, So that's what the RBA

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Speaker 6: is really going to move on. I don't think that

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Speaker 6: the landslide majority win for the Labor Party will really

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Speaker 6: change anything for the Reserve Bank Andrea.

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Speaker 3: We know that the soaring cost of living was a

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Speaker 3: key issue in this election campaign. How challenging is the

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Speaker 3: economic landscape for Prime Minister Albanezi and his Labor Party

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Speaker 3: right now.

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Speaker 5: Well, it will be challenging, but they'll also be great

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Speaker 5: expectation that now that they've got a clearer pathway through

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Speaker 5: the Senate, it looks like they'll have minority control along

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Speaker 5: with the Greens and not have to negotiate with Independence

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Speaker 5: as they did in the last election. And of course

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Speaker 5: I've got this whopping majority in the House of Representatives,

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Speaker 5: one that was quite unexpected. So there'll be an expectation

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Speaker 5: that they will roll their sleeves up and get on

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Speaker 5: with delivering policy, something that they've been criticized for for

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Speaker 5: not doing in the first term of having a fairly

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Speaker 5: lackluster government. So that will involve an expenditure and there

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Speaker 5: will be implications for that, but people will want to

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Speaker 5: see real policy outcomes, particularly on the housing crisis.

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Speaker 3: Andrea.

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Speaker 1: What next for the Liberals because obviously it's a period

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Speaker 1: of soul searching. There'll be a leadership race, but you know,

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Speaker 1: this is an election where the demographics were against them.

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Speaker 1: Certainly that's not going to change. There's not a whole

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Speaker 1: lot of moderate sentiment within this party now on the

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Speaker 1: front bench has been royaled so badly and Dutter losing

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Speaker 1: its seat and all the rest of it. So what's

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Speaker 1: the path to be able to find that appeal in

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Speaker 1: the next three years.

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Speaker 5: Yes, you've summed it up nicely. There there'll be a

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Speaker 5: long post mortem. There will be a lot of blood letting.

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Speaker 5: This is a party that has moved away from its

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Speaker 5: sensible center just to the right and is now largely

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Speaker 5: a party outside the major capital cities. It's a regional

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Speaker 5: and rural party. The Nationals did very well, they actually

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Speaker 5: increased their overall share and for the Liberals it's catastrophic.

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Speaker 5: So there'll be negotiations going on within that coalition partnership

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Speaker 5: about what that looks like and also negotiations about what

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Speaker 5: it means for the core of the Liberal Party. It's

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Speaker 5: moved away a long way from its ill a logical

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Speaker 5: center from when it was held by Malcolm Fraser. Will

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Speaker 5: it return back to a more moderate position. These are

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Speaker 5: the questions that I'll be watching, among many others.

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Speaker 3: Andrew. As we speak right now, we're hearing the President

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Speaker 3: Trump planzi one hundred percent tariff on all movies produced overseas.

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Speaker 3: Of course, we continue to follow the latest headlines from

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Speaker 3: the Trump administration, more potential tariffs to come up, and

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Speaker 3: right now we're now getting the latest headline the President

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Speaker 3: Trump is planning a one hundred percent tariff on all

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Speaker 3: movies produced overseas, one hundred percent tariff of movies that

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Speaker 3: are important into the United States. Andrea, as we continue

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Speaker 3: to watch the latest uncertainty coming from the Trump administration.

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Speaker 3: How interesting is the latest outcome in the Australian election

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Speaker 3: as also reflecting what we've seen around the world where

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Speaker 3: instead of punishing the incumbents, which has been sort of

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Speaker 3: the latest trend, we're seeing this more leaning towards safety,

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Speaker 3: towards knowing what's coming up from the local government, for

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Speaker 3: more stability.

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Speaker 5: Yeah, that's right. I think that latest tariff move shows

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Speaker 5: the unpredictability of Trump. Niven know what policy is coming

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Speaker 5: out is next, and there has been to move away

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Speaker 5: from punishing the incumbents. Keir Starmer perhaps the exception, but

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Speaker 5: there is a return to center politics. We've seen that

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Speaker 5: with Canada, with the UK and now Australia, and there's

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Speaker 5: strong relationships between those three countries and increasingly, although Australia

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Speaker 5: is just a middle power, there'll be an expectation that

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Speaker 5: it will form coalitions with those other governments to rebuff

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Speaker 5: some of the more extremes of the US administration.

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Speaker 1: Doan I one of the we were talking a little

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Speaker 1: bit about the property crisis. What do you think now

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Speaker 1: potentially emboldens this new government in the next three years

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Speaker 1: to be able to perhaps take more significant measures to

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Speaker 1: try and fix that problem.

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Speaker 6: Well, I think that they will be bolstered by the

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Speaker 6: fact that their base and that a lot of mortgage

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Speaker 6: holders and renters voted for the Labor Party, so that

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Speaker 6: could definitely embolden them to go go forth with trying

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Speaker 6: to actually achieve more of those plans around increasing supply,

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Speaker 6: which is really sort of key from here if we're

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Speaker 6: to see more sustainable growth in home prices in the

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Speaker 6: next five to ten years, to get more supply onto

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Speaker 6: the market and basically to do that, winning to move

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Speaker 6: from building one hundred and eighty thousand homes a year,

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Speaker 6: which we're doing right now, to something closer to around

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Speaker 6: two hundred and forty thousand homes a year. That means

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Speaker 6: working closely with the state and local governments to ultimately

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Speaker 6: get that supply up and hopefully labour parties large win

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Speaker 6: is going to see some of that occurring.

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Speaker 1: The other question is sort of how this government continues

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Speaker 1: to deal with Beijing. Right what secondary effects are you

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Speaker 1: seen for the Australian economy or is it kind of

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Speaker 1: holding up okay at the moment.

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Speaker 6: Well, so far we haven't really seen to an impact.

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Speaker 6: I think it's too soon because we've also seen Trump

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Speaker 6: and his team pause the reciprocal tariffs. So far, I

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Speaker 6: know that the tariffs on China have gone ahead two

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Speaker 6: one hundred and forty five percent, and that's actually the

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Speaker 6: average tariff rate on some items. It's actually even more

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Speaker 6: than which is just crazy. So basically the US and

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Speaker 6: China can't trade with one another. So far, we haven't

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Speaker 6: seen any implications for Australia. But what's likely to happen,

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Speaker 6: I think is that we're actually likely to see lower

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Speaker 6: price lower consumer goods price is here in Australia from

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Speaker 6: a flooding of goods from overseas markets and particularly from China,

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Speaker 6: but we just haven't seen that yet. I think it's

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Speaker 6: too soon. We need to wait for the reciprocal tariff

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Speaker 6: date deadline, which is the beginning of July. So we

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Speaker 6: have to see how Trump and his team negotiate with

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Speaker 6: other countries around some of these rates. But at the

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Speaker 6: same time, we haven't seen the full extent of where

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Speaker 6: tariffs are going to go. We know that Trump wants

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Speaker 6: to put higher tariffs in place on pharmaceutical products.

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Speaker 1: That's one of.

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Speaker 6: Australia's largest exports to the US. So there's more bad

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Speaker 6: news to come from here, is it?

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Speaker 1: Uncertainty is the only certainty as we go forward?

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Speaker 4: Right down.

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Speaker 1: Always great to have you with us. That was also

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Speaker 1: Andrea Carston, professor of Political Communication at Trobe University down

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Speaker 1: in Messina, who's a deputy Chief economist at AMP with us.

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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

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

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

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