WEBVTT - Hong Kong High Rise Fire, Fed Cut Bets Continue

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Welcome to the Daybreak Asia podcast. I'm Doug Prisoner. We

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<v Speaker 2>begin in Hong Kong, where rescue workers are trying to

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<v Speaker 2>extinguish a major fire at a high rise apartment complex

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<v Speaker 2>in the northern part of the city. At present, the

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<v Speaker 2>death toll is forty four, although hundreds of people are

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<v Speaker 2>still missing, and according to the Fire Department, blazes in

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<v Speaker 2>four of the buildings are under control. However, three buildings

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<v Speaker 2>are still burning. Bloomberg's midmen Low is on site.

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<v Speaker 3>I just want to tell you what it's like to

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<v Speaker 3>be here, because the first thing you notice is the

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<v Speaker 3>smell of the portrait smoke, and when the wind blows,

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<v Speaker 3>I could feel the sting in my eye because this

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<v Speaker 3>the buildings behind me are still billowing the smoke. And

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<v Speaker 3>we are sixteen hours into this fire, which started yesterday

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<v Speaker 3>at three pm. It was a level three fire at

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<v Speaker 3>the time. It has upgraded within hours to a Level five,

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<v Speaker 3>the highest severity, by six thirty pm. And if you

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<v Speaker 3>can see the buildings behind me, they are very close together,

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<v Speaker 3>which is very typical of any know, Hong Kong apartment

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<v Speaker 3>a residential estate, so that is one of the reasons

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<v Speaker 3>why the fire was able to spread from one block

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<v Speaker 3>to another. But another reason is because this entire estate

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<v Speaker 3>is about forty years old or so. It is a

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<v Speaker 3>government subsidized residential housing unit and it was going through

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<v Speaker 3>heavy renovation and you can see remnants of those bamboo scarefolding. Again,

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<v Speaker 3>very characteristic of Hong Kong as well. Now, typically the

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<v Speaker 3>fire wouldn't be spreading as fast as it did today,

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<v Speaker 3>and the authorities were saying it was spreading at an

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<v Speaker 3>unusual speed, and they had found polystyrene boards on the windows,

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<v Speaker 3>and they suspect that they have found materials that were

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<v Speaker 3>substandard as well. So the green netting, some of the

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<v Speaker 3>plastic shotings, if they were compliant with Hong Kong stendards,

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<v Speaker 3>they would have to be fire resistant.

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<v Speaker 2>That's Bloomberg's midmen Low. Now, Hong Kong police have arrested

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<v Speaker 2>three people from an engineering firm on suspicion of manslaughter.

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<v Speaker 2>At the same time, this fire has prompted renewed scrutiny

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<v Speaker 2>of the city's use of bamboo scaffolding on major renovation projects.

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<v Speaker 2>Let's turn to markets in the Asia Pacific, where equities

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<v Speaker 2>for the most part are advancing after some gains on

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<v Speaker 2>Wall Street, and we got perspective from Heartwood Issel. He

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<v Speaker 2>is head of APAC Equities and Credit at UBS Wealth Management.

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<v Speaker 2>Heartwood spoke with Bloomberg TV host Sherry On and April Hong.

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<v Speaker 4>So Hartman talking fus about the most important central bank

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<v Speaker 4>in the world, right, the FED and December being more

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<v Speaker 4>or less baked and already. But we also have come

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<v Speaker 4>quite far. Remember around the time of October, December seemed

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<v Speaker 4>like a done deal. So what extent is there this

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<v Speaker 4>certainty was that going to mean for Asia?

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<v Speaker 1>Now?

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<v Speaker 5>I think we have to assume and we have we

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<v Speaker 5>had on our side assumed all along, also that December

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<v Speaker 5>is coming when we think at least another one for

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<v Speaker 5>also the first quarter for Asia, it's generally typically positive.

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<v Speaker 5>Also when the dollar comes a bit softer, right, the

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<v Speaker 5>US economy is doing okay, So yeah, we will have

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<v Speaker 5>the entire Apec region on attractive with a couple of

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<v Speaker 5>different markets that we highlight in particular.

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<v Speaker 4>Which ones in particular.

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<v Speaker 5>Yeah, I would mention three different drivers sort of speaking.

