WEBVTT - US Inflation In Line With Forecasts, Fed Rate Cut Bets Solidified

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<v Speaker 1>Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner.

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<v Speaker 1>We know that Chinese officials are moving to revitalize the

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<v Speaker 1>domestic economy by focusing on domestic consumption, and in a

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<v Speaker 1>moment we'll take a look at the Chinese consumer as

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<v Speaker 1>well as consumer behavior right across the Asia Pacific with

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<v Speaker 1>David Mann. He is the chief economist for the APAC

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<v Speaker 1>at the MasterCard Economics Institute. But first let's get reaction

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<v Speaker 1>to the report on US consumer prices. In the month

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<v Speaker 1>of November, Core CPI was up three tenths of one

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<v Speaker 1>percent month on month and year on year, a gain

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<v Speaker 1>of three point three percent. Now, both of these readings

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<v Speaker 1>were in line with expectations. For a closer look, we're

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<v Speaker 1>joined by Robert Shine. He is the chief investment officer

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<v Speaker 1>at Blanky Shine Wealth Management. Robert, thank you so much

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<v Speaker 1>for making time to chat with us. I think it's

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<v Speaker 1>fair to say that the CPI print deepened the conviction

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<v Speaker 1>that the FED is going to cut interest rates next

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<v Speaker 1>week by twenty five basis points. But I'm wondering when

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<v Speaker 1>you look at the inflation story here in the US,

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<v Speaker 1>whether or not you're seeing signs of concern beneath the hood,

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<v Speaker 1>are you.

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<v Speaker 2>Well, the market actually cheered from this report, even though

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<v Speaker 2>we saw it tick up a little bit. Obviously we

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<v Speaker 2>have PPI as well tomorrow. It's going to give us

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<v Speaker 2>another sort of indication and read. But the CPI itself,

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<v Speaker 2>you know, the inflationary impulse underlying in the economy is

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<v Speaker 2>on a downward trajectory, which is welcome. That's what we

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<v Speaker 2>need to see, That's what the FED needs to see. Clearly,

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<v Speaker 2>we had FED fun futures point to a ninety percent

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<v Speaker 2>cut for next week, so that'll solidify that. But I

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<v Speaker 2>think the real concern, I think this is what you're

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<v Speaker 2>asking is in twenty twenty five, the concern is is

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<v Speaker 2>that inflation rears back right and so it's still stubborn

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<v Speaker 2>and we see an uptick in inflation which could pull

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<v Speaker 2>the rug out of under the what we're seeing in

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<v Speaker 2>terms of the rally. There's a lot of great setup

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<v Speaker 2>as to why the market can continue to grind high

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<v Speaker 2>and higher highs in twenty twenty five. But the biggest

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<v Speaker 2>problem I think for the markets and investors to consider

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<v Speaker 2>is if inflation is still there and it basically gives

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<v Speaker 2>the pausing effect on the easing policy for the Federal Reserve.

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<v Speaker 1>So I'm curious about what the house view a blanket

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<v Speaker 1>shine is on the outlook for inflation next year.

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<v Speaker 2>Well, I think you got to look at from a

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<v Speaker 2>bigger picture. Another reason why the market and the sentiment

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<v Speaker 2>of the market is the Santa Claus rally is continuing,

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<v Speaker 2>the trend is your friend, is because of sort of

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<v Speaker 2>what the new administration's policy by way of the Treasury

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<v Speaker 2>Secretary Scott Asset and Trump's appointee has basically laid the

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<v Speaker 2>baseline and he talked about three things that he's going

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<v Speaker 2>to focus on, which I think from a policy standpoint,

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<v Speaker 2>are instrumental to combat inflation, but everything else. One is

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<v Speaker 2>the debt and deficit. So one of the key policy

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<v Speaker 2>items that was proposed is to get the budget deficit

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<v Speaker 2>to three percent it's currently at seven. Number two, get

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<v Speaker 2>the GDP growth from two percent currently to three percent.

