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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner.

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Speaker 2: It was all about headline risk in the US. News

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Speaker 2: on those tariffs sparked a lot of volatility and equity trading.

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Speaker 2: President Trump delaying levies on Mexican and Canadian goods covered

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Speaker 2: by the North American Trade Deal. In a moment, we'll

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Speaker 2: be speaking with Karen pay. She is the executive vice

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Speaker 2: president and head of portfolio Management at Fiduciary Trust International.

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Speaker 2: But we begin in Tokyo. Earlier this morning, Bank of

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Speaker 2: America CEO Brian moynihan sat down for an exclusive interview

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Speaker 2: with Bloomberg.

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Speaker 3: Sherry On.

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Speaker 2: Here's part of their conversation.

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Speaker 1: And Brian, good to have you in the Tokyo studio.

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Speaker 3: It's good to be here, Sherry.

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Speaker 4: I mean it's a very exciting place these days.

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Speaker 1: I mean, you guys have been operating since what the

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Speaker 1: end of World War two? How is your business going?

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Speaker 3: It's great. And so we operated in the bank banking

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Speaker 3: side since the end of World War two. We've operated

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Speaker 3: on the.

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Speaker 4: Ob security side and became a full member and eighty six,

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Speaker 4: so we've been here a long time, about eight hundred

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Speaker 4: teammates one of the largest non Japanese banks in the city.

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Speaker 4: Corporate banking, investment banking, treasury services, and obviously the market's

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Speaker 4: business done very well here.

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Speaker 1: What parts especially are we seeing more excitement about.

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Speaker 4: Well, if you think about Japan, the excitement overall is

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Speaker 4: the changes in structure.

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Speaker 3: Obviously, if just rate structure coming.

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Speaker 4: Up inflation from a country had no inflation for years

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Speaker 4: for thirty years, it changes people's attitudes wage growth. And

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Speaker 4: then also on the other side of it, you're seeing

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Speaker 4: the corporate reforms going through, which are critical in the

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Speaker 4: push for the government to move the money outside the

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Speaker 4: deposit banking system into the investment system, which will happen,

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Speaker 4: which has drawn a lot of interest from outside world.

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Speaker 4: So we're here a lot m and a dialogue and

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Speaker 4: it was up last year and.

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Speaker 3: We expected to be up this year.

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Speaker 4: We're hearing we'e hundred about thirty forty percent of our

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Speaker 4: revenues of Asia in here in Japan, so strong. We're

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Speaker 4: seeing a lot of market activity. And then the flow,

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Speaker 4: it's the capital flows, you know, the treasury services business,

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Speaker 4: which is as exciting as them and a deal, but

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Speaker 4: it's critically important the profitability of our company.

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Speaker 1: We were just mentioning seven and nine for example, and

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Speaker 1: I know that you guys have been involved with them.

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Speaker 1: We're now hearing potential listing in the US.

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Speaker 4: Business that that I'd have to lead to my teammates.

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Speaker 4: I don't get involved in a deal, but look at

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Speaker 4: we are. We have a great team here, and they

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Speaker 4: do a great job. And if they think it's right

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Speaker 4: off for customers, and they'll tell them and we'll see

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Speaker 4: what happens.

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Speaker 1: But that's sort of part of that corporate reform story.

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Speaker 3: Yeah, that is, that's the idea.

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Speaker 4: We've been with government officials and clients, and the companies

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Speaker 4: are excited to have a you know, in the classic word,

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Speaker 4: animal spirits. Let's get moving, let's merge these companies together,

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Speaker 4: let's modernize them.

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Speaker 3: Let's keep working on the cost structure.

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Speaker 4: You have, you know, a very low unemployment rate here,

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Speaker 4: you know, two percent plus, you know, very low. There's

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Speaker 4: plenty of capacity to absorb, you know, employees. There's a

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Speaker 4: little more competition for wages, wage competition for employees, wage growth.

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Speaker 4: So I think all that sets up the ability to

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Speaker 4: get the reforms going through. Whether the corporate reforms return

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Speaker 4: forms that demands that you've got to return capital, getting

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Speaker 4: cash off the balance to these corporates, either back to

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Speaker 4: shareholders to do something, but in the end of the day,

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Speaker 4: you got to come back and.

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Speaker 3: It's got to be wise.

