1 00:00:02,480 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,720 --> 00:00:13,520 Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis, 3 00:00:13,520 --> 00:00:16,239 Speaker 2: along with Doug Krisner, join us each day for the 4 00:00:16,320 --> 00:00:19,680 Speaker 2: stories making news and moving markets in the Asia Pacific. 5 00:00:19,880 --> 00:00:22,320 Speaker 2: You can subscribe to the show anywhere you get your 6 00:00:22,360 --> 00:00:26,280 Speaker 2: podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and 7 00:00:26,320 --> 00:00:30,800 Speaker 2: the Bloomberg Business app. Karen Pie, executive vice president and 8 00:00:30,840 --> 00:00:35,600 Speaker 2: head of portfolio Management at Fiduciary Trust International. Karen, thank 9 00:00:35,640 --> 00:00:37,920 Speaker 2: you very much for joining us. We've talked a little 10 00:00:37,920 --> 00:00:40,960 Speaker 2: bit about the macro picture and how the FED looks 11 00:00:41,120 --> 00:00:44,360 Speaker 2: more likely now to cut in September. I think that's 12 00:00:44,400 --> 00:00:47,599 Speaker 2: what the market is expecting. Have you been sort of 13 00:00:47,720 --> 00:00:50,839 Speaker 2: keeping tabulations of the speakers, both a little on the 14 00:00:50,880 --> 00:00:53,599 Speaker 2: hawky side versus those on the duvish side. What do 15 00:00:53,600 --> 00:00:54,880 Speaker 2: you think we see in September? 16 00:00:56,440 --> 00:00:59,680 Speaker 1: Sure, Brian, thanks for having me, and I think that 17 00:01:00,320 --> 00:01:04,120 Speaker 1: right now it is a little bit difficult to predict. 18 00:01:04,160 --> 00:01:08,280 Speaker 1: It almost seems like the market is definitely looking for 19 00:01:08,319 --> 00:01:12,440 Speaker 1: a recut in September. Those odds have been increasing over 20 00:01:12,480 --> 00:01:16,080 Speaker 1: the past few weeks, and I think the data probably 21 00:01:16,120 --> 00:01:20,640 Speaker 1: supports that. In terms of the economy showing some signs 22 00:01:20,640 --> 00:01:25,240 Speaker 1: of continued slow down. Not weak data, but I think 23 00:01:25,319 --> 00:01:29,039 Speaker 1: you know, generally somewhat weaker data. You see that in 24 00:01:29,120 --> 00:01:33,839 Speaker 1: the labor report, and you also see that in terms 25 00:01:33,880 --> 00:01:36,679 Speaker 1: of some of the slowdown in terms of things like 26 00:01:36,760 --> 00:01:41,440 Speaker 1: oil demand. And you know, I think that some of 27 00:01:41,760 --> 00:01:45,440 Speaker 1: the combination of less inflationary pressure along with the slower 28 00:01:45,480 --> 00:01:50,400 Speaker 1: economy probably does lend itself to the FED having you know, 29 00:01:50,440 --> 00:01:51,760 Speaker 1: the potential room to cut. 30 00:01:52,320 --> 00:01:55,240 Speaker 2: So we can talk a little bit more about monetary policy. 31 00:01:55,280 --> 00:01:56,840 Speaker 2: But I wanted to get your take on earnings. We're 32 00:01:56,840 --> 00:01:59,920 Speaker 2: getting pretty close to the end of this latest earning season. 33 00:02:00,240 --> 00:02:02,240 Speaker 2: What sort of grade would you give to companies? 34 00:02:03,840 --> 00:02:06,480 Speaker 1: Sure, I think that's a great way to put it. 35 00:02:06,520 --> 00:02:10,079 Speaker 1: I think generally speaking, we had a fairly solid earnings 36 00:02:10,320 --> 00:02:14,440 Speaker 1: reporting season. In fact, you know, we still have the 37 00:02:14,560 --> 00:02:17,959 Speaker 1: majority of companies surprising on the upside when it came 38 00:02:18,000 --> 00:02:21,720 Speaker 1: to earnings, and I think as we started the earnings 39 00:02:21,720 --> 00:02:25,040 Speaker 1: reporting season, the surprises were coming in a little bit 40 00:02:25,080 --> 00:02:28,280 Speaker 1: on the lower side compared to what we've seen historically. 41 00:02:28,800 --> 00:02:32,960 Speaker 1: But as the earning season progress and we start to see, 42 00:02:33,240 --> 00:02:35,639 Speaker 1: you know, a greater percentage of companies report, and now 43 00:02:35,639 --> 00:02:39,680 Speaker 1: that we're almost through the earning season, earning surprise has 44 00:02:39,720 --> 00:02:42,600 Speaker 1: actually been pretty much on track in terms about a 45 00:02:42,800 --> 00:02:47,320 Speaker 1: five percent surprise, which is I think a pretty healthy 46 00:02:47,560 --> 00:02:52,440 Speaker 1: number relative to expectations. And I think that for the 47 00:02:52,440 --> 00:02:56,560 Speaker 1: most part, company's guidance was also generally positive, and we 48 00:02:56,639 --> 00:03:02,320 Speaker 1: had a I think a forty five percent of companies 49 00:03:03,080 --> 00:03:08,720 Speaker 1: suggesting raising their estimate or giving more positive guidance moving forward. 50 00:03:08,800 --> 00:03:11,280 Speaker 1: So I think that that generally speaks well in terms 51 00:03:11,280 --> 00:03:14,280 Speaker 1: of the outlook. I think some of the themes. 