WEBVTT - Markets Open Higher on US Tech Tariff Pause

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

0:00:10.119 --> 0:00:13.760
<v Speaker 2>Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner.

0:00:14.040 --> 0:00:16.680
<v Speaker 2>On today's episode, will break down the latest in the

0:00:16.800 --> 0:00:20.120
<v Speaker 2>US trade war with China as it enters a second week.

0:00:20.440 --> 0:00:23.759
<v Speaker 2>Stocks in the Asia Pacific as well as US equity

0:00:23.760 --> 0:00:26.920
<v Speaker 2>index futures pushing higher at this hour. This is after

0:00:27.040 --> 0:00:32.080
<v Speaker 2>President Trump exempted certain consumer electronic devices from the latest

0:00:32.120 --> 0:00:37.000
<v Speaker 2>reciprocal tariffs, but this relief is temporary. A specific tariff

0:00:37.080 --> 0:00:40.280
<v Speaker 2>on semiconductors will be announced in due course, and in

0:00:40.320 --> 0:00:42.879
<v Speaker 2>a moment we'll be hearing from Mark Matthews, head of

0:00:43.040 --> 0:00:47.400
<v Speaker 2>Asia Research at Julius Behar. But first is a conversation

0:00:47.479 --> 0:00:50.800
<v Speaker 2>with Chuck Camello. He is president and CEO of Essex

0:00:50.840 --> 0:00:54.440
<v Speaker 2>Financial Services. He joins us from Connecticut. Chuck, it's always

0:00:54.480 --> 0:00:57.240
<v Speaker 2>a pleasure to have the chance to benefit from your perspective.

0:00:57.680 --> 0:01:00.000
<v Speaker 2>It was quite a week we suffered through last week.

0:00:59.760 --> 0:01:02.560
<v Speaker 2>I think we can agree on that much. Things seem

0:01:02.600 --> 0:01:05.520
<v Speaker 2>to be stabilizing a bit more right now. I'm curious

0:01:05.520 --> 0:01:07.759
<v Speaker 2>as to what you're looking for in the next five

0:01:07.800 --> 0:01:08.560
<v Speaker 2>trading days.

0:01:09.040 --> 0:01:11.440
<v Speaker 3>Yeah, boy, it's first ball. It's very nice to be

0:01:11.520 --> 0:01:13.000
<v Speaker 3>with you so thank you so much for having me.

0:01:13.040 --> 0:01:14.800
<v Speaker 3>But yeah, you know, we're coming off one of the

0:01:14.800 --> 0:01:19.120
<v Speaker 3>most volatile and challenging weeks that I think, you know,

0:01:19.200 --> 0:01:21.680
<v Speaker 3>anybody who's been in this business for any length of time,

0:01:22.600 --> 0:01:24.280
<v Speaker 3>you know, was just shaking their head. It was certainly

0:01:24.319 --> 0:01:27.640
<v Speaker 3>a really really stressful one for you know, financial professionals

0:01:27.640 --> 0:01:30.800
<v Speaker 3>and clients alike. But you know, I think what we

0:01:30.920 --> 0:01:32.319
<v Speaker 3>wanted to see is a little bit of what we

0:01:32.400 --> 0:01:34.320
<v Speaker 3>got on Friday night and over the weekend.

0:01:34.600 --> 0:01:36.200
<v Speaker 4>Vic VI the reciprocal tariffs not.

0:01:36.600 --> 0:01:42.639
<v Speaker 3>Being applied to bones, ipadsnap tops, technology, things of that nature.

0:01:42.680 --> 0:01:45.319
<v Speaker 3>So they are still you know, getting hit with a

0:01:45.600 --> 0:01:47.520
<v Speaker 3>you know, I think believe they're in the twenty percent bucket.

0:01:47.600 --> 0:01:50.360
<v Speaker 3>But I think that was very very positive, and you know,

0:01:50.400 --> 0:01:52.840
<v Speaker 3>I think the futures are indicating that. But I think

0:01:52.920 --> 0:01:56.400
<v Speaker 3>certainly there's been so much uncertainty and you know, borderline

0:01:56.480 --> 0:01:59.800
<v Speaker 3>chaos that you know, anything that gives a little bit

0:01:59.840 --> 0:02:03.040
<v Speaker 3>of certainty to tear offfs or any type of certainty

0:02:03.040 --> 0:02:05.280
<v Speaker 3>of the policy coming out of Washington will be helpful.

0:02:05.560 --> 0:02:07.640
<v Speaker 3>And I think it will be very well well received

0:02:07.640 --> 0:02:10.400
<v Speaker 3>by the markets. And quite candidly, it's what they're crying

0:02:10.400 --> 0:02:11.000
<v Speaker 3>out for.

0:02:11.080 --> 0:02:14.040
<v Speaker 2>Do we need to still discuss recession risk? I mean,

0:02:14.160 --> 0:02:16.880
<v Speaker 2>right now looks as though the US equity market is

0:02:16.919 --> 0:02:19.600
<v Speaker 2>down about eleven percent from its high, and if there

0:02:19.680 --> 0:02:23.080
<v Speaker 2>is a recession on the horizon, I think that we're

0:02:23.120 --> 0:02:26.240
<v Speaker 2>going to see a significant repricing inequities. Do we still

0:02:26.280 --> 0:02:27.440
<v Speaker 2>need to consider that fact?

