WEBVTT - Broadcom Earnings, New US-China Chip Curbs 0:00:02.480 --> 0:00:06.800 Bloomberg Audio Studios, podcasts, radio news. 0:00:09.640 --> 0:00:12.880 This is the Bloomberg Daybreak Asia podcast. I'm Doug Prisner. 0:00:12.920 --> 0:00:15.400 You can join Brian Curtis and myself for the stories 0:00:15.440 --> 0:00:18.520 making news and moving markets in the APEC region. You 0:00:18.600 --> 0:00:21.439 can subscribe to the show anywhere you get your podcast 0:00:21.520 --> 0:00:24.919 and always on Bloomberg Radio, the Bloomberg Terminal, and the 0:00:24.920 --> 0:00:28.920 Bloomberg Business app. Let's take a closer look at the 0:00:28.920 --> 0:00:32.839 Broadcom story and also speak more broadly about what's happening 0:00:32.880 --> 0:00:36.760 in the semiconductor space with Bloomberg's Kun John Sabani. He 0:00:37.040 --> 0:00:41.240 is our senior Semiconductor analyst for Bloomberg Intelligence. He joins 0:00:41.280 --> 0:00:44.440 us from San Francisco. Cunjohn, It's always a pleasure when 0:00:44.440 --> 0:00:47.760 I look at the guidance for the current quarter, the 0:00:47.800 --> 0:00:50.920 company basically coming in around one hundred million dollars below 0:00:50.960 --> 0:00:55.120 the average estimate, and still the stock gets punished in 0:00:55.160 --> 0:00:57.960 the way that it was. Is there something more that 0:00:58.000 --> 0:00:59.840 we need to talk about here, that this is not 0:01:00.200 --> 0:01:03.080 just a miss on guidance, that there's something else afoot. 0:01:04.800 --> 0:01:07.440 Really, you know, the stock reaction so far has been 0:01:07.480 --> 0:01:11.080 surprising to us. Coming into the earnings. There were a 0:01:11.120 --> 0:01:14.880 couple of things we and investors were keen to focus on, 0:01:15.240 --> 0:01:19.400 namely the AI revenues, which they upsided by a billion dollars. Second, 0:01:19.520 --> 0:01:23.280 the VMware integration and the software revenue growth, which again 0:01:23.400 --> 0:01:28.240 came better than expected. The weakness, this very slight weakness, 0:01:28.520 --> 0:01:31.320 Really one hundred million dollars is very small given the 0:01:31.360 --> 0:01:34.440 magnetity of revenues they make. The weakness was really that 0:01:34.520 --> 0:01:39.880 the non AI cyclical legacy segments did not recover or 0:01:39.920 --> 0:01:42.679 are not recovering as fast as we had thought. Now 0:01:42.920 --> 0:01:45.960 that's not broadcome specific. That's going around in the end 0:01:46.000 --> 0:01:50.680 markets across the board in semis, in those legacy cyclical 0:01:50.720 --> 0:01:53.640 end markets. So the reaction seems to be a little 0:01:53.640 --> 0:01:55.280 bit overreaction to me. 0:01:56.960 --> 0:01:59.640 Can we take a bigger picture here in terms of 0:01:59.720 --> 0:02:03.640 what is that mean when these non AI components of 0:02:03.720 --> 0:02:06.320 the companies aren't doing as well? 0:02:06.800 --> 0:02:10.480 Yeah. So, you know, semiconductor is exposed to various industries 0:02:10.480 --> 0:02:14.519 and end markets. So typically we divide the segments within 0:02:14.560 --> 0:02:19.600 semiconductors into cyclical because inherently, historically semiconductors has been a 0:02:19.600 --> 0:02:22.480 cyclical industry that goes up and down with the economy 0:02:22.480 --> 0:02:26.360 in different segments. AI is the new sort of you know, 0:02:26.600 --> 0:02:30.120 very new area of business for them, and exposure, which 0:02:30.160 --> 0:02:33.760 is currently not seeing cycles but is more secular, so 0:02:33.880 --> 0:02:36.280 every year you see growth increasing and increasing, so it 0:02:36.360 --> 0:02:39.919 has not met a single full cycle. So these cyclical 0:02:40.680 --> 0:02:44.440 end markets are something like Heelco's your service providers, your 0:02:44.480 --> 0:02:49.240 industrial end markets, right your broadband, your overall general purpose 0:02:49.400 --> 0:02:52.800 it spend. And we have heard this across the board 0:02:52.800 --> 0:02:56.160 from other companies that these markets have gone are going 0:02:56.200 --> 0:03:00.120 through its trap, and some companies are seeing in the 0:03:00.120 --> 0:03:03.200 bottom a few quarters earlier, some a little bit later. 