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

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Speaker 2: Welcome to the Daybreak Asia podcast. I'm Doug Krisner. We

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Speaker 2: have a new wave of uncertainty after the Supreme Court

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Speaker 2: struck down President Trump's emergency tariffs. Earlier on truth Social

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Speaker 2: the President said he will put much higher tariffs on

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Speaker 2: countries that quote play games with that high Court ruling.

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Speaker 2: And now we are being told the White House is

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Speaker 2: working to issue a formal directive to increase the rate

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Speaker 2: on global tariffs to fifteen percent, but it's not clear

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Speaker 2: if this order will be finalized before those ten percent

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Speaker 2: levies are set to go into effect Tuesday at twelve

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Speaker 2: oh one a m. Eastern time. By the way, Morgan

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Speaker 2: Stanley is estimating that the average tariff now on goods

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Speaker 2: from China will drop from a rate that is around

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Speaker 2: thirty two percent now down to twenty four percent. For

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Speaker 2: a look at what's happening in the Asia Pacific, I'm

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Speaker 2: joined by Bloomberg's Leontin II. She is Managing editor for

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Speaker 2: Asia Equities. Leonting joining from our studios in Singapore. Thank

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Speaker 2: you so much. There's so much to talk about. I

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Speaker 2: know that China is back online today. We're seeing a

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Speaker 2: little bit of positivity in the equity market. How much

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Speaker 2: of this story do you think is related to the

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Speaker 2: Supreme Court's ruling on tariffs?

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Speaker 3: Yeah, I think for China definitely, it is an outstanding

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Speaker 3: winner out of the Supreme Court ruling, just because China

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Speaker 3: without that ten percent fentan or tariff, China's now having

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Speaker 3: the same tariff rate with all the other trading partners

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Speaker 3: with the US. So you can see yesterday the Hong

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Speaker 3: Kong stock market rallied pretty hard. I think the biggest

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Speaker 3: gainer out of Asia on that particular news, and of

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Speaker 3: course India was also considered part of that winners, part

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Speaker 3: of the winners, but I think overall people still think

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Speaker 3: China would hire Beta to be again with its stock market,

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Speaker 3: so there is more to gain for Chinese stocks.

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Speaker 2: Maybe we can talk a little bit now about artificial intelligence.

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Speaker 2: We had a rugged session in the States where equities

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Speaker 2: retreated on a little bit more anxiety over this AI

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Speaker 2: disruption theme. We had a report from Satrini Research and

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Speaker 2: they laid out a couple of different scenarios I want

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Speaker 2: to focus on too, One where delivery apps like door

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Speaker 2: Dash and Uber Eats are displaced by chatbot made alternatives

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Speaker 2: and in another scenario, a case where AI agents try

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Speaker 2: to save users' money by eliminating transaction fees charged by

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Speaker 2: payment processing firms like master Card and Visa. I'm curious

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Speaker 2: ly hunting about the conversation in the Asia Pacific regarding

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Speaker 2: AI disruption. What's it sound like to you?

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Speaker 3: Yeah, it does feel very pasimistic, very dystopian when you

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Speaker 3: read that article. I think traders very much interested in

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Speaker 3: the kind of scenario and analysis and how you know,

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Speaker 3: the kind of technology will translate to job losses and

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Speaker 3: also profit losses for many of the companies, especially the

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Speaker 3: intermediary companies like the food delivery companies. And you know,

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Speaker 3: anything that has is aimed to reduce friction is actually

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Speaker 3: going to be the first to be heard by all

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Speaker 3: these AI developments in Asia. Though, I think people are

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Speaker 3: looking for winners, right. We talked about how Asia, a

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Speaker 3: lot of Asia tech giants are really positioned to be,

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Speaker 3: you know, the beneficiaries in this AI boom in the

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Speaker 3: data center build out. Again, we actually saw s Khanis

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Speaker 3: jumping almost five percent during the period when the treaty.

