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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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

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Speaker 2: and we begin with a stunning announcement earlier this evening

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Speaker 2: from President Trump. In a post on truth Social Trump

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Speaker 2: said there is a tentative ceasefire deal between Israel and

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Speaker 2: Iran beginning at midnight Washington time. Trump went on to

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Speaker 2: say an official end of the twelve day war will

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Speaker 2: be saluted by the world. However, a short while ago,

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Speaker 2: in a post on x, Iran's foreign minister Abbasarachi said

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Speaker 2: as of now, there is no agreement on any cease fire.

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Speaker 2: Arachi said that Tehran will stop its attacks if Israel

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Speaker 2: stops its air strikes by four am Tehran time. Earlier

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Speaker 2: in the day, to provide a bit of context, we

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Speaker 2: had Iran retaliating for those US air strikes over the

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Speaker 2: weekend by attacking a US air base in cutter Now

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Speaker 2: the Katari government in accepted this attack. There were no casualties.

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Speaker 2: That may have helped to diffuse a lot of concern

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Speaker 2: about an immediate disruption of oil from the Middle East. Now,

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Speaker 2: in New York trading, we had crude oil falling pretty dramatically,

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Speaker 2: we were down more than seven percent. Let's get to

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Speaker 2: Joe Matthew. He's on the line from Washington, d C.

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Speaker 2: Joe is host of the Bloomberg Balance of Power radio

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Speaker 2: and TV program. Joe, give me your perspective on what

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Speaker 2: we're learning.

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Speaker 3: Well, it's just fast and furious today. Pretty remarkable to

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Speaker 3: think about the distance of time, just mere hours between

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Speaker 3: Israel watching Iran respond to US attacks on its nuclear sites.

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Speaker 3: As you just described, Doug to e merge with a

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Speaker 3: cease fire. We were asking just a short time ago

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Speaker 3: if it's hit for tap between the US and Iran

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Speaker 3: was over. I guess we can answer that now and

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Speaker 3: in fact put at least a book in on what's

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Speaker 3: been going on between Israel and Iran for the better

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Speaker 3: part of twelve days. We need to learn a lot here.

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Speaker 3: We're working on very few headlines. As you know, the

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Speaker 3: President likes to announce things on social media and there's

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Speaker 3: typically a lot of other news behind the headline. He's

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Speaker 3: on his way to the NATO summit tomorrow. As far

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Speaker 3: as we know, he's still on track with that plan,

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Speaker 3: and this is going to be a fascinating conversation when

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Speaker 3: he joins other world leaders overseas, and I suspect we'll

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Speaker 3: use this as a platform to send a big message

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Speaker 3: after what's happened in the last forty eight hours.

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Speaker 2: I guess the weekend through all day today, and now

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Speaker 2: we are at this moment crude oil prices Joe, are

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Speaker 2: just collapsing even further. We saw WTI down quite a

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Speaker 2: bit today in New York. I think collectively a sigh

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Speaker 2: of relief and markets given the degree of tension that

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Speaker 2: there has been, it's been palpable.

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Speaker 3: That's right. President Trump, by the way, just posted as

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Speaker 3: you were speaking, trust in Trump. That's all it says

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Speaker 3: with an American flag emoji. And that is the idea

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Speaker 3: here that the White House is trying to reinforce. If

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Speaker 3: you just had faith in the Boss, you wouldn't have

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Speaker 3: been nervous here in the markets to begin with. But

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Speaker 3: there has been a narrative in the markets broadly for

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Speaker 3: stocks and commodities. That's the great existential threat that's been

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Speaker 3: hanging over our heads for decades has suddenly been eliminated.

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Speaker 3: Now that's before we were talking about a ceasefire. There

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Speaker 3: were still missiles in the air dug and stocks were

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Speaker 3: going up today oil was going down. This is not

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Speaker 3: the scenario that we ever envisioned at a time like this,

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Speaker 3: but the idea that the nuclear threat has dissipated, save

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Speaker 3: all the rest of it, and there could be further

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Speaker 3: conflict in the Middle East. But that single item was

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Speaker 3: a massive risk off moment for investors in both spaces simultaneously.