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<v Speaker 2>And number three, which is most important, it's the inflation

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<v Speaker 2>that we're all worried about, which is increasing. You know, drill,

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<v Speaker 2>baby drill, so increasing three million barrels a day of

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<v Speaker 2>currently what we're us is producing. And they're going to

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<v Speaker 2>deregulate and they're going to increase production. So you know

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<v Speaker 2>as well as I do. Energy market is within everything,

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<v Speaker 2>and I think that's the key. So if they could,

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<v Speaker 2>you know, day one policy, you know one, get that

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<v Speaker 2>in Washington and get their agenda moving through, that could

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<v Speaker 2>help subside some of the inflationary pressures.

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<v Speaker 1>The government is such a powerful influence on the economy.

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<v Speaker 1>When I'm listening to I'm wondering whether it's possible to

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<v Speaker 1>reduce fiscal spending by that amount and yet produce economic

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<v Speaker 1>growth at a rate higher than what we're currently experiencing.

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<v Speaker 2>Yeah, So if we look back in the last twenty

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<v Speaker 2>four months, with all of the spending policies and bills

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<v Speaker 2>that have been enacted, that has been inflationary, and quite frankly,

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<v Speaker 2>a lot of that money. Like let's look at the

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<v Speaker 2>Chip Sack. Last I checked this summer, it was a

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<v Speaker 2>fifty four billion dollar passing of that act and only

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<v Speaker 2>a billion of the fifty four billion has actually worked

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<v Speaker 2>its ways in the economy. That's a big problem because

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<v Speaker 2>there's a lot of money that it still has to

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<v Speaker 2>be earmarked for the future, and that spending is inflationary,

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<v Speaker 2>so it's not going to be an easy road ahead.

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<v Speaker 2>And as you know, eighty seven percent of the time

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<v Speaker 2>inflation comes on two waves, but it takes some time.

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<v Speaker 2>So we'll see how this plays out, but that would

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<v Speaker 2>be the biggest concern in twenty twenty five.

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<v Speaker 1>So I hear your painting of the landscape, so to speak,

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<v Speaker 1>and I'm more curious about what it's leading you to

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<v Speaker 1>do in terms of putting new capital to work in markets.

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<v Speaker 2>Yeah, So I think twenty twenty five is going to

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<v Speaker 2>be all its the anticipation that's going to be the theme

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<v Speaker 2>of the year moving in. And the reason why is

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<v Speaker 2>one is going to be the Federal reserve right, the

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<v Speaker 2>easing cycle, the front running of the Fed and trying

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<v Speaker 2>to guess, you know, how many more cuts are they

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<v Speaker 2>going to give us, you know, next year, and then

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<v Speaker 2>all us alongside of that policy anticipation is going to

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<v Speaker 2>be Washington right, tax reform, energy reform, even immigration in

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<v Speaker 2>some parts of that as inflationary depending upon how it's

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<v Speaker 2>going to be handled. So the theme is a lot

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<v Speaker 2>of unknowns. You have to have sort of a defensive

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<v Speaker 2>posture with some cash equivalent not cash because cash is

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<v Speaker 2>not your friend as industrates come down, but has some

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<v Speaker 2>dry powder on the sidelines available to take advantage of

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<v Speaker 2>some opportunities coming our way. I do see more volatility

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<v Speaker 2>because of all the anticipation, meaning the markets are going

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<v Speaker 2>to front run, you know, some great news and headlines,

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<v Speaker 2>and then reality might set in, right Congress might you know,

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<v Speaker 2>might not agree on everything. So we're going to have

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<v Speaker 2>to wait and see how these plays.

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<v Speaker 1>So dry powder to deploy when opportunities present themselves on

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<v Speaker 1>the horizon. Is that a euphemism for a pullback that

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<v Speaker 1>you're perhaps anticipating in the near term.

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<v Speaker 2>Yeah, we're long overdue. I can see well into the

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<v Speaker 2>maybe the first quarter market continues, but you know, any

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<v Speaker 2>sort of you know, geopolitical or again disappointment from Washington

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<v Speaker 2>on policy or anything that shows that the federal Reserve

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<v Speaker 2>is going to have to take a pause, we're going

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<v Speaker 2>to be pulled back.

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<v Speaker 1>So where are you on markets offshore, particularly Asia? We

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<v Speaker 1>know that China has been doing a lot to stimulate

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<v Speaker 1>the demand side of the equation, not just supply, which

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<v Speaker 1>is a little new I think for Shi Jinping. Is

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<v Speaker 1>there anything interesting in your view in markets offshore, particularly Asia?

