WEBVTT - Strong Hiring Hits Fed Cut Bets, Japan Stocks Rise

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Welcome to the Daybreak

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<v Speaker 1>Asia podcast time Doug Chrisner. Financial markets are now being

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<v Speaker 1>forced to reconsider the magnitude of FED rate cuts later

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<v Speaker 1>in the year. This is after an unexpectedly strong US

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<v Speaker 1>employment report. The American economy added one hundred and thirty

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<v Speaker 1>thousand jobs in the month of January. That was double forecast,

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<v Speaker 1>and at the same time, the unemployment rate slid to

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<v Speaker 1>four point three percent. We got reaction from Pierre Yared.

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<v Speaker 1>He is a member of the White House National Economic Council.

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<v Speaker 2>We saw significant increases in construction over the past month,

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<v Speaker 2>especially if you look at non residential construction. That's consistent

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<v Speaker 2>with the President's economic policies. Because of these economic policies

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<v Speaker 2>that are there to drive investment and factories in the economy,

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<v Speaker 2>you saw an increase in construction jobs.

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<v Speaker 1>That is Pierre Yared, he is from the NEEC. For

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<v Speaker 1>a closer look at these jobs data, I'm joined by

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<v Speaker 1>Jeffrey Road. She is chief economist at LPL Financial. Jeffrey,

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<v Speaker 1>thank you so much for being here. What did you

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<v Speaker 1>make of the employment report?

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<v Speaker 3>Well, I think there are a couple things, so we

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<v Speaker 3>do have something I highlighted in my notes to my

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<v Speaker 3>clients here at LPL, so downward revision is no surprise there.

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<v Speaker 3>I think the big surprises were a fairly strong reading.

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<v Speaker 3>Of course, it was healthcare and social assistance construction. I

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<v Speaker 3>think the really interesting takeaway for me is this emerging

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<v Speaker 3>trend in hours worked. So you know, we've had this

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<v Speaker 3>low high or low fire environment for quite some time now.

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<v Speaker 3>Granted one hundred and sixty thousand that's not low at all,

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<v Speaker 3>so that's pretty strong. I don't know if this is

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<v Speaker 3>going to be a trend that that's going to continue

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<v Speaker 3>on the rest of the year, but it seems as

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<v Speaker 3>if employers are more interested in increasing hours worked rather

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<v Speaker 3>than and just outright going back to you know, one

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<v Speaker 3>seventy five one eighty k run rate. But we we

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<v Speaker 3>think this is we think this is indicative of the

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<v Speaker 3>fact that firms have had a very difficult time finding

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<v Speaker 3>qualified workers.

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<v Speaker 4>That was the problem.

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<v Speaker 3>Remember, and if I be surveys, several other surveys suggested

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<v Speaker 3>the same thing. Beijbook highlighted this. You know, during that

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<v Speaker 3>great reshuffling, firms couldn't find people. I think they're at

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<v Speaker 3>this point where they say, okay, we know the economy

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<v Speaker 3>has risk of slowing down, but we don't want to

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<v Speaker 3>give up the people we worked really hard to try

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<v Speaker 3>to find.

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<v Speaker 1>So these data seem to have forced the markets to

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<v Speaker 1>reconsider the magnitude of FED rate cuts later in the year.

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<v Speaker 1>How did the employment data impact your thinking in terms

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<v Speaker 1>of FED policy.

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<v Speaker 3>Well, it pushes things out a little bit. I don't

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<v Speaker 3>know if it changed too much, but it just confirmed

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<v Speaker 3>the fact that we think.

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<v Speaker 4>I think the FED.

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<v Speaker 3>Initiates cutting and easing of policy in the second half

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<v Speaker 3>of twenty twenty six. We think certainly with the role

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<v Speaker 3>of strong growth out of the last half of twenty

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<v Speaker 3>twenty five and inflation still running too high, it's that

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<v Speaker 3>it's pushing the Fed out toward later in the year.

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<v Speaker 4>I don't think.

