1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,119 --> 00:00:14,560 Speaker 2: Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Chrisner. 3 00:00:14,760 --> 00:00:17,599 Speaker 2: Well start in China, where over the weekend the People's 4 00:00:17,640 --> 00:00:21,360 Speaker 2: Bank of China vowed to step up financial support. Much 5 00:00:21,400 --> 00:00:25,320 Speaker 2: of the focus is on two areas tech, innovation and consumption, 6 00:00:25,720 --> 00:00:29,120 Speaker 2: and to that end, the PBOC reiterated a pledge to 7 00:00:29,160 --> 00:00:33,240 Speaker 2: lower interest rates as well as the reserve requirement ratio 8 00:00:33,320 --> 00:00:36,280 Speaker 2: for a closer look. Now we're joined by Villain Sells. 9 00:00:36,400 --> 00:00:39,960 Speaker 2: He is the CEO, I'm sorry, cio right, he is 10 00:00:40,000 --> 00:00:43,960 Speaker 2: the global CIO at HSBC Global Private Bank and Wealth. 11 00:00:44,080 --> 00:00:47,080 Speaker 2: Joining us from our studios in Hong Kong. Thank you 12 00:00:47,120 --> 00:00:49,479 Speaker 2: so much for being with us. I think the message 13 00:00:49,520 --> 00:00:52,360 Speaker 2: here of stronger stimulus is going to remain a key 14 00:00:52,440 --> 00:00:55,360 Speaker 2: focus for anyone who wants to put money to work 15 00:00:55,360 --> 00:00:59,560 Speaker 2: in China, be it a retail investor domestically or let's 16 00:00:59,560 --> 00:01:04,440 Speaker 2: say an institutional investor offshore. Have you heard enough from 17 00:01:04,480 --> 00:01:08,120 Speaker 2: the government? Has there been enough stimulus applied so far 18 00:01:08,560 --> 00:01:11,080 Speaker 2: to make you a buyer of risk assets in China? 19 00:01:11,520 --> 00:01:14,959 Speaker 1: So we have a neutral allocation to Chinese equities. You 20 00:01:14,959 --> 00:01:17,720 Speaker 1: know that is because we indeed are waiting for that 21 00:01:17,800 --> 00:01:22,200 Speaker 1: STIMILUS to come, and I believe that the markets and 22 00:01:22,240 --> 00:01:25,360 Speaker 1: our clients want to want to see quite a significant 23 00:01:25,400 --> 00:01:29,520 Speaker 1: package in a one stop, you know, one goal rather 24 00:01:29,560 --> 00:01:32,360 Speaker 1: than incremental measures. But the government has announced a lot 25 00:01:32,400 --> 00:01:35,399 Speaker 1: of things already. We do expect them as well, to 26 00:01:35,520 --> 00:01:39,840 Speaker 1: lower the interest rates, to lower the reserve requirements. You know, 27 00:01:39,880 --> 00:01:42,759 Speaker 1: clearly on the fiscal side, there will be stimulus as well. 28 00:01:43,360 --> 00:01:46,080 Speaker 1: You mentioned that you know, the stimulus would be on 29 00:01:46,120 --> 00:01:48,720 Speaker 1: the on the technology site and on the consumer side. 30 00:01:48,760 --> 00:01:51,800 Speaker 1: I do indeed think that you know, for markets, it 31 00:01:51,840 --> 00:01:55,440 Speaker 1: would be very encouraging if there is a lot of 32 00:01:55,480 --> 00:01:59,360 Speaker 1: support for domestic demand because clearly, you know, the uncertainty 33 00:01:59,480 --> 00:02:02,600 Speaker 1: is a and exports, you know, especially with the new 34 00:02:02,680 --> 00:02:08,359 Speaker 1: US administration, you know, so therefore support for domestic demand 35 00:02:08,600 --> 00:02:10,960 Speaker 1: for the consumer in particular through trade in schemes and 36 00:02:11,000 --> 00:02:13,000 Speaker 1: so on would be a positive. But we are waiting 37 00:02:13,080 --> 00:02:18,000 Speaker 1: for those measures potentially, you know, until March. Obviously, when 38 00:02:18,000 --> 00:02:22,160 Speaker 1: you get the big parliamentary NPC meeting, that could be 39 00:02:22,200 --> 00:02:24,680 Speaker 1: the time that we get you know, that package, and 40 00:02:24,680 --> 00:02:27,360 Speaker 1: if that is convincing, then we would indeed increase because 41 00:02:27,360 --> 00:02:29,399 Speaker 1: obviously Chinese equities are very cheap. 42 00:02:29,320 --> 00:02:32,200 Speaker 2: So villam, I'm curious about what the catalyst may be 43 00:02:32,480 --> 00:02:35,800 Speaker 2: to inspire some buying in Chinese markets. I mean, if 44 00:02:35,840 --> 00:02:38,640 Speaker 2: it's not an issue of valuation, what is the trigger? 