WEBVTT - Federal Reserve Opts for Outsized Rate Cut 0:00:02.480 --> 0:00:10.480 Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 0:00:10.520 --> 0:00:13.720 Daybreak Asia podcast. I'm Doug Krisner. You can join Brian 0:00:13.800 --> 0:00:16.640 Curtis and myself for the stories, making news and moving 0:00:16.680 --> 0:00:19.560 markets in the APAC region. You can subscribe to the 0:00:19.600 --> 0:00:23.080 show anywhere you get your podcast and always on Bloomberg Radio, 0:00:23.320 --> 0:00:26.080 the Bloomberg Terminal, and the Bloomberg Business App. 0:00:27.280 --> 0:00:29.440 Joining us now for further discussion of the FED and 0:00:29.600 --> 0:00:34.120 markets is Vincent Signerella, Bloomberg macro strategist Vince. Great to 0:00:34.159 --> 0:00:36.519 have you with us here on the program. So the 0:00:36.560 --> 0:00:40.199 FED took a pretty dramatic step here in cutting by 0:00:40.240 --> 0:00:43.320 fifty basis points, but then it signaled that it's not 0:00:43.479 --> 0:00:45.880 in a hurry to do more. So that's a kind 0:00:45.880 --> 0:00:49.720 of balancing. It seems like their messages we're fine tuning here, 0:00:50.040 --> 0:00:52.960 we're not panicking, we're not doing anything too dramatic. Is 0:00:52.960 --> 0:00:55.280 that the message that the market is reading. 0:00:56.560 --> 0:00:58.440 Yeah, I would say that's the best of the equity 0:00:58.520 --> 0:01:00.680 market is reading. I'm not so sure that market is 0:01:00.720 --> 0:01:05.080 taking it the same way the equity guys. It was 0:01:05.120 --> 0:01:07.520 a really volatile session. I have to say, I'm not 0:01:07.560 --> 0:01:12.520 sure if your listeners saw what happened after the or 0:01:13.160 --> 0:01:16.000 got a feel for what happened after two o'clock. But 0:01:16.120 --> 0:01:20.399 the volatility was extraordinary. We surged, we went read, we 0:01:20.560 --> 0:01:24.080 went back to the levels after the announcement, then went 0:01:24.120 --> 0:01:27.440 read again. It was absolutely all over the place. But 0:01:27.480 --> 0:01:29.400 the one thing that stayed tried and true with that, 0:01:29.520 --> 0:01:33.440 Yale stayed higher. So I kind of always leaned towards 0:01:33.440 --> 0:01:37.880 the fixed income guys as a former FX trader, being 0:01:37.920 --> 0:01:42.000 smarter than we are, and I look to them for guidance. 0:01:42.040 --> 0:01:44.199 And the guidance I get from the fixed income market 0:01:44.319 --> 0:01:47.760 is We're going to wait and see what the data says, 0:01:48.080 --> 0:01:50.040 the same way Powell says, we'll wait to see what 0:01:50.080 --> 0:01:50.680 the data says. 0:01:50.840 --> 0:01:52.520 Evin's One of the things that I was hearing during 0:01:52.520 --> 0:01:55.560 the day is that Poulll was essentially making up in 0:01:55.640 --> 0:01:58.440 going fifty today, making up for the fact that they 0:01:58.600 --> 0:02:02.320 decided to do nothing in July. Is that plausible, do 0:02:02.360 --> 0:02:02.720 you think? 0:02:03.480 --> 0:02:03.720 Yeah? 0:02:03.960 --> 0:02:06.200 I mean he mentioned that, he mentioned that they could 0:02:06.200 --> 0:02:11.160 have gone in July, but he passed over that very 0:02:11.200 --> 0:02:13.280 quickly and just said we could have gone, but we didn't, 0:02:13.720 --> 0:02:15.639 And he didn't really give a lot of color in that. 0:02:15.760 --> 0:02:19.080 I think you know, it would have been maybe a 0:02:19.120 --> 0:02:22.880 little bit better received from the fixed income market if 0:02:22.919 --> 0:02:25.160 they did twenty five basis points. In July did twenty 0:02:25.160 --> 0:02:30.480 five basis points. Now, the good news is that the 0:02:30.880 --> 0:02:34.800 warry going into this about the last two weeks was 0:02:34.800 --> 0:02:37.840 that if he went fifty it would be perceived as 0:02:37.840 --> 0:02:40.359 a bit of a panic. But clearly that wasn't the case. 0:02:41.480 --> 0:02:44.640 It looked more like a catching up, which is fine. 0:02:45.200 --> 0:02:47.560 But then you go back to what you guys had 0:02:47.600 --> 0:02:52.600 mentioned earlier, just a few moments ago, and that he's 0:02:52.600 --> 0:02:55.760 not in a rush. This isn't a predetermined course. We're 0:02:55.800 --> 0:03:00.639 still always saying the data dependent story. And the latest 0:03:00.720 --> 0:03:04.800 data we've seen is the Atlanta GDP FED printing three percent. 