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Speaker 3: The report co writer A lap Show was being interviewed

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Speaker 3: on BTV just now, so as you can see, people

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Speaker 3: are really tuning into what he has to say and

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Speaker 3: are really looking for winners. And Taiwan today is another

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Speaker 3: standout winner. TSMC was almost mentioned, I believe in that

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Speaker 3: report and TSMC and Taiwan, all these smaller makers today

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Speaker 3: having a great day, up seven percent or so last

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Speaker 3: time I checked. So I think in Asia again, that's

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Speaker 3: reinforced the narrative that biggest winners in this AI trade

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Speaker 3: are in Asia and of course in the US. You know,

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Speaker 3: a lot of the intermediaries are listed in the US

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Speaker 3: and not a lot of those things are listed in Asia.

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Speaker 3: That also sort of explains why Asia is not considered

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Speaker 3: a little bit of a haven right now in this

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Speaker 3: AI scare trade.

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Speaker 2: I was just looking at a story on the Bloomberg

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Speaker 2: earlier today describing about something that happened over the holiday

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Speaker 2: on the mainland where a few Chinese firms showed off

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Speaker 2: new humanoid robots at the annual Spring Festival gala. Is

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Speaker 2: there a lot in the way of enthusiasm when it

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Speaker 2: comes to robotics on the mainland.

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Speaker 3: Yes, we actually I saw that playing out last year

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Speaker 3: at around this time after the Spring Festival gala where

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Speaker 3: robotics are robots, i should say, showed off their dancing skills.

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Speaker 3: What's different this time around is the moves that you

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Speaker 3: saw in the performance was a lot more advanced. It

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Speaker 3: seems the development has really sped up during that one

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Speaker 3: year period. Uh, these robots were able to play kung fu,

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Speaker 3: were able to do backflips and land on their feet,

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Speaker 3: So it does excite investors. Of course, a lot of

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Speaker 3: people have warned that, you know, the real user case

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Speaker 3: for those robots. You know, they looked great on TV,

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Speaker 3: but they don't see a lot of sort of revenue

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Speaker 3: generation venues as if yet for these robotic companies. And

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Speaker 3: there's also a lot of competition in this robotic sector

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Speaker 3: in China, so in terms of long term investment in

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Speaker 3: that sector, some people have warned that there's not a

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Speaker 3: lot of visibility on profit generation.

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Speaker 2: So as long as we're talking about the holiday period,

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Speaker 2: I'm curious as to whether you've seen any high frequency

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Speaker 2: data on things like travel and spending that may give

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Speaker 2: us some sense of how well the consumer was engaged

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Speaker 2: during the lunar New Year festivities.

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Speaker 3: Yeah, there have been a slew of data, especially on

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Speaker 3: travel stats, and they are overwhelmingly positive. One st that

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Speaker 3: stood out to me was bookings for family trips over

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Speaker 3: the lunar New Year periods jumped seventy six percent year

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Speaker 3: over year. That's a big jump. And I was just

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Speaker 3: talking to some Millan colleagues an hour ago and they

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Speaker 3: were talking about how packed and crowded those big cities

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Speaker 3: award during that New Year period with tourists and hotels

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Speaker 3: apparently were really booked out and hotel rates quadrupled this

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Speaker 3: time around, but spending was still very strong. So it

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Speaker 3: does seem like people took advantage of this elongated period

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Speaker 3: this time nine day I think is the longest Lunar

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Speaker 3: New Year period ever to really enjoy the time with family,

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Speaker 3: and they chose to spend in a different city, you know,

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Speaker 3: have different experience. So I would say that part is

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Speaker 3: really positive. But on the other side, there's also some

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Speaker 3: weak data point out of box office. According to City,

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Speaker 3: the box office data out of this New Year period

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Speaker 3: was the weakest since twenty eighteen. Seems there wasn't enough

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Speaker 3: interesting content to draw viewers into the cinema, so that

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Speaker 3: is considered negative.

