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

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Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis

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Speaker 2: along with Doug Krisner. Join us each day for the

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Speaker 2: stories making news and moving markets in the Asia Pacific.

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Speaker 2: You can subscribe to the show anywhere you get your

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Speaker 2: podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and

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Speaker 2: the Bloomberg Business App.

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Speaker 3: Let's get to our guest, Alex wolf is with us,

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Speaker 3: a head of Asia Investment strategy at JP Morgan Private Bank,

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Speaker 3: and Alex joins us from our studios in Hong Kong.

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Speaker 3: Good of you to make time to chat with us.

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Speaker 3: I hope you're doing well. We're talking a lot about

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Speaker 3: the interest rate environment here and what is being described

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Speaker 3: as the Powell pivot now as the result of what

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Speaker 3: we heard at Jackson Hole. Do you think this is

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Speaker 3: a major inflection point for markets?

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Speaker 4: It seems so. It does look like how they assess

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Speaker 4: the balance of risks have shifted. Where you go back

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Speaker 4: to the summer. Just before the summer, the risk was

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Speaker 4: really moving too soon, the risk of inflation reigniting if

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Speaker 4: they cut too much too soon, whereas now after the

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Speaker 4: labor market data and some signs of weakness. It's really

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Speaker 4: the risk of waiting too long and how they balance

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Speaker 4: that has shifted over the course of the year, but

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Speaker 4: it does appear that they are balancing waiting too long

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Speaker 4: as a more significant risk. So we could see as

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Speaker 4: we expect, three cuts for this of this year and

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Speaker 4: then a few more into next year, but there's still

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Speaker 4: a very open question mark as to how much, because

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Speaker 4: they do have quite a bit of room to cut

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Speaker 4: to bring rates to neutral. So it is an inflection point.

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Speaker 4: Markets are already pricing a lot of it in, though

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Speaker 4: so not necessarily from a purely from a markets perspective,

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Speaker 4: but inflection point for what we're going to see in

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Speaker 4: terms of the interest rate environment.

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Speaker 3: You know, it's very interesting because we heard before the

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Speaker 3: power speech, we heard from the Governor of the Bank

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Speaker 3: of Japan, Kazuo Auweita, and he was saying last Friday,

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Speaker 3: the BOJ is likely going to continue raising interest rates.

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Speaker 3: Is that going to happen between now and the end

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Speaker 3: of the year. I'd heard earlier that maybe the BOJ,

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Speaker 3: given the turbulence that we had and a lot of

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Speaker 3: market volatility, particular in the foreign exchange, that maybe the

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Speaker 3: boj would wait until March. Do you think it will

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Speaker 3: happen sooner?

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Speaker 4: So their speech, that the most recent speech, has shifted

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Speaker 4: the view a bit because when they were looking at

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Speaker 4: the market volatility after the most recent hike, then they

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Speaker 4: gave indication they would not. Now as markets calm down,

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Speaker 4: data comes through strong, they're given an indication that they could.

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Speaker 4: We think it will be very, very dependent on what

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Speaker 4: we're seeing, both in terms of you know, you say

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Speaker 4: central banks are data dependent in many ways, a BODA

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Speaker 4: is market dependent what happens from a market volatility perspective,

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Speaker 4: but also what happens in terms of a US growth perspective.

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Speaker 4: If US growth stays okay, we see the soft land

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Speaker 4: and continue, the backdrop of Japanese markets stays or volatility

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Speaker 4: comes down, then yes they absolutely could because the macro

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Speaker 4: backdrop p byab points to another cut. But I think

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Speaker 4: those two factors will really be the determining factors whether

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Speaker 4: or not they go before the end of this year

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Speaker 4: or they wait until next year.

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Speaker 3: So if we look at the currencies in and of themselves,

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Speaker 3: I'm thinking the path forward for the dollar against the

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Speaker 3: end is weaker and the end is on course. I

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Speaker 3: would think to appreciate. Is that a good way of

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Speaker 3: thinking about it?

