1
00:00:02,480 --> 00:00:07,720
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

2
00:00:10,480 --> 00:00:14,280
Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis

3
00:00:14,280 --> 00:00:17,000
Speaker 2: along with Doug Krisner. Join us each day for the

4
00:00:17,079 --> 00:00:20,440
Speaker 2: stories making news and moving markets in the Asia Pacific.

5
00:00:20,640 --> 00:00:23,080
Speaker 2: You can subscribe to the show anywhere you get your

6
00:00:23,120 --> 00:00:27,040
Speaker 2: podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and

7
00:00:27,080 --> 00:00:28,440
Speaker 2: the Bloomberg Business app.

8
00:00:29,360 --> 00:00:33,879
Speaker 1: Day one of the Trump hush money trial deliberations is done.

9
00:00:34,159 --> 00:00:38,560
Speaker 1: Joining is a Bloomberg legal reporter, David Variako. David, thank

10
00:00:38,600 --> 00:00:41,120
Speaker 1: you so much for being here. I know you covered

11
00:00:41,200 --> 00:00:45,200
Speaker 1: every day of the trial, so you have seen firsthand

12
00:00:45,200 --> 00:00:48,120
Speaker 1: what the jury is deliberating. Let's go through the day here,

13
00:00:48,240 --> 00:00:50,600
Speaker 1: starting with instructions and we'll get to the notes because

14
00:00:50,600 --> 00:00:53,400
Speaker 1: I know you know that looks like it took about

15
00:00:53,400 --> 00:00:57,520
Speaker 1: an hour. Did Justice Mershan go through all thirty four counts?

16
00:00:57,520 --> 00:00:57,880
Speaker 2: Do you know?

17
00:00:57,960 --> 00:00:59,520
Speaker 1: Or was it more General.

18
00:01:01,880 --> 00:01:06,640
Speaker 3: Justice Mershon, who is overseeing the trial, gave the jury

19
00:01:06,840 --> 00:01:10,200
Speaker 3: legal instructions on how to apply the laws to the

20
00:01:10,240 --> 00:01:13,440
Speaker 3: evidence they heard in the five week trial. He didn't

21
00:01:13,480 --> 00:01:16,360
Speaker 3: actually go through the thirty four counts. That's what the

22
00:01:16,400 --> 00:01:22,360
Speaker 3: prosecutor did in closing arguments. He explained different legal concepts

23
00:01:22,400 --> 00:01:26,839
Speaker 3: to the jury and advised them on how they should deliberate,

24
00:01:27,440 --> 00:01:31,840
Speaker 3: and that took more than an hour, and the jury

25
00:01:32,240 --> 00:01:35,679
Speaker 3: in the later part of the morning went to deliberate.

26
00:01:36,920 --> 00:01:41,400
Speaker 3: A couple of hours later after a lunch break, they

27
00:01:42,400 --> 00:01:46,280
Speaker 3: sent a note back to the judge and they asked

28
00:01:47,880 --> 00:01:53,840
Speaker 3: for the testimony about four topics. But basically it centered

29
00:01:54,640 --> 00:01:58,200
Speaker 3: on a meeting that was held in twenty fifteen that

30
00:01:58,440 --> 00:02:04,040
Speaker 3: prosecutors say is key to the conspiracy that issue in

31
00:02:04,240 --> 00:02:07,880
Speaker 3: Trump's hush money trial. And this was a meeting in

32
00:02:07,920 --> 00:02:12,000
Speaker 3: August twenty fifteen that Trump attended at Trump Tower with

33
00:02:12,040 --> 00:02:17,200
Speaker 3: his former attorney Michael Cohen and the National Enquirer publisher

34
00:02:17,400 --> 00:02:21,239
Speaker 3: David Pecker. And so the jury wanted to hear what

35
00:02:21,360 --> 00:02:23,760
Speaker 3: Michael Cohen had to say when he was on the

36
00:02:23,800 --> 00:02:27,360
Speaker 3: witness stand about that meeting and what David Pecker said

37
00:02:27,360 --> 00:02:29,160
Speaker 3: on the witness stand about that meeting.

38
00:02:29,720 --> 00:02:32,720
Speaker 1: Now, now that note, and of course it couldn't be

39
00:02:32,760 --> 00:02:36,440
Speaker 1: the beginning of many it looks like that was a

40
00:02:36,560 --> 00:02:42,200
Speaker 1: key point tying that meeting in the prosecution's case. Are

41
00:02:42,240 --> 00:02:45,040
Speaker 1: they going Does it look to you like they're going

42
00:02:45,120 --> 00:02:47,160
Speaker 1: chronologically through this then.