45 00:02:38,680 --> 00:02:39,720 Speaker 2: What are we waiting for? 46 00:02:40,280 --> 00:02:42,520 Speaker 1: So it is the size of that package, you know, 47 00:02:42,520 --> 00:02:47,320 Speaker 1: and indeed that would in my mind, first bring in 48 00:02:47,440 --> 00:02:50,480 Speaker 1: the local investors and the regional investors, and then ultimately 49 00:02:50,600 --> 00:02:53,320 Speaker 1: the foreign buyers. I think the foreign buyers potentially have 50 00:02:53,440 --> 00:02:57,080 Speaker 1: less fomo and we'll want to see the proven the 51 00:02:57,120 --> 00:02:59,799 Speaker 1: pudding will want to see there those earnings accelerate, will 52 00:02:59,800 --> 00:03:02,600 Speaker 1: want to see the you know, more positive economic data. 53 00:03:02,680 --> 00:03:05,720 Speaker 1: But obviously, you know, even though the foreign buyers are 54 00:03:06,000 --> 00:03:08,920 Speaker 1: you know a little bit more reluctant, they also have 55 00:03:09,040 --> 00:03:11,800 Speaker 1: the very very low positions, many of them have zero. 56 00:03:12,040 --> 00:03:15,160 Speaker 1: So you know, I do think that if the stimulus 57 00:03:15,400 --> 00:03:18,080 Speaker 1: is convincing that you have a market that could rally 58 00:03:18,120 --> 00:03:20,320 Speaker 1: a lot for now for US, you know, we do, 59 00:03:20,480 --> 00:03:24,520 Speaker 1: we we are awaiting it, and therefore that's why we 60 00:03:24,560 --> 00:03:26,040 Speaker 1: have that neutral allocation. 61 00:03:25,720 --> 00:03:29,040 Speaker 2: Fifteen days until the Trump administration. Talk to me a 62 00:03:29,040 --> 00:03:31,320 Speaker 2: little bit about the risk that you see in US 63 00:03:31,480 --> 00:03:36,320 Speaker 2: China relations as a it overhangs the macro in China. 64 00:03:36,480 --> 00:03:39,120 Speaker 1: So so I do think that you know, what you 65 00:03:39,120 --> 00:03:42,600 Speaker 1: know people are most looking at is obviously the tariffs, 66 00:03:43,120 --> 00:03:46,840 Speaker 1: but from a from a global perspective, you know that 67 00:03:47,640 --> 00:03:51,320 Speaker 1: you know, mainly impacts the markets through the inflation and 68 00:03:51,360 --> 00:03:54,320 Speaker 1: through the interest rate channel. Right, So if you have 69 00:03:56,400 --> 00:04:00,000 Speaker 1: tariffs that are widespread and you know, so that's still 70 00:04:00,160 --> 00:04:02,320 Speaker 1: question mark because you know, it could be that they 71 00:04:02,320 --> 00:04:05,600 Speaker 1: are just a negotiating tactic. But if they are widespread, 72 00:04:05,760 --> 00:04:09,160 Speaker 1: then what is the impact on interest rates? The FED 73 00:04:09,560 --> 00:04:12,240 Speaker 1: members have already tried. Some FED members have already tried 74 00:04:12,240 --> 00:04:15,000 Speaker 1: to incorporate that, others have not. So it's clear that 75 00:04:15,080 --> 00:04:18,080 Speaker 1: there is big uncertainty around this, and therefore I think 76 00:04:18,120 --> 00:04:22,159 Speaker 1: the aid market will you know, be volatile as you know, 77 00:04:22,200 --> 00:04:27,680 Speaker 1: further announcements are made and potentially those negotiations mean that 78 00:04:28,160 --> 00:04:30,080 Speaker 1: industrates go up and down. So I think the bond 79 00:04:30,160 --> 00:04:34,160 Speaker 1: market is going to be volatile. That creates opportunities as 80 00:04:34,200 --> 00:04:37,440 Speaker 1: well for active managers obviously, right, who can lengthen shortened 81 00:04:37,480 --> 00:04:39,719 Speaker 1: duration or go up down the credit curve. But it 82 00:04:39,839 --> 00:04:42,359 Speaker 1: is also that bond market that is the most significant 83 00:04:42,360 --> 00:04:45,160 Speaker 1: threat to the equity market. I think equities are still 84 00:04:45,320 --> 00:04:48,880 Speaker 1: the place to be because of a decent economy, but 85 00:04:48,920 --> 00:04:51,239 Speaker 1: the bond market will create volatility in equities. 86 00:04:51,360 --> 00:04:53,920 Speaker 2: So I'm curious, if you move away from China, where 87 00:04:53,920 --> 00:04:56,520 Speaker 2: are you finding opportunities across the Asia Pacific? 88 00:04:57,040 --> 00:05:00,919 Speaker 1: So, you know, Asia, indeed, as you are implying, I 89 00:05:00,960 --> 00:05:05,320 Speaker 1: think is a very diverse opportunity set. You know, if 90 00:05:05,360 --> 00:05:09,080 Speaker 1: you look at China versus India versus Japan, they are 91 00:05:09,200 --> 00:05:13,720 Speaker 1: very different countries, very different markets, and so we have 92 00:05:13,800 --> 00:05:16,520 Speaker 1: overweights on both India and Japan, and by the way, 93 00:05:16,520 --> 00:05:20,640 Speaker 1: also on Singapore. You know, Japan there we are going 94 00:05:20,680 --> 00:05:24,880 Speaker 1: to have, you know, further wage growth. We're also going 95 00:05:24,920 --> 00:05:27,480 Speaker 1: to have potentially some fiscal spending ahead of the upper 96 00:05:27,480 --> 00:05:31,919 Speaker 1: house elections. And you know that wage growth gives obviously 97 00:05:31,960 --> 00:05:35,159 Speaker 1: consumers more to spend, leads to growth, but also a 98 00:05:35,160 --> 00:05:37,600 Speaker 1: little bit of inflation is not bad for companies because 99 00:05:37,600 --> 00:05:40,520 Speaker 1: it gives them pricing power. I don't think inflation is 100 00:05:40,520 --> 00:05:43,200 Speaker 1: so rum that the Bank of Japan needs to needs 101 00:05:43,200 --> 00:05:46,240 Speaker 1: to hunk very quickly. You know, I think you get 102 00:05:46,240 --> 00:05:48,680 Speaker 1: too interest straight hunks. So Japan is still a market 103 00:05:48,720 --> 00:05:52,560 Speaker 1: that we stick with. And then India, I would say 104 00:05:52,600 --> 00:05:55,599 Speaker 1: for people not to get too worried about the recent 105 00:05:56,200 --> 00:05:59,839 Speaker 1: weakness in the in the cyclical data that was mainly 106 00:06:00,080 --> 00:06:03,200 Speaker 1: urban and high tech. I think there is more stimulus 107 00:06:03,279 --> 00:06:07,359 Speaker 1: now for the rural side, for the mid tech side, 108 00:06:07,360 --> 00:06:09,599 Speaker 1: and then you get a formal employment which is being 109 00:06:09,640 --> 00:06:12,680 Speaker 1: pushed as well. It's a market that we I think 110 00:06:12,920 --> 00:06:16,520 Speaker 1: people need to stick with because from a structural perspective, 111 00:06:16,560 --> 00:06:19,320 Speaker 1: this is, you know, a very attractive allocation. 112 00:06:19,480 --> 00:06:21,440 Speaker 2: So if you look at the themes here, I'm wondering 113 00:06:21,600 --> 00:06:24,720 Speaker 2: if there is commonality in Japan and India and whether 114 00:06:24,760 --> 00:06:27,520 Speaker 2: the play is on the consumption side, on the consumer 115 00:06:27,600 --> 00:06:28,360 Speaker 2: is that logical? 116 00:06:29,160 --> 00:06:33,159 Speaker 1: It's yeah, it's basically around Asia we focus on the 117 00:06:33,200 --> 00:06:35,480 Speaker 1: domestic side and on the consumer side. Indeed, as you 118 00:06:35,520 --> 00:06:37,640 Speaker 1: were saying, so I would even lump in trya on 119 00:06:37,800 --> 00:06:40,479 Speaker 1: that as well. You know where we do think that 120 00:06:40,560 --> 00:06:44,360 Speaker 1: ultimately you are going to get that that that that 121 00:06:44,480 --> 00:06:47,640 Speaker 1: boost to consumer power. Clearly, that also then means that 122 00:06:47,640 --> 00:06:50,440 Speaker 1: that that a trade like that makes you less sensitive 123 00:06:50,600 --> 00:06:53,640 Speaker 1: to you know, whatever happens on the on the trade side. 124 00:06:53,760 --> 00:06:56,000 Speaker 2: I have to ask about South Korea right now, I'm 125 00:06:56,040 --> 00:06:59,160 Speaker 2: seeing a rally and the equity market in Seoul. How 126 00:06:59,200 --> 00:07:03,120 Speaker 2: do you view political risk as a factor in putting 127 00:07:03,120 --> 00:07:05,120 Speaker 2: money to work in the South Korean market. 128 00:07:05,360 --> 00:07:07,920 Speaker 1: Yeah, I mean, it's that is obviously difficult to assess 129 00:07:07,960 --> 00:07:11,119 Speaker 1: as to what is going to happen there, you know. Immediately, 130 00:07:11,240 --> 00:07:13,760 Speaker 1: I do think that, you know, our clients tend to 131 00:07:13,960 --> 00:07:18,400 Speaker 1: want to try to allocate on an you fundamental basis, 132 00:07:19,360 --> 00:07:24,440 Speaker 1: you know, and there what you're seeing sequentially year over years, 133 00:07:24,440 --> 00:07:28,080 Speaker 1: you saw quite significant growth in in earnings as a 134 00:07:28,120 --> 00:07:31,160 Speaker 1: steck rebounded last year in terms of earnings growth, and 135 00:07:31,200 --> 00:07:33,320 Speaker 1: then this year that is slowing down a little bit. 136 00:07:33,320 --> 00:07:35,560 Speaker 1: It is quite concentrated market and that's why we have 137 00:07:35,560 --> 00:07:38,000 Speaker 1: a neutral allocation on South Korea for the moment. 138 00:07:38,040 --> 00:07:42,040 Speaker 2: You mentioned Singapore a short while ago. What's the thesis. 