0:02:27.960 --> 0:02:29.200
<v Speaker 4>Well? I think you certainly do.

0:02:29.360 --> 0:02:32.160
<v Speaker 3>I mean there's you know, there's no shortage of folks,

0:02:32.240 --> 0:02:35.360
<v Speaker 3>you know, saying we're heading for recession or are in recession.

0:02:35.440 --> 0:02:36.800
<v Speaker 3>But you know a lot of those same folks have

0:02:36.840 --> 0:02:40.280
<v Speaker 3>called twelve the last seven recessions, So but this one

0:02:40.560 --> 0:02:45.040
<v Speaker 3>certainly feels different. I think the big difference here is

0:02:45.080 --> 0:02:49.320
<v Speaker 3>the overall sentiment. And you know, I think everybody feels it.

0:02:49.400 --> 0:02:53.200
<v Speaker 3>Everybody feels this uncertainty, everybody feels this sort of looming threat.

0:02:54.200 --> 0:02:57.520
<v Speaker 3>Terrorists are inflationary period, end of story. But you know,

0:02:57.600 --> 0:03:00.160
<v Speaker 3>there is the offset. There is maybe you know, some

0:03:00.160 --> 0:03:02.960
<v Speaker 3>some tax help and tax cuts coming out of Washington.

0:03:03.680 --> 0:03:06.800
<v Speaker 3>So you know, I've given up trying to predict the future.

0:03:06.800 --> 0:03:08.240
<v Speaker 4>But I certainly am not.

0:03:08.200 --> 0:03:10.480
<v Speaker 3>Going on in a lamb, nor am I being unique

0:03:10.520 --> 0:03:12.800
<v Speaker 3>in any way of saying the odds for recessions certainly

0:03:12.800 --> 0:03:14.519
<v Speaker 3>in the past. This is the crazy thing right over

0:03:14.560 --> 0:03:18.600
<v Speaker 3>the past just three weeks have risen, you know, substantially,

0:03:18.800 --> 0:03:19.239
<v Speaker 3>So check.

0:03:19.280 --> 0:03:21.720
<v Speaker 2>I'm curious about the extent to what you're using the

0:03:21.800 --> 0:03:24.679
<v Speaker 2>credit markets right now as a guide even to put

0:03:24.720 --> 0:03:26.560
<v Speaker 2>money to work on the equity side. What are you

0:03:26.600 --> 0:03:28.040
<v Speaker 2>seeing in the credit space?

0:03:28.520 --> 0:03:31.239
<v Speaker 3>Well, listen, I think the bond market, you know, and

0:03:31.360 --> 0:03:34.320
<v Speaker 3>again that was I think the big driver that you know,

0:03:34.400 --> 0:03:39.680
<v Speaker 3>got Wednesday's ninety day freeze because again in abnormal things

0:03:39.720 --> 0:03:42.560
<v Speaker 3>happen in abnormal times, and like Wednesday, was that right?

0:03:42.600 --> 0:03:47.200
<v Speaker 3>So the market market, you know, uh, market goes down

0:03:47.280 --> 0:03:50.840
<v Speaker 3>rather on Tuesday. Usually you're seeing bond prices, you know,

0:03:50.920 --> 0:03:53.640
<v Speaker 3>and yields moved down of you know, yields moved down

0:03:53.680 --> 0:03:55.520
<v Speaker 3>on fixed income that wasn't happening.

0:03:55.560 --> 0:03:56.440
<v Speaker 4>Dollar dropping as well.

0:03:56.440 --> 0:03:57.720
<v Speaker 3>And I think a lot of that is just the

0:03:57.800 --> 0:04:02.400
<v Speaker 3>overall concern from a lot of overseas buyers and holders

0:04:02.400 --> 0:04:04.680
<v Speaker 3>of just the instability in the US right now. So

0:04:05.160 --> 0:04:07.720
<v Speaker 3>the credit market was screaming out that there's a problem,

0:04:07.800 --> 0:04:10.840
<v Speaker 3>there's a big problem here, and I think that finally

0:04:10.880 --> 0:04:13.640
<v Speaker 3>got the President's attention. And I think that credit market

0:04:14.080 --> 0:04:16.760
<v Speaker 3>is a big barometer in terms of how things will

0:04:17.360 --> 0:04:18.920
<v Speaker 3>you know, how those winds are going to be blowing.

0:04:18.960 --> 0:04:22.839
<v Speaker 3>And I think they got to such an extent and

0:04:22.880 --> 0:04:26.160
<v Speaker 3>it got so much attention that it made the president pivot,

0:04:26.960 --> 0:04:29.839
<v Speaker 3>and that was obviously extremely helpful for the markets on

0:04:29.880 --> 0:04:33.839
<v Speaker 3>Wednesday when you saw these unbelievable increases. The challenge and

0:04:34.120 --> 0:04:36.680
<v Speaker 3>what we try to remind everybody is these huge increases

0:04:36.720 --> 0:04:40.560
<v Speaker 3>on Wednesday, Historically they're book ended, so we go back

0:04:40.560 --> 0:04:42.359
<v Speaker 3>in time and you look of when you've seen those

0:04:42.400 --> 0:04:47.560
<v Speaker 3>types of increases in percentage gained of those of the indexes.

