WEBVTT - Tracking the Yen's Impact on BOJ Policy

0:00:00.080 --> 0:00:07.040
<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

0:00:10.760 --> 0:00:14.240
<v Speaker 2>Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Krisner.

0:00:14.680 --> 0:00:16.759
<v Speaker 2>We had the S and P five hundred falling from

0:00:16.760 --> 0:00:19.880
<v Speaker 2>a record high, and you can blame Walmart. The retailer

0:00:19.960 --> 0:00:23.520
<v Speaker 2>issued a disappointing forecast for the full year, and banks

0:00:23.680 --> 0:00:26.040
<v Speaker 2>got caught up in some of that selling, with JP

0:00:26.160 --> 0:00:29.600
<v Speaker 2>Morgan Chase and Goldman Sachs each declining around four percent.

0:00:29.840 --> 0:00:32.240
<v Speaker 2>In a moment or two, we'll hear from Vance Howard.

0:00:32.280 --> 0:00:35.800
<v Speaker 2>He is the CEO at Howard Capital Management. But let's

0:00:35.840 --> 0:00:39.559
<v Speaker 2>begin in Singapore. Joining me now our friend friend of

0:00:39.600 --> 0:00:43.720
<v Speaker 2>the program, Bloomberg m Live strategist Mary Nicola. She joins

0:00:43.760 --> 0:00:46.720
<v Speaker 2>us from our radio studio in the Lion City. Thank

0:00:46.760 --> 0:00:48.600
<v Speaker 2>you for making time. I'm sure it's a busy day

0:00:48.640 --> 0:00:52.000
<v Speaker 2>for you, particularly if you're writing about the Japanese yen.

0:00:52.400 --> 0:00:54.960
<v Speaker 2>But before we get to the currency, I want to

0:00:55.000 --> 0:00:59.080
<v Speaker 2>get to the CPI print core CPI in Japan rising

0:00:59.120 --> 0:01:02.480
<v Speaker 2>at an annual rate of three point two percent in January.

0:01:02.640 --> 0:01:05.440
<v Speaker 2>That's a little above forecast. Does it force the hand

0:01:05.440 --> 0:01:06.640
<v Speaker 2>of the BOJ Do you think?

0:01:07.040 --> 0:01:10.240
<v Speaker 1>Yeah? It just gives confidence to the BOJ to resume

0:01:10.280 --> 0:01:13.840
<v Speaker 1>with tightening. So they've been talking for quite some time

0:01:14.000 --> 0:01:18.240
<v Speaker 1>about being able to continue with tightening if they see

0:01:18.280 --> 0:01:22.800
<v Speaker 1>some progress on inflation and if their forecasts come to fruition.

0:01:23.280 --> 0:01:26.959
<v Speaker 1>Now we're seeing that happening. We're seeing that even if

0:01:26.959 --> 0:01:29.920
<v Speaker 1>you look at PMIS this morning, they're still pretty robust,

0:01:30.120 --> 0:01:33.200
<v Speaker 1>showing that the economy is doing well. Inflation's on the

0:01:33.400 --> 0:01:37.119
<v Speaker 1>on the right trajectory. They're reaching their two percent goal,

0:01:37.200 --> 0:01:41.200
<v Speaker 1>and their two percent target is more than well entrenched,

0:01:41.800 --> 0:01:46.840
<v Speaker 1>and now they can start moving ahead with confidence on

0:01:47.840 --> 0:01:51.080
<v Speaker 1>raising rates. So I think you'll start seeing that message

0:01:51.120 --> 0:01:55.400
<v Speaker 1>really coming through from the boj and it already has,

0:01:55.440 --> 0:01:58.640
<v Speaker 1>but it's going to just it just gives them more confidence.

0:01:58.160 --> 0:02:00.720
<v Speaker 2>No doubt about it, and it's being reflected in the currency.

0:02:00.800 --> 0:02:02.720
<v Speaker 2>I mean, we're on the strong side of one point

0:02:02.720 --> 0:02:05.200
<v Speaker 2>fifty en versus the greenback.

0:02:05.240 --> 0:02:07.800
<v Speaker 1>Absolutely, and I think that continues, and I think you

0:02:07.920 --> 0:02:12.880
<v Speaker 1>see a much more pronounced strength of the en against

0:02:12.880 --> 0:02:15.560
<v Speaker 1>the likes of the euro, because especially with the Euro,

0:02:15.720 --> 0:02:20.320
<v Speaker 1>the interest rate differential is narrowing, and as long as

0:02:20.600 --> 0:02:23.200
<v Speaker 1>that continues, there is going to be a lot of

0:02:23.400 --> 0:02:25.760
<v Speaker 1>upside for the EN, especially against the Euro.

0:02:25.919 --> 0:02:28.680
<v Speaker 2>When is the next BOJ meeting that you really think

0:02:28.800 --> 0:02:30.639
<v Speaker 2>is live in terms of a rate hike.

0:02:30.880 --> 0:02:33.960
<v Speaker 1>So March is completely is not being priced in by

0:02:34.000 --> 0:02:36.000
<v Speaker 1>the traders, and I would agree because it looks like

0:02:36.040 --> 0:02:39.120
<v Speaker 1>they're taking a more methodical and measured approach to hiking.

