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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Bloomberg

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Speaker 1: Daybreak Asia Podcast. I'm Doug Chrisner. So we saw stock

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Speaker 1: index futures jump and the dollar strengthen. That was after

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Speaker 1: President Trump said he had no intention of firing fed

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Speaker 1: Share J. Powell.

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Speaker 2: I would like to see him be a little more

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Speaker 2: active in terms of his idea to lower interest rates.

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Speaker 2: Just a perfect time to lower interest rates if he

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Speaker 2: doesn't is at the end, No, it's not, but it

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Speaker 2: would be good timing. It would be which could have

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Speaker 2: taken place earlier.

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Speaker 1: Coming up, we'll discuss the latest on Powell with Tom Bruce.

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Speaker 1: He is macro investment strategist at Tangle with Total Wealth Management.

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Speaker 1: But we begin this morning in the Asia Pacific. Joining

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Speaker 1: me now is Ekaterina Bigos, cio for Asia Ex Japan

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Speaker 1: Core Investments at AXA Investment Managers. E. Katerina joins us

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Speaker 1: from our radio studios in Hong Kong. Ekaterina, thank you

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Speaker 1: so much. There has been so much happening in markets

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Speaker 1: these days. Obviously, I think a lot of what we're

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Speaker 1: seeing is tied to President Trump, both in word and deed,

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Speaker 1: just driving so much of the price action we know

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Speaker 1: the tariff policy has been extremely disruptive, to say the least,

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Speaker 1: and until today concerns over fed independence. In the time

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Speaker 1: that you have been in the market, have you ever

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Speaker 1: seen a level of uncertainty this high.

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Speaker 3: It's fair that to say that it's quite unprecedented. I mean,

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Speaker 3: if you look at just even the magnitude of the

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Speaker 3: tariffs that were implemented obviously on the second of April,

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Speaker 3: this has been of a scale that is unprecedented. That

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Speaker 3: has led to an escalation of uncertainty from corporate sphere,

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Speaker 3: but also that continues because we have this ninety day period.

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Speaker 3: I would say the peak of that probably uncertainty is

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Speaker 3: somewhat past us. And again the resolution of the quickie.

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Speaker 3: You have a positive resolution from some of the trading

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Speaker 3: partners or key trading partners around the tired negotiations. I

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Speaker 3: think it will be positive for the markets. But at

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Speaker 3: the moment we still in this period of unknown. We

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Speaker 3: hear some positive vibes around negotiative of Japan, potential career Vietnam,

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Speaker 3: but we haven't seen a conclusive deal yet. So I

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Speaker 3: think markets seeing a deal that is positive and also

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Speaker 3: that indicates of how that administration will negotiate with partners

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Speaker 3: I think will give some at least direction to the market,

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Speaker 3: so at least hopefully positive outcome reaction from that.

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Speaker 1: But the bigger problem is got to be China, and

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Speaker 1: we recently heard from Beijing kind of a warning here

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Speaker 1: against striking trade deals with the US that could hurt

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Speaker 1: the interest of Beijing. Give me your sense of where

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Speaker 1: this is going to go in terms of Washington and

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Speaker 1: Beijing and what you are beginning to price in or

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Speaker 1: discount as it were.

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Speaker 3: Ultimately, I think what the ramification of that is is

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Speaker 3: for for IZI, and I think the Asian story is

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Speaker 3: started to being more complex because again the ASI and

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Speaker 3: have benefited from China, have di flows the redirection of

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Speaker 3: some trade, and certainly it's the largest partner. If you

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Speaker 3: look at the ten top quarts of trade for US,

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Speaker 3: seven are sitting in Asia, right, So them negotiating a

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Speaker 3: deal that satisfies both countries I think is very complex,

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Speaker 3: and ultimately that is more complex for those countries rather

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Speaker 3: than say for US and China, which again the adversaries,

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Speaker 3: but ultimately does pose a more complexes for those regions.

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Speaker 1: So markets seem to be questioning America's standing as the

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Speaker 1: pre emited destination for global capital. Have we kind of

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Speaker 1: reached a critical juncture here? Has there been a level

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Speaker 1: of disruption that may be challenging to re establish or

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Speaker 1: is that saying too much?

