Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Welcome to the Bloomberg Daybreak Asia Podcast. I'm Charlie pellat
Speaker 2: Doug Prisoners Off. This week coming up, we'll get the
Speaker 2: latest on the trade front when we hear from Inu
Speaker 2: Manak Fellow at the Council on Farm Relations. But we
Speaker 2: begin this morning with markets. The dollar slip for a
Speaker 2: six consecutive session Friday, poised for its longest losing streak
Speaker 2: since March of twenty twenty four. That's after President Trump
Speaker 2: tapped Council of Economic Advisor's chair Stephen Myron to serve
Speaker 2: as a Federal Reserve governor. Earlier in the date, Myron
Speaker 2: threw his support behind Governor Christopher Waller to succeed FED
Speaker 2: Chair Jerome Powell. Both have echoed Trump's call for lower
Speaker 2: interest rates. For more, we heard from Ivyng, chief investment
Speaker 2: officer for the APACK at DWS. She spoke with Bloomberg's
Speaker 2: Heidi Stroud Watts and Paul Allen.
Speaker 3: I'd be great to have you here. I just want
Speaker 3: to get your thoughts there on this movement at the
Speaker 3: FED and you governor potentially for a few months at least.
Speaker 3: In Stephen Myyron, he'll of course just be one voice
Speaker 3: in the room. But Chris Waller is chair. How does
Speaker 3: that sound?
Speaker 4: I see instead of commenting on like a people movement,
Speaker 4: we're more focused on the data itself because on last Friday,
Speaker 4: labor market data is clearly showing the weakness of the
Speaker 4: labor market, and we really look at the Federal Reserve
Speaker 4: there that two key mandate they look at is one
Speaker 4: is invasion. Of course, invasion data is going to move
Speaker 4: higher with the tariff that we're seeing on the market,
Speaker 4: but the labor market witness anyway, the federal re civical
Speaker 4: for more than dovis stent. So if we look at
Speaker 4: next showmans, we still believe that there will before weights
Speaker 4: cut on the table.
Speaker 3: The people in the room, though, do make a difference.
Speaker 3: I mean both Stephen Myron and Chris Waller, you probably
Speaker 3: describe them as duves. More likely the ease in twenty
Speaker 3: twenty six.
Speaker 4: Make it easy and easier for sure.
Speaker 3: So where do you see the cash right hitting in
Speaker 3: the US next year?
Speaker 4: We're saying about like there would be like a four
Speaker 4: weight each of them about twenty five business point like,
Speaker 4: so that having more doel federal reserve governor on the
Speaker 4: table is definitely better, But idea like the federalism is
Speaker 4: still more data. Jifferins. So we focus a lot of
Speaker 4: on the economic datas does.
Speaker 1: That return the idea of sort of American exceptionalism in
Speaker 1: US assets or is that still a quandary as long
Speaker 1: as the trade uncertainty continues.
Speaker 4: I think like that still depends on like what is
Speaker 4: the data looking at, like when you talk about US exceptionalism. Like,
Speaker 4: so we look at the economic side, look at the
Speaker 4: corporate earning size, but if you compare about in terms
Speaker 4: of the economic growth that we are seeing in US
Speaker 4: in this year, yes, is still higher than eurosoon, but
Speaker 4: if you look at the next year, based on our
Speaker 4: in house reield erosome, we'll be able to deliver higher
Speaker 4: GDB growth than US pretty much Giffern by the physical
Speaker 4: stimulus that Germany is going to put on the and
Speaker 4: this from the macro perspective, even from the corporate earning perspective, Yes,
Speaker 4: US in the second quarter is still deliver excellence results
Speaker 4: that we are seeing in the market, particularly driven by
Speaker 4: the or the tech company. But if you look at
Speaker 4: in the Europe company like for the next year, I'm
Speaker 4: not saying about there would be delivered higher earning than
Speaker 4: the US company. At least the gap we are seeing
Speaker 4: between this two region is going to be narrowing. So
Speaker 4: is US still leading the market itself? There were still
Speaker 4: majority of the part of the market, but in terms
Speaker 4: of incremental money, we believe that there will be some
Speaker 4: incremental money. Thinking about on top of US, where would
Speaker 4: be a better place to put in when the difference
Speaker 4: between US and other region kind of narrative.
