1 00:00:02,480 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:09,640 --> 00:00:12,840 Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. 3 00:00:12,920 --> 00:00:15,400 Speaker 2: You can join Brian Curtis and myself for the stories, 4 00:00:15,440 --> 00:00:18,560 Speaker 2: making news and moving markets in the APAC region. You 5 00:00:18,600 --> 00:00:21,439 Speaker 2: can subscribe to the show anywhere you get your podcast 6 00:00:21,520 --> 00:00:24,919 Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the 7 00:00:24,920 --> 00:00:26,120 Speaker 2: Bloomberg Business App. 8 00:00:27,240 --> 00:00:30,960 Speaker 3: Frederic Newman, Chief Asia Economist and co head of Global 9 00:00:31,000 --> 00:00:33,239 Speaker 3: Research for Asia at HSBC. 10 00:00:34,000 --> 00:00:34,440 Speaker 1: Frederick. 11 00:00:34,800 --> 00:00:37,920 Speaker 3: Big news this week will likely be obviously the debate 12 00:00:37,960 --> 00:00:41,640 Speaker 3: tomorrow and also the CPI report. We're still kind of 13 00:00:41,800 --> 00:00:45,240 Speaker 3: wrangling with jobs report. It was out lay last week. 14 00:00:45,479 --> 00:00:49,600 Speaker 3: It did help frame what could be the essential question, 15 00:00:49,720 --> 00:00:53,040 Speaker 3: which is is the US economy slowing or is it 16 00:00:53,240 --> 00:00:54,040 Speaker 3: stalling out? 17 00:00:54,440 --> 00:00:54,600 Speaker 4: Now. 18 00:00:54,600 --> 00:00:56,480 Speaker 3: I know it's tempting to say the US economy is 19 00:00:56,520 --> 00:00:59,360 Speaker 3: not the global economy, but then with China stumbling, it 20 00:00:59,440 --> 00:01:00,080 Speaker 3: might as well. 21 00:01:00,960 --> 00:01:04,280 Speaker 5: Yeah, if the US economy stumbled, there will knock another 22 00:01:04,400 --> 00:01:08,800 Speaker 5: leg out from under US because Chinese economy is not 23 00:01:08,840 --> 00:01:11,440 Speaker 5: really delivering that growth and polls Europe is not really 24 00:01:11,480 --> 00:01:14,280 Speaker 5: delivering it, and so everybody's looking to the US to 25 00:01:14,440 --> 00:01:17,240 Speaker 5: carry the day. But of course if we get rising 26 00:01:17,319 --> 00:01:21,360 Speaker 5: unemployment there in a post potential recession, then all bets 27 00:01:21,400 --> 00:01:24,640 Speaker 5: are off. That would certainly push a global economy down 28 00:01:24,680 --> 00:01:27,080 Speaker 5: a notch, and that would be felt the cross Asia 29 00:01:27,080 --> 00:01:29,520 Speaker 5: as well in terms of trade, in terms of price 30 00:01:29,600 --> 00:01:33,520 Speaker 5: pressures would fizzle. It would raise a whole set of challenges. 31 00:01:33,640 --> 00:01:36,080 Speaker 2: Well, speaking of price pressures, maybe we can talk about 32 00:01:36,080 --> 00:01:39,840 Speaker 2: this deflation story in China. It clearly sees or we 33 00:01:39,880 --> 00:01:43,360 Speaker 2: see no sign of it abating. Prices have been dropping 34 00:01:43,360 --> 00:01:45,360 Speaker 2: since last year, and we had a piece on the 35 00:01:45,400 --> 00:01:49,320 Speaker 2: Bloomberg terminal today indicating that maybe we have entered a 36 00:01:49,400 --> 00:01:53,760 Speaker 2: new rather dangerous stage. Is that hyperbolic or are you 37 00:01:53,800 --> 00:01:56,880 Speaker 2: really concerned about the extent to which we are in 38 00:01:57,080 --> 00:01:59,480 Speaker 2: or see protracted deflation in China. 39 00:02:00,440 --> 00:02:04,160 Speaker 5: It's a challenge, and we know from other experience and 40 00:02:04,200 --> 00:02:07,120 Speaker 5: other economies not to be Japan, for example, that a 41 00:02:07,160 --> 00:02:10,560 Speaker 5: prolonged period of declining prices can sort of become very 42 00:02:10,720 --> 00:02:14,600 Speaker 5: entrenched because people's expectations adjust to it, and it's very 43 00:02:14,680 --> 00:02:17,720 Speaker 5: hard to get rid of this. So deflation is as 44 00:02:17,800 --> 00:02:20,520 Speaker 5: big a problem, if not a bigger problem than inflation, 45 00:02:20,720 --> 00:02:24,240 Speaker 5: and so we need to take this seriously. What's needed 46 00:02:24,280 --> 00:02:27,440 Speaker 5: really is a big a jolt to stimulus, a big 47 00:02:27,520 --> 00:02:30,040 Speaker 5: joal to the economy, to confidence, that is, to get 48 00:02:30,320 --> 00:02:34,160 Speaker 5: the Chinese economy back on its feet, and the core measure, 49 00:02:34,320 --> 00:02:37,320 Speaker 5: ultimately what matters is to get inflation back up to 50 00:02:37,440 --> 00:02:41,919 Speaker 5: reasonal range. And it's clearly now undershooting what might one 51 00:02:42,000 --> 00:02:45,040 Speaker 5: consider as being sort of a normal increase in prices 52 00:02:45,120 --> 00:02:46,760 Speaker 5: over the course of an economic cycle. 