0:03:05.000 --> 0:03:05.240 Wow. 0:03:05.320 --> 0:03:09.480 Goldman updated their third quarter GDP at three percent, and 0:03:09.520 --> 0:03:12.360 we've seen an inflation is a little hotter than forecasts. 0:03:12.400 --> 0:03:16.200 So I think the equity market, e Vince, I think 0:03:16.200 --> 0:03:18.600 the equity market, you know, the usually the first trades, 0:03:18.720 --> 0:03:21.919 not really the one that gets sustained. I'm seeing a 0:03:21.960 --> 0:03:24.799 lot of positivity here at the moment. Smpe me and 0:03:24.840 --> 0:03:26.919 E's are up now two thirds of a percent, some 0:03:26.960 --> 0:03:29.919 thirty seven points. The Nicks rallied seven hundred and ninety 0:03:29.960 --> 0:03:32.760 odd points. You're going to get a pretty solid rally 0:03:32.760 --> 0:03:35.360 in Hong Kong today. I would think it seems like 0:03:35.400 --> 0:03:38.400 the market is reading this, the bond end stock markets 0:03:38.840 --> 0:03:41.640 as yeah, things are okay, They've got some room to 0:03:41.680 --> 0:03:45.320 cut here. It's not determined what the what the path 0:03:45.360 --> 0:03:48.200 will be going forward, but it's certainly not panic at 0:03:48.240 --> 0:03:48.760 this time. 0:03:49.520 --> 0:03:52.000 No, no, not at all. And the good news for 0:03:52.040 --> 0:03:55.320 equity markets is, and it depends again on the data 0:03:55.360 --> 0:04:00.400 going forward, is that the quantitative titan cycle is clear over. 0:04:01.000 --> 0:04:05.400 We've moved at least temporarily into an easing cycle. We 0:04:05.480 --> 0:04:07.680 don't know the extent of that cycle or how far 0:04:07.720 --> 0:04:10.480 it's going to go. One of the things I would 0:04:10.520 --> 0:04:14.800 always go harken to is Bostic's comments, which is the 0:04:14.840 --> 0:04:18.040 credibility issue, which is the worst thing we could possibly 0:04:18.080 --> 0:04:22.400 do is cut interest rates and then the data doesn't 0:04:22.400 --> 0:04:24.719 support it going forward, and then we have to turn 0:04:24.760 --> 0:04:26.960 around and raise. So I think we're going to see 0:04:26.960 --> 0:04:30.800 a little bit more of a prudent, careful fed going forward, 0:04:31.520 --> 0:04:33.760 which showed in the dot plot where they just forecast 0:04:33.839 --> 0:04:37.120 twenty five basis points for November and December, which I 0:04:37.200 --> 0:04:41.360 think is reasonable, but also very cautious because it gives 0:04:41.360 --> 0:04:44.359 them the opportunity to go either way. They could easily 0:04:44.360 --> 0:04:47.360 go fifty basis points in November if the economy rolled over, 0:04:47.960 --> 0:04:50.320 or they could easily pull back to do absolutely nothing 0:04:50.320 --> 0:04:52.400 in November if the economy sort. 0:04:52.400 --> 0:04:56.040 So, Powell talked about recalibrating policy to a more neutral 0:04:56.120 --> 0:04:59.680 level in your work. I mean, I know it's theoretical 0:05:00.080 --> 0:05:03.479 and debated. Where the neutral rate seems to be. Is 0:05:03.560 --> 0:05:05.159 three percent fair? Do you think? 0:05:06.760 --> 0:05:09.120 I personally think so. I think the idea that we're 0:05:09.120 --> 0:05:11.760 going to get back to two percent is incredibly unreasonable. 