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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Welcome to the Daybreak

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Speaker 1: Asia podcast. I'm Doug Chrisner. Tariffs and other policies from

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Speaker 1: the Trump administration do remain a major risk for markets.

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Speaker 1: It was on Friday we had the S and P

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Speaker 1: falling more than one percent intra day. That's when President

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Speaker 1: Trump accused Beijing of violating an agreement with the US

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Speaker 1: to ease tariffs. Then later in the day the market

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Speaker 1: was able to recover. And that came after Trump said

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Speaker 1: he's expecting to speak with President Chi over the weekend.

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Speaker 1: The White House said that call could happen this week.

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Speaker 1: Here is Kevin Hassett. He is the director of the

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Speaker 1: National Economic Council, speaking on ABC's This Week.

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Speaker 2: We expect it's going to have a wonderful conversation about

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Speaker 2: the trade negotiations this week with President she That's our expectation,

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Speaker 2: But the bottomlight is that we've got to be ready

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Speaker 2: in case things don't happen the way we want.

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Speaker 1: That's Kevin Hassett. He is the director of the White

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Speaker 1: House National Economic Council. So let's take a closer look

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Speaker 1: at what tariffs mean for the economy. I'm joined now

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Speaker 1: by Carol Schleife. She's on the line from Minneapolis. Carol

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Speaker 1: is the chief market strategist at BEMO Private Wealth. Carol,

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Speaker 1: it's always a pleasure. It's been too long since we

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Speaker 1: last spoke. I'm glad you could join us. Thank you

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Speaker 1: so much. I don't know how anyone these days can

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Speaker 1: go about predicting the impact of tariff policy, especially the FED,

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Speaker 1: But I would like to begin with the impact on

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Speaker 1: the consumer. And I'm wondering, from your point of view,

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Speaker 1: whether the tariff story has been the primary driver of

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Speaker 1: this weakening that we have seen in consumer sentiment.

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Speaker 3: You know, it's one factor in sentiment, and it's always

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Speaker 3: important with the caveat or when you're talking about either

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Speaker 3: consumer sentiment, business sentiment, market sentiment, investor sentiment is that

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Speaker 3: the consumers can tell pollsters they're krabby and then go

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Speaker 3: out and purchase anyway. So it's consumers actually, in the

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Speaker 3: long run are much more tied to job prospects and

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Speaker 3: employment prospects, whether or not they have a job and

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Speaker 3: feel like they can continue to have a job.

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Speaker 4: If they do, they'll spend.

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Speaker 3: But it is overurking, particularly in that very sensitive top

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Speaker 3: tier consumer who are responsible for so much of the

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Speaker 3: aggregate GDP, and they're tied as well to how they're

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Speaker 3: feeling about their portfolios. And fortunately or unfortunately, markets can

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Speaker 3: react very quickly to changing tariff news. Companies can't. And

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Speaker 3: so the tricky thing for us in the wealth management

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Speaker 3: spaces to watch does consumer sentiment translate into what they

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Speaker 3: actually do on the one hand, and do fundamentals does

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Speaker 3: the fundamental stasis, if you will, that business is put

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Speaker 3: in by all the uncertainty translate into economic changes And

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Speaker 3: so far consumers are spending and the economy's in pretty

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Speaker 3: reasonable shape. So so far, so good, But it's a

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Speaker 3: very fragile relationship.

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Speaker 1: So we're now at the end of the earning season

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Speaker 1: and I'm sure you've been listening to many calls and

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Speaker 1: getting the guidance. Much of it reflects the fact, yes,

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Speaker 1: that these tariffs are in place and higher prices are

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Speaker 1: clearly a part of the equation right now. You can

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Speaker 1: debate whether or not these companies are in a position

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Speaker 1: to pass on those higher cost to consumers. But to

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Speaker 1: what extent are you concerned now about margin pressure?

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Speaker 3: Yeah, there's definitely that potential. It's important to remember that

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Speaker 3: the starting ground for that margin pressure is margins that

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Speaker 3: by and large inaggregator at all time highs. It was

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Speaker 3: a very instructive earning season, and then companies did We're

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Speaker 3: trying to threat a very fine needle in trying to

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Speaker 3: outline what the impact or the potential impact of tariffs

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Speaker 3: were without waving too big of a red flag because

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Speaker 3: that's obviously a sense of politically sensitive issue. But I

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Speaker 3: think as investors we got a lot of good read

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Speaker 3: and particularly in the most recent batch of retail earnings,

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Speaker 3: where a lot of the retail were outlining what their

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Speaker 3: impact was, what steps they were taking where they could

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Speaker 3: to try to shift supply chains, and they also by

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Speaker 3: and large illustrated a lot of sensitivity because they understand

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Speaker 3: this is not like in the pandemic when we had

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Speaker 3: inflation for the first time and they could just simply

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Speaker 3: pass it all through. This time around, consumers are highly

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Speaker 3: tired of price increases and it's going to be very selective,

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Speaker 3: if at all, and you've seen that creep through in

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Speaker 3: the economic numbers, where on the producer side is where

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Speaker 3: some of that's absorbed. But hopefully company by company they

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Speaker 3: can find some offsets for some of that. In terms

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Speaker 3: of deployment of artificial intelligence, deployment of technology, slow walking hires.