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Speaker 3: It is probably too early to say so call the

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Speaker 3: US exceptionalism is done. I mean, ultimately you have to

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Speaker 3: where the biggest companies are, Where is the biggest capital markets,

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Speaker 3: where the most liquid security is. Again, the challenge at

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Speaker 3: the moment is policies and administration, which has put a

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Speaker 3: lot of uncertainty around directing the capital into the US.

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Speaker 3: But ultimately the fundamentals of that market have not changed

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Speaker 3: in terms of the solidity of it. And ultimately, when

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Speaker 3: you say for investors, US still is the largest part

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Speaker 3: of an asset location for a lot of the investors.

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Speaker 3: So you do have to look at US again, some

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Speaker 3: appetite shifts are likely and gain the high uncertainty the

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Speaker 3: likely the more likely that we're going to see some

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Speaker 3: reallocations away from US. But to say that this is

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Speaker 3: again the story of US being still leading economy and

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Speaker 3: leading companies of course of the world, I think is

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Speaker 3: still very much plausible and still very much present.

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Speaker 1: In one of the interesting developments recently has been the

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Speaker 1: weakness of the dollar, and ironically it's going to help

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Speaker 1: the US strengthen its position in some the trade negotiations

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Speaker 1: and make life on the other hand difficult for some

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Speaker 1: of the trading partners in Asia. Will that not happen, well, I.

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Speaker 3: Mean that was the intention. Again, this is probably unintended

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Speaker 3: consequence of some of the measures that minister has put

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Speaker 3: in place, but they always wanted a week a dollar

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Speaker 3: to against spur some competitiveness of the US manufacturers. So

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Speaker 3: again some dollar weakness is not a negative for the

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Speaker 3: US economy, particularly for the exporters. A destabilization again, which

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Speaker 3: is again not a central scenario of the dollar. I

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Speaker 3: think this is probably more bigger risk where you can

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Speaker 3: see a floading of dollar assets, but again we're not

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Speaker 3: yet in that scenario. Some weakness, as you said, it

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Speaker 3: does bring competitiveness to the US trade, particularly that the

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Speaker 3: ambition is for the administration to bring some more manufacturing

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Speaker 3: back into US.

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Speaker 1: So maybe we can agree that the TERRFF situation has

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Speaker 1: the potential to damage the Chinese economy, maybe at least

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Speaker 1: in the short term. It's unclear though whether or not

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Speaker 1: the equity market in China would reacting, and I'm wondering

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Speaker 1: whether you get a sense that Chinese equities are somewhat

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Speaker 1: isolated from terriff exposure.

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Speaker 3: Yeah, I think I'll break it down in two and

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Speaker 3: I would say I'll probably refrain to say that the

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Speaker 3: tires will damage the Chinese economy. It does complicate the

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Speaker 3: Chinese economy, but if you look at the state of

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Speaker 3: Chinese economy coming into this time of conflict that we're

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Speaker 3: seeing at the moment of escalation, the structural and the

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Speaker 3: macro problems were there and they're still there. Ultimately, what

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Speaker 3: China needs to do before this escalation tiers they had

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Speaker 3: to do and now it's becoming even more an urgency

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Speaker 3: is to redirect its economy to become a lot more consumption.

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Speaker 3: So Chinese needs to consume more and that has already

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Speaker 3: been the sphere of focus for the policy makers. Now

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Speaker 3: that continuation has successful, they achieved that will be key

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Speaker 3: in how they're going to succeed through the spirit of uncertainty.

