1 00:00:00,160 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,640 --> 00:00:12,880 Speaker 2: This is the Bloomberg Daybreak Aisia podcast. I'm Doug Prisner. 3 00:00:12,920 --> 00:00:15,400 Speaker 2: You can join Brian Curtis and myself for the stories 4 00:00:15,440 --> 00:00:18,520 Speaker 2: making news and moving markets in the APAC region. You 5 00:00:18,600 --> 00:00:21,439 Speaker 2: can subscribe to the show anywhere you get your podcast 6 00:00:21,520 --> 00:00:24,919 Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the 7 00:00:24,920 --> 00:00:28,720 Speaker 2: Bloomberg Business app. Let's take a closer look at one 8 00:00:28,760 --> 00:00:31,880 Speaker 2: of our top stories in a little greater detail, President 9 00:00:31,920 --> 00:00:35,600 Speaker 2: Biden preparing to block me pon Steele's takeover of US deal. 10 00:00:35,960 --> 00:00:39,680 Speaker 2: I spoke earlier with a Josh Wingrove, Bloomberg White House reporter, 11 00:00:40,240 --> 00:00:43,720 Speaker 2: and I began by asking Josh for the latest on 12 00:00:43,760 --> 00:00:44,839 Speaker 2: this evolving story. 13 00:00:45,479 --> 00:00:48,440 Speaker 3: This has been a long running saga of this deal, 14 00:00:48,479 --> 00:00:53,240 Speaker 3: fourteen point one billion dollar deal announced in December. Biden 15 00:00:53,280 --> 00:00:55,680 Speaker 3: has been on record for some time opposed to it, 16 00:00:55,760 --> 00:00:58,920 Speaker 3: as has Donald Trump, and as has as a few 17 00:00:58,960 --> 00:01:01,880 Speaker 3: days ago Kamala ha. But the question has been sort 18 00:01:01,880 --> 00:01:04,080 Speaker 3: of like, why hasn't anything happened? Then, you know, it's 19 00:01:04,080 --> 00:01:06,800 Speaker 3: been sort of hanging in the air. And so the 20 00:01:06,880 --> 00:01:11,080 Speaker 3: development here is that are reporting is that Biden will 21 00:01:11,680 --> 00:01:14,080 Speaker 3: kill this deal once it gets to his desk from 22 00:01:14,120 --> 00:01:18,000 Speaker 3: the security review, a process known as a scifious process. 23 00:01:18,040 --> 00:01:21,920 Speaker 3: This is normally reserved for like adversarial nations, at least 24 00:01:21,959 --> 00:01:26,960 Speaker 3: from America's perspective, usually China, almost always China. It's really 25 00:01:27,080 --> 00:01:29,840 Speaker 3: unusual to have it aimed at a deal like this 26 00:01:29,920 --> 00:01:33,880 Speaker 3: one involving a Japanese company obviously an allied country of 27 00:01:33,920 --> 00:01:37,839 Speaker 3: the US. So there's just a lot of uncharted water 28 00:01:38,000 --> 00:01:41,520 Speaker 3: factor here. So right now everyone is just sort of 29 00:01:41,520 --> 00:01:44,920 Speaker 3: waiting to see what happens if Biden tries to kill 30 00:01:44,959 --> 00:01:48,600 Speaker 3: this deal. US deal is pledging to use every legal 31 00:01:48,640 --> 00:01:51,440 Speaker 3: tool it can. In other words, Biden killing it might 32 00:01:51,480 --> 00:01:54,440 Speaker 3: not necessarily mean it dying. It could more accurately mean 33 00:01:54,520 --> 00:01:58,120 Speaker 3: Biden trying to kill it and triggering some sort of 34 00:01:58,200 --> 00:02:01,080 Speaker 3: legal fight. It's worth backing up a bit here and 35 00:02:01,200 --> 00:02:05,279 Speaker 3: just saying the proponents of this deal say, hey, China 36 00:02:05,400 --> 00:02:09,079 Speaker 3: is using steel as a cudgel bullying people dumping steel 37 00:02:09,080 --> 00:02:13,560 Speaker 3: in their economies. This deal would make a large company 38 00:02:14,080 --> 00:02:18,840 Speaker 3: with American and Japanese assets primarily that could compete with China, 39 00:02:19,520 --> 00:02:22,160 Speaker 3: or at least have the scale to compete with China. 40 00:02:22,800 --> 00:02:25,840 Speaker 3: Critics of this deal have pointed to the lack of 41 00:02:25,880 --> 00:02:28,120 Speaker 3: guarantees or what they say are lack of guarantees for 42 00:02:28,240 --> 00:02:31,440 Speaker 3: union workers in Pennsylvania, which also just happens to be 43 00:02:31,480 --> 00:02:33,960 Speaker 3: one of the top electoral battlegrounds in this year's election, 44 00:02:34,080 --> 00:02:37,920 Speaker 3: if not the top electoral battleground, not to mention the 45 00:02:37,919 --> 00:02:39,799 Speaker 3: state where Joe Biden was born. So there's a lot 46 00:02:39,800 --> 00:02:41,560 Speaker 3: of moving parts on this one, but it looks like 47 00:02:41,600 --> 00:02:42,800 Speaker 3: Biden's going to try to kill it. 48 00:02:42,960 --> 00:02:45,040 Speaker 2: Yeah, that's a very important piece of context. 49 00:02:45,080 --> 00:02:45,240 Speaker 4: You know. 50 00:02:45,280 --> 00:02:47,639 Speaker 2: I was struck Josh by the piece in the Wall 51 00:02:47,639 --> 00:02:51,920 Speaker 2: Street Journal quoting the CEO of US Steel, David Burrett, 52 00:02:51,960 --> 00:02:54,960 Speaker 2: saying that if this deal were to fall apart, a 53 00:02:55,080 --> 00:02:58,320 Speaker 2: US deal would then close mills and move its headquarters 54 00:02:58,480 --> 00:03:00,680 Speaker 2: out of Pittsburgh. Do you think that's going to carry 55 00:03:00,720 --> 00:03:01,640 Speaker 2: any sway here? 56 00:03:02,200 --> 00:03:04,120 Speaker 3: They certainly are hoping it is. And there's been this 57 00:03:04,200 --> 00:03:06,720 Speaker 3: kind of drumbeat of what you might call last ditch 58 00:03:06,880 --> 00:03:10,120 Speaker 3: efforts from proponents of the deal. Remember both US Steal 59 00:03:10,240 --> 00:03:14,120 Speaker 3: and the Aspire Nipon Steel wants this deal. The people 60 00:03:14,120 --> 00:03:16,320 Speaker 3: that are opposed are led by the union as well 61 00:03:16,360 --> 00:03:19,400 Speaker 3: as lawmakers, including the senators in the state or now 62 00:03:19,480 --> 00:03:24,480 Speaker 3: there's most notably the President who's preparing to take action 63 00:03:25,000 --> 00:03:27,840 Speaker 3: on this. And so you had that statement. You also 64 00:03:27,880 --> 00:03:29,760 Speaker 3: had Nippon Steel say, hey, we're going to give a 65 00:03:29,800 --> 00:03:33,040 Speaker 3: majority American board to the company that would come up 66 00:03:33,080 --> 00:03:35,920 Speaker 3: as sort of a proxy board. In other words, that 67 00:03:36,040 --> 00:03:38,480 Speaker 3: is the thing that normally Sipius has to really twist 68 00:03:38,600 --> 00:03:42,000 Speaker 3: company's arms to do. They went ahead and voluntarily did 69 00:03:42,000 --> 00:03:44,640 Speaker 3: it look in what looks like an attempt to sort 70 00:03:44,640 --> 00:03:48,880 Speaker 3: of head off a question about that. And so there've 71 00:03:48,880 --> 