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<v Speaker 2>Well, definitely, given what we're seeing in the global markets.

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<v Speaker 2>You know, we're seeing markets cool off if you will.

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<v Speaker 2>And so over thirty percent of the global banks have

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<v Speaker 2>cut right now, and three of the five countries have stimulated,

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<v Speaker 2>most recently China with that big announcement, and that's you know,

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<v Speaker 2>long overdue. They've had years of even dealing with that

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<v Speaker 2>real estate crisis and unwinding that and that takes time.

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<v Speaker 2>So to get the consumer back in, the investor back in.

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<v Speaker 2>I think those announcements that the government's willing to stimulate

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<v Speaker 2>is going to be welcome and they could make the

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<v Speaker 2>Asian markets more interesting in the new year.

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<v Speaker 1>We had a report to earlier today being generated by

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<v Speaker 1>CBS News saying that President elect Trump has invited Chinese

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<v Speaker 1>President Chi Jinping to Trump's inauguration. It seems like an

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<v Speaker 1>olive branch, even though the new Trump administration is threatening tariffs.

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<v Speaker 1>When you look at this relationship US China, what does

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<v Speaker 1>it lead you to conclude in terms of a new

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<v Speaker 1>trade relationship. Is it going to become more adversarial or

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<v Speaker 1>will something new and favorable get worked out at the end.

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<v Speaker 2>So I would encourage investors to watch actions, not headlines. Right,

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<v Speaker 2>there's a headline a day that spokes and sircs fear

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<v Speaker 2>into what might happen, right, the anticipation effect of what

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<v Speaker 2>might play into the tariff war, if you will, A

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<v Speaker 2>lot of that's rhetoric. I think if you go back

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<v Speaker 2>to the very first day of the Trump administration, he

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<v Speaker 2>jumped on a plane and went over there. That was

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<v Speaker 2>one of the biggest messages that even though adversarially the

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<v Speaker 2>headlines and the media and the global communities want to

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<v Speaker 2>make something of that, by Trump actually making an actionary

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<v Speaker 2>point to go over there was a very big first step.

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<v Speaker 2>And obviously he threw on three hundred billion dollars worth

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<v Speaker 2>of tariffs even though they shook hands and broke bread. However,

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<v Speaker 2>the Biden administration kept on most, if not all, that

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<v Speaker 2>three hundred billion in tariffs. So tariffs are in there.

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<v Speaker 2>I don't see, you know, if we look at Walmart today,

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<v Speaker 2>I don't see a lot of the goods that come

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<v Speaker 2>from China on our Walmart shriff shelves in the United States.

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<v Speaker 2>They haven't gone up exponentially relative to anything else. So

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<v Speaker 2>they can work. They are a sort of a tool

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<v Speaker 2>to get somebody to the table to discuss what would

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<v Speaker 2>be a fair, equitable outcome for all parties.

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<v Speaker 1>So we're talking about tariffs as one part of the

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<v Speaker 1>incoming administration's economic policy. But you kind of alluded to

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<v Speaker 1>this early, which has to do with deregulation. So if

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<v Speaker 1>we can accept that as an endgame, is it necessarily

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<v Speaker 1>the case that we're going to see a lot more

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<v Speaker 1>in the way of merger and acquisition activity.

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<v Speaker 2>You're exactly right. In fact, if you look at the

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<v Speaker 2>US markets in the last twenty four months to even

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<v Speaker 2>thirty six months, we haven't seen IPOs, we haven't seen

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<v Speaker 2>m and A. But if you start deregulating, think about it, right,

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<v Speaker 2>energy sector, healthcare sector, and a few others, even the

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<v Speaker 2>financial sector with the reserves put on banks, and that's

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<v Speaker 2>where we saw the bank rally since election day here

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<v Speaker 2>in the US. There's going to unleash some animal spirits

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<v Speaker 2>in the marketplace and we could see a pickup in

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<v Speaker 2>M and A and IPOs, and that's where we were

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<v Speaker 2>confident of markets moving higher in the new year as well.

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<v Speaker 1>Robert will leave it there, Thank you so much for

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<v Speaker 1>joining us. Robert Chine is the chief investment officer at

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<v Speaker 1>Blankie Shine Wealth Management, joining us today from here in

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<v Speaker 1>New York City on the daybreak. Asia Pont Welcome, back

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<v Speaker 1>to the Bloomberg Gay Break Asia podcast. I'm Doug Chrisner.