0:02:39.639 --> 0:02:42.720
<v Speaker 1>But if the data continues the way it has been,

0:02:42.960 --> 0:02:46.080
<v Speaker 1>I think that could make May very much a live meeting,

0:02:46.960 --> 0:02:49.880
<v Speaker 1>so we could see if this progress continues, we could

0:02:49.960 --> 0:02:53.040
<v Speaker 1>see some of these rate hikes coming through sooner rather

0:02:53.080 --> 0:02:53.520
<v Speaker 1>than later.

0:02:53.840 --> 0:02:56.720
<v Speaker 2>How much of the end strength can we chalk up

0:02:56.760 --> 0:02:59.040
<v Speaker 2>to what we've been seeing play out in the US

0:02:59.120 --> 0:02:59.840
<v Speaker 2>bond market.

0:03:00.280 --> 0:03:02.480
<v Speaker 1>I mean, there's definitely a combination of the two, right,

0:03:02.560 --> 0:03:05.400
<v Speaker 1>So obviously the lower yields helps the end, but of

0:03:05.440 --> 0:03:08.799
<v Speaker 1>course what we're seeing from the Japan side is really

0:03:08.840 --> 0:03:11.800
<v Speaker 1>helping as well. So it's a bit of a twofold

0:03:12.240 --> 0:03:15.720
<v Speaker 1>situation for the end. And obviously the yields in the

0:03:15.800 --> 0:03:21.080
<v Speaker 1>US drifting lower helps if but it's being accompanied by

0:03:21.480 --> 0:03:26.560
<v Speaker 1>a much stronger inflation outlook at a much stronger GDP outlook,

0:03:26.880 --> 0:03:30.120
<v Speaker 1>both of which cement the idea that the BOJ is

0:03:30.120 --> 0:03:31.440
<v Speaker 1>going to continue hiking rates.

0:03:31.720 --> 0:03:33.680
<v Speaker 2>So step back and take a look at what you're

0:03:33.680 --> 0:03:37.080
<v Speaker 2>seeing across the region where you are, whether we're talking ausion,

0:03:37.560 --> 0:03:40.560
<v Speaker 2>whether we're talking North Asia, where we're even talking about

0:03:40.560 --> 0:03:44.760
<v Speaker 2>what's happening on the mainland in China. How unified is

0:03:44.800 --> 0:03:47.880
<v Speaker 2>the main macro theme right now or is it not?

0:03:48.160 --> 0:03:51.119
<v Speaker 2>Are we seeing kind of economies that are doing much

0:03:51.160 --> 0:03:51.920
<v Speaker 2>better than others?

0:03:52.360 --> 0:03:55.240
<v Speaker 1>I think it's more especially in the equity markets, it's

0:03:55.480 --> 0:03:59.800
<v Speaker 1>very much based on what's happening domestically. So of course

0:03:59.800 --> 0:04:03.440
<v Speaker 1>we're seeing the rise in the surgeon China and Hong

0:04:03.520 --> 0:04:07.040
<v Speaker 1>Kong equities largely on the back of this AI frenzy,

0:04:07.400 --> 0:04:10.800
<v Speaker 1>This robotics frenzy that's really coming through Deep Seak has

0:04:10.960 --> 0:04:14.960
<v Speaker 1>really given it a push. Ali Baba's earnings overnight adds

0:04:15.000 --> 0:04:18.040
<v Speaker 1>to the momentum as well, So there's a really good

0:04:18.080 --> 0:04:21.479
<v Speaker 1>combination there. And then of course you had Jijinping embracing

0:04:21.560 --> 0:04:25.719
<v Speaker 1>the business community in China. A lot of these just

0:04:26.000 --> 0:04:30.239
<v Speaker 1>augment and and just solidify this rally, and of course

0:04:30.279 --> 0:04:32.960
<v Speaker 1>you're going to need earnings, and earnings are absolutely crucial

0:04:33.040 --> 0:04:36.720
<v Speaker 1>in terms of just showing that there's fundamental support behind this.

0:04:37.720 --> 0:04:40.160
<v Speaker 1>So for China that's one story, but then you look

0:04:40.160 --> 0:04:43.040
<v Speaker 1>at the rest of the region, there's still growth hasn't

0:04:43.080 --> 0:04:46.240
<v Speaker 1>been great. You're seeing a lot of hiccups. Let's say,

0:04:46.240 --> 0:04:50.800
<v Speaker 1>for example, in whether it's Korea and Indonesia, they're starting

0:04:50.839 --> 0:04:55.520
<v Speaker 1>to stall. The central banks are looking to also, they've

0:04:55.600 --> 0:04:58.920
<v Speaker 1>maintained an easing bias, but they're quite concerned about easing

0:04:58.960 --> 0:05:02.240
<v Speaker 1>too aggressively because of the currency. So they're in this

0:05:02.480 --> 0:05:06.440
<v Speaker 1>tricky situation of trying to manage the currency but also

0:05:06.640 --> 0:05:10.160
<v Speaker 1>trying to manage growth. And until we get some clarity

0:05:10.240 --> 0:05:14.000
<v Speaker 1>on where the trajectory of tariffs are going, I think

0:05:14.000 --> 0:05:15.920
<v Speaker 1>they're going to be in that position for quite some time.