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<v Speaker 3>You know, perhaps maybe some people were thinking an April timeframe.

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<v Speaker 3>Perhaps it's a little bit later, so the Fed has

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<v Speaker 3>to continue to focus on inflation. A strong January jobs

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<v Speaker 3>report with an unemployment downtech that certainly gives the FED

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<v Speaker 3>a lot more time to focus on the inflation side

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<v Speaker 3>of their mandate.

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<v Speaker 1>So speaking of inflation, Friday, we get the CPI data,

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<v Speaker 1>do you think that it's we have the risk here

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<v Speaker 1>of a hot rating, Well.

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<v Speaker 3>We're still running in the point three month on month

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<v Speaker 3>run rate. We really need to see point one and

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<v Speaker 3>point two type numbers these month and month run rates here,

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<v Speaker 3>So I think it is going to run hot even

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<v Speaker 3>before this non farm pay report.

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<v Speaker 4>I do expect this.

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<v Speaker 3>Latest CPI number to run on the hot side, and

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<v Speaker 3>that's partially due to the fact that the economy is

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<v Speaker 3>humming pretty well.

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<v Speaker 4>Who would have thought we had a.

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<v Speaker 3>Greater than four percent quarter on quarter number for Q

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<v Speaker 3>three and Q four is looking like above two and

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<v Speaker 3>a half percent.

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<v Speaker 1>One of the things that the equity market has been

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<v Speaker 1>struggling with recently the notion of disruption being unleashed by

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<v Speaker 1>artificial intelligence. Last week, obviously, we saw it hit many

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<v Speaker 1>different software stocks today. In fact, real estate services companies

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<v Speaker 1>were hit on the notion that they are vulnerable as

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<v Speaker 1>well to applications and tools of artificial intelligence. Do you

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<v Speaker 1>have a sense are you beginning to develop a sense

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<v Speaker 1>of how AI is going to impact the overall economy,

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<v Speaker 1>maybe more so in terms of the job market.

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<v Speaker 3>Well, I am most concerned with those that are coming

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<v Speaker 3>right out of college, those that don't have a long

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<v Speaker 3>lineup of experience. There on their resumes. That's certainly going

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<v Speaker 3>to be hurting those folks with the increased utilization of AI.

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<v Speaker 3>Interestingly enough, I think we're still a little bit of

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<v Speaker 3>we're still far out until we see real bonafide impacts

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<v Speaker 3>on productivity from AI, and that's because utilization rates are

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<v Speaker 3>still pretty low, particularly in sectors that would benefit from AI.

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<v Speaker 3>So think leisure and hospitality, think healthcare services, some of

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<v Speaker 3>those sectors I just mentioned very very low utilization rates.

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<v Speaker 3>So we're just in the very beginnings I think of

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<v Speaker 3>of AI usage that would actually flow into productivity numbers.

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<v Speaker 1>Tonight in Washington, the Republican led House pass legislation to

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<v Speaker 1>and President Trump's tariffs on Canada. This comes at a

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<v Speaker 1>time when affordability is really the hot button political issue,

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<v Speaker 1>and at the same time, today we learned that Trump

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<v Speaker 1>is privately weighing whether or not to quit the US

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<v Speaker 1>Mexico Canada trade agreement that he signed during his first term.

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<v Speaker 1>Talk to me about the way in which you see

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<v Speaker 1>tariffs impacting the economy and whether or not they are

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<v Speaker 1>indeed feeding into this problem of affordability.

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<v Speaker 3>Well, no doubt, tariff saraheadwind. You know, its attacks. Whether

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<v Speaker 3>you want to admit or not right. So the fact

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<v Speaker 3>is the economy could actually do even better if it

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<v Speaker 3>weren't for the uncertainty around trade policy. I think one

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<v Speaker 3>of the biggest things in my mind that is a

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<v Speaker 3>a real negative impact from these tariffs and just the

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<v Speaker 3>uncertainty of tariff negotiations is businesses are hesitant to make

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<v Speaker 3>a three year five year plan, right, So you think

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<v Speaker 3>about the capac that could be spent if businesses felt

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<v Speaker 3>more comfortable about the you know, the years ahead. There's

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<v Speaker 3>just still so much uncertainty. It's hampering cap X spend.

