1
00:00:02,520 --> 00:00:10,719
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:11,560 --> 00:00:15,040
Speaker 2: Welcome to the Daybreak Asia podcast. I'm Doug Krisner. So

3
00:00:15,160 --> 00:00:17,800
Speaker 2: a new set of US tariffs has been set and

4
00:00:17,960 --> 00:00:21,480
Speaker 2: a new trade deal deadline has been issued. In one example,

5
00:00:21,520 --> 00:00:24,680
Speaker 2: President Trump will now impose a twenty five percent tariff

6
00:00:24,880 --> 00:00:28,480
Speaker 2: on goods from both Japan and South Korea beginning August first,

7
00:00:28,920 --> 00:00:32,280
Speaker 2: and Trump also imposed thirty six percent tariffs on goods

8
00:00:32,280 --> 00:00:37,920
Speaker 2: from Thailand and Cambodia, also effective August first. Interestingly, Trump

9
00:00:37,960 --> 00:00:41,479
Speaker 2: said later the new deadline is not one hundred percent firm.

10
00:00:41,840 --> 00:00:44,760
Speaker 2: Even so, the heat on US trading partners has been

11
00:00:44,800 --> 00:00:48,479
Speaker 2: turned up, especially now that the current ninety day reprieve

12
00:00:48,520 --> 00:00:52,160
Speaker 2: from those reciprocal duties is set to expire on Wednesday.

13
00:00:52,640 --> 00:00:55,200
Speaker 2: For a closer look, I'm joined now by Ahmed Riesco.

14
00:00:55,320 --> 00:00:58,960
Speaker 2: He is the CIO at Insignio, and Ahmed joins us

15
00:00:59,000 --> 00:01:01,880
Speaker 2: from Miami. All men, thank you for making time to.

16
00:01:01,920 --> 00:01:02,400
Speaker 1: Chat with me.

17
00:01:02,960 --> 00:01:05,759
Speaker 2: So today we get a new set of US tariffs

18
00:01:06,000 --> 00:01:10,039
Speaker 2: and a new trade deal deadline. Markets reacted adversely, that's

19
00:01:10,080 --> 00:01:12,679
Speaker 2: really not a surprise. Does it create a lot more

20
00:01:12,680 --> 00:01:14,360
Speaker 2: in the way of uncertainty? In your view?

21
00:01:16,400 --> 00:01:18,399
Speaker 1: I think it does in the near term.

22
00:01:18,560 --> 00:01:23,400
Speaker 3: However, I don't think it changes the longer term narrative,

23
00:01:23,560 --> 00:01:27,399
Speaker 3: which is that you know, Trump saw and the members

24
00:01:27,440 --> 00:01:32,280
Speaker 3: of his staff saw the uncertainty the market sell off

25
00:01:32,560 --> 00:01:34,800
Speaker 3: post Liberation Day, and I don't think they want to

26
00:01:34,800 --> 00:01:37,880
Speaker 3: return to that. So I mean we sort of expected this.

27
00:01:37,880 --> 00:01:39,440
Speaker 3: This is sort of if you look at the Trump

28
00:01:39,480 --> 00:01:42,920
Speaker 3: sort of playbook, this is this is par for the course.

29
00:01:43,680 --> 00:01:45,919
Speaker 3: I think if this I think if the market really

30
00:01:45,959 --> 00:01:49,280
Speaker 3: thought that these tariffs that were announced today were going

31
00:01:49,320 --> 00:01:51,840
Speaker 3: to stick, I think the market would be down a

32
00:01:51,880 --> 00:01:55,480
Speaker 3: lot more sharply than it is today. So I think, sure,

33
00:01:55,560 --> 00:01:58,080
Speaker 3: this cause is some uncertaining the short term, but I

34
00:01:58,080 --> 00:02:00,240
Speaker 3: don't think it changes the overall narrative that you know,

35
00:02:00,320 --> 00:02:03,240
Speaker 3: deals will get done and that the effective tariff rate

36
00:02:03,320 --> 00:02:06,120
Speaker 3: in the United States will settle somewhere between ten and

37
00:02:06,160 --> 00:02:06,840
Speaker 3: fifteen percent.