53 00:02:46,840 --> 00:02:49,800 Speaker 3: You do have more policymakers talking about this. Igung, the 54 00:02:49,840 --> 00:02:53,040 Speaker 3: former governor of the People's Bank of China I said 55 00:02:53,120 --> 00:02:56,160 Speaker 3: yesterday that policymakers need to focus on it right now. 56 00:02:56,560 --> 00:02:58,079 Speaker 3: You know what does he mean and what does he want? 57 00:02:58,600 --> 00:03:00,840 Speaker 5: Yeah, there's really a sense of urgency in his remark 58 00:03:00,919 --> 00:03:03,400 Speaker 5: saying that we got to do something here. And what's 59 00:03:03,440 --> 00:03:08,160 Speaker 5: really what's needed is stimulus, stimulus, stimulus, because we have 60 00:03:08,320 --> 00:03:10,920 Speaker 5: on the monetary side not really that much of a 61 00:03:10,960 --> 00:03:13,240 Speaker 5: stimulus coming through. We have on the fiscal side a 62 00:03:13,240 --> 00:03:15,840 Speaker 5: bit of a help, but nothing that smacks of those 63 00:03:15,880 --> 00:03:18,640 Speaker 5: big packages we saw in the past. And so I 64 00:03:18,680 --> 00:03:21,320 Speaker 5: think reading between the lines, the message here is, look, guys, 65 00:03:22,240 --> 00:03:25,320 Speaker 5: let's get turned on the spending tabs and get things 66 00:03:25,360 --> 00:03:28,160 Speaker 5: going again, because otherwise things were just going to just 67 00:03:28,440 --> 00:03:30,959 Speaker 5: fizzle further and be harder to get at the car 68 00:03:31,000 --> 00:03:31,840 Speaker 5: out of the rut again. 69 00:03:32,280 --> 00:03:35,600 Speaker 2: Have authority has been a little curious about the degree 70 00:03:35,640 --> 00:03:38,920 Speaker 2: to which more stimulus might weaken the currency? Is that 71 00:03:39,000 --> 00:03:40,120 Speaker 2: really the big worry here? 72 00:03:40,120 --> 00:03:44,040 Speaker 5: Do you think it was certainly constrained for many, many months. 73 00:03:44,400 --> 00:03:47,240 Speaker 5: The opportunity that presents itself now is that because the 74 00:03:47,280 --> 00:03:50,880 Speaker 5: Federal Reserve is expected to cut right the pressure and 75 00:03:50,880 --> 00:03:54,880 Speaker 5: the currency really relented, that opens the door for China 76 00:03:54,920 --> 00:03:57,720 Speaker 5: then to maybe press ahead with easing as well. Maybe 77 00:03:57,720 --> 00:03:59,600 Speaker 5: they're just waiting for the Fed to deliver its first 78 00:03:59,640 --> 00:04:03,440 Speaker 5: cut twenty five fifty, but that really opens up an opportunity. 79 00:04:03,480 --> 00:04:06,320 Speaker 5: One would think that interest rates will fall further in 80 00:04:06,400 --> 00:04:07,600 Speaker 5: Shohna in the coming months. 81 00:04:08,520 --> 00:04:11,040 Speaker 3: So we talk about the CPI numbers this week in 82 00:04:11,120 --> 00:04:14,760 Speaker 3: the United States, and you just referenced the Fed. There's 83 00:04:14,760 --> 00:04:18,160 Speaker 3: a program on Bloomberg that's almost as good as this one, surveillance. 84 00:04:18,360 --> 00:04:20,440 Speaker 3: And last night before I went to bed, I heard 85 00:04:20,480 --> 00:04:23,600 Speaker 3: Jim Bianco from his own company talking to the gang 86 00:04:23,640 --> 00:04:27,320 Speaker 3: on surveillance saying that he'd be more worried Frederick if 87 00:04:27,320 --> 00:04:31,640 Speaker 3: from here US inflation numbers actually dropped quickly, because he 88 00:04:31,680 --> 00:04:35,560 Speaker 3: would presume that that would only happen along with a 89 00:04:35,680 --> 00:04:40,000 Speaker 3: dramatic falloff in growth. Do you see some reasoning in 90 00:04:40,040 --> 00:04:41,280 Speaker 3: that and does it make sense? 91 00:04:42,360 --> 00:04:45,040 Speaker 5: Of course, if inflation were to drop very, very sharply 92 00:04:45,080 --> 00:04:47,320 Speaker 5: and that indicates a sudden drop off in demand and 93 00:04:47,320 --> 00:04:49,760 Speaker 5: we're siding into a recession, it will be very concerning. 94 00:04:49,839 --> 00:04:54,599 Speaker 5: But ultimately there are still inflation expectations relatively high in 95 00:04:54,600 --> 00:04:57,040 Speaker 5: the US. If you look at any survey, consumers still 96 00:04:57,080 --> 00:04:59,760 Speaker 5: say price pressures are the number one thing that bothers them. 97 00:05:00,120 --> 00:05:01,920 Speaker 5: So it'd be a long way to go from the 98 00:05:01,960 --> 00:05:03,600 Speaker 5: inflation that we just saw on in the last few 99 00:05:03,680 --> 00:05:07,040 Speaker 5: years really deflationary spiral. I think the FAT at the 100 00:05:07,040 --> 00:05:11,240 Speaker 5: moment needs to focus on growth rather than deflation. And 101 00:05:11,720 --> 00:05:14,040 Speaker 5: if growth buckles, then of course we need to have 102 00:05:14,760 --> 00:05:20,000 Speaker 5: more ratcots. Certainly, if inflation suddenly turns negative, we gotta 103 00:05:20,040 --> 00:05:22,640 Speaker 5: do something, But it's not really on the cards just yet. 104 00:05:22,760 --> 00:05:24,440 Speaker 2: We had a story a short while ago, maybe you 105 00:05:24,440 --> 00:05:27,240 Speaker 2: even actually heard at the House and the States here 106 00:05:27,240 --> 00:05:32,320 Speaker 2: passing legislation to blacklist Chinese biotech firms and their US subsidiaries. 107 00:05:33,000 --> 00:05:37,279 Speaker 2: Help us understand the risk to the Chinese economy right 108 00:05:37,279 --> 00:05:41,640 Speaker 2: now with the level of geopolitical tension between Beijing and Washington. 