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<v Speaker 1>I think we've had four straight sessions of dollar weakness.

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<v Speaker 1>The flip side has given us a much stronger Japanese currency,

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<v Speaker 1>But if we stay focused on the dollar its weakness.

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<v Speaker 1>Is this something you think the administration is really angling

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<v Speaker 1>for as a way of supporting a lot of the

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<v Speaker 1>manufacturers in the States that rely on markets overseas. Is

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<v Speaker 1>this a big positive, the dollar weakness that we're seeing

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<v Speaker 1>right now.

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<v Speaker 3>Well, it relates to the administration. Interestingly enough, I think

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<v Speaker 3>the administration is more focused on the ten year where

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<v Speaker 3>yields are. I think it is fair to say that,

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<v Speaker 3>you know, there is this notion that a week dollar

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<v Speaker 3>would allow a little our exports to be a little

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<v Speaker 3>bit more competitive on the global scale, and and that's

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<v Speaker 3>a fair point. I just would would answer back to

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<v Speaker 3>those commons say, look, we still have global central banks

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<v Speaker 3>holding a lot of US dollars, so they don't want

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<v Speaker 3>to see their their portfolio value decline because they're they're

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<v Speaker 3>dollar holdings are becoming weaker and weaker. But I do

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<v Speaker 3>think there is there is a component of trade on this.

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<v Speaker 3>Interestingly enough, there is there does seem to be such

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<v Speaker 3>a focus from the administration on the trade deficit. And

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<v Speaker 3>I think, you know, I think, as we all know,

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<v Speaker 3>trade is inherently of vulnerability, but there's really nothing out

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<v Speaker 3>of the ordinary of a of a largely developed economy

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<v Speaker 3>having a trade deficit just means we're wealthy enough to

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<v Speaker 3>support one.

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<v Speaker 1>So you mentioned the ten year with a yield right

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<v Speaker 1>now around four seventeen. It seems as though the market

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<v Speaker 1>at the long end of the curve doesn't really show

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<v Speaker 1>much in the way of concern as it relates to inflation.

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<v Speaker 1>Could that change in a dramatic way? Is there the

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<v Speaker 1>risk that the tenure could let's say, move up beyond

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<v Speaker 1>four and a quarter percent.

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<v Speaker 3>Well, there certainly are some important levels to watch. I

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<v Speaker 3>think we're in a pretty comfortable range. When you think

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<v Speaker 3>about seeing the ten year between a four to ten

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<v Speaker 3>to four to twenty five.

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<v Speaker 4>The economy can handle that.

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<v Speaker 3>Markets, financial markets and derivative type markets that base contracts

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<v Speaker 3>off of that will feel comfortable. I think once you

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<v Speaker 3>start approaching four and a half on the ten year,

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<v Speaker 3>and of course we were talking about the risk of

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<v Speaker 3>approaching five percent sent just you know, a few quarters ago.

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<v Speaker 3>But I think we're in a pretty comfortable range and

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<v Speaker 3>Marcus can handle that, and we're seeing that even play

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<v Speaker 3>out now.

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<v Speaker 4>That's that's not a cause for concern.

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<v Speaker 1>So does this change if the FED begins to unwind

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<v Speaker 1>its balance sheet, let's say, between now and the end

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<v Speaker 1>of the year, in a slightly more aggressive fashion.