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Speaker 4: I think not necessarily, because the end has already appreciated

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Speaker 4: quite a bit, and you already see a lot of

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Speaker 4: cuts Fed cuts in the price, so to speak. So

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Speaker 4: I think you would have to see the FED surprising

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Speaker 4: on the dubbish side for the dollar to really depreciate

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Speaker 4: against the end, given how much move we've already we've

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Speaker 4: already seen. So it does look like the current path

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Speaker 4: of the current path of a consensus path around rates

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Speaker 4: is someone in the price on the currency perspective, because

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Speaker 4: the move has been fairly substantial. But yeah, if the

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Speaker 4: Fed does a surprise on the other side, then yes

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Speaker 4: we will see dollard appreciation, likely against the end.

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Speaker 3: So later today in China will have the numbers on

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Speaker 3: industrial profits. Give me your view of what's happening there.

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Speaker 3: I mean, it seems as though the economy has just

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Speaker 3: been mired in stagnation. We know about the troubles with

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Speaker 3: the property market, to the resistance on the part of

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Speaker 3: the government to do more to stimulate. Is there an

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Speaker 3: end in sight?

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Speaker 4: Depends how much time you have for us. I think

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Speaker 4: you're suffering from a shortage of demand broad weak demand,

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Speaker 4: both from a business capex perspective, business investment as well

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Speaker 4: as household demand perspective, and on the policy side, have

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Speaker 4: not done enough to really stimulate demand. That's really the

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Speaker 4: crux of the problem. And it doesn't appear that we

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Speaker 4: are facing an inflection point in the near future either,

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Speaker 4: because policy has not been aggressive enough and it's continuing

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Speaker 4: to focus on the supply side versus the demand side,

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Speaker 4: which is continuing to exacerbate some of those imbalances and

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Speaker 4: further push prices down in deflationary territory. So it really

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Speaker 4: stems from that weakness of overall demand, and they're not

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Speaker 4: yet doing enough to fix that.

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Speaker 3: It seems like the other problem is just this dependence

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Speaker 3: on the export economy. And you know, with talk now

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Speaker 3: in the States about maybe revisiting the tariff issue, is

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Speaker 3: there a problem for China if let's imagine that Trump

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Speaker 3: administration gets another term and we're dealing with more tariffs

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Speaker 3: on the way. I mean, is that potentially a major

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Speaker 3: event for China and something that would hold back the

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Speaker 3: export part of the economy.

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Speaker 4: You know, I think the short answer is yes, but

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Speaker 4: it depends on whether you see a broadening out versus

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Speaker 4: just trade tensions with the US, because you're right, it

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Speaker 4: has been a surprise to see China really go back

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Speaker 4: to mid two thousand type economy that is more dependent

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Speaker 4: on exports, and certainly it has been a very long time.

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Speaker 4: And if you see many countries start to push back,

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Speaker 4: raise trade restrictions, raised tariffs, somewhat close off their markets

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Speaker 4: to Chinese exports, then that will have an impact because

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Speaker 4: China has been at least from a growth perspective, you

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Speaker 4: have seen net exports and how that feeds through into

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Speaker 4: manufacturing and other aspects of the economy that has been

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Speaker 4: a key driver. And so pushback that's more broad from

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Speaker 4: a number of economies could then feed through and kind

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Speaker 4: of hurt that at that growth engine right now that

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Speaker 4: that that China is relying on. So it'll be key

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Speaker 4: to see what are the countries step come through with

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Speaker 4: their own trade restructures.

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Speaker 3: One of the things that came became very clear after

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Speaker 3: the pandemic is that many manufacturers were overly concentrated in

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Speaker 3: China and they began to diversify away from the mainland

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Speaker 3: very quickly. Here, Alex, is that a trend that's going

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Speaker 3: to gather steam here?

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Speaker 4: I don't think it's going to gather steam. I think

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Speaker 4: it's continuing apace. China is a manufacturing powerhouse that most

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Speaker 4: companies have to use and have to rely on, but

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Speaker 4: many want to diversify with with kind of that China

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Speaker 4: plus one or a few other locations just from a

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Speaker 4: supply chain resiliency perspective. So I don't think it's going

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Speaker 4: to gather steam. It has been a trend, it will

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Speaker 4: continue to be a trend, but I don't think it's

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Speaker 4: necessarily accelerating.

