WEBVTT - Traders Focus in Ukraine, US Eco Data Lookahead 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:10.720 --> 0:00:14.640 Welcome to the Daybreak Asia podcast. I'm Doug Krisner. US 0:00:14.720 --> 0:00:18.120 trade policies will dominate the market's attention in the week ahead. 0:00:18.520 --> 0:00:21.920 You see the proposed tariffs on Canada and Mexico are 0:00:21.920 --> 0:00:24.639 set to go into effect on Tuesday, barring another last 0:00:24.680 --> 0:00:27.760 minute reprieve. And in a moment we'll check in with 0:00:28.000 --> 0:00:31.080 Todd Waalsh is the CEO and chief Technical Analyst at 0:00:31.120 --> 0:00:35.920 Alpha Cubed Investments. First, though, a different type of geopolitics 0:00:36.159 --> 0:00:39.919 in London over the weekend, European leaders pledge to increase 0:00:40.080 --> 0:00:44.000 defense spending and to assemble a coalition of the willing 0:00:44.040 --> 0:00:47.320 as a way of securing Ukraine. Let's bring in Bloomberg's 0:00:47.320 --> 0:00:50.559 Mark Cudmore from our Markets Live team for a closer look. 0:00:50.680 --> 0:00:53.720 Mark Joins is from the Lion City of Singapore. It's 0:00:53.720 --> 0:00:56.600 always a pleasure to have your perspective. I want to 0:00:56.640 --> 0:01:00.600 begin with the story on Europe because it's this move 0:01:00.640 --> 0:01:03.160 that we're seeing right now in the euro which seems 0:01:03.200 --> 0:01:07.160 to be a little counterintuitive, perhaps stronger against the greenback 0:01:07.200 --> 0:01:09.880 by around four tenths of one percent. What do you 0:01:09.959 --> 0:01:11.640 make of what's happening in the price action. 0:01:12.680 --> 0:01:14.880 I think this makes sense in the short term for 0:01:14.920 --> 0:01:16.720 a couple of reasons. One is, we saw a little 0:01:16.720 --> 0:01:18.720 bit of sell off into the clothes on Friday. You've 0:01:18.720 --> 0:01:21.240 got a member that currency markets will still open when 0:01:21.240 --> 0:01:24.560 they had the Oval Office incident between Trump and Zlenski, 0:01:24.600 --> 0:01:27.400 which was seen as negative for Europe, and so there's 0:01:27.400 --> 0:01:30.160 already priced in that initial reaction, and then over the 0:01:30.200 --> 0:01:32.400 weekend there's there's signs that Europe is kind of going 0:01:32.400 --> 0:01:34.520 to take the lead. And so this is offering the 0:01:34.520 --> 0:01:38.160 potential for a peace dividend for Europe, which would be positive. 0:01:38.160 --> 0:01:39.479 But there's a couple of other factors here. 0:01:39.520 --> 0:01:41.960 One is is that you know, this whole idea of 0:01:42.040 --> 0:01:44.160 peace dividend is reinforcing the idea that there's going to 0:01:44.160 --> 0:01:49.160 be greater defense spending across Europe, and that's seeing higher yields, 0:01:49.360 --> 0:01:51.920 and it's that yield support that is kind of providing 0:01:52.000 --> 0:01:54.080 extra support for the currency. In fact, if you look 0:01:54.200 --> 0:01:56.680 just at in straight differentials, your dollar should be a 0:01:56.760 --> 0:01:59.200 chunk higher and it's not. So it's actually lagging the 0:01:59.200 --> 0:02:01.800 instrate drived move of the last few months. And part 0:02:01.840 --> 0:02:04.480 of that is that the market is still very short 0:02:04.520 --> 0:02:07.080 the euro that they're very worried about the long term 0:02:07.120 --> 0:02:10.079 structural concerns are in Europe, and those long term structural 0:02:10.120 --> 0:02:12.359 concerns are valid on a growth point of view. 0:02:12.680 --> 0:02:16.359 But I think they miss two points, and I think 0:02:16.360 --> 0:02:18.160 they're worried that they're where. 0:02:18.280 --> 0:02:21.240 They could be squeezed can significantly further over the coming months. 0:02:21.280 --> 0:02:25.040 One is that fiscal stimulus in Europe has been a 0:02:25.040 --> 0:02:26.880 big part of the missing picture, and if we suddenly 0:02:26.919 --> 0:02:29.520 get that, whether it's under the guise of defense spending, 0:02:29.800 --> 0:02:32.440 it is still an extra amount of spending in Europe 0:02:32.480 --> 0:02:32.880 that will be. 0:02:32.840 --> 0:02:33.760 Positive to the region. 