0:04:48.000 --> 0:04:52.039
<v Speaker 3>They've happened in twenty twenty, and they've happened back in

0:04:52.160 --> 0:04:55.080
<v Speaker 3>two thousand, I think was two thousand and eight. So

0:04:55.120 --> 0:04:57.200
<v Speaker 3>you have to be very careful because none of us

0:04:57.240 --> 0:04:59.680
<v Speaker 3>want to revisit those periods of time. But that's where

0:04:59.720 --> 0:05:02.040
<v Speaker 3>you get these types of outsized moves in the market

0:05:02.040 --> 0:05:04.640
<v Speaker 3>of when things have just been so crazy, so scary,

0:05:05.080 --> 0:05:05.800
<v Speaker 3>and so valuable.

0:05:05.920 --> 0:05:08.640
<v Speaker 2>So I'm glad you brought up the notion of foreign

0:05:08.680 --> 0:05:12.119
<v Speaker 2>investors buying US treasuries and maybe what we saw last

0:05:12.120 --> 0:05:15.040
<v Speaker 2>week was just a lack of confidence in a lot

0:05:15.080 --> 0:05:18.200
<v Speaker 2>of the policies that the US is putting forward on

0:05:18.240 --> 0:05:20.880
<v Speaker 2>the trade side, obviously, but I'm wondering whether or not

0:05:21.360 --> 0:05:24.720
<v Speaker 2>there has been a significant breakage right now that maybe

0:05:24.760 --> 0:05:28.080
<v Speaker 2>it's going to take a lot more to restore confidence.

0:05:28.440 --> 0:05:29.560
<v Speaker 2>Is that a possibility.

0:05:30.400 --> 0:05:30.960
<v Speaker 4>I think it is.

0:05:31.040 --> 0:05:32.159
<v Speaker 3>I mean, I think there's a lot of things that

0:05:32.200 --> 0:05:35.800
<v Speaker 3>went into that into that you know, big rise in

0:05:36.000 --> 0:05:38.960
<v Speaker 3>the ten year and the thirty year last week. It

0:05:39.040 --> 0:05:42.159
<v Speaker 3>certainly overseas as part of it. But but you know,

0:05:42.200 --> 0:05:45.800
<v Speaker 3>from everything we see, you know, we haven't heard, nor

0:05:45.839 --> 0:05:47.200
<v Speaker 3>have we heard from a lot of the folks that

0:05:47.240 --> 0:05:49.800
<v Speaker 3>we work with, that that there's any you know, mass

0:05:49.880 --> 0:05:50.640
<v Speaker 3>selling going on.

0:05:51.200 --> 0:05:53.680
<v Speaker 4>You know, the huge hedge fund unwind of.

0:05:53.680 --> 0:05:58.240
<v Speaker 3>Treasuries, you know, the the treasuries you know, were hedge funds,

0:05:58.279 --> 0:06:01.440
<v Speaker 3>et cetera loaded up on treasuries with thought that you know,

0:06:01.480 --> 0:06:03.640
<v Speaker 3>there'd be a little bit more control coming out of Washington,

0:06:03.680 --> 0:06:06.880
<v Speaker 3>and that you know, sadly within when the tariff announcement

0:06:07.000 --> 0:06:10.680
<v Speaker 3>was made on Liberation Day at just those absurdly high rates,

0:06:10.720 --> 0:06:13.919
<v Speaker 3>it just shook everything. So I think between the you know,

0:06:14.480 --> 0:06:17.400
<v Speaker 3>very few things end well when the sentence starts with

0:06:18.040 --> 0:06:22.000
<v Speaker 3>leverage trades being unwound. So you know that that generally

0:06:22.040 --> 0:06:24.520
<v Speaker 3>got us in a pretty bad place as well in

0:06:24.600 --> 0:06:25.920
<v Speaker 3>terms of what was driving rates up.

0:06:26.000 --> 0:06:28.560
<v Speaker 2>So I'm curious, how are you approaching the equity side

0:06:28.640 --> 0:06:31.159
<v Speaker 2>right now in terms of an investment strategy. Are you

0:06:31.680 --> 0:06:34.360
<v Speaker 2>staying along the sidelines maybe and just hoarding a little

0:06:34.360 --> 0:06:36.680
<v Speaker 2>bit of cash at the moment, looking for maybe a

0:06:36.720 --> 0:06:39.680
<v Speaker 2>little bit more of a pullback and another entry point here,

0:06:39.800 --> 0:06:41.960
<v Speaker 2>or is there something else that I should know about

0:06:42.000 --> 0:06:44.640
<v Speaker 2>in terms of the way Chuck Camello is approaching the

0:06:44.680 --> 0:06:45.400
<v Speaker 2>market right now.

