1
00:00:02,520 --> 00:00:07,040
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

2
00:00:10,720 --> 00:00:14,200
Speaker 2: Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Chrisner.

3
00:00:14,520 --> 00:00:17,520
Speaker 2: It's the Easter Monday holiday in the Asia Pacific, so

4
00:00:17,600 --> 00:00:21,120
Speaker 2: we have markets in Australia and Hong Kong closed. Now,

5
00:00:21,160 --> 00:00:23,920
Speaker 2: this week's sentiment will likely remain at the mercy of

6
00:00:24,239 --> 00:00:28,160
Speaker 2: evolving trade policies from the Trump administration. South Korea's top

7
00:00:28,200 --> 00:00:31,400
Speaker 2: trade official will be in Washington this week to kickstar

8
00:00:31,520 --> 00:00:35,080
Speaker 2: trade negotiations. Now, this will be the second Asian nation

9
00:00:35,240 --> 00:00:37,960
Speaker 2: to sit down with the US to assess so called

10
00:00:38,080 --> 00:00:42,200
Speaker 2: reciprocal tariffs. Japan was the first. For more, we heard

11
00:00:42,200 --> 00:00:46,159
Speaker 2: from Naomi Fink, chief Global strategist at Nico Asset Management.

12
00:00:46,400 --> 00:00:48,600
Speaker 2: She spoke with Bloomberg's Paul Allen and.

13
00:00:48,520 --> 00:00:51,360
Speaker 1: Sherry On Naomi, great to have you with us, at

14
00:00:51,440 --> 00:00:55,279
Speaker 1: least for now, we haven't seen too many trade negotiations

15
00:00:55,280 --> 00:00:57,680
Speaker 1: back and forth over the weekend at least, But when

16
00:00:57,680 --> 00:00:59,240
Speaker 1: it comes to the rest of the week, what will

17
00:00:59,280 --> 00:00:59,920
Speaker 1: you be watching?

18
00:01:00,920 --> 00:01:04,920
Speaker 3: Well, I think since given what we've seen so far,

19
00:01:05,240 --> 00:01:09,120
Speaker 3: especially since the tariffs have been announced, it might be

20
00:01:09,680 --> 00:01:13,119
Speaker 3: that we do not get a straight answer even when

21
00:01:13,200 --> 00:01:19,280
Speaker 3: we reach the conclusion of these negotiations, the negotiation not

22
00:01:19,400 --> 00:01:23,920
Speaker 3: only with Japan, but the negotiations may continue far longer

23
00:01:24,600 --> 00:01:28,000
Speaker 3: than than we're we're really expecting right now.

24
00:01:28,520 --> 00:01:29,520
Speaker 4: Even if we do.

25
00:01:29,440 --> 00:01:34,120
Speaker 3: Get a an outcome, that outcome is probably liable to

26
00:01:34,120 --> 00:01:37,760
Speaker 3: get renegotiated. We've seen a lot of changes, so I

27
00:01:37,800 --> 00:01:41,080
Speaker 3: think right now what we can really only expect is

28
00:01:41,160 --> 00:01:45,440
Speaker 3: that is that there are going to be several possible outcomes.

29
00:01:45,880 --> 00:01:49,840
Speaker 3: One of those outcomes I think is probably at least

30
00:01:49,880 --> 00:01:53,160
Speaker 3: more favorable in terms of risk assets than others, and

31
00:01:53,240 --> 00:01:56,960
Speaker 3: may involve the US not falling into a year term recession.

32
00:01:57,160 --> 00:02:00,960
Speaker 3: But at the same time, we cannot rule out that

33
00:02:01,040 --> 00:02:05,040
Speaker 3: the possibility of near term recession. And I would emphasize

34
00:02:05,080 --> 00:02:07,640
Speaker 3: that the whole idea of tariffs is probably going to

35
00:02:07,680 --> 00:02:10,720
Speaker 3: be hardest on the US consumer. That's who it's going

36
00:02:10,760 --> 00:02:11,720
Speaker 3: to be toughest for.

37
00:02:12,120 --> 00:02:15,239
Speaker 1: And of course that potential recession could also come with

38
00:02:15,440 --> 00:02:18,280
Speaker 1: just disinflation as the FED has wanted to see, or

39
00:02:18,320 --> 00:02:23,640
Speaker 1: even just stackflation right because of continuing to prices rising

40
00:02:23,720 --> 00:02:26,840
Speaker 1: because of the tariffs. What would the implications be for

41
00:02:26,880 --> 00:02:28,840
Speaker 1: the markets depending on those two scenarios.