0:02:33.960 --> 0:02:35.840 And on the other hand, we've got a longer term 0:02:35.919 --> 0:02:39.960 dynamic where at the at the margin, uh Trump's policies 0:02:40.040 --> 0:02:43.000 are eroding the appeal of parking so much of your 0:02:43.000 --> 0:02:46.320 reserves in the dollar, and this is the dollar is 0:02:46.360 --> 0:02:47.680 going to remain the world's reserve currency. 0:02:47.720 --> 0:02:48.520 It's not being challenged. 0:02:48.760 --> 0:02:50.880 This is not about the end of the dollars deserve 0:02:50.919 --> 0:02:52.600 currency or anything like that. It just means that you 0:02:52.680 --> 0:02:55.640 might want to slightly lower share in the US. And 0:02:55.639 --> 0:02:57.240 they're part of the reason the US is going to 0:02:57.240 --> 0:02:59.280 remain the world's reserve currency. Of the US dollar is 0:02:59.360 --> 0:03:01.640 because there is a good alternative, but one of the 0:03:01.680 --> 0:03:05.160 best alternatives out there is Europe, and it's perceived as 0:03:05.200 --> 0:03:07.280 being a safe place to park your money, and that 0:03:07.360 --> 0:03:09.160 is only enhanced by the idea of fiscal spending. So 0:03:09.200 --> 0:03:10.840 I think you're a dollar short term, I don't have 0:03:10.919 --> 0:03:12.880 much conviction, but I understand why it's being helped by 0:03:12.919 --> 0:03:15.560 the news flow. I don't think it's counterintuitive medium term. 0:03:15.639 --> 0:03:17.120 Longer term, I think you're a dollar can go chunk 0:03:17.160 --> 0:03:19.040 high this year, and I think that's both from the 0:03:19.200 --> 0:03:22.120 squeeze of the euro shorts, but also because at this 0:03:22.240 --> 0:03:24.680 year I think will ultimately be negative for the dollar, 0:03:24.680 --> 0:03:25.639 but in choppy fashion. 0:03:25.880 --> 0:03:27.919 It's interesting that you make that point. I think it's 0:03:27.919 --> 0:03:30.800 fair to say that market expectations for FED raid cuts 0:03:30.840 --> 0:03:34.560 have intensified. That's only going to remove support for the greenback. 0:03:35.160 --> 0:03:38.480 Yeah, absolutely, I think you know, again, that's another widening 0:03:38.520 --> 0:03:42.120 of the rates differential. I think that the whole consensus 0:03:42.200 --> 0:03:46.720 narrative on what Trump's policies mean for markets have evolved 0:03:46.760 --> 0:03:49.320 significantly over the last couple of weeks. So I think 0:03:49.600 --> 0:03:52.000 a large part of people in markets kind of thought 0:03:52.000 --> 0:03:54.000 that ultimately to be pro growth and to be very 0:03:54.000 --> 0:03:55.960 pro dollar, and they'd be pro US stocks. 0:03:56.160 --> 0:03:56.360 You know. 0:03:56.600 --> 0:04:01.000 It was. It was a perpetuation of US exceptional in markets, 0:04:01.040 --> 0:04:03.440 and I think that's being undermined, and it's been undermined 0:04:03.440 --> 0:04:05.320 both from the market's point of view, but also. 0:04:05.120 --> 0:04:05.960 The economic point of view. 0:04:05.960 --> 0:04:09.760 I think there's a growing realization that the policies, whether 0:04:10.840 --> 0:04:13.160 wanted as some people believe by the administration or not, 0:04:13.600 --> 0:04:16.440 are going to be very much growth negative, at least 0:04:16.440 --> 0:04:19.200 initially now. They might ultimately longer term, in time for 0:04:19.200 --> 0:04:21.600 the midterms next year, be growth positive, but that's eighteen 0:04:21.600 --> 0:04:22.000 months away. 0:04:22.000 --> 0:04:23.120 You can't trade off that right now. 0:04:23.200 --> 0:04:26.640 Right now, the policy mix is definitely much more growth 0:04:26.640 --> 0:04:28.920 negative than people are anticipating, and we've yet to fully 0:04:29.000 --> 0:04:30.960 price that kind of change in consensus narrative. 0:04:31.080 --> 0:04:33.719 So I mentioned a moment ago, proposed terrorffs on Canada 0:04:33.760 --> 0:04:36.039 and Mexico are set to go in effect on Tuesday. 