0:03:03.480 --> 0:03:06.880 But the overall thesis across our oral sentiment is the 0:03:06.960 --> 0:03:09.959 traft has sort of been confirmed, but the recovery out 0:03:10.000 --> 0:03:13.720 of the straft is as not strong as we had expected. 0:03:14.160 --> 0:03:16.639 As you know, Kunjohn a broadcome as a major chip 0:03:16.680 --> 0:03:19.400 supplier for Apple. Is it too much to kind of 0:03:19.440 --> 0:03:23.040 read through what we're hearing from Broadcom and kind of 0:03:23.080 --> 0:03:26.080 conclude anything around Apple's business. 0:03:26.960 --> 0:03:31.160 Well, so there implied guidance for their wireless segment, which 0:03:31.200 --> 0:03:34.040 is really what the segment comprises, of which they only 0:03:34.080 --> 0:03:38.280 sell their chips to Apple amongst other handset makers, did 0:03:38.320 --> 0:03:43.440 not come weak, So there's nothing weakness to be implied 0:03:43.480 --> 0:03:46.680 from there, it was in line and from what we expected. 0:03:49.280 --> 0:03:52.880 So obviously we see that the AI business is doing well. 0:03:53.720 --> 0:03:57.240 How does this provide this constructive view on the AI 0:03:57.360 --> 0:04:01.680 bawl narrative, especially because we've had I had some a 0:04:01.800 --> 0:04:04.720 little bit of a drawback in that narrative over the 0:04:04.760 --> 0:04:05.680 past few weeks. 0:04:07.200 --> 0:04:10.080 Yeah, I see most of the drawbacks has been acting 0:04:10.120 --> 0:04:12.680 out on the stock price side. When you look at 0:04:12.720 --> 0:04:17.120 the fundamentals of the key AI chip suppliers, which we 0:04:17.160 --> 0:04:20.000 can just name in one hand, all of them have 0:04:20.120 --> 0:04:24.640 come out with great numbers and great and upsided guidance. 0:04:24.720 --> 0:04:28.680 So from a fundamental perspective, the demand signals keep on 0:04:28.760 --> 0:04:32.800 getting stronger. There's sort of nothing highlight, no risk factors 0:04:32.800 --> 0:04:35.240 there that we have seen, at least from the earnings 0:04:35.279 --> 0:04:38.520 of these companies that I've talked about. Similar Rotcom also 0:04:38.600 --> 0:04:40.840 upsided their numbers for AI for the sea. 0:04:41.200 --> 0:04:43.839 You know, when you talk about semiconductors, it's such a 0:04:43.880 --> 0:04:47.800 broad category, so many different types of chips, whether they're 0:04:47.880 --> 0:04:51.640 processors or memory chips. But I have to ask you 0:04:51.680 --> 0:04:55.279 Coo John about the story that our Ian King reported 0:04:55.320 --> 0:04:59.240 earlier about Intel considering options for its stake and Mobile 0:04:59.240 --> 0:05:02.960 Eye Global now we know that Intel has been struggling 0:05:03.000 --> 0:05:07.240 the business model right now being challenged. CEO Pat Gelsinger 0:05:07.400 --> 0:05:11.400 had wanted to build out a foundry business that seems 0:05:11.400 --> 0:05:13.920 to be somewhat in doubt right now. There are other 0:05:14.000 --> 0:05:17.640 parts of Intel's business that have been struggling. What do 0:05:17.720 --> 0:05:21.279 we know about this story right now and the degree 0:05:21.320 --> 0:05:26.000 to which Intel is really kind of struggling to find 0:05:25.160 --> 0:05:27.520 its balance once again. 0:05:29.080 --> 0:05:31.600 Yeah, I mean, look, Intel has been dealing with fires 0:05:31.600 --> 0:05:35.920 at multiple runs. If you divide Intel into its two 0:05:36.000 --> 0:05:40.160 core businesses, one is the product which is the chip business. 0:05:40.240 --> 0:05:44.440 Right mainly, the biggest portion that chip business comes from 0:05:44.480 --> 0:05:49.279 PCs and CPUs amongst other things, selling into data centers. 