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Speaker 2: Of course, Before I let you go, Leon Tink, maybe

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Speaker 2: we can talk a little bit about Japan, because I

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Speaker 2: know we have later in the week data on Tokyo inflation.

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Speaker 2: Also Japanese retail sales. The equity market has been fairly robust.

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Speaker 2: We know that Prime Minister Takeiichi is insisting on trying

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Speaker 2: to provide a little bit of stimulus to the economy,

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Speaker 2: and I know there is a very very sharp focus

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Speaker 2: on trying to relieve some of the inflationary pressures here.

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Speaker 2: What are you hearing with respect to Japan? What are

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Speaker 2: some of the stories that people are talking about today.

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Speaker 3: Yeah, two things. One is the Supreme Court ruling implication

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Speaker 3: on Japan, and the other of courses is AI trade.

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Speaker 3: I would say for the first one, Japan net net

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Speaker 3: is considered neutral because Japan had a fifteen percent terriff

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Speaker 3: deal with the US before, and the US, of course,

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Speaker 3: Trump has mentioned he's going to have that fifteen percent

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Speaker 3: teriffun all trading partners. So on that front, I think

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Speaker 3: we're not seeing a lot of reaction out of japan

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Speaker 3: auto makers. Last time I checked, we're up. And if

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Speaker 3: you look at AI, Japan does have some software companies

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Speaker 3: and payment companies listed and today they are having a

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Speaker 3: bit of sell off. But There are also a lot

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Speaker 3: of heavy weighted Japanese companies on the NICKETD to five

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Speaker 3: that are actually you know, chip equipment makers, so we're

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Speaker 3: looking at Advantest, Tokyo Electron. All these guys are actually

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Speaker 3: having a great day. So we talk a lot about

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Speaker 3: Korea and Taiwan being well positioned in the supply chain.

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Speaker 3: Japan actually has a lot of these names as well,

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Speaker 3: so that's why you see Nick turning more and more

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Speaker 3: positive as a day goes on.

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Speaker 2: We'll leave it there, Leon ting It's always a pleasure.

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Speaker 2: Thank you so very much. Leon ting Ti is Managing

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Speaker 2: editor for Asia Equities, joining from our studios in Singapore

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Speaker 2: here on the Daybreak Asia podcast. Welcome back to the

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Speaker 2: Daybreak Asia Podcast. I'm Doug Prisner. In the States, the

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Speaker 2: equity market retreated on renewed anxiety over the impact of

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Speaker 2: artificial intelligence as well as uncertainty over US tariff policy,

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Speaker 2: and that's where we begin our conversation with Ethan Devitt.

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Speaker 2: Ethan is managing director at Monetic Global Wealth, and she

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Speaker 2: spoke with Bloomberg TV host Heidi Stroud, Watts and Sherry

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Speaker 2: on we.

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Speaker 1: Sort of see this continuation of the momentum driven stock reversal. Right,

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Speaker 1: what do you make of this in terms of how

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Speaker 1: you know? Definitely you have to navigate given that I

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Speaker 1: know that you're still looking for some of those opportunities

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Speaker 1: within the AI and software spaces.

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Speaker 4: Well, it's a great question. I'm based in London, but

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Speaker 4: I've been watching this blizzard going on on the east

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Speaker 4: coast of the US and this is a blizzard of

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Speaker 4: information too that we're having to cope with. And it

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Speaker 4: is extraordinary that we have now had this cascade through

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Speaker 4: different sectors. Remember we started with the SAS and software

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Speaker 4: the service sector. It moved into my sector, private wealth,

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Speaker 4: with concern around the altruist tax preparation software disrupting that,

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Speaker 4: and now we're moving into just mainstream software areas. And

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Speaker 4: this is extraordinary that this basically magical thinking, fictitious report

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Speaker 4: could trigger this kind of concern. What we can see

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Speaker 4: therefore is just how jittery markets really are, just how

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Speaker 4: they're they're really selling first, asking questions later.