0:04:36.360 --> 0:04:40.520 China will likewise be charged in additional ten percent terre 0:04:40.560 --> 0:04:43.640 of beginning March fourth as well. What's the outlook for 0:04:43.760 --> 0:04:46.799 the Chinese currency offshore right now? Given the trade tensions 0:04:46.800 --> 0:04:48.680 between Beijing and Washington. 0:04:49.200 --> 0:04:52.920 Like kind of fine and boring, like ultimately you know, 0:04:53.160 --> 0:04:55.520 PBOC has the amor to control the currency as much 0:04:55.520 --> 0:04:58.360 as it wants. It's going for stability. You know, in 0:04:58.760 --> 0:05:03.320 a world where the dollar is appreciating, the yuan will 0:05:03.320 --> 0:05:05.960 always form other peers because it's controlled. In a world 0:05:05.960 --> 0:05:09.120 where the dollar depreciates, the yuan will underperform other peers 0:05:09.360 --> 0:05:11.480 because it's just been much more managed and kind of 0:05:11.520 --> 0:05:14.240 lower beat it to the move. I really find it 0:05:14.279 --> 0:05:17.360 hard to understand what the short term dynamic is around China. 0:05:17.400 --> 0:05:19.120 This week, you have the tarik coming in, which are 0:05:19.120 --> 0:05:19.800 obviously negative. 0:05:19.839 --> 0:05:22.280 But China can cope better with this new tariff world 0:05:22.279 --> 0:05:25.000 than a lot of other countries because it's already readjusted 0:05:25.040 --> 0:05:27.000 a lot of its supply chains away, It's already kind 0:05:27.000 --> 0:05:28.800 of focused on the rest of the world, and it's 0:05:28.839 --> 0:05:30.880 other countries that have to kind of change their policies 0:05:30.960 --> 0:05:32.880 to in fact be more pro China. So in many 0:05:32.880 --> 0:05:35.880 ways that the whole tariff mix is actually China positive 0:05:35.920 --> 0:05:38.080 in a way, which is why you've seen Chinese equities 0:05:38.080 --> 0:05:40.880 do so well. And I think the structural story is 0:05:40.960 --> 0:05:44.160 very very good for China. These are not Chinese stocks much, 0:05:44.160 --> 0:05:47.520 but Hong Kong stocks are still very discounted. Deep Seek 0:05:47.640 --> 0:05:50.280 is emphasizing that China will also get the benefits of 0:05:50.279 --> 0:05:53.440 the productivity boom from AI. It's not just for US stocks, 0:05:53.480 --> 0:05:55.840 and it meanwhile, they'd be discounted because they're perceived to 0:05:55.839 --> 0:05:58.640 be out of that kind of that benefit. But the 0:05:58.880 --> 0:06:01.240 short term dynamic is very much dominated not just by 0:06:01.240 --> 0:06:03.440 the tariffanies, but also you know, we have this very 0:06:03.480 --> 0:06:06.720 important Chinese Congress this week, and there's high expectations for stimulus. 0:06:07.000 --> 0:06:10.520 They've repeatedly disappointed when there's been high expectations before. So 0:06:10.560 --> 0:06:12.599 I'm a little bit wary of the short term price section. 0:06:12.720 --> 0:06:14.360 But I think the structural story is pretty good this year. 0:06:14.440 --> 0:06:17.600 Yes, indeed, it's the two sessions meetings that happened March 0:06:17.640 --> 0:06:21.279 fourth and fifth, and Premierly is expected to deliver a 0:06:21.360 --> 0:06:25.400 report on GDP that will probably include a growth target. 0:06:25.400 --> 0:06:27.440 Do you think it's going to come in anywhere near 0:06:27.520 --> 0:06:28.159 five percent? 0:06:30.000 --> 0:06:32.599 Probably will, but it doesn't really matter, Like you know, 0:06:32.720 --> 0:06:36.040 no one really believes the exactly what's achieved, and you know, 0:06:36.640 --> 0:06:38.920 we'll probably get a number. I'd be surprised if it 0:06:39.000 --> 0:06:41.520 is above five percent because I think that you know, 0:06:42.120 --> 0:06:44.360 it's it's a GDP number, which just trending down more 0:06:44.360 --> 0:06:47.719 towards four percent, four and a half percent, and that's 0:06:47.760 --> 0:06:49.680 still fine. That's still faster than most of the rest 0:06:49.720 --> 0:06:51.720 of the world. And you know, it's faster than the US, 0:06:51.720 --> 0:06:54.560 for example, faster than Europe, faster than most major peers. 