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<v Speaker 5>They are all very different. That's why you know that

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<v Speaker 5>that's also the beauty of the Apec region here, right,

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<v Speaker 5>So you can diversify that pretty well. So you have

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<v Speaker 5>the AI side, we would probably pick their China Tech

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<v Speaker 5>right also come back a little bit.

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<v Speaker 4>That looks very very interesting as supposed to say South Korea, Taiwan, Japan.

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<v Speaker 5>Japan is for the for different reasons. I'd say Taiwan,

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<v Speaker 5>South Korea, especially South Korea has has run up quite

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<v Speaker 5>a bit, but if it comes down a little bit,

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<v Speaker 5>we would also consider that. But probably right now, if

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<v Speaker 5>we compare these, especially on the air side, probably the

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<v Speaker 5>favorite right now is China Tech and the other ones

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<v Speaker 5>we have is value A programs. So two I would

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<v Speaker 5>like to mention here is certainly mentioned that Japan. If

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<v Speaker 5>the other one is here, our home is Singapore. And

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<v Speaker 5>then you have some sort of leggers also from the

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<v Speaker 5>earning side, but also from the index sides to some

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<v Speaker 5>extent laggards, and that's India and Indonesia. So again they

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<v Speaker 5>have different drivers. Next to you is going to look

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<v Speaker 5>a lot better on earnings like it normally does. So

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<v Speaker 5>a three different drivers interesting region. Right now, I.

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<v Speaker 1>Want to turn into Japan, but first let me stay

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<v Speaker 1>with China, because is it still appealing to you when

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<v Speaker 1>you continue to see the US China Trade engines, and

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<v Speaker 1>you have the Pentagon continuing to add these companies to

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<v Speaker 1>his blacklist.

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<v Speaker 5>It's not the first time that we're seeing some noise

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<v Speaker 5>happening around in China or the China.

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<v Speaker 6>Stocks as well.

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<v Speaker 5>Look, I always take a step back on fundamentals, right,

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<v Speaker 5>I mean, how many of these Chinese companies are really

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<v Speaker 5>exporting anything significant to the US? Right, So then you

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<v Speaker 5>could argue they don't really right, So these sort of

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<v Speaker 5>maybe it's also part of a negotiation. I'm not saying

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<v Speaker 5>we'll stop it here, but we have seen it before.

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<v Speaker 5>It has never stopped really the Chinese stocks also from

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<v Speaker 5>doing well as long as the fundamentals are doing well,

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<v Speaker 5>so I wouldn't over interpret that part of the game.

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<v Speaker 1>Yeah, I mean you have a point, right. We are

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<v Speaker 1>seeing this bifurcation when it comes to tech supply chains anyway,

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<v Speaker 1>So what does it matter if the US continues to

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<v Speaker 1>ban these companies at the same time for some of

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<v Speaker 1>those Japanese names. If you see the bigger and sharper

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<v Speaker 1>bifurcation of supply chains, what does it mean for the

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<v Speaker 1>likes of Tokyo Electron that supply this equipment and cannot

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<v Speaker 1>service their facilities in China for example, or even the

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<v Speaker 1>South Korean chip makers that cannot sell to Beijing.

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<v Speaker 5>That has been something that influenced a couple of companies,

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<v Speaker 5>including of course also European ones, right, So it's a

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<v Speaker 5>general it's a wide phenomenon oftentimes, what we see because

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<v Speaker 5>the demand for certainly on the aside, but even beyond

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<v Speaker 5>aid somewhat traditional semiconductors, that's very very strong right now.

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<v Speaker 5>Also what you sometimes see is that if something really

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<v Speaker 5>happens on the China side with some restrictions, right then

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<v Speaker 5>you're baked maybe a few quarters in where that takes

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<v Speaker 5>an effect. But as long as the demand globally is

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<v Speaker 5>that strong, right, it never really has held back the

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<v Speaker 5>stock prices of these companies, and I don't see why

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<v Speaker 5>it would be different this time for.

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<v Speaker 4>The drivers of Chinese tech in particular, what are you

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<v Speaker 4>seeing in terms of valuations versus it's global peers and

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<v Speaker 4>the prospects of growth, especially since we've just come through

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<v Speaker 4>the earning season, we still have meet to one coming

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<v Speaker 4>up of course.