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Speaker 4: Deals are strategically important that add value because spending money

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Speaker 4: is the easy part. Making it really get the returns

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Speaker 4: after you spend it is the hard part.

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Speaker 1: There's more in the pipeline for Bank of America here

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Speaker 1: when it.

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Speaker 4: Comes to deals this Yeah, yeah, just the amount of conversation,

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Speaker 4: amount excitement, both inbound from outside the rest of the

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Speaker 4: world and also outbound from the large companies here continue

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Speaker 4: to expand across agent but importantly into the United States

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Speaker 4: because frankly, a lot of the manufacturing debate that you

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Speaker 4: talked about in earlier section is do they need to

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Speaker 4: expand their manufacturing to maybe avoid potential terrorists which is unknown.

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Speaker 3: What's going on?

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Speaker 1: Yeah, how much does that add to business uncertainty for you?

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Speaker 3: Well, I think.

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Speaker 4: Clearly on the business side, after election, you had businesses

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Speaker 4: very enthusiastic about the lower regulatory birden they'd.

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Speaker 3: Have the ability to get deals done.

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Speaker 4: And you went from conversations last summer which were sort

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Speaker 4: of interesting conversations with the boards. Our teammates tell me

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Speaker 4: they go in and they talk and they'd show them

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Speaker 4: these deals, and so that makes sense, but it may

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Speaker 4: be hard to get it done now, to get in.

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Speaker 3: Here and let's talk about these deals that.

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Speaker 4: You know, the Trump President Trump's administration has made it

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Speaker 4: clear they're trying to get some things done which may

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Speaker 4: cost some short term you know, sort of lack of

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Speaker 4: understanding that effects a business community.

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Speaker 3: But they're saying at the end.

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Speaker 4: Of the day, you know, in the President said in

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Speaker 4: speech earlier, we may have some short term disruption to

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Speaker 4: get to the long term goal of downsizing government, downsizing regulation,

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Speaker 4: et cetera. And I think the businesses now are sort

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Speaker 4: of say, I've got to figure that answer out. And

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Speaker 4: that's fine because it's what it feels like forever a

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Speaker 4: month or two or three. But meanwhile, on the consumer side,

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Speaker 4: you're not seeing any change in activity despite what they're saying,

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Speaker 4: which is interesting.

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Speaker 1: Tell us a little bit about that because in your

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Speaker 1: last earnings calling January, and that was before the inauguration

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Speaker 1: of President Trump, you were saying that consumers were still

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Speaker 1: spending more than last year. Is that still the case.

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Speaker 4: So if this is sort of the dichotomy of what

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Speaker 4: a consumer says they're thinking about versus what they actually do.

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Speaker 4: So if you read the story the information of the

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Speaker 4: last month or so, consumer conferences come down and they're

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Speaker 4: worried about inflation going up and all that. That's sort

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Speaker 4: of what they say they're going to do, what they

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Speaker 4: really are doing. In the month of February, they spent

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Speaker 4: six percent more money out of our accounts into the

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Speaker 4: economy than they did last February, and year to date

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Speaker 4: it's about six and a half percent. You compare that

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Speaker 4: to the fourth quarter it was about four and a

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Speaker 4: half percent. We felt pretty good about that. So the

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Speaker 4: consumer is still spending. And by the way, if you

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Speaker 4: look at what they spend on food, basically flat in February.

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Speaker 4: So despite the discussion about eight prices and things, the

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Speaker 4: actual total expenditures about flat, services, travel, entertainment growing and

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Speaker 4: that helps drive jobs because those all spending by consumer

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Speaker 4: strives jobs. But the ones that are service oriented and

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Speaker 4: the entertainment require a lot of people's services.

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Speaker 1: I mean. All their policies from the administration, though a

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Speaker 1: little bit more disruptive when it comes to say immigration,

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Speaker 1: and hiring for these small and medium sized businesses.

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Speaker 4: Well, if you go to small medium sized businesses, they've

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Speaker 4: been facing two issues.

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Speaker 3: One is the real cost.

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Speaker 4: Of money went up a lot for them because they

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Speaker 4: borrow on lines of credit, short term lines of credit,

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Speaker 4: and so they have to make sure when you're talking

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Speaker 4: about so for four and a half percent or whatever

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Speaker 4: plus they're spread, that was so for a fifty basis

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Speaker 4: points plus or spread, that was a big change in rates.