109 00:05:42,680 --> 00:05:45,800 Speaker 5: Well, most of the technology restrictions that we've seen in 110 00:05:45,800 --> 00:05:49,400 Speaker 5: coming out of the US, most of those investment restrictions 111 00:05:49,400 --> 00:05:53,880 Speaker 5: that you just referenced, they are not necessarily detrimental to 112 00:05:54,000 --> 00:05:57,000 Speaker 5: current economic growth in China, right, They hit to just 113 00:05:57,080 --> 00:06:00,000 Speaker 5: a very high end, if you will, of tech investment 114 00:06:00,279 --> 00:06:04,239 Speaker 5: for example, they do affect sort of growth down the line, 115 00:06:04,800 --> 00:06:06,800 Speaker 5: sort of in four or five years time because of 116 00:06:06,839 --> 00:06:11,000 Speaker 5: that restricts China's ability to innovate, to generate new ideas, 117 00:06:11,080 --> 00:06:14,000 Speaker 5: and of course that has an impact. But I wouldn't 118 00:06:14,040 --> 00:06:17,120 Speaker 5: over exaggerate the impact it has on China's economy this year, 119 00:06:17,160 --> 00:06:20,400 Speaker 5: next year, maybe in twenty twenty six, because really that's 120 00:06:20,440 --> 00:06:22,400 Speaker 5: all about the property market. Let's face it, this is 121 00:06:22,440 --> 00:06:25,040 Speaker 5: the lack of domestic demand. It's not so much the 122 00:06:25,120 --> 00:06:28,080 Speaker 5: tech restriction. That's more of a strategic issue, and that 123 00:06:28,200 --> 00:06:31,000 Speaker 5: really impacts of how we should think about the Chinese 124 00:06:31,000 --> 00:06:33,520 Speaker 5: economy in ten years time from now, if we really 125 00:06:33,560 --> 00:06:38,760 Speaker 5: see an effective restrictive restriction on semiconductor investment for example. 126 00:06:39,480 --> 00:06:43,000 Speaker 3: Yeah, so we've got domestic consumption which clearly is stumbling 127 00:06:43,080 --> 00:06:45,000 Speaker 3: a little in China. And then we've got, you know, 128 00:06:45,040 --> 00:06:48,800 Speaker 3: the export regime. We'll get the China trade numbers today, 129 00:06:49,400 --> 00:06:53,360 Speaker 3: they're expected later this morning. Should we not expect too much? 130 00:06:54,080 --> 00:06:57,120 Speaker 5: Well, the actually experts are still doing very very well, 131 00:06:57,440 --> 00:07:00,080 Speaker 5: particularly in volume terms. Now the numbers that release the 132 00:07:00,240 --> 00:07:03,679 Speaker 5: usually normal numbers, they're not as strong as the volume 133 00:07:03,760 --> 00:07:07,800 Speaker 5: numbers are because prices are falling in certain categories. So 134 00:07:08,000 --> 00:07:10,600 Speaker 5: actually exports remain in a bright spot. And that's why 135 00:07:10,640 --> 00:07:13,680 Speaker 5: for a Chinese economy. Actually, one of the big worries 136 00:07:13,760 --> 00:07:16,240 Speaker 5: is that the US economy suddenly buckles and kind of 137 00:07:16,280 --> 00:07:19,800 Speaker 5: takes down global demand with it, because that would really 138 00:07:20,600 --> 00:07:24,160 Speaker 5: dampen a growth engine in China that's still working okay 139 00:07:24,200 --> 00:07:26,280 Speaker 5: from a Chinese perspective, and that is exports. 140 00:07:26,320 --> 00:07:28,920 Speaker 2: What about the tariff part of that story? Is that 141 00:07:29,240 --> 00:07:30,520 Speaker 2: a significant in your mind? 142 00:07:31,440 --> 00:07:34,040 Speaker 5: It is significant, Yeah, because be highly disruptive. If we 143 00:07:34,040 --> 00:07:36,520 Speaker 5: really see some of these plants that being profit come 144 00:07:36,560 --> 00:07:40,800 Speaker 5: to pass, that would potentially restrict China's ability to export 145 00:07:40,840 --> 00:07:43,119 Speaker 5: a lot. Now you might say it's just the US, 146 00:07:43,160 --> 00:07:45,560 Speaker 5: it's doing it. But the worry we would that might 147 00:07:45,640 --> 00:07:48,240 Speaker 5: have is that if the US imposes tariffs, then other 148 00:07:48,680 --> 00:07:51,760 Speaker 5: economies might be forced to do the same because essentially 149 00:07:51,800 --> 00:07:53,640 Speaker 5: they would then be on the receiving end of a 150 00:07:53,760 --> 00:07:56,440 Speaker 5: lot of imports from China, and so they might then 151 00:07:56,520 --> 00:07:58,880 Speaker 5: raise their protectionists as well. So the worry here is 152 00:07:58,920 --> 00:08:01,760 Speaker 5: a spiral, and to be honest, it's not just for 153 00:08:01,840 --> 00:08:04,600 Speaker 5: China's economy that's worrisome, but is for many many economies 154 00:08:04,600 --> 00:08:08,320 Speaker 5: because let's face it, trade restrictions are just not good 155 00:08:08,320 --> 00:08:11,400 Speaker 5: for global growth, and so there is a broader issue here. 156 00:08:11,920 --> 00:08:14,800 Speaker 3: On the trade numbers, we are expecting exports to have 157 00:08:14,880 --> 00:08:17,920 Speaker 3: advanced six point six percent year on year. As fred mentioned, 158 00:08:18,080 --> 00:08:20,200 Speaker 3: they've been pretty strong, although that is a little bit 159 00:08:20,200 --> 00:08:23,760 Speaker 3: lower than the prior seven percent gains. Import's supposed to 160 00:08:23,760 --> 00:08:25,840 Speaker 3: be up two and a half percent. That's well down 161 00:08:25,840 --> 00:08:28,600 Speaker 3: from the seven point two percent. Frederick Numan has been 162 00:08:28,600 --> 00:08:40,599 Speaker 3: with us from HSBC Stephanie Loan, chief investment officer at Stashaway, 163 00:08:40,920 --> 00:08:44,320 Speaker 3: with a closer look at global economic performance and also 164 00:08:44,400 --> 00:08:46,840 Speaker 3: the market. Steph thanks very much for coming into the 165 00:08:46,880 --> 00:08:50,520 Speaker 3: studios with it. So let's start off with the United States. 166 00:08:50,559 --> 00:08:53,760 Speaker 3: We'll get to China where we've got deflation stalking in 167 00:08:53,840 --> 00:08:56,520 Speaker 3: the country, but in the US it's more of a 168 00:08:56,679 --> 00:08:59,800 Speaker 3: nuanced question whether or not it's just kind of slowing 169 00:08:59,840 --> 00:09:03,199 Speaker 3: in the economy, or whether it's stalling out your thoughts. 