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<v Speaker 1>As Chinese officials take steps to stimulate their economy, domestic

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<v Speaker 1>demand is getting a renewed focus. To help us understand

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<v Speaker 1>the impact, let's bring in David Mann. He is the

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<v Speaker 1>chief economist for the Asia Pacific at the MasterCard Economics Institute.

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<v Speaker 1>David joins us from Singapore. Thank you for being with us. David,

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<v Speaker 1>and I'd like to begin by talking about China. We

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<v Speaker 1>can get to the rest of the Asia Pacific in

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<v Speaker 1>a moment. I'd like to get your take on the

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<v Speaker 1>messaging that we are getting from the polit Bureau meeting

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<v Speaker 1>and what that may mean for retail consumption in China.

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<v Speaker 3>Well, I think the best way to think about the

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<v Speaker 3>change in the messaging that we're seeing from policymakers in

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<v Speaker 3>China is one in which they're looking to leverage the

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<v Speaker 3>potential that there is from the consumer spending power that

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<v Speaker 3>China does have. It has a relatively high savings rate,

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<v Speaker 3>relatively lower portion of consumer spending within the economy compared

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<v Speaker 3>to elsewhere. That's partly, of course, as a result of

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<v Speaker 3>the higher levels of investment that has been in place

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<v Speaker 3>in China. For many years, but finding ways of releasing

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<v Speaker 3>some of that consumer spending power, releasing some of those

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<v Speaker 3>savings and converting them into consumption could really help to

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<v Speaker 3>support the economy in twenty twenty five. It is one

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<v Speaker 3>of those key things where whenever we've been asked over

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<v Speaker 3>the last few years, as we've been watching the weakness

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<v Speaker 3>and the housing market, the weakness and confidence, the weakness

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<v Speaker 3>and investment, what could turn this around? What could really help.

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<v Speaker 3>One of the big things is of course on consumer

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<v Speaker 3>as well as business confidence and consumer spending. So any

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<v Speaker 3>measures that put more money in people's pockets give them

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<v Speaker 3>more confidence in general on their own economic personal economic

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<v Speaker 3>outlook would of course be things that can then turn

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<v Speaker 3>into even more of that spending and could really draw

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<v Speaker 3>a line under the growth rate at least next year.

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<v Speaker 3>We know long term there are still major challenges with

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<v Speaker 3>the economy looking at a story of demographics which is

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<v Speaker 3>in decline as a contributor to growth. But there are

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<v Speaker 3>a few exciting industries around the world that are popping up,

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<v Speaker 3>in particular being driven or supported by AI and automation

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<v Speaker 3>that can really help to counter some of that demographic drag.

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<v Speaker 3>But that extra spending that you could get from the

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<v Speaker 3>consumer side would be very welcome. We would expect amidst

0:12:37.720 --> 0:12:40.439
<v Speaker 3>the sort of challenges that Channa's economy faces today and

0:12:40.520 --> 0:12:41.920
<v Speaker 3>we'll be facing throughout next year.

0:12:42.000 --> 0:12:44.440
<v Speaker 1>I think it's very significant that the focus now seems

0:12:44.440 --> 0:12:49.040
<v Speaker 1>to be on revitalizing domestic consumption rather than just dealing

0:12:49.559 --> 0:12:53.040
<v Speaker 1>with the supply side. Is that striking to you in

0:12:53.080 --> 0:12:53.439
<v Speaker 1>any way?

0:12:55.280 --> 0:12:58.200
<v Speaker 3>Yes, it does make a lot of sense that after

0:12:58.480 --> 0:13:01.200
<v Speaker 3>so many years where you can't really argue that there's

0:13:01.240 --> 0:13:04.600
<v Speaker 3>a lack of infrastructure that enables growth, that there's plenty

0:13:04.679 --> 0:13:07.240
<v Speaker 3>of that that's been built out over the last several decades,

0:13:07.640 --> 0:13:10.200
<v Speaker 3>that really it is more about the demand rather than

0:13:10.240 --> 0:13:14.559
<v Speaker 3>the supply side in the economy. Of course, with investment also,

0:13:14.679 --> 0:13:17.360
<v Speaker 3>we do note that because there has been that trend

0:13:17.400 --> 0:13:20.760
<v Speaker 3>slowing in growth in China, companies even from China are

0:13:20.840 --> 0:13:24.600
<v Speaker 3>looking to invest more outside of the country and going

0:13:25.440 --> 0:13:28.679
<v Speaker 3>out to find more growth opportunities, whether it's all around

0:13:28.720 --> 0:13:32.400
<v Speaker 3>the rest of the Asia Pacific region or even further afield.