42
00:02:29,320 --> 00:02:33,280
Speaker 3: Well, if we do see continued disinflation, then the FED

43
00:02:33,480 --> 00:02:37,960
Speaker 3: probably can be more comfortable with rate cuts if we

44
00:02:38,040 --> 00:02:41,960
Speaker 3: do see weaker growth and softer inflation. That's usually a

45
00:02:42,000 --> 00:02:44,760
Speaker 3: typical environment in which a central bank would cut rates.

46
00:02:44,960 --> 00:02:47,840
Speaker 3: But if we see weaker growth but the inflation does not.

47
00:02:48,000 --> 00:02:51,520
Speaker 4: Come lower, then they will be a bit.

48
00:02:51,440 --> 00:02:54,919
Speaker 3: Hobbled by that high inflation, so we won't be able

49
00:02:54,960 --> 00:02:57,160
Speaker 3: to see relief from monetary policy.

50
00:02:57,240 --> 00:02:59,360
Speaker 4: That's just how central banks work.

51
00:03:00,960 --> 00:03:03,280
Speaker 5: When do you go for cover at a time like this,

52
00:03:03,400 --> 00:03:06,120
Speaker 5: because some of those traditional plays, the US dollar was

53
00:03:06,160 --> 00:03:09,200
Speaker 5: saying getting beaten up at the moment, US treasuries have

54
00:03:09,240 --> 00:03:11,760
Speaker 5: been selling off. I mean, we've got gold to a record,

55
00:03:11,840 --> 00:03:15,839
Speaker 5: But do you look to other bond markets elsewhere where

56
00:03:15,840 --> 00:03:17,440
Speaker 5: are you finding safety?

57
00:03:17,919 --> 00:03:22,320
Speaker 4: Well, I think it's probably hard to find certainty.

58
00:03:23,280 --> 00:03:25,720
Speaker 3: Even if you just put cash under the mattress, which

59
00:03:25,760 --> 00:03:28,440
Speaker 3: is what has happened in Japan for decades and which

60
00:03:28,480 --> 00:03:32,320
Speaker 3: is now finally reversing, I think it's going to be

61
00:03:32,480 --> 00:03:36,080
Speaker 3: very hard to find one asset that's just the magic bullet.

62
00:03:36,160 --> 00:03:39,520
Speaker 3: So probably the best idea is to diversify, which means

63
00:03:39,520 --> 00:03:42,240
Speaker 3: that you're not going to be completely.

64
00:03:41,600 --> 00:03:43,200
Speaker 4: Insulated from market moves.

65
00:03:43,240 --> 00:03:47,280
Speaker 3: You don't want to have zero allocation to risk assets

66
00:03:47,320 --> 00:03:49,160
Speaker 3: because they also do rise.

67
00:03:48,920 --> 00:03:49,840
Speaker 4: They don't only fall.

68
00:03:49,920 --> 00:03:52,840
Speaker 3: So probably what you want to do is find some

69
00:03:52,920 --> 00:03:56,200
Speaker 3: areas that will at least insulate you against the worst

70
00:03:56,240 --> 00:03:58,880
Speaker 3: of the declines. One of the things that we have

71
00:03:58,960 --> 00:04:01,880
Speaker 3: been looking at is the potential for domestic demand in

72
00:04:01,920 --> 00:04:05,800
Speaker 3: some of these surplus economies, especially in Asia to a

73
00:04:05,800 --> 00:04:08,640
Speaker 3: bit longer term come through, because what do you do

74
00:04:08,760 --> 00:04:12,320
Speaker 3: when one of your largest trade partners says, well, we

75
00:04:12,360 --> 00:04:14,760
Speaker 3: don't really want to buy many of your products anymore,

76
00:04:14,880 --> 00:04:16,960
Speaker 3: while you see what you can do internally, and then

77
00:04:17,040 --> 00:04:20,000
Speaker 3: a lot of these countries do have huge built up surpluses,

78
00:04:20,080 --> 00:04:24,560
Speaker 3: so they can use it to stimulate domestic demands. There

79
00:04:24,600 --> 00:04:27,640
Speaker 3: are other assets as gold, which are which is remaining

80
00:04:27,680 --> 00:04:32,159
Speaker 3: supported probably because of this lack of other risk havens,

81
00:04:33,800 --> 00:04:36,960
Speaker 3: and I would see that as part of a diversified

82
00:04:37,000 --> 00:04:40,200
Speaker 3: portfolio as well, But I wouldn't be too hasty to.

83
00:04:40,360 --> 00:04:41,400
Speaker 4: Dump any asset.

84
00:04:41,480 --> 00:04:44,440
Speaker 3: I would look to to try and diversify well with

85
00:04:44,600 --> 00:04:48,000
Speaker 3: some of these these indicators that they mentioned just now.