170 00:09:03,000 --> 00:09:04,200 Speaker 1: Yeah, thank you for having me. 171 00:09:04,240 --> 00:09:06,120 Speaker 6: And I think, I mean that's kind of the center 172 00:09:06,200 --> 00:09:08,640 Speaker 6: of the debate right now, whether the US is entering 173 00:09:08,679 --> 00:09:12,479 Speaker 6: a recession or is this just a temporary slump, particularly 174 00:09:12,480 --> 00:09:14,600 Speaker 6: because we have the election coming up in the next 175 00:09:14,600 --> 00:09:18,160 Speaker 6: two months. And our view is that, I mean, it's 176 00:09:18,280 --> 00:09:21,280 Speaker 6: kind of a slow down, but we don't see a 177 00:09:21,440 --> 00:09:26,320 Speaker 6: risk or kind of a clear sign of systemic risk 178 00:09:26,440 --> 00:09:28,480 Speaker 6: happening in the economy. And if you look at the 179 00:09:28,600 --> 00:09:32,080 Speaker 6: kind of historically session there's always excess combined with some 180 00:09:32,120 --> 00:09:36,640 Speaker 6: systemic risk. For example, during the financial crisis, there was 181 00:09:36,679 --> 00:09:38,640 Speaker 6: a housing bubble, and of course there was a lot 182 00:09:38,640 --> 00:09:40,640 Speaker 6: of shadow banking kind of lending going on. 183 00:09:41,000 --> 00:09:42,520 Speaker 1: The consumer is also quite stretched. 184 00:09:43,120 --> 00:09:45,880 Speaker 6: Right now, we don't actually see any kind of stress 185 00:09:45,960 --> 00:09:48,120 Speaker 6: in the private sector or kind of in the banking 186 00:09:48,160 --> 00:09:51,559 Speaker 6: sector for the US. So I think there are some 187 00:09:51,600 --> 00:09:56,520 Speaker 6: signs that, for example, unemployment is slowly kind of grinding up. 188 00:09:57,080 --> 00:09:59,040 Speaker 6: There's been a lot of talks about the sum rule, 189 00:10:00,080 --> 00:10:03,520 Speaker 6: and I think what Chairman Power referred to it was 190 00:10:03,600 --> 00:10:08,559 Speaker 6: kind of more statistical phenomenon which I mean some herself 191 00:10:08,800 --> 00:10:12,240 Speaker 6: also agrees to and for us, I mean, ultimately it 192 00:10:12,280 --> 00:10:15,760 Speaker 6: comes down to whether the consumer is still employed and 193 00:10:15,760 --> 00:10:18,439 Speaker 6: also whether the consumer has the power to spend. And 194 00:10:18,480 --> 00:10:20,600 Speaker 6: if we look at some of the higher frequency data, 195 00:10:21,280 --> 00:10:24,280 Speaker 6: for example, credit card spending, I mean, the consumers are 196 00:10:24,320 --> 00:10:27,319 Speaker 6: still very very strong in the US, and unemployment rate 197 00:10:27,400 --> 00:10:29,800 Speaker 6: even though it's written risen from very very. 198 00:10:29,800 --> 00:10:33,760 Speaker 1: Low levels four to four point three percent, these. 199 00:10:33,600 --> 00:10:37,320 Speaker 6: Are by no means kind of even close to historical average, 200 00:10:37,320 --> 00:10:39,960 Speaker 6: which is about six percent. So I think all in all, 201 00:10:40,440 --> 00:10:42,960 Speaker 6: there is a slowdown, and particularly given that there's a 202 00:10:43,000 --> 00:10:46,600 Speaker 6: lot of uncertainty going into election, businesses are saying that 203 00:10:46,640 --> 00:10:49,160 Speaker 6: they are waiting for election results to spend. So we 204 00:10:49,200 --> 00:10:52,880 Speaker 6: think actually these two months, I could still see weaker 205 00:10:53,000 --> 00:10:56,760 Speaker 6: data and bit schoppier markets, but overall, I think the 206 00:10:56,960 --> 00:10:58,880 Speaker 6: US economy is still fairly strong. 207 00:10:59,480 --> 00:11:03,600 Speaker 2: So Brian mentioned the deflationary story in China. We had 208 00:11:03,640 --> 00:11:06,000 Speaker 2: this interesting piece on the Bloomberg terminal earlier in the 209 00:11:06,040 --> 00:11:09,680 Speaker 2: day saying that those price declines have entered a new man. 210 00:11:09,840 --> 00:11:14,120 Speaker 2: The term that Bi applied here was dangerous is there 211 00:11:14,280 --> 00:11:16,600 Speaker 2: And I know we've talked about this in the past, 212 00:11:16,640 --> 00:11:20,240 Speaker 2: but it feels like it's worth revisiting that China could 213 00:11:20,280 --> 00:11:25,040 Speaker 2: potentially entered the type of trap, the deflationary trap that 214 00:11:25,120 --> 00:11:28,760 Speaker 2: Japan spent decades in. It is that possible in your opinion? 215 00:11:30,240 --> 00:11:33,080 Speaker 6: I think if we look at the data there, a 216 00:11:33,120 --> 00:11:35,120 Speaker 6: few things are also quite alarming to us. 217 00:11:35,559 --> 00:11:38,880 Speaker 1: Number one key is the property market. 218 00:11:39,679 --> 00:11:41,840 Speaker 6: And if we look at kind of the high frequency 219 00:11:41,880 --> 00:11:45,120 Speaker 6: monthly data on property prices in China, I mean that's 220 00:11:45,120 --> 00:11:48,480 Speaker 6: still falling by analyzed kind of fab six percent year 221 00:11:48,520 --> 00:11:53,840 Speaker 6: on year, and there's no signs that trend is actually reversing. Also, 222 00:11:54,000 --> 00:11:56,560 Speaker 6: I think Bloomberg actually has a very very good data 223 00:11:56,600 --> 00:12:00,360 Speaker 6: series called the Credit Impulse, and that actually what we 224 00:12:00,440 --> 00:12:02,480 Speaker 6: found is that that tends to lead the equity market 225 00:12:02,520 --> 00:12:05,440 Speaker 6: by about six months. And the Credit and Pulse is 226 00:12:05,520 --> 00:12:08,719 Speaker 6: right now reading negative on a year year basis. I mean, 227 00:12:08,760 --> 00:12:12,160 Speaker 6: it has improved somewhat from the April lows, so April 228 00:12:12,280 --> 00:12:15,920 Speaker 6: was actually the bottom and it improved in the past 229 00:12:15,920 --> 00:12:18,480 Speaker 6: few months, but still the reading is still negative. 