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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner.

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Speaker 2: So President Trump has extended a tear off truce with

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Speaker 2: China for another ninety days. This was set to expire

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Speaker 2: on Tuesday. Sources tell Bloomberg. The President signed the order

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Speaker 2: for the extension on Monday. And this truce, just so

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Speaker 2: you remember, eases duties and export restrictions on key goods

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Speaker 2: like rare earth magnets. And we got reaction from Henrietta Trees,

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Speaker 2: she is director of Economic policy at Veda Partners.

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Speaker 3: Now that all eyes are on inflation data coming out tomorrow.

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Speaker 3: This is not an opportunity that the president can afford

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Speaker 3: to have twer rates spike on you know, five hundred

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Speaker 3: and fifty billion dollars worth of goods coming in from China.

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Speaker 3: So this had to occur. In my opinion, the President

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Speaker 3: didn't have another play. He had to delay.

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Speaker 2: Henrietta trays there are Veda Partners now. The extension could

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Speaker 2: also clear the way for further cooperation on chip exports

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Speaker 2: and AI hardware sales, although to be fair, national security

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Speaker 2: issues do remain. Coming up. A look at the market

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Speaker 2: implications with Joey Yang. She is head of product management

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Speaker 2: at market Vector Indexes. But we begin in San Francisco,

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Speaker 2: and that's where we find Derek Waaldbank is senior US

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Speaker 2: ecogov editor for Bloomberg News. Derek, thank you for making

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Speaker 2: time to chat with me. Remind me what the situation

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Speaker 2: on tariffs would look like had the President not agreed

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Speaker 2: to extend this pause.

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Speaker 4: Well, thank you for having me. Look, the situation would

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Speaker 4: look bad. That's that's where you start. You know, when

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Speaker 4: we first got into this US China sort of tip

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Speaker 4: for tat, it got it escalated quickly, and it escalated

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Speaker 4: past I think where either side had planned on it

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Speaker 4: going to a point that markets got spooked, and so

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Speaker 4: that that sort of was the was the precepading moment

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Speaker 4: for a kind of climb down and truce and pullback,

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Speaker 4: and so that's kind of what that's kind of what

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Speaker 4: we were looking at. There was there were all of

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Speaker 4: these sort of worst case scenarios going into place in

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Speaker 4: terms of tariffs but also potentially non tariff issues, you know,

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Speaker 4: and all of those have come off the table now

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Speaker 4: for another ninety days. This extends a truth through November tenth,

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Speaker 4: which is a really important extension here. You know, not

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Speaker 4: all extensions are created equal. And one of the things

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Speaker 4: that we've been trying to track is the prospects of

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Speaker 4: a potential meeting between Trump and Chi Janping. Now nothing

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Speaker 4: has been announced, nothing has been said that they're close to,

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Speaker 4: you know, whatever. But the current noise in Washington is

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Speaker 4: that is that you can sort of circle a period

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Speaker 4: of time kind of around the APEX summit in South Korea,

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Speaker 4: which is which is going to be around Halloween in

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Speaker 4: time early November, and right around there there's been some

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Speaker 4: noise you know, maybe on the sidelines of APEC maybe

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Speaker 4: Trump could go to China, you know, somewhere somewhere in

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Speaker 4: late October something like that. And so an extension through

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Speaker 4: November tenth gets you through that potential window when I

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Speaker 4: think a lot of people in Washington have been saying

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Speaker 4: that if Trump and she were going to meet this year,

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Speaker 4: it might make sense for them to meet.

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Speaker 2: I'm wondering about the timing in the context of Trump

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Speaker 2: preparing to meet with Putin in Alaska on Friday, and

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Speaker 2: whether or not this could be viewed as Trump kind

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Speaker 2: of putting himself in a weaker position. Is there a

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Speaker 2: sense that maybe he caved in a little bit and

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Speaker 2: could that weaken his hand slightly when he meets with

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Speaker 2: Putin In.