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<v Speaker 5>Yeah, that is interesting And one point I would pilot

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<v Speaker 5>in particular, especially on the China side, is the cloud

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<v Speaker 5>area of it, right, because you have a bit like

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<v Speaker 5>you had in the US with some similar names, I

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<v Speaker 5>would say, right, so investors watching also e commerce et cetera,

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<v Speaker 5>and there's one thing you can do, but ultimately we

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<v Speaker 5>know that everything eventually shifted towards cloud or later on.

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<v Speaker 5>Also also AI, and again I wouldn't see why it

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<v Speaker 5>would necessarily be different, right, So if I look at

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<v Speaker 5>the China ones, especially those that have cloud business, that

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<v Speaker 5>we see them only in recent quarters, maybe less about

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<v Speaker 5>two quarters, the cloud growth really coming up. So why

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<v Speaker 5>wouldn't I pay more than the sort of mid single

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<v Speaker 5>digit multiples on the earning side that we're paying now

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<v Speaker 5>that it's not difficult to make a case that should

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<v Speaker 5>be quite a bit higher.

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<v Speaker 4>But there is a sense of a double standard, right

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<v Speaker 4>if you look at some of the US players, Okay,

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<v Speaker 4>strong cash flow, cap backs looks great, and when they

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<v Speaker 4>spend more, they tend to get rewarded by investors. Sometimes

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<v Speaker 4>that's not the case with the Chinese tech names. So

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<v Speaker 4>what is your sense of what might shift the needle

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<v Speaker 4>when it comes to global investors looking at Chinese tech

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<v Speaker 4>stocks in particular.

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<v Speaker 5>I think one thing that is interesting if you also

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<v Speaker 5>look at how long you know the period of you know,

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<v Speaker 5>AI investments, thinking about AI has lasted right in US

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<v Speaker 5>you could say easily maybe given takes three years, right,

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<v Speaker 5>China probably more like like one year. Right, So that

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<v Speaker 5>alone means that China right in every thing that that

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<v Speaker 5>should follow is a bit early, and it's and it's

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<v Speaker 5>stays here than the US already is. So that alone,

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<v Speaker 5>in my view, is something that investors should keep in mind.

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<v Speaker 1>It's been really interesting Hartmouth, how sentiment has turned in

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<v Speaker 1>recent days after the textile of earlier in the month, right,

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<v Speaker 1>and now it seems that the driver's seat is also

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<v Speaker 1>molnetary policy with more Dubvish FED speak. What does it

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<v Speaker 1>mean for Asian markets?

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<v Speaker 5>If I look a bit further out for the landscape,

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<v Speaker 5>let's say we will get a bit softer next year

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<v Speaker 5>GDP growth, et cetera. Then perhaps is expected right now

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<v Speaker 5>that gives a lot of the Asian Central Bank a

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<v Speaker 5>lot more also room to come even further than we

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<v Speaker 5>already think they would still go to some extent, so

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<v Speaker 5>it buffers the downside on the equity side.

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<v Speaker 4>What does this mean for Asia local credit next year?

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<v Speaker 4>If growth to your point about it being quite resilient,

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<v Speaker 4>but we also have maybe some of these central banks

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<v Speaker 4>have run up into the limits of how chazing they

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<v Speaker 4>can do.

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<v Speaker 5>We see also the bit longer term with bond deals

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<v Speaker 5>coming from certainly the US also going a bit lower

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<v Speaker 5>from here right and then with a dollar especially maybe

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<v Speaker 5>over the next six months, so also being a bit softer.

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<v Speaker 5>That means here for apex, we prefer the IG side,

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<v Speaker 5>but we also prefer naturally, I would almost say the

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<v Speaker 5>local fax site on the bond site. These two are

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<v Speaker 5>the ones we really like.

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<v Speaker 2>That was hartwood Issel, head of a pack equities and

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<v Speaker 2>credit at UBS Wealth Management. He was speaking with Bloomberg

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<v Speaker 2>TV host Sherry On and April Hong here on the

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<v Speaker 2>Daybreak Asia podcast. Welcome back to the Daybreak Asia podcast.

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<v Speaker 2>I'm Doug Chrisner. The US equity market advanced in the

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<v Speaker 2>last session on rising expectations for FED rate cuts. We

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<v Speaker 2>had the S and P gaining ground for a fourth

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<v Speaker 2>straight session with a gain of seven tens of one percent. Unsurprisingly,

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<v Speaker 2>trading was light in front of the thanks thank Giving

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<v Speaker 2>Day holiday. Volume in the S and P was about

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<v Speaker 2>twenty three percent below the thirty day average, and volatility

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<v Speaker 2>seemed to take a breather. We had the Vicks falling

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<v Speaker 2>more than seven percent, closing just above seventeen. For a

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<v Speaker 2>closer look at the price action, I'm joined by Patrick Kennedy.

