Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Krisner.
Speaker 2: We had the S and P five hundred falling from
Speaker 2: a record high, and you can blame Walmart. The retailer
Speaker 2: issued a disappointing forecast for the full year, and banks
Speaker 2: got caught up in some of that selling, with JP
Speaker 2: Morgan Chase and Goldman Sachs each declining around four percent.
Speaker 2: In a moment or two, we'll hear from Vance Howard.
Speaker 2: He is the CEO at Howard Capital Management. But let's
Speaker 2: begin in Singapore. Joining me now our friend friend of
Speaker 2: the program, Bloomberg m Live strategist Mary Nicola. She joins
Speaker 2: us from our radio studio in the Lion City. Thank
Speaker 2: you for making time. I'm sure it's a busy day
Speaker 2: for you, particularly if you're writing about the Japanese yen.
Speaker 2: But before we get to the currency, I want to
Speaker 2: get to the CPI print core CPI in Japan rising
Speaker 2: at an annual rate of three point two percent in January.
Speaker 2: That's a little above forecast. Does it force the hand
Speaker 2: of the BOJ Do you think?
Speaker 1: Yeah? It just gives confidence to the BOJ to resume
Speaker 1: with tightening. So they've been talking for quite some time
Speaker 1: about being able to continue with tightening if they see
Speaker 1: some progress on inflation and if their forecasts come to fruition.
Speaker 1: Now we're seeing that happening. We're seeing that even if
Speaker 1: you look at PMIS this morning, they're still pretty robust,
Speaker 1: showing that the economy is doing well. Inflation's on the
Speaker 1: on the right trajectory. They're reaching their two percent goal,
Speaker 1: and their two percent target is more than well entrenched,
Speaker 1: and now they can start moving ahead with confidence on
Speaker 1: raising rates. So I think you'll start seeing that message
Speaker 1: really coming through from the boj and it already has,
Speaker 1: but it's going to just it just gives them more confidence.
Speaker 2: No doubt about it, and it's being reflected in the currency.
Speaker 2: I mean, we're on the strong side of one point
Speaker 2: fifty en versus the greenback.
Speaker 1: Absolutely, and I think that continues, and I think you
Speaker 1: see a much more pronounced strength of the en against
Speaker 1: the likes of the euro, because especially with the Euro,
Speaker 1: the interest rate differential is narrowing, and as long as
Speaker 1: that continues, there is going to be a lot of
Speaker 1: upside for the EN, especially against the Euro.
Speaker 2: When is the next BOJ meeting that you really think
Speaker 2: is live in terms of a rate hike.
Speaker 1: So March is completely is not being priced in by
Speaker 1: the traders, and I would agree because it looks like
Speaker 1: they're taking a more methodical and measured approach to hiking.
Speaker 1: But if the data continues the way it has been,
Speaker 1: I think that could make May very much a live meeting,
Speaker 1: so we could see if this progress continues, we could
Speaker 1: see some of these rate hikes coming through sooner rather
Speaker 1: than later.
Speaker 2: How much of the end strength can we chalk up
Speaker 2: to what we've been seeing play out in the US
Speaker 2: bond market.
Speaker 1: I mean, there's definitely a combination of the two, right,
Speaker 1: So obviously the lower yields helps the end, but of
Speaker 1: course what we're seeing from the Japan side is really
Speaker 1: helping as well. So it's a bit of a twofold
Speaker 1: situation for the end. And obviously the yields in the
Speaker 1: US drifting lower helps if but it's being accompanied by
Speaker 1: a much stronger inflation outlook at a much stronger GDP outlook,
Speaker 1: both of which cement the idea that the BOJ is
Speaker 1: going to continue hiking rates.
Speaker 2: So step back and take a look at what you're
Speaker 2: seeing across the region where you are, whether we're talking ausion,
Speaker 2: whether we're talking North Asia, where we're even talking about
Speaker 2: what's happening on the mainland in China. How unified is
Speaker 2: the main macro theme right now or is it not?
Speaker 2: Are we seeing kind of economies that are doing much
Speaker 2: better than others?