0:05:16.040 --> 0:05:18.719
<v Speaker 2>Yeah, particularly, I mean we know the story on tariffs

0:05:18.760 --> 0:05:20.520
<v Speaker 2>as it relates to China, but when you think of

0:05:20.560 --> 0:05:23.480
<v Speaker 2>a place like South Korea or even Japan, I mean

0:05:23.520 --> 0:05:26.400
<v Speaker 2>the risk that exporters would face under that situation.

0:05:26.839 --> 0:05:31.039
<v Speaker 1>Yeah, absolutely. And a lot of these companies have the

0:05:31.160 --> 0:05:34.520
<v Speaker 1>US as one of their big markets, and both the

0:05:34.520 --> 0:05:37.760
<v Speaker 1>two countries you mentioned also have big deficits against the US.

0:05:37.800 --> 0:05:40.480
<v Speaker 1>So they are clearly going to be in the limelight

0:05:40.520 --> 0:05:44.200
<v Speaker 1>and in the target for the US administration if they

0:05:44.240 --> 0:05:47.680
<v Speaker 1>have such big deficits. So I think they're still in

0:05:47.680 --> 0:05:51.120
<v Speaker 1>a precarious situation. A lot of their leaders have called

0:05:51.160 --> 0:05:55.000
<v Speaker 1>for them to be exempt from certain tariffs. Obviously, we

0:05:55.080 --> 0:05:57.760
<v Speaker 1>haven't heard any feedback in terms of if they are,

0:05:58.720 --> 0:06:02.080
<v Speaker 1>but at the same time theyre's still especially for someone

0:06:02.120 --> 0:06:05.160
<v Speaker 1>like Korea. Korea is a small, open economy and they

0:06:05.200 --> 0:06:09.440
<v Speaker 1>are going to be extremely vulnerable to some of these announcements.

0:06:09.520 --> 0:06:11.719
<v Speaker 2>You mentioned a moment ago the story on Deep Seek

0:06:11.720 --> 0:06:15.000
<v Speaker 2>and what it has done in terms of the equity market,

0:06:15.400 --> 0:06:17.440
<v Speaker 2>not only on the mainland in China, but to some

0:06:17.560 --> 0:06:20.560
<v Speaker 2>extent in Hong Kong as well here in the States.

0:06:20.600 --> 0:06:23.960
<v Speaker 2>The NASDAK Golden Dragon China Index, which obviously is a

0:06:24.000 --> 0:06:29.719
<v Speaker 2>measure of the ADRs those US listed stocks in Chinese firms,

0:06:30.400 --> 0:06:32.840
<v Speaker 2>We're up about sixteen percent year to date in the

0:06:32.920 --> 0:06:36.840
<v Speaker 2>NASDAK Golden Dragon China Index. Nasdaq Composite is only up

0:06:36.960 --> 0:06:40.760
<v Speaker 2>three percent. I'm wondering whether or not the earnings that

0:06:40.800 --> 0:06:43.320
<v Speaker 2>we're going to get next week from in Nvidia will

0:06:43.360 --> 0:06:47.640
<v Speaker 2>do anything to the story on AI related tech in China.

0:06:47.800 --> 0:06:50.040
<v Speaker 2>Is there a correlation there that we need to kind

0:06:50.080 --> 0:06:51.719
<v Speaker 2>of be alert to. Well.

0:06:51.760 --> 0:06:56.000
<v Speaker 1>I think what the Deep Seek and robotics frenzy has

0:06:56.080 --> 0:06:58.920
<v Speaker 1>really shaken things up in the US to the core,

0:06:59.279 --> 0:07:02.120
<v Speaker 1>showing that Chin can be a competitor in this space

0:07:02.760 --> 0:07:06.039
<v Speaker 1>and now, and especially because US companies are spending so

0:07:06.240 --> 0:07:10.080
<v Speaker 1>much money and they're questioning the valuations, especially when Deep

0:07:10.120 --> 0:07:12.000
<v Speaker 1>Seek is doing it at a fraction of the cost,

0:07:12.400 --> 0:07:16.920
<v Speaker 1>So why aren't the US companies doing something very similar?

0:07:17.320 --> 0:07:19.280
<v Speaker 1>So I think what we're going to see is that

0:07:19.360 --> 0:07:24.200
<v Speaker 1>if Nvidia needs to have blockbuster results to really drag

0:07:25.000 --> 0:07:28.960
<v Speaker 1>the Nasdaq, hire not to call valuations into questions into question,

0:07:29.040 --> 0:07:31.280
<v Speaker 1>because that's the key thing right now for the US

0:07:31.640 --> 0:07:35.040
<v Speaker 1>is that valuations are still very frothy, and then especially

0:07:35.080 --> 0:07:38.720
<v Speaker 1>if you compare them to China, valuations are still very cheap.

0:07:38.960 --> 0:07:42.080
<v Speaker 1>And of course we've been in this environment where is

0:07:42.200 --> 0:07:45.840
<v Speaker 1>China a value trapped for so long. But if earnings

0:07:45.960 --> 0:07:50.720
<v Speaker 1>continue to show that we're seeing a real turn in China,

0:07:51.040 --> 0:07:55.080
<v Speaker 1>then they could actually show and bring the US and

0:07:55.120 --> 0:07:56.320
<v Speaker 1>give it a run for its money.