86
00:04:48,360 --> 00:04:50,799
Speaker 5: Yeah, when you see selling like we've seen, the conversation

87
00:04:50,839 --> 00:04:54,320
Speaker 5: inevitably turns to dip buying. There's certainly some boggains to

88
00:04:54,360 --> 00:04:57,160
Speaker 5: be had. But what's the risk here? Are we still

89
00:04:57,200 --> 00:04:59,760
Speaker 5: in catch the falling knife territory or is this the

90
00:04:59,800 --> 00:05:02,200
Speaker 5: time to take a look at some purchases.

91
00:05:03,600 --> 00:05:07,720
Speaker 3: Well, I think if we're if we are long term investors,

92
00:05:07,839 --> 00:05:11,920
Speaker 3: then probably what we want to do is just calm

93
00:05:11,960 --> 00:05:15,159
Speaker 3: down and maybe dollar cost average. So yeah, we'll be

94
00:05:15,160 --> 00:05:17,000
Speaker 3: dip buying some of the time, some of the time

95
00:05:17,040 --> 00:05:19,799
Speaker 3: we won't be. But what we're looking for is long

96
00:05:19,880 --> 00:05:21,000
Speaker 3: term compounding.

97
00:05:21,440 --> 00:05:22,680
Speaker 4: And if we do.

98
00:05:22,600 --> 00:05:25,080
Speaker 3: Average at a rate where long term we can still

99
00:05:25,120 --> 00:05:29,679
Speaker 3: benefit from economic growth over many years, then we should

100
00:05:29,680 --> 00:05:30,239
Speaker 3: be Okay.

101
00:05:30,720 --> 00:05:32,520
Speaker 4: What I would discourage is.

102
00:05:33,240 --> 00:05:36,440
Speaker 3: Trading around these volatile markets, unless, of course, you are

103
00:05:37,440 --> 00:05:41,279
Speaker 3: somebody who wants to benefit off of that. Long Term investors,

104
00:05:41,279 --> 00:05:44,600
Speaker 3: though I find, typically aren't very successful at timing markets.

105
00:05:44,640 --> 00:05:48,680
Speaker 3: So what you want to do is, yes, position, yes, diversify,

106
00:05:49,080 --> 00:05:51,600
Speaker 3: but you don't really want to be timing a lot

107
00:05:51,640 --> 00:05:54,560
Speaker 3: of these moves because you might lose some of that

108
00:05:54,600 --> 00:05:56,400
Speaker 3: opportunity to long term compound.

109
00:05:57,400 --> 00:05:59,920
Speaker 1: Would you invest for the long term in China because

110
00:06:00,360 --> 00:06:02,640
Speaker 1: we have seen that they're not as trade dependent as

111
00:06:02,640 --> 00:06:04,600
Speaker 1: they used to be, some saying that they could actually

112
00:06:04,600 --> 00:06:07,159
Speaker 1: come out okay On the other side of this trade war.

113
00:06:07,560 --> 00:06:11,040
Speaker 3: So I think China is too large an economy, too

114
00:06:11,080 --> 00:06:13,800
Speaker 3: and too large a market and still long.

115
00:06:13,720 --> 00:06:16,960
Speaker 4: Term growing to ignore. I don't think that.

116
00:06:17,960 --> 00:06:20,560
Speaker 3: I know that some have called China uninvestable before. I

117
00:06:20,560 --> 00:06:23,000
Speaker 3: don't think that's true. I think it is a risky market,

118
00:06:23,120 --> 00:06:26,320
Speaker 3: but you know, we are investors who invest in risky markets.

119
00:06:26,360 --> 00:06:29,760
Speaker 3: It's just the degree of risk and how we can diversify.

120
00:06:29,839 --> 00:06:33,120
Speaker 3: So of course it definitely involves an understanding and a strategy,

121
00:06:33,400 --> 00:06:37,239
Speaker 3: but I would definitely say that that China is part

122
00:06:37,360 --> 00:06:40,560
Speaker 3: of a well diversified global portfolio.

123
00:06:41,040 --> 00:06:43,359
Speaker 1: We continue to see the weakness in the US dollar

124
00:06:43,440 --> 00:06:45,080
Speaker 1: on the other side of that trade. Of course, the

125
00:06:45,120 --> 00:06:47,680
Speaker 1: strength of the Japanese yeen miso security is not talking

126
00:06:47,720 --> 00:06:50,080
Speaker 1: about one thirties also being a level at this point

127
00:06:50,360 --> 00:06:51,200
Speaker 1: by year end.