38
00:02:06,960 --> 00:02:07,080
Speaker 1: Right.

39
00:02:07,120 --> 00:02:09,680
Speaker 3: It's hard to say exactly where, but if it does

40
00:02:10,800 --> 00:02:12,720
Speaker 3: along that range, I think we'll be okay. I think

41
00:02:12,760 --> 00:02:14,840
Speaker 3: the markets will be able to digest that.

42
00:02:14,760 --> 00:02:17,880
Speaker 2: We heard today from former FED Governor Kevin Walsh. His

43
00:02:18,000 --> 00:02:21,920
Speaker 2: name has been floated as a possible successor to FED Share.

44
00:02:22,080 --> 00:02:25,320
Speaker 2: J Powell and Warsh told Fox Business today that in

45
00:02:25,720 --> 00:02:29,440
Speaker 2: tariffs are not inflationary and that interest rates should be lower.

46
00:02:29,800 --> 00:02:32,480
Speaker 2: Do you believe what he's saying in terms of its

47
00:02:32,520 --> 00:02:35,000
Speaker 2: sincerity or is he lobbying for the job?

48
00:02:35,040 --> 00:02:38,240
Speaker 1: Do you think? I think it's probably a little bit

49
00:02:38,280 --> 00:02:38,760
Speaker 1: of both.

50
00:02:40,120 --> 00:02:42,400
Speaker 3: I do think that, you know, Trump is sort of

51
00:02:42,400 --> 00:02:46,040
Speaker 3: negotiating against himself here with Powell, meaning I think I

52
00:02:46,120 --> 00:02:48,720
Speaker 3: think Powell probably wants to cut at least one or

53
00:02:48,720 --> 00:02:52,240
Speaker 3: two insurance cuts, and I think, you know, but at

54
00:02:52,280 --> 00:02:55,440
Speaker 3: the same time, he wants to preserve the independence of

55
00:02:55,480 --> 00:02:57,760
Speaker 3: the FED, so he's less likely to cut because of

56
00:02:57,760 --> 00:03:00,560
Speaker 3: this political pressure that's being put on Trump. But I

57
00:03:00,600 --> 00:03:03,639
Speaker 3: do think the Fed has reasons to cut inflation has

58
00:03:03,760 --> 00:03:06,200
Speaker 3: you know, we're just simply not seeing it in the numbers.

59
00:03:06,240 --> 00:03:09,240
Speaker 3: And what's happened is that with inflation coming down, the

60
00:03:09,280 --> 00:03:12,000
Speaker 3: real FED funds rate has actually gone up quite a bit.

61
00:03:12,040 --> 00:03:15,480
Speaker 3: So monetary policy is quite restrictive right now, and given

62
00:03:15,520 --> 00:03:18,360
Speaker 3: where the labor market is in a sort of weekend state,

63
00:03:18,520 --> 00:03:20,359
Speaker 3: I think it makes sense for the FED to cut

64
00:03:20,360 --> 00:03:26,000
Speaker 3: at least two times, possibly three. Let's just hope, you know,

65
00:03:26,560 --> 00:03:28,880
Speaker 3: the politics can can sort of allow the Fed to

66
00:03:28,880 --> 00:03:29,480
Speaker 3: do its job.

67
00:03:29,680 --> 00:03:32,280
Speaker 2: So do you think that has largely been discounted by

68
00:03:32,320 --> 00:03:35,240
Speaker 2: the equity market as of now. The idea that we're

69
00:03:35,240 --> 00:03:37,720
Speaker 2: going to get that many rate cuts from the FED,

70
00:03:37,840 --> 00:03:40,480
Speaker 2: and that when they do occur, that there's not going

71
00:03:40,560 --> 00:03:42,120
Speaker 2: to be a lot in the way of juice that

72
00:03:42,200 --> 00:03:45,040
Speaker 2: those right cuts provide the equity market.