00:03:50,480 Speaker 3: been some other things that have been sort of dripping out, 72 00:03:50,520 --> 00:03:52,960 Speaker 3: including the most recent commitment of an additional one point 73 00:03:53,000 --> 00:03:55,200 Speaker 3: three billion that they would spend on top of the 74 00:03:55,240 --> 00:03:58,640 Speaker 3: previous commitments they had made. So they've been sort of, 75 00:03:58,680 --> 00:04:01,800 Speaker 3: you know, emptying out the apple cart with everything they 76 00:04:01,800 --> 00:04:05,640 Speaker 3: have to offer in a bid to at least get 77 00:04:06,080 --> 00:04:07,720 Speaker 3: try to get an outcome they want or at least 78 00:04:07,920 --> 00:04:10,720 Speaker 3: change the narrative around it. And right now, if this 79 00:04:10,880 --> 00:04:13,800 Speaker 3: deal does die, and again there's no way to tell 80 00:04:13,840 --> 00:04:15,960 Speaker 3: for sure whether that'll be the case, but if this 81 00:04:16,040 --> 00:04:18,839 Speaker 3: deal does die, then the question is what happens now 82 00:04:18,920 --> 00:04:21,880 Speaker 3: to the US deal. It's a sort of fabled American company, 83 00:04:21,920 --> 00:04:24,320 Speaker 3: but it's not at the top of it are in 84 00:04:24,480 --> 00:04:28,599 Speaker 3: terms of you know, financial stability, employment numbers, all that 85 00:04:28,800 --> 00:04:31,880 Speaker 3: is a real risk. It's not just US statements sort 86 00:04:31,880 --> 00:04:34,080 Speaker 3: of US deal sort of blowing smoke. There is a 87 00:04:34,120 --> 00:04:37,320 Speaker 3: real risk that some of these plants, particularly these union plants, 88 00:04:37,320 --> 00:04:39,240 Speaker 3: which are the older plants, the ones that need the 89 00:04:39,240 --> 00:04:42,359 Speaker 3: most investment, the least profitable ones, probably in some cases 90 00:04:43,200 --> 00:04:45,600 Speaker 3: real question with what happens to them if the Japanese 91 00:04:45,640 --> 00:04:46,200 Speaker 3: don't buy them. 92 00:04:46,440 --> 00:04:49,040 Speaker 2: Well to that point, I was reading an interview with 93 00:04:49,480 --> 00:04:51,960 Speaker 2: the CEO of US Steal, David Barrett, and he was 94 00:04:51,960 --> 00:04:55,840 Speaker 2: saying that the company needs to spend roughly three billion 95 00:04:55,920 --> 00:04:59,760 Speaker 2: dollars in capital to modernize these facilities as a way 96 00:04:59,760 --> 00:05:02,760 Speaker 2: of becoming more competitive on the global market. Has there 97 00:05:02,800 --> 00:05:06,600 Speaker 2: been any conversation from the government saying, here, would we 98 00:05:06,640 --> 00:05:09,880 Speaker 2: would provide this money to help you if we undo 99 00:05:09,960 --> 00:05:13,359 Speaker 2: this deal. Has there been that part of the discussion unfolding. 100 00:05:13,720 --> 00:05:16,160 Speaker 3: There hasn't, But that would be one potential shoe to 101 00:05:16,240 --> 00:05:19,159 Speaker 3: drop for this to happen. It would depend on Congress. 102 00:05:19,160 --> 00:05:22,039 Speaker 3: It would depend on a lot of things. There's bipartisan 103 00:05:22,080 --> 00:05:24,479 Speaker 3: agreement on this a little bit. I don't know that 104 00:05:24,480 --> 00:05:26,919 Speaker 3: it would have necessarily the steam I would just be 105 00:05:27,200 --> 00:05:29,800 Speaker 3: straight speculating, which I try to avoid doing every once 106 00:05:29,839 --> 00:05:32,080 Speaker 3: in a while. But yes, that is an option if 107 00:05:32,400 --> 00:05:35,120 Speaker 3: this deal falls apart and nip On steal is or 108 00:05:35,120 --> 00:05:37,839 Speaker 3: excuse me, us dealers sort of teetering and a bunch 109 00:05:37,839 --> 00:05:41,800 Speaker 3: of steel workers, you know, in a crucial battleground state 110 00:05:41,880 --> 00:05:43,880 Speaker 3: are about to be thrown out of work. Yeah, I 111 00:05:43,920 --> 00:05:45,840 Speaker 3: expect there at least to be a conversation about what, 112 00:05:45,880 --> 00:05:49,520 Speaker 3: if anything, the government to do. They just haven't gotten 113 00:05:49,560 --> 00:05:53,800 Speaker 3: there right now. The question also is can you split 114 00:05:54,040 --> 00:05:56,640 Speaker 3: this company up? That might be another one that surfaces. 115 00:05:57,000 --> 00:06:00,360 Speaker 2: He is a Josh Wingrove Bloomberg White House reporter joining 116 00:06:00,360 --> 00:06:02,960 Speaker 2: me earlier from the nation's capital, helping us understand a 117 00:06:03,000 --> 00:06:05,960 Speaker 2: little bit better what's going on with what we are 118 00:06:05,960 --> 00:06:09,120 Speaker 2: told would be a move by President Biden to block 119 00:06:09,600 --> 00:06:19,480 Speaker 2: Nippon Steele's takeover of views deal. Let's get to market 120 00:06:19,480 --> 00:06:23,520 Speaker 2: action with our guest, Riisa Recid, global market strategist at 121 00:06:23,800 --> 00:06:27,120 Speaker 2: JP Morgan joining us from the Lion City of Singapore. 122 00:06:27,400 --> 00:06:29,640 Speaker 2: RYCEA good of you to make time to chat with us. 123 00:06:29,920 --> 00:06:32,320 Speaker 2: I think it's really about FED policy at this point. 124 00:06:32,360 --> 00:06:35,400 Speaker 2: With a week reading on job openings right now, I 125 00:06:35,400 --> 00:06:38,200 Speaker 2: think the bond market is speculating a bit as to 126 00:06:38,240 --> 00:06:40,960 Speaker 2: whether or not we could get not a twenty five 127 00:06:41,040 --> 00:06:43,880 Speaker 2: basis point rate cut this month, but maybe something in 128 00:06:43,920 --> 00:06:46,599 Speaker 2: the neighborhood of fifty percent or fifty basis points. 129 00:06:46,680 --> 00:06:49,520 Speaker 4: What do you think, Yeah, no, thanks for having me in. 130 00:06:49,560 --> 00:06:52,359 Speaker 5: Good morning. So just looking back at the Jewels report, 131 00:06:52,360 --> 00:06:55,279 Speaker 5: I think it's persistent with the previous data that we see. 132 00:06:55,480 --> 00:06:58,320 Speaker 5: Number one, it does show a labor market that is cooling, 133 00:06:58,880 --> 00:07:01,720 Speaker 5: and secondly the assurance that it is in the cooling 134 00:07:01,839 --> 00:07:04,880 Speaker 5: but not breaking. So you know, when we look at 135 00:07:05,000 --> 00:07:09,840 Speaker 5: the ratio of openings to unemployment for example unemployed workers, 136 00:07:09,840 --> 00:07:12,560 Speaker 5: that really a fear of ongoing labor market tighten it. 137 00:07:13,400 --> 00:07:16,160 Speaker 5: Layoffs are still very low, there's showing no signs of 138 00:07:16,680 --> 00:07:21,239 Speaker 5: trending upwards as well. So the insufficient layoffs and really 139 00:07:21,280 --> 00:07:24,120 Speaker 5: echoes what Jerome Powell has said at the Jackson Hole 140 00:07:25,280 --> 00:07:27,760 Speaker 5: as keynote speech as well, that really the labor market 141 00:07:28,040 --> 00:07:32,120 Speaker 5: is indeed cooling but not necessarily breaking. So I mean 142 00:07:32,200 --> 00:07:34,560 Speaker 5: to your point about the fact they are really to 143 00:07:34,640 --> 00:07:37,640 Speaker 5: cut rates as pressure you know on inflation have been 144 00:07:37,640 --> 00:07:41,920 Speaker 5: put to rest. The magnitude, however, really depends on the 145 00:07:42,120 --> 00:07:45,800 Speaker 5: August employment report tomorrow for US, we do expect a 146 00:07:45,840 --> 00:07:48,440 Speaker 5: twenty five basis point cut, and that really is a 147 00:07:48,440 --> 00:07:52,360 Speaker 5: reflection that we don't see major imbalances right now. And 148 00:07:52,600 --> 00:07:56,320 Speaker 5: you know, the pickup with unemployment really reflects a labor 149 00:07:56,360 --> 00:07:58,680 Speaker 5: supply story rather than a labor demand story. 150 00:07:59,000 --> 00:08:01,960 Speaker 2: Tomorrow your time, that would be Friday, US when we 151 00:08:01,960 --> 00:08:06,080 Speaker 2: get government's data on August payrolls. Let's turn a little 152 00:08:06,080 --> 00:08:08,160 Speaker 2: bit to the reaction that we're seeing in the foreign 153 00:08:08,240 --> 00:08:10,680 Speaker 2: exchange today. With those lower treasure yields, we've got a 154 00:08:10,680 --> 00:08:13,760 Speaker 2: weaker dollar, but boy, I was just stunned by the 155 00:08:13,880 --> 00:08:16,200 Speaker 2: rally in the Japanese n We're a one forty three 156 00:08:16,400 --> 00:08:20,320 Speaker 2: forty five. There's been so much volatility right now in 157 00:08:20,400 --> 00:08:24,760 Speaker 2: the foreign exchange, particularly where the yen is concerned. How 158 00:08:24,840 --> 00:08:27,680 Speaker 2: much of this has to do with expectations that the 159 00:08:27,720 --> 00:08:32,120 Speaker 2: boj is going to be perhaps raising interest rates between 160 00:08:32,160 --> 00:08:33,120 Speaker 2: now and the end of the year. 161 00:08:34,480 --> 00:08:37,240 Speaker 5: Yeah, no, good question. So when it comes to Japan, 162 00:08:37,280 --> 00:08:39,520 Speaker 5: when you just look at the domestic story, with the 163 00:08:39,559 --> 00:08:42,320 Speaker 5: inflation prints that we have seen in the past week, 164 00:08:42,360 --> 00:08:45,800 Speaker 5: for example, we are seeing that that which price spiral 165 00:08:45,840 --> 00:08:47,960 Speaker 5: that the Bank of Japan is looking for it seems 166 00:08:48,000 --> 00:08:50,960 Speaker 5: to be intact, so the expectation that the BOG will 167 00:08:51,000 --> 00:08:54,920 Speaker 5: continue to high create sometime this is pretty much in tech. 168 00:08:55,360 --> 00:08:57,839 Speaker 5: But again, the Bank of Japan is a very gradualist 169 00:08:57,960 --> 00:09:02,199 Speaker 5: central bank, so then of hikes will not necessarily be 170 00:09:02,240 --> 00:09:05,240 Speaker 5: in the traditional sense of the twenty five clips that 171 00:09:05,280 --> 00:09:07,920 Speaker 5: we see for other central banks. But I think the 172 00:09:07,960 --> 00:09:10,320 Speaker 5: way that we look at Japan, especially the case of 173 00:09:10,400 --> 00:09:13,880 Speaker 5: investing longer term, the fundamentals are still pretty much in place. 174 00:09:14,280 --> 00:09:17,160 Speaker 5: So while the stronger yen could weigh on earning outlook, 175 00:09:17,320 --> 00:09:21,200 Speaker 5: the long term factors corporate governance, the fact that the 176 00:09:21,240 --> 00:09:24,960 Speaker 5: domestic story has really picked up in tender corner that 177 00:09:25,040 --> 00:09:27,959 Speaker 5: to us could really support Japanese equities at least in 178 00:09:28,000 --> 00:09:28,720 Speaker 5: the longer term. 179 00:09:29,240 --> 00:09:31,920 Speaker 2: Right, So what does this stronger yen mean for corporate Japan. 180 00:09:32,000 --> 00:09:33,680 Speaker 2: I mean, there's a case to be made that this 181 00:09:33,800 --> 00:09:36,760 Speaker 2: is going to harm the exporters. Is that necessarily the case? 182 00:09:38,080 --> 00:09:39,760 Speaker 5: Yeah, so I think in the shot them, that's the 183 00:09:39,800 --> 00:09:42,160 Speaker 5: expectation that it could weigh on earning outlook. But if 184 00:09:42,160 --> 00:09:46,160 Speaker 5: we do see the corporates in Japan for its second quarter, 185 00:09:46,280 --> 00:09:49,760 Speaker 5: they were able to expand margins, you know, they did 186 00:09:49,800 --> 00:09:52,360 Speaker 5: benefit it from a currency depreciation that we saw. So 187 00:09:52,400 --> 00:09:55,240 Speaker 5: if we do see the inverse happening i e. You know, 188 00:09:55,360 --> 00:09:58,000 Speaker 5: the stronger end, it could you know, affect the earning 189 00:09:58,000 --> 00:10:02,480 Speaker 5: out especially for the for this the foreign exporters as well. 190 00:10:02,720 --> 00:10:05,120 Speaker 5: But we do see that the linkages between a stronger 191 00:10:05,200 --> 00:10:08,960 Speaker 5: yen as well as the Japanese equities performance, that correlation 192 00:10:09,320 --> 00:10:12,120 Speaker 5: has somewhat broken in the last couple of years. So 193 00:10:12,240 --> 00:10:15,199 Speaker 5: we do, you know, hope to shift that conversation away 194 00:10:15,360 --> 00:10:19,160 Speaker 5: from that correlation to more longer term fundamental practice that 195 00:10:19,200 --> 00:10:20,640 Speaker 5: were you know, I mentioned earlier. 196 00:10:20,720 --> 00:10:23,120 Speaker 2: We've had a number of conversations on this show when 197 00:10:23,160 --> 00:10:26,920 Speaker 2: you consider the fact that Japan is a big exporter 198 00:10:27,000 --> 00:10:29,240 Speaker 2: of goods not just to the United States but to 199 00:10:29,640 --> 00:10:33,920 Speaker 2: China as well, and with slow growth in China that 200 00:10:33,960 --> 00:10:37,080 Speaker 2: may be in turn harming some of the big exporters 201 00:10:37,120 --> 00:10:38,840 Speaker 2: in Japan. Is that the way you see it. 202 00:10:40,640 --> 00:10:43,000 Speaker 5: So the way that we look at it is ultimately 203 00:10:43,040 --> 00:10:46,960 Speaker 5: the linkages between as you mentioned, the US as to Japan, 204 00:10:47,040 --> 00:10:49,199 Speaker 5: and we did see, you know, a couple of mondays 205 00:10:49,200 --> 00:10:52,079 Speaker 5: ago where we did see negative data that it came 206 00:10:52,120 --> 00:10:54,480 Speaker 5: out the US and how it did trigger for example, 207 00:10:55,120 --> 00:10:57,720 Speaker 5: movements in Japan as well, and it really reflects that 208 00:10:57,720 --> 00:10:59,920 Speaker 5: at the end of the day, the final demand story 209 00:11:00,200 --> 00:11:02,319 Speaker 5: very key not only for Japan by as well as 210 00:11:02,360 --> 00:11:05,840 Speaker 5: all the other export is out here in Asia, which 211 00:11:05,880 --> 00:11:08,680 Speaker 5: includes your career, Taiwan and even in stuff is Asia. 212 00:11:09,040 --> 00:11:11,040 Speaker 5: So I think, you know, the way that we look 213 00:11:11,080 --> 00:11:13,720 Speaker 5: at it is we are seeing and engaging the corporate 214 00:11:13,760 --> 00:11:16,720 Speaker 5: behavior in the US as a barometer of how the 215 00:11:16,760 --> 00:11:21,120 Speaker 5: export performance will be more so in Asia going forward. 