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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg

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Speaker 1: Daybreak Asia podcast. I'm Doug Prisner. You can join Brian

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Speaker 1: Curtis and myself for the stories, making news and moving

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Speaker 1: markets in the APAC region. You can subscribe to the

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Speaker 1: show anywhere you get your podcast and always on Bloomberg Radio,

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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. Chinese Premier

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Speaker 1: Lea Chung is in Australia. Let's take a closer look

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Speaker 1: now with Bloomberg's Paul Allen, our TV Australia correspondent, who

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Speaker 1: joins us on the line from ken Berra. Can you

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Speaker 1: help me understand the aim of the visit here, Paul.

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Speaker 2: Yeah, dog gets really get things back on track. And

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Speaker 2: in fact, those are the exact words that the Chinese

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Speaker 2: Premier Lichiang us when he arrived first off in Adelaide

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Speaker 2: for this four day trips. He says, Australia's unique depositioned

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Speaker 2: to connect to east and West, and there's going to

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Speaker 2: be new pandas on the way for Australia as well,

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Speaker 2: to replace the two that have been here for fifteen years.

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Speaker 2: So heavy on symbolism and when you think where we

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Speaker 2: were just a few years ago. I mean, it was

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Speaker 2: the only January that the tariffs on Australian wine got lifted.

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Speaker 2: It was in twenty twenty one that China was handing

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Speaker 2: out a list of fourteen demands or grievances. And yet

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Speaker 2: here we are a visit from a Chinese premiere and

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Speaker 2: it smiles and handshakes all round.

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Speaker 1: When I think of Australia and I think of how

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Speaker 1: rich the country is in natural resources and the critical

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Speaker 1: minerals that are linked to industries in China, is this

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Speaker 1: going to be a key topic as well?

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Speaker 2: Yeah, definitely, And there are still plenty of points of

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Speaker 2: tension here despite this reset. Premier Lee will be heading

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Speaker 2: to Western Australia next where he'll visit a lithium mine,

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Speaker 2: and critical minerals is a point of tensions as well.

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Speaker 2: Chinese investors were ordered to invest from the company here

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Speaker 2: in Australia, a small company called Northern Minerals that provides

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Speaker 2: rarers critical minerals, and that the vestiture was ordered by

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Speaker 2: the Australian government because it was in national security interests.

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Speaker 2: It's interesting too that China only accounts for two percent

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Speaker 2: of foreign investment in Australia about eighty five billion dollars.

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Speaker 2: The US, on the other hand, directly invests more than

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Speaker 2: a trillion US dollars in Australia about a quarter. So

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Speaker 2: even though China's the second largest economy in the world,

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Speaker 2: Australia's largest trading partner, foreign investment lags far behind. And

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Speaker 2: at the root of it are these national security issues.

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Speaker 1: What about the security tension between these two countries, particularly

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Speaker 1: as it relates to South China Sea.

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Speaker 2: Yes, the Prime Minister Anthony Albanezi says that is something

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Speaker 2: he's going to raise and has already been raised by

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Speaker 2: the Foreign Minister as well. There have been a number

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Speaker 2: of near misses between the Chinese and Australian military in

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Speaker 2: that area over the past few months. Most recently last month,

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Speaker 2: Australia accused of Chinese jets of flying of firing flares

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Speaker 2: dangerously close to an Australian helicopter. China of course disputes that,

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Speaker 2: but it is indicative that these tensions do remain. There

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Speaker 2: is also a matter of that Yangyang Drill, who is

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Speaker 2: an Australian writer. He's facing a suspended death sentence in

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Speaker 2: China right now. The Prime Minister says he tends to

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Speaker 2: raise that's a premiere as well.

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Speaker 1: When you look at the current state of trade relations,

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Speaker 1: I know, we just kind of went from economic issues

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Speaker 1: to security issues, now back to economic issues. How has

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Speaker 1: trade flow been working out between Australia and China lately.