0:06:54.680 --> 0:06:56.400 So I think even if it was a it was 0:06:56.440 --> 0:06:58.920 a GDP target of four percent, the markt would be 0:06:59.160 --> 0:07:01.640 massively disappo the short term and there'd be a real 0:07:01.720 --> 0:07:04.920 shakeout of kind of some recent bullishness. But ultimately I 0:07:04.920 --> 0:07:07.360 don't think that's too worrying a structural story if it's 0:07:07.360 --> 0:07:10.840 a sustainable four percent, and if it's a real four. 0:07:10.680 --> 0:07:11.880 Percent, which I think a lot of people do have 0:07:11.920 --> 0:07:12.680 suspicions about. 0:07:13.480 --> 0:07:16.440 Yeah, So the growth target plus the fiscal deficit obviously 0:07:16.560 --> 0:07:20.520 key focal points. Is it critical that Beijing step up 0:07:20.520 --> 0:07:22.760 and do more to support the economy or do you 0:07:22.800 --> 0:07:26.280 think leadership is content to have things move kind of 0:07:26.320 --> 0:07:28.960 sideways for the moment because there's so much uncertainty. 0:07:30.120 --> 0:07:33.040 I think they are kind of content with a little 0:07:33.040 --> 0:07:33.520 bit aside it. 0:07:33.560 --> 0:07:33.920 I don't know. 0:07:33.960 --> 0:07:38.320 It's very hard to anticipate the short term thinking of 0:07:38.320 --> 0:07:40.360 the Chinese government. I think longer term it's easily because 0:07:40.360 --> 0:07:42.960 they think in long term ways, and what's been happening 0:07:42.960 --> 0:07:44.400 in the last four or five years is they add 0:07:44.400 --> 0:07:48.320 this just humongous debt bubble based around the real estate market, 0:07:48.640 --> 0:07:52.040 and they've done a very very good job of deflating 0:07:52.080 --> 0:07:54.840 that and taking the pain to set the economy up 0:07:54.840 --> 0:07:57.480 for a much better place over the long term. Now 0:07:57.480 --> 0:07:59.560 they're not fully haven't fully taken all that pain yet, 0:07:59.560 --> 0:08:01.320 but there are long way through that process, and that's 0:08:01.400 --> 0:08:03.880 very impressive without seeing a class the economy. So I 0:08:03.920 --> 0:08:05.440 think that, you know, China, what they've done is they've 0:08:05.440 --> 0:08:08.080 gone they've premptively taken the pain over the last couple 0:08:08.080 --> 0:08:10.240 of years, probably another couple of years there to kind 0:08:10.240 --> 0:08:13.040 of make their economy on a more sustainable basis. And 0:08:13.240 --> 0:08:15.800 and some would argue in fact, actually that that's actually 0:08:15.800 --> 0:08:17.640 what Trump is trying to do in the US, is 0:08:17.640 --> 0:08:20.960 that his policies are about, you know, definancialization of the 0:08:21.080 --> 0:08:23.000 US economy to make it more sustainable and make it 0:08:23.000 --> 0:08:25.640 more private sector based. So I think China are ahead 0:08:25.640 --> 0:08:27.440 in that process. It doesn't mean that they've taken all 0:08:27.480 --> 0:08:30.720 the pain, and I think they are willing to overall 0:08:30.800 --> 0:08:31.880 move slowly now. 0:08:32.160 --> 0:08:33.679 The only reason I kind. 0:08:33.480 --> 0:08:36.120 Of didn't answer your question very clearly in the first place, 0:08:36.160 --> 0:08:37.920 but whether they know that they want to kind of 0:08:37.960 --> 0:08:39.560 boost markets in the short term or are they happy 0:08:39.600 --> 0:08:41.400 to go side of it, is because I do think 0:08:41.520 --> 0:08:43.679 right now at the moment, they wouldn't mind a bit 0:08:43.679 --> 0:08:45.920 of a boost in context of all these tariff headlines 0:08:45.920 --> 0:08:48.080 and fresh tariffsman to coming in China, and so maybe 0:08:48.080 --> 0:08:51.040 it would suit them, especially with the Congress meeting this week, 0:08:51.240 --> 0:08:54.280 to have stocks do pretty well. So I'd be surprised 0:08:54.280 --> 0:08:56.360 if they really disappoint this week. I just don't think 0:08:56.360 --> 0:08:58.080 they're gonna they're gonna excite the bulls. 