0:05:11.800 --> 0:05:15.320 We have a thirty five trillion dollar national debt, and 0:05:15.360 --> 0:05:17.719 that you know, if you look at both parties and 0:05:17.760 --> 0:05:21.680 where they're going in the election in a couple of months, 0:05:21.839 --> 0:05:25.719 both are talking about increasing spending, so that is not 0:05:26.000 --> 0:05:28.480 likely to go lower. It's going to go higher. The 0:05:28.520 --> 0:05:33.479 idea that interest rates have a substantial downside is I 0:05:33.480 --> 0:05:38.160 think a little bit unrealistic. Three percent is not unrealistic, 0:05:38.520 --> 0:05:44.039 but again it depends on inflation and how much either 0:05:44.080 --> 0:05:48.440 of these candidates, for instance, and their parties want to 0:05:48.440 --> 0:05:51.280 spend to get someplace, and what they will do when 0:05:51.279 --> 0:05:51.840 they get there. 0:05:52.440 --> 0:05:53.960 So one of the things that we've seen in the 0:05:54.000 --> 0:05:58.200 past several weeks is some of these cyclicals and small 0:05:58.240 --> 0:06:02.920 caps outperform. They've they've they've been seen as a beneficiary 0:06:03.279 --> 0:06:05.360 in a in a rate cutting cycle like this. 0:06:05.640 --> 0:06:06.000 Uh. 0:06:06.080 --> 0:06:09.200 Would you put commodities and commodity currencies in there? And 0:06:09.320 --> 0:06:12.480 is this something that investors can can play here continue 0:06:12.480 --> 0:06:12.839 to play? 0:06:13.760 --> 0:06:14.000 Yeah? 0:06:14.040 --> 0:06:17.039 Well, I mean, uh, you know, look at gold, you know, 0:06:17.160 --> 0:06:21.000 record highs, looking at copper futures and doing very well. 0:06:21.920 --> 0:06:24.279 You know, across the board, commodities are trading well. I 0:06:24.320 --> 0:06:27.440 mean in a lower interest rate environment, commodities tend to 0:06:27.440 --> 0:06:32.119 do well. Uh, they're easier to finance. But you know, again, 0:06:32.400 --> 0:06:36.960 it's when the one thing that that is positive for 0:06:37.000 --> 0:06:39.880 that space is the lower that you get us interest rates, 0:06:40.320 --> 0:06:43.440 the cheaper it is for emerging market currencies to finance 0:06:43.520 --> 0:06:47.000 their debt, which makes commodities a little bit cheaper across 0:06:47.000 --> 0:06:50.440 the board. So that gives them the opportunity to, if 0:06:50.440 --> 0:06:54.279 you will, finance exports, uh, and make those commodities cheaper, 0:06:54.360 --> 0:06:56.400 which makes them more affordable. 0:06:56.680 --> 0:07:00.200 And well wanted you were talking about volatility earlier, or 0:07:00.240 --> 0:07:02.760 I saw the dollar bouncing around. I was looking at 0:07:03.160 --> 0:07:05.960 the pound. I was looking at the euro earlier, put 0:07:05.960 --> 0:07:08.640 on your old four x hat. Where's the dollar headed 0:07:08.680 --> 0:07:09.200 from here? 0:07:10.880 --> 0:07:13.880 My personal feeling, I'm just going to look at dollar 0:07:14.000 --> 0:07:17.120 yen and I think that dollar yen has a lot 0:07:17.160 --> 0:07:19.840 of room to go lower. And this has more to 0:07:19.880 --> 0:07:23.119 do with boj policy going forward maybe than the Fed. 0:07:24.280 --> 0:07:29.120 The idea, obviously is the bojil stampad. This time around, 0:07:30.000 --> 0:07:33.880 we've got sort of LDP politics playing in, but there's 0:07:33.880 --> 0:07:36.760 a reasonable possibility they go fifty basis points at the 0:07:36.760 --> 0:07:39.600 meeting that follows, if not the meeting that follows that, 0:07:40.080 --> 0:07:42.800 and you're going to see this divergence in monetary policy. 0:07:43.040 --> 0:07:46.200 And the interesting thing is does that play into a 0:07:46.240 --> 0:07:50.120 substantially stronger yen which unwinds the carry trade, which then 0:07:50.200 --> 0:07:52.880 unwinds the equity trade. So that's going to be something 0:07:52.920 --> 0:07:56.880 equity traders need to keep in focus. That something that 0:07:56.920 --> 0:07:59.400 the fixed income market doesn't necessarily have to worry about. 