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Speaker 2: Well, it's interesting that the really key trading commodity during

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Speaker 2: these years of tensions did not get effected. Iron ore

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Speaker 2: continue to flow freely. China needs it. The things that

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Speaker 2: did suffer trade strikes bali wine, some coal exports, some

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Speaker 2: deep exports as well. These were all fairly symbolic. But

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Speaker 2: in terms of trade, as I mentioned, China is Australia's

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Speaker 2: number one trading partner, but Australia is China's number five

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Speaker 2: trading partners. So there is a reasonable degree of equity

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Speaker 2: in these trading positions and it's in the interests of

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Speaker 2: both countries to make sure that this has dealt with

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Speaker 2: and relations normalized. There is still one trade strike left

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Speaker 2: from China against Australia. That is live rock lobsters. Premierly

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Speaker 2: is heading to Western Australia next. As I said, that's

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Speaker 2: where rock lobster fisheries are, so there is an expectation

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Speaker 2: that that's going to get lifted as well, and to

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Speaker 2: be honest with to be a bit weird if everything

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Speaker 2: else got lifted and that one stayed in place. But

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Speaker 2: that could be an announceable that we see in the

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Speaker 2: next couple of days.

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Speaker 1: When you consider the politics of Australia and the mission

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Speaker 1: of the Albanesi government and addressing the relationships between or

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Speaker 1: the relationships singular between China and Australia, would you say

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Speaker 1: that it's a pretty hawkish one.

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Speaker 2: That's a curious question as well. Look, just as an aside,

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Speaker 2: I'm not sure if you can hear what's going on

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Speaker 2: in the background here, but I am sitting on the

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Speaker 2: front lawn of Parliament House at the moment. There'd be

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Speaker 2: a few hundred protesters in front of me, both pro

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Speaker 2: China and also there are a lot of free Tibet

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Speaker 2: flags in the crowd as well, and a lot of

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Speaker 2: Fellongong flags. You know, that's an indication of how more

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Speaker 2: openly our protest is accepted here in Australia. And you know,

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Speaker 2: all of these groups are Chinese nationals. But in terms

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Speaker 2: of the political environment and the hawkishness, something else interesting

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Speaker 2: happened today Peter Dutton, who's the leader of the coalition,

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Speaker 2: and the coalition was in power and the relations with China.

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Speaker 2: Thanks for low Peter Dutton is now the nation's preferred

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Speaker 2: prime minister. He's taken the leader to Anthony Alberanesi for

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Speaker 2: the first time. Now he and the coalition would have

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Speaker 2: a more hawkersh stunt. The Premier League will be meeting

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Speaker 2: Peter Dutton later on today, so that meeting has taken

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Speaker 2: on an interesting poignancy that China could soon be dealing

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Speaker 2: with a more hawkish reason.

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Speaker 1: Again, we'll have to wait and see on That sounds interesting, yes, definitely, Paul,

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Speaker 1: thank you so much for filling us in great reporting.

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Speaker 1: Paul Allen Bloomberg, a TV Australia corresponded, joining us from Canberra,

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Speaker 1: let's bring in our guest, Ben Luke is with us.

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Speaker 1: Ben is senior multi asset strategist at State Street Global Markets.

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Speaker 1: He's joining us from our studios in Hong Kong. It's

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Speaker 1: always a pleasure, Ben, Thanks for being with us. So

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Speaker 1: what do you think is driving the situation more these days?

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Speaker 1: Is it central bank policy or is it this enthusiasm

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Speaker 1: around artificial intelligence?

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Speaker 3: Well, I think in the near term, it remains to

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Speaker 3: be inflation, very simply, Doug. I think when you actually

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Speaker 3: look at the post those macro releases reaction functions, you

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Speaker 3: can see that the biggest impact in terms of markets

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Speaker 3: remains to be whether or not inflation moves back into

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Speaker 3: what we consider as a comfortable level for central banks,

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Speaker 3: and that leads to ultimately how rates are getting priced in,

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Speaker 3: and then that also will be the second impact to

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Speaker 3: that would be how currencies would drive because of how

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Speaker 3: rates are moving. So right now, I still think it's

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Speaker 3: an inflation story as opposed to obviously earnings or AI

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Speaker 3: or even the latest geopolitical tensions that we're seeing.