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<v Speaker 3>Well, I think, of course you're referencing Kevin worsh and

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<v Speaker 3>the nominee that most likely will pass. You know, by

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<v Speaker 3>the way, he's not a yes man, and he does

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<v Speaker 3>seem to have a pretty good history in his career

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<v Speaker 3>with crisis management, et cetera. But as it relates to

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<v Speaker 3>the unwinding of securities, letting security, the bond security is

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<v Speaker 3>mature that's certainly going to tighten financial conditions. In some ways,

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<v Speaker 3>you could say that that's okay, that at least will be

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<v Speaker 3>a little bit of a disinflationary impact on an economy

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<v Speaker 3>that needs that kind of influence right now. But I

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<v Speaker 3>think you think about how the markets are reacting to that,

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<v Speaker 3>there's still probably a little bit of a you know,

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<v Speaker 3>the the push pull is we try to understand what

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<v Speaker 3>a worst lead FED might look like, so you know,

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<v Speaker 3>maybe maybe we have a little bit more time and

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<v Speaker 3>to try to make our best guess on how that's

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<v Speaker 3>going to play out. In the end, though, I do

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<v Speaker 3>think this is this needs to happen. We do need

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<v Speaker 3>to see a balance sheet that's a little bit smaller

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<v Speaker 3>than where it is now. And if they do it

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<v Speaker 3>in a very measured fashion, I think they can shrink

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<v Speaker 3>the balance sheet without creating undo volatility.

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<v Speaker 1>Okay, Jeffrey, thank you so very much. We'll leave it there.

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<v Speaker 1>Jeffrey Roach is chief economist for LPL Financial, joining from Charlotte,

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<v Speaker 1>North Carolina here on the Daybreak as your podcast. Welcome

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<v Speaker 1>back to the Daybreak Asia podcast. I'm Doug Krisner in Japan.

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<v Speaker 1>The markets are back online after a holiday Wednesday today,

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<v Speaker 1>the reading on Japanese wholesale inflation was pretty much in

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<v Speaker 1>line with estimates. The producer price index was up last

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<v Speaker 1>month at an annual rate of two point three percent.

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<v Speaker 1>For a look at markets, I'm joined by Charu Chanana.

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<v Speaker 1>She is the chief investment strategist at Saxo Bank. Chau

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<v Speaker 1>joins us from Singapore. Thank you for being here. The

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<v Speaker 1>bullish momentum in Japanese equities has been undeniable. Obviously, much

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<v Speaker 1>of this is tied to Prime Minister Takeiichi's victory in

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<v Speaker 1>the recent snap election, and it seems as though this

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<v Speaker 1>so called Takeiichi trade still has power. Is that the

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<v Speaker 1>way you see.

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<v Speaker 5>It, very interesting election outcome that we've had in Japan,

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<v Speaker 5>with that two thirds majority for a single party, a

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<v Speaker 5>kind of victory that we haven't seen in a very

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<v Speaker 5>very long time. As you talk about, you know, yeah,

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<v Speaker 5>the Takaichi trade. Certainly a lot of focus on that

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<v Speaker 5>going into this election, I would say, because this election

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<v Speaker 5>was really a test of fiscal credibility. You know, there

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<v Speaker 5>were a lot of promises around suspension of the consumption tax,

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<v Speaker 5>you know, the consumption tax being you know, removed if

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<v Speaker 5>she was to get the kind of mandate that the

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<v Speaker 5>markets were expecting, and that kind of did lead the

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<v Speaker 5>markets to think about what that would mean, you know,

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<v Speaker 5>in terms of fiscal credibility, given that we know that

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<v Speaker 5>Japan's death is really high. It's about two D two

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<v Speaker 5>hundred plus percent of GDP, So I think with that

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<v Speaker 5>kind of victory, although the massive, you know, majority that

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<v Speaker 5>we've got there, I do think the Takaichi trade is

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<v Speaker 5>not going on as expected. Of course, on the equity

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<v Speaker 5>side it looks quite positive because of the fiscal impulse

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<v Speaker 5>that could come through, but the Takaichi trade also had

0:13:58.760 --> 0:14:01.320
<v Speaker 5>risks of a bond sell of and the weakness in

0:14:01.360 --> 0:14:04.040
<v Speaker 5>the Japanese yen, for instance, and those are not the

0:14:04.040 --> 0:14:08.280
<v Speaker 5>things that have really materialized, because I think the sense