0:06:45.839 --> 0:06:49.120
<v Speaker 3>No, I think we've already had a pretty significant pullback

0:06:49.160 --> 0:06:52.080
<v Speaker 3>in and of itself, and there's a tremendous amount of

0:06:52.080 --> 0:06:54.680
<v Speaker 3>cash sitting on the sidelines. So I think for the

0:06:54.800 --> 0:06:57.760
<v Speaker 3>average investor, and one of the things obviously that this

0:06:57.880 --> 0:07:01.640
<v Speaker 3>type of period of time calls four is caution, right

0:07:01.720 --> 0:07:03.880
<v Speaker 3>and some patients and some prudence with how you're going

0:07:03.880 --> 0:07:07.400
<v Speaker 3>to invest money. So certainly I think, you know, dollar

0:07:07.440 --> 0:07:10.600
<v Speaker 3>cost averaging into the market has made sense in the past,

0:07:10.720 --> 0:07:14.600
<v Speaker 3>it is tremendously makes sense right now. But you also

0:07:14.640 --> 0:07:16.640
<v Speaker 3>have to realize that these periods of time when the

0:07:16.680 --> 0:07:19.640
<v Speaker 3>market does sell off like this, for longer term investors,

0:07:19.680 --> 0:07:22.520
<v Speaker 3>right it is an opportunity. It's an opportunity wherever. Listen,

0:07:22.520 --> 0:07:24.160
<v Speaker 3>if your time frames three or six months, you know,

0:07:24.400 --> 0:07:26.920
<v Speaker 3>flip a coin, I couldn't begin to guess where it's

0:07:26.920 --> 0:07:27.240
<v Speaker 3>going to be.

0:07:27.560 --> 0:07:29.480
<v Speaker 4>But if you're going out longer, and I think.

0:07:29.360 --> 0:07:32.119
<v Speaker 3>History also shows us when you have this, I mean,

0:07:32.200 --> 0:07:35.200
<v Speaker 3>you know, I think the vics last week, I think.

0:07:35.280 --> 0:07:37.720
<v Speaker 4>I saw the highest at fifty six, fifty seven. I

0:07:37.760 --> 0:07:38.600
<v Speaker 4>think you got the sixty.

0:07:38.640 --> 0:07:41.080
<v Speaker 3>But regardless, you look at these big sell offs, these

0:07:41.120 --> 0:07:43.440
<v Speaker 3>big corrections, that level of VIX, and you look out

0:07:43.720 --> 0:07:47.360
<v Speaker 3>historically of market returns looking forward there generally are very good.

0:07:47.480 --> 0:07:49.560
<v Speaker 3>So we certainly have been putting some money to work,

0:07:49.600 --> 0:07:53.040
<v Speaker 3>whether it's in ETFs or whether individual securities as well

0:07:53.080 --> 0:07:55.600
<v Speaker 3>that now have come down to a point, especially some

0:07:55.640 --> 0:07:58.480
<v Speaker 3>of these tech names, where you know there there certainly

0:07:58.560 --> 0:08:00.640
<v Speaker 3>are a little they're quite a bit more attractive than

0:08:00.640 --> 0:08:02.640
<v Speaker 3>they were a few weeks ago. And again we try

0:08:02.640 --> 0:08:04.320
<v Speaker 3>to stress you don't have to call the bottom, you

0:08:04.320 --> 0:08:07.320
<v Speaker 3>don't have to get it perfect. So right now there

0:08:07.320 --> 0:08:10.040
<v Speaker 3>are some pretty attractive entry points in the equity market.

0:08:10.120 --> 0:08:12.600
<v Speaker 3>But again we're bracing and we're you're setting the expectation

0:08:12.640 --> 0:08:14.960
<v Speaker 3>with clients. It is a volatile time. We expect the

0:08:15.040 --> 0:08:18.280
<v Speaker 3>volatility to continue. But for a long term investor, you know,

0:08:18.760 --> 0:08:22.440
<v Speaker 3>getting long term above average re urns, is the volatility

0:08:22.520 --> 0:08:23.320
<v Speaker 3>is the price you pay for that.

0:08:23.480 --> 0:08:26.120
<v Speaker 2>A moment ago we talked about the possibility of recession.

0:08:26.240 --> 0:08:29.040
<v Speaker 2>I would imagine that for that reason you want to

0:08:29.040 --> 0:08:33.040
<v Speaker 2>avoid anything that is particularly economically sensitive. And I'm curious

0:08:33.360 --> 0:08:36.280
<v Speaker 2>that you brought up tech because as part of this

0:08:36.360 --> 0:08:39.840
<v Speaker 2>consumer electronics story that we've been talking about today and

0:08:39.920 --> 0:08:43.000
<v Speaker 2>the pivot away from the latest reciprocal tariffs, maybe a

0:08:43.000 --> 0:08:45.800
<v Speaker 2>little bit of a temporary reprieve here, but what has

0:08:46.120 --> 0:08:48.880
<v Speaker 2>been very clear from the White House today is that

0:08:49.120 --> 0:08:53.760
<v Speaker 2>a specific tariff on semiconductors is on the horizon, maybe

0:08:53.800 --> 0:08:57.760
<v Speaker 2>the next month or two. So within tech, how do

0:08:57.840 --> 0:08:58.640
<v Speaker 2>you even play it.