128
00:06:51,240 --> 00:06:53,880
Speaker 3: What do you think, Well, we've certainly seen dollars yen

129
00:06:54,000 --> 00:06:56,599
Speaker 3: at that level before. But what we want, I think,

130
00:06:56,680 --> 00:07:01,400
Speaker 3: if we are going to have some sort of ability

131
00:07:01,440 --> 00:07:04,720
Speaker 3: to avoid US recession, for example, is we want to

132
00:07:04,760 --> 00:07:08,280
Speaker 3: have moves that are are not sudden and not kind

133
00:07:08,320 --> 00:07:14,120
Speaker 3: of a flight to a flight to riskless assets. If

134
00:07:14,120 --> 00:07:18,760
Speaker 3: those exist anymore, Maybe the yen is closer to the

135
00:07:18,760 --> 00:07:22,800
Speaker 3: idea of a riskless asset. Now, if we do see

136
00:07:22,800 --> 00:07:25,440
Speaker 3: a sudden strengthening in the end, that could upend a

137
00:07:25,440 --> 00:07:29,360
Speaker 3: lot of corporates plans and it could probably cause a

138
00:07:29,400 --> 00:07:32,720
Speaker 3: lot of disruption. But if we see gradual strengthening of

139
00:07:32,760 --> 00:07:35,600
Speaker 3: the end, it allows the economy some time to adjust.

140
00:07:35,840 --> 00:07:39,040
Speaker 3: Of course, it's not as good for exporters, but a

141
00:07:39,080 --> 00:07:41,679
Speaker 3: lot of the exporters are large firms who can hedge,

142
00:07:41,680 --> 00:07:44,240
Speaker 3: who can move their investments around, they can deal with it.

143
00:07:44,600 --> 00:07:46,760
Speaker 3: A lot of the smaller players in Japan, though, are

144
00:07:46,800 --> 00:07:50,560
Speaker 3: importers and they can benefit from a gradual strengthening of

145
00:07:50,600 --> 00:07:53,400
Speaker 3: the end. So as long as the moves can remain

146
00:07:53,480 --> 00:07:56,760
Speaker 3: relatively measured, then I think Japan can adapt pretty well.

147
00:07:57,280 --> 00:07:59,160
Speaker 1: No, we think good to have you with us, Chief

148
00:07:59,160 --> 00:08:01,760
Speaker 1: Global Strategies, a NICO Asset Management here.

149
00:08:10,840 --> 00:08:14,320
Speaker 2: Welcome back to the Daybreak Asia podcast. I'm Doug Chrisner.

150
00:08:14,680 --> 00:08:16,760
Speaker 2: In the States. On Sunday, we heard from the head

151
00:08:16,800 --> 00:08:20,400
Speaker 2: of the Chicago FED, Austin Goulsby, who warned against efforts

152
00:08:20,400 --> 00:08:24,840
Speaker 2: to curtail the Fed's independence. Now, his remarks come just

153
00:08:25,000 --> 00:08:29,080
Speaker 2: days after President Trump publicly expressed his displeasure with FED

154
00:08:29,120 --> 00:08:32,680
Speaker 2: Shair J. Powell and said that Powell's termination couldn't come

155
00:08:32,800 --> 00:08:36,760
Speaker 2: fast enough. Here's Goulesby speaking earlier to CBS Face the Nation.

156
00:08:37,200 --> 00:08:43,960
Speaker 6: There's virtual unanimity among economists that monetary independence from political interference,

157
00:08:44,240 --> 00:08:46,760
Speaker 6: that the FED or any central bank be able to

158
00:08:46,840 --> 00:08:50,000
Speaker 6: do the job that it needs to do, is really important.

159
00:08:50,240 --> 00:08:52,800
Speaker 6: And they came to that not as a theory, but

160
00:08:53,000 --> 00:08:55,760
Speaker 6: just by looking around the world at places where they

161
00:08:55,800 --> 00:08:59,440
Speaker 6: don't have monetary independence. And the fact is the inflation

162
00:08:59,559 --> 00:09:02,720
Speaker 6: rate is high, higher, growth is slower, the job market

163
00:09:02,760 --> 00:09:03,120
Speaker 6: is worse.

164
00:09:03,160 --> 00:09:06,560
Speaker 2: Austin Goolsby there speaking to CBS Face the Nation for

165
00:09:06,640 --> 00:09:09,920
Speaker 2: more on this story. We heard from Alicia Garcio Herrero,

166
00:09:10,080 --> 00:09:13,360
Speaker 2: chief APAK economist for in the Texas, and she spoke

167
00:09:13,440 --> 00:09:15,480
Speaker 2: to Bloomberg's Paul Allen in Sydney.