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Speaker 1: So if you look at the numbers that we had

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Speaker 1: here in the US last week, both wholesale and retail inflation, directionally,

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Speaker 1: we are moving in the right way for the Fed

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Speaker 1: to be able to cut rates. I mean, there are

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Speaker 1: some people now that are saying, in order for the

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Speaker 1: Fed to be successful in engineering soft blanding, that they

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Speaker 1: should get to it and begin cutting interest rates. Do

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Speaker 1: you think that the folks on that side of the

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Speaker 1: debate have a point? Yeah?

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Speaker 3: I think so. I think into terms of the direction

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Speaker 3: we are getting there, I think it's the pace of

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Speaker 3: the movement that remains to be a struggle for the

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Speaker 3: Fed to really pull the first trigger. Is what we think,

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Speaker 3: very simply when we actually look at what the summary

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Speaker 3: of economic projections are indicating, they're still expecting somewhere at

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Speaker 3: around two point eight or even somewhere around three percent

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Speaker 3: in terms of year end targets. And the only way

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Speaker 3: for you to get there is you need to basically

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Speaker 3: have the same monthly reports that we're seeing, like what

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Speaker 3: we've seen last month, which is around point two percent

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Speaker 3: month over month. If you get that, then I think

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Speaker 3: at least you get it for another three or four

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Speaker 3: months out down the road. Then it gives you that

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Speaker 3: confidence that the Fed can start the cycle and not

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Speaker 3: just cut it right into a right stop it immediately

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Speaker 3: and actually can continue on with the path is what

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Speaker 3: we hope to see.

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Speaker 1: So when you think that way, I'm curious about the

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Speaker 1: way that you're forecasting the behavior of the going forward.

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Speaker 1: The dollar has been remarkably resilient. Will it begin to

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Speaker 1: fade a bit now as the FED starts to shift policy,

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Speaker 1: or will the dollar, when you compare what's happening in

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Speaker 1: other parts of the world, remain remain in very solid shape.

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Speaker 3: I think going into the second half, we have actually

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Speaker 3: downgraded the convection in the dollar. We had an overweight

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Speaker 3: in the dollar throughout the first half of this year.

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Speaker 3: We are finally moving back towards a neutral position. The

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Speaker 3: reason for this is positioning is very extreme ready, as

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Speaker 3: you mentioned that everybody is owning the dollar right now,

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Speaker 3: so there is obviously a much more limited room for

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Speaker 3: appreciation when positioning is that high. The second thing is

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Speaker 3: the dollar has actually rallied quite a bit obviously on

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Speaker 3: rate differentials, and as we anticipate the Fed to cut

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Speaker 3: rates following on with what we see for the rest

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Speaker 3: of the G ten space, then there isn't that much

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Speaker 3: of an uptick in terms of differentials that benefits the

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Speaker 3: dollar and not the rest of the world, So that

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Speaker 3: also into play. And last but not least, we continue

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Speaker 3: to see it as a soft landing scenario as you've

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Speaker 3: mentioned before, and that scenario tends to be beneficial for

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Speaker 3: equities to rally still and call that that should help

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Speaker 3: to alleviate the stress from that dollar strength that we

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Speaker 3: hopefully would see in the second half.

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Speaker 1: So we have some central bank meetings to contend with

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Speaker 1: in the week ahead. The PBOC is on the list,

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Speaker 1: along with the Bank of England and the Reserve Bank

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Speaker 1: of Australia. Let's begin in China. The decision that we're

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Speaker 1: expecting later today on the medium term lending facility. Is

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Speaker 1: China being as aggressive as the government ought to be

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Speaker 1: under the circumstances. If if you want to reach that

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Speaker 1: growth target, is Beijing doing enough?

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Speaker 3: It's simply not in our view. There's still this sense

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Speaker 3: in our view that the PBOC prioritizes currency stability over growth.

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Speaker 3: I mean, when we look at liquidity injection numbers, and

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Speaker 3: when we actually look at how the daily fixing has

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Speaker 3: moved and how the currencies valuate, it when you actually

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Speaker 3: compare the currency against its c fex basket, it's still overweight.

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Speaker 3: If the pbocs really committed to pushing on with further growth,

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Speaker 3: they could actually let the currency weaken more, but in

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Speaker 3: fact they didn't. So I think the MLF cut is

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Speaker 3: not something we expect in the near term yet, because

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Speaker 3: they still want to keep the currency stable for now.