0:08:59.360 --> 0:09:02.240
<v Speaker 3>Yeah, it's a great question, and it's it's not for

0:09:02.280 --> 0:09:04.280
<v Speaker 3>the faint of heart. But keep in mind, what comes

0:09:04.280 --> 0:09:07.640
<v Speaker 3>out of Washington, but what came out of Washington this

0:09:07.720 --> 0:09:10.880
<v Speaker 3>weekend versus what might come out of Washington Tuesday, Wednesday

0:09:10.960 --> 0:09:13.480
<v Speaker 3>or Thursday could be two very different things. And so

0:09:13.559 --> 0:09:15.480
<v Speaker 3>you know, we're in the business of trying to build

0:09:15.520 --> 0:09:18.920
<v Speaker 3>long term investment and wealth management plans for our clients,

0:09:19.000 --> 0:09:22.840
<v Speaker 3>and you know, we've had shakes in shocks that the

0:09:22.880 --> 0:09:26.240
<v Speaker 3>market is seen now, thankfully, not to the extent like

0:09:26.240 --> 0:09:27.839
<v Speaker 3>we've seen this past you know, a week and a

0:09:27.880 --> 0:09:31.840
<v Speaker 3>half or so, but with technology again, the way that

0:09:31.880 --> 0:09:35.079
<v Speaker 3>the market has pulled back, there are some pretty attractive

0:09:35.320 --> 0:09:37.960
<v Speaker 3>there can be some pretty attractive entry points. Now we're

0:09:37.960 --> 0:09:39.920
<v Speaker 3>not saying that you're buying now and you're going straight

0:09:39.920 --> 0:09:42.400
<v Speaker 3>back up. No, No, these are for long term investors.

0:09:42.400 --> 0:09:45.280
<v Speaker 3>And if you've got a long term timeframe, listen you

0:09:45.320 --> 0:09:47.199
<v Speaker 3>we might we might be looking at this market drop

0:09:47.240 --> 0:09:49.760
<v Speaker 3>another ten or fifteen percent. If it does, we'll put

0:09:49.760 --> 0:09:51.360
<v Speaker 3>a little bit more money to work at that time.

0:09:51.480 --> 0:09:56.480
<v Speaker 3>But you know, looking forward, looking long term, these are

0:09:56.520 --> 0:09:59.120
<v Speaker 3>the times where true wealth can be made.

0:09:59.400 --> 0:10:01.559
<v Speaker 2>Chuck, I'm cure as to whether or not you're seeing

0:10:01.600 --> 0:10:03.920
<v Speaker 2>opportunities in the bond market. We were talking about the

0:10:04.000 --> 0:10:07.200
<v Speaker 2>volatility and treasuries last week. Let's talk a little bit

0:10:07.240 --> 0:10:11.280
<v Speaker 2>about what your expectations from the Fed might be and

0:10:11.320 --> 0:10:13.960
<v Speaker 2>whether or not there are opportunities in credit.

0:10:14.360 --> 0:10:16.559
<v Speaker 3>Yeah, well, the Fed's in a tough spot, aren't they.

0:10:17.880 --> 0:10:20.360
<v Speaker 3>So you've got inflation, you know, inflation especially you know,

0:10:20.400 --> 0:10:25.240
<v Speaker 3>the most recent CPI PPI numbers came down, but again

0:10:25.360 --> 0:10:27.839
<v Speaker 3>quite candidly, what the heck does that mean at this point,

0:10:28.520 --> 0:10:30.720
<v Speaker 3>you know, looking at the tariffs that.

0:10:30.720 --> 0:10:31.960
<v Speaker 4>We might be dealing with in the future.

0:10:32.240 --> 0:10:34.000
<v Speaker 3>And then again you've got growth certainly slow, and so

0:10:34.040 --> 0:10:37.240
<v Speaker 3>they're betwixt and between. I think in the fixed income space,

0:10:37.280 --> 0:10:39.160
<v Speaker 3>you know, you know, if you asked me this this

0:10:39.240 --> 0:10:41.240
<v Speaker 3>question about a week and a half ago, two weeks ago,

0:10:41.480 --> 0:10:43.400
<v Speaker 3>you know, municipal bonds were doing just great and then

0:10:43.400 --> 0:10:46.160
<v Speaker 3>they completely blew up last week. And so we had

0:10:46.160 --> 0:10:48.720
<v Speaker 3>a great municipal bond manager in the office last week,

0:10:48.800 --> 0:10:50.440
<v Speaker 3>you know, talking to us about that. And you can

0:10:50.440 --> 0:10:52.440
<v Speaker 3>get close to five percent yields now on UNI. So

0:10:52.720 --> 0:10:54.760
<v Speaker 3>we certainly do think that there's an opportunity in the

0:10:54.840 --> 0:10:57.760
<v Speaker 3>municipal bond space. But again I think it's going to