168
00:09:15,880 --> 00:09:18,520
Speaker 5: Alicia, thanks for joining us. We have, of course seen

169
00:09:18,559 --> 00:09:21,559
Speaker 5: President Trump in the first hundred days or so picking

170
00:09:21,600 --> 00:09:24,800
Speaker 5: fights with friends foes, starting trade wars, and of course

171
00:09:24,800 --> 00:09:27,400
Speaker 5: the FEDNA in his sites as well, saying on truth

172
00:09:27,480 --> 00:09:32,640
Speaker 5: social pals termination can't come fast enough. Look, even if

173
00:09:32,640 --> 00:09:35,520
Speaker 5: it is just rhetoric, is there more risk here? More

174
00:09:35,600 --> 00:09:38,160
Speaker 5: volatility installed for markets? With this kind of talk.

175
00:09:38,840 --> 00:09:42,839
Speaker 7: Absolutely and this is not only because of the FED

176
00:09:42,840 --> 00:09:46,880
Speaker 7: independence as such, meaning the ability to cut or fight

177
00:09:47,080 --> 00:09:49,920
Speaker 7: rips if needed, but also because at the end of

178
00:09:50,080 --> 00:09:52,280
Speaker 7: the at the end of the day, the FED has

179
00:09:52,360 --> 00:09:57,800
Speaker 7: been instrumental during Corvid and this could happen again in

180
00:09:57,920 --> 00:10:02,200
Speaker 7: actually buying US treasures and basically through Q through quite

181
00:10:02,320 --> 00:10:02,960
Speaker 7: that business.

182
00:10:03,040 --> 00:10:06,920
Speaker 8: So Trump knows very well that the FED has.

183
00:10:08,440 --> 00:10:13,160
Speaker 7: In store ability to lower long term rids, not only

184
00:10:13,720 --> 00:10:15,920
Speaker 7: short term rates. So the FED is a very very

185
00:10:16,040 --> 00:10:20,040
Speaker 7: Juesy opportunity for Trump if what he wants is really

186
00:10:20,320 --> 00:10:22,559
Speaker 7: not only to lower the dollar, but also to lower

187
00:10:22,880 --> 00:10:25,800
Speaker 7: the cost of funding for the massive debt so that

188
00:10:26,160 --> 00:10:27,839
Speaker 7: the US has accumulated over time.

189
00:10:28,760 --> 00:10:32,560
Speaker 5: All aside from defending its independence, the FED saying very

190
00:10:32,640 --> 00:10:34,520
Speaker 5: much on message at the moment when it comes to

191
00:10:35,160 --> 00:10:39,240
Speaker 5: price stability, getting inflation under control. But can you foresee

192
00:10:39,520 --> 00:10:42,000
Speaker 5: a set of circumstances the way this year has been

193
00:10:42,040 --> 00:10:45,400
Speaker 5: going so far where growth becomes a greater concern for

194
00:10:45,440 --> 00:10:45,800
Speaker 5: the FED.

195
00:10:46,640 --> 00:10:51,880
Speaker 7: Well, it is likely, isn't it, Because growth depends very

196
00:10:51,920 --> 00:10:56,280
Speaker 7: much on investment. Investment depends on, if not certainty, at

197
00:10:56,360 --> 00:10:59,120
Speaker 7: least some certainty, and here we are in a world

198
00:10:59,160 --> 00:11:04,640
Speaker 7: of uncertainty. So the most obvious channel is really investment

199
00:11:04,840 --> 00:11:10,680
Speaker 7: for Trump's policies to affect growth, and therefore I think

200
00:11:10,840 --> 00:11:13,600
Speaker 7: it's quite easy to see that the other one obviously

201
00:11:13,840 --> 00:11:19,120
Speaker 7: is the labor force, meaning if Trump continues to be

202
00:11:19,720 --> 00:11:24,080
Speaker 7: so strict on immigration policies, because that that is needed

203
00:11:24,120 --> 00:11:25,640
Speaker 7: for growth as well. Well.

204
00:11:25,640 --> 00:11:27,520
Speaker 5: In terms of growth, we're going to get a new

205
00:11:27,520 --> 00:11:32,160
Speaker 5: set of forecasts from the IMF on Tuesday. Crystallina Jeojava

206
00:11:32,400 --> 00:11:34,560
Speaker 5: managing director, has already said, look, there's going to be

207
00:11:34,800 --> 00:11:38,840
Speaker 5: a notable markdowns in those forecasts, but she doesn't see

208
00:11:38,840 --> 00:11:41,720
Speaker 5: a recession. Where do you see the risk of recession

209
00:11:42,040 --> 00:11:43,839
Speaker 5: not just in the US, but there are other other

210
00:11:43,920 --> 00:11:45,120
Speaker 5: markets at risk as well.

211
00:11:45,800 --> 00:11:46,000
Speaker 8: Well.

212
00:11:46,000 --> 00:11:48,440
Speaker 7: We still don't know whether these tires are going to

213
00:11:48,440 --> 00:11:52,040
Speaker 7: be permanent to start, I mean, they aren't really there

214
00:11:52,240 --> 00:11:56,480
Speaker 7: except for China and some sectors we have exemptions even

215
00:11:56,559 --> 00:12:01,240
Speaker 7: on icit and electronics. We didn't have to for semiconductors.