0:08:00.240 --> 0:08:03.080 Yeah, that's something something that we've been musing over here, 0:08:03.560 --> 0:08:06.320 but it's not happening currently. I mean, the Nike has 0:08:06.320 --> 0:08:14.440 been pretty choppy, but today up up. Yeah. Yeah, it's 0:08:14.520 --> 0:08:17.400 been a very interesting time for Japan. The Bank of 0:08:17.480 --> 0:08:21.200 Japan meeting will be interesting and then the election next week. Well, 0:08:21.240 --> 0:08:23.040 just finally, I mean, do you feel good about I mean, 0:08:23.040 --> 0:08:24.200 how are the kids doing? The kids? 0:08:24.200 --> 0:08:26.600 Okay, Yeah, everything's good. 0:08:26.640 --> 0:08:29.720 Everything's good. I'm you know, a little a little chubbier, 0:08:29.720 --> 0:08:31.000 but otherwise do it fine. 0:08:31.600 --> 0:08:34.480 It's you're talking, You're you're eating and drinking well and 0:08:34.480 --> 0:08:35.320 we love to see that. 0:08:37.000 --> 0:08:37.240 Wow. 0:08:39.160 --> 0:08:40.000 Anything else, Doug A. 0:08:40.000 --> 0:08:41.800 Quick no, no, just don't be a stranger. 0:08:41.880 --> 0:08:44.560 Vinny, Yeah, call on this program. Yeah. I was going 0:08:44.640 --> 0:08:47.200 to get you in here. We can't pay you, but yeah, 0:08:47.200 --> 0:08:50.520 it's not a nice to have your time. Vince Signorella. 0:08:50.559 --> 0:08:55.000 There Bloomberg macro strategist with some keen insights on the FED. 0:09:01.679 --> 0:09:04.600 Helen ju joins us here in our studios in Hong Kong, 0:09:04.640 --> 0:09:09.280 Managing Directorates and CIO at NF Trinity. Helen, thank you 0:09:09.360 --> 0:09:11.960 very much for coming in. So it seems like this 0:09:12.040 --> 0:09:14.280 is just a little insurance policy taken out by the 0:09:14.320 --> 0:09:19.600 FED on the soft landing thesis. They're urging caution, they're 0:09:19.640 --> 0:09:22.120 saying there's no there's no panic here. They have room 0:09:22.200 --> 0:09:24.960 to cut and they're doing so. Do you think that 0:09:25.040 --> 0:09:28.679 this is a message that investors in Asia will embrace. 0:09:29.520 --> 0:09:32.880 Look, I think the message is quite clear. The message is, 0:09:33.160 --> 0:09:34.640 first of all, we don't want to look like we're 0:09:34.679 --> 0:09:37.720 falling behind the curve, as many people have been accusing 0:09:37.760 --> 0:09:40.960 them of recently, but that you know, it's too early 0:09:40.960 --> 0:09:43.120 to say that they're going to go all out dubvish, 0:09:43.320 --> 0:09:46.000 mainly because they said twelve times during the meeting that 0:09:46.040 --> 0:09:47.320 things are still pretty solid. 0:09:47.600 --> 0:09:49.640 So I think it's good. It's a good message. 0:09:49.679 --> 0:09:54.200 Right, So things are still good, but we're also fairly supportive. 0:09:53.679 --> 0:09:55.959 And you know, we're mindful of the risks, et cetera. 0:09:56.080 --> 0:09:59.160 So I think in combination, you've seen you know, Japan's 0:09:59.200 --> 0:10:01.320 opening up, and I think in the short term there's 0:10:01.360 --> 0:10:03.040 going to be a little bit more of a risk 0:10:03.080 --> 0:10:05.280 on attitude, not just because of the FED, but also 0:10:05.360 --> 0:10:07.559 because the data earlier this week was quite strong. 0:10:07.760 --> 0:10:10.160 So we talk a lot about long and variable legs 0:10:10.200 --> 0:10:13.480 when it comes to monetary policy. Maybe things, as a 0:10:13.520 --> 0:10:17.440 result of what have been very high rates start to 0:10:17.480 --> 0:10:19.720 slow down even more from here. Do you think the 0:10:19.920 --> 0:10:23.240 US manages a soft landing and we avoid recession? Is 0:10:23.280 --> 0:10:24.120 that the way you see it. 0:10:25.920 --> 0:10:27.800 We do think that the soft landing is the base 0:10:27.840 --> 0:10:30.160 case assumption. At the moment, I mean, we see. 0:10:30.120 --> 0:10:31.280 The bigger risk. 0:10:31.360 --> 0:10:34.120 However, is really a meaningful slenoun in terms of the 0:10:34.200 --> 0:10:36.840 jobs market. As you know, the US is a very 0:10:36.840 --> 0:10:40.520 consumption oriented market, and people the way that they spend 0:10:40.600 --> 0:10:42.640 is but depending on whether they feel secure in their 0:10:42.640 --> 0:10:45.240 employment and whether they have that wealth effect, and both 0:10:45.240 --> 0:10:48.959 of these factors have been full on positive after COVID, 0:10:49.000 --> 0:10:51.640 whereas in most other markets they've reversed. So the jobs 0:10:51.679 --> 0:10:54.839 market is really critical. If jobs market starts the weekend 0:10:54.840 --> 0:10:58.000 in the stock market will come down and everything's kind of interlinked, right. 