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Speaker 3: And I'm still struck by that moment today, sitting here

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Speaker 3: in our bureau in Washington, knowing that missiles were on

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Speaker 3: their way from Iran to US installations suddenly intercepted and

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Speaker 3: markets begin to rally without the President even speaking. I'm

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Speaker 3: not sure we've seen something like that before.

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Speaker 2: Iran's foreign minister was in Russia over the weekend. I

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Speaker 2: think there may have been some conversations happening early on Monday.

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Speaker 2: We know that Russia was pretty critical of the US

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Speaker 2: move on those nuclear sites, and at the same time, Beijing

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Speaker 2: seemed to be very, very disapproving. We know the relationship

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Speaker 2: on the oil side between Tehran and Beijing. The Chinese

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Speaker 2: are very very dependent on crude oil coming out of Iran,

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Speaker 2: and I'm wondering how those two countries, Russia and China,

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Speaker 2: may have put a little bit of pressure on the

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Speaker 2: Iranian regime to try to come to a resolution.

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Speaker 3: Well, that could be, and that's a great question to

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Speaker 3: ask in a narrative that we're going to be following

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Speaker 3: here or pursuing at Bloomberg. This could all take an

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Speaker 3: interesting turn as well tomorrow when the President gets to

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Speaker 3: the NATO summit, when, of course Ukraine was supposed to

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Speaker 3: be on the menu here. We didn't think we'd be

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Speaker 3: talking about a ceasefire, never mind the US striking Iran,

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Speaker 3: but knowing of course that Russia is already deeply involved

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Speaker 3: in its war against Ukraine. To watch this unfold in

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Speaker 3: the Middle East, it's a very dangerous moment and a

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Speaker 3: curious one as President Trump demands more spending from our

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Speaker 3: European allies in NATO, and I suspect that he's going

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Speaker 3: to speak to all of these if there's a news

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Speaker 3: conference where he's taking questions from reporters, we could advance

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Speaker 3: all of these storylines with a single visit to that summit.

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Speaker 2: Well, you mentioned the fact that the President is on

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Speaker 2: his way to the Netherlands for the NATO sumbody. How

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Speaker 2: do you think this development is going to change the

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Speaker 2: conversation there?

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Speaker 3: It's a great question. I suspect that he's going to

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Speaker 3: be asked a lot about this instead of Ukraine. And

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Speaker 3: if your President Zelenski, that's probably not a winning formula

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Speaker 3: for you this week. The fact of the matter is

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Speaker 3: Vladimir Putin continues to bomb civilians, striking We've seen horrifying

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Speaker 3: videos drones striking apartment buildings, and this is something that

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Speaker 3: may not get the attention that it would have otherwise.

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Speaker 3: The President's going to be there coming off of what

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Speaker 3: he sees as a massive victory though, and he's going

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Speaker 3: to claim victory for European nations that increase spending to

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Speaker 3: five percent of GDP. They're going to be lined up

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Speaker 3: to get a handshake and a photo opportunity with him

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Speaker 3: about that. Even though he doesn't have a lot of

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Speaker 3: nice things to say about our European allies. He made

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Speaker 3: this week. This whole summit was kind of orchestrated for

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Speaker 3: him to celebrate the push for our NATO allies to

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Speaker 3: spend more. He's gonna have a lot more to talk

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Speaker 3: about now when it comes to Iran, and he's going

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Speaker 3: to project himself Doug as a peacemaker when he goes

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Speaker 3: to this military alliance and in a summit of world leaders,

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Speaker 3: a peacemaker who is reportedly interested in winning the Nobel

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Speaker 3: Peace Prize, which is something that Pakistan suggested might happen today.

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Speaker 2: Joe, thanks for helping us break this all down. He

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Speaker 2: is Joe Matthew, co host of Balance of Power on

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Speaker 2: Bloomberg Radio and TV. For more on the still evolving

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Speaker 2: details of this cease fire, we heard from our breaking

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Speaker 2: news editor in Hong Kong, Jill Disis. She spoke with

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Speaker 2: Bloomberg Yvon Men and David Inglace.

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Speaker 4: You know, the market's been kind of a whiplash really,

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Speaker 4: but at least pricing is some sort of major de

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Speaker 4: escalation between the US and Iran, And then we have

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Speaker 4: these comments from the Foreign minister this morning.