216 00:11:21,240 --> 00:11:25,000 Speaker 2: What about the China story and the weak economic performance 217 00:11:25,120 --> 00:11:27,000 Speaker 2: in China and how that may be a drag for 218 00:11:27,040 --> 00:11:28,240 Speaker 2: some of the companies in Japan. 219 00:11:29,760 --> 00:11:33,520 Speaker 5: Yeah, so you know, when we think about China specifically, 220 00:11:33,559 --> 00:11:36,440 Speaker 5: it's you know what we're thinking, more is needed, right, 221 00:11:36,760 --> 00:11:40,720 Speaker 5: We do expect, we actually want to see additional fiscal support, 222 00:11:40,720 --> 00:11:43,360 Speaker 5: for example from central governments. We would like to see 223 00:11:43,440 --> 00:11:47,640 Speaker 5: larger rad cards and a more comprehensive housing civilization plan. 224 00:11:48,120 --> 00:11:52,200 Speaker 5: So to the extent that you know, China party makers really, 225 00:11:52,240 --> 00:11:54,520 Speaker 5: you know, focus on this, then we could see some 226 00:11:54,600 --> 00:11:58,000 Speaker 5: recovery in China and we could see a bottoming or 227 00:11:58,040 --> 00:12:00,679 Speaker 5: at least in the bottoming of the demand, and that 228 00:12:00,720 --> 00:12:04,760 Speaker 5: could really trigger at least some recovery in other parts 229 00:12:04,840 --> 00:12:08,680 Speaker 5: of the market, and that includes Japan as well. But 230 00:12:08,840 --> 00:12:10,920 Speaker 5: right now, we do see the manufacturing numbers that are 231 00:12:10,920 --> 00:12:14,280 Speaker 5: coming out of China, they don't look very constructive at 232 00:12:14,280 --> 00:12:16,560 Speaker 5: this point. So we do think that a lot of 233 00:12:16,600 --> 00:12:19,880 Speaker 5: it is still needed. But for the Japanese story in particular, 234 00:12:20,000 --> 00:12:23,440 Speaker 5: we do think that the US backdrop is really more 235 00:12:23,480 --> 00:12:25,480 Speaker 5: critical to the whole story. 236 00:12:26,080 --> 00:12:28,680 Speaker 2: You know, I'm struck by the fact that China has 237 00:12:28,720 --> 00:12:31,600 Speaker 2: been struggling for such a long time and there is 238 00:12:31,640 --> 00:12:35,600 Speaker 2: this issue of overcapacity when it comes to the manufacturing side. 239 00:12:35,720 --> 00:12:38,080 Speaker 2: Do you think that's going to be resolved anytime soon, 240 00:12:38,120 --> 00:12:41,880 Speaker 2: maybe by some consolidation that takes place in certain industries 241 00:12:42,040 --> 00:12:43,160 Speaker 2: like electric vehicles. 242 00:12:44,679 --> 00:12:46,960 Speaker 5: Now that's a good question, and you know when we 243 00:12:46,960 --> 00:12:48,920 Speaker 5: look at electric vehicles, and we do think that that's 244 00:12:48,960 --> 00:12:52,360 Speaker 5: the glimmer for China right because you know, we retail 245 00:12:52,400 --> 00:12:55,480 Speaker 5: sales number recovering study, but the underlying trend is still 246 00:12:55,559 --> 00:12:58,440 Speaker 5: very weak. We do expect investors to really still remain 247 00:12:58,559 --> 00:13:01,439 Speaker 5: very defensive in your town. So the strategy in China, 248 00:13:01,480 --> 00:13:04,480 Speaker 5: for example, is really tilting towards the high divendend company 249 00:13:04,600 --> 00:13:07,360 Speaker 5: state owned defensive sector. So I think that really hasn't 250 00:13:07,960 --> 00:13:10,920 Speaker 5: changed when it comes to evstough. I think something to 251 00:13:11,040 --> 00:13:13,959 Speaker 5: also not is that the evy domestic market, I e. 252 00:13:14,480 --> 00:13:16,960 Speaker 5: That once you have the over capacity of a supply, 253 00:13:17,640 --> 00:13:21,880 Speaker 5: the bulk of EV's market actually is a more domestic 254 00:13:21,920 --> 00:13:25,320 Speaker 5: story as well. So I think that's something to know. So, yes, 255 00:13:25,360 --> 00:13:29,640 Speaker 5: there's all this noise around terraffs, et cetera. But the 256 00:13:29,720 --> 00:13:33,360 Speaker 5: demand for electric vehicles within China is also going to 257 00:13:33,360 --> 00:13:37,320 Speaker 5: be key to addressing whether China solves the over capacity story. 258 00:13:37,840 --> 00:13:40,600 Speaker 2: What about the issue of potential trade wars getting a 259 00:13:40,600 --> 00:13:44,120 Speaker 2: lot worse if we touched on the EV tarriff part 260 00:13:44,160 --> 00:13:47,440 Speaker 2: of the equation, this tit for tat between countries like China, 261 00:13:47,559 --> 00:13:52,000 Speaker 2: the US, China, Canada, China, the European Union. I mean, 262 00:13:52,160 --> 00:13:54,720 Speaker 2: could this get a much worse before it gets better? 263 00:13:56,880 --> 00:13:58,680 Speaker 5: So I think that's a good question. That's something that 264 00:13:58,720 --> 00:14:01,360 Speaker 5: you know, we speak all a fair bit as well, 265 00:14:01,360 --> 00:14:04,320 Speaker 5: which you know, in part is due to why markets 266 00:14:04,320 --> 00:14:06,920 Speaker 5: we're very treating on a risk of men coming to 267 00:14:07,040 --> 00:14:09,800 Speaker 5: this week. You know, obviously we do have that Friday's 268 00:14:09,800 --> 00:14:13,320 Speaker 5: Shot report, but really the whole geopolitical backdrop is getting 269 00:14:13,400 --> 00:14:17,720 Speaker 5: noisier with these tarrs that are being floated and tilted 270 00:14:17,880 --> 00:14:20,440 Speaker 5: right now, but we don't think that that necessarily would 271 00:14:20,560 --> 00:14:24,480 Speaker 5: change again. We'll get more clarity around policies, you know, 272 00:14:24,600 --> 00:14:28,520 Speaker 5: sometime next year as well, but any implementation of TERRIS 273 00:14:28,520 --> 00:14:31,280 Speaker 5: will take some time, and you know, in the interim 274 00:14:31,280 --> 00:14:33,840 Speaker 5: we will continue to see some of these you know, 275 00:14:33,880 --> 00:14:36,040 Speaker 5: supply change adjustments that we have seen in the last 276 00:14:36,080 --> 00:14:39,040 Speaker 5: couple of years really continue on as well. 277 00:14:39,120 --> 00:14:40,760 Speaker 2: Right, so we'll leave it there. Thank you so much 278 00:14:40,880 --> 00:14:42,720 Speaker 2: for making time to chat with us, right or a 279 00:14:42,840 --> 00:14:54,080 Speaker 2: seed Global Market Strategistic JP Mortgane. Nancy Tangler is with us. 280 00:14:54,080 --> 00:14:58,160 Speaker 2: She is the CEO and c IO at Laffert Tanglar Investments, 281 00:14:58,640 --> 00:15:03,720 Speaker 2: and Nancy joins us from outside Lake Tahoe in northern California. 