Speaker 1: And you do you think Europe still has further to run,
Speaker 1: but maybe more selective? What about in Asia as well?
Speaker 2: Asia?
Speaker 4: We actually we like Japan, like I guess it's like
Speaker 4: a pre controversy, like we actually particularly like the Japan
Speaker 4: like property segments, maybe market we think about if we
Speaker 4: are expecting about two ways high coming in the bog like,
Speaker 4: why would we actually like the property seven is cell
Speaker 4: And the actually market share price is kind of revetting
Speaker 4: it right now if you look at Japan property particular
Speaker 4: on Japan, jbets is currently trading about fifteen percent discount
Speaker 4: to the NAV versus historical average, the Setter Journey ten
Speaker 4: percent premium. That's pretty much because of the macro impact
Speaker 4: I'm not here to call about like we are done
Speaker 4: with the weight hike in Japan that we're definitely not
Speaker 4: putting in this case. In fact, our in house we're
Speaker 4: thinking about there is two more weight hike coming in
Speaker 4: Japan in the next trow months that we are seeing.
Speaker 4: The key part is that when you look at close
Speaker 4: the global market, which markets still give you a decent
Speaker 4: spread between like the property and OIU versus like the
Speaker 4: that cosse even you're take into account of the way
Speaker 4: time we are putting in, there is still a decent
Speaker 4: spread in the Japan market is cell So like that's
Speaker 4: just the key part. And then we look at all
Speaker 4: the fundamental data, be it office, be logistic like a multifamily,
Speaker 4: all the setter isself due to the construction shortage we
Speaker 4: are facing right now in Japan because of the aging population,
Speaker 4: the demand suppie story is actually quite attractive. And not
Speaker 4: to even touch on the like corporate actions that we're
Speaker 4: seeing a class or the whole Japan. If you look
Speaker 4: at this particular setter with a jay with if the
Speaker 4: buy back a month in twenty twenty four, it's already
Speaker 4: higher than the last ten year aggregated number of the
Speaker 4: buy back a month, So like this setter is actually
Speaker 4: paid pretty well with like all the thematic we're talking
Speaker 4: about in Japan.
Speaker 3: And how about some of those really trade exposed sectors
Speaker 3: of Japan's equity market. So what's you view on that?
Speaker 3: And do you see that trade uncertainty now receding or
Speaker 3: is it just evolving?
Speaker 4: I think it's like it's depends on where is the
Speaker 4: expectations like compared with like on liberation day. Right now
Speaker 4: it's like basically receding a little bit, but like in
Speaker 4: terms of before the liberation date, it's like definitely all
Speaker 4: the export focused company like a trade related company that
Speaker 4: we're still getting affected. But like it's also set up
Speaker 4: by set because since I was touching on the property
Speaker 4: one logistic was the one people kind of say, oh,
Speaker 4: does it affected by the trade because there's more related
Speaker 4: to the tariff matter. But if you look at Japan
Speaker 4: just etcetera, particular for the property funds, it's more focusing
Speaker 4: on the domestic consumptions instead of external one. So that
Speaker 4: CETA itself is actually relatively immal.
Speaker 1: How do you feel about China because there's relative calm
Speaker 1: and it's fully expected that probably that trade truth will continue.
Speaker 4: Yes, yes, I think China isself like in terms of
Speaker 4: the tariff impact, like it's actually not really a key
Speaker 4: focus on the market, I would say because if you
Speaker 4: look at between Trump one and Trump two, given like
Speaker 4: the amount exported to the US is actually reducing, and
Speaker 4: also the export to US as a percent of China
Speaker 4: GDP is also below three percent. At this moment, it's
Speaker 4: still a news headline people focusing on, but a lot
Speaker 4: of focus actually have been focusing on the domestic consumption
Speaker 4: part Like it's a domestic consumption it's really getting better.