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<v Speaker 2>He is founding partner at All Source Investment Management. Patrick,

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<v Speaker 2>thanks for being here. What is your sense of what

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<v Speaker 2>the market is trying to understand at present?

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<v Speaker 7>I think there's two big risks that the market is

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<v Speaker 7>focused on right now. One is obviously valuation, So valuation

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<v Speaker 7>is very frothy when you look at history. Things like

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<v Speaker 7>the buffet indicator are hitting an all time high too,

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<v Speaker 7>standard deviations above where they usually are. So the buffet

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<v Speaker 7>indicator is just GDP versus what this stock market value is, right,

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<v Speaker 7>very simple indicator, but a powerful one.

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<v Speaker 6>And then the other is rates.

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<v Speaker 7>So I think we're getting more clarity that there'll be

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<v Speaker 7>cuts coming.

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<v Speaker 6>After the last meeting, we had.

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<v Speaker 7>A lot of fed chairs saying that, you know, we

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<v Speaker 7>wasn't necessarily a certainty that we would be getting a

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<v Speaker 7>cut in December. I think the odds are now favoring

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<v Speaker 7>a cut and potentially a couple more in the second

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<v Speaker 7>half of next year. But if that story falls apart,

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<v Speaker 7>if all of a sudden, you know we're pausing for

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<v Speaker 7>longer we view that as a pretty big risk to market,

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<v Speaker 7>especially with where valuations currently are.

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<v Speaker 2>So we had the Beige Book today from the FED,

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<v Speaker 2>and as a part of this report, multiple districts including

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<v Speaker 2>New York, Atlanta, Minneapolis on the list. They all reported

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<v Speaker 2>spending among higher income consumers was resilient. However, low and

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<v Speaker 2>middle income households are tightening the belt. This goes to

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<v Speaker 2>this ke shaped economy that we've been talking about. It

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<v Speaker 2>doesn't seem to be changing at all, does it.

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<v Speaker 6>It doesn't. It's the story of two economies.

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<v Speaker 7>And to your point, I think the folks on the

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<v Speaker 7>lower half of the income spectrum are getting hit harder

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<v Speaker 7>from things like tariffs, right and inflation. So you got

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<v Speaker 7>to think about what that consumer has been through over

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<v Speaker 7>the past five years. They've seen rates go from two

0:12:04.240 --> 0:12:07.280
<v Speaker 7>percent to you know, well above five and now.

0:12:07.360 --> 0:12:09.160
<v Speaker 6>Back down to around four, right.

0:12:09.480 --> 0:12:13.480
<v Speaker 7>But they've also seen skyrocketing prices and fuel, food, you

0:12:13.559 --> 0:12:16.200
<v Speaker 7>name it. So they've been through quite a lot when

0:12:16.240 --> 0:12:19.400
<v Speaker 7>you just look at their wallet right now, the top

0:12:19.440 --> 0:12:22.000
<v Speaker 7>half of the income spectrum can weather things like that,

0:12:22.120 --> 0:12:24.240
<v Speaker 7>it's not as big of a blow to them, but

0:12:24.360 --> 0:12:27.160
<v Speaker 7>that's not the case for lower income households, so we

0:12:27.240 --> 0:12:29.840
<v Speaker 7>have to see how that plays out for more cyclical names,

0:12:29.880 --> 0:12:31.160
<v Speaker 7>things like retailers and such.

0:12:31.440 --> 0:12:34.800
<v Speaker 2>So if expectations are calling for a FED rate cut

0:12:34.840 --> 0:12:37.679
<v Speaker 2>in December and many more in the year ahead, maybe

0:12:37.720 --> 0:12:40.840
<v Speaker 2>as many as three for twenty twenty six, I'm curious

0:12:40.880 --> 0:12:44.320
<v Speaker 2>just to get your take on the effectiveness of lower

0:12:44.440 --> 0:12:47.360
<v Speaker 2>rates and helping to address this ke shaped economy.