73
00:03:45,920 --> 00:03:48,360
Speaker 3: Yeah, I think if you were not to get a cut,

74
00:03:49,040 --> 00:03:52,200
Speaker 3: I think the market would react adversely to that. Right now,

75
00:03:52,240 --> 00:03:56,200
Speaker 3: the market has discounted roughly two more cuts this year,

76
00:03:56,840 --> 00:03:59,280
Speaker 3: with the first one in September and the next one

77
00:03:59,320 --> 00:04:02,200
Speaker 3: in December. Now that has oscillated a bit between two

78
00:04:02,280 --> 00:04:03,520
Speaker 3: and three cuts over the last.

79
00:04:03,400 --> 00:04:04,200
Speaker 1: Couple of weeks.

80
00:04:04,560 --> 00:04:07,320
Speaker 3: But surely if we were to get no federate cuts,

81
00:04:07,320 --> 00:04:09,960
Speaker 3: which again it's not our expectation and it's not what

82
00:04:10,040 --> 00:04:12,640
Speaker 3: we think should happen, I think the market would react

83
00:04:12,800 --> 00:04:13,600
Speaker 3: negatively to that.

84
00:04:13,840 --> 00:04:16,000
Speaker 2: So where are you finding opportunity right now in the

85
00:04:16,040 --> 00:04:16,719
Speaker 2: stock market?

86
00:04:18,320 --> 00:04:21,600
Speaker 3: Well, that's a great question. Nothing really has a lot

87
00:04:21,640 --> 00:04:25,799
Speaker 3: of conviction. I'm not in the mood to short either

88
00:04:25,880 --> 00:04:30,720
Speaker 3: equities or treasuries, and I'm certainly not in the mood

89
00:04:30,760 --> 00:04:31,440
Speaker 3: to buy the dollar.

90
00:04:31,520 --> 00:04:32,520
Speaker 1: So I'll put it that way.

91
00:04:32,520 --> 00:04:34,680
Speaker 3: I have, you know, sort of low conviction that the

92
00:04:34,680 --> 00:04:38,360
Speaker 3: equity rally will continue for the year. In fact, we

93
00:04:38,480 --> 00:04:40,640
Speaker 3: expect it to sort of end somewhere in the mid

94
00:04:40,680 --> 00:04:44,120
Speaker 3: six thousands. As long as you know our base case

95
00:04:44,160 --> 00:04:46,680
Speaker 3: of no recession and the effective teriffory between ten and

96
00:04:46,680 --> 00:04:50,560
Speaker 3: fifteen percent, we think that the equity market could continue

97
00:04:50,600 --> 00:04:53,320
Speaker 3: to grind higher. At the same time, that would see

98
00:04:53,320 --> 00:04:55,400
Speaker 3: the tenure somewhere around four and a quarter, so a

99
00:04:55,400 --> 00:04:57,800
Speaker 3: little bit lower than where it is today. But what

100
00:04:57,960 --> 00:05:00,080
Speaker 3: we do have higher conviction on is that the do

101
00:05:00,720 --> 00:05:02,680
Speaker 3: should continue to fall throughout the year.

102
00:05:03,000 --> 00:05:05,400
Speaker 2: Is there a higher probability that we're going to see

103
00:05:05,400 --> 00:05:09,960
Speaker 2: a pullback in stocks than let's say, a grind higher inequities.

104
00:05:11,480 --> 00:05:13,760
Speaker 3: Look, these things are impossible to say in a short term.

105
00:05:13,760 --> 00:05:15,560
Speaker 3: Who knows what the market's going to do from one

106
00:05:15,640 --> 00:05:18,120
Speaker 3: day to the next. I know we've had a very

107
00:05:18,160 --> 00:05:22,240
Speaker 3: strong rally here off the April eight lows, so you know,

108
00:05:22,360 --> 00:05:28,240
Speaker 3: some consolidation is you know, probably healthy and warranted. So

109
00:05:28,360 --> 00:05:30,479
Speaker 3: this could potentially be you know, if we have a

110
00:05:30,480 --> 00:05:32,839
Speaker 3: couple of weeks of uncertainty with the tariffs, this could

111
00:05:32,880 --> 00:05:36,120
Speaker 3: be the excuse that the market's looking forward to pullbacks

112
00:05:36,440 --> 00:05:39,520
Speaker 3: quite some. But the underlying trend should stay intact.