0:10:58.440 --> 0:10:59.520 If that were to happen. 0:10:59.360 --> 0:11:02.000 Then we go into vicious feedback loop, in which case 0:11:02.080 --> 0:11:04.640 I do think that growth will slow down much more 0:11:04.679 --> 0:11:07.160 than expected, So we have to watch very carefully. 0:11:07.320 --> 0:11:09.240 I think we're not completely out of the woods. 0:11:09.480 --> 0:11:11.520 So what's the smart way to play this in markets 0:11:11.520 --> 0:11:12.040 at the moment? 0:11:12.640 --> 0:11:14.760 Well, I think it's quite interesting because the market's basically 0:11:14.840 --> 0:11:17.760 saying two totally different things to you, right, So the 0:11:17.840 --> 0:11:22.040 credit spread, the share price performance of FAG US equities 0:11:22.040 --> 0:11:26.200 in general, US financials, US industrials, they're basically telling you 0:11:26.240 --> 0:11:28.960 there is barely any landing. Things are completely fine. On 0:11:29.000 --> 0:11:30.600 the other hand, if you look at some other sectors 0:11:30.600 --> 0:11:34.960 like consumer discretionary, tech, hardware, you know, a lot of 0:11:34.960 --> 0:11:38.680 areas outside the US and maybe commodities recently, these areas 0:11:38.720 --> 0:11:40.680 are telling you that things are not so fine, and 0:11:40.720 --> 0:11:43.640 actually treasury yields as well. Right, So I would say, 0:11:43.679 --> 0:11:46.480 you know, if we do have a decent soft landing scenario, 0:11:46.559 --> 0:11:49.320 I would be more interested in looking at a gradual 0:11:49.400 --> 0:11:52.360 recovery of those areas that have priced in more of 0:11:52.360 --> 0:11:55.560 a landing scenario and being underweight some of the areas 0:11:55.600 --> 0:11:57.719 that really hasn't priced in any kind of landing at all. 0:11:57.920 --> 0:12:00.720 So we've arrived, the easing cycle has has begun. Maybe 0:12:00.720 --> 0:12:03.120 we get another fifty basis points between now and the 0:12:03.200 --> 0:12:06.440 end of the year. What does that mean for central 0:12:06.480 --> 0:12:09.599 bankers and your neck of the woods. I'm thinking primarily 0:12:09.640 --> 0:12:10.839 of the BOJ at the moment. 0:12:12.360 --> 0:12:14.679 Well, I think the BOJ is a slightly different case 0:12:14.679 --> 0:12:17.000 from elsewhere just because of their starting point being so 0:12:17.120 --> 0:12:20.160 incredibly low versus all the other major central banks. But 0:12:20.440 --> 0:12:24.440 I would say elsewhere in Asia and in emerging markets anywhere, 0:12:24.480 --> 0:12:27.320 even in DM for for sure, other than the Japan 0:12:27.400 --> 0:12:30.040 special case, it definitely opens up the window right for 0:12:30.040 --> 0:12:32.040 people to do a bit more if they need to, 0:12:32.360 --> 0:12:35.200 because what people had been suffering throughout most of last 0:12:35.280 --> 0:12:37.800 year and end of the year before was basically that 0:12:37.880 --> 0:12:39.720 you don't have too much flexibility because you don't want 0:12:39.720 --> 0:12:42.960 your currency to endlessly depreciate against the dollar, which has 0:12:42.960 --> 0:12:44.920 been so strong for so long. So I think this 0:12:45.080 --> 0:12:48.480 is definitely a positive for non US markets and non 0:12:48.600 --> 0:12:49.480 US central banks. 