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Speaker 1: How do we kind of square all these together?

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Speaker 4: Yes, certainly, Yvon, So, I think there's a couple of

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Speaker 4: really key things to sort of pay attention to you here.

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Speaker 4: First of all, when you're looking at those comments out

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Speaker 4: of Iran, I think the really key line there is

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Speaker 4: that idea that they're saying, you know, we'll hold firef

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Speaker 4: is hold fire essentially, right, So I mean again, you know,

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Speaker 4: we're still kind of leading on the presumption that you know,

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Speaker 4: it's Donald Trump that came out and he's the one

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Speaker 4: that talked about announcing the ceasefire. I think, as with

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Speaker 4: everything Donald Trump, you have to kind of cut through

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Speaker 4: the bluster and try to navigate exactly what that means.

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Speaker 4: To me, the really key question here is what Bibi

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Speaker 4: Dent Yahoo is actually thinking, what that official comment from

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Speaker 4: Israel is going to be. To me, that's the big

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Speaker 4: key player that we're still waiting for that official comment from.

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Speaker 4: But all that being said, we're still about three hours

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Speaker 4: away from when Trump has said the ceasefire is actually

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Speaker 4: supposed to take place. Obviously, we've been seeing all morning

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Speaker 4: headlines flying around about continued military action happening that you know,

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Speaker 4: you're seeing, you know, Israel continue to conduct some strikes.

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Speaker 4: I think that that just kind of shows you this

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Speaker 4: is still a bit of an uncertain situation. But to me,

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Speaker 4: I mean when you look at the retaliation that Aroan

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Speaker 4: ultimately took against those US strikes from over the weekend,

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Speaker 4: I mean, targeting a US command base in Qatar, heavily telegraphed,

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Speaker 4: basically telling everybody ahead of time so that they could evacuate.

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Speaker 4: That's not the kind of massive escalation, you know that

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Speaker 4: you'd expect that's really more of a symbolic move here.

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Speaker 4: So it does seem like, you know, ceasefire maybe on

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Speaker 4: the table, but we're still waiting for some clarity there.

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Speaker 4: And again I really think we need to hear from

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Speaker 4: Israel about what exactly is happening over the next couple

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Speaker 4: of hours.

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Speaker 5: Right, And you know, Jill, just to ask you as well,

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Speaker 5: and you know, is it simply a matter of looking

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Speaker 5: at that you know, the clock quite literally because the

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Speaker 5: you know, the the time stamp that the US President

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Speaker 5: had attached to that announcement is still in a couple

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Speaker 5: of hours. So in the meantime to your point, right,

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Speaker 5: we've seen explosions in parts of Iran, we've seen deflecting.

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Speaker 5: Of course, they've said Iran has deflected the most intense

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Speaker 5: strike so far since June thirteen. Do markets look at

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Speaker 5: what's happening or what will potentially will happen these next

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Speaker 5: few hours and just largely try and overlook what's going

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Speaker 5: on here because there is that there is that deadline

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Speaker 5: at the end of this, at the end of these

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Speaker 5: these next.

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Speaker 4: Few hours or so, I mean potentially David, But again

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Speaker 4: I think this really just comes down to waiting to

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Speaker 4: hear more from what Iran and Israel are actually saying.

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Speaker 4: I mean, as of right now, obviously we've got these

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Speaker 4: latest comments from Iran. Again, I do think that while

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Speaker 4: you know, there is that line about no agreement being read,

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Speaker 4: to me, the much more critical piece of that is

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Speaker 4: just saying that, you know, it sort of depends on

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Speaker 4: whether you know Israel you know, sort of halts its actions.