0:08:58.160 --> 0:08:59.800 Before I let you go, Mark, I got to get 0:08:59.800 --> 0:09:02.080 your take on the Japanese end, because over the last 0:09:02.160 --> 0:09:04.360 couple of trading days we've seen a little bit of 0:09:04.360 --> 0:09:06.520 weakness begin to build in. We've got about a one 0:09:06.559 --> 0:09:09.520 to fifty handle now against the greenback. I thought the 0:09:09.720 --> 0:09:13.000 general expectation here was that we're going to get right 0:09:13.080 --> 0:09:16.280 tightening from the boj Is there something we need to 0:09:16.320 --> 0:09:19.680 explore as to why the en is weakening ever so slightly? 0:09:20.559 --> 0:09:23.040 I mean, really, it's just the dollar move. 0:09:23.160 --> 0:09:26.080 Dollar's seen a powerful bounce at the end of last week, 0:09:26.200 --> 0:09:27.960 so I think it's related to that. I mean, dollar 0:09:28.040 --> 0:09:30.160 yen is still a chunk lower than it was a month ago. 0:09:30.360 --> 0:09:32.439 We are still going to get rate tightening in Japan 0:09:32.480 --> 0:09:34.440 this year, but there is another dynamic. I mean, this 0:09:34.520 --> 0:09:37.720 whole new tariff world is quite negative for Japan, and 0:09:37.720 --> 0:09:41.520 so the policy mix that's been proposed isn't great for Japan. 0:09:42.320 --> 0:09:45.480 That said, you know, I think it's really important that 0:09:45.520 --> 0:09:47.920 the dollar is going to remain deeply volatile. The knee 0:09:48.000 --> 0:09:50.520 jerk reaction on tariff headlines will be dollar positive, and 0:09:50.559 --> 0:09:52.120 so we might get some of that this week. But 0:09:52.160 --> 0:09:56.840 I think ultimately the dollar will come lower over this year, 0:09:56.920 --> 0:09:58.760 and I think that as a result, dollar yen will 0:09:58.760 --> 0:10:01.959 also come lower. You know, people get very excited by 0:10:01.960 --> 0:10:04.640 the n side of the dynamic, and sometimes that is 0:10:04.640 --> 0:10:07.439 really relevant. I think this year, the overall direction will 0:10:07.480 --> 0:10:09.720 be more importantly decided by what happens to the dollar, 0:10:09.720 --> 0:10:11.120 and I think that's down is. 0:10:11.120 --> 0:10:13.160 The big data point that you're looking to this week, 0:10:13.200 --> 0:10:15.120 the employment report at the end of the week in 0:10:15.160 --> 0:10:16.000 the US. 0:10:16.520 --> 0:10:17.319 Do you know what, I. 0:10:17.240 --> 0:10:19.600 Haven't even got that far ahead in my own vision 0:10:19.640 --> 0:10:23.080 because it's so important what happens on tariffs, do they 0:10:23.080 --> 0:10:25.079 actually come through and in the reaction. So I think 0:10:25.080 --> 0:10:27.760 the tariff reaction and the Chinese Congress meeting are far 0:10:27.760 --> 0:10:30.920 more important. And in fact, actually the job's data this 0:10:30.960 --> 0:10:33.840 week is not as important as normal, and that's because 0:10:34.360 --> 0:10:39.360 the review period was too early to factor in the 0:10:39.440 --> 0:10:42.240 sudden jump in initial claims out of Washington. So we're 0:10:42.240 --> 0:10:45.400 gonna see real impact on the US jobs market over 0:10:45.400 --> 0:10:48.000 the coming months, but it won't show up and disreport 0:10:48.000 --> 0:10:50.120 and yet that's another month away. So in fact, I 0:10:50.120 --> 0:10:52.360 think people will look through this job support very quickly. 0:10:52.760 --> 0:10:54.040 If it's strong, they'll ignore it. 0:10:54.080 --> 0:10:56.160 If it's weak, people will panic because it's not meant 0:10:56.200 --> 0:10:57.559 to be weak just yet, it's meant to be week 0:10:57.559 --> 0:10:58.280 another month from now. 0:10:58.280 --> 0:11:00.160 We'll leave it there, Mark, It's always a pleasure, sure. 0:11:00.200 --> 0:11:03.440 Bloomberg's Mark Cudmore from our market's live team, joining us 0:11:03.440 --> 0:11:14.880 from Singapore here on the Daybreak Asia podcast. Welcome back 0:11:14.920 --> 0:11:18.280 to the Daybreak Asia Podcast. I'm Doug Chrisner. So in 0:11:18.320 --> 0:11:20.200 the week ahead, we'll get a better reading on the 0:11:20.240 --> 0:11:24.120 American economy. We have a couple of key data points, importantly, 0:11:24.520 --> 0:11:28.080 two series of PMI reports, and with those numbers, obviously 0:11:28.400 --> 0:11:32.760 reading zon sentiment. Plus on top of that durable goods orders, 0:11:32.920 --> 0:11:36.160 there's factory orders, construction spending is in there, and then 0:11:36.480 --> 0:11:39.240 at the end of the week it's that important employment report. 