139 00:07:42,360 --> 00:07:44,840 Speaker 1: The thesis is a it's a relatively defensive market, but 140 00:07:44,880 --> 00:07:47,720 Speaker 1: nevertheless it's been, you know, the top performing market in 141 00:07:47,760 --> 00:07:52,960 Speaker 1: Asian It obviously also has an income element which is 142 00:07:53,040 --> 00:07:56,720 Speaker 1: quite you know significant, and then exposure to the banking sector, 143 00:07:57,160 --> 00:07:59,440 Speaker 1: you know, which is doing quite well. So that's why 144 00:07:59,440 --> 00:08:03,080 Speaker 1: we have an an overweight in Singapore. Around the world, 145 00:08:03,120 --> 00:08:06,040 Speaker 1: we really try to diversify, you know. So the fact 146 00:08:06,040 --> 00:08:08,120 Speaker 1: that we're overweight to the UK, for example, is not that 147 00:08:08,160 --> 00:08:11,040 Speaker 1: we're super excited about it, but that you know, clients 148 00:08:11,040 --> 00:08:14,800 Speaker 1: cannot just have that overweight in the US, and obviously 149 00:08:14,920 --> 00:08:18,920 Speaker 1: markets that have you know, low valuations plus a defensive element, 150 00:08:19,080 --> 00:08:25,160 Speaker 1: plus a different sector composition than the US, you know, 151 00:08:25,200 --> 00:08:27,760 Speaker 1: they can benefit from having an overweight. So that's how 152 00:08:27,760 --> 00:08:32,120 Speaker 1: we come up with diversify in the UK, Japan, India, 153 00:08:32,160 --> 00:08:33,400 Speaker 1: and Singapore. 154 00:08:33,559 --> 00:08:35,240 Speaker 2: One of the things that I want to address before 155 00:08:35,240 --> 00:08:38,679 Speaker 2: I let you go is the dollar. The FED increasingly 156 00:08:38,760 --> 00:08:41,880 Speaker 2: has been sounding a little bit more hawkish, number of 157 00:08:41,880 --> 00:08:44,600 Speaker 2: officials here in the States over the weekend, indicating that 158 00:08:44,679 --> 00:08:47,880 Speaker 2: the fight against inflation is not over. There's a little 159 00:08:47,920 --> 00:08:50,640 Speaker 2: bit more to do in terms of reaching that two 160 00:08:50,720 --> 00:08:52,839 Speaker 2: percent target. If we can agree that there are fewer 161 00:08:52,880 --> 00:08:55,120 Speaker 2: ray cuts that we're going to get from the FED 162 00:08:55,160 --> 00:08:58,600 Speaker 2: in the year ahead, and that the dollar will remain resilient, 163 00:08:58,800 --> 00:09:01,400 Speaker 2: does that create a bit of a pall for risk 164 00:09:01,480 --> 00:09:02,960 Speaker 2: assets in your neck of the woods. 165 00:09:03,320 --> 00:09:05,880 Speaker 1: So we can completely agree that you have an you know, 166 00:09:05,960 --> 00:09:09,960 Speaker 1: fewer rate cuts than previously thought, and in particular, obviously 167 00:09:10,040 --> 00:09:12,200 Speaker 1: you need to compare that to what other central banks 168 00:09:12,200 --> 00:09:14,360 Speaker 1: are doing, so for example, the Eurozone, where you're going 169 00:09:14,400 --> 00:09:16,200 Speaker 1: to get more cuts than in the US. So that 170 00:09:16,320 --> 00:09:19,199 Speaker 1: leads to a strong dollar that is not the positive 171 00:09:19,280 --> 00:09:24,760 Speaker 1: for emoting markets. Obviously higher for longer rates and stronger 172 00:09:24,800 --> 00:09:27,720 Speaker 1: for longer US dollar, and so therefore you've seen quite 173 00:09:27,720 --> 00:09:30,680 Speaker 1: significant downflows out of emerging markets. But I do think 174 00:09:30,720 --> 00:09:32,480 Speaker 1: that this has to do as well with a number 175 00:09:32,520 --> 00:09:36,040 Speaker 1: of video syncretic events like for example, Brazil. You know 176 00:09:36,040 --> 00:09:38,679 Speaker 1: where you've had the outflows as well. You know, I 177 00:09:39,720 --> 00:09:45,120 Speaker 1: think what people are doing to address the strong dollar, 178 00:09:45,880 --> 00:09:49,240 Speaker 1: you know, is being in areas where you know that 179 00:09:49,320 --> 00:09:51,880 Speaker 1: doesn't matter all that much. Number one, the US itself. 180 00:09:54,160 --> 00:09:58,440 Speaker 1: You could also look at hard assets, so people looking 181 00:09:58,520 --> 00:10:02,560 Speaker 1: at gold for example. Although there is that negative correalition 182 00:10:02,600 --> 00:10:06,240 Speaker 1: with the US dollar, there is also the concern around 183 00:10:07,080 --> 00:10:10,719 Speaker 1: higher deficits, and that's where gold can help. And then 184 00:10:10,760 --> 00:10:15,199 Speaker 1: within the emerging markets, oil exporters for example, obviously I 185 00:10:15,320 --> 00:10:17,160 Speaker 1: tend to be less sensitive to strong dollar. 186 00:10:17,920 --> 00:10:19,800 Speaker 2: Will leave it there. Thank you so much for being 187 00:10:19,880 --> 00:10:21,520 Speaker 2: with us this morning. I wish you the best for 188 00:10:21,559 --> 00:10:25,080 Speaker 2: twenty twenty five. Villam Cells is the Global CIO at 189 00:10:25,200 --> 00:10:28,400 Speaker 2: HSBC Global Private Banking and Wealth. Joining us from our 190 00:10:28,440 --> 00:10:31,800 Speaker 2: studios in Hong Kong here on the Daybreak Asia podcast. 