0:05:49.680 --> 0:05:52.680 That business has seen has been going through decline for 0:05:52.720 --> 0:05:55.560 a while. The key important thing there is they've been 0:05:55.600 --> 0:05:59.800 losing share to its competitors. And the other core business 0:05:59.880 --> 0:06:02.760 is the foundry business, like you outlined. So they have 0:06:02.960 --> 0:06:06.480 been you know, multiple nodes or i should say multiple 0:06:07.000 --> 0:06:10.680 years behind PSMC, which continues to be the leader in 0:06:10.800 --> 0:06:15.400 advanced manufacturing nodes or in advanced semiconductor manufacturing technology. So 0:06:15.640 --> 0:06:19.120 they're trying to play catch up from all fronts, and 0:06:19.279 --> 0:06:23.440 you know, catching up and creating a brand new out 0:06:23.880 --> 0:06:27.160 foundry business which they can support to external customers is 0:06:27.200 --> 0:06:31.520 a multi year, three to five year and significantly expensive 0:06:31.640 --> 0:06:34.720 venture for which they need support from the Chipsacks funds, 0:06:34.720 --> 0:06:38.880 that customers, etc. So when you're trying to regain leadership 0:06:38.920 --> 0:06:42.479 in your product, regain leadership in your foundry business, it 0:06:42.520 --> 0:06:44.880 doesn't help also that the end markets at the same 0:06:44.920 --> 0:06:48.520 time are going against you, which we saw PCs sort 0:06:48.560 --> 0:06:52.360 of bottomed in twenty twenty three. Data center. Again, most 0:06:52.400 --> 0:06:54.599 of the dollar revenues right now are going towards the 0:06:54.600 --> 0:06:58.200 AI chip and in fact, Intel frankly missed that AI 0:06:58.320 --> 0:07:01.479 train because they were solely focused on the CPUs and 0:07:01.560 --> 0:07:05.880 their accelerator's program is not working as much as their peers. 0:07:05.880 --> 0:07:10.320 So basically you're you're again fighting fire on multiple fronts. 0:07:12.920 --> 0:07:16.280 So overall, what's your outlook for the seven conductor industry 0:07:16.320 --> 0:07:18.400 and for AI stocks. 0:07:19.920 --> 0:07:22.560 Yeah, so, you know, we are looking at this semine 0:07:22.760 --> 0:07:26.840 industry based on the end market exposure. When we look 0:07:26.880 --> 0:07:33.520 at the legacy cyclical end markets general purpose, enterprise, industrial, automotive, 0:07:34.320 --> 0:07:37.040 these are going through some tough times right now. We 0:07:37.160 --> 0:07:40.720 are seeing some green shoots in some pockets of this 0:07:40.920 --> 0:07:43.960 end market showing that demand is coming back, but you 0:07:44.000 --> 0:07:47.800 know the slope of their demand recovery remains a concern. Now. 0:07:47.800 --> 0:07:50.120 When we look at the secular portions of this, which 0:07:50.160 --> 0:07:53.840 is AI, we see it kicking on all firing on 0:07:53.880 --> 0:07:58.400 all cylinders. We don't see any slowdown within that sector. 0:07:58.720 --> 0:08:00.800 So that's how we look at the second from different 0:08:00.840 --> 0:08:01.800 in market perspective. 0:08:01.920 --> 0:08:03.920 Kun John, it's always a pleasure. Thank you so much 0:08:03.920 --> 0:08:06.840 for being with us, Kun John Sabani, Senior Semiconductor analyst 0:08:06.960 --> 0:08:16.840 or Bloomberg Intelligence. Katie Kaminski joins as she is the 0:08:16.920 --> 0:08:22.320 chief research strategist at Alpha Simplex, joining us from Boston. Nice, 0:08:22.360 --> 0:08:24.800 if you do have time for us. What do you 0:08:24.840 --> 0:08:27.320 make of where we are right now in the overall 0:08:27.360 --> 0:08:31.400 economic I noted that the ISM Services index may be 0:08:31.520 --> 0:08:34.160 a little bit of a positive surprise, but that ADP 0:08:34.400 --> 0:08:38.160 number on private payrolls may have been a little disappointing. 0:08:38.160 --> 0:08:39.319 Where are we at the moment? 0:08:40.679 --> 0:08:43.360 So what we're seeing in the trend falling space is 0:08:43.400 --> 0:08:46.640 we've actually seen a massive pivot that's been a little 0:08:46.640 --> 0:08:50.080 bit more defensive in other asset classes, which. 