0:10:57.800 --> 0:11:00.560
<v Speaker 3>be volatile there as well. And we here we go

0:11:00.640 --> 0:11:04.040
<v Speaker 3>all the way back to what policy comes out of

0:11:04.120 --> 0:11:05.800
<v Speaker 3>Washington is going to drive a lot of this kind

0:11:05.840 --> 0:11:08.600
<v Speaker 3>of stuff. And if there is this continuing lack of

0:11:08.679 --> 0:11:12.280
<v Speaker 3>confidence or this fear of instability in the US system

0:11:12.640 --> 0:11:15.959
<v Speaker 3>from overseas buyers, you know, we're we're going to see

0:11:16.000 --> 0:11:19.040
<v Speaker 3>more volatility in the ten and the thirty year. So

0:11:19.200 --> 0:11:21.920
<v Speaker 3>again it's it's, you know, somewhat of a similar story

0:11:21.920 --> 0:11:25.080
<v Speaker 3>of we're going to expect volatility, but again diversifying. I

0:11:25.080 --> 0:11:27.600
<v Speaker 3>think saying short to intermediate and duration is the way

0:11:27.600 --> 0:11:31.280
<v Speaker 3>to go better credit quality, you know, high yield acts

0:11:31.320 --> 0:11:34.360
<v Speaker 3>more like equities and times like this. But again the

0:11:34.440 --> 0:11:38.360
<v Speaker 3>similar story that it also provides an opportunity as you're

0:11:38.360 --> 0:11:40.480
<v Speaker 3>looking to put some money to work, and quite candidly,

0:11:40.520 --> 0:11:44.480
<v Speaker 3>now you're walking in some pretty pretty attractive returns. So

0:11:45.160 --> 0:11:48.120
<v Speaker 3>it isn't It is again for the right buyer and opportunity,

0:11:48.160 --> 0:11:51.240
<v Speaker 3>and good old cash is paying four percent, and so

0:11:51.280 --> 0:11:54.280
<v Speaker 3>you're certainly getting paid to wait until eventually, whenever, and

0:11:54.360 --> 0:11:56.760
<v Speaker 3>if the Fed does cut rates, you're at least getting

0:11:56.760 --> 0:11:58.560
<v Speaker 3>four percent to sit in cash and ride this out.

0:11:58.800 --> 0:12:01.320
<v Speaker 2>Chuck, thank you so much for joining us. Chuck Amillo there,

0:12:01.400 --> 0:12:05.560
<v Speaker 2>president and CEO of Essex Financial Services, joining us here

0:12:05.559 --> 0:12:15.920
<v Speaker 2>on the Daybreak Asia podcast. Welcome back to the Daybreak

0:12:15.920 --> 0:12:20.000
<v Speaker 2>Asia Podcast. I'm Derek Chrisner. Asian equities have advanced after

0:12:20.080 --> 0:12:23.360
<v Speaker 2>President Trump paused some import duties on a range of

0:12:23.480 --> 0:12:27.280
<v Speaker 2>consumer electronics. This appears to be lifting sentiment a bit

0:12:27.679 --> 0:12:31.160
<v Speaker 2>after a volatile week for markets last week. For more

0:12:31.200 --> 0:12:33.520
<v Speaker 2>we heard from Mark Matthews, he has head of Asia

0:12:33.559 --> 0:12:37.280
<v Speaker 2>research at the Bank, Julius Behar, he spoke with Bloomberg's

0:12:37.400 --> 0:12:38.960
<v Speaker 2>Cherry On and Heidi Stroud.

0:12:39.000 --> 0:12:44.720
<v Speaker 5>Watts very hard to know what the direction will be

0:12:44.720 --> 0:12:48.280
<v Speaker 5>because we just had Commerce Secretary Lutnik and the President

0:12:48.360 --> 0:12:53.560
<v Speaker 5>himself saying these exemptions are not temporary. We will have

0:12:53.640 --> 0:12:57.839
<v Speaker 5>permanent tariffs. And so it's a ping pong ball. It's

0:12:57.880 --> 0:13:02.080
<v Speaker 5>not being very well executed, but you never know what

0:13:02.120 --> 0:13:03.960
<v Speaker 5>they could say at the end of this week. I

0:13:04.000 --> 0:13:07.400
<v Speaker 5>think last week what was encouraging in a strange way,

0:13:07.400 --> 0:13:09.720
<v Speaker 5>if you want to make a positive out of a negative,

0:13:09.960 --> 0:13:13.120
<v Speaker 5>is the bond market forced a reaction from the White House,

0:13:13.960 --> 0:13:17.079
<v Speaker 5>and so it might do that again, and so many

0:13:17.240 --> 0:13:20.360
<v Speaker 5>other markets, like the currency market and the stock market,

0:13:20.440 --> 0:13:26.000
<v Speaker 5>and so it may be that tariffs that appear to

0:13:26.040 --> 0:13:31.360
<v Speaker 5>be permanent now actually do become not permanent over the

0:13:31.400 --> 0:13:35.280
<v Speaker 5>long term. But we don't know, and so in the

0:13:35.320 --> 0:13:40.000
<v Speaker 5>absence of any certainty, I'm not surprised that central banks

0:13:40.080 --> 0:13:45.439
<v Speaker 5>want to try to help economies along, because it does

0:13:45.480 --> 0:13:48.520
<v Speaker 5>look increasingly likely like the largest economy in the world

0:13:48.559 --> 0:13:50.640
<v Speaker 5>is heading into a recession in the United States.