0:12:49.960 --> 0:12:52.840 Can we connect the dots from the cut by the 0:12:52.880 --> 0:12:57.040 FED to the housing market in China and to the 0:12:57.120 --> 0:13:01.040 mood among the average the average mister and missus Wong 0:13:01.080 --> 0:13:03.160 in China, I mean, how are they feeling these days? 0:13:03.760 --> 0:13:06.680 There's not much of a direct linkage between the FED 0:13:06.720 --> 0:13:08.800 and the property owners in China. I would say the 0:13:08.880 --> 0:13:12.640 indirect linkage is that if there's less pressure on the 0:13:12.760 --> 0:13:15.160 R and B from the dollar strengthening, then the PBOC 0:13:15.280 --> 0:13:17.600 has more room to cut. But the PBOC has already 0:13:17.600 --> 0:13:21.000 been very proactive in terms of dropping mortgage rates as 0:13:21.040 --> 0:13:23.400 well as overall interest rates. So I think that's not 0:13:23.440 --> 0:13:26.600 the most important thing. The thing is about price expectation 0:13:27.040 --> 0:13:28.280 and confidence in the market. 0:13:28.760 --> 0:13:30.079 Even if rates are zero. 0:13:30.280 --> 0:13:31.720 You know, if you think prices are going to go 0:13:31.800 --> 0:13:34.120 down continuously year after year, you're not going to go 0:13:34.160 --> 0:13:35.960 out and buy a property. So I think that's the 0:13:36.440 --> 0:13:38.160 thing that they have to wrestle with at the moment. 0:13:38.360 --> 0:13:42.040 The expectation within the market has really weakened substantially, and 0:13:42.080 --> 0:13:44.679 you have to stabilize the expectation, if not reverse it 0:13:44.960 --> 0:13:48.040 before the market could possibly potentially pick up. So right now, 0:13:48.080 --> 0:13:50.760 all you've seen is secondary market is more active because 0:13:50.760 --> 0:13:53.720 there's more supply available as people who were previously hoarding 0:13:53.800 --> 0:13:56.280 or putting their properties on the market. The primary market 0:13:56.320 --> 0:13:59.360 has really suffered because of you know, developers not taking 0:13:59.360 --> 0:14:01.200 a lot of land the past few years and just 0:14:01.520 --> 0:14:04.640 you know, lack of a less of a price advantage 0:14:04.640 --> 0:14:05.560 for the primary market. 0:14:05.600 --> 0:14:06.960 So I think it's going to be challenging. 0:14:07.120 --> 0:14:10.839 Are your clients asking you about what the stakes are 0:14:10.840 --> 0:14:12.320 in the US presidential election. 0:14:13.559 --> 0:14:16.439 I think everybody's watching the election very very closely. Right 0:14:16.480 --> 0:14:18.880 a couple of months ago that the default assumption was 0:14:18.920 --> 0:14:21.640 that Trump was going to win for sure. You saw 0:14:21.680 --> 0:14:25.520 that in everything from you know, financials and tech, you know, 0:14:25.560 --> 0:14:29.040 which are the more regulated risk sectors, as well as 0:14:29.040 --> 0:14:31.800 the market overall, as well as you know, people basically 0:14:31.840 --> 0:14:34.720 thinking that muals should go up and corporate tax rates, 0:14:35.360 --> 0:14:37.120 tax cuts will get extended. Now. 0:14:37.160 --> 0:14:39.480 I think a lot of that is kind of unclear. 0:14:39.960 --> 0:14:42.800 And if Kamala actually wins, it's probably going to be 0:14:42.800 --> 0:14:44.720 better for the rest of the world because of the 0:14:44.800 --> 0:14:49.560 much lower Trump's specific Trump specific tariff risks. But for 0:14:49.640 --> 0:14:51.640 the US, I think it's probably a little bit of 0:14:51.680 --> 0:14:54.320 a challenge the exceptionalism thesis. 0:14:54.320 --> 0:14:57.280 Can I just get thirty seconds from you? On consumption 0:14:57.360 --> 0:15:00.280 in China, we touched on that briefly. The consumption picked 0:15:00.360 --> 0:15:02.840 up a little bit here during the holiday, but it's 0:15:03.640 --> 0:15:06.280 still away from better levels. How do you see things 0:15:06.280 --> 0:15:07.320 over the next couple of months. 0:15:08.080 --> 0:15:09.600 It's lukewarm at the moment. 