Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis
Speaker 2: along with Doug Krisner. Join us each day for the
Speaker 2: stories making news and moving markets in the Asia Pacific.
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Speaker 3: Let's get to our guest, Alex wolf is with us,
Speaker 3: a head of Asia Investment strategy at JP Morgan Private Bank,
Speaker 3: and Alex joins us from our studios in Hong Kong.
Speaker 3: Good of you to make time to chat with us.
Speaker 3: I hope you're doing well. We're talking a lot about
Speaker 3: the interest rate environment here and what is being described
Speaker 3: as the Powell pivot now as the result of what
Speaker 3: we heard at Jackson Hole. Do you think this is
Speaker 3: a major inflection point for markets?
Speaker 4: It seems so. It does look like how they assess
Speaker 4: the balance of risks have shifted. Where you go back
Speaker 4: to the summer. Just before the summer, the risk was
Speaker 4: really moving too soon, the risk of inflation reigniting if
Speaker 4: they cut too much too soon, whereas now after the
Speaker 4: labor market data and some signs of weakness. It's really
Speaker 4: the risk of waiting too long and how they balance
Speaker 4: that has shifted over the course of the year, but
Speaker 4: it does appear that they are balancing waiting too long
Speaker 4: as a more significant risk. So we could see as
Speaker 4: we expect, three cuts for this of this year and
Speaker 4: then a few more into next year, but there's still
Speaker 4: a very open question mark as to how much, because
Speaker 4: they do have quite a bit of room to cut
Speaker 4: to bring rates to neutral. So it is an inflection point.
Speaker 4: Markets are already pricing a lot of it in, though
Speaker 4: so not necessarily from a purely from a markets perspective,
Speaker 4: but inflection point for what we're going to see in
Speaker 4: terms of the interest rate environment.
Speaker 3: You know, it's very interesting because we heard before the
Speaker 3: power speech, we heard from the Governor of the Bank
Speaker 3: of Japan, Kazuo Auweita, and he was saying last Friday,
Speaker 3: the BOJ is likely going to continue raising interest rates.
Speaker 3: Is that going to happen between now and the end
Speaker 3: of the year. I'd heard earlier that maybe the BOJ,
Speaker 3: given the turbulence that we had and a lot of
Speaker 3: market volatility, particular in the foreign exchange, that maybe the
Speaker 3: boj would wait until March. Do you think it will
Speaker 3: happen sooner?
Speaker 4: So their speech, that the most recent speech, has shifted
Speaker 4: the view a bit because when they were looking at
Speaker 4: the market volatility after the most recent hike, then they
Speaker 4: gave indication they would not. Now as markets calm down,
Speaker 4: data comes through strong, they're given an indication that they could.
Speaker 4: We think it will be very, very dependent on what
Speaker 4: we're seeing, both in terms of you know, you say
Speaker 4: central banks are data dependent in many ways, a BODA
Speaker 4: is market dependent what happens from a market volatility perspective,
Speaker 4: but also what happens in terms of a US growth perspective.
Speaker 4: If US growth stays okay, we see the soft land
Speaker 4: and continue, the backdrop of Japanese markets stays or volatility
Speaker 4: comes down, then yes they absolutely could because the macro
Speaker 4: backdrop p byab points to another cut. But I think
Speaker 4: those two factors will really be the determining factors whether
Speaker 4: or not they go before the end of this year
Speaker 4: or they wait until next year.
Speaker 3: So if we look at the currencies in and of themselves,
Speaker 3: I'm thinking the path forward for the dollar against the
Speaker 3: end is weaker and the end is on course. I
Speaker 3: would think to appreciate. Is that a good way of
Speaker 3: thinking about it?