282 00:15:03,880 --> 00:15:05,880 Speaker 2: Good of you to make time for us. I'm sure 283 00:15:05,880 --> 00:15:08,240 Speaker 2: it's a vacation for you, and I'm going to throw 284 00:15:08,240 --> 00:15:10,480 Speaker 2: you a curveball right out of the gate. So these 285 00:15:10,520 --> 00:15:13,000 Speaker 2: dinner parties that you've been hosting now in the evening, 286 00:15:13,320 --> 00:15:17,920 Speaker 2: as you sip that great California should lee nicely chilled. 287 00:15:18,440 --> 00:15:21,120 Speaker 2: What are the conversations like around the dinner table. 288 00:15:22,120 --> 00:15:24,320 Speaker 1: Well, Doug, I get up at three thirty in the morning, 289 00:15:24,440 --> 00:15:25,840 Speaker 1: so no dinner parties. 290 00:15:25,880 --> 00:15:32,120 Speaker 2: For me, I'm all right, I'm envious. So talk to 291 00:15:32,160 --> 00:15:35,760 Speaker 2: me about what you're seeing overall in the overall strength 292 00:15:36,080 --> 00:15:38,960 Speaker 2: or weakness of the American economy, depending on how you 293 00:15:39,080 --> 00:15:39,400 Speaker 2: view it. 294 00:15:40,240 --> 00:15:43,720 Speaker 1: Yeah, well, it's certainly filled with cross currents, isn't it. 295 00:15:44,200 --> 00:15:46,000 Speaker 1: I think what we can all agree on is that 296 00:15:46,240 --> 00:15:49,480 Speaker 1: manufacturing is in a recession and it has been in 297 00:15:49,520 --> 00:15:53,120 Speaker 1: contraction for almost two years. 298 00:15:52,880 --> 00:15:54,280 Speaker 4: That isn't important. 299 00:15:54,400 --> 00:15:57,800 Speaker 1: It's not important from an overall GDP standpoint, as a 300 00:15:57,840 --> 00:16:00,960 Speaker 1: percentage of GDP manufacturing is fo to five percent, but 301 00:16:01,040 --> 00:16:04,440 Speaker 1: the multiplier effect is very important. 302 00:16:04,480 --> 00:16:06,440 Speaker 4: And so we were. 303 00:16:06,760 --> 00:16:10,480 Speaker 1: Watching, of course like everyone else's the ism manufacturing. But 304 00:16:10,560 --> 00:16:14,480 Speaker 1: I think the biggest disappointment this last week was that 305 00:16:14,560 --> 00:16:17,880 Speaker 1: prices paid went up, and so you know that doesn't 306 00:16:17,880 --> 00:16:21,000 Speaker 1: bode well for inflation, nor does do rising shelter costs, 307 00:16:21,000 --> 00:16:23,280 Speaker 1: which we're starting to see. There was a headline in 308 00:16:23,320 --> 00:16:25,840 Speaker 1: the Wall Street Journal today that said real estate investors 309 00:16:25,840 --> 00:16:27,840 Speaker 1: bet on higher apartment rents. 310 00:16:28,240 --> 00:16:31,160 Speaker 4: That is not good for CPI. So that's on the 311 00:16:31,160 --> 00:16:31,840 Speaker 4: one side. 312 00:16:31,720 --> 00:16:36,440 Speaker 1: The other side is consumer confidence actually inched up. Wall 313 00:16:36,440 --> 00:16:41,360 Speaker 1: Street Journal survey, you Mish Conference Board shows it drifting 314 00:16:41,440 --> 00:16:44,720 Speaker 1: back up, and then earnings were pretty fantastic this last 315 00:16:44,760 --> 00:16:47,640 Speaker 1: quarter at about twelve and a half percent, with revenues 316 00:16:47,680 --> 00:16:51,600 Speaker 1: growing at five over five and margins at near historic high. 317 00:16:52,080 --> 00:16:54,640 Speaker 1: So there's a lot to like, there's a lot to 318 00:16:54,680 --> 00:16:57,360 Speaker 1: worry about, as is often the case, and so we 319 00:16:57,520 --> 00:17:00,280 Speaker 1: continue to, you know, to pay attention to those things 320 00:17:00,320 --> 00:17:04,359 Speaker 1: and then hope that the FED makes the right decision. 321 00:17:05,359 --> 00:17:07,600 Speaker 2: Yeah, maybe it's not just about the FED. Because we're 322 00:17:07,640 --> 00:17:11,119 Speaker 2: an election season now, about two months away, and I 323 00:17:11,240 --> 00:17:13,920 Speaker 2: was struck by some research coming out of Goldman Sachs. 324 00:17:14,520 --> 00:17:17,760 Speaker 2: The firm's a team of economists kind of gaming out 325 00:17:18,359 --> 00:17:23,400 Speaker 2: the potential economic implications of either a Republican or Democratic victory. 326 00:17:23,760 --> 00:17:26,480 Speaker 2: And these economists a Goldman were saying that US GDP 327 00:17:27,040 --> 00:17:29,159 Speaker 2: faces a hit if Donald Trump were to win. On 328 00:17:29,200 --> 00:17:33,280 Speaker 2: the other hand, should Vice President Kamala Harris win, and 329 00:17:33,320 --> 00:17:36,600 Speaker 2: then you're looking at the possibility of democratic control of 330 00:17:36,640 --> 00:17:40,960 Speaker 2: both chambers in Congress. Goldman's team says that new spending, 331 00:17:41,080 --> 00:17:45,280 Speaker 2: expanded middle income tax credits, maybe that would would offer 332 00:17:45,320 --> 00:17:47,760 Speaker 2: a boost to GDP growth. Is that the way you 333 00:17:47,840 --> 00:17:50,680 Speaker 2: see the potential outcome of this election. 334 00:17:51,920 --> 00:17:54,040 Speaker 4: Doug, I think it's a little bit too early to tell. 335 00:17:54,160 --> 00:17:57,800 Speaker 1: I mean, I do remember on the eve of the 336 00:17:57,840 --> 00:18:03,439 Speaker 1: twenty sixteen election, or after the twenty sixteen election, the 337 00:18:03,560 --> 00:18:07,160 Speaker 1: consensus was that energy stocks would do well, that technology 338 00:18:07,200 --> 00:18:11,199 Speaker 1: stocks would do poorly, and financials would do well in 339 00:18:11,200 --> 00:18:15,879 Speaker 1: an environment of lower regulatory constraints. What we ended up 340 00:18:15,920 --> 00:18:19,440 Speaker 1: seeing in the last Trump administration was energy was down 341 00:18:19,560 --> 00:18:21,960 Speaker 1: forty plus percent. Now some of that was certainly skewed 342 00:18:21,960 --> 00:18:26,880 Speaker 1: by COVID, but financials were up forty something percent, and 343 00:18:27,240 --> 00:18:29,760 Speaker 1: technology I think was forty four and technology was up 344 00:18:29,760 --> 00:18:32,520 Speaker 1: like one hundred and twenty percent during his tenures. So 345 00:18:33,000 --> 00:18:36,879 Speaker 1: beware of some of the prognostications because we just don't know. 346 00:18:36,960 --> 00:18:41,240 Speaker 1: I mean that campaign rhetoric often does not line up 347 00:18:41,320 --> 00:18:44,840 Speaker 1: with how candidates governed, So I think you have to 348 00:18:44,840 --> 00:18:45,480 Speaker 1: be careful. 