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

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Speaker 2: Welcome to the Bloomberg day Break Asia Podcast. I'm Doug Chrisner.

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Speaker 2: So in the US session, we had equities losing a

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Speaker 2: bit of steam in the final minutes of trading. The

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Speaker 2: market finished little changed, was pretty choppy during the day,

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Speaker 2: and I guess you can chalk up the last moments

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Speaker 2: to some strong market on clothes selling pressure. We heard

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Speaker 2: today from FED Governor Chris Waller. He told Fox Business

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Speaker 2: the FED could cut rates in the second half of

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Speaker 2: the year.

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Speaker 3: If we can get the tariffs down closer to ten

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Speaker 3: percent and then that's all sealed, done and delivered somewhere

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Speaker 3: by July, then we're in good shape for the second

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Speaker 3: half of the year, and then we're in a good

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Speaker 3: position as the FED to kind of move with rate

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Speaker 3: cuts through the second half of the year.

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Speaker 2: Fed Governor Chris Waller. There elsewhere today we had bitcoin

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Speaker 2: breaking above one hundred eleven thousand dollars for the very

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Speaker 2: first time. And in a moment we'll look at the

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Speaker 2: crypto space. If Peter Chung, head of research at Presto.

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Speaker 2: But we begin this morning with markets joining me now,

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Speaker 2: Eric Stirner, he is the chief investment officer at Appollen

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Speaker 2: Wealth Management, Eric, thank you so much for taking time

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Speaker 2: to chat with me. Let's begin with a bond market

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Speaker 2: because in the prior session we saw a lot of volatility,

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Speaker 2: essentially a selloff, and a lot of this seemed to

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Speaker 2: reflect worries about the deadload for the federal government. Today

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Speaker 2: though a bit of recovery here in treasury prices. How

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Speaker 2: do you make sense of this?

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Speaker 1: Yeah, well, thanks for having me. And it's interesting because

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Speaker 1: over the last several months, I mean, we've seen a

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Speaker 1: lot of volatility in the bond market as there's been

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Speaker 1: so many concerns about tariffs and deficits. We've even heard

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Speaker 1: someone go so far as to say treasuries are losing

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Speaker 1: their stats as a safe haven investment, and I think

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Speaker 1: that's going too far because there's really no replacement. But

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Speaker 1: certainly there's just a lot of different interpretations of what

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Speaker 1: this tax bill is going to do to our debt levels.

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Speaker 1: And you hear some predictions and projections from economics and

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Speaker 1: saying it's going to increase it to the levels we

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Speaker 1: haven't seen since World War Two, while you know, the

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Speaker 1: White House is telling us a completely different story. So

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Speaker 1: I think that's just causing a lot of volatility in

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Speaker 1: the bond market. And I think I think rates are

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Speaker 1: going to stay high, and as long as they don't

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Speaker 1: approach five percent, I think we'll be fine. I think

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Speaker 1: once you start seeing that ten year approach five percent,

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Speaker 1: that's when you see potentially some pullback into equity markets.

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Speaker 2: So Chris Waller today was kind of addressing the teriff issue.

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Speaker 2: Was kind of interesting too that Jamie Diamond, the head

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Speaker 2: of JP Morgan Chase, was saying that he can't rule

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Speaker 2: out the possibility of stagflation. Now, Waller was talking about

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Speaker 2: the fact that maybe it's possible that we get trading

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Speaker 2: partners to settle at a terriffreight of around ten percent.

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Speaker 2: That sounds kind of inflationary to me, does it not?

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Speaker 1: It will be initially, uh inflationary, But I believe Waller

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Speaker 1: has been one person in the FED who has really

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Speaker 1: gone out and predict that that these terrafs will be

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Speaker 1: transitory in nature. So we'll see, you know, a slight

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Speaker 1: increase in inflation, but then for it to settle down.

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Speaker 1: And we know the FED the word transitories a word

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Speaker 1: someone in the FED try to avoid because they use

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Speaker 1: that after COVID, thinking that once the supply chains uh

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Speaker 1: or addressed, that the inflation will go down. But this

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Speaker 1: is very different than what we experienced after COVID. After COVID,

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Speaker 1: we saw so much inflation because there was so much stimulus,

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Speaker 1: and physcal stimulus UH paid out, consumers had saved a

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Speaker 1: lot of money being locked down for a number of months,

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Speaker 1: and there's a lot of imbalance in the labor markets.