Speaker 4: I think not necessarily, because the end has already appreciated
Speaker 4: quite a bit, and you already see a lot of
Speaker 4: cuts Fed cuts in the price, so to speak. So
Speaker 4: I think you would have to see the FED surprising
Speaker 4: on the dubbish side for the dollar to really depreciate
Speaker 4: against the end, given how much move we've already we've
Speaker 4: already seen. So it does look like the current path
Speaker 4: of the current path of a consensus path around rates
Speaker 4: is someone in the price on the currency perspective, because
Speaker 4: the move has been fairly substantial. But yeah, if the
Speaker 4: Fed does a surprise on the other side, then yes
Speaker 4: we will see dollard appreciation, likely against the end.
Speaker 3: So later today in China will have the numbers on
Speaker 3: industrial profits. Give me your view of what's happening there.
Speaker 3: I mean, it seems as though the economy has just
Speaker 3: been mired in stagnation. We know about the troubles with
Speaker 3: the property market, to the resistance on the part of
Speaker 3: the government to do more to stimulate. Is there an
Speaker 3: end in sight?
Speaker 4: Depends how much time you have for us. I think
Speaker 4: you're suffering from a shortage of demand broad weak demand,
Speaker 4: both from a business capex perspective, business investment as well
Speaker 4: as household demand perspective, and on the policy side, have
Speaker 4: not done enough to really stimulate demand. That's really the
Speaker 4: crux of the problem. And it doesn't appear that we
Speaker 4: are facing an inflection point in the near future either,
Speaker 4: because policy has not been aggressive enough and it's continuing
Speaker 4: to focus on the supply side versus the demand side,
Speaker 4: which is continuing to exacerbate some of those imbalances and
Speaker 4: further push prices down in deflationary territory. So it really
Speaker 4: stems from that weakness of overall demand, and they're not
Speaker 4: yet doing enough to fix that.
Speaker 3: It seems like the other problem is just this dependence
Speaker 3: on the export economy. And you know, with talk now
Speaker 3: in the States about maybe revisiting the tariff issue, is
Speaker 3: there a problem for China if let's imagine that Trump
Speaker 3: administration gets another term and we're dealing with more tariffs
Speaker 3: on the way. I mean, is that potentially a major
Speaker 3: event for China and something that would hold back the
Speaker 3: export part of the economy.
Speaker 4: You know, I think the short answer is yes, but
Speaker 4: it depends on whether you see a broadening out versus
Speaker 4: just trade tensions with the US, because you're right, it
Speaker 4: has been a surprise to see China really go back
Speaker 4: to mid two thousand type economy that is more dependent
Speaker 4: on exports, and certainly it has been a very long time.
Speaker 4: And if you see many countries start to push back,
Speaker 4: raise trade restrictions, raised tariffs, somewhat close off their markets
Speaker 4: to Chinese exports, then that will have an impact because
Speaker 4: China has been at least from a growth perspective, you
Speaker 4: have seen net exports and how that feeds through into
Speaker 4: manufacturing and other aspects of the economy that has been
Speaker 4: a key driver. And so pushback that's more broad from
Speaker 4: a number of economies could then feed through and kind
Speaker 4: of hurt that at that growth engine right now that
Speaker 4: that that China is relying on. So it'll be key
Speaker 4: to see what are the countries step come through with
Speaker 4: their own trade restructures.
Speaker 3: One of the things that came became very clear after
Speaker 3: the pandemic is that many manufacturers were overly concentrated in
Speaker 3: China and they began to diversify away from the mainland
Speaker 3: very quickly. Here, Alex, is that a trend that's going
Speaker 3: to gather steam here?
Speaker 4: I don't think it's going to gather steam. I think
Speaker 4: it's continuing apace. China is a manufacturing powerhouse that most
Speaker 4: companies have to use and have to rely on, but
Speaker 4: many want to diversify with with kind of that China
Speaker 4: plus one or a few other locations just from a
Speaker 4: supply chain resiliency perspective. So I don't think it's going
Speaker 4: to gather steam. It has been a trend, it will
Speaker 4: continue to be a trend, but I don't think it's
Speaker 4: necessarily accelerating.