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Speaker 1: Unfortunately, so does that mean that domestic demand will remain

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Speaker 1: sluggish and that China will be mired in somewhat of

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Speaker 1: a deflationary trap.

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Speaker 3: Unfortunately. I think that's still the case. We run our

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Speaker 3: own inflation metrics called price Stats, which is an online

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Speaker 3: inflation metrics that we run which is a daily basis,

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Speaker 3: and we basically track things online prices, and we still

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Speaker 3: continue to see China being in this deflation territory unfortunately,

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Speaker 3: and I don't think this is going to change unless

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Speaker 3: we see them actually give up or at least allow

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Speaker 3: for more fluxtuality when it comes to the currency going forward.

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Speaker 1: At the end of last week, as you know, we

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Speaker 1: had the meeting of the Bank of Japan policy rate

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Speaker 1: was held steady, not a surprise. I think the market

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Speaker 1: was very eager to get some suggestion that there would

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Speaker 1: be a reduction in bond purchases, but we didn't get

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Speaker 1: anything along those lines. I mean, we've been told now

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Speaker 1: to wait until after the July meeting. Is that significant disappointment,

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Speaker 1: do you think? And it is a reflection of something

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Speaker 1: that we should pay attention to in terms of the

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Speaker 1: thinking at the BOJ.

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Speaker 3: Well, I think the it's still a very douvish take

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Speaker 3: from the Bank of Japan. We were expecting the same thing,

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Speaker 3: no changes in the rates. Obviously some sort of an

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Speaker 3: announcement to come through. In terms of the tapering, our

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Speaker 3: guest was they would actually start off with a very

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Speaker 3: beginning tapering. I mean right now, their goal is that

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Speaker 3: they still reinvest around six billion monthly in terms of

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Speaker 3: JGB purchases. If you can cut it down by half

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Speaker 3: or cut it down by a third at the very beginning,

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Speaker 3: I can at least send a signal. But the signal

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Speaker 3: from having no numbers to come up with the overall

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Speaker 3: meeting indicates that they're still very, very hesitant to actually tighten.

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Speaker 3: And that's why I think the darn continues to strengthen

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Speaker 3: at this level where they will actually go back up

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Speaker 3: to one sixty if they don't intervene again.

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Speaker 1: Unfortunately, Ben very quickly a Japanese CPI at the end

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Speaker 1: of the week. Where do we stand right now with

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Speaker 1: the inflation in Japan?

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Speaker 3: As I mentioned, in terms of the price stats, we

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Speaker 3: are actually seeing above trend inflation, so there is significant

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Speaker 3: evidence for them to actually taper, But the mindset I

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Speaker 3: think of the Bank of Japan remains to be much

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Speaker 3: more dubbish than what markets are expecting.

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Speaker 1: Ben, always a pleasure, thanks for making time with us.

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Speaker 1: Ben Luke is the senior multi asset strategist at State

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Speaker 1: Street Global Markets, joining us from our studios in Hong Kong.

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Speaker 1: Here on Daybreak Asia. Let's get to our guest. Olivia

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Speaker 1: is with us. Olivier is head of applied Research for

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Speaker 1: the APAC at SIM Corporation. He joins us from the

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Speaker 1: line city of Singapore. Olivier, It's always a pleasure. A

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Speaker 1: lot of the focus has been on the FED stubborn

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Speaker 1: in its mission of getting inflation under control. But if

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Speaker 1: you look at the data, the direction here seems clear.

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Speaker 1: Right now, I think the Fed is looking for just

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Speaker 1: one rate cut. Markets may be a little bit more

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Speaker 1: aggressive in looking at two twenty five basis point rate

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Speaker 1: cuts between now and the end of twenty four. What

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Speaker 1: is your expectation here is in regards to the Fed.

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Speaker 4: I think the Fed will have this one time and

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Speaker 4: that'll be it. Because if you look at the data, yes,

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Speaker 4: inflation came down. I mean it was higher than expected

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Speaker 4: for Triemuth and it came down for the last two

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Speaker 4: but absolutely because April and May of twenty twenty three

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Speaker 4: were high numbers, so they were easy to beat. But June, July,

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Speaker 4: in August, we're very low numbers last year. So inflation

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Speaker 4: has to stay extremely low for the annual rate to

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Speaker 4: remain on the downward path, and that may not be the.