Speaker 1: I think it's more especially in the equity markets, it's
Speaker 1: very much based on what's happening domestically. So of course
Speaker 1: we're seeing the rise in the surgeon China and Hong
Speaker 1: Kong equities largely on the back of this AI frenzy,
Speaker 1: This robotics frenzy that's really coming through Deep Seak has
Speaker 1: really given it a push. Ali Baba's earnings overnight adds
Speaker 1: to the momentum as well, So there's a really good
Speaker 1: combination there. And then of course you had Jijinping embracing
Speaker 1: the business community in China. A lot of these just
Speaker 1: augment and and just solidify this rally, and of course
Speaker 1: you're going to need earnings, and earnings are absolutely crucial
Speaker 1: in terms of just showing that there's fundamental support behind this.
Speaker 1: So for China that's one story, but then you look
Speaker 1: at the rest of the region, there's still growth hasn't
Speaker 1: been great. You're seeing a lot of hiccups. Let's say,
Speaker 1: for example, in whether it's Korea and Indonesia, they're starting
Speaker 1: to stall. The central banks are looking to also, they've
Speaker 1: maintained an easing bias, but they're quite concerned about easing
Speaker 1: too aggressively because of the currency. So they're in this
Speaker 1: tricky situation of trying to manage the currency but also
Speaker 1: trying to manage growth. And until we get some clarity
Speaker 1: on where the trajectory of tariffs are going, I think
Speaker 1: they're going to be in that position for quite some time.
Speaker 2: Yeah, particularly, I mean we know the story on tariffs
Speaker 2: as it relates to China, but when you think of
Speaker 2: a place like South Korea or even Japan, I mean
Speaker 2: the risk that exporters would face under that situation.
Speaker 1: Yeah, absolutely. And a lot of these companies have the
Speaker 1: US as one of their big markets, and both the
Speaker 1: two countries you mentioned also have big deficits against the US.
Speaker 1: So they are clearly going to be in the limelight
Speaker 1: and in the target for the US administration if they
Speaker 1: have such big deficits. So I think they're still in
Speaker 1: a precarious situation. A lot of their leaders have called
Speaker 1: for them to be exempt from certain tariffs. Obviously, we
Speaker 1: haven't heard any feedback in terms of if they are,
Speaker 1: but at the same time theyre's still especially for someone
Speaker 1: like Korea. Korea is a small, open economy and they
Speaker 1: are going to be extremely vulnerable to some of these announcements.
Speaker 2: You mentioned a moment ago the story on Deep Seek
Speaker 2: and what it has done in terms of the equity market,
Speaker 2: not only on the mainland in China, but to some
Speaker 2: extent in Hong Kong as well here in the States.
Speaker 2: The NASDAK Golden Dragon China Index, which obviously is a
Speaker 2: measure of the ADRs those US listed stocks in Chinese firms,
Speaker 2: We're up about sixteen percent year to date in the
Speaker 2: NASDAK Golden Dragon China Index. Nasdaq Composite is only up
Speaker 2: three percent. I'm wondering whether or not the earnings that
Speaker 2: we're going to get next week from in Nvidia will
Speaker 2: do anything to the story on AI related tech in China.
Speaker 2: Is there a correlation there that we need to kind
Speaker 2: of be alert to. Well.
Speaker 1: I think what the Deep Seek and robotics frenzy has
Speaker 1: really shaken things up in the US to the core,
Speaker 1: showing that Chin can be a competitor in this space
Speaker 1: and now, and especially because US companies are spending so
Speaker 1: much money and they're questioning the valuations, especially when Deep
Speaker 1: Seek is doing it at a fraction of the cost,
Speaker 1: So why aren't the US companies doing something very similar?
Speaker 1: So I think what we're going to see is that
Speaker 1: if Nvidia needs to have blockbuster results to really drag
Speaker 1: the Nasdaq, hire not to call valuations into questions into question,
Speaker 1: because that's the key thing right now for the US
Speaker 1: is that valuations are still very frothy, and then especially
Speaker 1: if you compare them to China, valuations are still very cheap.
Speaker 1: And of course we've been in this environment where is
Speaker 1: China a value trapped for so long. But if earnings
Speaker 1: continue to show that we're seeing a real turn in China,
Speaker 1: then they could actually show and bring the US and
Speaker 1: give it a run for its money.
Speaker 2: So we had the ADRs in Ali Baba up about
Speaker 2: to eight in New York trading, obviously playing off the
Speaker 2: very strong results that we had for the latest quarter.
Speaker 2: What's the feeling about the Chinese consumer right now? If
Speaker 2: you look at the Ali Baba.