43
00:02:48,680 --> 00:02:51,840
Speaker 3: That's a distinct possibility. It's hard to know for sure,

44
00:02:53,000 --> 00:02:57,360
Speaker 3: and we wouldn't know that until after they deliver a verdict.

45
00:02:57,480 --> 00:03:04,640
Speaker 3: But that's quite possible, and juries often do that in

46
00:03:05,360 --> 00:03:08,799
Speaker 3: complex white collar cases like this one. They may say, well,

47
00:03:09,800 --> 00:03:12,600
Speaker 3: this is how the government's played it out. Let's review

48
00:03:12,639 --> 00:03:14,560
Speaker 3: the evidence and see if it checks out.

49
00:03:15,480 --> 00:03:19,320
Speaker 1: Okay. Now, a second note later in the day was

50
00:03:19,360 --> 00:03:22,840
Speaker 1: given on a clarification of some instructions. Do do we

51
00:03:22,960 --> 00:03:25,960
Speaker 1: know specifically what that was or what it encompasses.

52
00:03:28,720 --> 00:03:32,600
Speaker 3: They essentially want to hear Judge Mersham's legal instructions all

53
00:03:32,639 --> 00:03:37,240
Speaker 3: over again. He read it today and after they deliberated

54
00:03:37,480 --> 00:03:40,760
Speaker 3: for about four hours, they said they want to hear

55
00:03:40,840 --> 00:03:46,240
Speaker 3: the instructions again. It's anybody's guess what that means. But

56
00:03:46,560 --> 00:03:49,280
Speaker 3: it could be that there's a dispute over how to

57
00:03:49,520 --> 00:03:52,760
Speaker 3: apply some aspect of the law to some area of

58
00:03:52,800 --> 00:03:57,080
Speaker 3: the case. It could be that once they got into it,

59
00:03:57,120 --> 00:04:00,480
Speaker 3: they realize just what they are getting into and it

60
00:04:00,560 --> 00:04:03,880
Speaker 3: was time to really pay attention to what the judge

61
00:04:03,920 --> 00:04:04,720
Speaker 3: wanted them to do.

62
00:04:05,720 --> 00:04:09,680
Speaker 1: Yeah, now you have a huge amount of experience with this, David.

63
00:04:09,280 --> 00:04:13,960
Speaker 1: It looks like that. I mean, it's not a slam dunk.

64
00:04:14,040 --> 00:04:17,920
Speaker 1: Either way, it looks like they really are, at least

65
00:04:17,960 --> 00:04:20,560
Speaker 1: some of them and at least the foreman or for

66
00:04:20,640 --> 00:04:24,520
Speaker 1: a woman is really is really wanted to go through

67
00:04:24,560 --> 00:04:27,000
Speaker 1: this with a with kind of a critical thinking I

68
00:04:27,720 --> 00:04:29,799
Speaker 1: and figure out what the judge meant.

69
00:04:32,000 --> 00:04:34,080
Speaker 3: It seems clear that's what they're doing. I mean, this

70
00:04:34,160 --> 00:04:36,920
Speaker 3: is a historic case in US history, and I think

71
00:04:36,960 --> 00:04:39,640
Speaker 3: the import is not lost on the jury. They know

72
00:04:39,720 --> 00:04:43,279
Speaker 3: that a lot is writing on this, a lot you know,

73
00:04:45,080 --> 00:04:48,599
Speaker 3: having to do with Donald Trump's political and legal future.

74
00:04:49,720 --> 00:04:52,799
Speaker 3: They're aware that there's a tremendous amount of media attention

75
00:04:52,920 --> 00:04:55,680
Speaker 3: on this case, and so they want to take it

76
00:04:55,760 --> 00:04:57,000
Speaker 3: carefully and deliberately.

77
00:04:58,080 --> 00:05:01,440
Speaker 1: Yeah, Now, the judge did spend some time Justice Marshaun

78
00:05:01,800 --> 00:05:05,680
Speaker 1: did spend some time talking to them about not taking

79
00:05:05,760 --> 00:05:10,240
Speaker 1: into account that political process. That's hard to do. But

80
00:05:10,720 --> 00:05:15,280
Speaker 1: to you know, adjudicate based on law, does that have

81
00:05:15,320 --> 00:05:17,440
Speaker 1: any hold or are they still going to be, as

82
00:05:17,480 --> 00:05:19,640
Speaker 1: you say, go and go through the politics of it.