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Speaker 1: So I'm of the view I agree with what Christopher

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Speaker 1: Waller is saying that yes, we'll see some increases in prices,

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Speaker 1: but if you're paying more for one product, your consumers

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Speaker 1: are going to have less disposable income to pay for

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Speaker 1: other products, assuming there's no physical stimulus, So overall inflation

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Speaker 1: should be relatively teamed even through these terrafts, if, to

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Speaker 1: Waller's point, they settle in the ten percent range.

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Speaker 2: The day's economic news was largely positive. We had US

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Speaker 2: business activity and output expectations improving. In terms of the

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Speaker 2: labor market, first time jobless claims at the lowest level

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Speaker 2: in about four weeks. Perhaps a little concerning the fact

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Speaker 2: that existing home sales unexpectedly fell to the slowest pace

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Speaker 2: I think at about seven months how are you viewing

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Speaker 2: the outlook right now?

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Speaker 1: Well, I remain optimistic, but there's certainly some with some

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Speaker 1: caution because we don't know what the final outcome will

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Speaker 1: be of these trading negotiations. I think we all need

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Speaker 1: to get past that because the uncertainty is causing some

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Speaker 1: companies and need consumers to hold back on spending, even

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Speaker 1: some companies and initiating some hiring plans. But I'm of

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Speaker 1: the opinion that the one entity that that Trump President

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Speaker 1: Trump listens to is the stock market, is the bond market.

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Speaker 1: He doesn't want to put us into a recession. So

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Speaker 1: I think this is all high stakes negotiation. So once

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Speaker 1: we hopefully settle these these trade agreements soon in the

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Speaker 1: coming months, then then we have a lot to look

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Speaker 1: forward to between the tax cuts and deregulation, which should

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Speaker 1: provide tailwinds to the economy. And the labor market is

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Speaker 1: still very healthy, consumer spending is holding up at the

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Speaker 1: aggregate level. So I remain optimistic, but you know, certainly

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Speaker 1: we just need to get past this trade policy uncertainty

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Speaker 1: and then hopefully experience some of those tailwinds that I mentioned.

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Speaker 2: So where are you finding opportunity in markets these days?

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Speaker 2: And if we can focus first on domestic markets.

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Speaker 1: Yeah, sure. So within large cap you know, we do

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Speaker 1: want to tilt more into the quality factor. It's not

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Speaker 1: a complete risk on environment for the reasons I mentioned before.

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Speaker 1: So really companies with strong track records and strong cash

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Speaker 1: bound cash flows that could stand any potential economic slowdown.

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Speaker 1: But there are some sectors that, you know, traditional defensive sectors.

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Speaker 1: I think some clients may want to tilt a bit

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Speaker 1: more into until we hear the outcome of these trade negotiations.

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Speaker 1: Healthcare that had the highest earnings growth rate for the

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Speaker 1: first quarter, and we know between the weight loss drugs

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Speaker 1: and the aging demographics, there's a huge demand there for

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Speaker 1: healthcare and utilities. I mean utilities again another classic defensive play,

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Speaker 1: but because of the AI revolution, which I think we

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Speaker 1: all can agree we're in the early endings of there's

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Speaker 1: going to be enormous demand. I mean, if within utilities

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Speaker 1: over the past ten years, I mean the power demand

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Speaker 1: is growing, we know, grown one to two percent annually,

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Speaker 1: so very little demand there. But now with all these

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Speaker 1: data centers, and we're supposed to see a fifty percent

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Speaker 1: increase in data centers by the end of the next year.

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Speaker 1: The power demands expected to grow up to eight percent

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Speaker 1: over the next ten years. So while while you tild

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Speaker 1: these was traditionally a defensive play, I think it's part

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Speaker 1: of the AI offensive playbook right now. And then we're

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Speaker 1: starting to see the comeback of the mega techs. We

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Speaker 1: know those were the stocks that got hit the most

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Speaker 1: during the first few months of this year, first of

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Speaker 1: the news the deep seek and then of course from

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Speaker 1: all the fallout from Liberation Day. But like I said,

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Speaker 1: we're in the early endings of this AI revolution and

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Speaker 1: there's there's no stopping it. We know that's a huge movement,

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Speaker 1: is very competitive in the US trying to keep up

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Speaker 1: with China and these Magnificent seven companies they're earning growth

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Speaker 1: for twenty twenty five is still above all the other

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Speaker 1: sectors within the account. So those are some of the

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Speaker 1: areas that I like most for Germinder or the year.