0:14:08.320 --> 0:14:12.080
<v Speaker 5>here is that even though you get that fiscal impulse,

0:14:12.120 --> 0:14:17.720
<v Speaker 5>this kind of a majority also increases the chance of flexibility,

0:14:17.760 --> 0:14:22.000
<v Speaker 5>of policy coherence, and potentially less surprises. So the markets

0:14:22.040 --> 0:14:26.880
<v Speaker 5>actually really taking this in a positive sense. Equities are stronger,

0:14:27.400 --> 0:14:30.400
<v Speaker 5>the yen is turning out to be significantly stronger as well,

0:14:30.520 --> 0:14:32.520
<v Speaker 5>also a little bit helped by the weakness in the

0:14:32.640 --> 0:14:37.040
<v Speaker 5>US dollar. But certainly I think overall, the clarity the

0:14:37.160 --> 0:14:42.760
<v Speaker 5>strong mandate have really been a bigger positive, uh, compared

0:14:42.840 --> 0:14:47.080
<v Speaker 5>to any risks of you know, fiscals on the fiscal side.

0:14:47.320 --> 0:14:49.680
<v Speaker 1>Right now, what does that do in terms of the

0:14:49.760 --> 0:14:52.360
<v Speaker 1>thinking at the Bank of Japan that we know that

0:14:52.880 --> 0:14:56.320
<v Speaker 1>at least the bias seemed to be to raise infrast

0:14:56.400 --> 0:14:59.360
<v Speaker 1>rates again, does the BOJ have to take a break

0:14:59.360 --> 0:14:59.880
<v Speaker 1>for a while.

0:15:01.600 --> 0:15:04.760
<v Speaker 5>Again, that was I think the sense going into the

0:15:04.800 --> 0:15:07.480
<v Speaker 5>election that if she was going to get a strong mandate,

0:15:07.560 --> 0:15:11.440
<v Speaker 5>then you have fiscal losening. Then there is potentially going

0:15:11.480 --> 0:15:14.600
<v Speaker 5>to be some you know risks for the BOJ as

0:15:14.680 --> 0:15:17.640
<v Speaker 5>well to continue to normalize policy because you cannot have

0:15:18.040 --> 0:15:21.120
<v Speaker 5>that divergence play out in the fiscal and the monetary

0:15:21.160 --> 0:15:25.200
<v Speaker 5>policy sides. But I would say, you know, I think again,

0:15:25.400 --> 0:15:28.320
<v Speaker 5>given the kind of mandagies, god, I do think there

0:15:28.400 --> 0:15:32.240
<v Speaker 5>is actually room for that divergence to play out, because

0:15:32.720 --> 0:15:38.240
<v Speaker 5>certainly there will also be inflation risks in the Japanese economy.

0:15:38.280 --> 0:15:41.240
<v Speaker 5>We have seen those lingering for quite some time now,

0:15:41.680 --> 0:15:44.120
<v Speaker 5>and with this kind of a fiscal impulse that only

0:15:44.160 --> 0:15:47.440
<v Speaker 5>gets stronger and you know, cost of living pressures will

0:15:47.440 --> 0:15:50.760
<v Speaker 5>certainly be something that I think Takaiji continues to focus

0:15:50.800 --> 0:15:54.880
<v Speaker 5>on so restricting the hand of Bank of Japan in

0:15:54.960 --> 0:15:57.440
<v Speaker 5>that scenario does not seem to be the best option

0:15:57.520 --> 0:16:00.280
<v Speaker 5>to me. So I do think we could get other

0:16:00.320 --> 0:16:03.960
<v Speaker 5>normalization from the Bank of Japan even as we continue

0:16:04.000 --> 0:16:06.200
<v Speaker 5>to see that fiscal impulse coming through.

0:16:06.560 --> 0:16:09.800
<v Speaker 1>Charro, I'm curious as to whether you're still finding even

0:16:09.840 --> 0:16:13.480
<v Speaker 1>with the elevated levels of the nie ke, opportunities in

0:16:13.560 --> 0:16:14.560
<v Speaker 1>Japanese sequities.