0:13:51.320 --> 0:13:54.800
<v Speaker 6>As you say, It's kind of interesting seeing the reaction

0:13:54.960 --> 0:13:58.320
<v Speaker 6>that was prompted, presumably by what was really I guess

0:13:58.360 --> 0:14:01.600
<v Speaker 6>Trump's pain trade rob was happening in treasuries. Does that

0:14:01.640 --> 0:14:05.679
<v Speaker 6>give you more confidence in terms of pivoting to the

0:14:05.720 --> 0:14:07.240
<v Speaker 6>markets that the US has targeted?

0:14:07.360 --> 0:14:07.760
<v Speaker 2>Europe?

0:14:07.840 --> 0:14:12.000
<v Speaker 6>China, for example? Where do you see the diversification opportunities there? Now?

0:14:13.360 --> 0:14:18.839
<v Speaker 5>There are lots of good diversification opportunities because in those

0:14:19.800 --> 0:14:26.280
<v Speaker 5>places the authorities are starting to stimulate. And once again,

0:14:27.320 --> 0:14:29.800
<v Speaker 5>to make a positive out of a negative. I read

0:14:29.840 --> 0:14:31.840
<v Speaker 5>somewhere I can't remember who said it. I'm sorry I

0:14:31.880 --> 0:14:35.960
<v Speaker 5>can't give them credit that Donald Trump and Vladimir Putin

0:14:36.000 --> 0:14:37.720
<v Speaker 5>were the best thing that could have ever happened to

0:14:37.760 --> 0:14:41.960
<v Speaker 5>Europe because they've shooken it out of its torpor and

0:14:42.080 --> 0:14:44.760
<v Speaker 5>lethargy that it's been in for the last couple of decades.

0:14:44.800 --> 0:14:48.560
<v Speaker 5>And so there is lots of good value in Europe.

0:14:48.640 --> 0:14:50.840
<v Speaker 5>And now it seems like next year there's going to

0:14:50.880 --> 0:14:54.440
<v Speaker 5>be some growth there too, with Germany starting to stimulate

0:14:54.520 --> 0:14:56.960
<v Speaker 5>its economy, and it has the resources to do that,

0:14:57.600 --> 0:15:01.040
<v Speaker 5>and there's lots of things that German can spend on

0:15:01.280 --> 0:15:04.560
<v Speaker 5>which will not be wasteful spending. They actually could use

0:15:04.600 --> 0:15:06.680
<v Speaker 5>a lot of new infrastructure, and of course they'll be

0:15:06.720 --> 0:15:10.600
<v Speaker 5>increasing their defense spending as well. And in China there's

0:15:10.880 --> 0:15:15.880
<v Speaker 5>lots of room to stimulate the economy, and in other

0:15:15.920 --> 0:15:18.120
<v Speaker 5>parts of Asia as well. So yes, there are things

0:15:18.160 --> 0:15:21.240
<v Speaker 5>to do around the world. But what I have to

0:15:21.280 --> 0:15:23.840
<v Speaker 5>say is to the extent that the S and P

0:15:23.960 --> 0:15:28.600
<v Speaker 5>five hundred is the benchmark for the world, that index,

0:15:28.880 --> 0:15:32.320
<v Speaker 5>we believe is in a bear market, and I highly

0:15:32.360 --> 0:15:35.920
<v Speaker 5>suspect it'll be lower at the end of this year

0:15:35.960 --> 0:15:39.080
<v Speaker 5>than it was at the beginning of this year, and

0:15:39.120 --> 0:15:42.320
<v Speaker 5>so that acts as a weight on risk assets generally.

0:15:43.640 --> 0:15:47.400
<v Speaker 1>Yeah, especially for countries perhaps that are not really headed

0:15:47.440 --> 0:15:50.680
<v Speaker 1>towards the easing path, like Japan, which is an anomaly

0:15:50.920 --> 0:15:54.520
<v Speaker 1>is sort of among advanced economies. There was a lot

0:15:54.560 --> 0:15:57.760
<v Speaker 1>of optimism of our Japanese equities. But could we continue

0:15:57.840 --> 0:16:01.040
<v Speaker 1>to see that trend even when the bo is trying

0:16:01.080 --> 0:16:04.720
<v Speaker 1>to normalize policy at a time when the external environment

0:16:04.800 --> 0:16:05.520
<v Speaker 1>is so uncertain.

0:16:06.640 --> 0:16:10.280
<v Speaker 5>Yes, that's a very complicated situation. But I would say

0:16:10.560 --> 0:16:14.040
<v Speaker 5>that I like Japan because within Asia, it's the only

0:16:14.120 --> 0:16:18.720
<v Speaker 5>country that has really top quality global brand names, and

0:16:19.280 --> 0:16:22.360
<v Speaker 5>the overall return in equity of Japan is very low.