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Speaker 1: So when you talk about grid tech picks and shovels

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Speaker 1: around AI, would you be opportunity opportunistic right now even

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Speaker 1: with the high degree of uncertainty.

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Speaker 4: Yes, that has been something that we at Minetta have

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Speaker 4: been focused on for the past eighteen months, has been really,

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Speaker 4: as you mentioned, the picks and shovels. What is not

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Speaker 4: going to change as we have AI momentum come and go.

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Speaker 4: What is not going to change is the demand for

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Speaker 4: energy and we know that that is essentially just rising

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Speaker 4: around the world. We're looking at that coming from both

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Speaker 4: renewable energy sources, traditional energy sources and finding the picks

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Speaker 4: and shovels that play into that, and then a new sector,

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Speaker 4: grid tech, because that's where the uninvestment has been made.

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Speaker 4: The lack of investment has been in the grids, so

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Speaker 4: that we believe is sustained. It's perhaps not the momentum

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Speaker 4: side of markets right now. There's more of a defensive

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Speaker 4: and even value area, but we see that as been

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Speaker 4: very much adjacent to the AI story, but having legs

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Speaker 4: whereas AI is going to be more volatile.

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Speaker 5: And especially if we're focusing on that infrastructure build on

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Speaker 5: and video earnings will be so key. What will you

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Speaker 5: be watching.

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Speaker 4: We're going to be looking at the sustained demand and

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Speaker 4: how in Vidia. We know that that is going to

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Speaker 4: be an outlier that has been a market leader. It

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Speaker 4: is dominating the US stock market, but good a strong

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Speaker 4: story of sustained demand there and their outlook will be

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Speaker 4: critical to I think uplift the shareholders expectations because they

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Speaker 4: are really quite depressed right now in terms of the

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Speaker 4: uncertainty around AI. So we're looking for some shoots of

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Speaker 4: good news at this stage.

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Speaker 5: A lot of uncertainty also on the trade environment, of course,

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Speaker 5: with President Trump potentially now according to reports, announcing new

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Speaker 5: national security tariffs on top of fifteen percent tarts as well.

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Speaker 5: How do you factor that in when every time we

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Speaker 5: have a new trade deal with the United States, it

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Speaker 5: seems to change at any point.

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Speaker 4: It was interesting, but first it was bitcoin and digital

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Speaker 4: assets that were the canary and the coal mine for

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Speaker 4: trade uncertainties. That's long since past because the volatility has

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Speaker 4: just really enveloped the entire bitcoin area. So now we

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Speaker 4: have to look at other asset classes risk on which

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Speaker 4: are showing signs of concern around trade. This was not

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Speaker 4: the news that markets needed. It initially seemed quite good news.

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Speaker 4: There could have been a rally in the US economy

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Speaker 4: if some of these rebates and tariff's uncertainty was removed.

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Speaker 4: Then the rear guard action by President Trump to really

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Speaker 4: double down on his tariff policy. That's what seems to

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Speaker 4: have thrown markets off today. But remember we're looking at

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Speaker 4: uncertainty from many different areas. Private credit too is having

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Speaker 4: a difficult spell right now, and this really just does

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Speaker 4: underscore how much the markets for price for perfection. Up

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Speaker 4: to now, the resilient economy has confounded expectations over and

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Speaker 4: over again, and now we can find cracks everywhere, and

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Speaker 4: that's what markets I think are overreacting to at present.

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Speaker 5: You're not concerned about the private market issue that you

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Speaker 5: mentioned because we have the life of Apollo, OKKR blocks

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Speaker 5: and all investing in this infrastructure build out and at

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Speaker 5: this point the unstainties of course, as we have discussed,

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Speaker 5: could actually extend to all of the investment that these

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Speaker 5: people have made us.