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Speaker 3: You know, there's a lot of things that companies are

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Speaker 3: trying to do behind the scenes to minimize that margin

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Speaker 3: pressure because they understand that they're going to have to

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Speaker 3: eat more of this than they did last time.

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Speaker 4: Around.

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Speaker 1: One of the conversations on the street, and I know

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Speaker 1: that you're well aware of this is the gap between

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Speaker 1: what the hard data is indicating and what some of

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Speaker 1: the softer, more sentiment driven data is kind of indicating.

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Speaker 1: And I'm wondering how you make sense of that.

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Speaker 3: Well, I think a piece of it is is, you know,

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Speaker 3: because even share Paul and several of the different press

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Speaker 3: conferences from recent FOMC meetings will tell you that sentiment

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Speaker 3: data has a very loose correlation typically through to the

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Speaker 3: hard data. And we saw some hints last week that

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Speaker 3: you might have seen that start to shift in both

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Speaker 3: the Yumish survey and the conference board, where you saw

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Speaker 3: some snap back and consumer confidence that came after the

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Speaker 3: thawing in relationship or in the thawing in the trade

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Speaker 3: war between the US and China. And I think the

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Speaker 3: hard part is in the last two weeks, in particularly

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Speaker 3: We've had so many flip flops on tariffs that it

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Speaker 3: feels like consumers and definitely investors want to move on

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Speaker 3: to some other topic, So the sooner we can get

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Speaker 3: the narrative focused on growth in the economy or the

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Speaker 3: more pro business friendly pieces of the administration's tax policy,

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Speaker 3: as long as they keep it to a reasonable price

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Speaker 3: tag and don't upset the bond markets, which is a

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Speaker 3: whole other issue. But right now we're watching it very

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Speaker 3: closely to see if it translates through to economic activity.

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Speaker 3: It hasn't translated through yet, but we're watching it very,

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Speaker 3: very carefully.

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Speaker 1: I'm glad you mentioned the bond market will get there

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Speaker 1: in a moment, but we were talking about margin pressure

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Speaker 1: companies trying to contain cost. We get the employment data

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Speaker 1: this week, which is significant, I guess, probably the most

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Speaker 1: important piece on a monthly basis what are your expectations here?

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Speaker 1: What are we going to learn about the labor market

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Speaker 1: that we don't already know?

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Speaker 3: Well, I think the one thing I want to see

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Speaker 3: is I've heard some inclin from some hinting from economists

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Speaker 3: that for the first time since well before the pandemic,

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Speaker 3: we may get to a point where job openings are

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Speaker 3: below job seekers because as you recall some of the

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Speaker 3: tightness we've had in the labor market off and on

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Speaker 3: for the last five years, it's been we were at

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Speaker 3: a point at one point where there are two openings

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Speaker 3: for every seeker, and so a better balanced job market

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Speaker 3: means people have it's tougher asking for raises. They're more

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Speaker 3: likely to hunker down and stay put and not change jobs,

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Speaker 3: which is more helpful for employers. And I think watching

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Speaker 3: employers too, because selectively you're seeing some cutbacks, although they're

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Speaker 3: being very quiet and not not necessarily announcing them with

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Speaker 3: big media headlines because they don't want to overly concern

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Speaker 3: the workers they do have because of the understanding how

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Speaker 3: hard it was to get those workers in place. But

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Speaker 3: you know, some of the different manufacturing seminars and gatherings

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Speaker 3: I've been going to since the first of the year,

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Speaker 3: that has been a theme all years at the there

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Speaker 3: that employers are able to hang on to employees, and

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Speaker 3: so there's the job market has been less of an issue.

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Speaker 4: But we'll definitely want to watch.

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Speaker 3: If the wages are going up or if they're staying

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Speaker 3: in line, because they've been moderating quite a bit in

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Speaker 3: the last couple of quarters.