0:16:15.480 --> 0:16:18.680
<v Speaker 5>That's totally fair that you asked that question. We've had

0:16:18.800 --> 0:16:22.240
<v Speaker 5>a strong support from say corporate governance reforms in the

0:16:22.320 --> 0:16:25.640
<v Speaker 5>last two years. The weakness of the yen has supported

0:16:25.680 --> 0:16:28.920
<v Speaker 5>the exporters in the economy. So certainly, I think has

0:16:28.960 --> 0:16:33.640
<v Speaker 5>been a very strong story. I do think the positivity continues,

0:16:33.680 --> 0:16:37.840
<v Speaker 5>it only gets better, but will also be I think

0:16:38.440 --> 0:16:40.760
<v Speaker 5>later this year and going into next year, it will

0:16:40.760 --> 0:16:44.280
<v Speaker 5>also be a lot about selectivity in the Japanese markets.

0:16:44.320 --> 0:16:47.640
<v Speaker 5>I think it does stop being that broad story that

0:16:47.680 --> 0:16:50.520
<v Speaker 5>it has been so far, because, like we talked about,

0:16:50.640 --> 0:16:53.280
<v Speaker 5>right the Japanese en, if we were to see some

0:16:53.360 --> 0:16:56.280
<v Speaker 5>strengthening of the end, and we know it has a

0:16:56.640 --> 0:17:01.000
<v Speaker 5>significant room to appreciate here given you know how the

0:17:01.040 --> 0:17:04.520
<v Speaker 5>shot positioning is so wild, and you know the evaluation

0:17:04.600 --> 0:17:07.120
<v Speaker 5>of the yen is so cheap, and if the yen

0:17:07.240 --> 0:17:10.359
<v Speaker 5>is going to strengthen the rate sensitive sectors, certainly the

0:17:10.480 --> 0:17:15.080
<v Speaker 5>en sensitive sectors exporters for example, start to have an

0:17:15.080 --> 0:17:17.119
<v Speaker 5>impact on that. But of course, you know, I mean

0:17:17.160 --> 0:17:19.199
<v Speaker 5>if we are to get the kind of physcal impulse

0:17:19.280 --> 0:17:22.000
<v Speaker 5>that looks like it's coming through at least those sectors

0:17:22.080 --> 0:17:26.880
<v Speaker 5>where the subsidies really get targeted, you know, say defense

0:17:27.000 --> 0:17:28.960
<v Speaker 5>or strategic keep Because there's been a lot of talk

0:17:29.000 --> 0:17:32.320
<v Speaker 5>about AI and semiconductors being in focus in terms of

0:17:32.359 --> 0:17:35.679
<v Speaker 5>that spending as well a lot of domestic investment themes.

0:17:35.720 --> 0:17:39.480
<v Speaker 5>I think they continue to still hold up significantly better

0:17:39.520 --> 0:17:41.760
<v Speaker 5>than probably those end link sectors.

0:17:41.920 --> 0:17:45.680
<v Speaker 1>So if the region is benefiting from this build out

0:17:45.720 --> 0:17:49.800
<v Speaker 1>of artificial intelligence that's primarily happening in the US, is

0:17:49.840 --> 0:17:53.919
<v Speaker 1>that essentially a trade on certain technology firms that have

0:17:54.160 --> 0:18:00.399
<v Speaker 1>proved indispensable to the supply chain, particularly in the semiconductor industry.