113
00:05:39,560 --> 00:05:42,800
Speaker 2: How are you viewing market opportunities offshore right now?

114
00:05:43,279 --> 00:05:46,880
Speaker 3: Well, on the offshore space, we we do find some

115
00:05:47,000 --> 00:05:50,240
Speaker 3: great opportunities. We like, you know, certain countries quite a lot.

116
00:05:50,360 --> 00:05:52,960
Speaker 3: One country that we're really looking at that we find

117
00:05:53,040 --> 00:05:57,200
Speaker 3: quite attractive is Argentina. We think the country, you know,

118
00:05:57,279 --> 00:06:01,360
Speaker 3: has been going through a generational change that's very positive

119
00:06:01,480 --> 00:06:07,080
Speaker 3: for capital markets, for investors, for private capital in general.

120
00:06:07,880 --> 00:06:10,880
Speaker 3: We had a strong rally last year, some of it

121
00:06:11,000 --> 00:06:12,800
Speaker 3: was given back at the beginning of the year. We

122
00:06:12,800 --> 00:06:15,559
Speaker 3: think this is a nice opportunity to if you missed

123
00:06:15,560 --> 00:06:19,560
Speaker 3: the original wave of that trade, to potentially go back in.

124
00:06:19,720 --> 00:06:22,840
Speaker 3: So there are some pockets of opportunities outside of the

125
00:06:22,920 --> 00:06:24,279
Speaker 3: United States, that's one of them.

126
00:06:24,480 --> 00:06:26,800
Speaker 2: Are you holding onto a fair amount of cash right now?

127
00:06:28,200 --> 00:06:30,560
Speaker 3: No, I would say we're pretty neutral at this point.

128
00:06:31,040 --> 00:06:34,880
Speaker 3: We had raised cash post Liberation Day and then with

129
00:06:34,960 --> 00:06:38,080
Speaker 3: the market sell off, I'm not going to say we

130
00:06:38,640 --> 00:06:41,760
Speaker 3: caught the bottom of it, but we have been able

131
00:06:41,800 --> 00:06:44,080
Speaker 3: to participate. We were able to deploy some of that

132
00:06:44,160 --> 00:06:48,440
Speaker 3: cash once we saw that the market had really already

133
00:06:48,480 --> 00:06:51,880
Speaker 3: priced in a good recession. Remember markets were down close

134
00:06:51,920 --> 00:06:54,560
Speaker 3: to twenty percent of the Nasdaq and some of these

135
00:06:54,600 --> 00:06:57,599
Speaker 3: other like indices. So that's already you know, that's not

136
00:06:57,680 --> 00:07:00,640
Speaker 3: too far from the median correction during a tip recession.

137
00:07:00,800 --> 00:07:03,880
Speaker 2: So the big beautiful Bill, as we know, is now law.

138
00:07:04,080 --> 00:07:06,799
Speaker 2: It adds if you listen to what the Congressional Budget

139
00:07:06,839 --> 00:07:10,160
Speaker 2: Office is estimating about three point four trillion over the

140
00:07:10,200 --> 00:07:13,040
Speaker 2: next decade. The bond market at this point doesn't seem

141
00:07:13,080 --> 00:07:15,680
Speaker 2: to be very much concerned about that fact, are you.

142
00:07:17,440 --> 00:07:21,280
Speaker 3: Well, Look, I'm concerned about the country's long term fiscal health,

143
00:07:21,600 --> 00:07:24,559
Speaker 3: and I'm concerned that there's no political will from either

144
00:07:24,640 --> 00:07:29,120
Speaker 3: party to address it. What I will say is that

145
00:07:30,080 --> 00:07:32,360
Speaker 3: it looks like the deficit once you factor in the

146
00:07:32,360 --> 00:07:34,360
Speaker 3: tariff revenue that's coming in. I think that's a key

147
00:07:34,400 --> 00:07:37,440
Speaker 3: component of this, which, by the way, tells you also

148
00:07:37,480 --> 00:07:39,800
Speaker 3: that tariffs are going to be sticky, and tariffs are