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Speaker 3: Good conversation. Thanks for dropping by Alex Wilflare. He is

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Speaker 3: head of Asian Investment Strategy at JP Morgan Private Bank.

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Speaker 3: Joining from our studios in Hong Kong here on a

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Speaker 3: daybreak asion, let's bring in our guests. Sarah Mallick is

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Speaker 3: with us, the CIO of Neuven, who joins us on

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Speaker 3: the line from San Francisco. Good of you to make

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Speaker 3: time to chat with us, Sarah, I hope you're doing well.

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Speaker 3: Let's talk first about the FED, because I think it's

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Speaker 3: top of mind for many folks, particularly after what we

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Speaker 3: heard from Chair Jay Powell last week. Seems like rate

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Speaker 3: cuts are on the horizon. Do you think This is

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Speaker 3: going to be a pretty slow and steady process.

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Speaker 5: Hi, and yeah, thanks for having me. It's great to

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Speaker 5: be here. We did get proof of the Powell pivot

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Speaker 5: on Friday at Jackson Hole, which is the good news.

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Speaker 5: I think the market's question is exactly what you just said.

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Speaker 5: We're moving now from when are we getting ratecuts to

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Speaker 5: how many rate cuts are we getting. I think the

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Speaker 5: market's maybe overly optimistic in the short term about the

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Speaker 5: number of rate cuts we're going to get because the

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Speaker 5: economy is not on the cusp of a recession. Inflation

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Speaker 5: is now trending towards two percent, which is the fed's target.

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Speaker 5: So I think we start slowly twenty five basis points

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Speaker 5: in September. Then the Fed may take a little bit

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Speaker 5: of a wait and see and do another twenty five

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Speaker 5: at the end of the year, and then we'll see

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Speaker 5: what happens with the economy and what happens with inflation,

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Speaker 5: because let's not forget at the beginning of twenty twenty

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Speaker 5: four inflation was actually reaccelerating.

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Speaker 3: Again, that's a good point. Let's talk a little bit

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Speaker 3: about megacap tech the Magnificent seven, using the Bloomberg gauge

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Speaker 3: as a kind of a metric here was down today

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Speaker 3: broadly at around nine tens of one percent. We do

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Speaker 3: have the results from Nvidia after the bell on Wednesday.

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Speaker 3: What are you expecting to hear from Nvidia?

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Speaker 5: Yeah, I think in Nvidia the important thing is going

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Speaker 5: to be any commentary about the adoption of AI. I

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Speaker 5: think what people want to want to know is when

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Speaker 5: is artificial intelligence going to show up in terms of

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Speaker 5: increasing revenues and productivity for companies. You know, in Nvidia

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Speaker 5: already rebounding almost around twenty percent since the August lows,

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Speaker 5: so the stock has you know, quite a bit of

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Speaker 5: optimism in it already, and so I think people are

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Speaker 5: cautious going into the number. But if you look at

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Speaker 5: prior quarters for Nvidia, they've tended to bet and raise

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Speaker 5: and put up very strong numbers. So I certainly wouldn't

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Speaker 5: count out a strong quarter from them. I think it

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Speaker 5: will be. But the question is what's in the stock

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Speaker 5: price and how much higher can it go from here,

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Speaker 5: since it's already rebounded quite a bit in the last

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Speaker 5: few weeks.

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Speaker 3: So you're in San Francisco, obviously you're very close to

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Speaker 3: Silicon Valley, but within the city there are a lot

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Speaker 3: of AI startups. What's your sense of what's happening right now?

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Speaker 3: Where are we in this phase of adopting this new technology.

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Speaker 5: I think we're in a bit of a consolidation phase.

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Speaker 5: So if you look at these new technologies when they

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Speaker 5: come out, first of all, at the beginning, there's a

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Speaker 5: lot of excitement around something.

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Speaker 2: It's new.

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Speaker 5: Companies are very excited about it. I think we've already

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Speaker 5: gone through a lot of that phase. You see a

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Speaker 5: lot of the companies that dominate in the space performing

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Speaker 5: very well. Then there's a bit of a consolidation phase

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Speaker 5: where investors start to think about, Okay, how is this

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Speaker 5: actually going to get adopted into clients business models, how

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Speaker 5: is it going to be used? I think artificial intelligence

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Speaker 5: over time will show a big push improvement in productivity

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Speaker 5: and revenue growth for companies, but it's going to take

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Speaker 5: a while, and that's the phase that we're in now.