52 00:03:14,360 --> 00:03:16,640 Speaker 2: Yes, sorry, well, just I said, of course, the market 53 00:03:16,639 --> 00:03:19,800 Speaker 2: has been very positive. So would you say that the 54 00:03:19,840 --> 00:03:23,720 Speaker 2: market gains have outpaced the actual earnings gains? And if so, 55 00:03:23,800 --> 00:03:25,360 Speaker 2: what does that tell you about valuations? 56 00:03:26,960 --> 00:03:30,320 Speaker 1: Yeah, I think you hit that right on the now 57 00:03:30,440 --> 00:03:34,920 Speaker 1: head that we definitely continue to see some multiple expansion 58 00:03:35,120 --> 00:03:39,880 Speaker 1: contributing to contributing to stock gains. This year particularly, we 59 00:03:40,000 --> 00:03:42,920 Speaker 1: saw here to date a continuation in terms of the 60 00:03:43,000 --> 00:03:48,880 Speaker 1: multiple expansion and the technology stocks. Those stocks have been 61 00:03:49,240 --> 00:03:53,360 Speaker 1: contributors or largest contributors to earnings growth. So, for example, 62 00:03:53,400 --> 00:03:56,720 Speaker 1: technologies earnings growth this quarter was around twenty eight percent, 63 00:03:57,120 --> 00:04:01,200 Speaker 1: which is far outpacing roughly the five percent growth from 64 00:04:01,200 --> 00:04:04,320 Speaker 1: the rest of the market, and so many of those 65 00:04:04,360 --> 00:04:10,040 Speaker 1: stocks garnered some pretty high valuations, uh before the before 66 00:04:10,040 --> 00:04:12,520 Speaker 1: the correction, and now we're seeing, you know, some of 67 00:04:12,560 --> 00:04:17,120 Speaker 1: that rebound in valuation again. So in many ways, I 68 00:04:17,160 --> 00:04:20,880 Speaker 1: do think that there are some concerns about valuation and 69 00:04:21,520 --> 00:04:24,640 Speaker 1: segments of the market that may be a little bit overextended, 70 00:04:25,120 --> 00:04:28,960 Speaker 1: and investors have to pay attention to valuation, and I 71 00:04:29,000 --> 00:04:31,839 Speaker 1: think that there is definitely a lot of room to 72 00:04:31,960 --> 00:04:35,680 Speaker 1: differentiate stocks from a valuation standpoint. 73 00:04:36,200 --> 00:04:38,560 Speaker 2: So a lot of people are talking about how important 74 00:04:38,760 --> 00:04:41,720 Speaker 2: in Vidia's earnings are, but I wonder whether I mean, 75 00:04:41,960 --> 00:04:44,480 Speaker 2: I think we know that Nvidia is going to do 76 00:04:44,640 --> 00:04:47,200 Speaker 2: very well with its earnings. We haven't heard any any 77 00:04:47,240 --> 00:04:50,520 Speaker 2: warnings or any surprises, and the hyperscalers have been you know, 78 00:04:50,560 --> 00:04:54,040 Speaker 2: they've been overordering almost But what's curious is that that 79 00:04:54,040 --> 00:04:57,440 Speaker 2: doesn't really tell us too much about monetizing and sort 80 00:04:57,440 --> 00:05:02,640 Speaker 2: of downstream action like aiins in productivity or such. Have 81 00:05:02,720 --> 00:05:05,760 Speaker 2: you seen signs that this really is a mega theme 82 00:05:05,960 --> 00:05:07,640 Speaker 2: that is going to bear a lot of fruit. 83 00:05:09,320 --> 00:05:11,760 Speaker 1: Yeah, I think that's the million dollar question right now. 84 00:05:11,920 --> 00:05:15,880 Speaker 1: And certainly there were a lot of questions around that 85 00:05:16,200 --> 00:05:20,560 Speaker 1: theme during the earnings season, and I think that the 86 00:05:21,360 --> 00:05:24,920 Speaker 1: uncertainty or just the fact that investors are questioning that 87 00:05:25,520 --> 00:05:27,640 Speaker 1: led to a little bit of a ship in narrative 88 00:05:27,680 --> 00:05:30,120 Speaker 1: for a while in the market, and that contruted to 89 00:05:30,880 --> 00:05:35,400 Speaker 1: the correction that we saw recently, even though you know, 90 00:05:35,440 --> 00:05:37,480 Speaker 1: we know that there was a lot of technical factors 91 00:05:37,520 --> 00:05:40,680 Speaker 1: that contrude it in terms of the unwine of the 92 00:05:40,800 --> 00:05:44,000 Speaker 1: yen carry trade. But I do think that investors are 93 00:05:44,080 --> 00:05:50,280 Speaker 1: starting to question whether the rewards of AI investments are 94 00:05:50,320 --> 00:05:55,520 Speaker 1: going to yield positive, you know, earnings or positive revenue 95 00:05:55,560 --> 00:05:58,520 Speaker 1: growth for companies. I do think that, you know, when 96 00:05:58,520 --> 00:06:02,680 Speaker 1: it comes to AI and some of the stocks that 97 00:06:02,880 --> 00:06:07,560 Speaker 1: are geared to AI, that's important for investors to decipher. 98 00:06:08,080 --> 00:06:10,799 Speaker 1: And I do think that we are starting to see 99 00:06:10,839 --> 00:06:16,239 Speaker 1: some signs of potentially some slow down from very fast 100 00:06:16,839 --> 00:06:21,279 Speaker 1: pace growth within AI and technology. We do expect the 101 00:06:21,320 --> 00:06:24,320 Speaker 1: pace of investments to slow down as we head into 102 00:06:24,960 --> 00:06:29,360 Speaker 1: the latter part of the year, and we would expect 103 00:06:29,360 --> 00:06:32,560 Speaker 1: that other parts of the market start to contribute more 104 00:06:32,640 --> 00:06:34,440 Speaker 1: to earnings growth for the market. 