191 00:10:39,320 --> 00:10:42,240 Speaker 2: Welcome back to the Daybreak Asia podcast. I'm Doug Prisner, 192 00:10:42,760 --> 00:10:45,000 Speaker 2: stateside this week the Fed is going to be one 193 00:10:45,040 --> 00:10:48,080 Speaker 2: of the dominant themes. On Wednesday, we'll get minutes from 194 00:10:48,120 --> 00:10:51,920 Speaker 2: the last policy meeting, and no fewer than six FED 195 00:10:52,000 --> 00:10:54,320 Speaker 2: speakers are on the calendar. It was just over the 196 00:10:54,320 --> 00:10:57,240 Speaker 2: weekend that we heard from two FED officials, both saying 197 00:10:57,240 --> 00:11:00,520 Speaker 2: the central Bank must finish the fight on inflation and 198 00:11:00,640 --> 00:11:03,520 Speaker 2: get to that two percent target. Joining me now from 199 00:11:03,520 --> 00:11:05,880 Speaker 2: our studios here in New York is Hillary Kramer. She 200 00:11:06,000 --> 00:11:10,000 Speaker 2: is the chief investment officer at Kramer Capital Research. Happy 201 00:11:10,040 --> 00:11:13,080 Speaker 2: new year, thanks for stopping in. So the December meeting 202 00:11:13,360 --> 00:11:16,000 Speaker 2: from the FED, we got this idea that there are 203 00:11:16,000 --> 00:11:17,920 Speaker 2: going to be fewer rate cuts in the new year. 204 00:11:18,160 --> 00:11:20,360 Speaker 3: Right, Yes, that was the message. 205 00:11:19,800 --> 00:11:22,480 Speaker 2: From four down to two. And I'm wondering whether you 206 00:11:22,559 --> 00:11:26,079 Speaker 2: think maybe there's still too much optimism that we're going 207 00:11:26,120 --> 00:11:28,120 Speaker 2: to get those two rate cuts. 208 00:11:28,720 --> 00:11:33,600 Speaker 3: Well, the factors determining that much of it. If we 209 00:11:33,640 --> 00:11:37,719 Speaker 3: want to talk inflation right now, yes, the Fed is 210 00:11:37,760 --> 00:11:41,280 Speaker 3: not as stuck on this exact two percent level. But 211 00:11:41,640 --> 00:11:44,040 Speaker 3: let's talk tariffs and the fact that no matter how 212 00:11:44,080 --> 00:11:48,199 Speaker 3: you slice it, a tariff is even if it's beneficial. 213 00:11:48,280 --> 00:11:50,680 Speaker 3: I'm not making a comment on tariffs itself. On the 214 00:11:50,720 --> 00:11:54,800 Speaker 3: policy side, it creates a tax on the consumer. It 215 00:11:54,840 --> 00:11:58,400 Speaker 3: creates a tax, meaning inflation occurs when you have tariffs. 216 00:11:58,520 --> 00:12:00,640 Speaker 2: But didn't the FED seem to sugges just that that 217 00:12:01,320 --> 00:12:03,960 Speaker 2: a number of members on the committee were a little 218 00:12:04,040 --> 00:12:08,280 Speaker 2: concerned about the inflationary impact of some of these economic 219 00:12:08,320 --> 00:12:11,239 Speaker 2: policies from the incoming their administration. 220 00:12:11,520 --> 00:12:14,640 Speaker 3: Right, the FED members are concerned. And this brings up 221 00:12:14,640 --> 00:12:17,079 Speaker 3: the second point, And this is not real. 222 00:12:17,200 --> 00:12:17,679 Speaker 2: This is not. 223 00:12:17,760 --> 00:12:22,320 Speaker 3: About numbers policy, but this is about politics, and I'm 224 00:12:22,320 --> 00:12:25,480 Speaker 3: talking about the politics of the FED. The problem is 225 00:12:25,720 --> 00:12:28,840 Speaker 3: how much pressure is the White House? Is the President 226 00:12:28,960 --> 00:12:33,400 Speaker 3: Trump administration, from the White House, from the Oval Office 227 00:12:33,480 --> 00:12:37,480 Speaker 3: going to put on the Federal Reserve. Okay, now we 228 00:12:37,559 --> 00:12:40,959 Speaker 3: know that our chairman has said, hey, I am finishing 229 00:12:41,200 --> 00:12:45,079 Speaker 3: my term. I am finishing it, and he said that emphatically. 230 00:12:46,240 --> 00:12:48,600 Speaker 3: But at the same time, there's going to be pressure 231 00:12:48,640 --> 00:12:51,880 Speaker 3: to cut rates because President Trump wants the market to 232 00:12:51,960 --> 00:12:54,560 Speaker 3: keep going up. But we just had a twenty four 233 00:12:54,600 --> 00:12:57,520 Speaker 3: percent s and P five hundred in the twenty four 234 00:12:58,080 --> 00:13:00,400 Speaker 3: a twenty five percent s and P five one hundred 235 00:13:00,400 --> 00:13:04,600 Speaker 3: and twenty twenty three, meaning upwards, and that's three times 236 00:13:04,640 --> 00:13:07,640 Speaker 3: what it ordinarily would be, meaning even just to go 237 00:13:07,679 --> 00:13:10,440 Speaker 3: back to equilibrium, we would have to have a down 238 00:13:10,520 --> 00:13:12,840 Speaker 3: at year in twenty twenty five for the S and 239 00:13:12,880 --> 00:13:13,600 Speaker 3: P five hundred. 