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Speaker 1: Case all right, So can we conclude that maybe the

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Speaker 1: FED has been successful in engineering somewhat of a soft

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Speaker 1: landing here?

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Speaker 4: Whether the FED was successful or whether it's just simply

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Speaker 4: the economy that is slowing down, it's hard to tell

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Speaker 4: at this point who gets all the credit. But at

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Speaker 4: least inflation is on the right path. But it might

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Speaker 4: take a longer, you know, then people expect to get

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Speaker 4: that last stretch. And really, if you heard the consumers

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Speaker 4: are complaining about inflation, the Fed's mandate is still to

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Speaker 4: fight inflation because unemployment still okay?

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Speaker 1: Are you still constructive on the American equity market?

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Speaker 4: I think the equity market has gone up quite a

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Speaker 4: lot already, and volatility is really really low right now

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Speaker 4: ahead of what usually is a calm summer. But this

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Speaker 4: year is different, right. We expected, out of the thirteen

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Speaker 4: kind of events that are on the calendar for this summer,

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Speaker 4: we expected the EU parliamentary elections to be one of

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Speaker 4: the tamest events. And look what happened. It's sent shockwave

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Speaker 4: through France. Maybe Germany. We still have the UK elections next,

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Speaker 4: we have, of course still the US pre election debates

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Speaker 4: and then and national conventions. We have the Olympics, we

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Speaker 4: have UFO, we have so many events. Meanwhile, we still

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Speaker 4: don't know how and when wars in either Ukraine or

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Speaker 4: guys that will end. So there's quite a lot of

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Speaker 4: risk out there that it's not priced into markets.

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Speaker 1: Well, you mentioned the situation in Europe, but we also

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Speaker 1: have the ECB cutting interest rates. Obviously, although Madame Leguard

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Speaker 1: was putting market on the markets plural on notice not

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Speaker 1: to expect much more. The ECB will be data driven,

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Speaker 1: but all central bankers say that when you look at

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Speaker 1: what's happening on the continent, how is Europe doing?

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Speaker 5: I thank you.

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Speaker 4: Europe is back into fifty to fifty, whether it has

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Speaker 4: a double dip recession, and that's also one of the

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Speaker 4: reasons why the CV decided to cut. And again, if

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Speaker 4: we have a very volatile summer, if all these events

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Speaker 4: go the wrong way, then we could have a situation

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Speaker 4: where the economy suffers from all of that volatility and uncertainty.

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Speaker 4: We have too many elections that could go to the

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Speaker 4: far rights, and we've never had these parties in power.

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Speaker 4: We don't know what they will do and how they

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Speaker 4: will manage the economy.

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Speaker 1: Yeah, I remember when we started the year, the number

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Speaker 1: of elections that were happening across the globe. I mean,

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Speaker 1: it really spoke to the risk, the potential risk of

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Speaker 1: the politics would play in performing or allowing the markets

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Speaker 1: to perform this year. It's kind of I guess coming

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Speaker 1: to manifest when you look at the China story. We're

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Speaker 1: expecting the monthly activity data later today. I mean, what's

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Speaker 1: your read on China right now?

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Speaker 4: Well, China has some big issues right and the property

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Speaker 4: market is still non result. We keep hearing that a

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Speaker 4: package or rescue packages and it's going to be put

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Speaker 4: in place. The market goes up for a little while,

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Speaker 4: but then waits for details. Details don't come where details

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Speaker 4: come short. And that's where we are right now. We

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Speaker 4: had this big rally from mid Aple to mid May,

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Speaker 4: and then we pause, and now we were kind of

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Speaker 4: losing hope a little bit. Geopolitically, there's still a lot

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Speaker 4: of tensions US. China is not going in the right direction,

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Speaker 4: so there are a lot of reasons to worry there.

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Speaker 1: You seem a little bit cautious, and I'm wondering if

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Speaker 1: a person were to be defensive in the current environment,

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Speaker 1: how do you play that defensiveness.