Speaker 1: Story, it's showing good signs. It's showing positive signs, but
Speaker 1: we still have to remember that there's a deflationary pattern
Speaker 1: and disinflation. If you look at Q four GDP, we
Speaker 1: still had a negative GDP deflator obviously impacting that deflation
Speaker 1: still persists in the economy. You're still seeing signs, especially
Speaker 1: in home prices, that they're still negative. So the consumer
Speaker 1: hasn't really made a strong recovery yet, and I think
Speaker 1: a lot of investors are going to be looking to
Speaker 1: the March NPC meeting to see what really is the
Speaker 1: government going to do to turn this around, because if
Speaker 1: you do have persistent deflation, that's still going to weigh
Speaker 1: on EPs growth.
Speaker 2: One of the things that we learned today that US
Speaker 2: Treasury Secretary Scott Bessant will be speaking with his Chinese
Speaker 2: counter part on Friday later today in the APAC region.
Speaker 2: One of the things that we learned in a conversation
Speaker 2: with the Treasury Secretary earlier is that he will be
Speaker 2: pushing China to do more to stimulate domestic demand. Certainly,
Speaker 2: that's one of the key concerns for anyone who's been
Speaker 2: watching the economy in China, and Mary, you mentioned stimulus.
Speaker 2: We've got the two Sessions meeting coming up in a
Speaker 2: few weeks, and I'm wondering whether or not the market
Speaker 2: is really putting a lot on the idea that we're
Speaker 2: going to get much more in the way of domestic stimulus.
Speaker 1: I mean, that's what investors are looking for. So I
Speaker 1: think that's going to be the key thing, because that's
Speaker 1: what's really dragging the Chinese economy down. We've seen in
Speaker 1: some of the monetary data that there's been a fiscal push,
Speaker 1: and the fiscal push is actually materializing, and domestic demand
Speaker 1: is still very weak if you look at the monetary
Speaker 1: data for January, so there's still a lot to be
Speaker 1: desired in terms of consumption and how consumption is unfolding,
Speaker 1: and that's still the key trigger. I mean, we've talked
Speaker 1: a few times about the Japanification of China, and of
Speaker 1: course a big part of that is that deflation component,
Speaker 1: and deflation is going to stay in that scenario, or
Speaker 1: the economy is going to stay in a deflationary scenario
Speaker 1: if you don't see a revival in consumption. So consumption
Speaker 1: is going to be absolutely critical for the NPC to
Speaker 1: really target and reinforce.
Speaker 2: Mary, thank you so much for joining us. It's always
Speaker 2: a pleasure. Bloomberg m Live strategist Mary Nicola there joining
Speaker 2: us from Singapore here on the Daybreak Asia podcast. Welcome
Speaker 2: back to the Daybreak Asia Podcast. I'm Doug Chrisner. So
Speaker 2: today the US equity market dropped from all time highs.
Speaker 2: That came after a disappointing forecast from Walmart, and then
Speaker 2: on the call with analysts, Walmart execs seem to acknowledge
Speaker 2: there are still quite a few uncertainties related to consumer
Speaker 2: behavior as well as global economic and geopolitical concerns. So
Speaker 2: the Walmart story only added to the concern about US
Speaker 2: economic growth following that disappointing read on retail sales in
Speaker 2: the States last week. Let's take a closer look now
Speaker 2: with our guest Vance Howard. He is the CEO and
Speaker 2: portfolio manager at Howard Capital Management. Thanks for making time
Speaker 2: to chat with his fans. Can you give me your
Speaker 2: read on the American consumer right now? How do you
Speaker 2: see things?
Speaker 3: I think things are very positive. I mean, even with
Speaker 3: the Walmart's news today, there's a lot of you know,
Speaker 3: tornadoes swirling around right now that you know, are causing
Speaker 3: a lot of anks for investors, and I think that's
Speaker 3: the reason you saw a little bit of a drop
Speaker 3: in Walmart, which is a very good company. I think
Speaker 3: with this six percent pullback, I think you've got a
Speaker 3: buying opportunity here. But you know, you've got sanctions that
Speaker 3: are starting to kick that have been implemented. I'm not
Speaker 3: sure we've seen the full effects of sanctions yet. We
Speaker 3: clearly haven't. Unemployment, you know, stable, but it's range bound.
Speaker 3: It's really not up or down, but it continues to
Speaker 3: go sideways. I think you should be bullish on this.
Speaker 3: You know, we've had a great start to January and
Speaker 3: even to the middle of February. The market's up nicely
Speaker 3: year to date, so I think there's really nothing to
Speaker 3: complain about. Just because you have a drop in one stock,
Speaker 3: it wouldn't be too concerned about it.