240 00:13:13,760 --> 00:13:17,400 Speaker 2: So one of the negatives potentially on the economic policies 241 00:13:17,400 --> 00:13:19,960 Speaker 2: from the new administration would be that they are inflationary. 242 00:13:20,000 --> 00:13:21,520 Speaker 2: But if you look at some of the other things 243 00:13:21,520 --> 00:13:24,600 Speaker 2: that are being suggested a lot less in the way 244 00:13:24,760 --> 00:13:27,040 Speaker 2: of regulation. Isn't that a market positive? 245 00:13:27,640 --> 00:13:34,480 Speaker 3: Regulation is a positive to some extent. But if at 246 00:13:34,480 --> 00:13:37,440 Speaker 3: the same time, you know, we don't want you know, 247 00:13:37,440 --> 00:13:39,320 Speaker 3: we don't we don't want to eat our young, so 248 00:13:39,400 --> 00:13:39,840 Speaker 3: to speak. 249 00:13:39,880 --> 00:13:41,280 Speaker 2: You don't want the wild West. 250 00:13:41,480 --> 00:13:44,280 Speaker 3: Okay, And that that's that's part of the that's part 251 00:13:44,320 --> 00:13:47,559 Speaker 3: of the problem here, and this whole sort of like 252 00:13:47,720 --> 00:13:51,760 Speaker 3: you know, go down tomorrow lago and pay your you know, 253 00:13:51,800 --> 00:13:54,920 Speaker 3: your your your fee for entrance, so to speak, you know, 254 00:13:55,040 --> 00:13:58,720 Speaker 3: for for the inaugural balls in the form of millions 255 00:13:58,720 --> 00:14:01,920 Speaker 3: of dollars has you know, everyone's trying to curry favor, 256 00:14:02,400 --> 00:14:04,400 Speaker 3: and when you have too much of that going on, 257 00:14:04,520 --> 00:14:06,440 Speaker 3: it will be it will be a problem. 258 00:14:06,480 --> 00:14:09,200 Speaker 2: But I'm thinking of the banks, aren't they beneficial banks. 259 00:14:09,240 --> 00:14:12,960 Speaker 3: Oh, okay, financial institutions, which is one of the topics 260 00:14:13,000 --> 00:14:17,600 Speaker 3: that I am most bullish on. I see the financial institutions. 261 00:14:17,760 --> 00:14:20,840 Speaker 3: I mean it's going to be their year. November December, 262 00:14:20,840 --> 00:14:23,200 Speaker 3: there were investment bankers, just like because I sit on 263 00:14:23,240 --> 00:14:25,400 Speaker 3: boards and I can tell you investment bankers. You call 264 00:14:25,440 --> 00:14:29,320 Speaker 3: investment banker. They were like, they called back in one second, 265 00:14:29,360 --> 00:14:33,440 Speaker 3: and we're willing to take transactions or you know, fairness 266 00:14:33,440 --> 00:14:36,240 Speaker 3: opinions for so much less money than they ordinarily would 267 00:14:36,240 --> 00:14:39,160 Speaker 3: because there's been no business. There is so much in 268 00:14:39,200 --> 00:14:42,680 Speaker 3: the pipeline, and the venture capital funds firms, they have 269 00:14:42,880 --> 00:14:45,600 Speaker 3: a lot of IPOs in the in the market. But 270 00:14:45,640 --> 00:14:47,960 Speaker 3: then you also have all these bankruptcies. And that's why, 271 00:14:48,480 --> 00:14:52,160 Speaker 3: like if someone said, let's say you said, Hillary, where 272 00:14:52,200 --> 00:14:54,880 Speaker 3: is the real opportunity in financial institutions, I would say 273 00:14:55,080 --> 00:14:58,800 Speaker 3: in these boutique investment banks that are not dependent on 274 00:14:58,920 --> 00:15:02,120 Speaker 3: consumer credit the way that you have at a city bank. 275 00:15:02,440 --> 00:15:06,480 Speaker 3: So I'm talking Evercredlizard. I especially love Moelis. 276 00:15:06,520 --> 00:15:08,640 Speaker 2: So when you look at deal flow, is there a 277 00:15:08,680 --> 00:15:09,720 Speaker 2: theme here that we want to do. 278 00:15:10,160 --> 00:15:12,320 Speaker 3: At The theme is going to be you're gonna have 279 00:15:12,360 --> 00:15:16,120 Speaker 3: the Goldman Sachs is doing these massive transactions where we're 280 00:15:16,120 --> 00:15:20,080 Speaker 3: going to have cross border mergers with big fees, and 281 00:15:20,720 --> 00:15:23,040 Speaker 3: one might say that it might be built into some 282 00:15:23,120 --> 00:15:27,640 Speaker 3: extent into the stock price, but so few people realize 283 00:15:27,680 --> 00:15:30,120 Speaker 3: the extent at which money can be made, not just 284 00:15:30,160 --> 00:15:34,600 Speaker 3: on the advisory fee, but on the financing, on investing 285 00:15:34,640 --> 00:15:37,600 Speaker 3: the money of the principles who just cashed in and 286 00:15:37,600 --> 00:15:40,360 Speaker 3: got twenty billion dollars. I mean, they make money every 287 00:15:40,440 --> 00:15:43,400 Speaker 3: which way. So the big