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Speaker 3: And we've seen already various measures being put in place,

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Speaker 3: or at least expectations for those measures to be put

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Speaker 3: in place. When you look at the coupling for the

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Speaker 3: equity market. And this is again coming down to the

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Speaker 3: themes or say, what drives at the moment the sentiment

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Speaker 3: but also the outcomes of investment. Is of course tariff

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Speaker 3: and tariff uncertainty. Policy is one of them, so policy,

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Speaker 3: and the third is tech innovation. And when you look

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Speaker 3: at China and how the market has performed at the

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Speaker 3: beginning of the year, the excitement around China has been

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Speaker 3: driven by tech or the AI innovation that we've seen

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Speaker 3: in China, which has scoped to bright productively growth longer term,

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Speaker 3: but also immediately I think has scoped to bring some efficiencies,

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Speaker 3: particularly in places like consumer companies, online sales and so

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Speaker 3: on and so forth. When it comes to and that's

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Speaker 3: one sphere that has suddenly provided that rally which has

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Speaker 3: been very narrow but of course supported the market. Then

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Speaker 3: the other one is policy expectations. And again I want

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Speaker 3: to say expectations because policy has been been framed or

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Speaker 3: the policy direction has been framed by the ustations at

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Speaker 3: because of this tires, they'll be a lot more forceful,

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Speaker 3: they'll be a bit larger, and they'll be quicker. And

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Speaker 3: I think the expectations that policy coming in is driving

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Speaker 3: some that resilience in the equity Marcus for China, so

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Speaker 3: quite quite a coupling in terms of where that's coming from.

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Speaker 1: It's interesting that you mentioned technology. There was a tremendous

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Speaker 1: amount of positivity going into the kind of the situation

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Speaker 1: with the tear from the China side. AI has been

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Speaker 1: a big part of that story. I get that here

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Speaker 1: in the States there's a question mark around artificial intelligence lately.

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Speaker 1: Wells Fargo had a note the other day talking about

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Speaker 1: Amazon pausing some of its data center leases, and we've

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Speaker 1: had a story a while back about Microsoft reassessing the

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Speaker 1: money that it's allocating to the AI spend, particularly cloud

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Speaker 1: related infrastructure build out. Is there a risk now that

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Speaker 1: we're going to see, even in China's case, that maybe

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Speaker 1: there was a little bit too much overspending and that

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Speaker 1: we need to see a recalibration.

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Speaker 3: Well, I think that's it's not conclusive as of yet,

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Speaker 3: but certainly the deep seak innovation in China has led

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Speaker 3: to questions around the kapex that some of the magnificence

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Speaker 3: seven has deployed into a development. Ultimately, if you look

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Speaker 3: at the stage we are in terms of that development,

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Speaker 3: it's still very much at the stage one, where a

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Speaker 3: lot of focus is still on training the models, so

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Speaker 3: which still requires a lot of data, and it still

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Speaker 3: requires a lot of intensity. Now what energy in intensity

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Speaker 3: to train those models? In terms of why the deep

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Speaker 3: Sick has questioned that is that the inference or the

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Speaker 3: way the model respond to a certain question is deemed

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Speaker 3: to be a lot more effective that uses It's less

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Speaker 3: intensive in terms of using the cloud, in terms of

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Speaker 3: using the energy, and I think that still pauses a

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Speaker 3: question in terms of how much is needed for that

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Speaker 3: development and of AIS. Ultimately, the stage a longer term

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Speaker 3: benefit of AI doesn't sit into stage one. We do

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Speaker 3: expect the stage two and three. It's about applications, and

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Speaker 3: I think that's where the market is going to pay

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Speaker 3: a lot of attention, is how do you monetize Other

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Speaker 3: applications started to emerge, and we see them some again

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Speaker 3: emerging in China, we see some of them in the US.

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Speaker 3: But modernization and indications that those are starting to emerge

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Speaker 3: in a much more broad way across the consumer, across

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Speaker 3: the different sectors. I think that will be a positive

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Speaker 3: catalyst to the story.

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Speaker 1: So we're talking here about software, but let's imagine it

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Speaker 1: from the different side of the coin, which is the

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Speaker 1: hardware side, and which is one of China's vulnerabilities, particularly

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Speaker 1: when you consider semiconductors. Is China got the ability right

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Speaker 1: now to innovate in a way that could put it

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Speaker 1: on a level playing field with a company like in Video.