83
00:05:22,160 --> 00:05:24,039
Speaker 3: Well, I think they're going to go through the evidence

84
00:05:24,200 --> 00:05:29,440
Speaker 3: and the law, and the judge asks them to leave

85
00:05:29,480 --> 00:05:37,800
Speaker 3: their political biases behind. And so the question of whether

86
00:05:37,880 --> 00:05:42,680
Speaker 3: they can completely disregard all of their life's experiences in

87
00:05:42,839 --> 00:05:46,640
Speaker 3: their beliefs is not really relevant because the judge and

88
00:05:46,680 --> 00:05:51,040
Speaker 3: the lawyers realize that everyone brings something into the jury

89
00:05:51,080 --> 00:05:53,760
Speaker 3: room and they can't leave it all behind. They just

90
00:05:53,800 --> 00:05:56,960
Speaker 3: have to promise that they'll look at the evidence with

91
00:05:57,040 --> 00:06:00,520
Speaker 3: an open mind and be fair and unbiased. And that's

92
00:06:00,560 --> 00:06:02,760
Speaker 3: what the judge is asking them to do. That's what

93
00:06:02,839 --> 00:06:05,840
Speaker 3: he asked them to do at the beginning of the trial,

94
00:06:06,440 --> 00:06:09,680
Speaker 3: and that's what he wants them to do now. And

95
00:06:09,720 --> 00:06:16,520
Speaker 3: I should also say that while Trump has consistently criticized

96
00:06:16,960 --> 00:06:22,200
Speaker 3: the judge and the district Attorney Alvin Bragg as biased

97
00:06:22,360 --> 00:06:27,400
Speaker 3: and not giving him a fair trial, this trial has

98
00:06:27,480 --> 00:06:29,760
Speaker 3: gone for several weeks and he's had a chance to

99
00:06:29,800 --> 00:06:32,960
Speaker 3: present his evidence and cross examined witnesses. And we've gotten

100
00:06:32,960 --> 00:06:34,159
Speaker 3: to this point so far.

101
00:06:35,480 --> 00:06:35,960
Speaker 2: Well, now I.

102
00:06:37,560 --> 00:06:39,320
Speaker 1: Want to follow up on that, David, Sorry to interrupt you.

103
00:06:39,400 --> 00:06:43,119
Speaker 1: We have about a minute left. Trump did come out

104
00:06:43,440 --> 00:06:47,080
Speaker 1: today outside address the media. He did not do that yesterday,

105
00:06:47,360 --> 00:06:50,400
Speaker 1: and he said that Merchan should end the proceeding to

106
00:06:50,400 --> 00:06:53,720
Speaker 1: save his reputation. Is he gagged at all? At this point?

107
00:06:55,720 --> 00:06:57,920
Speaker 3: There is a gag order about him, but it does

108
00:06:57,920 --> 00:07:03,400
Speaker 3: not prohibit him from talking about the judge or you know,

109
00:07:03,839 --> 00:07:07,279
Speaker 3: the district attorney, alvit Bragg. He's not allowed to talk

110
00:07:07,320 --> 00:07:12,120
Speaker 3: about witnesses, and he's not allowed to talk about the jury.

111
00:07:12,880 --> 00:07:16,480
Speaker 3: The jury is deliberating. It's unclear whether that will remain

112
00:07:16,560 --> 00:07:18,520
Speaker 3: in place after the trial is over.

113
00:07:19,120 --> 00:07:22,840
Speaker 1: Okay, all right, hey David, thank you so much, and

114
00:07:22,880 --> 00:07:25,320
Speaker 1: I know you're back on You're in the court room tomorrow,

115
00:07:25,440 --> 00:07:28,520
Speaker 1: so we'll be checking back with you. That's David Boriacas,

116
00:07:29,240 --> 00:07:32,680
Speaker 1: who is covering the Trump trial husband from opening statements

117
00:07:32,920 --> 00:07:35,000
Speaker 1: through now. We appreciate your time.

118
00:07:41,800 --> 00:07:46,120
Speaker 2: Larry Tintarelli, chief technical strategist for blue Chip Daily Trend Report.