105 00:06:36,240 --> 00:06:38,760 Speaker 2: Let's do some quick hits on Asia, and I want 106 00:06:38,760 --> 00:06:41,000 Speaker 2: to sort of bridge the gap by saying that city 107 00:06:41,040 --> 00:06:43,279 Speaker 2: group came out and said that the carry trade is back, 108 00:06:43,400 --> 00:06:46,359 Speaker 2: but it's with dollars now, not with en, which is 109 00:06:46,480 --> 00:06:49,200 Speaker 2: kind of interesting. I suppose that tells you that they 110 00:06:49,200 --> 00:06:52,159 Speaker 2: think that the dollar likely weakens from here, but I 111 00:06:52,160 --> 00:06:54,719 Speaker 2: haven't actually checked what they're saying officially about that. But 112 00:06:55,000 --> 00:06:57,760 Speaker 2: the whole idea is that the FED is likely to 113 00:06:57,800 --> 00:07:00,320 Speaker 2: be into a round of cutting rates, and so you 114 00:07:00,400 --> 00:07:03,160 Speaker 2: might see the dollar pull back a little on that, 115 00:07:03,279 --> 00:07:07,040 Speaker 2: whereas the BOJ is talking about hiking rates at least 116 00:07:07,080 --> 00:07:09,479 Speaker 2: to a certain degree. What do you think about that 117 00:07:09,560 --> 00:07:13,320 Speaker 2: kind of trade and what's the implications for emerging markets? 118 00:07:14,320 --> 00:07:17,200 Speaker 1: Sure, so first I'll preface by saying I'm not a 119 00:07:17,240 --> 00:07:21,760 Speaker 1: currency expert, but you know, we do have to watch, 120 00:07:22,720 --> 00:07:25,640 Speaker 1: you know, these technical factors and what's driving the market, 121 00:07:25,720 --> 00:07:29,520 Speaker 1: and it definitely plays a large role in terms of 122 00:07:30,040 --> 00:07:32,960 Speaker 1: In terms of the market, I think the liquidity factor 123 00:07:33,120 --> 00:07:37,560 Speaker 1: is the more important factor, and I think that the 124 00:07:37,640 --> 00:07:40,840 Speaker 1: fact that that BOJ was talking about potentially raising interest 125 00:07:40,920 --> 00:07:44,800 Speaker 1: rates is what caused the technical sell off in the 126 00:07:44,880 --> 00:07:49,840 Speaker 1: Japanese market, Asian Asian markets, and also the US market, 127 00:07:49,840 --> 00:07:53,440 Speaker 1: which has been quite levered to the yen carriage trade. 128 00:07:53,720 --> 00:07:58,760 Speaker 1: So you know, I think going forward, monitoring what's happening 129 00:07:58,840 --> 00:08:02,720 Speaker 1: in terms of the Forum is an important factor as 130 00:08:02,720 --> 00:08:07,160 Speaker 1: we think about the liquidity factor and how it would 131 00:08:07,280 --> 00:08:13,080 Speaker 1: potentially tighten credit around the world. I mean, I think 132 00:08:13,160 --> 00:08:18,160 Speaker 1: it's not just an emerging markets or Asian issue. It 133 00:08:18,280 --> 00:08:23,160 Speaker 1: has huge implications for the global financial markets. And when 134 00:08:23,200 --> 00:08:27,880 Speaker 1: you see tightening in any part of major economic markets, 135 00:08:28,040 --> 00:08:30,800 Speaker 1: it would have reburiderations, even in the US market. 136 00:08:31,600 --> 00:08:33,800 Speaker 2: All Right, we've got to go, unfortunately, but thank you 137 00:08:33,880 --> 00:08:37,120 Speaker 2: very much. Karen pie with US, Executive Vice president at 138 00:08:37,160 --> 00:08:49,600 Speaker 2: Fiduciary Trust International. Henrietta Trece, Managing Director and Director of 139 00:08:49,679 --> 00:08:54,960 Speaker 2: Economic Policy at Veda Partners. Henrietta Kamala Harris has dramatically 140 00:08:55,000 --> 00:08:58,120 Speaker 2: improved her position over the past many weeks in the 141 00:08:58,160 --> 00:09:01,840 Speaker 2: polls tracking voter preferences. Before we get to some of 142 00:09:01,880 --> 00:09:05,720 Speaker 2: the latest developments, just in the broad overview, what has 143 00:09:05,840 --> 00:09:08,080 Speaker 2: led to those changes for her? 144 00:09:08,880 --> 00:09:10,800 Speaker 3: Thanks for asking and thanks for having me. She is 145 00:09:10,960 --> 00:09:14,760 Speaker 3: up five points nationally on average, which is no small 146 00:09:14,800 --> 00:09:18,079 Speaker 3: feat since jumping into this race. A lot of her 147 00:09:18,120 --> 00:09:21,680 Speaker 3: gains are coming from third party voters. So for those 148 00:09:21,720 --> 00:09:25,040 Speaker 3: watching the polls, Rka Junior has dropped substantially in the 149 00:09:25,120 --> 00:09:27,960 Speaker 3: last couple of weeks, and most of his supporters have 150 00:09:28,120 --> 00:09:31,800 Speaker 3: picked a major party candidate, either Kamala Harris or Donald Trump, 151 00:09:31,800 --> 00:09:35,320 Speaker 3: but disproportionately they're trending towards