149
00:07:39,800 --> 00:07:43,000
Speaker 3: probably going to be around a lot longer than Trump

150
00:07:43,480 --> 00:07:46,080
Speaker 3: because that's revenue coming into the government right now. When

151
00:07:46,120 --> 00:07:48,800
Speaker 3: you factor in those terraffs, you're looking at a fiscal

152
00:07:48,800 --> 00:07:52,320
Speaker 3: deficit of roughly six and a half percent. Now, that's

153
00:07:52,360 --> 00:07:55,000
Speaker 3: a bad number, but we were expecting somewhere between seven

154
00:07:55,040 --> 00:07:58,120
Speaker 3: and eight percent. So this is a situation where the

155
00:07:58,160 --> 00:08:00,880
Speaker 3: news is bad, but it's not as bad as it

156
00:08:00,920 --> 00:08:02,880
Speaker 3: could have been, and I think this is why you're

157
00:08:02,920 --> 00:08:06,119
Speaker 3: seeing the bond market largely shrug this off for now.

158
00:08:06,200 --> 00:08:10,280
Speaker 2: So what are your expectations for US economic growth for

159
00:08:10,320 --> 00:08:12,480
Speaker 2: the remainder of the year. Let's say I'm talking to

160
00:08:12,480 --> 00:08:16,400
Speaker 2: you from Miami. Any indication that I have been receiving

161
00:08:16,800 --> 00:08:19,119
Speaker 2: lately about the growth in Miami is that the city

162
00:08:19,200 --> 00:08:21,800
Speaker 2: is doing very well. So talk to me about the

163
00:08:21,800 --> 00:08:25,000
Speaker 2: broader landscape. How are you seeing overall US economic growth

164
00:08:25,040 --> 00:08:25,679
Speaker 2: going forward?

165
00:08:27,000 --> 00:08:29,800
Speaker 3: Yeah, so, I mean, we're expecting US economic growth to

166
00:08:29,880 --> 00:08:32,800
Speaker 3: sort of take a bit of a downstep up, but

167
00:08:32,880 --> 00:08:35,679
Speaker 3: nothing too severe. We're expecting GDP to come in at

168
00:08:35,760 --> 00:08:38,400
Speaker 3: roughly one and a half percent. If you look at

169
00:08:38,559 --> 00:08:42,160
Speaker 3: current levels, it's looking at around one percent, So we

170
00:08:42,240 --> 00:08:44,400
Speaker 3: think the second half of the year will look better

171
00:08:44,520 --> 00:08:48,640
Speaker 3: for growth. One and a half percent sounds okay considering

172
00:08:48,880 --> 00:08:52,840
Speaker 3: what we were staring down the you know, staring down

173
00:08:52,920 --> 00:08:56,080
Speaker 3: the barrel come April eighth, But keep in mind, US

174
00:08:56,240 --> 00:08:59,079
Speaker 3: trend level growth is two percent, so it's not enough.

175
00:08:59,600 --> 00:09:01,560
Speaker 3: It's going to be one of the weaker years for

176
00:09:01,720 --> 00:09:03,560
Speaker 3: US growth that we've seen in quite some time.

177
00:09:03,679 --> 00:09:04,839
Speaker 1: So even though that.

178
00:09:04,800 --> 00:09:08,200
Speaker 3: Doesn't sound too terrible, it's not great, especially given the

179
00:09:08,240 --> 00:09:09,120
Speaker 3: debt dynamics.

180
00:09:09,200 --> 00:09:12,040
Speaker 2: So how much of that forecast is predicated on the

181
00:09:12,080 --> 00:09:14,800
Speaker 2: notion that we're going to get a total of fifty

182
00:09:14,840 --> 00:09:16,800
Speaker 2: basis points in FED easing this year.

183
00:09:17,640 --> 00:09:18,760
Speaker 1: Yeah, that's the base case.

184
00:09:18,840 --> 00:09:23,880
Speaker 3: If we don't, I think growth will be slower than that.