0:18:01.040 --> 0:18:03.560
<v Speaker 5>I mean, actually AI has been a big team in

0:18:03.560 --> 0:18:06.280
<v Speaker 5>Asia as well, and I think investors are slowly realizing

0:18:06.359 --> 0:18:10.920
<v Speaker 5>that the backbone of the manufacturing backbone off AI actually

0:18:10.920 --> 0:18:14.160
<v Speaker 5>sits in Asia. So uh, there has been of course,

0:18:14.280 --> 0:18:17.320
<v Speaker 5>uh you know, that realization of late and investors are

0:18:17.600 --> 0:18:19.840
<v Speaker 5>trying to position accordingly. Of course, you know, I mean

0:18:19.880 --> 0:18:23.520
<v Speaker 5>I think US firms still remain those innovation leaders, uh,

0:18:23.600 --> 0:18:25.920
<v Speaker 5>but since you know, towards the end of last year,

0:18:25.960 --> 0:18:29.200
<v Speaker 5>we have seen a lot of risks around concentration, around

0:18:29.280 --> 0:18:33.280
<v Speaker 5>circularity of those US the tech firms, around the KPEX

0:18:33.400 --> 0:18:36.080
<v Speaker 5>signals that we've been getting from them, and what kind

0:18:36.119 --> 0:18:39.359
<v Speaker 5>of ROI could they deliver. There's been questions around that.

0:18:40.000 --> 0:18:43.680
<v Speaker 5>There's been questions around whether or not the US really

0:18:43.760 --> 0:18:47.639
<v Speaker 5>has all of that infrastructure in place to kind of

0:18:47.720 --> 0:18:50.840
<v Speaker 5>really meet the growing electricity, the growing power demand that

0:18:50.920 --> 0:18:54.560
<v Speaker 5>this whole AI theme demands. And of course we've had,

0:18:54.640 --> 0:18:56.280
<v Speaker 5>you know, because of the massive run into the U

0:18:56.359 --> 0:19:01.200
<v Speaker 5>stops that has been you know, overpositioning or valuation fatigue,

0:19:01.240 --> 0:19:04.800
<v Speaker 5>so to say, And investors have been questioning, is too

0:19:05.640 --> 0:19:07.960
<v Speaker 5>if you do want to stay in that AI theme,

0:19:08.280 --> 0:19:11.560
<v Speaker 5>where does the story still have legs? And Asia has

0:19:11.640 --> 0:19:15.200
<v Speaker 5>been a top answered I would say on those fronts.

0:19:15.240 --> 0:19:17.560
<v Speaker 5>I mean, like I said, it's been the manufacturing backbone,

0:19:17.640 --> 0:19:21.840
<v Speaker 5>you know, Thai answer TSMC for example, which produces advanced

0:19:21.960 --> 0:19:25.200
<v Speaker 5>wafers which powers leading AI chips. That's been very much

0:19:25.200 --> 0:19:27.920
<v Speaker 5>in focus. We've been getting some strong numbers from Taiwan

0:19:28.000 --> 0:19:31.600
<v Speaker 5>even for January, you know, revenue growth focus. I mean,

0:19:31.600 --> 0:19:35.560
<v Speaker 5>we've gotten some really good numbers there. Korea's leaders like

0:19:35.680 --> 0:19:39.600
<v Speaker 5>you know, Samsung and sk Heinex, they are they hold

0:19:40.000 --> 0:19:43.760
<v Speaker 5>more than ninety percent of the global HbA market share,

0:19:43.800 --> 0:19:46.680
<v Speaker 5>so again a very very critical component of that entire

0:19:46.800 --> 0:19:48.880
<v Speaker 5>chip manufacturing story.

0:19:49.119 --> 0:19:52.000
<v Speaker 1>Charro, what is your assessment of the tech story on

0:19:52.080 --> 0:19:55.159
<v Speaker 1>the Chinese mainland, particularly as it relates to some of

0:19:55.200 --> 0:19:57.400
<v Speaker 1>these advanced semiconductors.