0:13:32.840 --> 0:13:37.079
<v Speaker 3>And so for the domestic economy, the investment side is

0:13:37.160 --> 0:13:40.480
<v Speaker 3>probably is already that much softer, and so there's even

0:13:40.559 --> 0:13:42.599
<v Speaker 3>more of that shift in the direction of having the

0:13:42.679 --> 0:13:45.520
<v Speaker 3>higher portion of consumer spending that you see in other

0:13:46.080 --> 0:13:48.440
<v Speaker 3>major economies. We think that is the sort of trend

0:13:48.480 --> 0:13:50.720
<v Speaker 3>that makes a lot of sense in the case of China,

0:13:50.800 --> 0:13:51.960
<v Speaker 3>that we should go in that direction.

0:13:52.160 --> 0:13:54.199
<v Speaker 1>Do you have a sense of the ripple effect and

0:13:54.360 --> 0:13:58.800
<v Speaker 1>how this economic stimulus may kind of filter through markets

0:13:58.840 --> 0:14:00.280
<v Speaker 1>across the Asia Pacific.

0:14:01.880 --> 0:14:04.679
<v Speaker 3>That one is more of an open question until we

0:14:04.800 --> 0:14:08.599
<v Speaker 3>know more about the specific details. The one thing that

0:14:08.720 --> 0:14:12.120
<v Speaker 3>we look at at the MasterCard economic sensitie when thinking

0:14:12.160 --> 0:14:14.600
<v Speaker 3>about the outlook for say, other parts of the region

0:14:14.679 --> 0:14:17.400
<v Speaker 3>and what the impact is from other major economies around

0:14:17.400 --> 0:14:20.160
<v Speaker 3>the world, whether it's the US or China, as the

0:14:20.240 --> 0:14:23.400
<v Speaker 3>case may be, the two biggest economies. The big one

0:14:23.480 --> 0:14:26.560
<v Speaker 3>we're focusing on is through the lens on travel, and

0:14:26.720 --> 0:14:31.320
<v Speaker 3>on that front, we have not yet seen the complete recovery,

0:14:31.520 --> 0:14:34.000
<v Speaker 3>at least looking at the official travel data that we

0:14:34.080 --> 0:14:38.640
<v Speaker 3>can get from China for the outbound traveler going all

0:14:38.720 --> 0:14:42.120
<v Speaker 3>around the region or anywhere else coming from China. Now,

0:14:42.240 --> 0:14:44.720
<v Speaker 3>this is something that still means there is a source

0:14:44.760 --> 0:14:48.280
<v Speaker 3>of extra recovery still yet to actually happen in that space.

0:14:48.800 --> 0:14:51.320
<v Speaker 3>The interesting thing though, is when we do see it,

0:14:51.840 --> 0:14:54.160
<v Speaker 3>is it a more confident traveler or is it a

0:14:54.240 --> 0:14:57.000
<v Speaker 3>more cautious traveler. When you look at some of the

0:14:57.120 --> 0:15:00.960
<v Speaker 3>data we've been seeing, for example, out of say, there

0:15:01.040 --> 0:15:05.200
<v Speaker 3>is more evidence that there is a softer spending than

0:15:05.360 --> 0:15:07.240
<v Speaker 3>used to be the case, that there are people that

0:15:07.360 --> 0:15:10.320
<v Speaker 3>are traveling in not spending quite the same way that

0:15:10.360 --> 0:15:13.240
<v Speaker 3>they used to in twenty nineteen. But at the same time,

0:15:13.680 --> 0:15:17.200
<v Speaker 3>we're not fully back on the economy itself in being

0:15:17.240 --> 0:15:19.600
<v Speaker 3>in a stronger position. Neither are we fully back on

0:15:19.640 --> 0:15:21.880
<v Speaker 3>the total volumes of people, So just the shar volume

0:15:21.920 --> 0:15:25.320
<v Speaker 3>story would be helpful. Another location where also this is

0:15:25.360 --> 0:15:28.200
<v Speaker 3>a major focus is Thailand, for example, in the region

0:15:28.520 --> 0:15:33.360
<v Speaker 3>where China pre pandemic was such an important source market

0:15:33.560 --> 0:15:36.920
<v Speaker 3>for the tourism industry, and we think that will go back.