0:08:49.880 --> 0:08:52.240 Is definitely making me a little bit. 0:08:52.120 --> 0:08:57.320 Concerned going into the fall, particularly, you've seen this risk 0:08:57.360 --> 0:08:58.520 off trade this week. 0:08:58.600 --> 0:09:00.760 It's been seeping out since early June. 0:09:00.920 --> 0:09:04.880 So across different asset class themes, you're definitely seeing a 0:09:04.920 --> 0:09:07.480 little bit more of a higher probability that we could 0:09:07.480 --> 0:09:10.600 have or a session or a harder landing than we 0:09:10.640 --> 0:09:12.120 anticipated earlier this year. 0:09:12.280 --> 0:09:14.000 So, if you had to bet on what the Fed 0:09:14.080 --> 0:09:16.640 will do on the eighteenth, are you in the twenty 0:09:16.679 --> 0:09:19.200 five basis point right cut camp or are you in 0:09:19.240 --> 0:09:20.040 the fifty camp? 0:09:21.160 --> 0:09:23.480 I'd say I'm in the twenty five just because I 0:09:23.520 --> 0:09:28.680 think if they go fifty negative information also can be 0:09:28.720 --> 0:09:31.120 taken the wrong way as well. So what we've noticed 0:09:31.160 --> 0:09:34.520 is any sort of concern and economic data or any 0:09:34.840 --> 0:09:37.720 miss in economic data now has been really a focus. 0:09:38.040 --> 0:09:40.600 So my guess is that they'll be more conservative just 0:09:41.160 --> 0:09:43.559 to kind of keep things going smoothly. 0:09:43.960 --> 0:09:46.400 I noted earlier that the swaps market is pricing in 0:09:46.440 --> 0:09:48.520 a total of about one hundred basis points and easing 0:09:48.600 --> 0:09:50.040 between now and the end of the year. Do you 0:09:50.080 --> 0:09:51.439 think that's a little too aggressive? 0:09:52.679 --> 0:09:54.720 I mean it could be, because I guess you know, 0:09:54.800 --> 0:09:56.840 if you've looked at the Fed over the last couple 0:09:56.880 --> 0:09:59.240 of years, they have been a little bit slower to 0:09:59.640 --> 0:10:02.440 kind of at moving, but then once they do, they 0:10:02.480 --> 0:10:03.520 have moved quickly. 0:10:03.600 --> 0:10:05.839 So for example with hikes and so. 0:10:05.880 --> 0:10:08.920 I think after you start seeing that going, people are 0:10:08.920 --> 0:10:13.080 anticipating that if it's if they're really needing to actually 0:10:13.160 --> 0:10:15.720 cut rates, that they'll keep going quickly like they did 0:10:15.840 --> 0:10:17.800 when they were hiking. 0:10:17.840 --> 0:10:20.319 We were talking a moment ago about the disappointing guidance 0:10:20.320 --> 0:10:24.680 from Broadcom chip Player. Obviously, this AI trade has been 0:10:24.800 --> 0:10:29.160 so much of really why the equity market has performed 0:10:29.200 --> 0:10:32.200 so well recently. Are you convinced that we are at 0:10:32.240 --> 0:10:34.439 a point now where the market really needs to come 0:10:34.480 --> 0:10:36.320 to terms with the fact that we have yet to 0:10:36.360 --> 0:10:40.839 really see the ROI that's necessary to justify some of 0:10:40.880 --> 0:10:43.640 the valuations in some of these AI related names. 0:10:44.920 --> 0:10:47.960 I think the challenge with high evaluations like this is 0:10:47.960 --> 0:10:53.239 that they're very, very concentrated, and anytime markets are concentrated 0:10:53.240 --> 0:10:56.760 in this way and you have positioning that came off 0:10:56.840 --> 0:10:59.520 some but that has come back as well, there's still 0:11:00.160 --> 0:11:03.199 a lot of room where we might need to reprice, 0:11:03.360 --> 0:11:07.200 especially with something so new like this. It's hard to 0:11:07.320 --> 0:11:11.559 estimate what the NPV of that particular. Those technologies are 0:11:11.640 --> 0:11:13.960 so we could definitely have a repricing as we try 0:11:13.960 --> 0:11:14.760 to figure out. 0:11:16.120 --> 0:11:17.840 Where that's going to go later this year. 0:11:18.240 --> 0:11:21.440 Historically the month of September is pretty dicey for the 0:11:21.440 --> 0:11:24.080 equity market. Are we at risk of maybe a little 0:11:24.080 --> 0:11:25.960 bit more downside? 