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Speaker 1: So the Senate returns to Washington this week and lawmakers

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Speaker 1: are going to be taking up the spending build it

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Speaker 1: recently passed the House. You know well that during that

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Speaker 1: process there were some ructions in the bond market. Now,

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Speaker 1: we heard recently from Jamie Dimond, the head of JP

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Speaker 1: Morgan Chase, and he was saying that a crack in

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Speaker 1: the bond market is going to happen, and I'm wondering

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Speaker 1: what he knows that maybe we need to know.

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Speaker 4: I'm not certain he knows anything.

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Speaker 3: I mean, keep in mind the heads of banks for

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Speaker 3: called for serious recessions a couple of years ago.

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Speaker 4: That never emerged either.

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Speaker 3: But I do think and I wrote about this a

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Speaker 3: couple of weeks ago because I wrote up the issue

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Speaker 3: coming out of the House, and I noted then that

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Speaker 3: you'd had the twenty year bond auction had been very squishy,

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Speaker 3: and that it was I don't want to say cute

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Speaker 3: or amusing, but it's interesting that Congress thinks they have

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Speaker 3: a big vote in this, because I think ultimately the

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Speaker 3: bond market's going to have the biggest vote in what

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Speaker 3: the size of the potential deficit is because the thing

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Speaker 3: that will be interesting is one of the things I'll

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Speaker 3: be talking to our field about this week too. To

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Speaker 3: watch is that now that the Senate's back this week,

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Speaker 3: they've on paper allowed themselves a bigger potential deficit than

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Speaker 3: the House had, and that the market.

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Speaker 4: Won't The bond market will not take kindly to that.

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Speaker 3: And we saw what happened last week in Japan with

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Speaker 3: the longer yields. They're having very poor auctions. Our bond

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Speaker 3: markets were little reassured this week because we had shorter

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Speaker 3: auctions and they all went off well and yields drifted

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Speaker 3: back down a little bit, but they're still with the

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Speaker 3: tenuere at four and a half percent and the thirty

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Speaker 3: year having flirted with five. Investors will be watching that

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Speaker 3: very carefully, and I sincerely hope the Senate does too.

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Speaker 1: Are you wary of the bond market right now? Maybe

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Speaker 1: you would be disinclined to take a position even if

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Speaker 1: it were let's say at the shore to medium part

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Speaker 1: of the curve.

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Speaker 3: Now, I think, I think that bond market will help

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Speaker 3: keep them on line. And I think the fact that

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Speaker 3: Secretary Vescent is so plugged in, and I mean because

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Speaker 3: he started coaching President Trump very early on, even before

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Speaker 3: he was had secured Senate approval, he was getting President

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Speaker 3: Trump to focus on that tenure.

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Speaker 4: In the yields there.

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Speaker 3: So I would assume that if you start to see

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Speaker 3: serious things come out of the bond market that you're

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Speaker 3: going to you're going to get Congress to toe the

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Speaker 3: line on that.

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Speaker 4: So I'm less concerned there.

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Speaker 3: And I think you know our estimate of fear value

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Speaker 3: on the ten years four and a quarter, four and

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Speaker 3: three quarter in the near term, So you're right in

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Speaker 3: the middle of that range right now. And we've been

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Speaker 3: short recommending staying shorter on the curve for a very

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Speaker 3: long time. But I wouldn't mind stepping out a little

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Speaker 3: bit because we are not in the camp where we

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Speaker 3: think yields are going to blow out marketly to the

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Speaker 3: top side.

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Speaker 1: Okay, we'll leave it there. Carol, always a pleasure. Thank

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Speaker 1: you so much. Thank you for joining us. Carol schlive

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Speaker 1: from Minneapolis. She is the chief market strategist at Demo

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Speaker 1: Private Wealth. Joining us here on the Daybreak Asia podcast.

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Speaker 1: Welcome back to the Daybreak Asia Podcast. I'm Doug Chrisner.

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Speaker 1: Recently US Commerce Secretary Howard Lutnik said a new US

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Speaker 1: visa program backed by President Trump was nearing launch. Lutnik

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Speaker 1: told Axios that a government website for the gold Card

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Speaker 1: visa would be live within days. Well, that was more

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Speaker 1: than a week ago, and so far it hasn't. The

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Speaker 1: five million dollar Trump Gold Card visa would give wealthy

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Speaker 1: investors US residency and an expedited path to citizenship. Well,

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Speaker 1: Forbes magazine said it's still just a concept of a

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Speaker 1: marketing plan without nearly enough potential buyers. But that's not

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Speaker 1: to say golden visa programs aren't working. In New Zealand,

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Speaker 1: for example, the country has streamlined its program and it's

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Speaker 1: been able to attract more wealthy investors. For a closer

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Speaker 1: look at golden visas, I'm joined now by Stuart Nash.