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Speaker 4: Terms of a China to Russia. Probably not. I'm not

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Speaker 4: getting a read from people that that those two things

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Speaker 4: might be linked. But in terms of a Russia talks

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Speaker 4: thing specifically, I do think that you see a lot

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Speaker 4: from the Ukrainian side, a lot from the Europeans. I'd

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Speaker 4: very concerned about what Donald Trump might say in a

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Speaker 4: meeting with Vladimir Putin. You know, Trump has been a

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Speaker 4: lot more willing to hear Putin out than a lot

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Speaker 4: of Europeans and a lot of Ukrainian leadership, and there

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Speaker 4: is some concern that Donald Trump may agree to things

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Speaker 4: or say, hey, this makes a lot of sense to

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Speaker 4: things that Putin wants to do that would be far

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Speaker 4: far reaching demands in practice. Certainly, the news about what

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Speaker 4: Putin wanted as an offer for Ukraine essentially represents Ukraine

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Speaker 4: giving up territory in exchange for a ceasefire, with Russia

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Speaker 4: not really giving up anything at all at the start,

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Speaker 4: and I think there was a lot of reaction out

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Speaker 4: of Europe that said something like that would represent a

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Speaker 4: little bit of a capitulation. Now, Donald Trump does not

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Speaker 4: want to be seen as someone who capitulates to Vladimir Putin,

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Speaker 4: And indeed we've seen in recent weeks Trump has been

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Speaker 4: increasingly exasperated with Putin for not stopping, for continuing to

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Speaker 4: shell Kiev. But at the same point, this is a

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Speaker 4: guy who for months and months and months has said

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Speaker 4: that Ukraine probably needs to sacrifice far more than it

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Speaker 4: had wanted to in order to get a peace deal,

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Speaker 4: and someone who has said that he very much prioritizes

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Speaker 4: getting fighting to stop. How that fighting may stop. He

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Speaker 4: may be a little bit more malleable on the details

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Speaker 4: than Kiev and Europeans may wish.

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Speaker 2: So has this exercise at the end of the day,

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Speaker 2: whether we're talking about US China or US Russia, kind

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Speaker 2: of illustrated to President Trump that may not have the

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Speaker 2: degree of leverage that he thinks he has in some

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Speaker 2: of these cases.

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Speaker 4: Well, I think that there's a really interesting thing with

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Speaker 4: the overall Trump administration, right. Donald Trump literally wrote a

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Speaker 4: book called The Art of the Deal. He sees himself

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Speaker 4: as the world's consummate deal maker, and in so doing

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Speaker 4: wants to go at a Nobel Peace Prize right, He's

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Speaker 4: said that a lot. But this is somebody who really

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Speaker 4: embraces large headlines. His administration maybe not the one that

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Speaker 4: sweats the small stuff, right, you know, the Trump administration

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Speaker 4: I was, I was in I was in Washington last

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Speaker 4: week meeting with Trump officials, and one of the things

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Speaker 4: that we talked about was the concept of moving at

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Speaker 4: Trump speed. Moving at Trump speed does not always leave

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Speaker 4: you time to check all of of the you know,

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Speaker 4: cross t's and dotted eyes. And you've seen some examples

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Speaker 4: over the last several months where something has happened they've said, oh,

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Speaker 4: it didn't quite mean that. Let's go back and try

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Speaker 4: and reverse that. So this is just an administration that

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Speaker 4: very much wants the big headlines. But when details can

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Speaker 4: get difficult, you know that that can be a little

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Speaker 4: bit more of a trouble zone. Now, when you're talking

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Speaker 4: about you know, Vladimir Putin, you're talking about somebody who

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Speaker 4: has had has swum in the details. And China is,

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Speaker 4: if anything, an incredibly technocratic, bureaucratic society that loves details,

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Speaker 4: and so there is a little bit of a mismatch

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Speaker 4: there where sometimes on the detail side, you know, they

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Speaker 4: can you know, they may see that they can, you know,

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Speaker 4: try and try and get one on Trump. But Trump

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Speaker 4: also moves with a rapidity and has a willingness to

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Speaker 4: move so fast that maybe sometimes that sets his opponents

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Speaker 4: on edge. So it's a little bit of each side

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Speaker 4: vexes each other sometimes.

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Speaker 2: Before I let you go, Derek, I have to ask

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Speaker 2: about the deal that the Trump administration worked out with

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Speaker 2: both in Nvidia and advanced micro devices. These companies will

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Speaker 2: be allowed to sell their less advanced chips to the

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Speaker 2: Chinese market if they were to pay fifteen percent of

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Speaker 2: the revenue from those Chinese sales to the US government.

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Speaker 2: Give me your sense of what's at work here.