349 00:18:45,720 --> 00:18:47,520 Speaker 4: The market will get it right, but I think it's 350 00:18:47,560 --> 00:18:48,480 Speaker 4: a little bit too soon. 351 00:18:48,600 --> 00:18:50,800 Speaker 1: I think we get volatility for the next few weeks, 352 00:18:50,800 --> 00:18:55,240 Speaker 1: and then the market will start discounting the election, and then. 353 00:18:55,119 --> 00:18:57,000 Speaker 4: You'll be able to sort of see some trends. 354 00:18:57,000 --> 00:18:59,439 Speaker 1: But by the way, they're both big spenders, and I 355 00:18:59,440 --> 00:19:02,840 Speaker 1: think the end has got to moderate. We have a 356 00:19:02,840 --> 00:19:05,920 Speaker 1: thirty four trillion dollars, probably thirty five trillion. Well, we've 357 00:19:05,960 --> 00:19:10,920 Speaker 1: been talking deficit and debt and we've got it. We've 358 00:19:10,960 --> 00:19:13,679 Speaker 1: really got to pay attention to that because you know 359 00:19:13,720 --> 00:19:17,000 Speaker 1: it's over one hundred and thirty percent of GDP. 360 00:19:17,800 --> 00:19:20,320 Speaker 2: Well, you mentioned volatility, and I'm wondering how you viewed 361 00:19:20,320 --> 00:19:22,440 Speaker 2: the volatility that we have seen in some of these 362 00:19:22,480 --> 00:19:25,920 Speaker 2: technologies talks lately, particularly the semiconductors. 363 00:19:26,600 --> 00:19:26,879 Speaker 4: Yeah. 364 00:19:27,400 --> 00:19:30,080 Speaker 1: Well, we were trimming back all of our technology in 365 00:19:30,119 --> 00:19:34,040 Speaker 1: early July, and then as we entered the third tech 366 00:19:34,200 --> 00:19:36,840 Speaker 1: summer swoon, we had one in twenty twenty two, twenty 367 00:19:36,880 --> 00:19:39,679 Speaker 1: twenty three, and now this year we were actually selectively 368 00:19:39,720 --> 00:19:43,159 Speaker 1: adding to names. So we initiated a position in AMD. 369 00:19:43,359 --> 00:19:45,959 Speaker 1: We think they're a long term winner, even if all 370 00:19:46,000 --> 00:19:49,840 Speaker 1: they get is the table scraps from Nvidia. We added 371 00:19:49,880 --> 00:19:53,600 Speaker 1: to our Dell holdings, and we added to Nvidia, and 372 00:19:53,680 --> 00:19:55,040 Speaker 1: did so again this morning. 373 00:19:55,520 --> 00:19:58,280 Speaker 2: Can you give me a sense anecdotally. I know you're 374 00:19:58,440 --> 00:20:02,160 Speaker 2: normally in Scottsdale, Arizona, on a the Chips in Science 375 00:20:02,240 --> 00:20:04,440 Speaker 2: Act and some of the spending that's been taking place 376 00:20:04,480 --> 00:20:09,040 Speaker 2: to create these manufacturing these chip manufacturing facilities, many of 377 00:20:09,080 --> 00:20:11,760 Speaker 2: which are in Arizona. How has that impact of the 378 00:20:11,760 --> 00:20:14,080 Speaker 2: local economy, So. 379 00:20:14,160 --> 00:20:16,359 Speaker 1: I think it's I think it's helped housing to a 380 00:20:16,359 --> 00:20:19,760 Speaker 1: great extent. I do think, you know, the economy there 381 00:20:19,840 --> 00:20:23,640 Speaker 1: is pretty robust. Real estate prices have come in somewhat 382 00:20:23,720 --> 00:20:27,719 Speaker 1: but remained still in an expansionary. 383 00:20:29,760 --> 00:20:30,880 Speaker 4: Remain expansionary. 384 00:20:31,600 --> 00:20:33,879 Speaker 1: But I think, you know, there's been a lot of 385 00:20:33,880 --> 00:20:37,520 Speaker 1: fits and starts, and Intel, for example, has not yet 386 00:20:37,680 --> 00:20:41,159 Speaker 1: seen the money and may have to scrap their plant, 387 00:20:41,200 --> 00:20:44,160 Speaker 1: but Taiwan Semi's plants are moving forward. 388 00:20:44,800 --> 00:20:47,240 Speaker 4: The construction is robust. 389 00:20:46,800 --> 00:20:49,240 Speaker 1: And I think I think it will continue to benefit 390 00:20:49,320 --> 00:20:52,760 Speaker 1: the economy because what you're getting now too is other 391 00:20:52,840 --> 00:20:56,600 Speaker 1: companies moving into. You know, Google's got some server farms 392 00:20:56,640 --> 00:21:00,040 Speaker 1: going in, and there's there's a lot of activity. So 393 00:21:00,040 --> 00:21:02,280 Speaker 1: when I moved there, it was kind of a trust 394 00:21:02,280 --> 00:21:05,920 Speaker 1: fund town, and now it's really legitimately a business town. 395 00:21:06,280 --> 00:21:09,600 Speaker 1: And so real estate prices have really skyrocketed over the 396 00:21:09,720 --> 00:21:11,159 Speaker 1: last five to seven years. 397 00:21:11,680 --> 00:21:13,679 Speaker 4: You can even argue ten years after. 398 00:21:14,000 --> 00:21:17,879 Speaker 1: They hit bottom, and we are seeing the bad parts 399 00:21:17,880 --> 00:21:22,520 Speaker 1: of growth, which is traffic, congestion, some air quality problems. 400 00:21:22,560 --> 00:21:25,000 Speaker 2: We'll leave it there. Nancy, always a pleasure. Thanks so much. 401 00:21:25,160 --> 00:21:29,359 Speaker 2: Nancy Tegler from Laffer Tengler investments. Joining here on that 402 00:21:29,440 --> 00:21:39,000 Speaker 2: day breakation, Eddie Lowey is the chief investment officer at 403 00:21:39,160 --> 00:21:43,240 Speaker 2: Maybank Group Wealth Management. On the line from Singapore, Eddie, 404 00:21:43,240 --> 00:21:44,920 Speaker 2: good of you to make time to chat with us. 405 00:21:45,040 --> 00:21:49,040 Speaker 2: I hope you're doing well. We're bracing ourselves for a 406 00:21:49,119 --> 00:21:51,439 Speaker 2: rate cut later in the month. The question now is 407 00:21:51,480 --> 00:21:54,080 Speaker 2: whether the FED is going to cut by twenty five 408 00:21:54,119 --> 00:21:56,440 Speaker 2: basis points or by fifty. Do you have a sense 409 00:21:56,440 --> 00:21:56,800 Speaker 2: of this. 410 00:21:58,280 --> 00:21:58,800 Speaker 3: Right morning? 411 00:21:59,160 --> 00:22:02,880 Speaker 6: Well, from single point, we are actually currently penciling in 412 00:22:03,119 --> 00:22:06,520 Speaker 6: the fat to cut BATS by fifty basis point in 413 00:22:06,560 --> 00:22:09,480 Speaker 6: twenty twenty fourved with but twenty five in September well 414 00:22:09,480 --> 00:22:14,000 Speaker 6: looked by another one in fourth quarter, so not likely 415 00:22:14,040 --> 00:22:17,760 Speaker 6: to see a fifty basis point with five in September. 