0:11:26.480 --> 0:11:27.719 I would definitely say so. 0:11:27.800 --> 0:11:31.080 I mean September and October are definitely tricky months for 0:11:31.120 --> 0:11:35.680 equity markets. If you look at where trend positioning has moved, 0:11:35.760 --> 0:11:38.760 you've also seen that as well, that's become much more reticent, 0:11:39.160 --> 0:11:41.960 and you've also seen a lot more risk off behavior 0:11:42.440 --> 0:11:46.640 with stock bond correlations going back to normal. So in 0:11:46.640 --> 0:11:49.720 that sense, I think people are nervous about what are 0:11:49.720 --> 0:11:53.240 the ramifications of all the policy that we have sort 0:11:53.280 --> 0:11:54.480 of endured in the last two. 0:11:54.400 --> 0:11:54.920 Or three years. 0:11:55.160 --> 0:11:57.400 We can talk about Fed policy, we can also talk 0:11:57.440 --> 0:12:00.960 about fiscal policy, and let's talk about the Is that 0:12:01.400 --> 0:12:04.600 pretty much noise at this point kind of around the 0:12:04.600 --> 0:12:08.520 periphery of the market oors some of that the proposals 0:12:08.520 --> 0:12:11.840 that we are hearing from either Trump or Harris. Is 0:12:11.840 --> 0:12:13.720 that beginning to penetrate. 0:12:14.559 --> 0:12:17.280 Well, I think it's adding to a lot of volatility 0:12:17.640 --> 0:12:20.520 because it's really still even though it's only about two 0:12:20.559 --> 0:12:24.640 months away, I feel like there's definitely still more volatility 0:12:24.679 --> 0:12:27.320 in terms of different narratives we're seeing, and we've definitely 0:12:27.400 --> 0:12:31.280 seen a lot more volatility in many different asset classes 0:12:31.280 --> 0:12:34.520 that are much more directly impacted by policy choice. So, 0:12:34.559 --> 0:12:37.959 for example, if you look at the commodity sector, that 0:12:38.040 --> 0:12:40.360 has definitely been in a downward trend, but it has 0:12:40.440 --> 0:12:42.640 been moving around quite a bit, so I do think 0:12:42.640 --> 0:12:44.480 that it's creating a lot of noise. 0:12:44.679 --> 0:12:48.600 Yeah, I'm looking at crude oils sub seventy dollars, that's WTI. 0:12:49.240 --> 0:12:52.120 So we had lower treasury yields today, not by much. 0:12:52.160 --> 0:12:54.240 But one of the things that's been happening lately is 0:12:54.280 --> 0:12:57.720 the dollar has been trading week. Is that a trend 0:12:57.720 --> 0:12:59.960 that you expect to continue or is this a bit 0:13:00.120 --> 0:13:03.560 of an anomaly the dollar relative to some of the 0:13:03.600 --> 0:13:07.240 other currencies around the world, particularly in Asia. I'm thinking 0:13:07.640 --> 0:13:10.640 of the end especially, do you think the dollar is 0:13:10.679 --> 0:13:11.800 going to recover a little bit? 0:13:13.160 --> 0:13:16.640 Well, actually, the dollar has been very much under pressure 0:13:16.720 --> 0:13:20.559 for the last few weeks. But we've been seeing increasing 0:13:20.720 --> 0:13:23.160 signals of weakness and the dollar, and that doesn't surprise 0:13:23.240 --> 0:13:26.880 me because in general, cuts particularly from the US FED, 0:13:27.360 --> 0:13:30.280 is going to put pressure on the dollar, and so 0:13:30.320 --> 0:13:34.040 we're definitely seeing that theme play out, but you also 0:13:34.080 --> 0:13:37.160 see counter forces. So the dollar does tend to rally 0:13:37.200 --> 0:13:40.400 when the equity market sells off, so you're seeing a 0:13:40.400 --> 0:13:42.679 little bit of both. But it seems to be that 0:13:43.000 --> 0:13:46.160 FED policy is really the biggest driver of the dollar 0:13:46.240 --> 0:13:50.120 moves recently as we move into potential shift in policy. 0:13:50.240 --> 0:13:53.360 So you seem a little cautious on risk assets here 0:13:53.400 --> 0:13:56.079 in the US, and I'm wondering whether that is kind 0:13:56.120 --> 0:13:58.839 of motivating you to look offshore a little bit. Are 0:13:58.840 --> 0:14:00.440 you doing that right now? 0:14:00.960 --> 0:14:05.559 So we're looking across equities, you're not seeing You're actually 0:14:05.559 --> 0:14:08.600 seeing the US still being a little stronger than outside 0:14:08.640 --> 0:14:13.760 the US. China in particular has shown more negative signals recently. 