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Speaker 4: So to me, I'm looking at this and thinking, you know,

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Speaker 4: like we do have this this Trump deadline. I mean,

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Speaker 4: it sounds like Trump talked to net and Yahoo. He

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Speaker 4: certainly obviously is the US is a key player and

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Speaker 4: what's happening here, But again we're really waiting to hear

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Speaker 4: what Israel ultimately says. And so I think what this

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Speaker 4: is showing you is it kind of you know, it's

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Speaker 4: you know, this is there's an element of you know,

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Speaker 4: sort of fog of war here, where with a lot

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Speaker 4: of these types of action, there's a lot of different

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Speaker 4: players involved. There's a lot of different pieces on the

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Speaker 4: table that you're kind of you know, dealing with in

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Speaker 4: these really really sensitive situations, a lot of you know,

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Speaker 4: actions that have already happened, some of which have been

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Speaker 4: you know, pretty highly telegraphed. So it does kind of

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Speaker 4: tell us, I think that you need to kind of

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Speaker 4: wait to see, you know, what happens over the next

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Speaker 4: couple of hours, what sort of a fish statements you get.

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Speaker 4: You know, it's it's easy to kind of run into

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Speaker 4: something like this, see a Trump truth social post with

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Speaker 4: all of that bluster in those capital letters kind of

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Speaker 4: flying around sort of you know, projecting this idea of

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Speaker 4: a of a ceasefire. But again, I think we have

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Speaker 4: to wait to see what ultimately happens. And then ultimately

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Speaker 4: it kind of sounds like, you know, if there's a

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Speaker 4: ceasefire that's actually in place, maybe we sort of set

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Speaker 4: the clock back to where we were a couple of

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Speaker 4: weeks ago, where tensions have de escalated a little bit.

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Speaker 4: You know, we're back to looking at a situation where

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Speaker 4: maybe you know, Aroun in the US and and such,

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Speaker 4: you're at the negotiating table again, and we're sort of

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Speaker 4: you know, getting off of the military incursions that we've

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Speaker 4: seen Israel in particular ramp up over the last several days.

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Speaker 4: But again, I think just really points to a picture

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Speaker 4: where there's a lot that's in action here. I think

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Speaker 4: we have to kind of wait and see what some

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Speaker 4: of these official comments are ultimately going to tell us.

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Speaker 2: That's Bloomberg's Jill lisis in Hong Kong speaking to our

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Speaker 2: TV colleagues of a Man and David Inglace here on

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Speaker 2: the Daybreak asir podcast. Back to the Daybreak Asia podcast.

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Speaker 2: I'm Doug Chrisner. We continue with our top story. Earlier,

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Speaker 2: in a post on truth Social President Trump announced a

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Speaker 2: tentative ceasefire between Israel and Iran. Trump said the two

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Speaker 2: countries have agreed to a complete and total ceasefire beginning

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Speaker 2: at approximately twelve midnight Wall Street time. Now. It was

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Speaker 2: earlier in the day that Iran retaliated for those US

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Speaker 2: air strikes over the weekend by attacking a US air

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Speaker 2: base and cutter. Oil prices plunged given what appears to

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Speaker 2: be a lower probability of disruptions of crude from the Mideast,

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Speaker 2: and crude oil is continuing to decline in the electronic session.

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Speaker 2: Joining me now for a closer look at market action

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Speaker 2: is Ross Mayfield. He is the investment strategist at Baird Ross.

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Speaker 2: Thank you for making time to chat with me about

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Speaker 2: this so news of the ceasefire obviously coming from the president.

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Speaker 2: Reuters is now citing an unidentified senior Iranian official on

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Speaker 2: this agreement. We've not yet heard from Jerusalem, but it

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Speaker 2: seems like we're making progress, at least it would appear

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Speaker 2: in that direction. How are you understanding all of these

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Speaker 2: various components right now.

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Speaker 1: Yeah, I think it's hard to you know, feel confident

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Speaker 1: until you get confirmation from all sides. But directionally you're

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Speaker 1: headed in the right in the right direction, and that's

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Speaker 1: what really is going to matter for markets here is

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Speaker 1: that rather than things continuing to escalate as was the

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Speaker 1: you know, fear and concerns over the weekend, we've gotten

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Speaker 1: to a point where there's you know, de escalation with

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Speaker 1: with maybe potentially you know, minimal long term impact. We've

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Speaker 1: we've obviously seen oil prices drop pretty significantly, and for

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Speaker 1: for most US investors on the other side of the world,

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Speaker 1: that that's the primary mechanism by which these sorts of

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Speaker 1: Middle Eastern tensions can really can really make an impact quickly.