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Speaker 3: So they had to always be more careful when you.

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Speaker 4: Saw them kind of conservatively handle their lines of credit

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Speaker 4: usage and stuff. Then the election happens and they feel

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Speaker 4: really good about the regulatory but they started noticing that

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Speaker 4: they were getting able to.

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Speaker 3: Hire as easily, and so they're worried about.

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Speaker 4: Where people think they're worried about inflation, they're actually right

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Speaker 4: now a little bit more worried about getting employees and

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Speaker 4: running the businesses. And I think as these policies settle in,

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Speaker 4: you'll see them settle in.

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Speaker 3: But they were over regulated.

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Speaker 4: All companies were, but the small medium sized businesses have

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Speaker 4: felt all the labor regulation stuff. We have, thousands of

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Speaker 4: people can deal it, they don't. And so if you're

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Speaker 4: running your own business and they feel good about that,

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Speaker 4: but it's offset by let's get a set of rules

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Speaker 4: set and then we can go how.

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Speaker 1: Soon do you think they'll get some help from the

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Speaker 1: fat or reserve by lower rates?

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Speaker 4: Well, you know the market now, I think put three

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Speaker 4: cuts in after some of the data they and the

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Speaker 4: market's been all over the place in the sense because

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Speaker 4: over the last ninety one hundred twenty days, I bet

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Speaker 4: you we've had.

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Speaker 3: Five six cuts to zero cuts back three cuts.

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Speaker 4: Our team believes that the FED is kind of done

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Speaker 4: cutting rates until inflation kind of gets in control. They

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Speaker 4: believe that the and I'd say they may as they're

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Speaker 4: thinking about that, given that if these chairs go in,

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Speaker 4: they thought they would have some impact on the growth

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Speaker 4: in the US, and that may cause them to think

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Speaker 4: about that. But right now they're saying, look, you've got

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Speaker 4: a real rate structure, which is FED. You've got employment

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Speaker 4: pretty stable and loosened a lot over the last year.

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Speaker 4: And so maybe it's their views there'll be no cuts.

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Speaker 4: We'll see what happens if they start to see.

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Speaker 1: Also something inflation is getting under control or there are upside.

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Speaker 4: Our team, our team of economists, always thought it'd take

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Speaker 4: three years to get inflation under control, and so there

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Speaker 4: they projected to get down near the target towards the

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Speaker 4: end of twenty six. But takes that long, and every says,

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Speaker 4: why doesn't happen faster? It just takes a while for

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Speaker 4: the all works through the system, especially with the amount

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Speaker 4: of stimulus and other things that went on.

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Speaker 1: In the meantime. You talk about markets being all over

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Speaker 1: the place. Has that increased your activity in that sense

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Speaker 1: and business and market activity.

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Speaker 4: If you look at the first quarter, you know, we

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Speaker 4: told our we gave our guidance in our first quarter

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Speaker 4: call and I was going to be a flatish quarter,

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Speaker 4: a quarter with two less days. That looks in great shape.

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Speaker 4: Loans and deposits or get what we expect to happen.

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Speaker 4: The trading revenues BEN is strong and up from last

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Speaker 4: year amid single digits type of numbers.

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Speaker 3: So we feel very good. I'd say, the m and the.

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Speaker 4: Debt capital markets open and processing through. We're the equity

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Speaker 4: capital markets, as we talked about, at a little slower

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Speaker 4: than but still solid. Everything's in good shape. Whether and

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Speaker 4: then asset you know, then the wealth management business very strong.

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Speaker 4: So we feel very good about the current prospects of

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Speaker 4: our company.

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Speaker 1: The same here in Japan, because we saw the brokeras

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Speaker 1: un for example, posting a loss for Bank of American

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Speaker 1: twenty twenty three. Did it get better last year?

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Speaker 4: Yeah, You've got to be careful of our legal entities

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Speaker 4: because there's we don't run the business that way, run

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Speaker 4: a global things. But the group here made about thirty

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Speaker 4: percent of the pre tax profit for Asia. They're very

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Speaker 4: strong group, and so sometimes the mechanics how that runs

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Speaker 4: through because of the bank and the broker dealer and

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Speaker 4: the parent. I wouldn't get too concerned about the too

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Speaker 4: interested in the legal entity.