0:07:56.400 --> 0:07:59.480
<v Speaker 2>So we had the ADRs in Ali Baba up about

0:07:59.520 --> 0:08:02.480
<v Speaker 2>to eight in New York trading, obviously playing off the

0:08:02.600 --> 0:08:05.559
<v Speaker 2>very strong results that we had for the latest quarter.

0:08:05.600 --> 0:08:09.000
<v Speaker 2>What's the feeling about the Chinese consumer right now? If

0:08:09.040 --> 0:08:10.440
<v Speaker 2>you look at the Ali Baba.

0:08:10.200 --> 0:08:13.760
<v Speaker 1>Story, it's showing good signs. It's showing positive signs, but

0:08:13.800 --> 0:08:18.000
<v Speaker 1>we still have to remember that there's a deflationary pattern

0:08:18.080 --> 0:08:21.520
<v Speaker 1>and disinflation. If you look at Q four GDP, we

0:08:21.600 --> 0:08:26.040
<v Speaker 1>still had a negative GDP deflator obviously impacting that deflation

0:08:26.200 --> 0:08:29.800
<v Speaker 1>still persists in the economy. You're still seeing signs, especially

0:08:29.880 --> 0:08:33.880
<v Speaker 1>in home prices, that they're still negative. So the consumer

0:08:33.960 --> 0:08:37.880
<v Speaker 1>hasn't really made a strong recovery yet, and I think

0:08:37.920 --> 0:08:41.000
<v Speaker 1>a lot of investors are going to be looking to

0:08:41.320 --> 0:08:44.160
<v Speaker 1>the March NPC meeting to see what really is the

0:08:44.200 --> 0:08:46.880
<v Speaker 1>government going to do to turn this around, because if

0:08:46.920 --> 0:08:51.240
<v Speaker 1>you do have persistent deflation, that's still going to weigh

0:08:51.640 --> 0:08:53.280
<v Speaker 1>on EPs growth.

0:08:53.480 --> 0:08:55.480
<v Speaker 2>One of the things that we learned today that US

0:08:55.520 --> 0:08:59.680
<v Speaker 2>Treasury Secretary Scott Bessant will be speaking with his Chinese

0:08:59.679 --> 0:09:04.240
<v Speaker 2>counter part on Friday later today in the APAC region.

0:09:04.559 --> 0:09:06.920
<v Speaker 2>One of the things that we learned in a conversation

0:09:07.120 --> 0:09:10.600
<v Speaker 2>with the Treasury Secretary earlier is that he will be

0:09:10.640 --> 0:09:14.880
<v Speaker 2>pushing China to do more to stimulate domestic demand. Certainly,

0:09:15.440 --> 0:09:18.000
<v Speaker 2>that's one of the key concerns for anyone who's been

0:09:18.040 --> 0:09:22.400
<v Speaker 2>watching the economy in China, and Mary, you mentioned stimulus.

0:09:22.400 --> 0:09:25.040
<v Speaker 2>We've got the two Sessions meeting coming up in a

0:09:25.040 --> 0:09:28.200
<v Speaker 2>few weeks, and I'm wondering whether or not the market

0:09:28.240 --> 0:09:30.679
<v Speaker 2>is really putting a lot on the idea that we're

0:09:30.720 --> 0:09:33.359
<v Speaker 2>going to get much more in the way of domestic stimulus.

0:09:33.679 --> 0:09:36.439
<v Speaker 1>I mean, that's what investors are looking for. So I

0:09:36.520 --> 0:09:38.400
<v Speaker 1>think that's going to be the key thing, because that's

0:09:38.400 --> 0:09:42.719
<v Speaker 1>what's really dragging the Chinese economy down. We've seen in

0:09:42.840 --> 0:09:46.840
<v Speaker 1>some of the monetary data that there's been a fiscal push,

0:09:47.080 --> 0:09:50.960
<v Speaker 1>and the fiscal push is actually materializing, and domestic demand

0:09:51.000 --> 0:09:52.960
<v Speaker 1>is still very weak if you look at the monetary

0:09:53.000 --> 0:09:57.520
<v Speaker 1>data for January, so there's still a lot to be

0:09:57.760 --> 0:10:01.720
<v Speaker 1>desired in terms of consumption and how consumption is unfolding,

0:10:02.760 --> 0:10:06.400
<v Speaker 1>and that's still the key trigger. I mean, we've talked

0:10:06.440 --> 0:10:10.240
<v Speaker 1>a few times about the Japanification of China, and of

0:10:10.320 --> 0:10:13.359
<v Speaker 1>course a big part of that is that deflation component,

0:10:13.800 --> 0:10:17.599
<v Speaker 1>and deflation is going to stay in that scenario, or

0:10:17.840 --> 0:10:20.120
<v Speaker 1>the economy is going to stay in a deflationary scenario

0:10:20.480 --> 0:10:23.960
<v Speaker 1>if you don't see a revival in consumption. So consumption

0:10:24.040 --> 0:10:27.480
<v Speaker 1>is going to be absolutely critical for the NPC to

0:10:27.600 --> 0:10:29.160
<v Speaker 1>really target and reinforce.