Kamala Harris. So now he's 152 00:09:35,360 --> 00:09:37,960 Speaker 3: down to about five percent, which is why the Trump 153 00:09:38,040 --> 00:09:41,040 Speaker 3: campaign is trying to get his final five percent of 154 00:09:41,120 --> 00:09:44,720 Speaker 3: voters over to their camp, and there is speculation that 155 00:09:44,800 --> 00:09:49,920 Speaker 3: he might endorse Trump in the days ahead. But the youth, minority, female, 156 00:09:50,200 --> 00:09:54,160 Speaker 3: moderate voter trend is all towards Kamala Harris, and she 157 00:09:54,480 --> 00:09:58,880 Speaker 3: is doing pretty well with all of those demographics right now, 158 00:09:58,920 --> 00:10:01,040 Speaker 3: and that's where a lot of for gains have come 159 00:10:01,080 --> 00:10:02,480 Speaker 3: from in the polls thus far. 160 00:10:03,400 --> 00:10:05,800 Speaker 2: I get it, and you know, we stated that that 161 00:10:05,880 --> 00:10:08,679 Speaker 2: she's made that improvement, But I'm really curious, you know 162 00:10:08,720 --> 00:10:12,200 Speaker 2: what is leading to it? Is it is that she's 163 00:10:12,240 --> 00:10:15,120 Speaker 2: more youthful? Is it that people are souring on former 164 00:10:15,160 --> 00:10:18,800 Speaker 2: President Trump? Is it her position on certain policies? I 165 00:10:18,800 --> 00:10:20,319 Speaker 2: don't think so, what is it? 166 00:10:21,520 --> 00:10:24,839 Speaker 3: Our positions on policies are the exact same as we've 167 00:10:24,880 --> 00:10:28,000 Speaker 3: seen from Democratic presidential candidates since two thousand and eight. 168 00:10:28,640 --> 00:10:32,320 Speaker 3: President Obama rolled out the twenty eight percent corporate tax 169 00:10:32,400 --> 00:10:36,040 Speaker 3: rate in twenty twelve, if I'm not mistaken, maybe twenty ten. 170 00:10:36,720 --> 00:10:39,160 Speaker 3: And that's basically been the Democratic platform ever since. So 171 00:10:39,200 --> 00:10:42,160 Speaker 3: it's not like she's reinventing the wheel. What's happening is 172 00:10:42,520 --> 00:10:46,880 Speaker 3: she is bringing folks who were not enthusiastic about Biden 173 00:10:47,480 --> 00:10:50,720 Speaker 3: into her camp overwhelmingly and giving a lot of the 174 00:10:50,840 --> 00:10:55,080 Speaker 3: two thousand and eight enthusiasm to the Democratic Party. And 175 00:10:55,120 --> 00:10:57,959 Speaker 3: then let's not forget that the big reason that Joe 176 00:10:58,000 --> 00:11:02,680 Speaker 3: Biden won was because Donald try was wildly on support 177 00:11:02,720 --> 00:11:05,680 Speaker 3: it by the majority of Americans. He hasn't won an 178 00:11:05,720 --> 00:11:09,400 Speaker 3: election since twenty sixteen. The Republican Party has underperformed since 179 00:11:09,400 --> 00:11:14,600 Speaker 3: twenty sixteen, and that's largely because the opposition to Trump 180 00:11:14,720 --> 00:11:18,720 Speaker 3: is so galvanized and enthusiastic that they'll go to wherever 181 00:11:18,800 --> 00:11:19,680 Speaker 3: else they can find. 182 00:11:20,200 --> 00:11:22,320 Speaker 2: Then let's do some quick hits here, because we had 183 00:11:22,360 --> 00:11:27,480 Speaker 2: the Harris campaign adding some of these prominent Obama leaders 184 00:11:27,760 --> 00:11:30,480 Speaker 2: in senior roles. David Pulla, for instance, he ran the 185 00:11:30,520 --> 00:11:33,520 Speaker 2: campaign back in two thousand and eight. Others like Stephanie 186 00:11:33,559 --> 00:11:37,400 Speaker 2: Cutler and Jennifer Palmiery. What's key there. 187 00:11:38,880 --> 00:11:42,040 Speaker 3: Yeah, they're definitely trying to recreate and continue the momentum 188 00:11:42,040 --> 00:11:44,199 Speaker 3: that Democrats felt in two thousand and eight. You can 189 00:11:44,240 --> 00:11:47,120 Speaker 3: see it from their electoral college map. When you think 190 00:11:47,160 --> 00:11:50,480 Speaker 3: about where Kamala Harris is focus right now, it's less 191 00:11:50,559 --> 00:11:54,440 Speaker 3: on Pennsylvania and much more on North Carolina and Georgia, 192 00:11:54,559 --> 00:11:58,480 Speaker 3: states that Joe Biden and or Obama were able to 193 00:11:58,480 --> 00:12:02,480 Speaker 3: win in the last decade, and it's less focused on 194 00:12:02,640 --> 00:12:05,680 Speaker 3: Pennsylvania specifically. So it's a different trajectory than you would 195 00:12:05,679 --> 00:12:09,000 Speaker 3: have seen under Biden. And they're basically calling for that 196 00:12:09,200 --> 00:12:12,800 Speaker 3: campaign play. If you want to make a sort of 197 00:12:12,800 --> 00:12:14,840 Speaker 3: football analogy, that's the route that they're running. 198 00:12:15,000 --> 00:12:17,600 Speaker 2: Okay, I wanted to get thirty seconds on Joe Biden's 199 00:12:17,640 --> 00:12:20,640 Speaker 2: speech last night. We carried it in its entirety here 200 00:12:20,920 --> 00:12:23,480 Speaker 2: and we summarized it afterwards. It was it was a 201 00:12:23,480 --> 00:12:26,440 Speaker 2: pretty vigorous speech. It was a combative speech. How did 202 00:12:26,440 --> 00:12:26,920 Speaker 2: you read it? 203 00:12:28,000 --> 00:12:29,800 Speaker 1: Yeah, absolutely, very vigorous. 