Speaker 3: Good conversation. Thanks for dropping by Alex Wilflare. He is
Speaker 3: head of Asian Investment Strategy at JP Morgan Private Bank.
Speaker 3: Joining from our studios in Hong Kong here on a
Speaker 3: daybreak asion, let's bring in our guests. Sarah Mallick is
Speaker 3: with us, the CIO of Neuven, who joins us on
Speaker 3: the line from San Francisco. Good of you to make
Speaker 3: time to chat with us, Sarah, I hope you're doing well.
Speaker 3: Let's talk first about the FED, because I think it's
Speaker 3: top of mind for many folks, particularly after what we
Speaker 3: heard from Chair Jay Powell last week. Seems like rate
Speaker 3: cuts are on the horizon. Do you think This is
Speaker 3: going to be a pretty slow and steady process.
Speaker 5: Hi, and yeah, thanks for having me. It's great to
Speaker 5: be here. We did get proof of the Powell pivot
Speaker 5: on Friday at Jackson Hole, which is the good news.
Speaker 5: I think the market's question is exactly what you just said.
Speaker 5: We're moving now from when are we getting ratecuts to
Speaker 5: how many rate cuts are we getting. I think the
Speaker 5: market's maybe overly optimistic in the short term about the
Speaker 5: number of rate cuts we're going to get because the
Speaker 5: economy is not on the cusp of a recession. Inflation
Speaker 5: is now trending towards two percent, which is the fed's target.
Speaker 5: So I think we start slowly twenty five basis points
Speaker 5: in September. Then the Fed may take a little bit
Speaker 5: of a wait and see and do another twenty five
Speaker 5: at the end of the year, and then we'll see
Speaker 5: what happens with the economy and what happens with inflation,
Speaker 5: because let's not forget at the beginning of twenty twenty
Speaker 5: four inflation was actually reaccelerating.
Speaker 3: Again, that's a good point. Let's talk a little bit
Speaker 3: about megacap tech the Magnificent seven, using the Bloomberg gauge
Speaker 3: as a kind of a metric here was down today
Speaker 3: broadly at around nine tens of one percent. We do
Speaker 3: have the results from Nvidia after the bell on Wednesday.
Speaker 3: What are you expecting to hear from Nvidia?
Speaker 5: Yeah, I think in Nvidia the important thing is going
Speaker 5: to be any commentary about the adoption of AI. I
Speaker 5: think what people want to want to know is when
Speaker 5: is artificial intelligence going to show up in terms of
Speaker 5: increasing revenues and productivity for companies. You know, in Nvidia
Speaker 5: already rebounding almost around twenty percent since the August lows,
Speaker 5: so the stock has you know, quite a bit of
Speaker 5: optimism in it already, and so I think people are
Speaker 5: cautious going into the number. But if you look at
Speaker 5: prior quarters for Nvidia, they've tended to bet and raise
Speaker 5: and put up very strong numbers. So I certainly wouldn't
Speaker 5: count out a strong quarter from them. I think it
Speaker 5: will be. But the question is what's in the stock
Speaker 5: price and how much higher can it go from here,
Speaker 5: since it's already rebounded quite a bit in the last
Speaker 5: few weeks.
Speaker 3: So you're in San Francisco, obviously you're very close to
Speaker 3: Silicon Valley, but within the city there are a lot
Speaker 3: of AI startups. What's your sense of what's happening right now?
Speaker 3: Where are we in this phase of adopting this new technology.
Speaker 5: I think we're in a bit of a consolidation phase.
Speaker 5: So if you look at these new technologies when they
Speaker 5: come out, first of all, at the beginning, there's a
Speaker 5: lot of excitement around something.
Speaker 2: It's new.
Speaker 5: Companies are very excited about it. I think we've already
Speaker 5: gone through a lot of that phase. You see a
Speaker 5: lot of the companies that dominate in the space performing
Speaker 5: very well. Then there's a bit of a consolidation phase
Speaker 5: where investors start to think about, Okay, how is this
Speaker 5: actually going to get adopted into clients business models, how
Speaker 5: is it going to be used? I think artificial intelligence
Speaker 5: over time will show a big push improvement in productivity
Speaker 5: and revenue growth for companies, but it's going to take
Speaker 5: a while, and that's the phase that we're in now.