216
00:12:01,280 --> 00:12:05,000
Speaker 7: We're still working waiting for pharmas. So we haven't really

217
00:12:05,080 --> 00:12:08,760
Speaker 7: seen the full range of tariffs. So in that regard,

218
00:12:08,800 --> 00:12:13,320
Speaker 7: I think, you know, the world might escape recession if

219
00:12:13,320 --> 00:12:17,040
Speaker 7: Trump realizes that these tariffs are are very totly in

220
00:12:17,080 --> 00:12:20,640
Speaker 7: a way, ironically, if the market, since we're bloombered, if

221
00:12:20,640 --> 00:12:23,680
Speaker 7: the markets are wise enough to put a cost, a

222
00:12:23,760 --> 00:12:27,680
Speaker 7: high cost on additional tariffs, which is what we've been seeing,

223
00:12:28,120 --> 00:12:31,040
Speaker 7: especially you know during that terrible week of sell off

224
00:12:31,080 --> 00:12:34,360
Speaker 7: in the US tructuring market. I think that is making

225
00:12:35,080 --> 00:12:39,920
Speaker 7: it more expensive if you want for Trump to put

226
00:12:39,920 --> 00:12:43,280
Speaker 7: the world into a recession. So I would say markets

227
00:12:43,320 --> 00:12:47,400
Speaker 7: going down in a way, will we hopefully protect the

228
00:12:47,480 --> 00:12:51,319
Speaker 7: world from this from these policies, does avoid a recession,

229
00:12:51,480 --> 00:12:52,600
Speaker 7: a global recession.

230
00:12:53,320 --> 00:12:56,319
Speaker 5: You mentioned that cellof that we saw in US treasure

231
00:12:56,440 --> 00:12:59,320
Speaker 5: is do you feel like some uncomfortable questions are being

232
00:12:59,360 --> 00:13:03,440
Speaker 5: asked around the haven status of of US bonds and

233
00:13:03,720 --> 00:13:06,920
Speaker 5: do you see people going outsewhere for safety? Where might

234
00:13:06,960 --> 00:13:07,240
Speaker 5: that be?

235
00:13:07,880 --> 00:13:10,400
Speaker 8: Well, clearly so far the Euro, that's what we've seen.

236
00:13:10,720 --> 00:13:14,880
Speaker 7: H And the reason is that Asian currencies are in

237
00:13:14,920 --> 00:13:16,400
Speaker 7: a way reacting.

238
00:13:17,920 --> 00:13:19,040
Speaker 8: With the exception of the game.

239
00:13:19,080 --> 00:13:22,560
Speaker 7: But more will be more will be warranted from from

240
00:13:22,600 --> 00:13:25,800
Speaker 7: best and I'm sure, but generally if you look at

241
00:13:25,840 --> 00:13:27,480
Speaker 7: the if you look at the reaction of the R

242
00:13:27,520 --> 00:13:30,760
Speaker 7: and B, then when the cell of happened, another.

243
00:13:30,480 --> 00:13:32,160
Speaker 8: Asian currencies is all deprecisions.

244
00:13:32,200 --> 00:13:35,760
Speaker 7: So there's very few that are actually standing out basically

245
00:13:35,800 --> 00:13:37,040
Speaker 7: approceeding against a.

246
00:13:37,040 --> 00:13:40,160
Speaker 8: Weakening and that was a euro big time.

247
00:13:40,559 --> 00:13:42,560
Speaker 7: And I think there may be other currencies, you know

248
00:13:42,640 --> 00:13:45,880
Speaker 7: that that will fulfill that role, maybe Swiss from maybe

249
00:13:45,920 --> 00:13:49,439
Speaker 7: you know, British found maybe not the ously because the

250
00:13:50,280 --> 00:13:52,400
Speaker 7: is kind of a proxy of of R and B

251
00:13:52,600 --> 00:13:56,640
Speaker 7: or China's Chinese currency. But but other than that, I

252
00:13:56,679 --> 00:13:59,320
Speaker 7: think you you you did have the euros as a

253
00:13:59,360 --> 00:14:02,719
Speaker 7: big winner. I don't know whether that's a winning strategy

254
00:14:02,760 --> 00:14:04,760
Speaker 7: for Europe review if you think in fact they s

255
00:14:04,800 --> 00:14:07,240
Speaker 7: to be cut rat although it was expected, but a

256
00:14:07,360 --> 00:14:11,439
Speaker 7: very very strong euro which takes all of this anxiety

257
00:14:11,520 --> 00:14:13,760
Speaker 7: about the dollar, could bring the euro to one point

258
00:14:13,760 --> 00:14:16,920
Speaker 7: thirty and that would kill the European economy. So nobody

259
00:14:16,960 --> 00:14:19,800
Speaker 7: wants to do the next dollar. As far as strong

260
00:14:19,880 --> 00:14:22,520
Speaker 7: apprecisions concerned. Let me tell you, nobody is ready because

261
00:14:22,560 --> 00:14:25,760
Speaker 7: everybody is suffering from a worse economic environment.