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Speaker 3: I mean, look, I think the momentum they've had and

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Speaker 3: the innovation they had so far, it gets them probably

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Speaker 3: to a certain level. And I think it has sufficient

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Speaker 3: momentum at the moment to work at the level under

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Speaker 3: the stage. As I said, we are where we are

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Speaker 3: at the moment, right so we haven't seen a broadening

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Speaker 3: of the application cycle. We haven't seen a lot of

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Speaker 3: usage yet being put in place. Again, we see in

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Speaker 3: a peripher we've seen announcement particular as I said in

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Speaker 3: China in consumer companies where what they're doing is they

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Speaker 3: have a eye models to create a much more effective

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Speaker 3: and efficient consumer experience, right so, and I think that

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Speaker 3: could lead to increased consumption, increase sales and has a

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Speaker 3: positive impact. The broadening of that I think has again

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Speaker 3: the scope for AID is to broaden into sphere like healthcare, biotech.

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Speaker 3: You know, even in industries that has not happened yet,

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Speaker 3: and I think probably that stage when the broadening is

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Speaker 3: happening China my face challenges. But I think at the moment,

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Speaker 3: at the stage where in and where they're looking to

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Speaker 3: direct the economy, I think it's still having a positive impact.

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Speaker 1: E Katerina, thank you so much for joining us. That

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Speaker 1: is E Katerina Bigo Cio for Asia ex Japan Core

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Speaker 1: Investments at Axa Investment Managers joining us from Hong Kong

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Speaker 1: here on the Daybreak Asia podcast. Welcome back to the

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Speaker 1: Daybreak Asia Podcast. I'm Doug Krisner. Joining me now is

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Speaker 1: Tom Bruce. He is macro investment strategist to tangle with

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Speaker 1: Total Wealth Management. Tom is on the line from Houston, Texas. Tom,

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Speaker 1: thank you so much. It's always a pleasure. It seems

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Speaker 1: like President Trump has really softened his tone when it

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Speaker 1: comes to this idea of replacing the Fed chairman for

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Speaker 1: being too slow to cut interest rates. And there seems

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Speaker 1: to be a bit of relief right now if you

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Speaker 1: look at the price action that we're seeing in late trading,

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Speaker 1: do you really think that the president has or his

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Speaker 1: advisors have their thumbs on the market as a way

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Speaker 1: of gauging sentiment right now?

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Speaker 4: Absolutely, I think so. I think some of oursers more

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Speaker 4: than others. Scott Bessett clearly and personally trompably. It is

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Speaker 4: a clearer pulse of the market, and the tope of

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Speaker 4: news that we've seen this evening is exactly what we

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Speaker 4: want to see for the markets. We want to see

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Speaker 4: more assurance that the Fed chair is secure in his position,

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Speaker 4: that it's something that we went and have questioned until recently.

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Speaker 4: And secondly, that we have some resolution to China, because

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Speaker 4: that's such a big part of this terrifor.

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Speaker 1: Quation, no doubt about that. Today Bloomberg News reported some

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Speaker 1: closed door comments from Treasury Secretary Scott Bessant, and he

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Speaker 1: was quoted as saying the standoff with China is unsustainable

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Speaker 1: and he's expecting the situation to de escalate. That seems

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Speaker 1: to be kind of a calming message. Do you think

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Speaker 1: that we're embarking on some type of resolution here in

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Speaker 1: the near term, or do you think this trade war,

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Speaker 1: if we can call it, that has the potential to

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Speaker 1: drag on for a while.

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Speaker 4: Unfortunately, my expectation would be for this to drag on

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Speaker 4: for a while. You know, a week or two ago,

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Speaker 4: the Chinese communicated that they were willing to come to

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Speaker 4: the table if they were being tripped with respect. And

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Speaker 4: I think that's what we've seen from the administration today,

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Speaker 4: between Scott business comments and Donald Trump later in the

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Speaker 4: day commenting that he expected things to go well to

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Speaker 4: China and one hundred and four ven percent tariff wasn't

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Speaker 4: going to stay in place. So that was very encouraging.

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Speaker 1: So we had a lot of positivity in the equity

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Speaker 1: market today. A volume, though, was a little on the

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Speaker 1: light side. Do we make too much of this one?