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Speaker 1: When it comes to the JGB trading us for things,

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Speaker 1: Are you seeing more interests? Are you building that up?

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Speaker 3: Yeah?

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Speaker 4: We continue to add people in the trading business across

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Speaker 4: the world. Honestly, Jimmy de Mart's on a great job.

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Speaker 4: We've moved up about two hundred basis points or so

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Speaker 4: on market share across the last five years. We give

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Speaker 4: them more balance sheet, more risks to take. They've done

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Speaker 4: a good job of deploying it, and they keep adding

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Speaker 4: everywhere as activity picks up. We're adding people here too.

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Speaker 1: Yeah, because I mean, for the first time in a

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Speaker 1: very long time. We are seeing a lot of volatility

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Speaker 1: in the rates market, a lot of interest as well.

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Speaker 1: We've heard about difficulties hiring, for example, rates traders because

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Speaker 1: all of a sudden this became so exciting.

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Speaker 4: That's going to be true, and I think one of

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Speaker 4: the keys you be personally think there's a lot more

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Speaker 4: people coming from the outside to work in Japan, and

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Speaker 4: the rules and regulations a lot that to happen. So

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Speaker 4: we'll also hire internal people, but if there's not enough,

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Speaker 4: we'll bring people from around the world to help on.

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Speaker 4: It's exciting to a city to live in Tokyo, so

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Speaker 4: it's not hard to get people to come here and

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Speaker 4: you're able to get them in the work and so

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Speaker 4: we feel good about that. And from the country's perspective,

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Speaker 4: that's one of the things. After women came into workforce

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Speaker 4: and after there were people worked a little longer, what

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Speaker 4: you're seeing is foreign workers coming in of all different

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Speaker 4: types stuff, and so we feel good about that. We

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Speaker 4: can get prospects here, but it is a tight labor market.

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Speaker 4: There's no question, a lot of talent, a lot of talent,

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Speaker 4: but a lot of demand for that talent.

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Speaker 1: We are seeing also a lot of interest by activists

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Speaker 1: investors and you have a big advisory in that sector.

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Speaker 1: What are you seeing it?

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Speaker 4: We agree with you, and I think i'd be careful

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Speaker 4: about only equitting that actives investor. Is the pronouncements by

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Speaker 4: the government and the exchange and stuff that you've got

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Speaker 4: to move, the amount of cash on these balance sheets

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Speaker 4: are making things happen. So activists can catalyze activity, But

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Speaker 4: in the end of day, what's going to.

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Speaker 3: Also catalyze activities?

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Speaker 4: Boards of directors and management teams saying we have been

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Speaker 4: given a mandate to change and now with the interest

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Speaker 4: rate and inflation and things of more a billion economy,

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Speaker 4: we got demand growing at one percent.

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Speaker 3: That doesn't sound great except for where it came from.

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Speaker 3: That is great.

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Speaker 4: And so I think that is going to cause more

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Speaker 4: activity necessarily. So, yes, there's activists, and we have an

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Speaker 4: advisory business that helps people through that discussion and no

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Speaker 4: cause activity. But the imperor modit or the imperor modit

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Speaker 4: by the government to drive activity also causes it. And

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Speaker 4: when I talk to CEOs of companies of big market caps,

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Speaker 4: they're figuring out how to reposition themselves to keep driving.

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Speaker 1: Are you using more of Bank of America's balance sheeting

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Speaker 1: trading here in Japan compared to other parts of Asia,

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Speaker 1: well that ages.

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Speaker 4: We have five or six percent growths who really have

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Speaker 4: to be careful. So in Austraia we have a great

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Speaker 4: business and so we we we've added about two hundred

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Speaker 4: billion dollars across the world and trading balance sheet and

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Speaker 4: you know what percentage of when here I have to

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Speaker 4: get somebody give me the statistics, but it's it's we're

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Speaker 4: supporting the business everywhere.

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Speaker 1: Some of the things that we've seen across the world.

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Speaker 1: Of course, we've talked a little bit about the fragmentation

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Speaker 1: about tariffs. When you see that growing rivalry between China

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Speaker 1: and the US, for example, is that something that concerns

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Speaker 1: you as a CEO when you look at Bank of America's.

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Speaker 4: Business, Well, our business is going to reflect our customers

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Speaker 4: and clients, and so in the US that's you know,

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Speaker 4: consumers and wealthy consumers and business business of all size

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Speaker 4: and corporates and then investors.