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Speaker 5: A bit of a weight and see. But when you

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Speaker 5: look at the companies that have invested heavily in this

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Speaker 5: space for many years, like Microsoft and also in Vidia,

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Speaker 5: that sort of wins because it's in the center of

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Speaker 5: everything and every company that uses AI, those are going

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Speaker 5: to be clear winners over time, it's just a matter

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Speaker 5: of what price do you want to own them, and

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Speaker 5: the quarter to quarter maybe volatile over time.

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Speaker 3: So if you look at the rivalry between the US

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Speaker 3: and China, particularly where technology is concerned, is the US

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Speaker 3: so far out in front that there's nothing to worry

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Speaker 3: about or are you of the view that maybe we

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Speaker 3: should be looking over our shoulder when I say we

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Speaker 3: folks in the United States that are really invested in

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Speaker 3: this technology and probably be a little bit more concerned

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Speaker 3: about what China is trying to do to catch up.

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Speaker 5: Well, I certainly wouldn't bet against US technology. I think

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Speaker 5: the US does have a strong lead in that sector.

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Speaker 5: But always in any sector that's growing quickly, where things

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Speaker 5: are changing very rapidly, you always need to be looking

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Speaker 5: over your shoulder and most importantly thinking about what's in

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Speaker 5: front of you. And so you know, for any US companies,

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Speaker 5: any new technology, at any time, you know there's going

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Speaker 5: to be startups. There's going to be different areas of

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Speaker 5: the world that could come up with ideas that leapfrog

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Speaker 5: where we are today. So I think, you know, it's

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Speaker 5: important the US has shown a dominance in technology in AI.

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Speaker 5: You know in digital technology for a number of years now,

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Speaker 5: and that's why growth stocks have tended to outform on

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Speaker 5: an annual basis for most of the prior decade plus.

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Speaker 5: But we definitely still need to keep an eye on

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Speaker 5: the rest of the world and what's happening in those

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Speaker 5: areas you Our view in general is that emerging markets

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Speaker 5: look attractive here. Their valuations are attractive, they have strong

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Speaker 5: earnings growth expectations going forward, and global portfolio managers have

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Speaker 5: tended to be under allocated to emerging markets. But the

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Speaker 5: areas that we favor are Indonesia, Brazil, and in international development,

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Speaker 5: we like Japan and India. I think China still has

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Speaker 5: some issues that it needs to work through.

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Speaker 3: One of the things that I think is going on

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Speaker 3: in terms of the advancements that China had hoped to

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Speaker 3: make in terms of technology the export controls that were

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Speaker 3: imposed on the part of the Biden administration where high

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Speaker 3: quality semiconductors were concerned. We've got an election in November.

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Speaker 3: Is there a policy change that you would like to

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Speaker 3: see from either the Trump administration should there be one,

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Speaker 3: or the Harris administration, should there be one.

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Speaker 5: I think definitely tariffs have had a heightened impact on

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Speaker 5: China and its growth rate. And also post the pandemic,

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Speaker 5: where many countries, including the US, have moved to onshore

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Speaker 5: and near shoring of manufacturing and supply change so that

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Speaker 5: we can rely more more positively on our supply change.

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Speaker 5: So those are two trends that I think also help

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Speaker 5: the United States in general. You know, I think generally,

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Speaker 5: you know, in terms of regulations and policies going forward,

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Speaker 5: it's a bit of a wait and see. But I

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Speaker 5: think most importantly is they should be set in place

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Speaker 5: so that we can advance as quickly as possible in

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Speaker 5: terms of technology in a safe way so that you know,

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Speaker 5: it can help productivity for companies, consumers, help companies grow

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Speaker 5: their revenues, and you know, we can stay ahead because

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Speaker 5: if the US isn't doing it, or China isn't doing it,

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Speaker 5: build be another region of the world that is doing it.

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Speaker 5: So we need to make sure that, you know, technology

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Speaker 5: is advancing on a global basis as quickly as it

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Speaker 5: can in a way that's safe for people to use.