0:15:36.800 --> 0:15:37.960
<v Speaker 2>In that direction again.

0:15:38.200 --> 0:15:42.000
<v Speaker 3>But in the meantime, while the China recovery has not

0:15:42.240 --> 0:15:46.560
<v Speaker 3>been full, we have been seeing other markets, including further

0:15:46.640 --> 0:15:49.480
<v Speaker 3>afield in Europe or the US, but particularly including India,

0:15:49.920 --> 0:15:53.200
<v Speaker 3>starting to fill in some of those gaps all around

0:15:53.240 --> 0:15:56.560
<v Speaker 3>the region, actually including in Thailand Vietnam for example. We

0:15:56.680 --> 0:15:59.560
<v Speaker 3>noted in our travel report earlier this year that it

0:15:59.760 --> 0:16:02.240
<v Speaker 3>is it now sees two and a half as many

0:16:02.440 --> 0:16:06.080
<v Speaker 3>times travelers coming from India into Vietnam compared to where

0:16:06.080 --> 0:16:09.400
<v Speaker 3>we were in twenty nineteen, and with the projections we

0:16:09.560 --> 0:16:11.760
<v Speaker 3>have for the scale of the rise of the middle

0:16:11.800 --> 0:16:14.920
<v Speaker 3>class and the upper income consumers in India over the

0:16:15.040 --> 0:16:18.080
<v Speaker 3>next ten to fifteen years, the total numbers of people

0:16:18.160 --> 0:16:20.440
<v Speaker 3>traveling could be approaching the sort of numbers that we

0:16:20.520 --> 0:16:23.600
<v Speaker 3>had pre pandemic out of China over the next fifty

0:16:23.760 --> 0:16:25.440
<v Speaker 3>or by the end of the next fifteen years.

0:16:25.920 --> 0:16:27.800
<v Speaker 1>We can't lose sight of the fact that the US

0:16:27.880 --> 0:16:30.200
<v Speaker 1>and China are bracing for what appears to be a

0:16:30.280 --> 0:16:35.040
<v Speaker 1>renewed standoff. This obviously after Donald Trump campaigned on implementing

0:16:35.240 --> 0:16:39.240
<v Speaker 1>some fresh tariffs on all Chinese goods, Do you have

0:16:39.360 --> 0:16:41.640
<v Speaker 1>a sense of the impact? Maybe that's too much to

0:16:41.720 --> 0:16:44.360
<v Speaker 1>say at this point. I mean, perhaps the thread of

0:16:44.400 --> 0:16:47.640
<v Speaker 1>tariffs is a negotiating ploy, but let's assume for the

0:16:47.720 --> 0:16:50.680
<v Speaker 1>moment that some are implemented. Do you have a sense

0:16:50.800 --> 0:16:53.600
<v Speaker 1>of what the impact may be, not only in China

0:16:53.680 --> 0:16:55.880
<v Speaker 1>but in the APAC more generally.

0:16:57.640 --> 0:17:00.440
<v Speaker 3>Well, the main thing, I think the main thing people

0:17:00.880 --> 0:17:03.960
<v Speaker 3>focus on, rightly so at first, is on Okay, how

0:17:04.080 --> 0:17:07.600
<v Speaker 3>bad is it, how damaging is this to the amount

0:17:07.680 --> 0:17:11.040
<v Speaker 3>of exports, for example, that we would see going directly

0:17:11.160 --> 0:17:14.400
<v Speaker 3>from China into the US as we saw last time around.

0:17:14.440 --> 0:17:17.720
<v Speaker 3>Though I would note that the ratio of China's exports

0:17:18.240 --> 0:17:20.840
<v Speaker 3>to global exports is about the same as it was

0:17:21.520 --> 0:17:27.840
<v Speaker 3>even compared to before twenty seventeen, so the main change

0:17:27.880 --> 0:17:30.960
<v Speaker 3>has been China exporting more to other places around the world.