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Speaker 4: Well, there's a couple of things that are interesting there.

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Speaker 4: One is that it's generally considered that US companies are

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Speaker 4: not meant to pay duties to the US government for

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Speaker 4: the privilege of exporting. That's a sort of long held

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Speaker 4: legal concept. I was really struck with something that our

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Speaker 4: Cameron Christ wrote for m Live, our markets blog and

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Speaker 4: any you know, basically saying, look, you know, the latest

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Speaker 4: US government intervention has been met with barely a shrug

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Speaker 4: in markets. I was actually interested in that because you know,

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Speaker 4: these sorts of policies are ones that years gone by,

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Speaker 4: even months gone by, would have been created with a

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Speaker 4: great hue and cry from Wall Street and Silicon Valley

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Speaker 4: and all others. Now it's sort of barely registers on

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Speaker 4: a Monday. And I think that that's a really interesting

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Speaker 4: sort of development there. There have been a lot of

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Speaker 4: things I think that the Trump administration likes to do

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Speaker 4: in that concept of moving fast and you know, making

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Speaker 4: demands and doing things and having deals, and you know,

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Speaker 4: all those sorts of things, and they all kind of

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Speaker 4: moved together, in trained together, and in that movement together,

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Speaker 4: there is so much volume that some things become normalized

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Speaker 4: and it's hard for your opponents to pick out one

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Speaker 4: or two things because everything else sort of slides by.

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Speaker 4: This is actually by design. This is this is one

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Speaker 4: of the tenets of the idea of why you move

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Speaker 4: in that sort of you know, in that sort of way.

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Speaker 4: It's because then things kind of do go by. But

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Speaker 4: because all of this volatility has kept on going, the

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Speaker 4: volatility itself becomes a little bit normalized. And that I

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Speaker 4: think is really a sort of fascinating concept there. You know,

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Speaker 4: on the on the exports themselves, one thing I think

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Speaker 4: is important to watch is that a lot of Trump's

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Speaker 4: biggest China Hawk advisors have really sought for him to

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Speaker 4: crack down heavily. At the same time, Trump wants an

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Speaker 4: overall deal with China, and we've seen in the issue

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Speaker 4: of leverage on Russia's oil exports. Trump has been very

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Speaker 4: willing to threaten India with increased tariffs. China is another

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Speaker 4: big buyer of Russian oil. While we have these Chinese

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Speaker 4: talks goings going on so far, you are not hearing

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Speaker 4: a lot out of President Trump talking about wanting to

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Speaker 4: sort of lay the smack down on China as well.

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Speaker 4: I think that's an interesting note as we consider these

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Speaker 4: next ninety days.

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Speaker 2: Derek will leave it there. Great stuff, Thank you so

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Speaker 2: very much. Derek Wallbank is senior US ecogov editor for

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Speaker 2: Bloomberg News, joining from San Francisco here on the Daybreak

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Speaker 2: Asia podcast. Welcome back to the Daybreak Asia Podcast. I'm

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Speaker 2: Dog Chrisner. So market's barely budge today. After President Trump

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Speaker 2: extended a pause of tariffs on Chinese goods for another

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Speaker 2: ninety days. Meantime, with earning season nearly over, the market

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Speaker 2: is turning its attention to economic data for clues on

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Speaker 2: whether the FED will be able to cut infrastrates in September.

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Speaker 2: To help break things down, I'm joined now by Joe Young.

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Speaker 2: She is head of product management at Market Vector Indexes. Joy,

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Speaker 2: Thanks for making time to chat with us today. It

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Speaker 2: felt like the market was a little bit on pins

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Speaker 2: and needles as we walk up to that CPI report,

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Speaker 2: But to be fair, we're not far from record highs.

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Speaker 2: In fact, the NASDAT comp dropped today from a record high.

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Speaker 2: Are you still constructive on US equities?

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Speaker 4: Yeah?

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Speaker 1: So, I mean we're in this is interesting times, isn't it.

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Speaker 1: So we just saw the announcement of another extension and

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Speaker 1: markets are just kind of barely flat, right, because this

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Speaker 1: is really showing how complicated and messy this tariff policy is.