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Speaker 3: So if we can agree that there is weakness in

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Speaker 3: the Chinese economy, I'm curious is to the bullish case

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Speaker 3: that you're making for Japan because I believe that China

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Speaker 3: is Japan's largest trading partner. Now things may be improving

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Speaker 3: for corporate Japan. One of the things that had been

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Speaker 3: kind of a good tailwind was the weaker end, but

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Speaker 3: that seems to have turned around just a bit. Give

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Speaker 3: me your case for putting money to work in Japan

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Speaker 3: right now.

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Speaker 5: Sure, So japan currency volatility has definitely had an impact

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Speaker 5: of factors for Japan that we like, or companies that

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Speaker 5: are domestically oriented, that are oriented that are more protected

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Speaker 5: from export issues from currency issues. Sectors like financials five

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Speaker 5: X are very strong there. Return on equity is strong,

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Speaker 5: so a company like Orrex which has a fifty billion

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Speaker 5: yen buy back in place and strong first quarter results.

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Speaker 5: And then we also like companies that are paying dividends

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Speaker 5: that provide income to investors. So construction companies which aren't

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Speaker 5: exposed to a lot of oversea product overseas projects are

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Speaker 5: attractive to us, like Shimizu and Tayse. So I think, Japan,

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Speaker 5: do you want to say in the companies that are

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Speaker 5: less exposed to external factors outside of the country.

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Speaker 3: We had an announcement today from Apple very quickly is

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Speaker 3: this a company that do you want to take another

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Speaker 3: look at if you are not already invested in Apple.

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Speaker 5: So we have been owners of Apple for quite a

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Speaker 5: long time. If you look at Apple from a seasonal

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Speaker 5: point of view, the seasonal positive trade for them tends

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Speaker 5: to be made to September, leading up to that iPhone

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Speaker 5: launch that you mentioned that's coming out in a couple

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Speaker 5: of weeks. So seasonally, I think Apple is a stock

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Speaker 5: that is at the tail end of when it tends

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Speaker 5: to do well. But it's also a bit under owned

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Speaker 5: and a bit more stable than some of the other

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Speaker 5: mag seven. So I think that Apple is still a

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Speaker 5: company that investors want to keep within their portfolios as

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Speaker 5: they implement more artificial intelligence into their phones.

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Speaker 3: Sarah, good stuff. Thank you so much for being with us.

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Speaker 3: Sarah Mallick from Neuvene, joining us here on a day

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Speaker 3: break Asia. This is Bloomberg. Our guest is Laurence saidel Baker,

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Speaker 3: economist at ITR Economics, joining us from Manchester, New Hampshire. Lauren,

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Speaker 3: thanks for being with us. Let's begin with the Fed,

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Speaker 3: shall we. What did you think of what we heard

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Speaker 3: from Powell last Friday?

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Speaker 1: Yes, Friday's comments from share Powell. We're a stunning a

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Speaker 1: burst of clarity from a FED chair who does not

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Speaker 1: usually like to give the market that much clarity. So

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Speaker 1: I think he has all but cemented rate cuts to

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Speaker 1: come in September. I firmly believe we're in that twenty

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Speaker 1: five basis point camp. So the market likely to be

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Speaker 1: a little bit disappointed. I think many market participants were

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Speaker 1: looking for a bit more out of the gate, but

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Speaker 1: twenty five basis points in September, we'll start that rate

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Speaker 1: cutting cycle.

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Speaker 3: So if you had to evaluate the Fed's performance throughout

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Speaker 3: this period where they've struggle to normalize in an environment

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Speaker 3: where inflation has been stubborn, I mean, transitory is one

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Speaker 3: term that got thrown around quite a bit, and then

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Speaker 3: that proved not to be the case. We saw something

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Speaker 3: a little bit more durable. Now inflation seems to be

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Speaker 3: no longer at a boil. Are you critical of the

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Speaker 3: way that the FED executed You know, the Fed.