0:10:29.520 --> 0:10:31.640
<v Speaker 2>Mary, thank you so much for joining us. It's always

0:10:31.640 --> 0:10:35.319
<v Speaker 2>a pleasure. Bloomberg m Live strategist Mary Nicola there joining

0:10:35.400 --> 0:10:45.959
<v Speaker 2>us from Singapore here on the Daybreak Asia podcast. Welcome

0:10:45.960 --> 0:10:49.280
<v Speaker 2>back to the Daybreak Asia Podcast. I'm Doug Chrisner. So

0:10:49.320 --> 0:10:52.240
<v Speaker 2>today the US equity market dropped from all time highs.

0:10:52.360 --> 0:10:56.079
<v Speaker 2>That came after a disappointing forecast from Walmart, and then

0:10:56.120 --> 0:10:59.199
<v Speaker 2>on the call with analysts, Walmart execs seem to acknowledge

0:10:59.200 --> 0:11:02.760
<v Speaker 2>there are still quite a few uncertainties related to consumer

0:11:02.800 --> 0:11:07.680
<v Speaker 2>behavior as well as global economic and geopolitical concerns. So

0:11:07.800 --> 0:11:11.200
<v Speaker 2>the Walmart story only added to the concern about US

0:11:11.320 --> 0:11:15.400
<v Speaker 2>economic growth following that disappointing read on retail sales in

0:11:15.440 --> 0:11:17.719
<v Speaker 2>the States last week. Let's take a closer look now

0:11:17.760 --> 0:11:20.960
<v Speaker 2>with our guest Vance Howard. He is the CEO and

0:11:21.080 --> 0:11:24.800
<v Speaker 2>portfolio manager at Howard Capital Management. Thanks for making time

0:11:24.840 --> 0:11:26.719
<v Speaker 2>to chat with his fans. Can you give me your

0:11:26.760 --> 0:11:29.720
<v Speaker 2>read on the American consumer right now? How do you

0:11:29.840 --> 0:11:30.400
<v Speaker 2>see things?

0:11:30.960 --> 0:11:33.560
<v Speaker 3>I think things are very positive. I mean, even with

0:11:33.600 --> 0:11:35.920
<v Speaker 3>the Walmart's news today, there's a lot of you know,

0:11:36.000 --> 0:11:38.400
<v Speaker 3>tornadoes swirling around right now that you know, are causing

0:11:38.400 --> 0:11:40.040
<v Speaker 3>a lot of anks for investors, and I think that's

0:11:40.080 --> 0:11:41.560
<v Speaker 3>the reason you saw a little bit of a drop

0:11:41.600 --> 0:11:44.040
<v Speaker 3>in Walmart, which is a very good company. I think

0:11:44.080 --> 0:11:46.120
<v Speaker 3>with this six percent pullback, I think you've got a

0:11:46.120 --> 0:11:48.760
<v Speaker 3>buying opportunity here. But you know, you've got sanctions that

0:11:48.800 --> 0:11:51.040
<v Speaker 3>are starting to kick that have been implemented. I'm not

0:11:51.040 --> 0:11:53.200
<v Speaker 3>sure we've seen the full effects of sanctions yet. We

0:11:53.240 --> 0:11:57.400
<v Speaker 3>clearly haven't. Unemployment, you know, stable, but it's range bound.

0:11:57.400 --> 0:11:59.120
<v Speaker 3>It's really not up or down, but it continues to

0:11:59.160 --> 0:12:01.760
<v Speaker 3>go sideways. I think you should be bullish on this.

0:12:01.840 --> 0:12:03.760
<v Speaker 3>You know, we've had a great start to January and

0:12:03.800 --> 0:12:06.080
<v Speaker 3>even to the middle of February. The market's up nicely

0:12:06.160 --> 0:12:08.120
<v Speaker 3>year to date, so I think there's really nothing to

0:12:08.120 --> 0:12:10.360
<v Speaker 3>complain about. Just because you have a drop in one stock,

0:12:11.200 --> 0:12:12.560
<v Speaker 3>it wouldn't be too concerned about it.

0:12:12.600 --> 0:12:16.000
<v Speaker 2>But we also heard from Rivian, the automaker, talking about

0:12:16.360 --> 0:12:19.040
<v Speaker 2>the risk of tariffs, the drag that that would create

0:12:19.080 --> 0:12:22.240
<v Speaker 2>on its business. You're not concerned at all about tariff

0:12:22.240 --> 0:12:23.280
<v Speaker 2>policy going forward.

0:12:23.679 --> 0:12:25.760
<v Speaker 3>I think tariff policy is going to create volatility in

0:12:25.800 --> 0:12:27.560
<v Speaker 3>the market. And you know, I'm an active trader, Doug.