0:12:48.440 --> 0:12:50.280
<v Speaker 6>That's that's a very tough question.

0:12:50.559 --> 0:12:53.080
<v Speaker 7>I think that you know, if you have lower rates,

0:12:53.080 --> 0:12:58.480
<v Speaker 7>there's a reverberation across markets. I don't think that that's

0:12:58.520 --> 0:13:01.760
<v Speaker 7>the only thing that we need to do in order

0:13:01.840 --> 0:13:05.120
<v Speaker 7>to correct that. It's a much more difficult problem to solve,

0:13:05.200 --> 0:13:08.800
<v Speaker 7>in my opinion. One, you need strong earnings to come

0:13:08.840 --> 0:13:11.480
<v Speaker 7>through so you can continue to have job growth, income growth,

0:13:11.559 --> 0:13:13.360
<v Speaker 7>and that sort of thing. And I think the S

0:13:13.400 --> 0:13:16.160
<v Speaker 7>and P is now pricing in around fourteen percent on

0:13:16.240 --> 0:13:19.000
<v Speaker 7>earnings growth next year, which is largely due to AI.

0:13:19.760 --> 0:13:21.360
<v Speaker 6>I think the big story.

0:13:21.000 --> 0:13:23.960
<v Speaker 7>Around earnings growth next year is that the bottom four

0:13:24.040 --> 0:13:26.720
<v Speaker 7>ninety three need to deliver. Right, so everyone knows that

0:13:26.760 --> 0:13:29.880
<v Speaker 7>the Max seven is doing very well. They're profiting from AI.

0:13:29.960 --> 0:13:33.120
<v Speaker 7>You're already seeing the underlying impact of their balance sheet,

0:13:33.240 --> 0:13:35.880
<v Speaker 7>cash flow, so on and so forth. Where we haven't

0:13:35.960 --> 0:13:38.320
<v Speaker 7>seen that is the four hundred ninety three, the bottom

0:13:38.320 --> 0:13:41.440
<v Speaker 7>four ninety three, right, And the expectation is that in

0:13:41.480 --> 0:13:44.880
<v Speaker 7>twenty six we see a broadening throughout those names which

0:13:44.920 --> 0:13:47.160
<v Speaker 7>will help those lower income households.

0:13:47.240 --> 0:13:47.440
<v Speaker 6>Right.

0:13:47.960 --> 0:13:51.520
<v Speaker 7>If we don't see a broadening within those four ninety three,

0:13:52.040 --> 0:13:54.600
<v Speaker 7>that's a big risk for markets. And in fact our

0:13:54.679 --> 0:13:57.160
<v Speaker 7>view is ironically, if we don't see a broadening within

0:13:57.200 --> 0:14:00.160
<v Speaker 7>the four ninety three, what's even more at risk than

0:14:00.200 --> 0:14:03.239
<v Speaker 7>those names decreasing in value as the MAG seven themselves

0:14:03.320 --> 0:14:06.920
<v Speaker 7>because of the concentration within those names. So in the

0:14:07.000 --> 0:14:08.920
<v Speaker 7>S and p as, I think it's over thirty percent

0:14:08.960 --> 0:14:11.560
<v Speaker 7>now within the MAG seven. If all of a sudden

0:14:11.640 --> 0:14:13.920
<v Speaker 7>that thesis doesn't come to play where we see this

0:14:14.000 --> 0:14:16.679
<v Speaker 7>broadening within the market and the market is sold off,

0:14:16.760 --> 0:14:19.800
<v Speaker 7>it's going to hit the heavy concentrated names, which is

0:14:19.840 --> 0:14:20.440
<v Speaker 7>the MAG seven.

0:14:20.800 --> 0:14:23.560
<v Speaker 2>So we know that the equity market has been challenged

0:14:23.600 --> 0:14:26.280
<v Speaker 2>recently with a fair amount of skepticism when it comes

0:14:26.280 --> 0:14:30.160
<v Speaker 2>to the AI trade, especially where megacap Tech is concerned.

0:14:30.440 --> 0:14:33.520
<v Speaker 2>Trading has been pretty choppy over the last couple of weeks,

0:14:33.640 --> 0:14:36.160
<v Speaker 2>although now it seems as if the market has found

0:14:36.160 --> 0:14:40.480
<v Speaker 2>some solid footing, does that necessarily mean all questions have

0:14:40.600 --> 0:14:43.480
<v Speaker 2>been answered, particularly as we look ahead to the new year.