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Speaker 1: Was doing the best they could in what was really

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Speaker 1: an unprecedented scenario. On Friday, Chair Palell, he actually made

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Speaker 1: jokes about how everyone thought inflation would be transitory. He

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Speaker 1: called us all sailors on the good ship transitory I

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Speaker 1: believe was the uh, well, what passes for a joke

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Speaker 1: in central banker speak at least, And so the FED

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Speaker 1: certainly does have one eye on the history books and

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Speaker 1: how this time will be remembered. But we have to

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Speaker 1: remember we did not know what we were up against

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Speaker 1: with COVID. So many of these inflationary impacts, they were

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Speaker 1: the pandemic echoes, they were the supply chain hurdles. But

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Speaker 1: many of them have also just been stubborn due to

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Speaker 1: the fact that our labor market is tight. It's tight

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Speaker 1: for demographic issues, it's not tight for really the types

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Speaker 1: of things that the FED has control over. So I

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Speaker 1: think they're doing what they can. Again, they can't control demographics,

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Speaker 1: and at some point that is what's going to control

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Speaker 1: the labor market, I firmly believe in twenty twenty five

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Speaker 1: and beyond.

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Speaker 3: So how do you evaluate the labor market right now?

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Speaker 3: We had the adjustment from BLS last week, we'll get

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Speaker 3: non farm payrolls a week from this Friday. Are you

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Speaker 3: seeing a deterioration in the labor market to the extent

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Speaker 3: to which we should be looking for much weaker growth

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Speaker 3: or are things kind of holding up fairly well.

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Speaker 1: So I really want to separate direction from the level

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Speaker 1: or the magnitude. So yes, we are seeing deterioration in

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Speaker 1: the labor market. That said, this deterioration is coming from

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Speaker 1: just an incredibly tight starting point. So we're seeing some loosening,

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Speaker 1: but we are still tight by any historical standard. If

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Speaker 1: you compare any of these measures back to their trailing

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Speaker 1: five or ten year average, just certainly to their long

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Speaker 1: term averages, this is still a tight market. We still

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Speaker 1: do not have one unemployed worker for each available job opening.

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Speaker 1: Now we're a far cry from the two job openings

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Speaker 1: to one available worker ratio that we saw at the

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Speaker 1: worst of this time, but not back to that one

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Speaker 1: to one ratio. So the labor market will be tight

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Speaker 1: by twenty twenty five when growth picks back up again.

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Speaker 1: We're already seeing some of these green shoots, already seeing

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Speaker 1: those kind of leading indicators come into play, so there

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Speaker 1: will be more demand for these workers. And again we

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Speaker 1: don't have some new glut of workers coming on the scene.

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Speaker 1: We have the Baby boomers finally retiring, finally aging out.

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Speaker 1: We don't have another huge generation Gen Z. They're aging

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Speaker 1: into labor force participation now. They're actually a smaller generation

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Speaker 1: than the millennials were. So until we see businesses really

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Speaker 1: invest in automation really replacing the need for these workers,

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Speaker 1: this will be a challenge going forward and something that

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Speaker 1: we will have to balance our first of all behavior

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Speaker 1: as businesses, but also just our understanding of what is

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Speaker 1: a balanced labor market.

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Speaker 3: You'll have to forgive me. When I'm listening to the

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Speaker 3: points that you're making, my reaction is that you're in

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Speaker 3: the soft landing camp. Is that true?

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Speaker 1: I think it's too soon to take a victory laugh,

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Speaker 1: But you know, it's if this is a recession and

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Speaker 1: it's not a GDP recession. Very clearly we are seeing

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Speaker 1: manufacturing activity contract very mildly. The industrial economy, i'll call

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Speaker 1: it flat. That's largely plateaued for about a year now.

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Speaker 1: It was really since last August that we saw flatness

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Speaker 1: in the industrial sector. So it depends where you're sitting

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Speaker 1: as to how you feel this cycle. But if your

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Speaker 1: sector is contractionary, this is probably the most mild contraction

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Speaker 1: in anyone's recent memory. So soft landing, borderline plateau with

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Speaker 1: a slight downward bias is maybe what I call the

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Speaker 1: industrial sector right now. Anytime I throw around the term recession,

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Speaker 1: everyone jumps right back to two thousand and eight. This

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Speaker 1: is no two thousand and eight.

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Speaker 3: Can we talk a little bit about politics without getting political?