230 00:12:18,559 --> 00:12:19,720 Speaker 1: And I mean that. 231 00:12:19,600 --> 00:12:23,400 Speaker 6: Tells us that there's a lower chance of a recovery 232 00:12:23,520 --> 00:12:26,920 Speaker 6: in Chinese asset markets in the near term. And I 233 00:12:26,960 --> 00:12:29,520 Speaker 6: think I mean the government, I think it's well whether 234 00:12:29,840 --> 00:12:32,320 Speaker 6: and I think you're seeing signs that they are trying 235 00:12:32,360 --> 00:12:35,480 Speaker 6: to do more stimulus. There are talks about trying to 236 00:12:35,559 --> 00:12:39,760 Speaker 6: encourage private investments. But I think, I mean, there's also 237 00:12:39,960 --> 00:12:43,720 Speaker 6: the concern about the upcoming election as well. Right so 238 00:12:44,320 --> 00:12:47,160 Speaker 6: right now there's a lot of uncertainty about whether Trump 239 00:12:47,280 --> 00:12:49,320 Speaker 6: or Harwist will be in office, and I think that 240 00:12:49,480 --> 00:12:53,520 Speaker 6: sort of plays into the minds of the Chinese leaders 241 00:12:53,840 --> 00:12:56,360 Speaker 6: as to I mean, how much of what kind of 242 00:12:56,360 --> 00:12:58,760 Speaker 6: stimulus they should or can put out in the next 243 00:12:58,800 --> 00:13:01,400 Speaker 6: two months. So I think they are also probably in 244 00:13:01,400 --> 00:13:05,359 Speaker 6: a waiting mode with regards to Chinese kind of policies 245 00:13:05,400 --> 00:13:08,920 Speaker 6: and how the US China relations play out. So I 246 00:13:08,960 --> 00:13:12,680 Speaker 6: think that's kind of what's concerning, is that in a 247 00:13:12,720 --> 00:13:15,880 Speaker 6: near time, I think there's a low chance that they 248 00:13:15,920 --> 00:13:19,720 Speaker 6: will be putting out significant policies. And on the other hand, 249 00:13:20,640 --> 00:13:22,960 Speaker 6: conditions are actually deter aretaining on a monthly basis. 250 00:13:22,960 --> 00:13:26,360 Speaker 3: So we put all this together, you know, it almost 251 00:13:26,440 --> 00:13:29,800 Speaker 3: seems like there could be light at the end of 252 00:13:29,800 --> 00:13:32,160 Speaker 3: the tunnel at some point in China. So would would 253 00:13:32,200 --> 00:13:35,960 Speaker 3: you say that in designing a portfolio that you would 254 00:13:36,040 --> 00:13:39,040 Speaker 3: lean toward taking advantage of the lower numbers in China, 255 00:13:39,240 --> 00:13:41,000 Speaker 3: or would you just ride some of the gains that 256 00:13:41,040 --> 00:13:43,440 Speaker 3: we've seen in the US that have peeled back a 257 00:13:43,440 --> 00:13:45,320 Speaker 3: little bit and may have some more room to run. 258 00:13:45,679 --> 00:13:48,960 Speaker 6: Yeah, I think definitely these two months will be tough 259 00:13:48,960 --> 00:13:51,400 Speaker 6: to navigate, but of course, for long time investors, I think, 260 00:13:51,440 --> 00:13:54,679 Speaker 6: I mean, these are great time to accumulate themes or 261 00:13:54,800 --> 00:13:58,640 Speaker 6: kind of assets that have long term prospects. We did 262 00:13:58,679 --> 00:14:00,880 Speaker 6: a study on kind of how how the different ESSE 263 00:14:01,000 --> 00:14:04,800 Speaker 6: classes perform posts the first rate cut as well, given 264 00:14:04,800 --> 00:14:07,840 Speaker 6: that we are entering a FED rate cut cycle, and 265 00:14:07,920 --> 00:14:10,839 Speaker 6: it turns out that I mean for equities, bonds, even 266 00:14:10,880 --> 00:14:13,720 Speaker 6: goal I mean, they tend to perform quite well six 267 00:14:13,760 --> 00:14:17,280 Speaker 6: to twelve months post the first rate cut. I think 268 00:14:17,440 --> 00:14:19,640 Speaker 6: with regards to your question about whether we should kind 269 00:14:19,640 --> 00:14:23,240 Speaker 6: of invest in US or in China, I think, for example, 270 00:14:23,880 --> 00:14:26,160 Speaker 6: if we look at kind of the US growth sectors, 271 00:14:26,640 --> 00:14:30,640 Speaker 6: they are I guess with the evaluation correction, they're a 272 00:14:30,680 --> 00:14:34,400 Speaker 6: bit more attractive than before. And particularly I think if 273 00:14:34,400 --> 00:14:38,560 Speaker 6: you look at the revelative pe or evaluation versus its 274 00:14:38,560 --> 00:14:41,080 Speaker 6: home history, and you take out kind of bigger companies, 275 00:14:41,840 --> 00:14:44,360 Speaker 6: some of the smaller companies, or even like healthcare looks 276 00:14:44,440 --> 00:14:48,000 Speaker 6: actually quite attractive from a long term perspective. So I think, 277 00:14:48,040 --> 00:14:51,160 Speaker 6: I mean, these are sectors that deliver the highest earnings 278 00:14:51,160 --> 00:14:53,200 Speaker 6: growth in the long term, and I mean these kind 279 00:14:53,200 --> 00:14:56,520 Speaker 6: of short term fluctuations actually provide very good entry points 280 00:14:56,560 --> 00:14:57,480 Speaker 6: for long term investors. 