185
00:09:24,760 --> 00:09:28,280
Speaker 3: You're seeing a lot of weakness in housing, You're seeing

186
00:09:28,320 --> 00:09:29,920
Speaker 3: weakness in the labor market.

187
00:09:30,559 --> 00:09:31,800
Speaker 1: Again, I think if.

188
00:09:31,720 --> 00:09:35,960
Speaker 3: Not, but for the political pressure that Trump is putting

189
00:09:36,000 --> 00:09:39,040
Speaker 3: on Powell, I think you would. My guess is, obviously

190
00:09:39,080 --> 00:09:41,640
Speaker 3: this is a counterfactual. We can't run the simulation. But

191
00:09:41,920 --> 00:09:44,920
Speaker 3: my guess is that Powell would have already perhaps cut

192
00:09:44,960 --> 00:09:48,240
Speaker 3: already at least once, or at least gearing up to

193
00:09:48,280 --> 00:09:50,640
Speaker 3: cut here shortly. But I think, you know, like I said,

194
00:09:50,640 --> 00:09:53,880
Speaker 3: Trump is negotiating against himself by putting this political pressure

195
00:09:53,880 --> 00:09:54,439
Speaker 3: on Powell.

196
00:09:54,520 --> 00:09:57,880
Speaker 2: So there's a possibility, let's put the tariff story aside

197
00:09:57,920 --> 00:09:59,760
Speaker 2: for a moment, that the FED is behind the curve

198
00:10:00,160 --> 00:10:00,800
Speaker 2: of what you're saying.

199
00:10:01,559 --> 00:10:03,200
Speaker 1: I think, so, yes, yeah, all.

200
00:10:03,160 --> 00:10:05,320
Speaker 2: Right, we'll leave it there. Amed, Thank you so very much,

201
00:10:05,440 --> 00:10:09,439
Speaker 2: Amed Riesco. He is the CIO at Insignio. Joining from

202
00:10:09,520 --> 00:10:19,560
Speaker 2: Miami here on the Daybreak Asia podcast. Welcome back to

203
00:10:19,600 --> 00:10:23,040
Speaker 2: the Daybreak Asia Podcast. I'm Doug Krisner. Let's take a

204
00:10:23,080 --> 00:10:26,360
Speaker 2: closer look at the US tariff story. Earlier today, President

205
00:10:26,400 --> 00:10:30,360
Speaker 2: Trump imposed new levy rates on US trading partners beginning

206
00:10:30,440 --> 00:10:34,640
Speaker 2: August first. This would include Japan and South Korea. Interestingly,

207
00:10:34,840 --> 00:10:38,920
Speaker 2: Trump also left the door open for additional negotiations. We

208
00:10:39,040 --> 00:10:43,320
Speaker 2: got some analysis from Skyler weinand the CIO at Reagan Capital.

209
00:10:43,360 --> 00:10:47,280
Speaker 2: He joined Bloomberg TV host Heidi Stroud Watts and Avril Hong,

210
00:10:47,480 --> 00:10:50,560
Speaker 2: and Heidi asked the first question about the way in

211
00:10:50,600 --> 00:10:54,240
Speaker 2: which markets are reacting to the shift in US tariff policy.

212
00:10:54,400 --> 00:10:55,360
Speaker 1: Look at the market today.

213
00:10:56,320 --> 00:11:01,319
Speaker 4: The market's down a little, but US stock market's up

214
00:11:01,640 --> 00:11:06,319
Speaker 4: seven percent for the year. So every day that actually

215
00:11:06,360 --> 00:11:13,120
Speaker 4: goes by the volatility from that initial Liberation day receipts,

216
00:11:14,040 --> 00:11:17,160
Speaker 4: and as time goes by, it's just human nature, right,

217
00:11:17,440 --> 00:11:20,760
Speaker 4: So as time goes by, it has less and less

218
00:11:20,800 --> 00:11:23,559
Speaker 4: of an effect on the market. And so the market

219
00:11:24,120 --> 00:11:28,000
Speaker 4: today is pricing in those tariffs that we just saw

220
00:11:28,040 --> 00:11:33,760
Speaker 4: on the screen thirty to forty roughly, and any lower

221
00:11:33,800 --> 00:11:38,240
Speaker 4: tariff amount would obviously be very beneficial for the Asian

222
00:11:38,280 --> 00:11:38,880
Speaker 4: stock market.