Speaker 2: But we also heard from Rivian, the automaker, talking about
Speaker 2: the risk of tariffs, the drag that that would create
Speaker 2: on its business. You're not concerned at all about tariff
Speaker 2: policy going forward.
Speaker 3: I think tariff policy is going to create volatility in
Speaker 3: the market. And you know, I'm an active trader, Doug.
Speaker 3: You know that you've known me for quite some time,
Speaker 3: so you know movement you know, creates opportunities for guys
Speaker 3: like me, and I think it creates opportunities for investors
Speaker 3: and traders to boot both folks. But one thing you
Speaker 3: need to look at, Doug, is you've got to look
Speaker 3: at the trend of the market. And you know, you've
Speaker 3: talked to me numerous times about the eight cm byline
Speaker 3: that is our proprietary trend indicator, and it's still positive.
Speaker 3: It's very positive actually, So any pullback we see as
Speaker 3: a buying opportunity until the trend changes. So you've got
Speaker 3: to get your head to what's actually happening in the market.
Speaker 3: And the market's looking pretty strong. It continues to move higher.
Speaker 3: You're up, you know what, two or three or four
Speaker 3: on the S and P year to date. That's an
Speaker 3: amazing number for the first six weeks. I think people
Speaker 3: should be incredibly happy.
Speaker 2: In terms of Fed policy, we heard from one FED
Speaker 2: president today indicating that maybe two rate cuts are still
Speaker 2: in the cards this year. Is that the way you
Speaker 2: see things.
Speaker 3: I don't know if I see two, but I definitely
Speaker 3: see one. You know, the Fed has been pretty clear
Speaker 3: that they're going to hold rates stable for a little
Speaker 3: bit longer, and I don't think that really hurts anything
Speaker 3: or affects anything. I think we'll see some pressure on
Speaker 3: the FED to make a move, probably to drop rates,
Speaker 3: because I think that's Trump. That's the way Trump would
Speaker 3: like to see interest rates go. I think that's the
Speaker 3: way we'd all like to see interest rates go. We
Speaker 3: would help mortgages, it would help the you know, the
Speaker 3: housing market, would you know, pop up a little bit,
Speaker 3: because we had a little bit of a drop in
Speaker 3: the housing market, so that would be beneficial. But I'm
Speaker 3: not too concerned about rates. I don't think that they're
Speaker 3: being too big of a drag right now. And you know,
Speaker 3: there's a lot of other issues out there that I
Speaker 3: think are causing some anks with investors, and I think
Speaker 3: over the next two three four months, we'll work our
Speaker 3: way through these and I think you'll probably see a
Speaker 3: pretty healthy market. Especially the last two quarters of twenty
Speaker 3: twenty five I think could be really dynamic. And one
Speaker 3: of the reasons for that, Doug, is the amount of
Speaker 3: cash that's on the sideline. With six point eight trillion
Speaker 3: dollars in money market, it's one of the largest cash
Speaker 3: build ups I've ever seen. In doing this for thirty
Speaker 3: five years.
Speaker 2: I have to ask you about gold, and maybe you're
Speaker 2: not a player in bullion, but we did hear from
Speaker 2: neumont A Mining after the bell. We're talking about a
Speaker 2: dollar forty per share that was thirty four cents above
Speaker 2: what the street was looking for. There has been so
Speaker 2: much positivity around gold, and I think part of that
Speaker 2: story is concerned about inflation. First of all, would you
Speaker 2: use gold as a hedge right now?
Speaker 3: I don't know if I'd use gold as a hedge.
Speaker 3: I think right now, like I said, the eight cm
Speaker 3: bylines positives stay long this market. I wouldn't be too
Speaker 3: worried about gold. I'll tell you, if you want to
Speaker 3: trade something that's somewhat of a hedge, look at bitcoin.
Speaker 3: Trade bitcoin. That's been a pretty decent hedge, and it's
Speaker 3: been a very active tradeable investment mechanism for people, especially
Speaker 3: since they came out with the ETF on bitcoin. But
Speaker 3: as far as go gos, you know, people the gold
Speaker 3: bugs always want to run those up, but you know
Speaker 3: they're often wrong. I'd be very cautious on gold. It's
Speaker 3: a hard commodity to trade.
Speaker 2: Mega cap stocks have been a big favorite for this
Speaker 2: market for quite some time, and I'm wondering whether or
Speaker 2: not you feel you've just got to be exposed to
Speaker 2: those big names.