281 00:14:57,560 --> 00:14:59,200 Speaker 2: Before we let you go, Steph, I know you have 282 00:14:59,240 --> 00:15:02,840 Speaker 2: a background artificial intelligence, and I'm wondering how you're feeling 283 00:15:02,880 --> 00:15:04,520 Speaker 2: about that trade these days. 284 00:15:05,520 --> 00:15:08,320 Speaker 6: Yeah, I think there's a lot of I think that 285 00:15:08,520 --> 00:15:10,680 Speaker 6: I guess in the past few months, there has been 286 00:15:10,720 --> 00:15:14,200 Speaker 6: concerns about all these capex spends UH if they would 287 00:15:14,240 --> 00:15:17,040 Speaker 6: turn into actual revenues. I think that's kind of the 288 00:15:17,200 --> 00:15:20,479 Speaker 6: key debate right now for a lot of AI investors. 289 00:15:20,840 --> 00:15:24,760 Speaker 6: But I think if you look at the latest research UH, 290 00:15:24,920 --> 00:15:29,040 Speaker 6: and also kind of the way the hyperscalers are spending UH, 291 00:15:29,280 --> 00:15:31,960 Speaker 6: people that are close to the technology, they're betting that 292 00:15:32,480 --> 00:15:35,600 Speaker 6: the scaling law still stands. And the scaling law for 293 00:15:35,640 --> 00:15:38,720 Speaker 6: those who are not too familiar with is the I 294 00:15:38,720 --> 00:15:41,560 Speaker 6: guess what's empowering all these investments is the fact that 295 00:15:41,840 --> 00:15:44,640 Speaker 6: I mean, the more you invest in these computing power, 296 00:15:44,920 --> 00:15:46,680 Speaker 6: the more you're going to get out from it. And 297 00:15:46,720 --> 00:15:50,360 Speaker 6: it's these are exponential. So all these hyper scalers are 298 00:15:50,360 --> 00:15:53,400 Speaker 6: investing because they all believe that the more compute, the 299 00:15:53,400 --> 00:15:56,080 Speaker 6: more chips you put into a data center, the closer 300 00:15:56,160 --> 00:15:58,320 Speaker 6: you know, the fastest you will get to a GI 301 00:15:58,440 --> 00:16:00,080 Speaker 6: And I think that's the race that's on for the 302 00:16:00,120 --> 00:16:00,840 Speaker 6: next few years. 303 00:16:00,920 --> 00:16:02,760 Speaker 3: But it's scary when you look at a company like 304 00:16:02,760 --> 00:16:05,200 Speaker 3: in Nvidia that traded up to around one point forty 305 00:16:05,400 --> 00:16:08,120 Speaker 3: drop below one hundred down like ninety three with no 306 00:16:08,200 --> 00:16:10,160 Speaker 3: bad news. Yes, I mean what happens if you actually 307 00:16:10,200 --> 00:16:10,920 Speaker 3: get bad news? 308 00:16:11,280 --> 00:16:11,520 Speaker 1: Yes? 309 00:16:11,600 --> 00:16:13,680 Speaker 6: And I think that it shows you that there has 310 00:16:13,720 --> 00:16:15,880 Speaker 6: been a lot of forth right when everybody is talking 311 00:16:15,880 --> 00:16:18,840 Speaker 6: about in video, when people like kind of all think 312 00:16:18,880 --> 00:16:21,920 Speaker 6: that Jensen is gone, there there is a lot of 313 00:16:21,960 --> 00:16:24,360 Speaker 6: froth in terms of the stock. I think right now 314 00:16:24,400 --> 00:16:27,120 Speaker 6: with correction and some of that froth is gone, I 315 00:16:27,120 --> 00:16:30,680 Speaker 6: mean is still intact right, Earnings growth is still phenomenon. 316 00:16:31,000 --> 00:16:33,480 Speaker 6: Of course, I think the AI store should and will 317 00:16:33,560 --> 00:16:36,680 Speaker 6: spread out to other ship makers and other sectors. So 318 00:16:36,760 --> 00:16:40,000 Speaker 6: for example, I think if you think about the application layer, 319 00:16:40,200 --> 00:16:41,960 Speaker 6: I mean that's kind of where a lot of the 320 00:16:41,960 --> 00:16:44,480 Speaker 6: big companies are, a lot of opportunities will stand. 321 00:16:44,520 --> 00:16:46,000 Speaker 1: And I think the biggest story. 322 00:16:46,040 --> 00:16:51,320 Speaker 6: There is personalized everything, personalized healthcare for example, personalized assistance, 323 00:16:51,360 --> 00:16:53,400 Speaker 6: and I mean these are yet to do discussed. 324 00:16:53,080 --> 00:16:54,800 Speaker 3: Just like the stuff that we're getting from Apple. It 325 00:16:54,920 --> 00:16:57,160 Speaker 3: just it doesn't seem that it's like right around the corner. 326 00:16:57,200 --> 00:17:00,000 Speaker 3: But apparently it's coming. Stephanie out of time, but thanks, 327 00:17:00,000 --> 00:17:03,400 Speaker 3: thank you, Stephanie Long, chief investment officer at Stashaway. 328 00:17:10,160 --> 00:17:12,959 Speaker 2: So we are roughly twenty four hours away from the 329 00:17:13,000 --> 00:17:17,240 Speaker 2: debate between Vice President Kamala Harris and former President Donald Trump. 330 00:17:17,680 --> 00:17:20,280 Speaker 2: Joining us now for a preview is Morris Reid. He 331 00:17:20,400 --> 00:17:23,840 Speaker 2: is a partner at the consultancy firm Actem. Mister Reid 332 00:17:23,880 --> 00:17:27,880 Speaker 2: is also a former official in the Clinton administration. Mister Reid, 333 00:17:27,880 --> 00:17:29,960 Speaker 2: thank you so much for joining us and making time 334 00:17:30,400 --> 00:17:33,520 Speaker 2: to help us preview, which I think we can all 335 00:17:33,560 --> 00:17:37,800 Speaker 2: agree is a pretty high stakes debate tomorrow night. To 336 00:17:37,880 --> 00:17:41,560 Speaker 2: what extent have voters not yet made up their minds 337 00:17:41,880 --> 00:17:43,080 Speaker 2: when it comes to this race. 338 00:17:44,600 --> 00:17:47,000 Speaker 4: If you look at the seven states or six states 339 00:17:47,040 --> 00:17:50,359 Speaker 4: that matter, the swing voters are still on the fence. 