Speaker 5: A bit of a weight and see. But when you
Speaker 5: look at the companies that have invested heavily in this
Speaker 5: space for many years, like Microsoft and also in Vidia,
Speaker 5: that sort of wins because it's in the center of
Speaker 5: everything and every company that uses AI, those are going
Speaker 5: to be clear winners over time, it's just a matter
Speaker 5: of what price do you want to own them, and
Speaker 5: the quarter to quarter maybe volatile over time.
Speaker 3: So if you look at the rivalry between the US
Speaker 3: and China, particularly where technology is concerned, is the US
Speaker 3: so far out in front that there's nothing to worry
Speaker 3: about or are you of the view that maybe we
Speaker 3: should be looking over our shoulder when I say we
Speaker 3: folks in the United States that are really invested in
Speaker 3: this technology and probably be a little bit more concerned
Speaker 3: about what China is trying to do to catch up.
Speaker 5: Well, I certainly wouldn't bet against US technology. I think
Speaker 5: the US does have a strong lead in that sector.
Speaker 5: But always in any sector that's growing quickly, where things
Speaker 5: are changing very rapidly, you always need to be looking
Speaker 5: over your shoulder and most importantly thinking about what's in
Speaker 5: front of you. And so you know, for any US companies,
Speaker 5: any new technology, at any time, you know there's going
Speaker 5: to be startups. There's going to be different areas of
Speaker 5: the world that could come up with ideas that leapfrog
Speaker 5: where we are today. So I think, you know, it's
Speaker 5: important the US has shown a dominance in technology in AI.
Speaker 5: You know in digital technology for a number of years now,
Speaker 5: and that's why growth stocks have tended to outform on
Speaker 5: an annual basis for most of the prior decade plus.
Speaker 5: But we definitely still need to keep an eye on
Speaker 5: the rest of the world and what's happening in those
Speaker 5: areas you Our view in general is that emerging markets
Speaker 5: look attractive here. Their valuations are attractive, they have strong
Speaker 5: earnings growth expectations going forward, and global portfolio managers have
Speaker 5: tended to be under allocated to emerging markets. But the
Speaker 5: areas that we favor are Indonesia, Brazil, and in international development,
Speaker 5: we like Japan and India. I think China still has
Speaker 5: some issues that it needs to work through.
Speaker 3: One of the things that I think is going on
Speaker 3: in terms of the advancements that China had hoped to
Speaker 3: make in terms of technology the export controls that were
Speaker 3: imposed on the part of the Biden administration where high
Speaker 3: quality semiconductors were concerned. We've got an election in November.
Speaker 3: Is there a policy change that you would like to
Speaker 3: see from either the Trump administration should there be one,
Speaker 3: or the Harris administration, should there be one.
Speaker 5: I think definitely tariffs have had a heightened impact on
Speaker 5: China and its growth rate. And also post the pandemic,
Speaker 5: where many countries, including the US, have moved to onshore
Speaker 5: and near shoring of manufacturing and supply change so that
Speaker 5: we can rely more more positively on our supply change.
Speaker 5: So those are two trends that I think also help
Speaker 5: the United States in general. You know, I think generally,
Speaker 5: you know, in terms of regulations and policies going forward,
Speaker 5: it's a bit of a wait and see. But I
Speaker 5: think most importantly is they should be set in place
Speaker 5: so that we can advance as quickly as possible in
Speaker 5: terms of technology in a safe way so that you know,
Speaker 5: it can help productivity for companies, consumers, help companies grow
Speaker 5: their revenues, and you know, we can stay ahead because
Speaker 5: if the US isn't doing it, or China isn't doing it,
Speaker 5: build be another region of the world that is doing it.