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Speaker 1: When you look at price action where volume is light,

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Speaker 1: I know, things can become a little exaggerated. Do you

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Speaker 1: want to kind of hang your hat on the s

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Speaker 1: and P kind of turning the corner maybe and picking

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Speaker 1: up two and a half percent today? Was today's price

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Speaker 1: action a big deal? Or does it kind of just

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Speaker 1: fit into this puzzle that we've seen recently where you know,

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Speaker 1: there's been so much volatility up one day, big, down

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Speaker 1: big the next day one.

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Speaker 4: Hundred percent hinges on tariffs, so we can go up

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Speaker 4: or down quite a debt. But the low we put

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Speaker 4: in a couple weeks ago that looked pretty solid from

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Speaker 4: a technical standpoint, but if we don't have progress, we

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Speaker 4: don't have some trade deals announced, it's not going to hold.

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Speaker 4: So we needed to continue to see progress. I think

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Speaker 4: the information we got today from the administration was very constructive,

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Speaker 4: but we need to see followed for with some real

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Speaker 4: deals coming through in the next week or so.

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Speaker 1: I don't know whether you can comment on a specific stock,

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Speaker 1: but I want to talk briefly about Tesla because tonight

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Speaker 1: the company came out with earnings a little disappointing, but

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Speaker 1: then on the call with analyst, Elon Musk said he's

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Speaker 1: going to be stepping back from his role at DOGE

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Speaker 1: next month, and there seems to be a lot of

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Speaker 1: relief right now in the way in which the stock

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Speaker 1: is behaving. It's up more than five percent in the

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Speaker 1: late US session, and it's helping to give a big

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Speaker 1: boost to the many futures contracts. Talk to me a

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Speaker 1: little bit about the role that Musk has been playing

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Speaker 1: in policy and the extent to which you view this.

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Speaker 1: Maybe you don't as a distraction for Tesla's shareholders and

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Speaker 1: the stock.

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Speaker 4: Well, we did not focus on individual stocks, but you know,

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Speaker 4: from my perspective, it is very welcome to see more

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Speaker 4: of a focus on Tesla. You know, Elon Musk is

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Speaker 4: a very busy man. He's he has, you know, multiple

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Speaker 4: businesses and now as admistration Endoge. It makes you wonder

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Speaker 4: how he's part at any time for Tesla. I know

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Speaker 4: he has to some degree, but seeing a renewed focus

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Speaker 4: on it is certainly welcome from from a shareholder perspective.

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Speaker 4: And despite the numbers being bad today, I think there's

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Speaker 4: still plain of encouraging, encouraging catalysts on Tesla's the horizon

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Speaker 4: for Tesla. If you look at what they're doing in

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Speaker 4: robotics and you know full self drives, there's a lot

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Speaker 4: of different things that are that you can be excited

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Speaker 4: about that aren't necessarily showing up in the balance sheet today.

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Speaker 1: So I think we can agree that the level of

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Speaker 1: uncertainty in markets right now has been extreme. How are

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Speaker 1: you navigating this to terrain right now? Tom? Are you

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Speaker 1: you able to discover opportunity or is the risk too

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Speaker 1: great right now that you're more inclined to kind of

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Speaker 1: step aside and let some of this dust settle and

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Speaker 1: at least in the near term.

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Speaker 4: You're certainly right that it's a time of extreme uncertainty.

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Speaker 4: However this happens, you know, it's the financial markets. When

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Speaker 4: we were going through two thousand and eight and many

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Speaker 4: other times, we didn't know how it was going to

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Speaker 4: end up then either. So from this, from that perspective,

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Speaker 4: it's it's a new problem of the markets are dealing

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Speaker 4: with now. But you know this, it's a recurring theme

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Speaker 4: over the years, is that we have a lot of volatility,

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Speaker 4: and I think you have to have to be optimistic

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Speaker 4: at the end of the day and believe that you know,

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Speaker 4: eventually innovation and the free markets will went out and

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Speaker 4: the markets will go higher, and you know, at the

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Speaker 4: end of the day, you know investors were we rewarded.