416 00:22:18,080 --> 00:22:20,640 Speaker 6: Having said that, I think a lot depends on how 417 00:22:20,720 --> 00:22:23,560 Speaker 6: the job's data is going to pan out, so we 418 00:22:23,640 --> 00:22:26,280 Speaker 6: do not rule out more ass IFA easing down in 419 00:22:26,320 --> 00:22:30,920 Speaker 6: subsequent months should actually job data detior more than expected. 420 00:22:31,160 --> 00:22:32,639 Speaker 2: So one of the things that I was looking at 421 00:22:32,680 --> 00:22:35,360 Speaker 2: today is the move lower and treasury yields. It's it's 422 00:22:35,359 --> 00:22:39,119 Speaker 2: stunning actually whether the US Treasury curve is essentially flat 423 00:22:39,240 --> 00:22:42,080 Speaker 2: right now two and a ten each of three point 424 00:22:42,119 --> 00:22:45,320 Speaker 2: seven six percent. We saw some dollar weakness in New 425 00:22:45,359 --> 00:22:48,640 Speaker 2: York trading. Is this something now that is pretty much 426 00:22:48,640 --> 00:22:50,600 Speaker 2: at a tipping point where the dollar is going to 427 00:22:50,640 --> 00:22:53,919 Speaker 2: remain weak going forward against the majors and and perhaps 428 00:22:53,960 --> 00:22:56,399 Speaker 2: you're going to see currencies like the end clearly that 429 00:22:56,960 --> 00:22:58,760 Speaker 2: will continue to strengthen. 430 00:23:00,280 --> 00:23:03,840 Speaker 6: I think, well, we have actually been calling, you know, 431 00:23:03,840 --> 00:23:06,280 Speaker 6: for the treasure used to trend below four percent since 432 00:23:06,280 --> 00:23:07,800 Speaker 6: the beginning of this year, and that has booked well 433 00:23:07,880 --> 00:23:10,680 Speaker 6: for us. But having said that, at this juncture, if 434 00:23:10,680 --> 00:23:12,639 Speaker 6: you look at market pricing, market is actually pricing in 435 00:23:12,680 --> 00:23:15,480 Speaker 6: one hundred business point of gray card this year. We 436 00:23:15,560 --> 00:23:19,199 Speaker 6: thought that's a bit too aggressive, right, So you know, 437 00:23:19,240 --> 00:23:21,920 Speaker 6: in the near term we could actually see some sharpness 438 00:23:21,960 --> 00:23:25,480 Speaker 6: in the treasure yields and dollar actually looks a bit 439 00:23:25,480 --> 00:23:27,840 Speaker 6: over sold in the near term. So not surprised to 440 00:23:27,880 --> 00:23:31,040 Speaker 6: see a you know, a rebound in a short term, 441 00:23:31,040 --> 00:23:33,480 Speaker 6: although I would say that upside is kept so in 442 00:23:33,520 --> 00:23:35,840 Speaker 6: a short term, despite the fact that that there could 443 00:23:35,880 --> 00:23:38,280 Speaker 6: be a short term bound in the dollar, we would 444 00:23:38,359 --> 00:23:40,840 Speaker 6: be sellers, you know, because we think that the dollar 445 00:23:40,960 --> 00:23:44,080 Speaker 6: should actually soften in the midium term against Asian currencies, 446 00:23:44,080 --> 00:23:44,600 Speaker 6: including the. 447 00:23:44,640 --> 00:23:47,480 Speaker 2: Yen, speaking of the end. I mean, we're we were 448 00:23:47,520 --> 00:23:49,760 Speaker 2: really strong in New York, trading up about that one 449 00:23:49,800 --> 00:23:52,480 Speaker 2: point two percent against the greenback. And then came data 450 00:23:52,480 --> 00:23:56,160 Speaker 2: from Japan that workers' real wages moving up in July 451 00:23:56,280 --> 00:23:59,080 Speaker 2: for a second consecutive month. Does this really keep a 452 00:23:59,119 --> 00:24:01,840 Speaker 2: lot of pressure on the j to hike before the 453 00:24:01,920 --> 00:24:02,520 Speaker 2: end of the year. 454 00:24:03,720 --> 00:24:06,360 Speaker 6: We think so in some ways, because if you look 455 00:24:06,400 --> 00:24:08,840 Speaker 6: at apart from the wages, if you look at Tokyo's 456 00:24:08,960 --> 00:24:12,320 Speaker 6: aug the CPI data that just came out yesterday, you know, 457 00:24:12,480 --> 00:24:15,439 Speaker 6: spa exploit. It was actually two point four percent you 458 00:24:15,480 --> 00:24:18,440 Speaker 6: and I didn't expected. So I think we think that 459 00:24:18,480 --> 00:24:20,960 Speaker 6: the Bank of Japan is slightly that there's a good 460 00:24:21,000 --> 00:24:22,960 Speaker 6: chance that Bank of Japan could hiden at the time 461 00:24:23,200 --> 00:24:27,480 Speaker 6: sometime in fourth quarter. Having said that, you know, the 462 00:24:27,680 --> 00:24:30,400 Speaker 6: pace of tightening from the Bank of Japan will still 463 00:24:30,440 --> 00:24:32,600 Speaker 6: be measured because they need to balance the need to 464 00:24:32,640 --> 00:24:35,639 Speaker 6: support growth. But you know, given the fact that VOG 465 00:24:35,800 --> 00:24:37,760 Speaker 6: is hiking, the fat is easy, we think that the 466 00:24:37,800 --> 00:24:40,200 Speaker 6: dollar year should hit towards one for it by the LCO. 467 00:24:41,000 --> 00:24:43,119 Speaker 2: Well, let's talk a little bit about China. I'm curious 468 00:24:43,160 --> 00:24:45,480 Speaker 2: to get your take. I mean, things have been so 469 00:24:46,400 --> 00:24:48,800 Speaker 2: disappointing when you look at some of the data, particularly 470 00:24:48,840 --> 00:24:51,000 Speaker 2: the PMI reports that we had in the last week, 471 00:24:51,840 --> 00:24:55,000 Speaker 2: and I'm wondering whether or not you are confident that 472 00:24:55,000 --> 00:24:57,439 Speaker 2: we're going to see something meaningful happen in terms of 473 00:24:57,520 --> 00:25:01,040 Speaker 2: policy from the central government. I mean, it seems as 474 00:25:01,040 --> 00:25:03,879 Speaker 2: though there's been so much resistance on the part of 475 00:25:03,920 --> 00:25:08,359 Speaker 2: Beijing to do more, and I understand in theory why 476 00:25:08,080 --> 00:25:12,919 Speaker 2: they are being so deliberately slow in dolling out more stimulus, 477 00:25:13,240 --> 00:25:16,639 Speaker 2: but it seems like there's no way to turn this 478 00:25:16,640 --> 00:25:20,560 Speaker 2: this weak sentiment reading that we're constantly talking about, whether 479 00:25:20,640 --> 00:25:22,960 Speaker 2: it's the consumer or in the case of a number 480 00:25:22,960 --> 00:25:27,520 Speaker 2: of businesses, more weak sentiment. No way to turn that 481 00:25:27,560 --> 00:25:29,520 Speaker 2: around unless you get a lot more from the government. 482 00:25:29,800 --> 00:25:31,960 Speaker 2: Is that accurate or am I wrong in that? 483 00:25:33,000 --> 00:25:33,280 Speaker 5: Yeah? 484 00:25:33,560 --> 00:25:35,439 Speaker 6: Well, in some ways we will be well also a 485 00:25:35,440 --> 00:25:40,680 Speaker 6: bit disappointed by the lack of you know, significant big 486 00:25:40,680 --> 00:25:45,439 Speaker 6: steps to to really we've agreed that the confidence be 487 00:25:45,560 --> 00:25:47,720 Speaker 6: in a consumer space or is it a coplit space. 