Speaker 5: So we need to make sure that, you know, technology
Speaker 5: is advancing on a global basis as quickly as it
Speaker 5: can in a way that's safe for people to use.
Speaker 3: So if we can agree that there is weakness in
Speaker 3: the Chinese economy, I'm curious is to the bullish case
Speaker 3: that you're making for Japan because I believe that China
Speaker 3: is Japan's largest trading partner. Now things may be improving
Speaker 3: for corporate Japan. One of the things that had been
Speaker 3: kind of a good tailwind was the weaker end, but
Speaker 3: that seems to have turned around just a bit. Give
Speaker 3: me your case for putting money to work in Japan
Speaker 3: right now.
Speaker 5: Sure, So japan currency volatility has definitely had an impact
Speaker 5: of factors for Japan that we like, or companies that
Speaker 5: are domestically oriented, that are oriented that are more protected
Speaker 5: from export issues from currency issues. Sectors like financials five
Speaker 5: X are very strong there. Return on equity is strong,
Speaker 5: so a company like Orrex which has a fifty billion
Speaker 5: yen buy back in place and strong first quarter results.
Speaker 5: And then we also like companies that are paying dividends
Speaker 5: that provide income to investors. So construction companies which aren't
Speaker 5: exposed to a lot of oversea product overseas projects are
Speaker 5: attractive to us, like Shimizu and Tayse. So I think, Japan,
Speaker 5: do you want to say in the companies that are
Speaker 5: less exposed to external factors outside of the country.
Speaker 3: We had an announcement today from Apple very quickly is
Speaker 3: this a company that do you want to take another
Speaker 3: look at if you are not already invested in Apple.
Speaker 5: So we have been owners of Apple for quite a
Speaker 5: long time. If you look at Apple from a seasonal
Speaker 5: point of view, the seasonal positive trade for them tends
Speaker 5: to be made to September, leading up to that iPhone
Speaker 5: launch that you mentioned that's coming out in a couple
Speaker 5: of weeks. So seasonally, I think Apple is a stock
Speaker 5: that is at the tail end of when it tends
Speaker 5: to do well. But it's also a bit under owned
Speaker 5: and a bit more stable than some of the other
Speaker 5: mag seven. So I think that Apple is still a
Speaker 5: company that investors want to keep within their portfolios as
Speaker 5: they implement more artificial intelligence into their phones.
Speaker 3: Sarah, good stuff. Thank you so much for being with us.
Speaker 3: Sarah Mallick from Neuvene, joining us here on a day
Speaker 3: break Asia. This is Bloomberg. Our guest is Laurence saidel Baker,
Speaker 3: economist at ITR Economics, joining us from Manchester, New Hampshire. Lauren,
Speaker 3: thanks for being with us. Let's begin with the Fed,
Speaker 3: shall we. What did you think of what we heard
Speaker 3: from Powell last Friday?
Speaker 1: Yes, Friday's comments from share Powell. We're a stunning a
Speaker 1: burst of clarity from a FED chair who does not
Speaker 1: usually like to give the market that much clarity. So
Speaker 1: I think he has all but cemented rate cuts to
Speaker 1: come in September. I firmly believe we're in that twenty
Speaker 1: five basis point camp. So the market likely to be
Speaker 1: a little bit disappointed. I think many market participants were
Speaker 1: looking for a bit more out of the gate, but
Speaker 1: twenty five basis points in September, we'll start that rate
Speaker 1: cutting cycle.
Speaker 3: So if you had to evaluate the Fed's performance throughout
Speaker 3: this period where they've struggle to normalize in an environment
Speaker 3: where inflation has been stubborn, I mean, transitory is one
Speaker 3: term that got thrown around quite a bit, and then
Speaker 3: that proved not to be the case. We saw something
Speaker 3: a little bit more durable. Now inflation seems to be
Speaker 3: no longer at a boil. Are you critical of the
Speaker 3: way that the FED executed You know, the Fed.