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Speaker 2: We were talking a moment ago about the volatility in

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Speaker 2: the bond market. How are you viewing the financials right now,

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Speaker 2: the big banks especially.

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Speaker 1: That's another area that I do like within the financials

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Speaker 1: because once we get I keep on saying, once we

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Speaker 1: get past this tree uncertainty, But it's certainly a cloud

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Speaker 1: we have to get past. We expect M and A

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Speaker 1: activity to pick up because I expect at least two

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Speaker 1: rate cuts this year from the FED, and as interest

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Speaker 1: rates lower than we could see some more M and

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Speaker 1: A activity pick up. And that's only going to help

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Speaker 1: the bottom line of these big banks for Germinder this year.

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Speaker 2: So, Eric, before I let you go, give me your

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Speaker 2: your sense of what's happening offshore right now and whether

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Speaker 2: you're seeing opportunity in markets, let's say, in Asia, Europe

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Speaker 2: or Latin America.

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Speaker 1: Yeah, I think if you look outside of China, the

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Speaker 1: Asia ex China, as were many US companies are redesigning

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Speaker 1: their supply chains, there's norms opportunity for those emerging markets

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Speaker 1: within Asia. You know, Europe, We're starting to see some

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Speaker 1: come back there. The valuations are attractive and they're just

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Speaker 1: trying to keep up with the US, especially on this

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Speaker 1: technology front, and looking for their own movements for deregulation

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Speaker 1: and to increase their defense spending. So I do like

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Speaker 1: some of these opportunities with whether it's Germany or Asia

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Speaker 1: ex China. But I do believe for the remainder of

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Speaker 1: the year, the US will reclaim the leadership and we'll

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Speaker 1: see stronger returns out of the US than some of

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Speaker 1: these international markets. So I know that's international has certainly

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Speaker 1: gone off to a big lead on the US, but

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Speaker 1: I expect the US to make it comeback in the

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Speaker 1: second half of this year.

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Speaker 2: All right, Eric will leave it there, Thank you so much.

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Speaker 2: Eric Stirner there. He is the chief investment officer at

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Speaker 2: Apollen Wealth Management. Joining us here on the Daybreak Asia podcast.

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Speaker 2: Welcome back to the Daybreak Asia Podcast. I'm Doug Chrisner,

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Speaker 2: and we moved to crypto next. In the States. During

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Speaker 2: the last session, bitcoin surpassed one hundred eleven thousand for

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Speaker 2: the very first time. We have seen increasing bollishness on

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Speaker 2: bitcoin given support from the Trump administration, and that in

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Speaker 2: turn is helping to foster greater institutional demand. Let's take

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Speaker 2: a closer look at what's happening in the crypto market

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Speaker 2: these days with our guest Peter Chung. He is head

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Speaker 2: of research at quant crypto firm Presto Research. Peter joins

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Speaker 2: us from Hong Kong. It's always a pleasure to talk

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Speaker 2: with you. Trump has turned from crypto's skeptic into what

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Speaker 2: appears to be one of the industry's biggest champions. How

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Speaker 2: would you say that his influence is moving the market

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Speaker 2: these days?

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Speaker 4: Yeah. Trump has been very supportive of the industry, as

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Speaker 4: you all probably know, and I think I'm supportive of

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Speaker 4: most of the things he's done. You know, he he

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Speaker 4: announced he delivered on his promises, so he announced the

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Speaker 4: strategy bigcoin reserves, and then uh, you know, that's also

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Speaker 4: triggering the state governments in the US to to consider

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Speaker 4: implementing their own version of bigcoin reserves as well. And

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Speaker 4: then I think the state of Arizona recently actually enacted

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Speaker 4: a bigcoin reserve bill. But outside that, I mean, I

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Speaker 4: think the one thing that that I'm a little bit

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Speaker 4: kind of I guess nervous is uh, you know, whenever

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Speaker 4: he his family members kind of get involved in in

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Speaker 4: a lot of cryptop projects, including mean coins, and uh,

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Speaker 4: you know, I think the reason why I kind of

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Speaker 4: get concerned about it is because he kind of gives

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Speaker 4: his political opponents an excuse to uh slow things down

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Speaker 4: in terms of uh, you know, administration is trying to

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Speaker 4: do for the industry. And good example was I think,

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Speaker 4: you know, in recently the stable coin Bill was went

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Speaker 4: through some slowdown because I think the Democrats kind of,

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Speaker 4: you know, criticize some of the dealings that his family,

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Speaker 4: the Trump's family members are involved in. So I mean,

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Speaker 4: luckily we went, we overcame that, and then now I

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Speaker 4: think it's very close to being passed on the Senate.