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Speaker 1: He is former Minister of Economic Development in New Zealand.

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Speaker 1: He's also a co founder of Nash Kelly Global. Stuart,

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Speaker 1: thank you so much for making time to chat with me.

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Speaker 1: Why do you think there is this interest in golden

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Speaker 1: visa programs these days?

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Speaker 5: Well, certainly I can speak about New Zealand. Is there's

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Speaker 5: a lot of global uncertainty at the moment. You've got

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Speaker 5: obviously a war going on, in Europe, you've got the

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Speaker 5: tinder box which is the Middle East. You've got a

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Speaker 5: change in the US administration, which again in itself was

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Speaker 5: causing a lot of uncertainty. And in a country like

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Speaker 5: New Zealand, we're sort of seen as an oasis at

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Speaker 5: the bottom of the world where by and large the

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Speaker 5: ultra high networth they tend to seek out tax havens

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Speaker 5: for their wealth. But at the moment there's a number

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Speaker 5: who were seeking out safe havens as opposed to tax havens.

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Speaker 1: You also have a background in law enforcement, so I'm

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Speaker 1: going to ask you about the vetting process in the

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Speaker 1: situation like this. Described to me what it looks like.

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Speaker 5: Yeah, well, I was the Minister of Police and what

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Speaker 5: we're very clear about with regard to our Golden Visa

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Speaker 5: is that it has to have integrity. So there is

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Speaker 5: a process you've got to go through. You've got to invest.

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Speaker 5: There are two schemes. One of them is five million

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Speaker 5: New Zealand, which is about two point eight million US dollars,

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Speaker 5: and you've got to prove that the money was through

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Speaker 5: legitimate means, and that's a reasonably robust process. And there's

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Speaker 5: another scheme where you can invest ten million dollars again,

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Speaker 5: that's about just under six million US. Again, you've got

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Speaker 5: to prove the money was was going through legitimate processes.

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Speaker 5: You've also got to go through health checks and your

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Speaker 5: stock standard checks to prove that you are a suitable person.

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Speaker 5: So you know, we don't want rogues and vagabonds into

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Speaker 5: the country. We want people who are legitimate investors, who

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Speaker 5: play into the New Zealand brand and who bring not

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Speaker 5: only their wealth, but for me, one of the really

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Speaker 5: important things is they bring their experience, their competencies, their capabilities,

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Speaker 5: their networks and their connections.

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Speaker 1: What about the requirement to speak English.

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Speaker 5: That was in the old visa. The visa has now

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Speaker 5: changed and there is now no English language requirement. The

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Speaker 5: other thing about New Zealand's Golden Visa as well, and

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Speaker 5: this is important for a number of our clients at

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Speaker 5: Nashcally Global because as mentioned we bring in the ultra

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Speaker 5: high networth into New Zealand through Nashale Globe, is that

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Speaker 5: once you have the visa, you do not have to

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Speaker 5: reapply for it, and that is reasonably unique in terms

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Speaker 5: of Golden visas globally. So once you've got your permanent residency,

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Speaker 5: you've got it for life.

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Speaker 1: So are there requirements or at least guidelines in terms

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Speaker 1: of the people who would apply for these visas the

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Speaker 1: expectation that they would put money to work in the

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Speaker 1: economy to invest. Is there a kind of a structure

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Speaker 1: to that part of the process.

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Speaker 5: Yeah, there is. So there's two categories. There's the growth

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Speaker 5: category that's the five million kiwi and then there's the

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Speaker 5: balance category and that's ten million kiwi. As mentioned about

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Speaker 5: two point eight million UIs about just under six million

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Speaker 5: US and the others category. And the businesses that people

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Speaker 5: can invest in they must be vetted by our New

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Speaker 5: Zealand Train Enterprise, which is like an Economic development of

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Speaker 5: the government. So there are a number of companies that

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Speaker 5: have been vetted by the government to prove that they

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Speaker 5: are of majority of New Zealand citizenship. People can also

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Speaker 5: put their money into bonds or manage funds, and again

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Speaker 5: the managed funds have to be approved by the Ministry

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Speaker 5: for Economic Development. Now there are two reasons for this.

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Speaker 5: First and foremost, we need to make sure that when

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Speaker 5: people are investing in New Zealand companies that the companies

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Speaker 5: themselves have integrity. You know, we don't want investors coming

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Speaker 5: over here from the other side of the world and

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Speaker 5: feelings if they've been ripped off it all. And it's

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Speaker 5: one of the services that we offer at Nationally Global actually.