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Speaker 3: Outside the US, our business is very very specific.

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Speaker 4: It's it's large companies, it's in large investors, and so

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Speaker 4: anything that caused them to move money we have to

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Speaker 4: follow and help them do it so, so it'd be

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Speaker 4: great if everybody were all on the same page and

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Speaker 4: everything was perfect. That just never happens. It's never happened

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Speaker 4: in world's history. It's not going to happen tomorrow either.

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Speaker 4: So I think the concerns of how to move money

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Speaker 4: around and how to where to invest, you know. I

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Speaker 4: think at the end of the day, we're sitting here

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Speaker 4: in Tokyo. This come a favorite place to look, and

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Speaker 4: there's other places like this around the world. The United

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Speaker 4: States is a strong place to look as we travel

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Speaker 4: around Europe and other places. So I think it's really

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Speaker 4: going to reflect those customers as opposed to us catalyzing

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Speaker 4: activity and us running our business differently. We run our

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Speaker 4: business to support our customers and clients, and they dictate

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Speaker 4: the activity, and then we help advise them about that activity.

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Speaker 4: And what we're saying is they're enthusiastic about the growth

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Speaker 4: in the US, a growth on a global basis three

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Speaker 4: percent plus the rate structure coming down a little bit

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Speaker 4: across the world.

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Speaker 3: DCB cut rates, so they feeling good about it. They

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Speaker 3: just need a.

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Speaker 4: Business likes plans three, five, seven, ten year cycles, and

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Speaker 4: it's hard to do that when there's this much movement,

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Speaker 4: But on the other hand, they face us all the time.

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Speaker 2: That was Bank of America CEO Brian moynihan speaking exclusively

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Speaker 2: with Bloomberg. She Sherry on coming up Karen Pay from

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Speaker 2: Fiduciary Trust International. This is Bloomberg. Welcome back to the

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Speaker 2: Daybreak Asia podcast. I'm Doug Krisner. So we know now

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Speaker 2: that the Trump administration is suspending tariffs on US imports

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Speaker 2: from Mexico and Canada covered by the North American Trade

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Speaker 2: Agreement for a period of one month. But the headlines

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Speaker 2: on tariffs today sparked a lot of intense, quick and

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Speaker 2: sharp swings in the equity market. At the end of

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Speaker 2: the day, there were losses right across the board. We

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Speaker 2: had the S and P down one point eight percent.

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Speaker 2: NASDAT comp weaker today by two point six percent. For

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Speaker 2: a closer look, I'm joined now by Karen Pay, executive

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Speaker 2: vice president also the head of portfolio management at Fiduciary

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Speaker 2: Trust International, joining us from here in New York. Karen,

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Speaker 2: thank you for making time to chat with us. What's

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Speaker 2: it been like in the office these days.

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Speaker 5: It's actually been relatively calm. We have not heard a

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Speaker 5: lot of panic calls from clients. But you know, I

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Speaker 5: think it's starting to pick up a little bit in

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Speaker 5: terms of, you know, clients are starting to ask questions,

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Speaker 5: and not surprisingly right because there's a lot going on

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Speaker 5: in the news, and you know, there's a lot to

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Speaker 5: keep up with, and there certainly you know, greater degree

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Speaker 5: of volatility in the market that we're seeing, as you mentioned,

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Speaker 5: and so you know, it's been relatively orderly, but I

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Speaker 5: would say that it's starting to pick up a little

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Speaker 5: bit in terms of just the attention being kay to

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Speaker 5: what's going on in the market.

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Speaker 2: So have you been making adjustments to your portfolios with

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Speaker 2: all of the headlines that we've been talking about, whether

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Speaker 2: it's on the economic data side or whether it's on

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Speaker 2: the tariff side, are you adjusting positioning?

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Speaker 5: Well, I would say that we have been adjusting positioning

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Speaker 5: kind of coming into the year. We in December, when

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Speaker 5: we were thinking about twenty twenty five and the outlook,

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Speaker 5: we sort of expected that perhaps in the upcoming quarters

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Speaker 5: that we would get some market volatility. We recognize that valuations,

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Speaker 5: you know, at the towards the end of the year

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Speaker 5: and kind of coming into this year, we're at the

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Speaker 5: higher end of the range we also recognize that the

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Speaker 5: market was very concentrated in terms of what was driving

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Speaker 5: them are markets for the past two years, and so

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Speaker 5: coming into this year, we sort of felt that there

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Speaker 5: would be more volatility expected. We were expecting that tariffs

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Speaker 5: would be a topic of conversation.