119
00:07:46,720 --> 00:07:49,760
Speaker 2: So you like in Vidio, you like Freeport mac Moran,

120
00:07:49,960 --> 00:07:52,720
Speaker 2: and you like Lily. So those are three big trends,

121
00:07:53,400 --> 00:07:56,520
Speaker 2: with AI being the first, and then obviously a copper

122
00:07:56,640 --> 00:08:02,480
Speaker 2: the second, and GLP one third. What's interesting is that

123
00:08:02,600 --> 00:08:04,400
Speaker 2: all three of these areas have had a good run

124
00:08:04,440 --> 00:08:07,960
Speaker 2: this year, but basically across the broader Marcus who've kind

125
00:08:08,000 --> 00:08:10,400
Speaker 2: of stalled out over the past two months, very strong

126
00:08:10,440 --> 00:08:15,040
Speaker 2: first three months, roughly flat during April and May. So

127
00:08:15,320 --> 00:08:18,360
Speaker 2: to you, Larry, is this a welcome consolidation or is

128
00:08:18,360 --> 00:08:20,760
Speaker 2: it a sign that you know we've topped out for

129
00:08:20,800 --> 00:08:21,120
Speaker 2: the year.

130
00:08:22,800 --> 00:08:25,560
Speaker 4: Ryan, thank you for having me on. So I do

131
00:08:25,640 --> 00:08:32,120
Speaker 4: believe this is a welcome consolidation before we test hire.

132
00:08:32,240 --> 00:08:36,000
Speaker 4: The first three months we're fairly strong. April we had

133
00:08:36,120 --> 00:08:39,040
Speaker 4: a bit of a pullback, but we've had a nice

134
00:08:39,160 --> 00:08:45,240
Speaker 4: recovery to new highs, which I think is technically very bullish.

135
00:08:45,280 --> 00:08:47,800
Speaker 2: Do you not worry about the macro? We've had some

136
00:08:47,960 --> 00:08:51,040
Speaker 2: pretty weak bond auctions here of late, striving yields up

137
00:08:51,040 --> 00:08:53,400
Speaker 2: a little bit, and that's happening at a time when

138
00:08:54,240 --> 00:08:56,560
Speaker 2: there are at least a few signs that jobs and

139
00:08:56,600 --> 00:09:00,360
Speaker 2: growth may be slowing. Again, depends on what you think

140
00:09:00,400 --> 00:09:04,000
Speaker 2: that's welcome or unwelcome. But does the macro concern you?

141
00:09:05,080 --> 00:09:08,120
Speaker 4: It does, and I do worry about two things. I

142
00:09:08,240 --> 00:09:12,000
Speaker 4: worry about bond yields because I don't want to see

143
00:09:12,080 --> 00:09:16,800
Speaker 4: bond yields break out over five percent. But my biggest

144
00:09:16,880 --> 00:09:22,640
Speaker 4: concern is inflation. Inflation's really stalled out over the past

145
00:09:22,720 --> 00:09:28,040
Speaker 4: four months. So the Fed's target is twelve month core PCE.

146
00:09:29,240 --> 00:09:32,760
Speaker 4: In December that was two point nine, and over the

147
00:09:32,800 --> 00:09:36,680
Speaker 4: past four months it's only come down ten basis points.

148
00:09:36,720 --> 00:09:41,080
Speaker 4: To two point eight, so inflation that that last mile

149
00:09:41,240 --> 00:09:44,600
Speaker 4: has been very sticky, and that is a concern for me.

150
00:09:46,320 --> 00:09:48,600
Speaker 2: One of the interesting issues is that if you took

151
00:09:48,640 --> 00:09:51,240
Speaker 2: out the owner's equivalent rents and some of that kind

152
00:09:51,240 --> 00:09:53,840
Speaker 2: of stuff that's in there that they don't use in Europe,

153
00:09:54,120 --> 00:09:57,040
Speaker 2: the numbers would look a lot more pleasant. I know,

154
00:09:57,120 --> 00:09:58,720
Speaker 2: it's like, you know, these are the number is, this

155
00:09:58,840 --> 00:10:01,079
Speaker 2: is our system, this is what we do in the

156
00:10:01,200 --> 00:10:05,000
Speaker 2: United States. And I guess when you talk to people,

157
00:10:05,120 --> 00:10:08,560
Speaker 2: they still are very concerned about inflation. So no matter what,

158
00:10:08,679 --> 00:10:10,079
Speaker 2: it's still an issue, right.

159
00:10:10,840 --> 00:10:15,720
Speaker 4: Yes, absolutely, And I think the Fed is really dialed

160
00:10:15,760 --> 00:10:20,760
Speaker 4: into that two percent target for twelve month core PCE.

161
00:10:21,840 --> 00:10:24,120
Speaker 4: I'd like to see it come down on Friday, but

162
00:10:24,760 --> 00:10:28,360
Speaker 4: I think until it really starts to come down under

163
00:10:28,400 --> 00:10:32,319
Speaker 4: two point four, under two point three, I don't really

164
00:10:32,360 --> 00:10:34,760
Speaker 4: see how the Fed could cut interest rates right now.