340 00:17:51,160 --> 00:17:53,680 Speaker 4: They certainly knew about Donald Trump. He's got one hundred 341 00:17:53,720 --> 00:17:57,040 Speaker 4: percent name recognition. So that's the good news and the 342 00:17:57,119 --> 00:18:00,879 Speaker 4: bad news for him. For the Vice president, this could 343 00:18:00,920 --> 00:18:04,600 Speaker 4: be a pressure make or break debate because she's never 344 00:18:04,640 --> 00:18:07,320 Speaker 4: been at this level when she's really starting to introduce 345 00:18:07,400 --> 00:18:09,240 Speaker 4: herself to the wider public. 346 00:18:09,320 --> 00:18:10,720 Speaker 7: So it's going to be quite high stake. 347 00:18:12,200 --> 00:18:15,840 Speaker 3: So what is the most important issue? And I'll preface 348 00:18:16,119 --> 00:18:18,240 Speaker 3: the question by saying that we had Frank Lunza on 349 00:18:18,320 --> 00:18:22,240 Speaker 3: yesterday the pollster, and he said that definitely that the 350 00:18:22,400 --> 00:18:26,600 Speaker 3: costs of American households is the burning issue at the moment. 351 00:18:26,640 --> 00:18:28,320 Speaker 3: Do you agree and if not, what is. 352 00:18:29,760 --> 00:18:32,159 Speaker 4: I agree with Frank? He always always on point and 353 00:18:32,240 --> 00:18:35,600 Speaker 4: has his finger on the pulse. Every election comes down 354 00:18:35,640 --> 00:18:39,720 Speaker 4: to pocketbook issues. The real question for every American is 355 00:18:40,560 --> 00:18:44,400 Speaker 4: will my life be better? Elections are always about the future, 356 00:18:44,920 --> 00:18:49,400 Speaker 4: about aspiration and inspiration. Who's able to connect with them 357 00:18:49,480 --> 00:18:53,760 Speaker 4: on the key issues? Pocketbook issues, bread and butter issues, 358 00:18:53,800 --> 00:18:56,560 Speaker 4: Will my kid have a better future? Those are the 359 00:18:56,600 --> 00:18:59,760 Speaker 4: issues that always matter. So elections are always about the future, 360 00:18:59,800 --> 00:19:00,720 Speaker 4: not pass. 361 00:19:01,320 --> 00:19:03,720 Speaker 2: So for the Vice President, I'm curious to get your 362 00:19:03,760 --> 00:19:06,320 Speaker 2: take on the degree to which she would embrace her 363 00:19:06,400 --> 00:19:11,359 Speaker 2: time with abide administration, or perhaps so weighted more toward 364 00:19:11,440 --> 00:19:13,080 Speaker 2: trying to differentiate herself. 365 00:19:13,119 --> 00:19:16,280 Speaker 4: Which is it well, it's a little bit of both. 366 00:19:16,840 --> 00:19:20,119 Speaker 4: Funny enough, you always embrace the good and you distance 367 00:19:20,200 --> 00:19:23,600 Speaker 4: yourself from the bad, and she's been doing that quite well. 368 00:19:23,600 --> 00:19:26,199 Speaker 4: She's trying to thread the needle, so she has to 369 00:19:26,240 --> 00:19:29,320 Speaker 4: embrace the good things, but she can never divorce herself 370 00:19:29,320 --> 00:19:32,240 Speaker 4: with some of the challenges. So when you talk about 371 00:19:32,280 --> 00:19:34,920 Speaker 4: the things that the Biden administration and Huropean has done well, 372 00:19:35,200 --> 00:19:39,360 Speaker 4: the chip acts, some of the things around the economy. 373 00:19:39,040 --> 00:19:39,920 Speaker 7: She's embracing them. 374 00:19:39,920 --> 00:19:43,000 Speaker 4: But the most Americans are a lot of Americans feel 375 00:19:43,040 --> 00:19:47,120 Speaker 4: that there are tougher opportunities. It's been a challenging economy 376 00:19:47,160 --> 00:19:49,879 Speaker 4: for them. But funny enough, a lot of people don't 377 00:19:49,880 --> 00:19:52,600 Speaker 4: blame her for that. So she will take the bet 378 00:19:52,760 --> 00:19:53,560 Speaker 4: the best. 379 00:19:53,400 --> 00:19:55,680 Speaker 7: Embrace them, and she will distance herself from the good. 380 00:19:56,880 --> 00:19:59,840 Speaker 3: So, Morris, if we look at costs in the household 381 00:20:00,280 --> 00:20:03,480 Speaker 3: sector for people, you would only imagine that they would 382 00:20:03,520 --> 00:20:07,240 Speaker 3: go higher if Trump were to enact one hundred percent 383 00:20:07,359 --> 00:20:12,000 Speaker 3: tariffs on countries that he deems unworthy, that somehow don't 384 00:20:12,000 --> 00:20:14,720 Speaker 3: believe in the US dollar, don't support it, or whatever. 385 00:20:15,480 --> 00:20:18,440 Speaker 3: And it really does raise the question does the American 386 00:20:18,560 --> 00:20:22,680 Speaker 3: household understand that I mean or do they assume that, well, 387 00:20:22,720 --> 00:20:24,480 Speaker 3: this would be better for the economy. We want to 388 00:20:24,840 --> 00:20:28,080 Speaker 3: reshore all of our manufacturing, and they understand, don't they 389 00:20:28,080 --> 00:20:29,440 Speaker 3: that that would raise costs. 390 00:20:30,640 --> 00:20:31,160 Speaker 7: They don't. 391 00:20:31,320 --> 00:20:35,800 Speaker 4: You know, there's a disconnect between terrorists, theoretic around TIFFs 392 00:20:36,320 --> 00:20:39,880 Speaker 4: and how that really impacts the fact is that when 393 00:20:39,960 --> 00:20:41,359 Speaker 4: you raise terrorists. 