204 00:12:30,559 --> 00:12:33,880 Speaker 3: You know, started late, reflecting the enthusiasm that folks are 205 00:12:33,880 --> 00:12:36,439 Speaker 3: feeling in Chicago this week. You can see it on 206 00:12:36,480 --> 00:12:41,959 Speaker 3: display right now if you're watching the DNC. The idea 207 00:12:42,160 --> 00:12:48,559 Speaker 3: is to perpetuate this galvanization voter turnout volunteerism. I think 208 00:12:48,600 --> 00:12:53,959 Speaker 3: it's particularly well displayed across fundraising numbers. The Harris campaign 209 00:12:54,000 --> 00:12:58,160 Speaker 3: has generated more than five hundred million dollars in the 210 00:12:58,200 --> 00:13:02,240 Speaker 3: weeks since she has taken over the candidacy, and that 211 00:13:02,280 --> 00:13:05,600 Speaker 3: compares to a thirty six million dollars take home for 212 00:13:05,679 --> 00:13:10,440 Speaker 3: the RNC last month. So the disparity the darkness is 213 00:13:10,520 --> 00:13:15,280 Speaker 3: really quite striking, and I think Joe Biden is the 214 00:13:15,280 --> 00:13:18,120 Speaker 3: one to receive credit for that. This is sort of 215 00:13:18,120 --> 00:13:20,079 Speaker 3: a swan song, as everybody's been putting in. I think 216 00:13:20,120 --> 00:13:20,840 Speaker 3: that's very apt. 217 00:13:21,400 --> 00:13:24,200 Speaker 2: You mentioned that President and former President Trump, you know, 218 00:13:24,240 --> 00:13:27,600 Speaker 2: doesn't resonate with the entire country we just heard him 219 00:13:27,600 --> 00:13:31,480 Speaker 2: talking about. I mean he calls all Democrats Marxists and communists. 220 00:13:31,880 --> 00:13:34,600 Speaker 2: When people hear that, they just think, oh, that's well, 221 00:13:34,640 --> 00:13:38,000 Speaker 2: that's Trump, or you know, do they believe them. 222 00:13:39,120 --> 00:13:42,800 Speaker 3: Well, it doesn't really matter what everybody believes. It matters 223 00:13:42,840 --> 00:13:45,960 Speaker 3: what independence believe. They are the ones who decide an election. 224 00:13:46,200 --> 00:13:48,360 Speaker 3: So you know, ninety seven percent of Democrats are going 225 00:13:48,360 --> 00:13:50,920 Speaker 3: to vote for a Democrat, ninety seven percent of Republicans 226 00:13:50,960 --> 00:13:53,559 Speaker 3: are going to vote for a Republican. It's the independence 227 00:13:53,559 --> 00:13:55,440 Speaker 3: on the in between, which is why I stress that 228 00:13:55,440 --> 00:13:58,000 Speaker 3: in my notes right now, and is why Biden won 229 00:13:58,040 --> 00:14:01,440 Speaker 3: his race in twenty twenty and Obama was able to 230 00:14:01,440 --> 00:14:04,760 Speaker 3: win his in twenty two thousand and eight and twenty twelve. 231 00:14:04,960 --> 00:14:07,920 Speaker 3: The only Democratic candidate to lose the independence by two points, 232 00:14:07,920 --> 00:14:11,199 Speaker 3: if I'm not mistaken, was a former Secretary of State 233 00:14:11,280 --> 00:14:14,840 Speaker 3: Hillary Clinton. So what you're looking at right now is 234 00:14:14,920 --> 00:14:19,520 Speaker 3: Kamala Harris swaying independent voters. So when Trump says that 235 00:14:19,880 --> 00:14:23,760 Speaker 3: Democrats are communists or Marxist or whatever, he's failing to 236 00:14:23,960 --> 00:14:26,360 Speaker 3: convince the people who decide the election, which are the 237 00:14:26,400 --> 00:14:29,480 Speaker 3: moderate wing of the American electorate, the independent wing of 238 00:14:29,480 --> 00:14:32,640 Speaker 3: the American electorate, which in critical swing states like Nevada 239 00:14:32,920 --> 00:14:36,600 Speaker 3: are huge majorities or pluralities, rather with there. 240 00:14:37,440 --> 00:14:38,960 Speaker 2: So you're lucky we ran out of time. I was 241 00:14:39,000 --> 00:14:42,040 Speaker 2: going to ask you if Kamala Harris's price gouging comments 242 00:14:42,640 --> 00:14:45,480 Speaker 2: means she doesn't support free capitalism. We'll have to say 243 00:14:45,520 --> 00:14:48,160 Speaker 2: that for another time. I know it's not really the case, 244 00:14:48,320 --> 00:14:51,400 Speaker 2: but anyway, thank you so much, Henrietta. We always love 245 00:14:51,440 --> 00:15:03,640 Speaker 2: it when you're on Henrietta Trees. From Beta Partners, I'm 246 00:15:03,640 --> 00:15:06,600 Speaker 2: Brian Curtis along with Paul Allen and joining us now 247 00:15:06,600 --> 00:15:09,320 Speaker 2: on the program is our colleague Paul Dobson, who is 248 00:15:09,360 --> 00:15:13,840 Speaker 2: Bloomberg Executive editor for Asia Markets. So we've got the Fed, 249 00:15:13,920 --> 00:15:18,480 Speaker 2: We've got Nvidia's earnings coming up, We've had something to 250 00:15:18,520 --> 00:15:21,360 Speaker 2: reflect on what