488 00:25:47,760 --> 00:25:49,600 Speaker 6: So if you look at Chinese groupment, there has been 489 00:25:49,720 --> 00:25:55,000 Speaker 6: sluggish second quarter earnings will so unremarkable and in terms 490 00:25:55,000 --> 00:25:59,639 Speaker 6: of stock market valuation is inexpensive, but unlikely to stage 491 00:25:59,680 --> 00:26:02,840 Speaker 6: a meaning will rebound unless we see really big moves 492 00:26:03,200 --> 00:26:05,439 Speaker 6: from the Chinese government. But at this juncture, if you 493 00:26:05,480 --> 00:26:08,760 Speaker 6: look at the economy is sluggish, but it's not collapsing. 494 00:26:08,920 --> 00:26:14,960 Speaker 6: So unless things get really bad, unlikely to see a 495 00:26:14,960 --> 00:26:16,720 Speaker 6: big move from the Chinese dom near time. 496 00:26:16,920 --> 00:26:19,320 Speaker 2: So how are you exposed to China right now? Do 497 00:26:19,359 --> 00:26:22,240 Speaker 2: you have exposure, let's say, in some of these medium 498 00:26:22,280 --> 00:26:23,240 Speaker 2: sized businesses. 499 00:26:24,680 --> 00:26:26,840 Speaker 6: No, I think at this juncture we are a little 500 00:26:26,840 --> 00:26:32,200 Speaker 6: bit more cautious towards really uh, consumer related sectors because 501 00:26:32,520 --> 00:26:36,160 Speaker 6: of the very weak sentiment and the retail sales numbers 502 00:26:36,200 --> 00:26:39,080 Speaker 6: also with not great. Instead, I think we will prefer 503 00:26:39,200 --> 00:26:42,040 Speaker 6: to be positioned defensive feed towards you know, some of 504 00:26:42,080 --> 00:26:45,879 Speaker 6: the dividend yielding sectors sees like for example, the energy 505 00:26:45,920 --> 00:26:46,600 Speaker 6: intel coals. 506 00:26:47,200 --> 00:26:47,600 Speaker 3: Uh. 507 00:26:48,480 --> 00:26:50,680 Speaker 6: You you just sort of like share prices will be 508 00:26:50,720 --> 00:26:54,200 Speaker 6: supported by the difficult you uh, that is that she's 509 00:26:54,200 --> 00:26:55,680 Speaker 6: still pretty attractive at this structure. 510 00:26:55,920 --> 00:26:59,800 Speaker 2: Well, you mentioned energy crude oil in New York yesterday. 511 00:27:00,000 --> 00:27:02,160 Speaker 2: Think we felt a nine month low. There's a lot 512 00:27:02,160 --> 00:27:05,679 Speaker 2: of concern about soft demand globally. That's a China story 513 00:27:06,040 --> 00:27:09,480 Speaker 2: and the risk that maybe OPECK plus will raise output 514 00:27:09,560 --> 00:27:12,600 Speaker 2: next month. I'm seeing WTI right now in the electronic 515 00:27:12,640 --> 00:27:15,840 Speaker 2: session a little positive, but we're sub seventy dollars a barrel. 516 00:27:16,400 --> 00:27:20,240 Speaker 2: Are you optimistic that that energy is the right play here? 517 00:27:21,880 --> 00:27:23,640 Speaker 6: No, I think that if you look at energy Plan, 518 00:27:23,720 --> 00:27:26,200 Speaker 6: no doubt. Yes, big demand outlook is petically from China 519 00:27:26,200 --> 00:27:30,040 Speaker 6: that's being on prices. But having said that, OPEC plus supply, 520 00:27:30,160 --> 00:27:33,800 Speaker 6: I think that remains a question because I think if 521 00:27:33,800 --> 00:27:37,240 Speaker 6: you look at the latest comments Opak is actually talking 522 00:27:37,280 --> 00:27:41,000 Speaker 6: about maybe perhaps they are considering not to increase apply 523 00:27:41,080 --> 00:27:45,040 Speaker 6: in the coming months. Given the recent we treating prices 524 00:27:45,240 --> 00:27:48,080 Speaker 6: plus the fact that we still have lingering geopilical uncertain 525 00:27:48,359 --> 00:27:51,679 Speaker 6: in the middities, I think that's somewhat underpriced. So we 526 00:27:51,800 --> 00:27:54,960 Speaker 6: think that at this junctual oil prices could actually find 527 00:27:54,960 --> 00:27:57,760 Speaker 6: support at around the seventy dollars barrel at this junction. 528 00:27:58,160 --> 00:28:00,679 Speaker 2: Anie, when you talk to clients, what are they sharing 529 00:28:00,720 --> 00:28:04,440 Speaker 2: with you in terms of their concerns and maybe their 530 00:28:04,480 --> 00:28:07,000 Speaker 2: resistance to taking on risk at this point in time. 531 00:28:08,160 --> 00:28:09,880 Speaker 6: I think one of the key things here is that 532 00:28:11,080 --> 00:28:14,600 Speaker 6: markets have actually, despite the recent sharpeners, equity markets have 533 00:28:14,680 --> 00:28:19,320 Speaker 6: actually done very really well this year, especially in the US, 534 00:28:20,240 --> 00:28:22,919 Speaker 6: and valuations for S and P five hundred is a 535 00:28:23,000 --> 00:28:26,719 Speaker 6: notch once in the division above the historical means. So 536 00:28:26,800 --> 00:28:30,199 Speaker 6: there are some reluctance to actually chase the market. But 537 00:28:30,359 --> 00:28:32,800 Speaker 6: what well YEAH think here is that? Yes, I think, 538 00:28:32,840 --> 00:28:34,800 Speaker 6: no doubt it is. Actually we are going into a 539 00:28:34,880 --> 00:28:38,120 Speaker 6: very tricky transition period where the FED is expected to 540 00:28:38,200 --> 00:28:41,840 Speaker 6: transit to a rig card cycle and the US is 541 00:28:41,840 --> 00:28:45,880 Speaker 6: going to transit to a new leadership by November. Having 542 00:28:45,920 --> 00:28:48,120 Speaker 6: said that, soft lending in US is going to be 543 00:28:48,160 --> 00:28:50,960 Speaker 6: supportive for RISKSSS in the medium term. So I think 544 00:28:50,960 --> 00:28:55,600 Speaker 6: there are still opportunities, particularly beyond the megacap or AI stocks. 545 00:28:55,920 --> 00:28:58,040 Speaker 2: Eddie will leave it there. Pleasure to have the chance 546 00:28:58,080 --> 00:29:01,840 Speaker 2: to spend time and discussing what markets are doing these 547 00:29:01,920 --> 00:29:04,560 Speaker 2: days and to get your perspective. Eddy Low, the chief 548 00:29:04,560 --> 00:29:09,239 Speaker 2: investment Officer at Maybank Group Wealth Management. This has been 549 00:29:09,240 --> 00:29:12,600 Speaker 2: the Bloomberg Daybreak Asia podcast, bringing you the stories making 550 00:29:12,680 --> 00:29:15,680 Speaker 2: news and moving markets in the Asia Pacific. Visit the 551 00:29:15,680 --> 00:29:19,239 Speaker 2: Bloomberg Podcast channel on YouTube to get more episodes of 552 00:29:19,280 --> 00:29:22,840 Speaker 2: this and other shows from Bloomberg. Subscribe to the podcast 553 00:29:22,880 --> 00:29:26,640 Speaker 2: on Apple, Spotify, or anywhere else you listen and always 554 00:29:26,640 --> 00:29:30,240 Speaker 2: on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.