0:14:45.000 --> 0:14:48.120
<v Speaker 7>So I see a definite split on the street when

0:14:48.120 --> 0:14:50.880
<v Speaker 7>it comes to your viewpoint for next year. Right, I mean,

0:14:50.880 --> 0:14:53.240
<v Speaker 7>at the beginning of twenty twenty five, there's a lot

0:14:53.280 --> 0:14:56.920
<v Speaker 7>of bullishness out there that has very much changed at

0:14:56.960 --> 0:14:58.840
<v Speaker 7>the end of twenty five, where you see almost an

0:14:58.840 --> 0:15:02.400
<v Speaker 7>equal amount of bears. I think the big inflection point

0:15:02.440 --> 0:15:06.640
<v Speaker 7>for next year is does AI monetize in the way

0:15:06.680 --> 0:15:07.400
<v Speaker 7>we think it will?

0:15:07.600 --> 0:15:07.840
<v Speaker 4>Right.

0:15:08.920 --> 0:15:10.280
<v Speaker 6>If it does, great, you.

0:15:10.240 --> 0:15:12.680
<v Speaker 7>Know, the bulls win that argument, and the bull market

0:15:12.680 --> 0:15:15.760
<v Speaker 7>can continue as long as rate cuts come along with that.

0:15:16.520 --> 0:15:20.240
<v Speaker 7>If we don't see monetization next year, I think that's

0:15:20.280 --> 0:15:22.880
<v Speaker 7>when the chickens come home to roosts, so to speak.

0:15:23.000 --> 0:15:25.720
<v Speaker 7>I think that next year is that inflection point the

0:15:25.880 --> 0:15:30.000
<v Speaker 7>show me market, so to speak, where AI truly needs

0:15:30.000 --> 0:15:31.040
<v Speaker 7>to show its benefits.

0:15:31.080 --> 0:15:32.000
<v Speaker 6>Because now we've.

0:15:31.840 --> 0:15:35.200
<v Speaker 7>Been rallying on what three years of this news, So

0:15:35.240 --> 0:15:38.040
<v Speaker 7>if we don't see the underlying impacts hit to earnings,

0:15:38.440 --> 0:15:41.320
<v Speaker 7>I think that investors aren't going to start aren't going

0:15:41.320 --> 0:15:44.280
<v Speaker 7>to give as much rope as they gave this year, right,

0:15:44.800 --> 0:15:47.520
<v Speaker 7>and we'll sell that news. So because of that, we're

0:15:47.520 --> 0:15:50.080
<v Speaker 7>a little more cautious next year on that story, and

0:15:50.120 --> 0:15:51.360
<v Speaker 7>we want to see how it plays out.

0:15:51.400 --> 0:15:54.960
<v Speaker 2>How are you feeling about markets offshore right now? Foreign markets,

0:15:55.000 --> 0:15:58.160
<v Speaker 2>particularly those in Asia.

0:15:58.320 --> 0:16:01.120
<v Speaker 7>EM has had a phenomenal year, right, a banner year.

0:16:01.680 --> 0:16:06.200
<v Speaker 7>We see momentum going into next year. I think obviously,

0:16:06.240 --> 0:16:08.840
<v Speaker 7>if the US market gets hit, you know, if the

0:16:08.920 --> 0:16:12.200
<v Speaker 7>US market sneezes, everyone else catches the cold, so to speak. Right,

0:16:12.960 --> 0:16:15.240
<v Speaker 7>But I do think the story can continue in EM

0:16:15.520 --> 0:16:17.600
<v Speaker 7>next year as long as rates come down. I think

0:16:17.680 --> 0:16:19.440
<v Speaker 7>a lot of that has to do with the story

0:16:19.480 --> 0:16:22.160
<v Speaker 7>of Hey, rates of peaks. We're now seeing rates come

0:16:22.200 --> 0:16:25.160
<v Speaker 7>down or at least the expectation of rate cuts coming,

0:16:25.640 --> 0:16:28.280
<v Speaker 7>and therefore EM stocks should continue to do well.

0:16:28.320 --> 0:16:29.960
<v Speaker 6>So a lot of momentum.