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Speaker 6: We thought that there would certainly be uncertainty.

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Speaker 5: Related to tariffs, and therefore we've been we've been rebalancing

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Speaker 5: portfolios just from a risk standpoint, from an asset allocation standpoint.

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Speaker 6: You know, we're.

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Speaker 5: Still positive on equities because the fundamental backdrop in terms

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Speaker 5: of the economy, in terms of the pro growth, pro

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Speaker 5: us agenda, is still sort of the main theme for

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Speaker 5: this year. But we do think that, you know, right

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Speaker 5: now we're going through a period of a soft patch

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Speaker 5: or a pause that's being created by some of this

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Speaker 5: uncertainty related to tariffs.

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Speaker 2: Do you think there's a on a risk that we

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Speaker 2: could see a pick up an inflation.

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Speaker 5: Certainly we would acknowledge that there is a risk. I

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Speaker 5: think that that's been playing a lot into the bond yields.

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Speaker 5: You know, we in January we saw bond yields actually

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Speaker 5: rise to about four point eight percent because the markets

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Speaker 5: were thinking that there could be terriff induced inflation, but

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Speaker 5: also that pro growth meant that there would be an

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Speaker 5: acceleration in the economy, and that combination could be inflationary.

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Speaker 5: I think it's to be seen whether you know whether

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Speaker 5: there would be and whether you know to what magnitude.

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Speaker 6: I think that.

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Speaker 5: It's definitely you know, on the table in terms of

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Speaker 5: you know, how much is to be seen, because one

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Speaker 5: of the offsets is that we are starting to see

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Speaker 5: a slower economy right now. And you know, we have

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Speaker 5: seen that some of these factors are caused by uh,

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Speaker 5: some consumers and businesses front loading, you know, their orders

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Speaker 5: before the tariffs take place.

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Speaker 6: So there's a lot of noise right now in terms

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Speaker 6: of the data. And you know, there's also the part

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Speaker 6: that businesses are not in.

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Speaker 5: A position to raise prices as much as they were

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Speaker 5: able to do so in the last couple of years.

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Speaker 5: So we're at a point where consumers are starting to

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Speaker 5: push back or they just can't afford these higher prices anymore. Certainly,

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Speaker 5: the lower income consumer is feeling a lot of those pressures.

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Speaker 2: So I hear that you're broadly speaking still constructive on

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Speaker 2: the equity market. You've been doing some rebalancing though, and

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Speaker 2: I'm wondering whether or not you look to the fixed

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Speaker 2: income markets as a part of that rebalancing. Have you

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Speaker 2: been leaning a little bit more into fixed income?

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Speaker 4: We have.

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Speaker 5: I think that over the past year we have been

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Speaker 5: leaning a little bit more towards fixed income. We are cognizant,

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Speaker 5: and we are paying attention to you know, just like

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Speaker 5: we pay attention to valuations on the equity side, we

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Speaker 5: do the same thing on the fixed income side. And

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Speaker 5: you know, bonds were definitely a lot more attractive when

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Speaker 5: ten your bond yields were around four point eight percent

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Speaker 5: or north of four point five. I think that right now,

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Speaker 5: with ten your bond yields at four point you know,

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Speaker 5: to four point three ish, they're still attractive. We still

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Speaker 5: think that they provide balance to a portfolio, to a

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Speaker 5: balanced portfolio, But we want to be more opportunistic and

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Speaker 5: be more tactical in this environment. We do think that

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Speaker 5: there are opportunities that are created based on the market

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Speaker 5: volatility on both the fixed income side as well as

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Speaker 5: the equity side.

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Speaker 2: Are you looking offshore at all these days? Are you

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Speaker 2: seeing opportunities in Asia right now, for example?