0:11:39.480 --> 0:11:41.920 This go round, we're looking at numbers for the month 0:11:41.920 --> 0:11:44.400 of February. Joining us now to take a look at 0:11:44.440 --> 0:11:46.680 all of these things. Todd Waals. She is the CEO 0:11:46.960 --> 0:11:51.520 also the chief technical analyst at Alpha Cubed Investments. Todd, 0:11:51.559 --> 0:11:53.800 it's always a pleasure. Thanks so much for joining us. 0:11:54.280 --> 0:11:56.200 I think we can agree that there have been signs 0:11:56.240 --> 0:11:59.079 of slowing in the US economy and at the same 0:11:59.160 --> 0:12:02.880 time the appearance that inflation is stubborn. One of the 0:12:02.880 --> 0:12:06.079 things that's been very interesting is that yields have been down, 0:12:06.200 --> 0:12:08.480 particularly at the long end. I think the tenuere is 0:12:08.520 --> 0:12:11.400 down about fifty bases points since the peak in January. 0:12:11.760 --> 0:12:14.080 What is the bond market telling us exactly? 0:12:14.760 --> 0:12:17.440 I think the bond market, and thanks for having me on, Doug, 0:12:17.480 --> 0:12:19.520 it's always great, But the bond market is a little 0:12:19.559 --> 0:12:23.560 proxy for what we've been seeing throughout the market, overreacting 0:12:23.559 --> 0:12:27.600 in one direction or another all year. We've gotten mixed data. 0:12:27.800 --> 0:12:29.880 Of course, as you mentioned, CPI has been running a 0:12:29.880 --> 0:12:33.240 little hot. PC has some hot components, but we've got 0:12:33.240 --> 0:12:36.920 consumer confidence cooling. We've got housing, you know, arguably in 0:12:36.960 --> 0:12:40.360 a deep freeze, and tariffs are not growth friendly. So 0:12:40.400 --> 0:12:43.360 the market is running to that side of the boat 0:12:43.400 --> 0:12:46.520 right now, and we've got the tenure coming down below 0:12:46.559 --> 0:12:49.000 that what we view as a yellow light area, that 0:12:49.160 --> 0:12:51.559 four point five percent level on the tenure. We're below 0:12:51.600 --> 0:12:54.559 that now and as long as we don't plummet aggressively 0:12:54.640 --> 0:12:56.720 below that in the short run, we think we're going 0:12:56.800 --> 0:13:00.920 to see, you know, pulling back of rates, but within 0:13:01.200 --> 0:13:01.920 a range. 0:13:02.400 --> 0:13:04.319 Is some of this do perhaps to a little bit 0:13:04.320 --> 0:13:07.400 of too much optimism about the FED becoming maybe a 0:13:07.400 --> 0:13:08.679 little bit more accommodative. 0:13:09.080 --> 0:13:10.960 I mean, remember a few weeks ago we were all 0:13:11.040 --> 0:13:13.640 worried that the tenure was going to go to five percent. 0:13:13.920 --> 0:13:19.880 And what we're seeing overall, Doug is market participants. Investors 0:13:20.040 --> 0:13:23.120 have just gotten off two years of pretty easy twenty 0:13:23.160 --> 0:13:26.280 five percent plus gains in the S and P five hundred, 0:13:26.720 --> 0:13:31.440 and they've moved into sort of a micro management strategy, 0:13:31.520 --> 0:13:34.960 running from one scary news boomerang to the next. We 0:13:35.000 --> 0:13:38.079 had the deep seek news right everything was coming along 0:13:38.160 --> 0:13:41.080 just fine until then, and then we re evaluate the 0:13:41.240 --> 0:13:44.920 entire AI ecosystem in one day based on you know, 0:13:45.040 --> 0:13:47.880 marginal information. At that point, then the CPI is a 0:13:47.920 --> 0:13:50.800 little sticky. Then Nvidia comes out with great earnings