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Speaker 4: So there are ways to play right now because markets

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Speaker 4: are very concentrated. While we're talking about seven stocks in

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Speaker 4: the US eleven in Europe, there are other sectors to play,

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Speaker 4: other areas to look at that have been ignored by

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Speaker 4: buy investors because they don't get the same hype A's

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Speaker 4: AI or the we Go Vi drugs. So I would

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Speaker 4: really urge investors to look at some of the sectors

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Speaker 4: in the consumer staples, some of the banks, not mid

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Speaker 4: sized banks, stick to the large banks, and some of

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Speaker 4: the energy companies because all of this AI stuff is

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Speaker 4: going to need a lot of energy, which we don't

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Speaker 4: have right now.

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Speaker 1: So we had the BOJ meeting at the end of

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Speaker 1: last week and a lot of criticism from participants that

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Speaker 1: perhaps the BOJ is behind the curve at this point,

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Speaker 1: it's not moving aggressively enough. We're going to get some

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Speaker 1: indication as to the amount of bond reduction bond buying reduction,

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Speaker 1: but not until the July BOJ meeting. How are you

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Speaker 1: viewing Japan these days?

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Speaker 4: So Japan's benefited from you know, geo politics, right, they

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Speaker 4: rerouting of the global supply chain away from China. It's

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Speaker 4: benefited from a weekend, right were one twenty two years ago,

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Speaker 4: where one fifty seven and fifty eight today. That's ridiculous.

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Speaker 4: So it's had some positive technical or external factors. But

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Speaker 4: inflation has been higher than what the bugs says it

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Speaker 4: was for what eighteen nineteen months in a row now,

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Speaker 4: and they've done nothing. So we'd like to see them

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Speaker 4: stop printing money a little bit and see if the

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Speaker 4: economy can hold on on its own.

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Speaker 1: Would you be a buyer very quickly of Japanese equities

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Speaker 1: at these levels?

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Speaker 4: At these levels, probably not, but any dips would be

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Speaker 4: nice to take.

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Speaker 1: All right, we'll leave it there, Olivier, always a pleasure.

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Speaker 1: Thanks for being with us. Olivier Dossier, head of Applied

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Speaker 1: Research for the APAC at Simcorp, joining us from Singapore

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Speaker 1: here on a daybreak Asia. Let's take a look at

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Speaker 1: market action with our guest, Louis Navalier. He is the

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Speaker 1: founder and chairman of Navalier Associates. He joins us from

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Speaker 1: the Sunshine State. Pleasure to have you on the program.

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Speaker 1: Thanks so much for joining us. Let's begin with the FED.

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Speaker 1: We've heard a little bit from a number of FED

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Speaker 1: officials kind of pushing back on the eagerness that many

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Speaker 1: in the market are expressing with respect to rate cuts

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Speaker 1: this year. How do you see the FED engineering this process?

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Speaker 5: Well, normally the FED does cut before the election because

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Speaker 5: they don't want to be part of the political debate.

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Speaker 6: They'll be dragged into the election debate because they'll be

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Speaker 6: blamed for some of the problems out there. So obviously

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Speaker 6: we have a rate cut coming in September.

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Speaker 5: I frankly think they had to cut in July.

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Speaker 6: The only reason that we haven't cut yet is is

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Speaker 6: that owner's equipment rent issue in the CPI. The PPI,

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Speaker 6: of course, was perfect the other day, you know, so

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Speaker 6: the in places out of the PPI. So you know,

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Speaker 6: in America we're still growing. We have house information because

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Speaker 6: of immigration and we have a higher birth rate. But

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Speaker 6: you someplace like Europe, they don't have houshalformation, so they

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Speaker 6: don't have real estate inflation. So you know it's you

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Speaker 6: guys actually did a good job reporting on Friday that

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Speaker 6: the PCE components look like the pc is going to

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Speaker 6: be at point one or lower, so that that would

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Speaker 6: give us hope. Right now, bad news is good news.

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Speaker 6: No one wants to see strong retail sales or strong

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Speaker 6: pmis because we all just want the VET to hurry

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Speaker 6: out and cut. And the bond vigilantes, the people that

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Speaker 6: set the.

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Speaker 5: Bond market yields, are actually probably more important than the

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Speaker 5: Fed right now.

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Speaker 1: So if growth is really not coming down in a

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Speaker 1: meaningful way, maybe we get a number of data points

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Speaker 1: that kind of put the markets at ease in terms

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Speaker 1: of the inflation story. Are you still positive on equities?