Speaker 4: Like of course a lot of driver is regarding the
Speaker 4: trading policy, consumer stimulus, but we did see that recently
Speaker 4: we're in between of the result season in like Hong
Speaker 4: Kong China. For some company with more exposure in the
Speaker 4: China retail market, they actually say that it's more a
Speaker 4: bot based recovery they're seeing, not on that particular semon,
Speaker 4: not the particular on high end or like a Circle
Speaker 4: Star that is very popular. But this is what they're
Speaker 4: saying is like they see the bottoming, they see that
Speaker 4: it's a bot based recovery over there.
Speaker 1: I mean in a PAC chief in investment officer at DWS.
Speaker 2: Welcome back to the Daybreak Asia podcast. I'm Charlie Palatine.
Speaker 2: This week for Doug Chrisner. Indian Prime Minister Narendra Modi
Speaker 2: spoke with Brazil's President Lola Thursday about strengthening trade ties
Speaker 2: amid rising US tariffs. Earlier this week, President Trump hit
Speaker 2: India with fifty percent tariffs to penalize it for its
Speaker 2: trade barriers and purchases of Russian oil. Modi is also
Speaker 2: expected to visit China later this month for a summit
Speaker 2: with President Ji Jinping, his first trip there in seven years.
Speaker 2: For more on the tariff story, we heard from Inu Manak,
Speaker 2: fellow for Trade Policy at the Council on Forim Relations.
Speaker 2: She spoke with Bloomberg's Heidi Stroud Watts and Paul.
Speaker 1: Allen and a great to agree with us. And this
Speaker 1: is another example of President Trump sort of trying to
Speaker 1: achieve his foreign policy goals through trade policy. Right, do
Speaker 1: you think it will be successful? Given that we know
Speaker 1: for India the issue of purchasing Russian crud is really
Speaker 1: a deeply structural one for its economy.
Speaker 5: This is going to be a very difficult negotiation with
Speaker 5: India and the use of tariffs as a tool for
Speaker 5: all sorts of foreign policy objectives has been sort of
Speaker 5: the method for President Trump. Now with India, what we're
Speaker 5: looking at is the potential for these tariffs to go
Speaker 5: into place on August twenty seventh, and that would be
Speaker 5: bringing it to about a fifty percent rate. That's an
Speaker 5: enormous amount of taxes that we would apply to Indian
Speaker 5: imports coming in.
Speaker 4: Now.
Speaker 5: Some of the products that we're most concerned about, like pharmaceuticals,
Speaker 5: electronics would not be affected yet, but there's a chance
Speaker 5: that all of this will be ratcheted up as well
Speaker 5: in due course, making this a very challenging negotiation that
Speaker 5: will likely have to be extended.
Speaker 1: What does it mean for India that has sort of
Speaker 1: in recent years become the rising counter an ally to
Speaker 1: the US against China, right because China also has Russian
Speaker 1: crew purchases. But those negation negotiations kind of just keep
Speaker 1: getting extended, and we're seeing the likes of traditional US
Speaker 1: allies as well, like South Korea, Japan, the Philippines really
Speaker 1: struggling to get to a point where they can get
Speaker 1: a compromise with the White House.
Speaker 2: You know.
Speaker 5: One of the odd things that we've seen during this
Speaker 5: administration has been the fact that traditional allies have been
Speaker 5: treated more like adversaries, and our adversaries have seeningly had
Speaker 5: an easier time dealing with the US president. So this
Speaker 5: is a very odd time and one where there is
Speaker 5: a shift in policy that is noticeable. We saw during
Speaker 5: the Biden years there was a lot of courting of India,
Speaker 5: trying to get India as a bulwark against China on
Speaker 5: the US side to adopt some US policies towards China
Speaker 5: that were similar. But what we see here is some
Speaker 5: sort of transactional deal making that President Trump hopes to
Speaker 5: achieve through these tactics, but it's not really clear that
Speaker 5: this will pay off. And in the meantime, we see
Speaker 5: India reaching out to others at Brazil like China, and
Speaker 5: that could actually threaten long term US objectives.
Speaker 3: Yeah, again, to your point on timing, that timing is interesting.
Speaker 3: Nurentromodi's going to be meeting Lula to Silva first visit
Speaker 3: to China in seven years. The timing is coincidental, but
Speaker 3: India of course has a long long history of non alignment.
Speaker 3: To these meetings to some degree help India position for
Speaker 3: life outside of the US fere.