262
00:14:25,760 --> 00:14:27,600
Speaker 8: But most likely is the euro. Indeed.

263
00:14:28,760 --> 00:14:31,880
Speaker 5: Yeah, And in terms of the tension between US and

264
00:14:31,960 --> 00:14:34,000
Speaker 5: China on the trade front, at the moment, we have

265
00:14:34,080 --> 00:14:37,560
Speaker 5: seen China not really willing to come to the negotiating table. Instead,

266
00:14:37,560 --> 00:14:41,960
Speaker 5: it's added another seven rare earths to a texport control list.

267
00:14:42,480 --> 00:14:46,440
Speaker 5: Who do you see blinking first in this dispute? Which

268
00:14:46,480 --> 00:14:49,200
Speaker 5: economy is the best place to withstand the most pain?

269
00:14:49,920 --> 00:14:51,760
Speaker 8: Well, the US is blinking first.

270
00:14:51,800 --> 00:14:54,000
Speaker 7: You just have to listen to what Trump has to

271
00:14:54,040 --> 00:14:57,080
Speaker 7: say about this. He's ready to negotiate, and basically, and

272
00:14:57,120 --> 00:15:00,360
Speaker 7: I think he went too far. He basically said that,

273
00:15:00,400 --> 00:15:03,200
Speaker 7: you know, he doesn't want to go further on retaliation

274
00:15:03,360 --> 00:15:06,440
Speaker 7: with higher and higher times. Parents have already closed the market,

275
00:15:06,520 --> 00:15:08,560
Speaker 7: so it doesn't really matter whether you go further. But

276
00:15:08,840 --> 00:15:12,960
Speaker 7: that is a signal of willingness to negotiate. And it's

277
00:15:13,080 --> 00:15:16,120
Speaker 7: not so much because China will not suffer. I think

278
00:15:16,280 --> 00:15:19,440
Speaker 7: China will suffer from the trade war, but it's mostly

279
00:15:19,480 --> 00:15:27,720
Speaker 7: about the resilience about that suffering. I think Chinese Chinese citizens,

280
00:15:27,760 --> 00:15:32,160
Speaker 7: if you want to households, but even corporations, let's focus

281
00:15:32,200 --> 00:15:32,800
Speaker 7: on households.

282
00:15:32,840 --> 00:15:36,480
Speaker 8: They're ready for this. They've been they've been prepared.

283
00:15:36,440 --> 00:15:39,680
Speaker 7: That this has to happen, that they need to withstand

284
00:15:39,680 --> 00:15:42,720
Speaker 7: the shock. Americans have not been prepared because there have

285
00:15:42,760 --> 00:15:45,920
Speaker 7: been Basically, the Trump administration is telling them that it's

286
00:15:45,960 --> 00:15:48,240
Speaker 7: going to be wonderful. So so you know that that

287
00:15:48,360 --> 00:15:51,040
Speaker 7: is why the use is going to blink first.

288
00:15:51,040 --> 00:15:54,680
Speaker 5: In my view, do you feel that we might see

289
00:15:54,720 --> 00:15:58,320
Speaker 5: some more stimulus coming from China, particularly support for consumers

290
00:15:58,320 --> 00:15:59,040
Speaker 5: and households.

291
00:15:59,520 --> 00:16:03,600
Speaker 8: Well, I think China knows that.

292
00:16:05,360 --> 00:16:07,480
Speaker 7: Of course, I has some bullets, but it doesn't have

293
00:16:07,640 --> 00:16:09,640
Speaker 7: all of the bullets that it used to have.

294
00:16:09,840 --> 00:16:12,440
Speaker 8: Many reasons. We all know that you know, too much dead.

295
00:16:13,080 --> 00:16:16,880
Speaker 7: But even on the on the Montrepolitan side, which is

296
00:16:16,880 --> 00:16:20,520
Speaker 7: what we're going to see today with the long primary

297
00:16:21,400 --> 00:16:25,000
Speaker 7: long prime rate, is that if they cut very quickly,

298
00:16:25,360 --> 00:16:28,800
Speaker 7: the deprecision of the R and B will be faster.

299
00:16:29,000 --> 00:16:31,440
Speaker 7: And I think that's not a very good negotiating tool

300
00:16:31,480 --> 00:16:35,000
Speaker 7: that they can't have, that they let the currency go.