Speaker 3: We own them, I mean everybody owns them, and yeah,
Speaker 3: you're right, you can't really be in this market without owning,
Speaker 3: you know, the Magnificent seven or at least pieces of them.
Speaker 3: But here's some good news though. Did you know that
Speaker 3: forty eight percent of the broader market is now outperforming
Speaker 3: the indexes? So that's a really positive sign that things
Speaker 3: are starting to move out a small caps are doing better,
Speaker 3: mid caps are doing better. You're seeing you're seeing names
Speaker 3: pop up on news channels like yours, Doug where that
Speaker 3: we didn't hear about a year ago or two years ago,
Speaker 3: that are making a lot of money and they're really
Speaker 3: producing some great returns and they're great producing some great products.
Speaker 2: Are you seeing any value in the bond market these days?
Speaker 3: Very little? And you know, if you're going to trade
Speaker 3: the bonds, I think you need to be looking at
Speaker 3: the convertible bond, something like a CWB. That's what the
Speaker 3: ETF for the convertible bonds, where we do on quite
Speaker 3: a bit of convertible bond right now. They've done well
Speaker 3: year to date. I would be more looking at the
Speaker 3: convertibles than I would in the ten or the twenty
Speaker 3: year treasuries.
Speaker 2: For sure, we had pretty impressive numbers from Ali Baba
Speaker 2: early today. It's going to be very interesting to see
Speaker 2: how these shares trade in Hong Kong. Do you want
Speaker 2: to be exposed to markets offshore right now, to companies
Speaker 2: like Ali Baba in China.
Speaker 3: I'm having so much fun with our domestic markets, Doug.
Speaker 3: I'm really not too very interested in going overseas right now.
Speaker 3: I think there's a lot of instability over there, a
Speaker 3: lot of questions that are going on Ukraine, Russia, You've
Speaker 3: got Europe that's a little bit I guess i'd say
Speaker 3: a little bit unsettled. It's some of the comments that
Speaker 3: Trump has made with Putin. So I think you're staying
Speaker 3: here in our domestic markets. I think he can make
Speaker 3: just as much money, if not more. And I think
Speaker 3: you've got a more stable in a more stable environment
Speaker 3: too to buy stocks and to own stocks in.
Speaker 2: It's interesting vance today. The price action led to a
Speaker 2: conversation around a possible pullback for the equity market. Now.
Speaker 2: We really haven't seen a meaningful correction for some time,
Speaker 2: have we. So I'm wondering in the short term whether
Speaker 2: the US equity market is a little vulnerable here. What
Speaker 2: do you think, Well, I.
Speaker 3: Think that we could be, but you've also you know,
Speaker 3: the queues broke out a little bit, the S and
Speaker 3: P broke out a little bit. If you're looking at
Speaker 3: the queues, it needs to break about about five point
Speaker 3: forty one on the queues for a solid breakout. But
Speaker 3: remember this, Doug is, don't ever short a dull market,
Speaker 3: and this is definitely the past two and a half
Speaker 3: months has been a dull market. The vix is dull.
Speaker 3: It's just been going sideways. I'd be really cautious on
Speaker 3: being too negative because if we do get a solid breakout,
Speaker 3: we get one piece of great news on inflation, or
Speaker 3: we get one piece of great news that you know,
Speaker 3: something's working with the Trump administration with their deregulation that
Speaker 3: they're implementing, you could see the market really pop. And
Speaker 3: I think if you see it pop, I think you're
Speaker 3: going to see a lot of shorters get hurt, and
Speaker 3: I think that they're going to be scrambling to cover,
Speaker 3: which will push the market even higher.
Speaker 2: Interesting point, Vance, thank you so much for making time
Speaker 2: for US. Vance Howard There. He is the CEO also
Speaker 2: portfolio manager at Howard Capital Management. Joining us here on
Speaker 2: the Daybreak Asia Podcast. Thanks for listening to today's episode
Speaker 2: of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we
Speaker 2: look at the story shaping markets, finance, and geopolitics in
Speaker 2: the Asia Pacific. You can find us on Apple, Spotify,
Speaker 2: the Bloomberg Podcast YouTube channel, or anywhere else you listen.
Speaker 2: Join us again tomorrow for insight on the market moves
Speaker 2: from Hong Kong to Singapore and Australia. I'm Doug Prisoner
Speaker 2: and this is Bloomberg