happened with dollar, yen and such, and 251 00:15:21,400 --> 00:15:24,000 Speaker 2: that seems to have cleared a little bit. Paul, What's 252 00:15:24,080 --> 00:15:25,560 Speaker 2: number one issue at the moment for you? 253 00:15:26,800 --> 00:15:27,440 Speaker 1: Oh? 254 00:15:27,480 --> 00:15:29,960 Speaker 4: Well, I think that all eyes and all focus will 255 00:15:29,960 --> 00:15:33,040 Speaker 4: be on what we hear from central banks at the 256 00:15:33,160 --> 00:15:36,040 Speaker 4: end of the week. First of all, we have testimony 257 00:15:36,120 --> 00:15:39,160 Speaker 4: from the Bank of Japan's who Aida in parliament on Friday, 258 00:15:39,200 --> 00:15:42,200 Speaker 4: and then Friday evening Asia time, Friday morning in the 259 00:15:42,360 --> 00:15:45,920 Speaker 4: US we will hear more from Jay Powell at the 260 00:15:45,960 --> 00:15:52,200 Speaker 4: FED on on the interest rate policy. And I think 261 00:15:52,240 --> 00:15:54,600 Speaker 4: that the market is going to be paying very careful 262 00:15:54,600 --> 00:15:57,320 Speaker 4: attention to what sort of a signal we get on 263 00:15:57,480 --> 00:16:01,520 Speaker 4: interest rate cuts from the FED. Is already moving in 264 00:16:01,640 --> 00:16:04,280 Speaker 4: advance in anticipation of the idea that the Fed is 265 00:16:04,320 --> 00:16:07,600 Speaker 4: going to be talking about starting cutting interest rates in 266 00:16:07,640 --> 00:16:11,480 Speaker 4: September and maybe continuing on a cycle of cuts in 267 00:16:11,600 --> 00:16:13,760 Speaker 4: coming months as well. And we're seeing that in our 268 00:16:13,840 --> 00:16:17,440 Speaker 4: markets really very clearly reflected in a weakening dollar and 269 00:16:17,480 --> 00:16:23,320 Speaker 4: a big ready for Asia's currencies. We're you know, pushing 270 00:16:23,520 --> 00:16:26,120 Speaker 4: very high in Southeast Asia on a number of different 271 00:16:26,160 --> 00:16:29,520 Speaker 4: different measures. Here in Singapore, we're close to the strongest 272 00:16:29,800 --> 00:16:34,560 Speaker 4: level since twenty eighteen, for example. And also it's causing 273 00:16:34,560 --> 00:16:37,600 Speaker 4: inflows into equities markets and into bond markets at the 274 00:16:37,640 --> 00:16:41,360 Speaker 4: same time. So that weaker dollar is the really starting 275 00:16:41,400 --> 00:16:44,840 Speaker 4: to sort of ripple across the rest of Asia. Now. 276 00:16:44,880 --> 00:16:47,880 Speaker 4: The danger, of course, is that the yen also rallies, 277 00:16:47,920 --> 00:16:51,720 Speaker 4: and what we saw previously a couple of weeks ago 278 00:16:51,920 --> 00:16:54,560 Speaker 4: was a big rally and the yen upended everything in 279 00:16:54,600 --> 00:16:57,640 Speaker 4: the rest of global markets because of the carry trade 280 00:16:57,680 --> 00:17:00,400 Speaker 4: and the unwinded that cause. So that's something to watch 281 00:17:00,400 --> 00:17:02,400 Speaker 4: out for, and that's why both the Bank of Japan 282 00:17:02,480 --> 00:17:04,159 Speaker 4: and the fedow worth paying a lot of attention to 283 00:17:04,359 --> 00:17:04,720 Speaker 4: right now. 284 00:17:05,680 --> 00:17:10,520 Speaker 5: Yeah, so market's positioning for an outline of easing from 285 00:17:10,520 --> 00:17:12,720 Speaker 5: the Fed. What if instead of that, we just get 286 00:17:12,720 --> 00:17:16,720 Speaker 5: a big speech about data dependency, because that's happened before. 287 00:17:17,600 --> 00:17:20,760 Speaker 4: It has and you could count on your own power 288 00:17:20,800 --> 00:17:23,040 Speaker 4: to try to say as little as possible that would 289 00:17:23,040 --> 00:17:25,639 Speaker 4: cause ripples in the market. On the other hand, Jackson 290 00:17:25,680 --> 00:17:28,960 Speaker 4: Hole is historically a place where the FED does like 291 00:17:29,040 --> 00:17:34,160 Speaker 4: to sort of preview war telegraph shifts in policy, and 292 00:17:34,800 --> 00:17:37,080 Speaker 4: all of the data now seems to be supporting the 293 00:17:37,080 --> 00:17:40,480 Speaker 4: idea that the Fed will be moving in the direction 294 00:17:40,560 --> 00:17:42,960 Speaker 4: of cutting interest rates. If you look at inflation measures 295 00:17:42,960 --> 00:17:45,040 Speaker 4: that we've seen over the past couple of weeks, we 296 00:17:45,119 --> 00:17:47,320 Speaker 4: had a miss on the cp on the PPI, I 297 00:17:47,320 --> 00:17:50,240 Speaker 4: beg your Pardner, and then we ca a CPI as well, 298 00:17:50,280 --> 00:17:52,919 Speaker 4: and so that really gave the idea that will be 299 00:17:53,000 --> 00:17:56,240 Speaker 4: okay for the FED to cut even though the rest 300 00:17:56,280 --> 00:17:58,960 Speaker 4: of the economic data shows some resilience. I think if 301 00:17:58,960 --> 00:18:01,639 Speaker 4: Fed if how were to just you know, sort of 302 00:18:01,680 --> 00:18:06,960 Speaker 4: like talk data dependence with no indication at all that 303 00:18:07,000 --> 00:18:10,359 Speaker 4: there's a closeness or nearness to cuts, then the market 304 00:18:10,400 --> 00:18:11,639 Speaker 4: might take that quite negatively. 