Speaker 1: Was doing the best they could in what was really
Speaker 1: an unprecedented scenario. On Friday, Chair Palell, he actually made
Speaker 1: jokes about how everyone thought inflation would be transitory. He
Speaker 1: called us all sailors on the good ship transitory I
Speaker 1: believe was the uh, well, what passes for a joke
Speaker 1: in central banker speak at least, And so the FED
Speaker 1: certainly does have one eye on the history books and
Speaker 1: how this time will be remembered. But we have to
Speaker 1: remember we did not know what we were up against
Speaker 1: with COVID. So many of these inflationary impacts, they were
Speaker 1: the pandemic echoes, they were the supply chain hurdles. But
Speaker 1: many of them have also just been stubborn due to
Speaker 1: the fact that our labor market is tight. It's tight
Speaker 1: for demographic issues, it's not tight for really the types
Speaker 1: of things that the FED has control over. So I
Speaker 1: think they're doing what they can. Again, they can't control demographics,
Speaker 1: and at some point that is what's going to control
Speaker 1: the labor market, I firmly believe in twenty twenty five
Speaker 1: and beyond.
Speaker 3: So how do you evaluate the labor market right now?
Speaker 3: We had the adjustment from BLS last week, we'll get
Speaker 3: non farm payrolls a week from this Friday. Are you
Speaker 3: seeing a deterioration in the labor market to the extent
Speaker 3: to which we should be looking for much weaker growth
Speaker 3: or are things kind of holding up fairly well.
Speaker 1: So I really want to separate direction from the level
Speaker 1: or the magnitude. So yes, we are seeing deterioration in
Speaker 1: the labor market. That said, this deterioration is coming from
Speaker 1: just an incredibly tight starting point. So we're seeing some loosening,
Speaker 1: but we are still tight by any historical standard. If
Speaker 1: you compare any of these measures back to their trailing
Speaker 1: five or ten year average, just certainly to their long
Speaker 1: term averages, this is still a tight market. We still
Speaker 1: do not have one unemployed worker for each available job opening.
Speaker 1: Now we're a far cry from the two job openings
Speaker 1: to one available worker ratio that we saw at the
Speaker 1: worst of this time, but not back to that one
Speaker 1: to one ratio. So the labor market will be tight
Speaker 1: by twenty twenty five when growth picks back up again.
Speaker 1: We're already seeing some of these green shoots, already seeing
Speaker 1: those kind of leading indicators come into play, so there
Speaker 1: will be more demand for these workers. And again we
Speaker 1: don't have some new glut of workers coming on the scene.
Speaker 1: We have the Baby boomers finally retiring, finally aging out.
Speaker 1: We don't have another huge generation Gen Z. They're aging
Speaker 1: into labor force participation now. They're actually a smaller generation
Speaker 1: than the millennials were. So until we see businesses really
Speaker 1: invest in automation really replacing the need for these workers,
Speaker 1: this will be a challenge going forward and something that
Speaker 1: we will have to balance our first of all behavior
Speaker 1: as businesses, but also just our understanding of what is
Speaker 1: a balanced labor market.
Speaker 3: You'll have to forgive me. When I'm listening to the
Speaker 3: points that you're making, my reaction is that you're in
Speaker 3: the soft landing camp. Is that true?
Speaker 1: I think it's too soon to take a victory laugh,
Speaker 1: But you know, it's if this is a recession and
Speaker 1: it's not a GDP recession. Very clearly we are seeing
Speaker 1: manufacturing activity contract very mildly. The industrial economy, i'll call
Speaker 1: it flat. That's largely plateaued for about a year now.
Speaker 1: It was really since last August that we saw flatness
Speaker 1: in the industrial sector. So it depends where you're sitting
Speaker 1: as to how you feel this cycle. But if your
Speaker 1: sector is contractionary, this is probably the most mild contraction
Speaker 1: in anyone's recent memory. So soft landing, borderline plateau with
Speaker 1: a slight downward bias is maybe what I call the
Speaker 1: industrial sector right now. Anytime I throw around the term recession,
Speaker 1: everyone jumps right back to two thousand and eight. This
Speaker 1: is no two thousand and eight.