301
00:16:35,240 --> 00:16:38,880
Speaker 7: And also it could prompt capital outflows. Not now, because

302
00:16:38,880 --> 00:16:41,120
Speaker 7: you know, the US is not attractive in terms of

303
00:16:41,240 --> 00:16:43,880
Speaker 7: stock market and so on, but it could happen all

304
00:16:43,920 --> 00:16:47,080
Speaker 7: of a sudden if data, you know, gets worse for China.

305
00:16:47,520 --> 00:16:49,960
Speaker 7: So I think they need to be careful with the bullets.

306
00:16:50,000 --> 00:16:53,520
Speaker 7: They need to move them slowly and steadily. And I

307
00:16:54,000 --> 00:16:57,080
Speaker 7: don't know whether today they will they will show that

308
00:16:57,200 --> 00:16:59,680
Speaker 7: maybe maybe they're in a position of strength so far

309
00:16:59,720 --> 00:17:02,880
Speaker 7: because they had quite good data for the first codor

310
00:17:02,920 --> 00:17:05,000
Speaker 7: GDP and people.

311
00:17:04,760 --> 00:17:07,720
Speaker 8: Are looking at Trump like you're blinking. You're blinking, so

312
00:17:07,800 --> 00:17:08,040
Speaker 8: you know.

313
00:17:08,040 --> 00:17:10,199
Speaker 7: Maybe the comfany is still there and they don't need

314
00:17:10,240 --> 00:17:12,720
Speaker 7: to cut now, they may expare it for later.

315
00:17:13,320 --> 00:17:16,040
Speaker 5: Well, we do have a lot of pmis coming out

316
00:17:16,040 --> 00:17:19,520
Speaker 5: this week which should make interesting reading Australia, Japan, India

317
00:17:19,560 --> 00:17:22,200
Speaker 5: among them, but also the US as well. And if

318
00:17:22,200 --> 00:17:24,040
Speaker 5: we take a look at this chart, I'll describe it

319
00:17:24,040 --> 00:17:26,560
Speaker 5: to you on the Bloomberg terminal. It's a look at

320
00:17:26,600 --> 00:17:28,720
Speaker 5: the last set of pmis that we had out of

321
00:17:28,760 --> 00:17:32,479
Speaker 5: the US. It shows a big lift to these services outlook,

322
00:17:32,520 --> 00:17:36,760
Speaker 5: but manufacturing definitely seeing signs of pessimism here. Do you

323
00:17:36,800 --> 00:17:38,480
Speaker 5: anticipate that there's more of this to come?

324
00:17:39,440 --> 00:17:44,639
Speaker 7: Surely because those manufacturers now are confronted with humongous import tariffs,

325
00:17:44,640 --> 00:17:47,159
Speaker 7: at least from China, but they also have you know,

326
00:17:47,600 --> 00:17:53,040
Speaker 7: still central tarists, auto tariffs, still an aluminium which is

327
00:17:53,080 --> 00:17:59,560
Speaker 7: an important intermediate good ten percent, you know, regular tariffs.

328
00:17:59,600 --> 00:18:02,840
Speaker 7: So all of this is additional costs for manufacturer. So yes,

329
00:18:03,119 --> 00:18:06,640
Speaker 7: I think that's going to happen. It's already quite impressive

330
00:18:06,680 --> 00:18:09,639
Speaker 7: that the service sector is still doing well in the

331
00:18:09,720 --> 00:18:13,120
Speaker 7: US in at least pmis.

332
00:18:12,600 --> 00:18:16,159
Speaker 5: All right, I got Sia Herrero, Chief Asia Pacific Economists

333
00:18:16,200 --> 00:18:18,600
Speaker 5: Athna Texas. Thanks, as always for joining us with your

334
00:18:18,600 --> 00:18:19,080
Speaker 5: own sights.

335
00:18:21,040 --> 00:18:24,400
Speaker 2: Thanks for listening to today's episode of the Bloomberg Daybreak

336
00:18:24,560 --> 00:18:27,960
Speaker 2: Asia Edition podcast. Each weekday, we look at the story

337
00:18:28,000 --> 00:18:32,359
Speaker 2: shaping markets, finance, and geopolitics in the Asia Pacific. You

338
00:18:32,400 --> 00:18:36,480
Speaker 2: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,

339
00:18:36,600 --> 00:18:39,639
Speaker 2: or anywhere else you listen. Join us again tomorrow for

340
00:18:39,760 --> 00:18:43,240
Speaker 2: insight on the market moves from Hong Kong to Singapore

341
00:18:43,640 --> 00:18:47,440
Speaker 2: and Australia. I'm Doug Prisoner and this is Bloomberg