0:14:13.800 --> 0:14:16.920 So I think there still is that US looks a 0:14:16.920 --> 0:14:19.600 little bit better, that this idea of a self landing 0:14:19.720 --> 0:14:21.600 is still on the table. 0:14:21.680 --> 0:14:24.160 But I do think the biggest area. 0:14:23.880 --> 0:14:27.120 We're looking at is much more how people are behaving 0:14:27.120 --> 0:14:32.240 in other asset classes, particularly fixed income commodities, and how 0:14:32.320 --> 0:14:36.120 that may play into sort of repricing the possibility of 0:14:36.400 --> 0:14:41.560 a recessionary type move or a potential pullback this fall. 0:14:41.720 --> 0:14:43.560 The flip side of some of the dollar weakness that 0:14:43.600 --> 0:14:45.840 we were talking about a moment ago is the strength 0:14:45.840 --> 0:14:48.160 that we have seen lately in the Japanese and some 0:14:48.200 --> 0:14:51.000 of that is a Bank of Japan story. I get that, 0:14:51.640 --> 0:14:55.640 and Governor Uwaita, the head of the BOJ, indicating that 0:14:55.680 --> 0:14:59.520 the central bank there is inclined to titan Further, one 0:14:59.520 --> 0:15:01.880 of the things it has to be looked at is 0:15:01.920 --> 0:15:04.920 where the economy is overall and where inflation is in 0:15:05.040 --> 0:15:07.440 Japan overall. But I think many of the folks that 0:15:07.440 --> 0:15:10.120 we chat with on the show are of the belief 0:15:10.120 --> 0:15:15.080 that we could get another rate hike, albeit small, between 0:15:15.080 --> 0:15:16.880 now and the end of the year from Japan. And 0:15:17.160 --> 0:15:21.000 I'm wondering at what point this begins to create a 0:15:21.080 --> 0:15:26.080 repatriation of Japanese money out of markets like let's say, 0:15:26.120 --> 0:15:29.280 the US and back to Japan. Do you think that's 0:15:29.320 --> 0:15:29.920 a real risk. 0:15:31.360 --> 0:15:34.440 I mean, I think definitely, because what you're seeing right now, 0:15:34.560 --> 0:15:36.640 especially when you look at the carry trade and what 0:15:36.840 --> 0:15:41.320 happened in August, there has been a big retracement of 0:15:41.320 --> 0:15:44.200 a lot of positioning, and I think if you start 0:15:44.240 --> 0:15:48.840 to see that divergence where Japan is hiking and the 0:15:48.960 --> 0:15:52.160 US has started a cutting cycle or an eating cycle 0:15:52.560 --> 0:15:57.080 that creates another incentive which I think could definitely cause flows. 0:15:58.200 --> 0:16:01.520 And you've already seen the power of that in August, 0:16:02.280 --> 0:16:04.840 just with how much we saw that unwide and the 0:16:04.880 --> 0:16:06.680 carry trade and how much the yen has been that 0:16:06.720 --> 0:16:10.440 funding currency. So I think it could definitely be the case, 0:16:10.560 --> 0:16:12.760 just how extremely different they are out of. 0:16:12.680 --> 0:16:13.800 Cycle with everyone else. 0:16:13.920 --> 0:16:16.520 So, Katie, last question, do you want to be exposed 0:16:16.520 --> 0:16:18.920 to Japan right now? Is that a worthwhile trade for you? 0:16:20.400 --> 0:16:23.240 I think it's a risky one right now, just because 0:16:23.560 --> 0:16:27.000 of how you know, how dislocated it is from what's 0:16:27.040 --> 0:16:29.360 going on outside the US. But that means, you know, 0:16:29.440 --> 0:16:32.400 from our perspective, that means that there could be very 0:16:32.400 --> 0:16:35.200 interesting trends to follow going forward. 0:16:35.320 --> 0:16:36.640 So maybe being long. 0:16:36.480 --> 0:16:39.920 The end, which we're starting to see some indication, which 0:16:40.160 --> 0:16:41.560 I think is is. 0:16:41.760 --> 0:16:43.960 Definitely a change of pace since the last few years. 