305 00:18:12,160 --> 00:18:15,159 Speaker 2: Yeah, the problem with data dependence is that you know, 306 00:18:15,320 --> 00:18:18,840 Speaker 2: there's a lagged defect in the rate hikes that they've had, 307 00:18:18,880 --> 00:18:21,399 Speaker 2: and there's such a huge gap between where inflation is 308 00:18:21,440 --> 00:18:25,920 Speaker 2: now and where it was before, and with the FED 309 00:18:25,920 --> 00:18:29,520 Speaker 2: funds rated five and three eighths percent, some people are worried. 310 00:18:29,840 --> 00:18:32,800 Speaker 2: And we also had this revision in US payroll growth, 311 00:18:32,840 --> 00:18:35,399 Speaker 2: and it looks like you could have a half a 312 00:18:35,400 --> 00:18:39,480 Speaker 2: million to a million fewer jobs than we thought we had, 313 00:18:39,960 --> 00:18:42,800 Speaker 2: and that might further stoke some concerns that the Fed's 314 00:18:42,800 --> 00:18:45,760 Speaker 2: behind the curve. How are you reading that? 315 00:18:47,359 --> 00:18:49,200 Speaker 4: I think that that's going to be really interesting data 316 00:18:49,200 --> 00:18:53,119 Speaker 4: points to watch out for. And the particularly Blimbig Economics 317 00:18:53,160 --> 00:18:55,399 Speaker 4: has been talking up the idea that the labor market 318 00:18:55,480 --> 00:18:59,320 Speaker 4: is weaker than the headline data might suggest. On the 319 00:18:59,359 --> 00:19:02,000 Speaker 4: other hand, you know, the rest of the economic data 320 00:19:02,000 --> 00:19:04,920 Speaker 4: does seem pretty strong as well. The retail sales, for example, 321 00:19:05,280 --> 00:19:11,359 Speaker 4: are still coming up in favor. There So to attach 322 00:19:11,440 --> 00:19:14,200 Speaker 4: too much importance to that backward looking data without being 323 00:19:14,240 --> 00:19:19,160 Speaker 4: aware of the kind of current situation might lend something 324 00:19:19,320 --> 00:19:22,600 Speaker 4: of an over reaction. At the moment, the market doesn't 325 00:19:22,600 --> 00:19:25,400 Speaker 4: seem to be thinking that the FED is behind the curve, 326 00:19:25,400 --> 00:19:27,000 Speaker 4: and there's going to need to start with a fifty 327 00:19:27,040 --> 00:19:29,639 Speaker 4: basis point cut based on what's placed in at the moment. 328 00:19:30,280 --> 00:19:32,600 Speaker 4: If it were, If it were starting to really worry 329 00:19:32,600 --> 00:19:34,800 Speaker 4: about the economic slow down, then of course that could 330 00:19:34,880 --> 00:19:37,800 Speaker 4: lead to a faster shift down and then all of 331 00:19:37,840 --> 00:19:41,600 Speaker 4: those trades that we're talking about, the weak dollar, lower 332 00:19:41,640 --> 00:19:43,560 Speaker 4: bond shields would accelerate. 333 00:19:43,600 --> 00:19:46,920 Speaker 5: Most likely yeah, the week a dollar narrative is really 334 00:19:46,920 --> 00:19:51,040 Speaker 5: getting embedded now, which currency is particularly in Asia seem 335 00:19:51,080 --> 00:19:52,480 Speaker 5: to have the most upside at the moment? 336 00:19:53,880 --> 00:19:58,760 Speaker 4: Really good question. Markets like Southeast Asia in general. We've 337 00:19:58,760 --> 00:20:01,000 Speaker 4: seen big Radi's Malaysia and ring it led the way 338 00:20:01,080 --> 00:20:05,679 Speaker 4: and now catch up with Taibar for example, even Philippine 339 00:20:05,680 --> 00:20:08,720 Speaker 4: Pei so too. I think in major markets, you know, 340 00:20:08,840 --> 00:20:12,000 Speaker 4: So the places where there's a bit more caution is 341 00:20:12,000 --> 00:20:17,600 Speaker 4: the yen because of the fact that the rapid news 342 00:20:17,640 --> 00:20:22,840 Speaker 4: we saw there already were unsettling for global markets. But basically, 343 00:20:22,920 --> 00:20:26,159 Speaker 4: you know, anywhere where interest rates are likely to stay 344 00:20:26,240 --> 00:20:29,919 Speaker 4: higher for longer in the in the sort of dimensioned 345 00:20:29,960 --> 00:20:34,399 Speaker 4: or in the situation where US rates are coming lower. 