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Speaker 1: And I think you know that the handshake is just

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Speaker 1: the easy part, you know, the implementation is really the

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Speaker 1: difficult part. And the areas that we're seeing cracks and

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Speaker 1: so that's why you have a lot of investors just

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Speaker 1: waiting on this eyelines to see what else is going

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Speaker 1: to be exposed, like we saw with the gold confusion

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Speaker 1: and then unwinding and getting clarity around what actually happens

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Speaker 1: when you sign the deal, and you know, the legal

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Speaker 1: contracts come on board. But clearly, if you look within

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Speaker 1: the markets, you know AI is definitely still going up

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Speaker 1: because it's a real story and people want to invest

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Speaker 1: in something. And the markets have responded on the back

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Speaker 1: of last week's earnings that there is real growth and

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Speaker 1: demand in the space and that they're willing to look

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Speaker 1: beyond some of the short term uncertainties around tariff and

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Speaker 1: tariff impact.

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Speaker 2: Okay, so that's fair, but I want to point out

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Speaker 2: I was looking today at the latest survey from Bank

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Speaker 2: of America, our record share of fund managers see the

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Speaker 2: US equity market is being too expensive after that sharp

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Speaker 2: rally since April. And if you look at the multiple

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Speaker 2: right now for the Nasdaq composite thirty five times earnings,

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Speaker 2: that sounds or feels to me like it's an expensive market.

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Speaker 2: You don't feel that way.

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Speaker 1: It's definitely expensive relative to you know, where we have

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Speaker 1: seen PA's historic these historically. But I think we're also

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Speaker 1: trying to understand, you know, how AI story will play out,

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Speaker 1: and we know that there's there's strong demand and that

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Speaker 1: innovation is starting to appear across different segments in industry,

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Speaker 1: So you know, it just depends on how far out

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Speaker 1: you want to look, but also what else are you

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Speaker 1: going to invest in, because right now we're seeing this

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Speaker 1: divergence between AI tech companies and consumer discretionary companies that

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Speaker 1: are being more impacted by teriffs and exposed by some

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Speaker 1: of the complexities of the tear fallouts. But even within

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Speaker 1: and I would say caution investors when they look at

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Speaker 1: the AI stories not to be so focus on any

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Speaker 1: single company because we see that even within the AI

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Speaker 1: tech there's a divergence between some of these large mega

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Speaker 1: players and some of these smaller players that can't get

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Speaker 1: away from some of the uncertainties around how the tariff

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Speaker 1: stories will play out, and they're exposed on both the

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Speaker 1: import and export side of the costs impact, and so

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Speaker 1: you know, there's still you know, there's still quite a

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Speaker 1: lot of strength in these megacat players because they have

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Speaker 1: a lot of cap X, they can wait it out.

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Speaker 1: They can also absorb some of the price impact. So

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Speaker 1: you know, this is still you know, it's got legs

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Speaker 1: to play out, and you know some you know, time

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Speaker 1: to like see what's really going to happen within this sector.

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Speaker 2: So for a while now, many investors have been playing

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Speaker 2: energy as kind of tangential to the direct AI trade.

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Speaker 2: Whether you're looking at a company like Microsoft or whether

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Speaker 2: you're looking at a company like Nvidia. Is the energy

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Speaker 2: complex still something that you're looking at these days.

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Speaker 1: Absolutely, because we know that AI is going to require

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Speaker 1: a lot of data, and that data consumption is going

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Speaker 1: to require a lot of energy, and not just any energy,

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Speaker 1: but reliable energy. So there's a strong demand for the

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Speaker 1: energy infrastructure and a lot of investment back into that

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Speaker 1: infrastructure because this data consumption is enormous.

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Speaker 2: One of the things that's been a part of the

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Speaker 2: market's relative strength here, it's been the notion that we're

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Speaker 2: going to get multiple FED rate cuts this year, and

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Speaker 2: over the weekend, Governor Michelle Bowman was saying she favors three.

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Speaker 2: Do you think that's overly optimistic. Will the economy be

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Speaker 2: in such a state where three rate cuts are required?

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Speaker 1: I think it's unclear at the moment, because the data

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Speaker 1: really is telling a different story from you know, what

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Speaker 1: the market is trying to price in, and we know

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Speaker 1: that the market doesn't really reflect the economy. And we

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Speaker 1: also understand now that the tariff impact will take you

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Speaker 1: a while to play out, and it's impacting some of

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Speaker 1: the small cap players more than the megacap and this

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Speaker 1: small cap players is you know, some of the biggest

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Speaker 1: support for driving labor numbers. So, you know, I think

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Speaker 1: that's very optimistic. And you know, what we're seeing now

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Speaker 1: is strong demand still for alternative assets like gold and

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Speaker 1: bitcoin that are you know, really a little bit immune

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Speaker 1: to some of this volatility and noise around inflation, disinflation

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Speaker 1: and interest rates.