0:16:44.200 --> 0:16:46.400 Katie, thank you so much for joining us here on 0:16:46.480 --> 0:16:49.280 day Break Asia. A good weekend to you there in Boston, 0:16:49.360 --> 0:16:59.720 Katie Kaminski, chief re search strategist at Alpha Simplex. Well, 0:16:59.760 --> 0:17:03.720 the CIDIC CLSA Investor Forum will get underway at the 0:17:03.800 --> 0:17:06.760 Grand hiatt in Hong Kong on Monday. This event will 0:17:06.800 --> 0:17:10.680 feature a number of the region's most prominent market players 0:17:10.760 --> 0:17:13.120 joining us. Now for a little more is Sean cochrane. 0:17:13.160 --> 0:17:16.520 He is head of research at CLSA, joining us from 0:17:16.560 --> 0:17:18.440 our studios in Hong Kong. Good of you to make 0:17:18.480 --> 0:17:20.720 time to chat with us. Thanks for dropping by. As 0:17:20.760 --> 0:17:24.359 I understand it, this is the thirty first year of 0:17:24.440 --> 0:17:26.919 the forum. Can you help me understand what this is 0:17:27.000 --> 0:17:29.679 primarily known for sure? 0:17:29.880 --> 0:17:32.919 Yeah, thirty one years indeed, And what we really do 0:17:33.000 --> 0:17:36.199 is we get about a couple of thousand investors to 0:17:36.200 --> 0:17:40.720 come in and talk to over five hundred corporate representatives 0:17:40.760 --> 0:17:44.480 to decide what's going on specifically within Asia, which is 0:17:44.480 --> 0:17:47.200 our primary coverage focus, and of course within the world. 0:17:47.680 --> 0:17:50.399 And it basically helps everyone take their view as to 0:17:50.440 --> 0:17:54.000 how they're going to help their clients or directly themselves 0:17:54.040 --> 0:17:55.600 make money in markets. 0:17:56.080 --> 0:17:59.199 Do you aggregate these viewpoints to kind of come up 0:17:59.240 --> 0:18:04.719 with some cohesive viewpoint on how well the economies in 0:18:04.760 --> 0:18:07.919 the Asia Pacific are performing? I know there are individual 0:18:07.960 --> 0:18:11.119 ones and there is a differentiator here when you consider 0:18:11.160 --> 0:18:13.320 what's going on let's say in Nasie and versus China, 0:18:13.400 --> 0:18:16.520 versus South Korea, versus Japan. But I'm wondering whether you're 0:18:16.560 --> 0:18:20.040 able to formulate, given all of the diversity and viewpoint 0:18:20.400 --> 0:18:23.600 some type of cohesive point of view. 0:18:24.480 --> 0:18:26.800 Absolutely, so I guess the answer is both yes and no. 0:18:27.119 --> 0:18:29.119 So let me start with the no and then go 0:18:29.160 --> 0:18:31.320 to the yes and the no. Is that what Seelisa 0:18:31.440 --> 0:18:33.639 loves to do is we call ourselves a house of 0:18:33.720 --> 0:18:36.639 views rather than having a house view. We pride ourselves 0:18:36.680 --> 0:18:39.520 in trying to provide insights to our clients, and we 0:18:39.640 --> 0:18:41.640 have a hard time believing if we tell an analyst 0:18:41.680 --> 0:18:45.040 they must take a certain assumption while doing their work 0:18:45.240 --> 0:18:48.840 that they can truly believe, deliver conviction and provide their 0:18:48.840 --> 0:18:52.440 best insights to clients. So we don't force cohesion. However, 0:18:52.640 --> 0:18:55.680 of course I find the forum of myself personally extremely useful, 0:18:55.840 --> 0:18:58.080 and we do provide reports to clients both throughout the 0:18:58.119 --> 0:19:01.919 course of the event and afterwards to put together that picture. Personally, 0:19:01.960 --> 0:19:04.160 I find it quite useful because we can all look 0:19:04.160 --> 0:19:06.160 at the data, but of course part of the data 0:19:06.200 --> 0:19:08.359 can be revised up or down, and so it's that 0:19:09.119 --> 0:19:12.320 aggregation of a huge amount of anecdote in one place 0:19:12.359 --> 0:19:15.520 is incredibly valuable to come up with a really informed 0:19:15.560 --> 0:19:18.160 you that is right on the pulse of what's happening 0:19:18.320 --> 0:19:18.800 right now. 0:19:19.240 --> 0:19:22.120 Is there a panel at this year's forum that you're 0:19:22.320 --> 0:19:23.639 especially looking forward to. 0:19:24.640 --> 0:19:27.080 Well, we actually pride ourselves and have an extraordinary amount 0:19:27.119 --> 0:19:30.280 of content. So we have well over seventy direct speakers 0:19:30.280 --> 0:19:31.840 throughout