346 00:20:34,520 --> 00:20:37,240 Speaker 4: So Australia for example, where the central banks have been 347 00:20:37,280 --> 00:20:40,560 Speaker 4: talking about wanting to keep interest rates up for longer, 348 00:20:41,359 --> 00:20:44,840 Speaker 4: should see currency benefit and maybe against New Zealand's dollar 349 00:20:44,920 --> 00:20:48,080 Speaker 4: as well, where where we saw the cut the other day. 350 00:20:49,280 --> 00:20:52,159 Speaker 2: Interesting story that moved within the past couple of hours 351 00:20:52,160 --> 00:20:55,480 Speaker 2: on the terminal about the Japanese stock market when it 352 00:20:55,520 --> 00:20:59,200 Speaker 2: had its worst selling that we saw just recently. Foreign 353 00:20:59,240 --> 00:21:02,959 Speaker 2: investors were selling futures pretty heavily, but they were buying 354 00:21:03,080 --> 00:21:07,400 Speaker 2: cash equities and summing up that our story says that 355 00:21:07,400 --> 00:21:11,719 Speaker 2: that's a sign that stickier money hasn't lost confidence in 356 00:21:11,760 --> 00:21:15,359 Speaker 2: the market. What's your take now on the conditions in 357 00:21:15,440 --> 00:21:19,000 Speaker 2: Japan and where we're going, both in inequities and the end. 358 00:21:20,359 --> 00:21:22,480 Speaker 4: I think I think is really interesting. I think so 359 00:21:22,560 --> 00:21:24,560 Speaker 4: much it's dependent on the end that it's hard to 360 00:21:24,600 --> 00:21:28,239 Speaker 4: separate the two at the moment. However, you know, on 361 00:21:28,280 --> 00:21:30,560 Speaker 4: a currency hedged basis, So if you take the en 362 00:21:30,600 --> 00:21:33,320 Speaker 4: out of the equation and you're a US buyer of 363 00:21:33,440 --> 00:21:37,119 Speaker 4: Japanese equities, you're still neck connect with the performance of 364 00:21:37,280 --> 00:21:41,080 Speaker 4: US markets here today. So there's plenty of reasons to 365 00:21:41,240 --> 00:21:47,040 Speaker 4: like Japanese equities, even if even if you take away 366 00:21:47,080 --> 00:21:50,480 Speaker 4: the sort of our potential for the end too, we 367 00:21:50,560 --> 00:21:53,000 Speaker 4: can help you out further. I think part of that 368 00:21:53,400 --> 00:21:56,520 Speaker 4: is that we're seeing some finally, some growth, you know, 369 00:21:56,560 --> 00:21:58,840 Speaker 4: in the most recent GDP numbers after quite a long 370 00:21:58,840 --> 00:22:03,280 Speaker 4: period of stagnation, and also retail sales the consumer picking 371 00:22:03,359 --> 00:22:06,760 Speaker 4: up again, which has been giving companies something of a boost. 372 00:22:07,000 --> 00:22:09,080 Speaker 4: You know. One of the big concerns is whether the 373 00:22:09,119 --> 00:22:12,080 Speaker 4: companies have pricing power, if they can continue to raise 374 00:22:12,560 --> 00:22:17,240 Speaker 4: their prices without scaring off consumers. You know, it's that 375 00:22:17,359 --> 00:22:20,439 Speaker 4: whole cycle of higher wages leading to higher prices and 376 00:22:20,480 --> 00:22:23,080 Speaker 4: so on, And right now it seems that that is 377 00:22:23,160 --> 00:22:25,280 Speaker 4: possible and that the consumer is still the err and 378 00:22:25,359 --> 00:22:28,840 Speaker 4: that wage growth is continuing to push through, and so 379 00:22:29,000 --> 00:22:33,720 Speaker 4: that's quite a positive sort of underlying story for parts 380 00:22:33,760 --> 00:22:37,160 Speaker 4: of the Japanese market. I think that the other thing 381 00:22:37,760 --> 00:22:39,800 Speaker 4: to watch out for, you know, is also the banks, 382 00:22:39,800 --> 00:22:42,160 Speaker 4: which benefit from higher interest rates. So if the BOJ 383 00:22:42,320 --> 00:22:46,119 Speaker 4: does continue to signal higher rates in the future, then 384 00:22:46,160 --> 00:22:49,880 Speaker 4: that should benefit another segment of Japanese Japan's market as well. 385 00:22:50,800 --> 00:22:53,280 Speaker 5: Just very quickly, Baul, we've also got CBI numbers at 386 00:22:53,320 --> 00:22:55,600 Speaker 5: the end of the week from Japan thirty seconds. What 387 00:22:55,640 --> 00:22:56,560 Speaker 5: are we looking for. 388 00:22:58,119 --> 00:23:02,439 Speaker 4: Well, you know, the will be expecting that there's still 389 00:23:02,720 --> 00:23:06,879 Speaker 4: some strength in those numbers, and the BOJ we'll be 390 00:23:06,920 --> 00:23:10,720 Speaker 4: able to continue hiking two strong numbers though, you know, 391 00:23:10,840 --> 00:23:12,800 Speaker 4: is the danger here? I think at the moment, too hot, 392 00:23:12,840 --> 00:23:15,320 Speaker 4: too cold for the US, too hot, too cold for Japan. 393 00:23:15,560 --> 00:23:17,600 Speaker 4: That could start to un settle markets again and see 394 00:23:17,600 --> 00:23:19,200 Speaker 4: some pretty short news in the currencies. 395 00:23:19,680 --> 00:23:22,320 Speaker 2: All right, Paul, thanks for joining us. Paul, Dobson, Bloomberg 396 00:23:22,359 --> 00:23:30,000 Speaker 2: Executive Editor for Asian Markets. This is the Bloomberg Daybreak 397 00:23:30,040 --> 00:23:33,639 Speaker 2: Asia podcast, bringing you the stories making news and moving 398 00:23:33,680 --> 00:23:37,359 Speaker 2: markets in the Asia Pacific. Visit the Bloomberg Podcast channel 399 00:23:37,440 --> 00:23:40,280 Speaker 2: on YouTube to get more episodes of this and other 400 00:23:40,359 --> 00:23:44,720 Speaker 2: shows from Bloomberg. Subscribe to the podcast on Apple, Spotify, 401 00:23:45,000 --> 00:23:48,440 Speaker 2: or anywhere else you listen and always on Bloomberg Radio, 402 00:23:48,560 --> 00:23:51,120 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app.