financial institutions will make money, 288 00:15:43,640 --> 00:15:46,240 Speaker 3: and then the boutiques are going to make money as 289 00:15:46,280 --> 00:15:49,680 Speaker 3: well because there's a lot of deal flow that needs 290 00:15:49,720 --> 00:15:54,600 Speaker 3: to be handled, especially let's say in retail big box. Look, 291 00:15:54,640 --> 00:15:56,840 Speaker 3: this has not been a great year. Just take a 292 00:15:56,840 --> 00:15:58,480 Speaker 3: look at companies like big Lots. 293 00:15:58,720 --> 00:16:00,720 Speaker 2: I'm also thinking crypto is going to be a big 294 00:16:00,760 --> 00:16:02,080 Speaker 2: factor here, am I right? Oh? 295 00:16:02,200 --> 00:16:06,440 Speaker 3: Cryptos. So this is why I am bullish on Coinbase 296 00:16:06,520 --> 00:16:09,400 Speaker 3: and I'm bullish on robin Hood, but especially on Coinbase 297 00:16:09,760 --> 00:16:14,040 Speaker 3: because Coinbase is your one stop shopping for digital currency 298 00:16:14,880 --> 00:16:20,400 Speaker 3: that they handle everything including this tokenizations, meaning you have companies, 299 00:16:20,520 --> 00:16:25,640 Speaker 3: nonprofit people that are tokenizing. They're creating these tokens, and 300 00:16:25,880 --> 00:16:28,200 Speaker 3: many of them will go down but it's who's doing 301 00:16:28,200 --> 00:16:31,960 Speaker 3: the transaction, who gets the transaction fee as well. With 302 00:16:32,200 --> 00:16:35,600 Speaker 3: let's say robin Hood, for example, it is so easy 303 00:16:35,840 --> 00:16:39,000 Speaker 3: to open an account at Robinhood as an individual and 304 00:16:39,040 --> 00:16:43,680 Speaker 3: do fractional ownership of digital currency, of the bitcoins ethereums 305 00:16:43,720 --> 00:16:47,640 Speaker 3: the coin, all of them as well as but it's 306 00:16:47,680 --> 00:16:51,360 Speaker 3: the leverage, the margin that people can take. Now the 307 00:16:51,480 --> 00:16:55,840 Speaker 3: individual has to be very careful and tread with incredible 308 00:16:55,920 --> 00:17:00,560 Speaker 3: care when it comes to investing in the big coins. Right, 309 00:17:00,600 --> 00:17:04,040 Speaker 3: bitcoin is not gold, and it is going to have 310 00:17:04,080 --> 00:17:08,919 Speaker 3: a place in our economy, and it will because the 311 00:17:08,960 --> 00:17:11,439 Speaker 3: White House is going to dictate that bitcoin has be 312 00:17:11,520 --> 00:17:14,480 Speaker 3: bought and so therefore the price is going to rise. 313 00:17:14,680 --> 00:17:17,240 Speaker 3: And you have countries that are buying in bitcoin. And 314 00:17:17,359 --> 00:17:20,840 Speaker 3: when you have tariffs, what's the way around tariffs? You 315 00:17:21,000 --> 00:17:24,360 Speaker 3: deal with bitcoin and purchases and you get you bring 316 00:17:24,400 --> 00:17:26,960 Speaker 3: things in through the port. So bitcoin is going to 317 00:17:27,000 --> 00:17:30,160 Speaker 3: have a new value. So we should expect to see 318 00:17:30,160 --> 00:17:33,640 Speaker 3: that going from the mid ninety thousands to one hundred 319 00:17:33,640 --> 00:17:36,120 Speaker 3: and fifty thousand, I mean easily one hundred fifty thousand 320 00:17:36,160 --> 00:17:39,000 Speaker 3: to two hundred thousand dollars. But then one day it's 321 00:17:39,240 --> 00:17:41,440 Speaker 3: it's musical chairs and it comes down. 322 00:17:41,600 --> 00:17:43,560 Speaker 2: Well, let me talk about a little bit about what 323 00:17:43,720 --> 00:17:46,600 Speaker 2: may be vulnerability. Was a great year for the equity market. 324 00:17:46,600 --> 00:17:48,800 Speaker 2: It was also a great year for the crypto space. 325 00:17:49,160 --> 00:17:51,080 Speaker 2: Our markets right now vulnerable in your. 326 00:17:51,040 --> 00:17:53,560 Speaker 3: View, very vulnerable, very vulnerable. 327 00:17:53,560 --> 00:17:56,160 Speaker 2: And what are you doing being believing. 328 00:17:55,760 --> 00:18:03,160 Speaker 3: That I am recommending that everyone have keep their powder dry? 329 00:18:03,800 --> 00:18:07,080 Speaker 3: Is the twenty twenty percent to thirty percent in cash 330 00:18:07,119 --> 00:18:09,399 Speaker 3: and wait especially because you can still get You might 331 00:18:09,440 --> 00:18:11,280 Speaker 3: not be able to get five percent, but you can 332 00:18:11,320 --> 00:18:13,800 Speaker 3: still get four percent and lock it in or three 333 00:18:13,800 --> 00:18:17,200 Speaker 3: point seventy five percent on your cash. That's a pretty 334 00:18:17,240 --> 00:18:20,840 Speaker 3: decent return, whether you're an institution or an individual. And 335 00:18:21,320 --> 