0:12:27.600 --> 0:12:29.120
<v Speaker 3>You know that you've known me for quite some time,

0:12:29.160 --> 0:12:31.880
<v Speaker 3>so you know movement you know, creates opportunities for guys

0:12:31.960 --> 0:12:34.959
<v Speaker 3>like me, and I think it creates opportunities for investors

0:12:34.960 --> 0:12:38.680
<v Speaker 3>and traders to boot both folks. But one thing you

0:12:38.679 --> 0:12:40.000
<v Speaker 3>need to look at, Doug, is you've got to look

0:12:40.000 --> 0:12:41.480
<v Speaker 3>at the trend of the market. And you know, you've

0:12:41.480 --> 0:12:43.920
<v Speaker 3>talked to me numerous times about the eight cm byline

0:12:44.000 --> 0:12:46.920
<v Speaker 3>that is our proprietary trend indicator, and it's still positive.

0:12:46.920 --> 0:12:49.960
<v Speaker 3>It's very positive actually, So any pullback we see as

0:12:49.960 --> 0:12:52.520
<v Speaker 3>a buying opportunity until the trend changes. So you've got

0:12:52.559 --> 0:12:55.120
<v Speaker 3>to get your head to what's actually happening in the market.

0:12:55.360 --> 0:12:58.120
<v Speaker 3>And the market's looking pretty strong. It continues to move higher.

0:12:58.120 --> 0:12:59.839
<v Speaker 3>You're up, you know what, two or three or four

0:13:00.280 --> 0:13:01.760
<v Speaker 3>on the S and P year to date. That's an

0:13:01.800 --> 0:13:04.240
<v Speaker 3>amazing number for the first six weeks. I think people

0:13:04.240 --> 0:13:05.440
<v Speaker 3>should be incredibly happy.

0:13:05.640 --> 0:13:08.200
<v Speaker 2>In terms of Fed policy, we heard from one FED

0:13:08.280 --> 0:13:11.959
<v Speaker 2>president today indicating that maybe two rate cuts are still

0:13:12.000 --> 0:13:13.960
<v Speaker 2>in the cards this year. Is that the way you

0:13:14.000 --> 0:13:14.520
<v Speaker 2>see things.

0:13:15.080 --> 0:13:16.679
<v Speaker 3>I don't know if I see two, but I definitely

0:13:16.679 --> 0:13:18.360
<v Speaker 3>see one. You know, the Fed has been pretty clear

0:13:18.400 --> 0:13:20.200
<v Speaker 3>that they're going to hold rates stable for a little

0:13:20.200 --> 0:13:22.720
<v Speaker 3>bit longer, and I don't think that really hurts anything

0:13:22.800 --> 0:13:25.880
<v Speaker 3>or affects anything. I think we'll see some pressure on

0:13:25.920 --> 0:13:27.719
<v Speaker 3>the FED to make a move, probably to drop rates,

0:13:27.760 --> 0:13:30.120
<v Speaker 3>because I think that's Trump. That's the way Trump would

0:13:30.160 --> 0:13:32.160
<v Speaker 3>like to see interest rates go. I think that's the

0:13:32.160 --> 0:13:33.800
<v Speaker 3>way we'd all like to see interest rates go. We

0:13:33.800 --> 0:13:36.160
<v Speaker 3>would help mortgages, it would help the you know, the

0:13:36.200 --> 0:13:38.000
<v Speaker 3>housing market, would you know, pop up a little bit,

0:13:38.000 --> 0:13:39.240
<v Speaker 3>because we had a little bit of a drop in

0:13:39.280 --> 0:13:41.920
<v Speaker 3>the housing market, so that would be beneficial. But I'm

0:13:41.920 --> 0:13:44.199
<v Speaker 3>not too concerned about rates. I don't think that they're

0:13:44.480 --> 0:13:47.200
<v Speaker 3>being too big of a drag right now. And you know,

0:13:47.240 --> 0:13:48.880
<v Speaker 3>there's a lot of other issues out there that I

0:13:48.880 --> 0:13:51.560
<v Speaker 3>think are causing some anks with investors, and I think

0:13:51.600 --> 0:13:53.520
<v Speaker 3>over the next two three four months, we'll work our

0:13:53.559 --> 0:13:55.360
<v Speaker 3>way through these and I think you'll probably see a

0:13:55.440 --> 0:13:58.319
<v Speaker 3>pretty healthy market. Especially the last two quarters of twenty

0:13:58.360 --> 0:14:00.760
<v Speaker 3>twenty five I think could be really dynamic. And one

0:14:00.800 --> 0:14:02.520
<v Speaker 3>of the reasons for that, Doug, is the amount of

0:14:02.520 --> 0:14:05.760
<v Speaker 3>cash that's on the sideline. With six point eight trillion

0:14:05.800 --> 0:14:08.280
<v Speaker 3>dollars in money market, it's one of the largest cash

0:14:08.280 --> 0:14:10.640
<v Speaker 3>build ups I've ever seen. In doing this for thirty

0:14:10.640 --> 0:14:11.880
<v Speaker 3>five years.

0:14:11.720 --> 0:14:14.320
<v Speaker 2>I have to ask you about gold, and maybe you're

0:14:14.320 --> 0:14:16.839
<v Speaker 2>not a player in bullion, but we did hear from

0:14:16.880 --> 0:14:20.000
<v Speaker 2>neumont A Mining after the bell. We're talking about a

0:14:20.080 --> 0:14:22.880
<v Speaker 2>dollar forty per share that was thirty four cents above

0:14:23.080 --> 0:14:25.520
<v Speaker 2>what the street was looking for. There has been so

0:14:25.640 --> 0:14:28.120
<v Speaker 2>much positivity around gold, and I think part of that

0:14:28.200 --> 0:14:32.080
<v Speaker 2>story is concerned about inflation. First of all, would you

0:14:32.280 --> 0:14:34.320
<v Speaker 2>use gold as a hedge right now?