and 0:13:50.880 --> 0:13:52.920 the market doesn't know what to do with them. And 0:13:53.040 --> 0:13:54.680 I don't know if you've been paying attention to this, 0:13:54.760 --> 0:13:57.880 but there's been some geopolitical news lately as well, not 0:13:58.000 --> 0:14:00.719 to mention tariffs. And then on the of all that, 0:14:01.240 --> 0:14:04.000 we get a big bitcoin announcement from the administration today, 0:14:04.200 --> 0:14:08.840 and investors are hyper overreacting to all of this information, 0:14:09.480 --> 0:14:12.640 and we're really encouraging people to get about thirty thousand 0:14:12.679 --> 0:14:14.960 feet up and look at the major trends that are 0:14:15.360 --> 0:14:17.840 going to be ongoing through twenty twenty five and beyond. 0:14:17.960 --> 0:14:21.640 Well, you mentioned the tariffs there. The proposed tariffs on 0:14:21.760 --> 0:14:24.960 Canada and Mexico are set to go into effect Tuesday, 0:14:25.240 --> 0:14:28.920 and today Treasurer Secretary Bessett was saying they're unlikely to 0:14:29.080 --> 0:14:31.360 raise inflation. Would you agree with that. 0:14:31.800 --> 0:14:34.000 In the long run, Probably not. And you know, we 0:14:34.080 --> 0:14:37.200 could have quite a debate about whether tariffs are inflation 0:14:37.240 --> 0:14:39.800 area or not. We're leaning towards them being sort of 0:14:39.800 --> 0:14:42.320 a one time issue that the market can look through. 0:14:42.680 --> 0:14:46.320 But the tariff issue writ large is not just tariffs 0:14:46.400 --> 0:14:49.480 on Canada and Mexico and some marginal tariffs on China. 0:14:49.600 --> 0:14:53.000 This is a larger sort of administration policy that we're 0:14:53.000 --> 0:14:56.160 going to be dealing with throughout the year with other 0:14:56.240 --> 0:14:59.520 trading partners. And the most important component there, I think 0:14:59.800 --> 0:15:04.160 is no trading partner has significantly pushed back yet, and 0:15:04.280 --> 0:15:08.040 once that happens, we may see another catalyst for volatility. 0:15:08.800 --> 0:15:10.560 You know, when you have the market run up like 0:15:10.600 --> 0:15:13.880 it did for two years in a row, notwithstanding any 0:15:14.560 --> 0:15:18.360 extraneous news issues, it wouldn't be surprising to see some consolidation, 0:15:18.600 --> 0:15:22.520 some volatility when you throw all this instability into the mix, 0:15:22.680 --> 0:15:25.440 and you know, the market hades instability. We've got a 0:15:25.480 --> 0:15:30.560 great recipe for a sawtooth market and outsize volatility, especially 0:15:30.760 --> 0:15:33.160 on the sectors that have done so well the last 0:15:33.160 --> 0:15:36.440 two years, and we've already seen some of that so 0:15:36.560 --> 0:15:37.240 far here to date. 0:15:37.560 --> 0:15:40.040 You mentioned the cryptos space a moment ago. You're right, 0:15:40.560 --> 0:15:43.440 President Trump did spark a rally earlier and some of 0:15:43.440 --> 0:15:46.320 the digital currencies. A lot of those gains, though, have 0:15:46.400 --> 0:15:50.960 evaporated in a post Sunday, Trump said that his executive 0:15:51.040 --> 0:15:54.560 order really directed the Presidential Working Group to move forward 0:15:55.280 --> 0:15:59.200 on a crypto strategic reserve. What do you think this 0:15:59.360 --> 0:16:00.920 means at the end end of the day. Is it 0:16:00.960 --> 0:16:04.480 a good idea? On top of that, you know. 0:16:04.640 --> 0:16:06.880 I don't know. To be honest with you, I don't 0:16:06.880 --> 0:16:09.440 want to take a strong stance pro or against crypto 0:16:10.880 --> 0:16:13.880 at this time. If the administration does it, then it's 0:16:13.880 --> 0:16:17.920 great for crypto. If they do some measured approach, then 0:16:17.960 --> 0:16:21.080 maybe not. But the bottom line, the action in crypto 0:16:21.160 --> 0:16:25.760 today speaks to the hyper over analysis and over activity 0:16:25.920 --> 0:16:30.080 from investors across the board. We are encouraging investors to 0:16:30.120 --> 0:16:33.520 look at the two