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Speaker 4: Well, it's a very good point. What we've been looking

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Speaker 4: at the low volatility in fixed income public fixed income

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Speaker 4: markets that has been that the tight spreads that we're

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Speaker 4: seeing there, the move index being so subdued, that is,

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Speaker 4: it does not cohere with what we're seeing and the

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Speaker 4: other jitters of markets. So where has the risk moved

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Speaker 4: to within bonds? It seems to have moved into the

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Speaker 4: private credit area, and now investors are waking up to

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Speaker 4: that there definitely is going to be contamination from this

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Speaker 4: software arena drawback to the private credit area given their exposures.

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Speaker 4: But time and time again we've heard that this is

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Speaker 4: we cannot paint the entire private credit area with one rush.

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Speaker 4: That it is is very much a question of some

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Speaker 4: firms having the pick of the crops and other firms

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Speaker 4: in crowded areas with less compelling returns. So we shouldn't

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Speaker 4: be to sweeping about our outlook for the private credit area.

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Speaker 4: But it's true that there have perhaps been due diligence

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Speaker 4: problems if you've seen that time and time again, and

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Speaker 4: that the default level will rise. But we do expect

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Speaker 4: that overall private credit is quite sound. But these cockroaches

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Speaker 4: that Jamie Diamond mentioned are going to start cropping up,

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Speaker 4: and the question is whether markets overreact to them.

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Speaker 1: Even we have this situation where time and time again

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Speaker 1: there's hits coming from usually trade uncertainty or your political uncertainty.

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Speaker 1: But it feels like the sort of risk and volatility

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Speaker 1: response can be muted going forward. You raise a question

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Speaker 1: of where that risk is going to go? Right, What

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Speaker 1: is your assessment of I guess how that volatility gets

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Speaker 1: spread in the coming months.

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Speaker 4: Well, I think we have to remember that when we

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Speaker 4: do have these pullbacks and markets, they're very short lived

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Speaker 4: at the moment, and that's because we do have this

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Speaker 4: strong inclusion of retail investors in all markets everywhere. We

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Speaker 4: know that the millennials that are priced out of the

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Speaker 4: real estate market are investing like stocks like never before.

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Speaker 4: Mainstream is participating in Wall Street like never before. So

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Speaker 4: that's on the sidelines. This huge amount of money in

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Speaker 4: money market funds is on the sidelines. They are out

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Speaker 4: there looking for bargains. And essentially, when we have spreads

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Speaker 4: in fixed income as low as they are as I mentioned,

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Speaker 4: and we still have inflation taking away in the background,

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Speaker 4: nobody is making money owning bonds, so there is still

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Speaker 4: strong demand for owning equities. So that's why I believe

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Speaker 4: that these pullbacks will be short lived, and that's why

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Speaker 4: markets are really somewhat apart from these momentum problems we're

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Speaker 4: having just now. Markets have been somewhat immune to geopolitical developments.

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Speaker 4: They have been immune from domestic political developments. They don't

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Speaker 4: seem to care about the large fiscal budget deficit across

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Speaker 4: many developed nations because the underlying company earnings have been

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Speaker 4: so compelling. So that has been the market's ability to

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Speaker 4: hold two ideas at one time. Now we're seeing some

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Speaker 4: jitters in that respect, but I don't believe it's fundamental.

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Speaker 2: That was Ethan Devitt, managing director at Monetta Global Wealth,

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Speaker 2: speaking with Bloomberg TV host Heidi Stroudwats and Sherry On

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Speaker 2: bringing you their conversation here on the Daybreak Asia podcast.

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Speaker 2: Thanks for listening to today's episode of the Bloomberg Daybreak

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Speaker 2: Asia Edition podcast. Each weekday, we look at the story

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

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Speaker 2: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,

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Speaker 2: or anywhere else you listen. Join us again tomorrow for

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Speaker 2: insight on the market moves from Hong Kong to Singapore

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Speaker 2: and Australia. I'm Doug Prisner, and this is Bloomberg