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Speaker 1: Is growth enough to drive earnings going forward?

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Speaker 2: Yeah?

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Speaker 6: I don't have an earnings issue, but the market is

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Speaker 6: shockingly narrow. You know, our research shows you got to

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Speaker 6: be in the top sixty percent of fundamentals, and market's

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Speaker 6: very fundily focused. But unfortunately the top five percent continue

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Speaker 6: to hog all the money.

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Speaker 5: You know, the.

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Speaker 6: Navidio is the super micros, the Eli Lilly's novaan.

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Speaker 5: Ordas, things like that.

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Speaker 6: But the market did brought out a bit in May

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Speaker 6: on small cap. It's brought out now because we have

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Speaker 6: the annual Russell realignment. But you know, I'd like to

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Speaker 6: see more than just earnings.

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Speaker 5: Ride the market, and I think the when.

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Speaker 6: The FED starts to cut race rates. It gives a

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Speaker 6: little turbo boost to the market, and our traditional patterns,

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Speaker 6: we will rally right up to the election. You know,

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Speaker 6: the election rhetoric is good. You know, we went from

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Speaker 6: having no taxes on tips to having no taxes because

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Speaker 6: we're just going to have tariffs. You know, I mean,

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Speaker 6: I got if that will happen, but you know, it's

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Speaker 6: interesting rhetoric, you know what I mean. And the other

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Speaker 6: side's promising student loan relief, et cetera.

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Speaker 5: So you know this, this is why we tend to

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Speaker 5: rally go in elections.

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Speaker 1: Well, you talked about the narrowness, I mean, a lot

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Speaker 1: of leadership coming from megacap Tech. Obviously, will that be

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Speaker 1: the story for the remainder of the year. There's no

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Speaker 1: way to kind of argue with that at this point.

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Speaker 5: Well, again, I'm quoting Bloomberg.

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Speaker 6: When I watch you guys, I think you guys said

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Speaker 6: we went from the Magnificent seven, the Magnificent one, and

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Speaker 6: forty four hun ninety nine other stocks. And I would

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00:24:27,200 --> 00:24:30,760
Speaker 6: respectfully agree with that since Navidia is my largest holding,

440
00:24:30,880 --> 00:24:35,960
Speaker 6: and you know, I mean Apple has to introduced a

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00:24:36,000 --> 00:24:42,080
Speaker 6: folding phone. Microsoft's okay, yeah, Google's got some antitrust things,

442
00:24:43,520 --> 00:24:47,600
Speaker 6: metas you know, got margins under pressure.

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Speaker 5: So we are at a.

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00:24:50,720 --> 00:24:54,600
Speaker 6: Magnificent one right now, to be candid with you, and

445
00:24:54,840 --> 00:24:57,040
Speaker 6: we would like to see the market broaden out from there,

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00:24:57,080 --> 00:25:01,639
Speaker 6: but we will rally going in into elections. Earnings or

447
00:25:01,680 --> 00:25:05,560
Speaker 6: forecasts to be you have to have positive analysts revisions

448
00:25:05,720 --> 00:25:08,480
Speaker 6: at this juncture, you know, because after any season winds down,

449
00:25:09,240 --> 00:25:12,720
Speaker 6: the analysts that are rising in their estimates higher are

450
00:25:12,720 --> 00:25:15,240
Speaker 6: really helping those stocks. The other thing is we have

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00:25:15,280 --> 00:25:19,720
Speaker 6: a very strong dollar that impedes multinationals. I do think

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00:25:19,760 --> 00:25:21,880
Speaker 6: it will shift to more small MidCap.

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Speaker 5: Through June, you know, July is okay.

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Speaker 6: I hate August. If I run the market, I just

455
00:25:30,040 --> 00:25:35,119
Speaker 6: closed every August. But come October we'll be rallying again,

456
00:25:35,359 --> 00:25:38,840
Speaker 6: and so we'll have some bumps along the way.

457
00:25:38,880 --> 00:25:41,480
Speaker 1: So you mentioned the Nvidia story. Obviously that is pretty

458
00:25:41,520 --> 00:25:45,720
Speaker 1: much the centerpiece of the artificial intelligence trade. What would

459
00:25:45,760 --> 00:25:49,440
Speaker 1: cause you to reconsider that at least in the short term.