0:17:31.119 --> 0:17:34.520
<v Speaker 3>The other thing is, if we do see that weaker demand,

0:17:35.440 --> 0:17:39.840
<v Speaker 3>the weaker overall growth number, it certainly adds to the

0:17:40.000 --> 0:17:42.840
<v Speaker 3>reasons why you would then see even more of the

0:17:42.920 --> 0:17:46.679
<v Speaker 3>stimulus measures and even more of that much broader based,

0:17:46.880 --> 0:17:50.520
<v Speaker 3>stronger types of stimulus measures out of China to counter it. Now,

0:17:50.600 --> 0:17:53.160
<v Speaker 3>the other thing, those are the points with the negatives

0:17:53.200 --> 0:17:55.919
<v Speaker 3>and how to counter it. The other thing we should

0:17:55.920 --> 0:17:59.280
<v Speaker 3>be also focusing on is this also may well be

0:17:59.600 --> 0:18:05.439
<v Speaker 3>adding to an acceleration of FDI inflows into many other markets,

0:18:05.440 --> 0:18:08.760
<v Speaker 3>whether it's around the Asian region including Vietnam, or over

0:18:08.960 --> 0:18:11.840
<v Speaker 3>into parts of Africa, or even into India, where we

0:18:11.920 --> 0:18:15.280
<v Speaker 3>see even more diversification of supply chains. Even more companies

0:18:15.359 --> 0:18:18.080
<v Speaker 3>around the world from all parts of the world, whether

0:18:18.119 --> 0:18:20.399
<v Speaker 3>it's from the Asia Pacific or from the US or Europe.

0:18:20.760 --> 0:18:24.560
<v Speaker 3>Looking to be producing in multiple locations. Of course it

0:18:24.680 --> 0:18:27.320
<v Speaker 3>needs to make economic sense, but that's spreading out of

0:18:27.359 --> 0:18:29.800
<v Speaker 3>where it goes and seeing more of those FDI flows.

0:18:30.480 --> 0:18:32.840
<v Speaker 3>That is something we were very focused on, and we

0:18:32.880 --> 0:18:36.600
<v Speaker 3>would note that actually the outbound FDI, the cumulative amount

0:18:36.640 --> 0:18:39.360
<v Speaker 3>of FDI that China has been accumulating in the last

0:18:39.359 --> 0:18:42.680
<v Speaker 3>few years has been quite noteworthy already and that would

0:18:42.880 --> 0:18:44.200
<v Speaker 3>most likely also accelerate.

0:18:44.840 --> 0:18:47.600
<v Speaker 1>So you're obviously in Singapore, I'm here in New York City.

0:18:47.760 --> 0:18:51.159
<v Speaker 1>Is there something that people in my neck of the

0:18:51.240 --> 0:18:54.960
<v Speaker 1>woods are missing when it comes to understanding the dynamics

0:18:55.040 --> 0:18:57.880
<v Speaker 1>right now? The economic dynamics across the Asia Pacific.

0:19:00.160 --> 0:19:02.320
<v Speaker 3>I think the main thing that I would stress is

0:19:02.440 --> 0:19:05.320
<v Speaker 3>there's so many different stories to be told across the

0:19:05.400 --> 0:19:08.280
<v Speaker 3>Asia Pacific region. So we can talk of course I

0:19:08.400 --> 0:19:11.440
<v Speaker 3>mentioned China and India earlier, but even within say the

0:19:11.600 --> 0:19:16.240
<v Speaker 3>Asian region, which is a collection of very divergent markets

0:19:16.280 --> 0:19:19.280
<v Speaker 3>all the way from low Cambodia through to Singapore which

0:19:19.359 --> 0:19:23.320
<v Speaker 3>is a high income advanced economy. That is I think

0:19:23.400 --> 0:19:25.200
<v Speaker 3>the key thing to be watching for that there's so

0:19:25.400 --> 0:19:28.040
<v Speaker 3>many stories all the way through and everything in between.