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Speaker 5: Yeah, it's a great question and of course, you know,

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Speaker 5: there's been a lot of recovery and significant moves in

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Speaker 5: the Asian market, particularly in the Chinese technology stocks. We

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Speaker 5: think that a lot of that has to do with

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Speaker 5: the fact that they've under performed so much in the

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Speaker 5: past few years, and so you know, there's there really

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Speaker 5: hasn't been any interest in that part of the market,

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Speaker 5: and so it's easy to kind of see any positive

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Speaker 5: news lifting those stocks up very quickly. And there's also

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Speaker 5: you know, the news around deep Seek and also now

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Speaker 5: you know Ali Baba talking about the Chinese tech companies

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Speaker 5: coming out with sort of better, more efficient technology around

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Speaker 5: AI is helping to lift those stocks. I would say

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Speaker 5: that we are definitely, you know, recognizing that there could

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Speaker 5: be evaluation catch up in foreign markets particularly. I think

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Speaker 5: we would say that it's probably more interesting for us

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Speaker 5: to look at European equities than it is necessarily emerging

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Speaker 5: markets or the Chinese market, just because longer term we

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Speaker 5: still see secular challenges and in terms of growth for

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Speaker 5: emerging markets and for the Chinese market.

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Speaker 2: Karen, I'm curious about your cash position right now. Are

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Speaker 2: you fully invested, are you keeping a little bit of

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Speaker 2: dry powder on the sidelines in case we get a

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Speaker 2: little bit more of a pullback. I mean, right now,

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Speaker 2: I think the Nasdaq one hundred is flirting with a correction.

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Speaker 6: Yes, yes, definitely.

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Speaker 5: I noticed that as well, Nasax down over ten percent

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Speaker 5: from the highs as S and P down a little

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Speaker 5: bit over six percent. So you know, we are getting

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Speaker 5: into correction territory and you know, significant parts of the market,

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Speaker 5: and certainly if you look within the equity market, there

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Speaker 5: are you know, stocks that are down twenty percent or more.

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Speaker 5: Right So you know, I think that there are opportunities

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Speaker 5: in terms of market leadership and what's underperforming. We've seen

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Speaker 5: a big recovery and value stocks for example this year,

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Speaker 5: and some dividend yielding stocks the defensive stock So it's

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Speaker 5: really a matter of to your question, what are we

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Speaker 5: doing with cash. We have been, as I mentioned earlier,

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Speaker 5: rebalancing portfolios recognizing some of the risks. We've also sort

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Speaker 5: of gone ahead of the when we had, you know,

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Speaker 5: much higher valuations to make sure that clients that need

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Speaker 5: cash that.

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Speaker 6: We've raised the cash.

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Speaker 5: Aside from that, I would say that from a portfolio

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Speaker 5: positioning standpoint, where more or less actually overweight a little

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Speaker 5: bit fixed income compared to cash, because we see better

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Speaker 5: yield opportunities in fixed income, and the Fed right now

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Speaker 5: is probably going to continue to lower rates. It's been

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Speaker 5: a little bit of back and forth in terms of

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Speaker 5: market expectations for the Fed.

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Speaker 6: You know, we went from expectations of one.

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Speaker 5: Rate cut just a few weeks ago to now potentially

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Speaker 5: three rate cuts. So the yields on very short term

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Speaker 5: cash could be going lower, whereas you can lock in

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Speaker 5: some better and more attractive yields and fixed income.

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Speaker 2: It's interesting you make that point. We heard from Fed

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Speaker 2: Governor Chris Waller today. He was saying that he would

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Speaker 2: not support lowering rates in March. Even so he does

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Speaker 2: see room for two, possibly three rate cuts sometime this year. Karen,

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Speaker 2: great stuff. Thank you so much for joining us. Karen

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Speaker 2: pay there. She is executive VP also the head of

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Speaker 2: portfolio Management at Fiduciary Trust International, joining us here on

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Speaker 2: the Daybreak Asia Podcast. Thanks for listening to today's episode

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Speaker 2: of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we

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00:23:32,440 --> 00:23:36,320
Speaker 2: look at the story shaping markets, finance, and geopolitics in

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00:23:36,359 --> 00:23:39,520
Speaker 2: the Asia Pacific. You can find us on Apple, Spotify,

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00:23:39,680 --> 00:23:43,160
Speaker 2: the Bloomberg Podcast YouTube channel, or anywhere else you listen.

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Speaker 2: Join us again tomorrow for insight on the market moves

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Speaker 2: from Hong Kong to Singapore and Australia. I'm Doug Chrisner,

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Speaker 2: and this is Bloomberg