165
00:10:35,360 --> 00:10:37,960
Speaker 2: But if the average wage increases are up around four

166
00:10:38,040 --> 00:10:41,400
Speaker 2: percent over time, if inflation is running at three and

167
00:10:41,440 --> 00:10:43,400
Speaker 2: you're getting four, you're still doing okay.

168
00:10:43,480 --> 00:10:48,120
Speaker 4: Right, That is the math. But I think what the

169
00:10:48,280 --> 00:10:50,960
Speaker 4: I think the Fed is really dug into that two

170
00:10:51,040 --> 00:10:55,559
Speaker 4: percent target, and the market is really focused on the fed.

171
00:10:56,360 --> 00:10:59,160
Speaker 2: I think it's great you brought that up, because you know,

172
00:10:59,280 --> 00:11:03,680
Speaker 2: there there's the math and then there's sentiment, and they crossover,

173
00:11:04,360 --> 00:11:07,400
Speaker 2: but they're sort of different. You talk about, well, you know,

174
00:11:07,440 --> 00:11:09,559
Speaker 2: if market interest rates are up a little bit, yields

175
00:11:09,720 --> 00:11:12,320
Speaker 2: up a little you know, companies are doing fine. Sure

176
00:11:12,800 --> 00:11:16,080
Speaker 2: on the math side, there will be you know, higher costs,

177
00:11:16,120 --> 00:11:18,600
Speaker 2: but not everybody is borrowing money, and so not every

178
00:11:18,600 --> 00:11:22,120
Speaker 2: company is so exposed. But then you've got sentiment, and

179
00:11:22,240 --> 00:11:24,040
Speaker 2: sentiment is a little trickier.

180
00:11:25,880 --> 00:11:29,160
Speaker 4: It is now. The good thing is consumer confidence came

181
00:11:29,200 --> 00:11:33,960
Speaker 4: in Tuesday at one oh two, which was above forecast.

182
00:11:34,040 --> 00:11:39,120
Speaker 4: So the consumer, I think the consumer feels good. They're

183
00:11:39,160 --> 00:11:42,440
Speaker 4: four to oh one. K's are probably near the highs,

184
00:11:42,480 --> 00:11:46,319
Speaker 4: with the markets near the highs. Consumer confidence is strong.

185
00:11:46,800 --> 00:11:51,320
Speaker 4: But I do think that inflation. I think we're still

186
00:11:51,360 --> 00:11:54,480
Speaker 4: seeing it in food. We still see it a little

187
00:11:54,480 --> 00:11:57,480
Speaker 4: bit at the gas pump. So it's it's mixed as

188
00:11:57,559 --> 00:12:01,000
Speaker 4: far as the signals. But according to consumer confidence, the

189
00:12:01,000 --> 00:12:03,520
Speaker 4: consumer's feeling good and they're spending money.

190
00:12:03,600 --> 00:12:06,559
Speaker 2: So one of your themes is AI and in particular

191
00:12:06,920 --> 00:12:10,960
Speaker 2: and VIDIA, there would be certainly some investors that would

192
00:12:11,000 --> 00:12:14,680
Speaker 2: be uncomfortable with the rapid gains of late. But you say,

193
00:12:14,720 --> 00:12:16,280
Speaker 2: if you look at the numbers, if you look at

194
00:12:16,320 --> 00:12:19,599
Speaker 2: the growth rates, if you look at what they're actually delivering,

195
00:12:20,080 --> 00:12:22,679
Speaker 2: it's not that expensive. State your case.

196
00:12:24,000 --> 00:12:28,240
Speaker 4: That's a great point. So in Vidia's earnings over the

197
00:12:28,880 --> 00:12:32,560
Speaker 4: past twelve months, net income is up six hundred and

198
00:12:32,640 --> 00:12:36,719
Speaker 4: twenty eight percent, their revenues are up two hundred and

199
00:12:36,760 --> 00:12:40,480
Speaker 4: sixty seven percent. The stock itself is only up one

200
00:12:40,559 --> 00:12:43,160
Speaker 4: hundred and ninety five percent. So as much as in

201
00:12:43,240 --> 00:12:47,439
Speaker 4: Nvidia stock has gone up, it has not gone up

202
00:12:47,760 --> 00:12:49,079
Speaker 4: as much getting cheaper.

203
00:12:49,280 --> 00:12:50,520
Speaker 2: It's getting cheaper, isn't it.