223
00:11:41,559 --> 00:11:45,720
Speaker 5: It's got a function of how good that US rally looks.

224
00:11:45,960 --> 00:11:47,440
Speaker 2: Is also what we've said with.

225
00:11:47,440 --> 00:11:49,800
Speaker 5: The US dollar, right, if you take that out of

226
00:11:49,800 --> 00:11:52,200
Speaker 5: the equation, are they better international options?

227
00:11:54,440 --> 00:11:57,320
Speaker 4: Yeah, so you can look at Europe for sure, and

228
00:11:58,360 --> 00:12:03,600
Speaker 4: where Pe level are much lower the United States, and

229
00:12:03,880 --> 00:12:07,319
Speaker 4: interest rates have been coming down precipitously. A lot of

230
00:12:07,400 --> 00:12:10,920
Speaker 4: European countries in the Europe have been cutting, so you

231
00:12:11,080 --> 00:12:14,520
Speaker 4: have this stimulus coming in from lower.

232
00:12:14,240 --> 00:12:18,800
Speaker 1: Interest rates, you have a better value in terms of Pe.

233
00:12:19,880 --> 00:12:23,520
Speaker 4: All of those add up to potentially better opportunities in Europe.

234
00:12:23,640 --> 00:12:27,200
Speaker 4: Looking to Asia, it's a little bit more difficult, right,

235
00:12:27,520 --> 00:12:34,720
Speaker 4: you have Japanese inflation with Japanese wage deceleration. Market's not

236
00:12:34,800 --> 00:12:38,880
Speaker 4: doing great, but yeah, it's it's the decline of the

237
00:12:38,920 --> 00:12:44,760
Speaker 4: dollar has definitely been beneficial internationally. But as other countries

238
00:12:44,800 --> 00:12:48,240
Speaker 4: have been cutting interest rates and have lower interest rates,

239
00:12:48,559 --> 00:12:51,280
Speaker 4: and the US interest rates stay high, especially on the

240
00:12:51,320 --> 00:12:56,600
Speaker 4: long end, I would anticipate that that ninety seven dollars,

241
00:12:56,920 --> 00:12:59,920
Speaker 4: that ten to fifteen percent dollar decline that we've seen

242
00:13:00,480 --> 00:13:01,079
Speaker 4: to reverse.

243
00:13:03,760 --> 00:13:06,040
Speaker 5: Why though, because we've seen in the past couple of

244
00:13:06,040 --> 00:13:10,960
Speaker 5: months the greenback hasn't been benefiting from yield differentials.

245
00:13:12,880 --> 00:13:13,120
Speaker 1: Yeah.

246
00:13:14,240 --> 00:13:18,640
Speaker 4: Part of that was given Liberation Day, given the administration

247
00:13:18,840 --> 00:13:22,520
Speaker 4: saying hey, basically, your money's no good here. You had

248
00:13:23,160 --> 00:13:24,920
Speaker 4: a section I think it was eight ninety nine that

249
00:13:25,120 --> 00:13:28,280
Speaker 4: just got stripped out that was going to potentially penalize

250
00:13:28,920 --> 00:13:29,960
Speaker 4: foreign investment.

251
00:13:30,440 --> 00:13:32,600
Speaker 1: So it's just a matter of time.

252
00:13:33,200 --> 00:13:38,840
Speaker 4: Before these carry trades set back in and make US

253
00:13:38,880 --> 00:13:43,920
Speaker 4: treasuries attractive again and accelerate the value of the dollar.

254
00:13:44,360 --> 00:13:48,720
Speaker 4: So you were still dealing with the after shocks of

255
00:13:49,040 --> 00:13:53,040
Speaker 4: the administration saying hey, get out of here. That's been

256
00:13:53,080 --> 00:13:57,520
Speaker 4: receding in. You know, stock market's gone crazy. I think

257
00:13:57,920 --> 00:14:02,640
Speaker 4: interest rates potentially pulling investors back in the US treasuries

258
00:14:03,080 --> 00:14:06,000
Speaker 4: will happen. Rates me need to go a little bit

259
00:14:06,040 --> 00:14:08,520
Speaker 4: higher in order for that to happen and in order

260
00:14:08,559 --> 00:14:09,920
Speaker 4: for the dollar to strengthen again.