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Speaker 2: I want to get your take on a story that

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Speaker 2: we've been talking about President Trump basically allowing companies like

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Speaker 2: Nvidia and Advanced micro Devices to sell certain chips to

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Speaker 2: China if those companies were to pay fifteen percent of

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Speaker 2: the revenue from these sales to Chinese firms back to

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Speaker 2: the US government. It's pretty creative approach, isn't it.

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Speaker 1: What do you think of that, Well, certainly we're seeing

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Speaker 1: this shift from these broad based caraff policies to increasingly

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Speaker 1: what's becoming a play, pay to play model, and this

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Speaker 1: is you know, Trump's tactic. He really likes these one

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Speaker 1: on one negotiations and exemptions. It's benefiting the US government

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Speaker 1: in the short run, but it does, you know, raise

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Speaker 1: real concerns around what are we trading off for this

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Speaker 1: type of you know, negotiation tactic. You know, where does

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Speaker 1: this leave national security? Where does it leave market competition,

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Speaker 1: and where does it leave some of these smaller players.

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Speaker 2: So we've talked a lot about big cap tech high

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Speaker 2: technology as it's tied into the AI trade. Is there

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Speaker 2: anything else and we also mentioned power by the way,

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Speaker 2: but I'm wondering if there's anything else you're looking at

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Speaker 2: these days that you believe represents value in a compelling way.

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Speaker 1: Well aside from like making sure that are diversified across

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Speaker 1: gold and bitcoin. You know, we think, you know, investors

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Speaker 1: should be diversified against any single stock exposure. So we're

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Speaker 1: still looking at groups or baskets within the semiconductor because

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Speaker 1: you know, you should have a global exposure across semiconductor.

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Speaker 1: We're looking at, as you mentioned before that the AI infrastructure,

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Speaker 1: and then we're looking at defense tech and we saw

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Speaker 1: last week, you know, Palenteers stock price on the back

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Speaker 1: of their earnings announcement and you know, defense national security,

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Speaker 1: given kind of the geopolitical risks that are still out

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Speaker 1: there is definitely a growth and an investment space for investors.

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Speaker 2: Joy, before I let you go, are there opportunities offshore

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Speaker 2: that you have identified something you want to share.

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Speaker 1: Definitely, when you know, we think diversification means that investors

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Speaker 1: should also look beyond US equities and bonds because you know,

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Speaker 1: this American exceptionalism, you know, it can be a little

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Speaker 1: bit too inward looking. And we're seeing relative value still

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Speaker 1: in international markets. In emerging markets as they navigate the

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Speaker 1: tariff policies, you know, they will ultimately recapture some of

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Speaker 1: the fundamental growth that you know they've been storing up for.

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Speaker 2: Can you give me specific jurisdictions that you'll like right now?

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Speaker 2: Is it Taiwan, is it Japan? Is it South Korea?

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Speaker 1: Well, we you know, we always like these emerging market

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Speaker 1: that have strong trait ties, whether it's Vietnam, Korea, Brazil,

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Speaker 1: you know, because they were lagging and we see your

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Speaker 1: gate that they're regaining some of the strength that they

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Speaker 1: lost previously.

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Speaker 2: We'll leave it there, Joe, it's always a pleasure. Thank

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Speaker 2: you so much for making time to chat with me.

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Speaker 2: Joe Young there. She is head of product management at

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Speaker 2: market Vector Indexes, joining us here on the Daybreak Asia podcast.

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Speaker 2: Thanks for listening to today's episode of The Bloomberg Daybreak

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Speaker 2: Asia Edition podcast. Each weekday, we look at the story

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Speaker 2: shaping markets, finance, and geopolitics in the Asia Pacific. You

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Speaker 2: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,

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Speaker 2: or anywhere else you listen. Join us again tomorrow for

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Speaker 2: insight on the market moves from Hong Kong to Singapore

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Speaker 2: and Australia. I'm Doug Prisoner and this is Bloomberg