204
00:12:51,240 --> 00:12:54,400
Speaker 4: Well, I you know, it's staying about the same. Here's

205
00:12:54,679 --> 00:12:59,800
Speaker 4: here's the growth story for Nvidia. Projected earnings growth over

206
00:12:59,840 --> 00:13:03,240
Speaker 4: the next two years is fifty nine percent per year.

207
00:13:03,800 --> 00:13:07,400
Speaker 4: It trades at a thirty two forward PE. So I

208
00:13:07,480 --> 00:13:11,640
Speaker 4: would make the argument the S and P is projected

209
00:13:11,720 --> 00:13:16,600
Speaker 4: ten percent earnings growth in trades about twenty one forward PE.

210
00:13:16,760 --> 00:13:19,080
Speaker 4: So I would make the argument that in Vidia is

211
00:13:19,080 --> 00:13:20,720
Speaker 4: at a big discount to the market.

212
00:13:21,040 --> 00:13:21,199
Speaker 5: Yeah.

213
00:13:21,280 --> 00:13:24,000
Speaker 2: Absolutely, And that's why I say that it actually feels

214
00:13:24,000 --> 00:13:26,439
Speaker 2: in some ways cheaper that forward pe of thirty two.

215
00:13:27,160 --> 00:13:28,880
Speaker 2: And if you go back a couple of years it was,

216
00:13:29,720 --> 00:13:32,559
Speaker 2: you know, arguably around thirty four. Larry, thank you for

217
00:13:32,640 --> 00:13:36,720
Speaker 2: joining us. A real pleasure. Larry Tenderelli, chief technical strategist

218
00:13:36,720 --> 00:13:47,120
Speaker 2: for blue Chip Daily Trend before well joining us now

219
00:13:47,120 --> 00:13:50,800
Speaker 2: on the program for discussion of markets and economic growth

220
00:13:50,880 --> 00:13:55,440
Speaker 2: is Blita own, chairman of Dalton Investments. Blita always a

221
00:13:55,440 --> 00:13:58,720
Speaker 2: pleasure to get your insights. So the weaker bond auctions

222
00:13:58,760 --> 00:14:04,040
Speaker 2: here have driven bond yields significantly higher. It is rattling

223
00:14:04,080 --> 00:14:07,959
Speaker 2: markets for sure. In that I guess it suggests that

224
00:14:08,120 --> 00:14:11,000
Speaker 2: you know, you could get much higher market interest rates

225
00:14:11,320 --> 00:14:14,600
Speaker 2: at a time when growth might be slowing. Do you

226
00:14:14,600 --> 00:14:15,560
Speaker 2: share those fears.

227
00:14:15,920 --> 00:14:19,600
Speaker 5: I've been concerned about the supply of debt and the

228
00:14:19,680 --> 00:14:23,240
Speaker 5: need to refinance for the Treasury as well as regional

229
00:14:23,280 --> 00:14:26,400
Speaker 5: banks in particular for quite a while. Corporates are in

230
00:14:26,440 --> 00:14:29,920
Speaker 5: good shape, investors, individuals are in good shape because they

231
00:14:30,680 --> 00:14:34,600
Speaker 5: you know, many of them locked up long term margin

232
00:14:34,640 --> 00:14:39,560
Speaker 5: rates are very favorable low levels. But banks and the

233
00:14:39,680 --> 00:14:44,240
Speaker 5: Treasury aren't in such good shape. So it's a problem

234
00:14:44,240 --> 00:14:46,880
Speaker 5: that you know, we'll have to deal with unless the

235
00:14:46,880 --> 00:14:50,720
Speaker 5: Fed cuts interostrates and the economy sinks into a much

236
00:14:50,800 --> 00:14:53,240
Speaker 5: lower growth path, which I don't think is going to

237
00:14:53,280 --> 00:14:57,240
Speaker 5: happen soon, but that seems to be what could save

238
00:14:57,400 --> 00:15:00,640
Speaker 5: this scenario of credit going badly.

239
00:15:01,640 --> 00:15:04,920
Speaker 2: It's always tough to know what's welcome and what's unwelcome.

240
00:15:05,520 --> 00:15:10,320
Speaker 2: A welcome cooling in growth and in inflation is one thing,

241
00:15:10,400 --> 00:15:15,440
Speaker 2: but an unwelcome or rapid cooling is another. Where are

242
00:15:15,440 --> 00:15:16,080
Speaker 2: we at the moment.