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Speaker 4: But I think things like that could happen in future

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Speaker 4: if the family member continues to get involved in the

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Speaker 4: various dealings in crypto businesses.

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Speaker 2: We've seen lately a recent surge in crypto exchange hacks

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Speaker 2: and some executive kidnapping attempts. That's put the industry I think,

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Speaker 2: a bit on edge and obviously increased interest in security.

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Speaker 2: Talk to me about the degree to which you're concerned

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Speaker 2: about these developments and how authorities may go about re

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Speaker 2: establishing a level of confidence in the overall infrastructure.

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Speaker 4: Yeah, so it's crypto is a very nice and industry.

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Speaker 4: So there's a lot of building that needs to happen

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Speaker 4: in terms of infrastructures, and I think a security and

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Speaker 4: safety and things like that is an obvious, uh kind

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Speaker 4: of homework that the industry needs to do. And but

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Speaker 4: I think having said that, these sort of things has happened,

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Speaker 4: you know, in the traditional banking sector as well. We

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Speaker 4: just uh, you know, maybe don't hear about it too

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Speaker 4: often because you know, maybe it happens on a routine

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Speaker 4: basis and it doesn't make interesting headlines. So it's it's

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Speaker 4: it's expected from a very nat industry. What I can

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Speaker 4: tell you, I think is that the people in the

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Speaker 4: industry realize that these are the problems that needs to

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Speaker 4: be fixed, and then working very some very smart people

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Speaker 4: are working on solving these problems. So I think in

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Speaker 4: due course, I think we will have a safe and

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Speaker 4: sounding infrastructure for the industry to grow on.

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Speaker 2: So what is the one area in the regulatory regime

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Speaker 2: you would like to see addressed right now?

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Speaker 4: I think, I mean a lot of it I think

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Speaker 4: has to do with, you know, providing legal framework for

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Speaker 4: the industry to operate safely and in predictably. I think

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Speaker 4: what lack over the last few years is the regulatory

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Speaker 4: clarity on what's legal and what's not legal, what's allowed

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Speaker 4: and not allowed, and the last administration simply kind of

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Speaker 4: refuse to provide it, thinking that the you know, they

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Speaker 4: would give their you know, executive branches more discretion, empowered

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Speaker 4: to run things in the way they see fit and

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Speaker 4: a lot of that a lot of times were driven

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Speaker 4: by more by political motivations than anything else. So I

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Speaker 4: think it's good that we now have an administration that

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Speaker 4: wants to provided that regulatory clarity. Uh. And I think,

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Speaker 4: you know, some are coming from the executive branches through

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Speaker 4: in the in the form of executive orders, which are

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Speaker 4: in a eadier kind of way of dealing with it.

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Speaker 4: But some others are coming from a lot of legislative

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Speaker 4: legislative efforts in the Congress, and they obviously take more time,

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Speaker 4: but I think these will be stronger and former foundation

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Speaker 4: that cannot be removed that easily, even if after Trump

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Speaker 4: leaves the office. So these are all positive developments, and

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Speaker 4: I think we just have to be patient to have

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Speaker 4: these things to come into place and start to have

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Speaker 4: a positive impact on the industry.

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Speaker 2: What about the level of institutional demand going forward, do

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Speaker 2: you expect that to increase right now or do you

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Speaker 2: think the major institutions may be a little bit more

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Speaker 2: cautious right now and there's a risk that they may

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Speaker 2: adopt more of a weight and see attitude.

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Speaker 4: Actually, I think the events of the last few months,

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Speaker 4: you know, with all the kind of a market tomoil

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Speaker 4: and people talking about detail aisation trade. I think it's

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Speaker 4: actually I think it strengthens the argument for embracing digital

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Speaker 4: last and particularly bitcoin. I think what we've seen that

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Speaker 4: actually in the price sections over the course of the

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Speaker 4: last two months. You know, in April, when the all

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Speaker 4: the risk assets were selling off, the only two assets

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Speaker 4: that actually were doing well was gold and the bitcoin,

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Speaker 4: which you know is you know many people treated as

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Speaker 4: a disital gold. And also we actually even saw it.