big themes so that their investment 0:16:33.640 --> 0:16:37.680 process doesn't get upended like a ferry with passengers running 0:16:37.680 --> 0:16:40.080 from one side to the other, which we've been seeing 0:16:40.120 --> 0:16:44.040 all year long. We're looking at consolidation in the AI 0:16:44.080 --> 0:16:47.400 ecosystem names. But remember we're going to be talking about 0:16:47.440 --> 0:16:50.640 the build out of AI for another decade and it's 0:16:50.680 --> 0:16:53.640 going to have fits and stars, consolidation, big moves. You 0:16:53.680 --> 0:16:56.840 want to use that volatility to build out some of 0:16:56.840 --> 0:16:59.360 the names maybe that you missed or you're underrepresented in 0:17:00.520 --> 0:17:04.840 and Underneath it all, the Federal Reserve, still within their 0:17:04.880 --> 0:17:08.359 dot plot, is expecting to lower rates, and it doesn't 0:17:08.359 --> 0:17:10.359 pay to fight the FED, as you know. And in 0:17:10.359 --> 0:17:14.480 addition to that, the Trump administration seems committed to bringing 0:17:14.560 --> 0:17:16.600 rates down, and we don't know when they're going to 0:17:16.640 --> 0:17:18.639 do it. You know, it looks pretty positive in the 0:17:18.680 --> 0:17:20.760 last couple of weeks, but you know that doesn't have 0:17:20.840 --> 0:17:24.000 to keep going in the same direction quickly. But overall, 0:17:24.119 --> 0:17:26.639 we think they're going to accomplish their goal over the 0:17:26.680 --> 0:17:29.600 next six months, twelve months, eighteen months, which brings the 0:17:29.640 --> 0:17:33.520 dividend value trade right to the foe and it's a 0:17:33.520 --> 0:17:35.240 great place to kind of hide out for part of 0:17:35.240 --> 0:17:38.959 your portfolio. Large dividends, lower volatility when you've got the 0:17:39.000 --> 0:17:44.200 FED and ostensibly the new administration on your team putting 0:17:44.240 --> 0:17:45.919 the wind at your back for that trade. 0:17:46.200 --> 0:17:48.480 So we're at the end of earning season. I think 0:17:48.560 --> 0:17:51.320 roughly four hundred and fifty companies in the S and 0:17:51.320 --> 0:17:55.680 P five hundred have reported so far. Seventy five percent 0:17:55.920 --> 0:17:59.560 have beaten expectations. We get some key data points in 0:17:59.600 --> 0:18:02.520 terms of earnings this week. Cost go I think on 0:18:02.600 --> 0:18:04.760 the list along with targets, so we're looking at the 0:18:04.800 --> 0:18:08.120 American retail space. Talk to me a little bit about 0:18:08.119 --> 0:18:11.320 your expectations and if you can kind of make the 0:18:11.359 --> 0:18:15.160 pivot into the American consumer, how well is the US 0:18:15.200 --> 0:18:16.200 consumer holding up. 0:18:17.600 --> 0:18:20.560 We're seeing consumer confidence come in a little bit, and 0:18:21.320 --> 0:18:25.280 the American consumer doesn't like instability and doesn't like fear. 0:18:25.359 --> 0:18:28.359 Fear causes people to contract, and I think that's going 0:18:28.400 --> 0:18:30.600 to be a little bit of a headwind as we 0:18:30.640 --> 0:18:34.119 see these retail earnings coming in this year. The hallmark 0:18:34.160 --> 0:18:36.199 as we look back on this year is going to 0:18:36.240 --> 0:18:40.919 be choppiness volatility. But if we expect volatility or a 0:18:40.960 --> 0:18:45.240 consolidating year after two big years, if logic is our copilot, 0:18:46.200 --> 0:18:48.040 that can really help us out as we build out 0:18:48.320 --> 0:18:51.960 our portfolios. We want to fade the high value consumer 0:18:52.040 --> 0:18:54.040 names a little bit. Don't be adding to them here. 0:18:54.200 --> 0:18:57.159 They have the price for perfection and it's going to 0:18:57.200 --> 0:19:01.119 be difficult to exceed that in a year. Frankly, anyone 0:19:01.119 --> 0:19:03.920 who has to move is in a tough position with 0:19:04.000 --> 0:19:07.280 housing and rights where they're at, So it's going to 0:19:07.320 --> 0:19:08.760 be a bumpy year. We're going to see it in 0:19:08.800 --> 0:19:10.800