0:16:22.680 --> 0:16:26.160
<v Speaker 5>It's less than ten percent because it's dragged down by

0:16:26.200 --> 0:16:29.560
<v Speaker 5>conglomerates and banks. But because it's such a big market.

0:16:29.720 --> 0:16:33.680
<v Speaker 5>Over I believe, what seven thousand listed companies something like that,

0:16:33.760 --> 0:16:37.280
<v Speaker 5>you can construct a portfolio of a dozen or more

0:16:38.240 --> 0:16:42.800
<v Speaker 5>very high quality, global brand name, large and liquid companies

0:16:42.800 --> 0:16:46.480
<v Speaker 5>with returns on equity in the high teens or twenties.

0:16:46.680 --> 0:16:50.960
<v Speaker 5>And that's the way I would approach Japan because it

0:16:51.040 --> 0:16:54.720
<v Speaker 5>does have these really high quality companies that don't mean

0:16:55.080 --> 0:16:57.400
<v Speaker 5>to be nasty about the rest of Asia, but the

0:16:57.400 --> 0:16:58.520
<v Speaker 5>rest of Asia doesn't have that.

0:17:00.080 --> 0:17:02.480
<v Speaker 1>What about China? I mean you mentioned earlier that Europe

0:17:02.600 --> 0:17:05.560
<v Speaker 1>was really shaken into action because of this sense of crisis.

0:17:05.600 --> 0:17:09.560
<v Speaker 1>Could we actually see Beijing now trying to really boost

0:17:09.600 --> 0:17:13.000
<v Speaker 1>the economy and that's stimilars measures really filtering through the

0:17:13.000 --> 0:17:15.520
<v Speaker 1>stock market. But on the other hand, of course, you

0:17:15.560 --> 0:17:17.760
<v Speaker 1>have all of this pressure coming from tariffs.

0:17:18.920 --> 0:17:22.880
<v Speaker 5>Yes, I think so. Well, the major Chinese industries are

0:17:22.920 --> 0:17:25.480
<v Speaker 5>still well below they're all time highs. And when I

0:17:25.520 --> 0:17:28.040
<v Speaker 5>say well below, I mean you know, thirty forty fifty

0:17:28.040 --> 0:17:32.240
<v Speaker 5>percent or not expensively hang saying index still has something

0:17:32.320 --> 0:17:35.600
<v Speaker 5>like a four and a half percent dividend yield. You

0:17:35.600 --> 0:17:38.520
<v Speaker 5>don't pay taxes on dividends, by the way in Hong Kong.

0:17:38.600 --> 0:17:42.080
<v Speaker 5>And I think the major thing was deep seek back

0:17:42.119 --> 0:17:45.680
<v Speaker 5>in January, not only because it proved that China can

0:17:45.720 --> 0:17:51.720
<v Speaker 5>operate at the forefront of high technology globally and offer

0:17:51.880 --> 0:17:56.439
<v Speaker 5>very competitive products. But the government's response to that I

0:17:56.480 --> 0:18:00.800
<v Speaker 5>thought was very good in that it had kind of

0:18:00.840 --> 0:18:04.080
<v Speaker 5>been keeping the big technology stocks in the doghouse since

0:18:04.200 --> 0:18:09.000
<v Speaker 5>Jackmaw's infamous speech a few years ago, and it's clear

0:18:09.080 --> 0:18:12.840
<v Speaker 5>now the government views the big technology companies and technology

0:18:12.840 --> 0:18:15.800
<v Speaker 5>in general, and China's a positive force, is a soft

0:18:15.840 --> 0:18:18.840
<v Speaker 5>power for the world. So I think that mending offenses

0:18:18.880 --> 0:18:21.720
<v Speaker 5>between government and big tech in China is also very important.

0:18:22.000 --> 0:18:24.280
<v Speaker 2>That was Mark Matthews, head of research at the Bank

0:18:24.400 --> 0:18:28.399
<v Speaker 2>Julius Bear, speaking with Bloomberg's Sherry On and Heidi Stroud

0:18:28.440 --> 0:18:34.439
<v Speaker 2>Watts right here on the Daybreak Asia Podcast. Thanks for

0:18:34.480 --> 0:18:39.119
<v Speaker 2>listening to today's episode of the Bloomberg Daybreak Asia Edition podcast.

0:18:39.440 --> 0:18:42.560
<v Speaker 2>Each weekday, we look at the story shaping markets, finance,

0:18:42.920 --> 0:18:46.000
<v Speaker 2>and geopolitics in the Asia Pacific. You can find us

0:18:46.040 --> 0:18:50.240
<v Speaker 2>on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere

0:18:50.240 --> 0:18:53.359
<v Speaker 2>else you listen. Join us again tomorrow for insight on

0:18:53.400 --> 0:18:57.560
<v Speaker 2>the market moves from Hong Kong to Singapore and Australia.

0:18:57.960 --> 0:19:07.720
<v Speaker 2>I'm Doug Chrisner and this is lumberm