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Speaker 5: But the other thing is that it's got to be

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Speaker 5: companies or funds that are predominantly New Zealand owned, because

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Speaker 5: you know, why would you seek money to invest in

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Speaker 5: a company or a fund in New Zealand when it's

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Speaker 5: not helping the New Zealand economy.

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Speaker 1: So Nash Kelly Global helps to facilitate this process. But

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Speaker 1: when I think of the economy in New Zealand, I

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Speaker 1: think of the rising property market, how expensive the cost

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Speaker 1: of living is, particularly on the housing front, and I'm

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Speaker 1: wondering whether or not the local community has been supportive

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Speaker 1: of this program or whether there has been a pushback.

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Speaker 5: It's a really good point, Doug. We're not dealing with

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Speaker 5: hundreds of thousands of people here. And you know, there

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Speaker 5: was a point in time when when I was in

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Speaker 5: cabinet where we put a foreign buyer ban on because

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Speaker 5: what we were seeing is literally planeloads of people coming

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Speaker 5: over and buying houses in New Zealand because we have

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Speaker 5: no capital gains tax, and so we put a stop

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Speaker 5: on that. But you know what we're now seeing is

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Speaker 5: ultrah networth people coming in and if you're spending you know,

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Speaker 5: five million kiwi or ten million kiwi, you're not competing

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Speaker 5: with first home buyers in New Zealand. You know, I say,

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Speaker 5: you're competing with the lotto winners.

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Speaker 4: Right.

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Speaker 5: So the people who are coming and they're settling here,

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Speaker 5: they are buying houses, you know, five million plus and

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Speaker 5: so buy and large the business community and the vast

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Speaker 5: majority in our communities get the fact that the people

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Speaker 5: coming over under the Golden Visas scheme are bringing actually

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Speaker 5: wealth and connections and money that will actually create economic

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Speaker 5: development and jobs. So look, there's a little bit of

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Speaker 5: pushback on the fringe that by and large the vast

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Speaker 5: majority you're very supportive of this.

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Speaker 1: That's said, does the government need to or is it

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Speaker 1: in the process of creating restrictions around this program?

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Speaker 5: Not at all. In fact, we've opened it up a

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Speaker 5: little bit more. Whilst other countries are putting restrictions. New

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Speaker 5: Zealand has taken off the English language test. We've reduced

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Speaker 5: the amount of time that you have to spend in

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Speaker 5: the country. So in the growth category you've only got

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Speaker 5: to spend three weeks over three years in order to

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Speaker 5: get your permanent residency. In the balance category, it's forty

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Speaker 5: nine days over five years. So we've reduced some of

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Speaker 5: the barriers. But we also acknowledge, as back to the

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Speaker 5: earlier point Doug, that we want people with integrity. Hence

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Speaker 5: the reason why the process you've got to go through

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Speaker 5: to be to get your visa is robust.

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Speaker 1: I'm curious as to whether or not there has been

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Speaker 1: any economic analysis as to the extent to which this

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Speaker 1: may contribute to overall growth in the economy.

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Speaker 5: Yeah, we have seen a lot. That the new visa

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Speaker 5: was only launched in the first of April, there was

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Speaker 5: quite a lot of analysis done under the old visa

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Speaker 5: scheme and it showed I can't remember the exact amount,

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Speaker 5: but it was certainly billions into the economy. One thing

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Speaker 5: we have tightened up on though I launched this visa

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Speaker 5: in twenty twenty two, what we did tighten up on

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Speaker 5: is the money has got to be invested in stay

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Speaker 5: in New Zealand as opposed to repatriating it out of

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Speaker 5: the country. So our immigration ministry will check that people

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Speaker 5: are actually investing in a way that they said they

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Speaker 5: would to ensure that the money is staying here and

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Speaker 5: helping the New Zealand economy and the number of our

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Speaker 5: companies go global. If that's what they want to.

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Speaker 1: Do, Stuart will leave it there. Thank you so much

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Speaker 1: for joining us. A great conversation with Stuart Nash of

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Speaker 1: Nash Kelley Global. He is a former Minister of Economic

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Speaker 1: Development in New Zealand. As we talk about golden visas

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Speaker 1: here on the Daybreak Asia Podcast. Thanks for listening to

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Speaker 1: today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday,

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Speaker 1: we look at the story shaping markets, finance, and geopolitics

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Speaker 1: in the Asia Pacific. You can find us on Apple, Spotify,

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Speaker 1: the Bloomberg Podcast YouTube channel, or anywhere else you listen.

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Speaker 1: Join us again tomorrow for insight on the market moves

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Speaker 1: from Hong Kong to Singapore and Australia. I'm Doug Prisner

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Speaker 1: and this is Bloomberg