0:14:35.000 --> 0:14:36.400
<v Speaker 3>I don't know if I'd use gold as a hedge.

0:14:36.440 --> 0:14:37.960
<v Speaker 3>I think right now, like I said, the eight cm

0:14:38.000 --> 0:14:40.520
<v Speaker 3>bylines positives stay long this market. I wouldn't be too

0:14:40.560 --> 0:14:42.400
<v Speaker 3>worried about gold. I'll tell you, if you want to

0:14:42.440 --> 0:14:44.800
<v Speaker 3>trade something that's somewhat of a hedge, look at bitcoin.

0:14:44.880 --> 0:14:47.520
<v Speaker 3>Trade bitcoin. That's been a pretty decent hedge, and it's

0:14:47.560 --> 0:14:51.440
<v Speaker 3>been a very active tradeable investment mechanism for people, especially

0:14:51.480 --> 0:14:54.600
<v Speaker 3>since they came out with the ETF on bitcoin. But

0:14:54.680 --> 0:14:56.440
<v Speaker 3>as far as go gos, you know, people the gold

0:14:56.480 --> 0:14:58.800
<v Speaker 3>bugs always want to run those up, but you know

0:14:58.800 --> 0:15:01.600
<v Speaker 3>they're often wrong. I'd be very cautious on gold. It's

0:15:01.600 --> 0:15:03.000
<v Speaker 3>a hard commodity to trade.

0:15:03.360 --> 0:15:05.720
<v Speaker 2>Mega cap stocks have been a big favorite for this

0:15:05.800 --> 0:15:08.360
<v Speaker 2>market for quite some time, and I'm wondering whether or

0:15:08.400 --> 0:15:11.120
<v Speaker 2>not you feel you've just got to be exposed to

0:15:11.160 --> 0:15:12.040
<v Speaker 2>those big names.

0:15:13.080 --> 0:15:16.280
<v Speaker 3>We own them, I mean everybody owns them, and yeah,

0:15:16.280 --> 0:15:18.400
<v Speaker 3>you're right, you can't really be in this market without owning,

0:15:18.480 --> 0:15:20.560
<v Speaker 3>you know, the Magnificent seven or at least pieces of them.

0:15:20.600 --> 0:15:22.600
<v Speaker 3>But here's some good news though. Did you know that

0:15:22.640 --> 0:15:27.000
<v Speaker 3>forty eight percent of the broader market is now outperforming

0:15:27.080 --> 0:15:30.200
<v Speaker 3>the indexes? So that's a really positive sign that things

0:15:30.200 --> 0:15:33.000
<v Speaker 3>are starting to move out a small caps are doing better,

0:15:33.320 --> 0:15:35.720
<v Speaker 3>mid caps are doing better. You're seeing you're seeing names

0:15:35.720 --> 0:15:38.400
<v Speaker 3>pop up on news channels like yours, Doug where that

0:15:38.480 --> 0:15:40.560
<v Speaker 3>we didn't hear about a year ago or two years ago,

0:15:40.600 --> 0:15:42.520
<v Speaker 3>that are making a lot of money and they're really

0:15:42.560 --> 0:15:45.960
<v Speaker 3>producing some great returns and they're great producing some great products.

0:15:46.240 --> 0:15:48.680
<v Speaker 2>Are you seeing any value in the bond market these days?

0:15:49.120 --> 0:15:51.480
<v Speaker 3>Very little? And you know, if you're going to trade

0:15:51.520 --> 0:15:52.920
<v Speaker 3>the bonds, I think you need to be looking at

0:15:52.920 --> 0:15:56.200
<v Speaker 3>the convertible bond, something like a CWB. That's what the

0:15:56.320 --> 0:15:59.000
<v Speaker 3>ETF for the convertible bonds, where we do on quite

0:15:59.000 --> 0:16:01.040
<v Speaker 3>a bit of convertible bond right now. They've done well

0:16:01.120 --> 0:16:03.040
<v Speaker 3>year to date. I would be more looking at the

0:16:03.040 --> 0:16:05.200
<v Speaker 3>convertibles than I would in the ten or the twenty

0:16:05.320 --> 0:16:05.960
<v Speaker 3>year treasuries.

0:16:06.000 --> 0:16:09.320
<v Speaker 2>For sure, we had pretty impressive numbers from Ali Baba

0:16:09.600 --> 0:16:12.320
<v Speaker 2>early today. It's going to be very interesting to see

0:16:12.360 --> 0:16:15.240
<v Speaker 2>how these shares trade in Hong Kong. Do you want

0:16:15.280 --> 0:16:18.440
<v Speaker 2>to be exposed to markets offshore right now, to companies

0:16:18.520 --> 0:16:19.840
<v Speaker 2>like Ali Baba in China.