Speaker 3: Can we talk a little bit about politics without getting political?
Speaker 3: From what you've heard, from what you've heard from both
Speaker 3: president former President Trump and Vice President Harris, is there
Speaker 3: enough policy here for you to kind of develop a
Speaker 3: model of what each administration may mean for the economy.
Speaker 1: The good news when it comes to red or blue
Speaker 1: sitting in the White House is that historically there just
Speaker 1: is not a consistent and compelling correlation to which political
Speaker 1: party the economy prefers. So I, as an economist, I'm
Speaker 1: a data driven individual. I cannot sit here and in
Speaker 1: good faith say that one party would be better one
Speaker 1: party would be worse. Without that statistically significant correlation. Now
Speaker 1: we will see specific items like tariffs, for example, those
Speaker 1: get very political. So we could see individual asset prices,
Speaker 1: commodity prices certainly respond to one political party or another.
Speaker 1: But I'm not worried about say GDP growth, or the
Speaker 1: labor market or inflation, and any of those high level trends.
Speaker 1: Really they're just too big. The driving factors, those fundamentals
Speaker 1: are just too large. They don't turn on a dime
Speaker 1: for any one election, or let me put it this way,
Speaker 1: for any one person, even if that person is sitting
Speaker 1: in the Oval office.
Speaker 3: So if there's a change in immigration policy or a
Speaker 3: policy that is put forward that would challenge a lot
Speaker 3: of the immigrant population that is a part of the
Speaker 3: US labor force, how does that enter into your thinking
Speaker 3: when we're talking about the tightness of the labor market.
Speaker 1: So at the margin, immigration could have some impacts, but
Speaker 1: it won't be a wholesale change. Today we would have
Speaker 1: to roughly quadruple legal immigration to even come close to
Speaker 1: filling all of those vacant jobs that we again just
Speaker 1: don't have the people for. So I don't see immigration
Speaker 1: as really the solution to our problem by increasing it. Again,
Speaker 1: any crackdowns potentially would just really depend on the magnitude.
Speaker 1: Obviously certain sectors would be hit much worse, But for
Speaker 1: better or for worse, I don't see that as the
Speaker 1: one item that could materially sway the labor market.
Speaker 3: When you look at what's going on in the global economy,
Speaker 3: the weakness in China, for example, I mean, is that,
Speaker 3: in your view, a significant drag on what's happening in
Speaker 3: the rest of the world.
Speaker 1: So China's growth has been keeping a lot of especially Asia,
Speaker 1: but certainly global, say the global industrial economy mildly positive,
Speaker 1: as the US and Europe have been just slightly negative.
Speaker 1: So China's growth right now this is nothing like the
Speaker 1: growth they've posted in recent years, in recent decades, this
Speaker 1: is a new normal. I mean that economy has gone
Speaker 1: from emerging too while largely emerged at this point. Now,
Speaker 1: that said, the long term trend has been one of reonshoring.
Speaker 1: We've heard about foreign direct investment really swaying from Asia
Speaker 1: back toward especially the United States, but North America more generally.
Speaker 1: So this is a longer term trend. The pandemic certainly
Speaker 1: accelerated that trend, but I'm not looking to China's slow
Speaker 1: down as say a risk to exports or any of
Speaker 1: those North American trends. Again, that level of re on shoring,
Speaker 1: of near shoring, friendshoring, whatever buzzword you want to use
Speaker 1: these days, that is the predominant trend, and that's what's
Speaker 1: really going to impact our manufacturing and industrial sector going forward.
Speaker 3: Good conversation, Lauren, Thank you so much for making time
Speaker 3: to chat with us. Laurence sidel Baker economist at ITR Economics,
Speaker 3: joining from Manchester, New Hampshire.
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Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen
Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the
Speaker 2: Bloomberg Business App.