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00:25:49,480 --> 00:25:54,120
Speaker 1: There's been so much euphoria around AI. Are we at

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00:25:54,200 --> 00:25:57,359
Speaker 1: risk of maybe some type of corrective behavior when it

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00:25:57,359 --> 00:25:58,359
Speaker 1: comes to price action?

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Speaker 3: No.

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Speaker 7: I wrote an article that Navidia would be a four

465
00:26:03,119 --> 00:26:09,000
Speaker 7: trillion a billion dollars, a four trillion dollar company this

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00:26:09,160 --> 00:26:11,560
Speaker 7: year and five trillion dollars next year.

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00:26:13,520 --> 00:26:14,880
Speaker 5: I'm dead serious about that.

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00:26:15,760 --> 00:26:20,320
Speaker 6: This company went nuts last quarter before it's blackbl chips

469
00:26:20,320 --> 00:26:24,240
Speaker 6: were being shipped. Now the blackboll ships are being shipped

470
00:26:24,320 --> 00:26:27,720
Speaker 6: every year. They got new chips. The chips take over

471
00:26:27,760 --> 00:26:32,560
Speaker 6: two billion to develop. They'll be introducing new chips every

472
00:26:33,080 --> 00:26:36,200
Speaker 6: year until the end of the decade, and then eventually

473
00:26:36,880 --> 00:26:39,560
Speaker 6: we'll have to go to quantum computing to speed things up.

474
00:26:39,600 --> 00:26:45,000
Speaker 6: Because the chips are approaching the atomic level. We don't

475
00:26:45,000 --> 00:26:50,640
Speaker 6: know how to go smaller than that. So Navidia will

476
00:26:50,640 --> 00:26:53,480
Speaker 6: also have an appliance sized computer.

477
00:26:53,640 --> 00:26:57,080
Speaker 5: It'll be water cooled that will replace entire data centers.

478
00:26:57,119 --> 00:27:00,359
Speaker 6: So my biggest bets right now are in the data

479
00:27:00,359 --> 00:27:05,639
Speaker 6: center companies that are helping boost call cloud computing, boost

480
00:27:05,680 --> 00:27:10,240
Speaker 6: the electric grid. We have a lot of cybersecurity stocks

481
00:27:10,280 --> 00:27:14,679
Speaker 6: as well. We do have a grid issue because the

482
00:27:14,720 --> 00:27:22,679
Speaker 6: Biden administration did rush recently a mandate that they have

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00:27:22,720 --> 00:27:26,200
Speaker 6: to sequester the carbon on big natural gas plants and

484
00:27:29,440 --> 00:27:34,200
Speaker 6: a carbon sequester approvals like eight years. Okay, so that's

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00:27:34,280 --> 00:27:38,920
Speaker 6: really screwed up. Expanding the grid, and you know, obviously

486
00:27:38,960 --> 00:27:42,160
Speaker 6: it depends where you live. But you know, obviously California,

487
00:27:42,160 --> 00:27:45,280
Speaker 6: Nevada or Solar and Batteries.

488
00:27:44,760 --> 00:27:46,680
Speaker 5: And other places would just like putting.

489
00:27:46,400 --> 00:27:50,679
Speaker 6: More natural speaker power plants to meet a load demand.

490
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Speaker 6: So we do have a very acute electricity problem brewing

491
00:27:54,880 --> 00:27:55,440
Speaker 6: in America.

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Speaker 1: Louis always a pleasure to Louis Nevillie or a founder

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Speaker 1: chairman of associates joining us here on Daybreak Asia. This

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00:28:05,280 --> 00:28:08,159
Speaker 1: has been the Bloomberg Daybreak Asia podcast, bringing you the

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00:28:08,240 --> 00:28:11,200
Speaker 1: stories making news and moving markets in the Asia Pacific.

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Speaker 1: Visit the Bloomberg Podcast channel on YouTube to get more

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00:28:14,880 --> 00:28:18,480
Speaker 1: episodes of this and other shows from Bloomberg. Subscribe to

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Speaker 1: the podcast on Apple, Spotify, or anywhere else you listen,

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