Speaker 5: In many ways, that's the trajectory that India was taking
Speaker 5: for a long time, and only more recently have we
Speaker 5: seen this pivot whereby India is looking to strengthen its
Speaker 5: ties with the United States in a more productive fashion
Speaker 5: and to pivot away from some of those relationships. But
Speaker 5: I think President Trump has has made pretty clear that
Speaker 5: he is opposed to the bricks countries, including India, from
Speaker 5: taking on any sort of counter to US power across
Speaker 5: the world or setting up a currency, for example, that
Speaker 5: would be a bricks currency. So I think what we're
Speaker 5: seeing is sort of the bricks countries again sort of
Speaker 5: aligning a little bit on some of these issues, and
Speaker 5: perhaps that could lead to a little bit of pressure
Speaker 5: on the United States to change course in its current policy.
Speaker 3: And we heard from Narentromodia moment ago. I mean he
Speaker 3: vowed to protect Indian farmers at all costs. I mean domestically, politically,
Speaker 3: there's a lot on the line for Prime Minister Modi here,
Speaker 3: isn't that oh absolute?
Speaker 5: You know, India is one of the toughest negotiators you'll
Speaker 5: ever sit across from They have been persistent in maintaining
Speaker 5: fairly high levels of protection on many markets, and their
Speaker 5: tariffs remain fairly high, and India has not been willing
Speaker 5: to back down on that for a very long time.
Speaker 5: So I think for the Trump administration, this is an
Speaker 5: attempt to sort of force India to make those systemic
Speaker 5: changes that have been a problematic for quite a long time.
Speaker 5: And I'm not quite sure that India is going to
Speaker 5: cave across the board and all these things. But as
Speaker 5: we've seen with the deals that have come out so far,
Speaker 5: there are certain carrots that have been given in order
Speaker 5: to lower these terraf rates, and other countries have been
Speaker 5: willing to give something back to the United States, whether
Speaker 5: it's in investments or in reducing some targeted terror farrier.
Speaker 5: So I can imagine that India could strike some sort
Speaker 5: of deal that still maintains quite high levels of protection
Speaker 5: and yet gives the United States something that it can
Speaker 5: live with.
Speaker 1: Do you see sort of fundamental changes when it comes
Speaker 1: to realignment of strategic relationships within Asia, particularly pertaining to
Speaker 1: the global self. We've seen efforts by beajing or ready
Speaker 1: to do that. Do you think some of these changes
Speaker 1: and sort of re alliances, if you will, might be
Speaker 1: longer lasting than just this US administration.
Speaker 5: It's entirely possible that we could see global realignment of
Speaker 5: a lot of different economic and diplomatic relationships as a
Speaker 5: result of the Trump administration's tariff policy. You know, we're
Speaker 5: already starting to see trade patterns begin to shift. We're
Speaker 5: seeing some partners of the United States look for other
Speaker 5: markets to diversify their exports, and so I think that
Speaker 5: that could lead to more permanent changes the longer that
Speaker 5: this goes on. Now, of course, there could be a
Speaker 5: reversal in the future. The courts are reviewing the current
Speaker 5: tariffs that have been put in place, and then that
Speaker 5: could overturn some of these tariffs. Could still come back
Speaker 5: in terms of other statutes and laws that the president
Speaker 5: could use to enact additional tariffs. So I think that
Speaker 5: for the remainder of President Trump's time in office, this
Speaker 5: is going to be a rocky couple of years, and
Speaker 5: allies are going to have to weigh whether or not
Speaker 5: they're going to wait out any substantive change in US
Speaker 5: policy before they make substantive shifts in.
Speaker 3: Their own all right in my nec fellow for Trade
Speaker 3: Policy at the Council on Foreign Relations.
Speaker 2: Thanks for listening to today's episode of the Bloomberg Daybreak
Speaker 2: Asia Edition podcast. Each weekday, we look at the story
Speaker 2: shaping markets, finance, and geopolitics in the Asia Pacific. You
Speaker 2: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,
Speaker 2: or anywhere else you listen. Join us again tomorrow for
Speaker 2: insight on the market moves from Hong Kong to Singapore
Speaker 2: and Australia. I'm Doug Prisoner and this is Bloomberg