0:16:29.560 --> 0:16:31.280
<v Speaker 7>Has been built up over there, and I think it's

0:16:31.280 --> 0:16:32.800
<v Speaker 7>going to be tough to kill that within the next

0:16:32.840 --> 0:16:33.400
<v Speaker 7>six months.

0:16:33.480 --> 0:16:35.960
<v Speaker 2>So we've seen the dollar hold up pretty well recently,

0:16:36.040 --> 0:16:39.040
<v Speaker 2>even though there's been a lot of conversation about impending

0:16:39.040 --> 0:16:43.240
<v Speaker 2>FED rate cuts, and if the dollar continues to remain firm, yes,

0:16:43.360 --> 0:16:46.120
<v Speaker 2>markets in Asia may benefit. But I'm wondering about the

0:16:46.120 --> 0:16:50.360
<v Speaker 2>point where the dollar's fortunes begin to change. Is that

0:16:50.440 --> 0:16:51.440
<v Speaker 2>something you've thought about.

0:16:52.520 --> 0:16:54.600
<v Speaker 7>It's been a strange macro story, Doug.

0:16:54.640 --> 0:16:55.440
<v Speaker 6>I mean, look at gold.

0:16:55.480 --> 0:16:58.960
<v Speaker 7>For example, gold has rallied with stocks, so I think

0:16:59.000 --> 0:17:02.440
<v Speaker 7>you know, one of the things that investors were concerned

0:17:02.480 --> 0:17:05.040
<v Speaker 7>about is usually the gold market will sniff something out

0:17:05.240 --> 0:17:07.359
<v Speaker 7>prior to the equity markets, and all of a sudden

0:17:07.359 --> 0:17:10.520
<v Speaker 7>you see the gold markets rep higher. It's definitely cause

0:17:10.680 --> 0:17:14.439
<v Speaker 7>for I won't say a concern, but pause. Right, So,

0:17:14.600 --> 0:17:18.240
<v Speaker 7>all year we've seen gold rally with stocks. I think

0:17:18.280 --> 0:17:21.360
<v Speaker 7>a lot of that has to do with concern around valuations,

0:17:21.440 --> 0:17:24.480
<v Speaker 7>concern around debt, central banks, so on and so forth.

0:17:24.960 --> 0:17:27.520
<v Speaker 7>But typically you don't see as HI have a correlation

0:17:27.720 --> 0:17:31.360
<v Speaker 7>between gold and the stock market. But we're really interested

0:17:31.359 --> 0:17:34.080
<v Speaker 7>in seeing is next time there's a big pullback in stocks,

0:17:34.200 --> 0:17:37.000
<v Speaker 7>if there's also a pullback within gold.

0:17:37.160 --> 0:17:38.120
<v Speaker 6>Right, So we own.

0:17:37.960 --> 0:17:42.959
<v Speaker 7>It as a hedge one and then two obviously capital appreciation,

0:17:43.520 --> 0:17:45.800
<v Speaker 7>But if all of a sudden that head story falls apart,

0:17:45.840 --> 0:17:47.720
<v Speaker 7>we're really going to have to rethink our thesis on that.

0:17:47.920 --> 0:17:50.639
<v Speaker 2>Okay, Patrick, we'll leave it there. Always a pleasure, happy

0:17:50.680 --> 0:17:53.640
<v Speaker 2>thanksgiving to you, Patrick Kennedy, as founding partner at All

0:17:53.680 --> 0:17:56.719
<v Speaker 2>Source Investment Management, joining us here on the Daybreak as

0:17:56.760 --> 0:18:01.560
<v Speaker 2>your podcast. Thanks for listening to today's episode of the

0:18:01.560 --> 0:18:05.719
<v Speaker 2>Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at

0:18:05.720 --> 0:18:10.240
<v Speaker 2>the story shaping markets, finance, and geopolitics in the Asia Pacific.

0:18:10.440 --> 0:18:13.760
<v Speaker 2>You can find us on Apple, Spotify, the Bloomberg Podcast

0:18:13.800 --> 0:18:17.200
<v Speaker 2>YouTube channel, or anywhere else you listen. Join us again

0:18:17.200 --> 0:18:20.520
<v Speaker 2>tomorrow for insight on the market moves from Hong Kong

0:18:20.640 --> 0:18:25.040
<v Speaker 2>to Singapore and Australia. I'm Doug Chrisner, and this is

0:18:25.080 --> 0:18:25.600
<v Speaker 2>Bloomberg