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Speaker 2: One of the things that we've been seeing, obviously is

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Speaker 2: the charade in the crude oil price. But the other

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Speaker 2: thing that has been kind of interesting. The bond market

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Speaker 2: is been looking at higher oil and its inflationary implications

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Speaker 2: that seems to be being removed from the market as

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Speaker 2: we speak. How do you feel about the inflation story

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Speaker 2: right now?

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Speaker 1: I feel great about it. We've got core inflation down meaningfully.

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Speaker 1: The biggest component of the CPI basket housing, you know,

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Speaker 1: both asking rents and home prices are moderating and even

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Speaker 1: falling in many parts of the country. So I think

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Speaker 1: the case for the FED to cut in July and

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Speaker 1: it is strong, and you know, we heard have heard

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Speaker 1: from a couple of FMC members that that's on the tables.

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Speaker 1: So you know, this the oil story. The FED tends

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Speaker 1: to look through some of those more ballatile components, but

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Speaker 1: it would have been another thorn in their side if

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Speaker 1: we gotten oil up to you know, ninety one hundred

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Speaker 1: dollars a barrow. So the fact that we're pulling back

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Speaker 1: some meaningfully here, alongside core inflation coming down, and with

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Speaker 1: the tariffs paused and continuing to be paused, I think

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Speaker 1: there's a real case to cut in July, and a

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Speaker 1: little more aggressive given some of the weakness in the

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Speaker 1: labor market.

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Speaker 2: Yeah. FED Governor Michelle Bowman seemed to signal today's support

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Speaker 2: for a potential rate cut in July. That seems to

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Speaker 2: echo what we heard from Fed Governor Chris Waller. We

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Speaker 2: also heard today from Austin Goolsby. He is the head

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Speaker 2: of the Chicago Fed, and he was kind of putting

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Speaker 2: a caveat on that, saying that if the inflation hit

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Speaker 2: from tariffs remain subdued, then he maybe could get on

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Speaker 2: board with the Fed resuming rate cuts. How do you

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Speaker 2: view the tariff story as a part of the inflation story.

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Speaker 1: Well, it's obviously a big part of what they're watching.

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Speaker 1: And ultimately, it's not how I think about it, it's

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Speaker 1: how the FED thinks about it. They're clearly very concerned

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Speaker 1: about the potential for inflation from the tariffs. Obviously, the

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Speaker 1: market is more on the side that July is not

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Speaker 1: a live meeting. Something like eighty percent odds in the

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Speaker 1: fitful futures market that we just continue at current levels

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Speaker 1: until September.

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Speaker 4: But I.

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Speaker 1: Struggle with it. I do think it's a mistake to

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Speaker 1: wait for the confidence that the tariff policy hasn't resulted

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Speaker 1: in some sort of issue, because you know that the

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Speaker 1: labor market is weakening currently and if you wait too long,

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Speaker 1: and this is a part of the FED story for

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Speaker 1: the last fifty years, is if you wait until you

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Speaker 1: kind of see the whites of the eyes, it's often

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Speaker 1: too late to avoid, you know, some sort of economic downturns.

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Speaker 1: So it'll be important in a couple of weeks to

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Speaker 1: see that either those reciprocal tariff pauses get extended or

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Speaker 1: that we announce you know, more deals than I think

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Speaker 1: the market expects to see right now. But the main

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Speaker 1: thing will be can we get those pauses extended, you

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Speaker 1: know for most countries, and that the administration acknowledges you know,

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Speaker 1: most of our trading partners are negotiating in good faith.

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Speaker 2: So we've talked about a few of the risk How

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Speaker 2: are you left feeling about risk assets right now, particularly equities?

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Speaker 1: Yeah, I feel pretty bullish, to be honest with you,

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Speaker 1: you know, the fact that we're dealing with all of

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Speaker 1: these kind of headwinds and noisy macro things, geopolitics, a

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Speaker 1: big tax bill, and yet the market is still within

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Speaker 1: a couple percentage points of all time high. I mean,

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Speaker 1: the resilience today was pretty astounding given what happened over

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Speaker 1: the weekend. You've had this this really aggressive kind of

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Speaker 1: momentum thrust off the April lows, you know, participation not

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Speaker 1: just in the US, but a broad cyclical leadership. You know,

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Speaker 1: tech kind of coming back into the fold. So a

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Speaker 1: lot of things that really our market messages that portend

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Speaker 1: strong returns if you look out six or twelve months historically.