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Speaker 1: You were talking a moment ago about being laser focused

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Speaker 1: on the tariff story. That may put a big question

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Speaker 1: mark over the equity market. Is there more opportunity right

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Speaker 1: now in fixed income? Do you think then on the

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Speaker 1: equity side.

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Speaker 4: That's a distinct possibility. This Sole America trade that we've

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Speaker 4: seen where the US treasuries and the US dollar have

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Speaker 4: not been a safe even as of late, that's certainly

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Speaker 4: a new development that I would like to see reversed.

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Speaker 4: We like to see that on a bad day in

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Speaker 4: the markets has risk off. The treasuries are being purchased

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Speaker 4: in people feel confident in the US government, and from

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Speaker 4: what I've seen in the past three weeks, including in

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Speaker 4: the last few days, it's still not quite the case.

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Speaker 4: So we really need to see that relationship change in

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Speaker 4: a meaningful way. Once that's restored, we could see treasury

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Speaker 4: yields come back down quite a bit.

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Speaker 1: So to what extent are you forecasting a recession? Maybe

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Speaker 1: that's not even in your outlook right now, but I'm wondering,

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Speaker 1: because of the conversation around weaker growth and the question

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Speaker 1: over prolonged kind of tariff policy that may hold back

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Speaker 1: a lot of revenue, I'm wondering whether or not you're

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Speaker 1: seeing a distinct possibility that we could see contraction in

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Speaker 1: the American economy.

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Speaker 4: I don't think there's much uncertainty about it. If we

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Speaker 4: don't have trade deals, so it's going to be a recession.

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Speaker 4: I assume we're at the beginning of it now, But

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Speaker 4: as far as the trade deal is being worked out

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Speaker 4: and avoiding a recession, that's really hard to say. Enough

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Speaker 4: damage may have been done at this juncture to where

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Speaker 4: we inner recession anyhow, And I and I think a

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Speaker 4: lot of other market participants are. You know, we have

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Speaker 4: our eyes glued on hard data because all the Soviet

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Speaker 4: data we've seen lately has been terrible. So, you know,

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Speaker 4: particularly the labor market, if we started seeing job list

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Speaker 4: game's rise, that's going to be you know, certainly a

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Speaker 4: red flag for a centering O recession.

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Speaker 1: What about opportunities offshore? Given everything that we've been discussing

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Speaker 1: potential challenges for the American markets, do you want to

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Speaker 1: be exposed more to what's going on in Asia right

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Speaker 1: now or to Europe? Or is that something that you're

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Speaker 1: completely ignoring because there are also risks in those jurisdictions.

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Speaker 4: Well, there are. I still feel like the the US

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Speaker 4: is probably the best place long term. Is we really

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Speaker 4: lead the world in terms of innovation. However, over the

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Speaker 4: medium run, you can see places like Europe, in Germany particular,

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Speaker 4: they are unveiling your fiscal stimulus combined with monetary simulus.

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Speaker 4: That's a pretty potent combination, so you could see select

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Speaker 4: economies in Europe do exceptionally well. I also feel like

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Speaker 4: Southeast Asia has perhaps the unique opportunity here if at

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Speaker 4: the end of the day, after all this has worked out,

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Speaker 4: tariffs on Southeast Asia are somewhat less severe than they

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Speaker 4: are in China, then on a relative basis, they may

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Speaker 4: really stand a benefit from this with trading of the

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Speaker 4: US going forward.

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Speaker 1: Tom will leave it there. Thank you so much for

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Speaker 1: joining us. He's Tom Bruce, macro investment strategist at Tangle

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Speaker 1: with Total Wealth Management, joining us from Houston, Texas. Here

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Speaker 1: on the Daybreak Asia Podcast. Thanks for listening to today's

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Speaker 1: episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday,

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Speaker 1: we look at the story shaping markets, finance, and geopolitics

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Speaker 1: in the Asia Pacific. You can find us on Apple, Spotify,

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Speaker 1: the Bloomberg Podcast YouTube channel, or anywhere else you listen.

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Speaker 1: Join us again tomorrow for insight on the market moves

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Speaker 1: from Hong Kong to Singapore and Australia. I'm Doug Chrisner,

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Speaker 1: and this is Bloomberg