0:19:28.080 --> 0:19:30.960
<v Speaker 3>When we think of the major the biggest market in

0:19:31.040 --> 0:19:34.639
<v Speaker 3>the Asian region in Southeast Asia being Indonesia, and the

0:19:34.760 --> 0:19:37.359
<v Speaker 3>key thing I think that is really going on that

0:19:37.480 --> 0:19:41.600
<v Speaker 3>I think has been underappreciated, maybe on a global scale

0:19:41.600 --> 0:19:44.280
<v Speaker 3>at least, is just how many reforms we have been

0:19:44.359 --> 0:19:47.919
<v Speaker 3>seeing that are helping to boost investment and growth around

0:19:47.960 --> 0:19:50.399
<v Speaker 3>this region. I mentioned India. I think that is a

0:19:52.119 --> 0:19:54.800
<v Speaker 3>top story in that regard, given it is a place

0:19:54.840 --> 0:19:57.760
<v Speaker 3>where we believe it will be the fastest growing major

0:19:58.119 --> 0:20:01.800
<v Speaker 3>sized economy in the region, and indeed even globally, it

0:20:01.920 --> 0:20:05.960
<v Speaker 3>also has the scale of population to go alongside that

0:20:06.080 --> 0:20:09.359
<v Speaker 3>growth potential. But on top of that, places like Indonesia

0:20:09.480 --> 0:20:13.320
<v Speaker 3>also have been implementing policy reforms, finding ways or looking

0:20:13.359 --> 0:20:16.520
<v Speaker 3>for new ways to boost key sectors of the economy,

0:20:16.560 --> 0:20:20.399
<v Speaker 3>whether it's tourism or other types of infrastructure buildouts that

0:20:20.440 --> 0:20:24.760
<v Speaker 3>would enable even more growth on the industrial side. I

0:20:24.840 --> 0:20:27.760
<v Speaker 3>think that's the other thing now on top of that,

0:20:27.920 --> 0:20:30.119
<v Speaker 3>I would stress, and that's particularly where we bring in

0:20:30.440 --> 0:20:33.760
<v Speaker 3>Northeast Asia as well in Southeast Asia, is thinking about

0:20:33.880 --> 0:20:36.720
<v Speaker 3>just how much innovation we've been seeing that now is

0:20:36.800 --> 0:20:40.200
<v Speaker 3>coming from this region in terms of just how rapidly

0:20:40.760 --> 0:20:44.600
<v Speaker 3>so much new technology was being developed or new approaches

0:20:44.640 --> 0:20:47.840
<v Speaker 3>were being developed and rolled out in Asia Pacific and

0:20:48.000 --> 0:20:51.160
<v Speaker 3>then being rolled out to the West. I think expecting

0:20:51.240 --> 0:20:53.280
<v Speaker 3>it to be a source of innovation even more in

0:20:53.320 --> 0:20:56.200
<v Speaker 3>the future is another thing that I think really folks

0:20:56.240 --> 0:20:57.720
<v Speaker 3>should pay a close attention.

0:20:57.520 --> 0:20:59.399
<v Speaker 1>To, and we will, I'm sure in the year ahead.

0:20:59.480 --> 0:21:01.080
<v Speaker 1>David Tank, thank you so much for being with us.

0:21:01.280 --> 0:21:04.200
<v Speaker 1>David Mann there, chief economist for the Asia Pacific for

0:21:04.359 --> 0:21:09.280
<v Speaker 1>the MasterCard Economics Institute, joining us from Singapore here on

0:21:09.359 --> 0:21:15.520
<v Speaker 1>the Daybreak Asia podcast. Thanks for listening to today's episode

0:21:15.640 --> 0:21:19.560
<v Speaker 1>of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we

0:21:19.640 --> 0:21:23.440
<v Speaker 1>look at the story shaping markets, finance, and geopolitics in

0:21:23.480 --> 0:21:26.560
<v Speaker 1>the Asia Pacific. You can find us on Apple, Spotify,

0:21:26.720 --> 0:21:30.160
<v Speaker 1>the Bloomberg Podcast YouTube channel, or anywhere else you listen.

0:21:30.560 --> 0:21:33.399
<v Speaker 1>Join us again tomorrow for insight on the market moves

0:21:33.480 --> 0:21:37.960
<v Speaker 1>from Hong Kong to Singapore and Australia. I'm Doug Chrisner,

0:21:38.119 --> 0:21:39.480
<v Speaker 1>and this is Bloomberg