00:18:26,200 Speaker 3: you can wait because no one's there. It's too risky 336 00:18:26,280 --> 00:18:29,120 Speaker 3: to be jumping in. At these levels, we are at 337 00:18:29,280 --> 00:18:33,920 Speaker 3: levels of nineteen ninety nine, two thousand, when the Internet 338 00:18:34,119 --> 00:18:36,119 Speaker 3: was at its height. You know, this reminds me of 339 00:18:36,640 --> 00:18:39,800 Speaker 3: Yahoo being two hundred and fifty dollars a share dropping 340 00:18:39,800 --> 00:18:42,200 Speaker 3: to one hundred and seventy dollars a share, people going 341 00:18:42,240 --> 00:18:44,399 Speaker 3: in and buying millions and millions of dollars of it, 342 00:18:44,440 --> 00:18:46,879 Speaker 3: and then the next stop was twenty dollars a share 343 00:18:47,280 --> 00:18:48,280 Speaker 3: and margin calls. 344 00:18:48,359 --> 00:18:50,879 Speaker 2: So we've been talking a lot about deals here that 345 00:18:51,000 --> 00:18:53,800 Speaker 2: may be attractive in the United States on the equity side, 346 00:18:53,920 --> 00:18:56,280 Speaker 2: maybe in the crypto space. We've talked a little bit 347 00:18:56,320 --> 00:18:58,240 Speaker 2: about some of the themes that may be driving the 348 00:18:58,240 --> 00:19:01,480 Speaker 2: price action. Are you seeing an thing away from the 349 00:19:01,600 --> 00:19:04,239 Speaker 2: US that is curious to you right now that may 350 00:19:04,240 --> 00:19:06,320 Speaker 2: be piquing your interests offshore anything. 351 00:19:06,640 --> 00:19:12,240 Speaker 3: Yes, the big pharma companies, especially Snofi SNY, they really 352 00:19:12,440 --> 00:19:16,000 Speaker 3: have such an incredible pipeline. They missed the COVID nineteen 353 00:19:16,280 --> 00:19:21,000 Speaker 3: vaccines and the therapeutics, but they have put so much money 354 00:19:21,000 --> 00:19:25,000 Speaker 3: this French biotech. Now you also have Novo Nordisk, which 355 00:19:25,040 --> 00:19:27,840 Speaker 3: did have a hiccup, very a very rare hiccup in 356 00:19:27,880 --> 00:19:31,080 Speaker 3: November because they had an obesity drug that didn't have 357 00:19:31,119 --> 00:19:35,080 Speaker 3: the most positive returns that they thought it would have 358 00:19:35,880 --> 00:19:39,280 Speaker 3: in one of their fased studies. But Novo Nordisk, look, 359 00:19:39,440 --> 00:19:43,480 Speaker 3: we're going to be if there are so many people 360 00:19:43,520 --> 00:19:47,639 Speaker 3: on ozembic and manjiorno right now to lose weight, but 361 00:19:47,680 --> 00:19:50,480 Speaker 3: we haven't even started to see how many are going 362 00:19:50,560 --> 00:19:54,959 Speaker 3: to be on that. Now. We might see some bounce 363 00:19:55,080 --> 00:19:57,800 Speaker 3: back with the car companies in Europe that have done 364 00:19:57,880 --> 00:20:01,679 Speaker 3: so poorly. You know, they've really struggled. You know, we 365 00:20:01,760 --> 00:20:05,760 Speaker 3: could see that just simply because you know, there's there's 366 00:20:05,920 --> 00:20:10,639 Speaker 3: they're oversold. And then and then even that, look at Toyota, 367 00:20:10,720 --> 00:20:14,280 Speaker 3: you know, look at a Honda Nissan merger. What that 368 00:20:14,400 --> 00:20:18,240 Speaker 3: might you know, end up creating. So there's opportunities to 369 00:20:18,359 --> 00:20:18,760 Speaker 3: jump in. 370 00:20:18,840 --> 00:20:21,320 Speaker 2: Now we'll leave it there. We've covered a lot of ground. 371 00:20:21,600 --> 00:20:23,919 Speaker 2: Thank you for coming in sharing your thoughts with us. 372 00:20:23,920 --> 00:20:26,399 Speaker 2: I wish you the best for twenty twenty five. She 373 00:20:26,480 --> 00:20:30,560 Speaker 2: is Hillary Kramer, chief investment officer at Kramer Capital Research, 374 00:20:30,920 --> 00:20:35,960 Speaker 2: joining us here on the Daybreak Asia Podcast. Thanks for 375 00:20:36,040 --> 00:20:40,639 Speaker 2: listening to today's episode of the Bloomberg Daybreak Asia Edition podcast. 376 00:20:40,960 --> 00:20:44,080 Speaker 2: Each weekday, we look at the story shaping markets, finance, 377 00:20:44,440 --> 00:20:47,560 Speaker 2: and geopolitics in the Asia Pacific. You can find us 378 00:20:47,560 --> 00:20:51,800 Speaker 2: on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere 379 00:20:51,800 --> 00:20:54,879 Speaker 2: else you listen. Join us again tomorrow for insight on 380 00:20:54,920 --> 00:20:59,080 Speaker 2: the market moves from Hong Kong to Singapore and Australia. 381 00:20:59,480 --> 00:21:01,960 Speaker 2: I'm Doug Prisoner and this is Bloomberg. 382 00:21:02,640 --> 00:21:09,560 Speaker 3: M m m hmm.