0:16:20.360 --> 0:16:23.000
<v Speaker 3>I'm having so much fun with our domestic markets, Doug.

0:16:23.000 --> 0:16:25.760
<v Speaker 3>I'm really not too very interested in going overseas right now.

0:16:25.800 --> 0:16:27.520
<v Speaker 3>I think there's a lot of instability over there, a

0:16:27.560 --> 0:16:30.480
<v Speaker 3>lot of questions that are going on Ukraine, Russia, You've

0:16:30.480 --> 0:16:32.880
<v Speaker 3>got Europe that's a little bit I guess i'd say

0:16:33.360 --> 0:16:35.760
<v Speaker 3>a little bit unsettled. It's some of the comments that

0:16:35.840 --> 0:16:38.440
<v Speaker 3>Trump has made with Putin. So I think you're staying

0:16:38.440 --> 0:16:40.160
<v Speaker 3>here in our domestic markets. I think he can make

0:16:40.240 --> 0:16:41.800
<v Speaker 3>just as much money, if not more. And I think

0:16:41.840 --> 0:16:45.000
<v Speaker 3>you've got a more stable in a more stable environment

0:16:45.040 --> 0:16:47.640
<v Speaker 3>too to buy stocks and to own stocks in.

0:16:48.080 --> 0:16:50.800
<v Speaker 2>It's interesting vance today. The price action led to a

0:16:50.840 --> 0:16:54.720
<v Speaker 2>conversation around a possible pullback for the equity market. Now.

0:16:54.720 --> 0:16:58.280
<v Speaker 2>We really haven't seen a meaningful correction for some time,

0:16:58.360 --> 0:17:02.120
<v Speaker 2>have we. So I'm wondering in the short term whether

0:17:02.240 --> 0:17:05.479
<v Speaker 2>the US equity market is a little vulnerable here. What

0:17:05.480 --> 0:17:06.879
<v Speaker 2>do you think, Well, I.

0:17:06.920 --> 0:17:09.040
<v Speaker 3>Think that we could be, but you've also you know,

0:17:09.160 --> 0:17:11.080
<v Speaker 3>the queues broke out a little bit, the S and

0:17:11.160 --> 0:17:12.720
<v Speaker 3>P broke out a little bit. If you're looking at

0:17:12.760 --> 0:17:14.760
<v Speaker 3>the queues, it needs to break about about five point

0:17:14.800 --> 0:17:17.239
<v Speaker 3>forty one on the queues for a solid breakout. But

0:17:17.320 --> 0:17:20.320
<v Speaker 3>remember this, Doug is, don't ever short a dull market,

0:17:20.359 --> 0:17:21.880
<v Speaker 3>and this is definitely the past two and a half

0:17:21.880 --> 0:17:24.040
<v Speaker 3>months has been a dull market. The vix is dull.

0:17:24.080 --> 0:17:26.919
<v Speaker 3>It's just been going sideways. I'd be really cautious on

0:17:27.000 --> 0:17:29.760
<v Speaker 3>being too negative because if we do get a solid breakout,

0:17:30.000 --> 0:17:32.520
<v Speaker 3>we get one piece of great news on inflation, or

0:17:32.560 --> 0:17:34.800
<v Speaker 3>we get one piece of great news that you know,

0:17:34.880 --> 0:17:38.320
<v Speaker 3>something's working with the Trump administration with their deregulation that

0:17:38.359 --> 0:17:41.320
<v Speaker 3>they're implementing, you could see the market really pop. And

0:17:41.359 --> 0:17:42.800
<v Speaker 3>I think if you see it pop, I think you're

0:17:42.800 --> 0:17:44.359
<v Speaker 3>going to see a lot of shorters get hurt, and

0:17:44.359 --> 0:17:45.960
<v Speaker 3>I think that they're going to be scrambling to cover,

0:17:46.000 --> 0:17:47.480
<v Speaker 3>which will push the market even higher.

0:17:47.840 --> 0:17:50.160
<v Speaker 2>Interesting point, Vance, thank you so much for making time

0:17:50.200 --> 0:17:53.200
<v Speaker 2>for US. Vance Howard There. He is the CEO also

0:17:53.320 --> 0:17:56.439
<v Speaker 2>portfolio manager at Howard Capital Management. Joining us here on

0:17:56.480 --> 0:18:02.399
<v Speaker 2>the Daybreak Asia Podcast. Thanks for listening to today's episode

0:18:02.440 --> 0:18:06.480
<v Speaker 2>of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we

0:18:06.520 --> 0:18:10.399
<v Speaker 2>look at the story shaping markets, finance, and geopolitics in

0:18:10.440 --> 0:18:13.600
<v Speaker 2>the Asia Pacific. You can find us on Apple, Spotify,

0:18:13.760 --> 0:18:17.240
<v Speaker 2>the Bloomberg Podcast YouTube channel, or anywhere else you listen.

0:18:17.640 --> 0:18:20.560
<v Speaker 2>Join us again tomorrow for insight on the market moves

0:18:20.600 --> 0:18:25.120
<v Speaker 2>from Hong Kong to Singapore and Australia. I'm Doug Prisoner

0:18:25.320 --> 0:18:26.720
<v Speaker 2>and this is Bloomberg