394 00:20:41,560 --> 00:20:44,320 Speaker 7: That is really passed on to the consumers. 395 00:20:44,640 --> 00:20:47,480 Speaker 4: So most Americans don't understand when the president says he 396 00:20:47,560 --> 00:20:50,840 Speaker 4: talks tough, or a candidate talks toughs about terrorists, they 397 00:20:50,840 --> 00:20:54,439 Speaker 4: don't realize that really means higher prices for them. So 398 00:20:54,560 --> 00:20:56,960 Speaker 4: there's a real disconnect. One of the things that I 399 00:20:57,000 --> 00:21:01,120 Speaker 4: always talk about is the price of adds really pocketbook issues. 400 00:21:01,640 --> 00:21:05,800 Speaker 4: If people feel like groceries, gas, the things that they 401 00:21:05,840 --> 00:21:08,840 Speaker 4: have to do with every day are being more expensive, 402 00:21:09,280 --> 00:21:12,360 Speaker 4: that tends to break against the incumbent. So the terarf 403 00:21:12,480 --> 00:21:16,040 Speaker 4: issues were tough talk. Donald Trump likes to talk tough. 404 00:21:16,520 --> 00:21:20,480 Speaker 4: That really translates to more expensive goods, products, and services 405 00:21:20,480 --> 00:21:21,439 Speaker 4: for the American people. 406 00:21:22,240 --> 00:21:25,480 Speaker 2: The GOP has labeled the Vice president as the borders 407 00:21:25,480 --> 00:21:28,159 Speaker 2: are but as I understand it, as I recall, she 408 00:21:28,400 --> 00:21:33,080 Speaker 2: was essentially tasked to go to Central American countries and 409 00:21:33,119 --> 00:21:36,000 Speaker 2: try to discover the root cause of the migrant crisis. 410 00:21:36,840 --> 00:21:41,600 Speaker 2: How does she tomorrow night address the immigration issue going forward? 411 00:21:42,840 --> 00:21:44,760 Speaker 4: She needs to be very clear that she's going to 412 00:21:44,800 --> 00:21:48,400 Speaker 4: be tough on the borders. We do have an immigration 413 00:21:48,640 --> 00:21:51,640 Speaker 4: crisis in America. What she has to do is an 414 00:21:51,640 --> 00:21:54,080 Speaker 4: offer a solution. She needs to recognize that there's a 415 00:21:54,200 --> 00:21:57,240 Speaker 4: challenges and she needs to put forward her plan to 416 00:21:57,359 --> 00:22:00,960 Speaker 4: make it better. Donald Trump certainly and she will try 417 00:22:00,960 --> 00:22:05,479 Speaker 4: to rap him in the situation that happened where the 418 00:22:05,520 --> 00:22:08,399 Speaker 4: President and the Senate had a deal but he tanked it. 419 00:22:09,720 --> 00:22:11,719 Speaker 4: She needs to really address the fact that there's a 420 00:22:11,760 --> 00:22:14,399 Speaker 4: problem and she needs to offer her solution. This is 421 00:22:14,400 --> 00:22:17,000 Speaker 4: really where I say that most candidts don't need to 422 00:22:17,000 --> 00:22:19,719 Speaker 4: get into details. They need to talk about governing principles, 423 00:22:19,760 --> 00:22:22,439 Speaker 4: their philosophy, and what they would do when they assume 424 00:22:22,520 --> 00:22:23,240 Speaker 4: the highest level. 425 00:22:23,480 --> 00:22:25,000 Speaker 7: This is what the vice president needs to do. 426 00:22:25,040 --> 00:22:27,239 Speaker 4: She needs to recognize that there is a problem and 427 00:22:27,359 --> 00:22:29,480 Speaker 4: offer a solution on which she would do to. 428 00:22:29,440 --> 00:22:30,040 Speaker 7: Make it better. 429 00:22:30,400 --> 00:22:34,119 Speaker 3: But should she go on the offensive? Should she attack Trump? 430 00:22:34,280 --> 00:22:38,600 Speaker 3: If he as I think many expect, if he attacks her. 431 00:22:40,040 --> 00:22:41,760 Speaker 4: Well, she's certainly going to have to be tough one 432 00:22:41,840 --> 00:22:43,680 Speaker 4: of the three keys that I've said that she has 433 00:22:43,720 --> 00:22:45,840 Speaker 4: to do. She has to be authentic, she has to 434 00:22:45,840 --> 00:22:48,080 Speaker 4: be relatable, and she has to be tough. 435 00:22:48,920 --> 00:22:51,640 Speaker 7: People will look to see if Donald Trump can rattle her. 436 00:22:51,680 --> 00:22:54,440 Speaker 4: If Donald Trump can rattle her, then maybe Puten could 437 00:22:54,480 --> 00:22:57,959 Speaker 4: rattle her, maybe irank roud of her, maybe North Korea 438 00:22:58,000 --> 00:23:00,000 Speaker 4: could raudle her. So she has to be very clear. 439 00:23:00,240 --> 00:23:03,240 Speaker 4: She has to be tough, and she also has to 440 00:23:03,240 --> 00:23:04,960 Speaker 4: be confident in her approach. 441 00:23:06,080 --> 00:23:09,600 Speaker 2: Morris Reid is a partner at the consultancy firm Actim. 442 00:23:09,640 --> 00:23:13,240 Speaker 2: He's also a former official in the Clinted administration. Mister Reid, 443 00:23:13,280 --> 00:23:14,040 Speaker 2: thank you so much. 444 00:23:16,440 --> 00:23:19,840 Speaker 3: This is the Bloomberg Daybreak Asia podcast, bringing you the 445 00:23:19,920 --> 00:23:23,400 Speaker 3: stories making news and moving markets in the Asia Pacific. 446 00:23:23,640 --> 00:23:26,760 Speaker 3: Visit the Bloomberg Podcast channel on YouTube to get more 447 00:23:26,800 --> 00:23:30,639 Speaker 3: episodes of this and other shows from Bloomberg. Subscribe to 448 00:23:30,680 --> 00:23:34,480 Speaker 3: the podcast on Apple, Spotify, or anywhere else you listen 449 00:23:34,760 --> 00:23:37,960 Speaker 3: and always on Bloomberg Radio, the Bloomberg Terminal, and the 450 00:23:37,960 --> 00:23:39,240 Speaker 3: Bloomberg Business app.