0:15:09.640 --> 0:15:12.120 I don't think it's getting substantially worse than before, but 0:15:12.160 --> 0:15:15.600 we don't see much room for dramatic pickup either, precisely 0:15:15.640 --> 0:15:19.480 because of the property price expectation issue we talked about earlier, 0:15:19.480 --> 0:15:23.240 and the very significant impact is having unwealth effects in China, 0:15:23.680 --> 0:15:26.160 and that's the total opposite of what's happening in the US, 0:15:26.200 --> 0:15:29.640 where property crises are still boyant, stock market is still boyant, 0:15:29.680 --> 0:15:32.440 and people are going on and spending a lot despite the. 0:15:32.400 --> 0:15:35.840 Inflation we talked about Japan. I mentioned the fact that 0:15:36.480 --> 0:15:38.760 with the FED doing what it is, maybe it takes 0:15:38.800 --> 0:15:41.239 a little bit of pressure off the BOJ. But obviously 0:15:42.040 --> 0:15:45.320 the Japanese situation is very different. Here, we're seeing quite 0:15:45.320 --> 0:15:49.360 the rally going on in the Japanese equity market. It 0:15:49.440 --> 0:15:52.240 seems to be a pretty robust debate on whether or 0:15:52.280 --> 0:15:55.320 not we're going to get another rate hike between now 0:15:55.360 --> 0:15:56.800 and the end of the year from the BOJ. Do 0:15:56.840 --> 0:15:58.800 you want to weigh in on that? Is that likely. 0:16:00.200 --> 0:16:00.680 Possible? 0:16:00.800 --> 0:16:03.960 But I don't think that it's necessarily for sure. I 0:16:04.000 --> 0:16:07.360 think that there was obviously a pretty significant reaction to 0:16:07.400 --> 0:16:12.160 the last one and more volatility resulting versus what always expected. 0:16:13.200 --> 0:16:15.080 So I think, and you know, I think it really 0:16:15.080 --> 0:16:17.880 depends on the data, right and whether they really see 0:16:17.920 --> 0:16:22.680 a meaningful evidence of continued, you know, robust growth and 0:16:23.200 --> 0:16:25.560 more inflationary pressures in the economy. 0:16:25.840 --> 0:16:26.240 Yeah. 0:16:26.320 --> 0:16:29.280 So you and I live in Hong Kong, and Hong 0:16:29.360 --> 0:16:32.240 Kong is an important place. Hong Kong will no doubt 0:16:32.320 --> 0:16:35.720 benefit from rates moving down by the FED. Again, we 0:16:35.720 --> 0:16:39.240 don't know how much, but fifty basis points here, can 0:16:39.280 --> 0:16:41.240 you see a little bit of a pickup in activity 0:16:41.280 --> 0:16:44.200 in Hong Kong or Is it wholly dependent on the 0:16:44.280 --> 0:16:45.640 Chinese economy rebounding. 0:16:46.520 --> 0:16:49.560 It's not wholly dependent on the Chinese economy rebounding, but 0:16:49.600 --> 0:16:52.400 I think it's very important because the Chinese economy really 0:16:52.520 --> 0:16:56.080 drives consumption here in Hong Kong, the financial markets here 0:16:56.120 --> 0:16:58.960 in Hong Kong and the property market and the you know, 0:16:59.000 --> 0:17:00.560 buying demand coming from North. 0:17:01.200 --> 0:17:03.760 But that said, leaving China aside, I. 0:17:03.680 --> 0:17:06.000 Do think that you're right, Hong Kong will benefit hugely 0:17:06.160 --> 0:17:08.679 from the rate cut cycle in the US because of 0:17:08.720 --> 0:17:12.280 the you know, pegged currency, et cetera, and the fact 0:17:12.280 --> 0:17:15.240 that the property market's been under a significant amount of pressure. 0:17:15.280 --> 0:17:16.920 So I think at least this alleviates some of the 0:17:16.960 --> 0:17:19.800 pressures on the mortgages et cetera over time, and we'll 0:17:20.119 --> 0:17:24.400 start to stabilize, if not start to potentially boost confidence 0:17:24.440 --> 0:17:27.960 towards price expectation on Hong Kong's own property market in 0:17:28.000 --> 0:17:28.879 the residential space. 0:17:28.960 --> 0:17:31.040 Are we going to get more stimulus out of beychain, 0:17:31.280 --> 0:17:33.720 either on the fiscal side or or the monetary side. 0:17:33.760 --> 0:17:34.400 Do you think. 