243
00:15:16,440 --> 00:15:18,800
Speaker 5: I think we're in an unwelcome face, and the simple

244
00:15:18,800 --> 00:15:21,080
Speaker 5: reason is because we have a lot of things that

245
00:15:21,120 --> 00:15:23,080
Speaker 5: are out of whack. We borrow too much, not just

246
00:15:23,160 --> 00:15:26,480
Speaker 5: the US, but many countries, developed countries around the world.

247
00:15:27,680 --> 00:15:31,160
Speaker 5: We are moving from a unipolar world to a multipolar world,

248
00:15:31,160 --> 00:15:35,600
Speaker 5: if you like, and that takes building of new supply chains,

249
00:15:36,200 --> 00:15:40,200
Speaker 5: new relationships, which is not helpful put productivity in the

250
00:15:40,280 --> 00:15:43,640
Speaker 5: near to medium term. We're doing this transition from the

251
00:15:43,640 --> 00:15:47,600
Speaker 5: traditional economy to a greener world, which we need, and

252
00:15:47,880 --> 00:15:52,920
Speaker 5: that's also costly. With the increased your political tensions, we're

253
00:15:52,920 --> 00:15:56,040
Speaker 5: also setting more money aside for defense, which is another problem.

254
00:15:56,440 --> 00:15:59,200
Speaker 5: So then there's a lot of competition for capital, which

255
00:15:59,240 --> 00:16:03,440
Speaker 5: is just you know, just difficult for financial markets. So

256
00:16:03,920 --> 00:16:05,480
Speaker 5: on the other hand, so it's not all bad. On

257
00:16:05,480 --> 00:16:08,480
Speaker 5: the other hand, we have AI, which is extremely promising,

258
00:16:08,600 --> 00:16:11,680
Speaker 5: but it's uncertain that it will help things dramatically in

259
00:16:11,720 --> 00:16:13,480
Speaker 5: the near term, but over the long term it should

260
00:16:13,480 --> 00:16:13,920
Speaker 5: help a lot.

261
00:16:15,240 --> 00:16:17,200
Speaker 2: I have a huge respect for you, bully to but

262
00:16:17,280 --> 00:16:20,240
Speaker 2: I mean, if you're looking at overall conditions in markets,

263
00:16:21,160 --> 00:16:23,680
Speaker 2: you know, you've got nominal growth around three three and

264
00:16:23,680 --> 00:16:26,520
Speaker 2: a half percent in the United States. You've got inflation

265
00:16:26,560 --> 00:16:29,760
Speaker 2: that's come down from nine percent to something close to

266
00:16:29,800 --> 00:16:32,200
Speaker 2: a three handle, a little bit less than that. Even

267
00:16:32,280 --> 00:16:36,520
Speaker 2: on PCE numbers. You've got, as you mentioned, you've got

268
00:16:36,880 --> 00:16:39,600
Speaker 2: a killer app out there with AI that is giving

269
00:16:39,960 --> 00:16:43,560
Speaker 2: companies just a lot of fuel for growth in the future.

270
00:16:43,760 --> 00:16:46,880
Speaker 2: I mean, if you don't like this environment, what kind

271
00:16:46,920 --> 00:16:48,160
Speaker 2: of an environment do you like.

272
00:16:50,080 --> 00:16:52,520
Speaker 5: Perhaps I'm just too conservative fiscally, but I'd like to

273
00:16:52,560 --> 00:16:58,560
Speaker 5: see a government that's more responsible fiscally. It's just, you know,

274
00:16:58,560 --> 00:17:00,720
Speaker 5: it's just kind of how I wired. I suppose I'd

275
00:17:00,840 --> 00:17:03,080
Speaker 5: like to see govern and be more responsible and not

276
00:17:03,200 --> 00:17:05,840
Speaker 5: just keep kicking the can down the road. This seems

277
00:17:05,840 --> 00:17:08,399
Speaker 5: to be the mo for many countries. It's not that

278
00:17:08,480 --> 00:17:11,080
Speaker 5: I'm just critical of the US, but in Japan, we

279
00:17:11,160 --> 00:17:12,600
Speaker 5: saw what happened when they kicked the can down the

280
00:17:12,640 --> 00:17:15,320
Speaker 5: road in the nineties led to three decades of very

281
00:17:15,320 --> 00:17:20,360
Speaker 5: slow growth and very poor returns for investors, and it's

282
00:17:20,400 --> 00:17:22,080
Speaker 5: happening in China right now. I don't know how long

283
00:17:22,119 --> 00:17:24,720
Speaker 5: this will go on for this malaise in the property market.