0:19:59.520 --> 0:20:03.359
<v Speaker 5>So there's obviously been a huge policy push in China

0:20:03.840 --> 0:20:05.919
<v Speaker 5>to you know, there's been two reasons for that. I

0:20:05.920 --> 0:20:08.719
<v Speaker 5>would say one, as we all know has you know,

0:20:08.960 --> 0:20:12.080
<v Speaker 5>because of the export controls that they faced from the US,

0:20:12.520 --> 0:20:15.960
<v Speaker 5>there was an increased need for self sufficiency on that

0:20:16.040 --> 0:20:18.439
<v Speaker 5>chip side, and that's why they've given a huge amount

0:20:18.440 --> 0:20:23.920
<v Speaker 5>of policy benefit to develop those chips domestically. So that's

0:20:23.960 --> 0:20:26.159
<v Speaker 5>obviously aided that sector in a big way. But we

0:20:26.240 --> 0:20:29.520
<v Speaker 5>also know that, you know, on a more on a

0:20:29.560 --> 0:20:34.760
<v Speaker 5>more macro front, China's economy has been facing multiple headwinds,

0:20:34.800 --> 0:20:39.080
<v Speaker 5>you know, from demographics and the property sector slowed down. Uh,

0:20:39.119 --> 0:20:42.320
<v Speaker 5>these are things they've been trying to reverse but have

0:20:42.520 --> 0:20:45.600
<v Speaker 5>not achieved a lot of success with so far. H So,

0:20:45.640 --> 0:20:49.560
<v Speaker 5>if you look at their AI plan, they are actually

0:20:49.600 --> 0:20:53.520
<v Speaker 5>starting to talk about the productivity gains from AI being

0:20:53.600 --> 0:20:57.040
<v Speaker 5>really the big drivers of growth going forward, especially as

0:20:57.080 --> 0:21:00.680
<v Speaker 5>these headwinds on the other sides continue. So both from

0:21:00.680 --> 0:21:04.679
<v Speaker 5>a growth perspective, but also from a self sufficiency and

0:21:04.760 --> 0:21:08.320
<v Speaker 5>a strategic priority perspective, China has been pushing a lot

0:21:08.359 --> 0:21:11.240
<v Speaker 5>of policy support towards the tech sector, and I think

0:21:11.280 --> 0:21:13.680
<v Speaker 5>that has really played out again and again. You bring

0:21:13.760 --> 0:21:16.840
<v Speaker 5>up the valuation differences that we've had between US and

0:21:16.960 --> 0:21:20.760
<v Speaker 5>China's tech place, the efficiency gains that we saw with

0:21:20.800 --> 0:21:23.600
<v Speaker 5>deep sea Class DA for example. I mean, the models

0:21:23.600 --> 0:21:27.919
<v Speaker 5>certainly seem far more able to justify the ROI versus

0:21:27.920 --> 0:21:30.320
<v Speaker 5>the cape expend you know, if you compare them to

0:21:30.440 --> 0:21:33.840
<v Speaker 5>their USPR. So those are stories that have certainly been

0:21:34.040 --> 0:21:36.800
<v Speaker 5>extremely helpful to the China tech side.

0:21:36.880 --> 0:21:39.000
<v Speaker 1>Okay, Charu, we'll leave it there. Thank you so much.

0:21:39.280 --> 0:21:43.239
<v Speaker 1>Charu Chanana, chief investment strategist at Saxo Bank, joining from

0:21:43.320 --> 0:21:49.199
<v Speaker 1>Singapore here on the Daybreak Asia podcast. Thanks for listening

0:21:49.240 --> 0:21:53.440
<v Speaker 1>to today's episode of the Bloomberg Daybreak Asia edition. Podcast.

0:21:53.760 --> 0:21:56.919
<v Speaker 1>Each weekday, we look at the story shaping markets, finance,

0:21:57.240 --> 0:22:01.680
<v Speaker 1>and geopolitics in the Asia Pacific. Find us on Apple, Spotify,

0:22:01.800 --> 0:22:05.320
<v Speaker 1>the Bloomberg Podcast YouTube channel, or anywhere else you listen.

0:22:05.720 --> 0:22:08.600
<v Speaker 1>Join us again tomorrow for insight on the market moves

0:22:08.680 --> 0:22:13.200
<v Speaker 1>from Hong Kong to Singapore and Australia. I'm Doug Chrisner,

0:22:13.359 --> 0:22:14.760
<v Speaker 1>and this is Bloomberg