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Speaker 3: From what you've heard, from what you've heard from both

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Speaker 3: president former President Trump and Vice President Harris, is there

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Speaker 3: enough policy here for you to kind of develop a

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Speaker 3: model of what each administration may mean for the economy.

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Speaker 1: The good news when it comes to red or blue

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Speaker 1: sitting in the White House is that historically there just

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Speaker 1: is not a consistent and compelling correlation to which political

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Speaker 1: party the economy prefers. So I, as an economist, I'm

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Speaker 1: a data driven individual. I cannot sit here and in

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Speaker 1: good faith say that one party would be better one

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Speaker 1: party would be worse. Without that statistically significant correlation. Now

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Speaker 1: we will see specific items like tariffs, for example, those

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Speaker 1: get very political. So we could see individual asset prices,

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Speaker 1: commodity prices certainly respond to one political party or another.

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Speaker 1: But I'm not worried about say GDP growth, or the

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Speaker 1: labor market or inflation, and any of those high level trends.

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Speaker 1: Really they're just too big. The driving factors, those fundamentals

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Speaker 1: are just too large. They don't turn on a dime

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Speaker 1: for any one election, or let me put it this way,

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Speaker 1: for any one person, even if that person is sitting

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Speaker 1: in the Oval office.

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Speaker 3: So if there's a change in immigration policy or a

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Speaker 3: policy that is put forward that would challenge a lot

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Speaker 3: of the immigrant population that is a part of the

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Speaker 3: US labor force, how does that enter into your thinking

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Speaker 3: when we're talking about the tightness of the labor market.

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Speaker 1: So at the margin, immigration could have some impacts, but

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Speaker 1: it won't be a wholesale change. Today we would have

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Speaker 1: to roughly quadruple legal immigration to even come close to

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Speaker 1: filling all of those vacant jobs that we again just

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Speaker 1: don't have the people for. So I don't see immigration

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Speaker 1: as really the solution to our problem by increasing it. Again,

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Speaker 1: any crackdowns potentially would just really depend on the magnitude.

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Speaker 1: Obviously certain sectors would be hit much worse, But for

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Speaker 1: better or for worse, I don't see that as the

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Speaker 1: one item that could materially sway the labor market.

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Speaker 3: When you look at what's going on in the global economy,

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Speaker 3: the weakness in China, for example, I mean, is that,

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Speaker 3: in your view, a significant drag on what's happening in

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Speaker 3: the rest of the world.

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Speaker 1: So China's growth has been keeping a lot of especially Asia,

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Speaker 1: but certainly global, say the global industrial economy mildly positive,

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Speaker 1: as the US and Europe have been just slightly negative.

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Speaker 1: So China's growth right now this is nothing like the

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Speaker 1: growth they've posted in recent years, in recent decades, this

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Speaker 1: is a new normal. I mean that economy has gone

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Speaker 1: from emerging too while largely emerged at this point. Now,

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Speaker 1: that said, the long term trend has been one of reonshoring.

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Speaker 1: We've heard about foreign direct investment really swaying from Asia

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Speaker 1: back toward especially the United States, but North America more generally.

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Speaker 1: So this is a longer term trend. The pandemic certainly

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Speaker 1: accelerated that trend, but I'm not looking to China's slow

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Speaker 1: down as say a risk to exports or any of

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Speaker 1: those North American trends. Again, that level of re on shoring,

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Speaker 1: of near shoring, friendshoring, whatever buzzword you want to use

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Speaker 1: these days, that is the predominant trend, and that's what's

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Speaker 1: really going to impact our manufacturing and industrial sector going forward.

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Speaker 3: Good conversation, Lauren, Thank you so much for making time

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Speaker 3: to chat with us. Laurence sidel Baker economist at ITR Economics,

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Speaker 3: joining from Manchester, New Hampshire.

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Speaker 2: This is the Bloomberg Daybreak Asia podcast, bringing you the

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Speaker 2: stories making news and moving markets in the Asia Pacific.

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Speaker 2: Visit the Bloomberg Podcast channel on YouTube to get more

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Speaker 2: episodes of this and other shows from Bloomberg. Subscribe to

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Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen

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Speaker 2: Bloomberg Business App.