261
00:14:11,760 --> 00:14:14,840
Speaker 5: Yeah, it's interesting because I think you believe that the

262
00:14:14,920 --> 00:14:17,040
Speaker 5: knicks move by the Fed might actually be a hike.

263
00:14:17,840 --> 00:14:21,120
Speaker 5: What are you watching for that would inform that may

264
00:14:21,160 --> 00:14:26,200
Speaker 5: become September In terms of the aftershocks from US policy

265
00:14:26,280 --> 00:14:27,400
Speaker 5: into inflation into.

266
00:14:27,320 --> 00:14:32,720
Speaker 4: Growth, financial conditions are as easy today as they were

267
00:14:32,760 --> 00:14:37,440
Speaker 4: three years ago. Basically right when the FED started hiking

268
00:14:37,440 --> 00:14:41,640
Speaker 4: interest rates. You have the highest stock market cap and

269
00:14:41,720 --> 00:14:47,000
Speaker 4: the US in history. You have consumer balance sheets flush

270
00:14:47,080 --> 00:14:50,160
Speaker 4: with cash, US net wealth at one hundred and seventy

271
00:14:50,200 --> 00:14:54,800
Speaker 4: trillion dollars, US corporations utilizing the least amount of leverage

272
00:14:54,800 --> 00:14:58,640
Speaker 4: in history. So you add all that up and you

273
00:14:58,680 --> 00:15:02,400
Speaker 4: have a tremendous sum amount of dry powder for the

274
00:15:02,400 --> 00:15:03,560
Speaker 4: market to keep going.

275
00:15:03,800 --> 00:15:06,320
Speaker 1: Okay, look at the most recent.

276
00:15:06,080 --> 00:15:11,560
Speaker 4: Jobs report, very very bullish for continued growth, but inflation

277
00:15:11,640 --> 00:15:15,480
Speaker 4: is still relatively high. And the US government just passed

278
00:15:15,680 --> 00:15:20,000
Speaker 4: what a three trillion dollar deficit bill, totally unnecessary spending.

279
00:15:20,240 --> 00:15:23,960
Speaker 4: We're not in war currentling hoping that we're going to

280
00:15:24,040 --> 00:15:25,080
Speaker 4: grow ourselves out of it.

281
00:15:25,400 --> 00:15:28,120
Speaker 1: So all of these things add up to.

282
00:15:29,640 --> 00:15:35,240
Speaker 4: Hypersonic growth and potential inflation that the FED may have

283
00:15:35,320 --> 00:15:38,160
Speaker 4: to walk back the one hundred bases points it cuts

284
00:15:38,560 --> 00:15:40,080
Speaker 4: that they put into effect last fall.

285
00:15:42,800 --> 00:15:46,680
Speaker 5: Really interesting prospective, Skyla. Thank you so much, Skylo Wine

286
00:15:46,720 --> 00:15:49,680
Speaker 5: and a cio of Reading Capital.

287
00:15:52,400 --> 00:15:55,760
Speaker 2: Thanks for listening to today's episode of the Bloomberg Daybreak

288
00:15:55,920 --> 00:15:59,280
Speaker 2: Asia Edition podcast. Each weekday, we look at the story

289
00:15:59,360 --> 00:16:03,680
Speaker 2: shaping marks, finance and geopolitics in the Asia Pacific. You

290
00:16:03,720 --> 00:16:07,840
Speaker 2: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,

291
00:16:07,960 --> 00:16:10,960
Speaker 2: or anywhere else you listen. Join us again tomorrow for

292
00:16:11,080 --> 00:16:14,600
Speaker 2: insight on the market moves from Hong Kong to Singapore

293
00:16:15,000 --> 00:16:18,760
Speaker 2: and Australia. I'm Doug Prisner, and this is Bloomberg