the course of the day, and we have over 0:19:31.880 --> 0:19:35.159 thirteen thousand interactions that will occur during the week. But 0:19:35.200 --> 0:19:38.000 if I think of some of the speakers and content 0:19:38.040 --> 0:19:41.200 that I think investors will be most excited about. Obviously, 0:19:41.200 --> 0:19:43.399 we have Frank Luntz, who will be speaking about the 0:19:44.280 --> 0:19:46.560 likely outcome of the US election, and that's of course 0:19:46.560 --> 0:19:49.240 important in terms of global policy and the state of 0:19:49.240 --> 0:19:52.320 the US economy, which is a massive driver even here 0:19:52.840 --> 0:19:55.320 in Asia. We have some interesting speakers as well, and 0:19:55.400 --> 0:19:57.840 that we really pride ourselves on not just doing the 0:19:57.920 --> 0:20:00.280 standard cookie cut of what you might expect of an 0:20:00.280 --> 0:20:02.439 investment house. So we have a diplomat that will be 0:20:02.440 --> 0:20:05.160 talking about the state of geopolitics. We have macro specialists, 0:20:05.200 --> 0:20:07.359 but the curveball sort of speakers that are really a 0:20:07.359 --> 0:20:09.280 lot of fun. We have one speaker who's going to 0:20:09.320 --> 0:20:11.560 be talking about how to be indiestractable in a world 0:20:11.640 --> 0:20:14.560 driven by devices and social media. We have another speaker 0:20:14.560 --> 0:20:17.720 who's a former world class rugby player who looks at 0:20:17.760 --> 0:20:21.000 the role of team cohesion and the success of team sports, 0:20:21.040 --> 0:20:23.800 and we've collaborated on a report looks at how does 0:20:23.840 --> 0:20:27.080 that apply to the investment world and to corporate environments. 0:20:27.240 --> 0:20:30.399 We have another expert that works for sports legends around 0:20:30.560 --> 0:20:33.040 how do I use breathing to perform? And this matters 0:20:33.160 --> 0:20:35.960 even for say traders in a market environment where they're 0:20:35.960 --> 0:20:38.040 trying to put on the best trade in the in 0:20:38.080 --> 0:20:42.200 real time, manage their autonomous nervous system to perform really, 0:20:42.240 --> 0:20:45.159 really well. And we even have a poker player that 0:20:45.320 --> 0:20:48.400 is helping us understand risk reward ratios to make sure 0:20:48.440 --> 0:20:49.960 we can make great investment decisions. 0:20:50.040 --> 0:20:54.080 Sounds like a stimulating forum. Indeed, when you consider the 0:20:54.160 --> 0:20:58.680 role of government, are you inviting voices from various governments 0:20:58.720 --> 0:21:00.440 to sit down at the table and to to share 0:21:00.480 --> 0:21:01.560 their viewpoints as well? 0:21:02.240 --> 0:21:07.520 Absolutely so. We have a government officials from multiple countries 0:21:07.600 --> 0:21:11.080 that are presenting at the event, both at this event 0:21:11.160 --> 0:21:13.760 and in previous events. So where there's a government official 0:21:13.800 --> 0:21:16.720 that has a market message that's relevant to the market, 0:21:16.760 --> 0:21:19.280 or they need access to investors to understand what investors 0:21:19.280 --> 0:21:21.679 are thinking, or even they need access to corporates, then 0:21:21.720 --> 0:21:23.840 this is obviously a fantastic forum for them to do it. 0:21:23.880 --> 0:21:26.399 And so it's part and parcel of our event. 0:21:26.840 --> 0:21:30.399 You mentioned Frank Launce there and kind of the US perspective. 0:21:30.480 --> 0:21:33.720 I'm wondering when you consider US China relations right now, 0:21:33.720 --> 0:21:35.719 whether this is going to be top of the line 0:21:35.880 --> 0:21:36.800 for this year's forum. 0:21:38.040 --> 0:21:40.960 It's always a topic that's very, very important for investors. 0:21:40.960 --> 0:21:43.840 Over the last several years, the strategic competition between the 0:21:43.960 --> 0:21:47.680 US and China has created massive policy change, and certainly 0:21:48.400 --> 0:21:51.480 Frank can help us understand the likelihood of say a 0:21:51.760 --> 0:21:55.200