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Speaker 4: I think it was earlier this week when the I

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Speaker 4: think it was two days ago that the twenty year

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Speaker 4: treasury auction was met with a very poor demand and

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Speaker 4: all assets tanked, but the bitcoin quickly rebounded and I

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Speaker 4: performed other risk assets. And I think it all kind

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Speaker 4: of as to the narrative of detail arization trade. Uh,

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Speaker 4: you know, in the aftermath of the Liberation Day terror

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Speaker 4: finouncement and also with the Moody's downgrade and all these

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Speaker 4: things that I think, uh uh strengthening uh this uh,

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Speaker 4: the argument for embracing more alternative reserve assets like a bitcoin.

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Speaker 2: So beyond the world of kind of an asset class.

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Speaker 2: One of the things that was much touted at the

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Speaker 2: beginning of this kind of crypto revolution was the fact

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Speaker 2: that it could become a medium for exchange, that it

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Speaker 2: would be useful in actually conducting commerce. That really hasn't

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Speaker 2: happened to the level that the early proponents were projecting.

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Speaker 2: What accounts for that? How come there's been and I'm

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Speaker 2: not going to say it's been a failure yet, but

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Speaker 2: certainly there's been kind of this lackluster demand to use

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Speaker 2: bitcoin as a medium of exchange.

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Speaker 4: That's very true, and it's very interesting that you asked

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Speaker 4: me that question on the day of Bitcoin Pizza Day.

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Speaker 4: You know, some people may know that, you know, the

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Speaker 4: people in the crypto industry is celebrate May twenty second

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Speaker 4: as a big cooin as a pizza day. Because I

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Speaker 4: think it was some ten years ago or maybe thirteen

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Speaker 4: years ago, somebody in Florida purchased the bigcoin in purchased

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Speaker 4: a pizza for ten thousand bitcoin, which was worth about

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Speaker 4: forty one dollars at the time. Obviously, ten thousand bitcoin

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Speaker 4: is now worth one point one billion dollars, so that

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Speaker 4: was one of the most expensive It was the most

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Speaker 4: expensive pizza. And I think that's what people who understand

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Speaker 4: bitcoin dynamics know that now is not the time to

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Speaker 4: use bitcoin as a medium of exchange, because you know,

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Speaker 4: we're at a very early stage of embracing this asset

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Speaker 4: as a stover value, and the medium of exchange part

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Speaker 4: of the money evolution only comes after that the stage

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Speaker 4: of adoption as a stover value comes to an end.

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Speaker 4: And so therefore I think, you know, medium of exchange part,

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Speaker 4: it's a very long term story, and it's as if

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Speaker 4: you understand that people will be very reluctant to spend

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Speaker 4: your bitcoin at the.

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Speaker 2: Current So if you had to speculate on jurisdiction or

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Speaker 2: a geography where we would see early adoption using bitcoin

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Speaker 2: or any other crypto is a medium of exchange, would

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Speaker 2: it happen necessarily in Asia first in a meaningful way,

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Speaker 2: and then spread to other parts of the.

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Speaker 4: World, Well, it's hard to say. I think medium Actually,

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Speaker 4: I'm not even sure whether the medium of exchange part

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Speaker 4: will ever come. But it's not a very important part

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Speaker 4: of the narrative for investing in bitcoin because the biggest

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Speaker 4: upside for the bitcoin price I think comes during that

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Speaker 4: first stage where people embrace it as a serve value,

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Speaker 4: and then any additional upside that comes as a result

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Speaker 4: of a medium of exchange adoption is going to be

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Speaker 4: very very small, so maybe it'll confirmation, but it will

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Speaker 4: come from other parts. But I think that's not something

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Speaker 4: that I think you should be overly concerned about as

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Speaker 4: an industry in bitcoin.

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Speaker 2: Peter will leave it there. Thank you so much. Peter

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Speaker 2: Chung is head of research at the quant crypto firm

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Speaker 2: Presto Research. Joining here from Hong Kong on the Daybreak

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Speaker 2: Asia Podcast. Thanks for listening to today's episode of the

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Speaker 2: Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at

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

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Speaker 2: YouTube channel, or anywhere else you listen. Join us again

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Speaker 2: tomorrow for insight on the market moves from Hong Kong

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Speaker 2: to Singapore and Australia. I'm Doug Chrisner, and this is

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Speaker 2: Bloomberg