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Speaker 1: Now you know, the environment is rife with headwinds too,

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Speaker 1: and it's it's not a perfect backdrop, but I think

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Speaker 1: the message from the market is a lot more optimistic

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Speaker 1: than the message from you know, the news as it's

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Speaker 1: covering the geo political situation, and that's the message that

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Speaker 1: I think we have to pay more attention to.

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Speaker 2: So how are you feeling about valuations? With an S

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Speaker 2: and P trading it around twenty four times earnings, they're rich.

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Speaker 1: I mean, it's one of those things where you know,

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Speaker 1: as a timing tool it's basically useless. But you would

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Speaker 1: say that if you're looking out from this starting point,

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Speaker 1: and again with the market functionally back at all time

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Speaker 1: highs and many global markets now well on the you know,

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Speaker 1: through all time highs and at new records as we speak,

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Speaker 1: you would say that if you're looking at the next

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Speaker 1: five years or the rest of the decade, you would

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Speaker 1: expect more muted returns from here. You know, whether that

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Speaker 1: looks like a couple more years of outsized gains and

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Speaker 1: then you know, sort of an AI bubble having to

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Speaker 1: deflate down the road, or whether it just looks like,

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Speaker 1: you know, a couple of years of single digit, more

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Speaker 1: muted returns. It's not something that's going to keep us

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Speaker 1: out of the market, but it kind of frames up,

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Speaker 1: you know, the expectations that we would have for returns,

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Speaker 1: and especially in what we feel is going to be

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Speaker 1: a higher for longer rate environment, even if the FED

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Speaker 1: starts to cut again later this year.

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Speaker 2: Yeah, thirty one times earnings. If you look at the

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Speaker 2: Nasdaq one hundred. You talked about the possibility of maybe

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Speaker 2: AI bubble. Is that something that you're concerned about actively?

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Speaker 2: Are you taking defensive measures in that regard?

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Speaker 1: No, it's something that we think about. I don't think

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Speaker 1: we're quite there yet. I mean the obvious corollary would

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Speaker 1: be the late nineties into the early two thousands dot

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Speaker 1: com bubble, and as much as you know some of

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Speaker 1: the valuations today, uh, look look frothy. I don't think

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Speaker 1: they really hold a candle to what we saw in

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Speaker 1: you know, ninety nine in two thousand, So I think

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Speaker 1: we could get there. The enthusiasm around AI is clearly

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Speaker 1: coming back into the market. But for one, a lot

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Speaker 1: of the big companies today are just much better capitalized,

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Speaker 1: you know, more cash, less debt, bigger motes, and then

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Speaker 1: past that AI, you know, the adoption rate of AI

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Speaker 1: seems to be really aggressive. You know that most of

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Speaker 1: the survey data we're seeing from you know, some of

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Speaker 1: the big consultant firms suggests that companies are really experimenting

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Speaker 1: with these tools and trying to get more efficient at

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Speaker 1: at a high clip. So I think we could get there, certainly,

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Speaker 1: but I don't think the sentiment environment is there yet.

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Speaker 1: People are still very kind of restrained and risks as

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Speaker 1: opposed to youph it, and I don't think that the

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Speaker 1: valuations are quite there yet. So to me, it would

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Speaker 1: be more of like a you know, maybe a twenty

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Speaker 1: twenty seven kind of story.

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Speaker 2: Okay, Ross, we'll leave it there. Thank you so much.

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Speaker 2: Ross Mayfield, he is investment strategist at Baird joining us

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Speaker 2: here on the Daybreak Asia podcast. Thanks for listening to

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Speaker 2: today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday,

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Speaker 2: we look at the story shaping markets, finance, and geopolitics

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Speaker 2: in the Asia Pacific. You can find us on Apple, Spotify,

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Speaker 2: the Bloomberg Podcast YouTube channel, or anywhere else you listen.

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Speaker 2: Join us again tomorrow for insight on the market moves

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Speaker 2: from Hong Kong to Singapore and Australia. I'm Doug Prisoner

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Speaker 2: and this is Bloomberg