0:17:36.200 --> 0:17:41.359 It's difficult. We've been trying to hope for more stimulus 0:17:41.359 --> 0:17:43.320 for a while. We have gotten a great deal of 0:17:43.359 --> 0:17:44.280 stimulus already. 0:17:44.359 --> 0:17:45.880 Right, if you think about the rate. 0:17:45.720 --> 0:17:50.879 Cuts, the mortgage reset, the mortgage cuts overall, the infrastructure spend, 0:17:51.040 --> 0:17:55.360 the local government financing vehicle fixes, and the fiscal side. 0:17:55.600 --> 0:17:58.200 A lot of these things have come together with consumption 0:17:59.400 --> 0:18:02.480 policies like ev trade in and incentives, etc. 0:18:02.840 --> 0:18:06.440 But all of that has struggled. 0:18:05.880 --> 0:18:09.320 Against the face of the declining property price. So I 0:18:09.320 --> 0:18:11.280 think we will get more to answer your question, but 0:18:11.560 --> 0:18:13.640 is it going to be super effective if property price 0:18:13.680 --> 0:18:15.360 continues to slip. 0:18:15.440 --> 0:18:16.920 I think it's going to be an uphill battle. 0:18:17.119 --> 0:18:19.440 We've got about thirty seconds for this. I just want 0:18:19.480 --> 0:18:21.560 to ask you what is your number one pick right now? 0:18:21.600 --> 0:18:23.760 What's your big conviction trade at the moment. 0:18:24.600 --> 0:18:27.960 I think the big convention trade is basically to be 0:18:28.119 --> 0:18:32.480 more positive on Asia rather than just develop market. I 0:18:32.520 --> 0:18:36.520 think that all of Asia has actually suffered pretty significantly 0:18:37.000 --> 0:18:39.560 as a result of the very very strong dollar, and 0:18:39.600 --> 0:18:41.959 I think that reversal is going to give a lot 0:18:42.000 --> 0:18:44.480 more breathing room here in terms of the property market. 0:18:44.480 --> 0:18:46.000 As you talked about in terms of consumption. 0:18:46.240 --> 0:18:48.720 If Kamala Harri swins and we don't have as much tariffs, 0:18:48.720 --> 0:18:50.560 that's going to be a positive as well. And I 0:18:50.600 --> 0:18:53.360 think that some of the semi related stuff in Korea, Taiwan, etc. 0:18:53.720 --> 0:18:57.200 Has been pressured and is better value and less crowded. 0:18:57.280 --> 0:19:00.159 All right, we've seen money flow into Southeast Asia, the 0:19:00.200 --> 0:19:02.920 Singapore stock market, for instance, of about six and a 0:19:02.920 --> 0:19:05.560 half percent in the past month. Helen, Thank you. Helen 0:19:05.640 --> 0:19:07.040 Ju from NF Trining. 0:19:14.160 --> 0:19:18.879 Naomi Fink, Chief Global strategistic NICO Asset Management, joining us 0:19:19.160 --> 0:19:21.760 live here on daybreak asient. Naomi, thanks for making time 0:19:21.800 --> 0:19:24.320 to chat with us. Obviously it's about the FED today. 0:19:24.359 --> 0:19:26.080 We can talk about what it may mean for the 0:19:26.080 --> 0:19:29.560 Bank of Japan and going into the decision today, this 0:19:29.720 --> 0:19:31.720 debate is it going to be twenty five? Is it 0:19:31.760 --> 0:19:33.720 going to be fifty? We got fifty? What do you 0:19:33.760 --> 0:19:34.199 make of that? 0:19:35.400 --> 0:19:39.240 Well, I personally thought that twenty five would have been 0:19:39.320 --> 0:19:44.200 more appropriate given the economic data out of the US. 0:19:44.440 --> 0:19:47.960 Although the labor market picture is softening, it's not softening 0:19:48.000 --> 0:19:51.520 to the extent that we should really be worried about 0:19:51.560 --> 0:19:55.600 growth right now. I still expect growth to remain positive, 0:19:55.640 --> 0:19:59.520 although potentially slower. I think it was more about the 0:19:59.560 --> 0:20:03.520 fact that the FED had room to cut given wherever 0:20:03.920 --> 0:20:07.960 neutral is, it's below where we are now. And also 0:20:08.320 --> 0:20:12.240 market expectations had already priced it in, so there wasn't 0:20:12.240 --> 0:20:15.480 the worry that delivering a fifty basis point cut would 0:20:15.480 --> 0:20:18.480 send a message that there was some sort of undetected 0:20:18.880 --> 0:20:24.840