284
00:17:25,160 --> 00:17:27,240
Speaker 5: And the US right now we're benefiting from a very

285
00:17:27,240 --> 00:17:29,440
Speaker 5: strong dollar, which is great, but I don't know how

286
00:17:29,480 --> 00:17:30,600
Speaker 5: long this will last either.

287
00:17:30,960 --> 00:17:34,240
Speaker 2: So yeah, all fair points for sure. And I note

288
00:17:34,240 --> 00:17:39,160
Speaker 2: that on your list of top conviction trades, the US

289
00:17:39,280 --> 00:17:42,680
Speaker 2: is not there. You've got Japan, India, and Korea, and

290
00:17:43,000 --> 00:17:46,359
Speaker 2: China's not there as well, So that in itself tells

291
00:17:46,359 --> 00:17:48,119
Speaker 2: an interesting story. And when we've had you on in

292
00:17:48,119 --> 00:17:51,119
Speaker 2: the past, I know you've been very cautious about China.

293
00:17:51,320 --> 00:17:53,320
Speaker 2: Let's save that for a few moments. What do you

294
00:17:53,400 --> 00:17:56,320
Speaker 2: like about Japan at the moment that you didn't like

295
00:17:56,920 --> 00:17:57,640
Speaker 2: a decade ago.

296
00:17:59,200 --> 00:18:02,640
Speaker 5: The biggest change in Japan is corporate governance reform. And

297
00:18:02,800 --> 00:18:06,200
Speaker 5: the reason that matters now is because when the Japanese

298
00:18:06,720 --> 00:18:10,040
Speaker 5: government tried to reflate the economy, they were successful in

299
00:18:10,119 --> 00:18:13,760
Speaker 5: that corporate profits rose dramatically, but the profits didn't go

300
00:18:13,840 --> 00:18:15,960
Speaker 5: to the consumer, which is why we've had such slow

301
00:18:16,000 --> 00:18:18,360
Speaker 5: growth in Japan, and it didn't go to the consumer

302
00:18:19,280 --> 00:18:22,840
Speaker 5: because companies decided to keep cash on the balance sheet.

303
00:18:23,000 --> 00:18:26,360
Speaker 5: So with corporate governance reform, companies are being forced essentially

304
00:18:26,880 --> 00:18:31,000
Speaker 5: to start distributing that money back to their investors through

305
00:18:31,080 --> 00:18:37,040
Speaker 5: higher dividends or through share buybacks. And because of the

306
00:18:37,160 --> 00:18:40,240
Speaker 5: change in the acceptance of hostile bids, you're now seeing

307
00:18:40,280 --> 00:18:43,680
Speaker 5: private equity coming into the picture, and there's a vast

308
00:18:43,680 --> 00:18:47,440
Speaker 5: discrepancy between where Japanese companies are valued on an EV

309
00:18:47,560 --> 00:18:49,919
Speaker 5: to EP the deb basis, which is, you know, the

310
00:18:49,960 --> 00:18:52,920
Speaker 5: price you pay as a private investor, which means that

311
00:18:52,960 --> 00:18:54,879
Speaker 5: you take into account the cash they have and the

312
00:18:54,920 --> 00:18:57,199
Speaker 5: debt they have. It makes companies look a lot cheaper

313
00:18:57,560 --> 00:19:01,160
Speaker 5: and the private equity price that's available out there. So

314
00:19:01,560 --> 00:19:04,040
Speaker 5: that's a huge upside, we believe for Japanese companies.

315
00:19:04,280 --> 00:19:06,840
Speaker 2: Do you see some of the same changes afoot in Korea?

316
00:19:08,359 --> 00:19:11,959
Speaker 5: Not yet. It's you know, we invest one company at

317
00:19:11,960 --> 00:19:14,600
Speaker 5: the time. So when we look hard at Korea, which

318
00:19:14,640 --> 00:19:17,920
Speaker 5: we do, there are companies that are very attractive because

319
00:19:17,960 --> 00:19:20,359
Speaker 5: the Korean market generally is cheap. So if you find one,

320
00:19:20,760 --> 00:19:22,800
Speaker 5: and because of volatility in the Korean market, which is

321
00:19:22,880 --> 00:19:25,280
Speaker 5: very high. You can make a lot of money on

322
00:19:25,320 --> 00:19:29,359
Speaker 5: individual companies that will well run, that treat their investors well.

323
00:19:29,440 --> 00:19:31,639
Speaker 5: But as a whole, I think there needs to be

324
00:19:31,840 --> 00:19:37,880
Speaker 5: significant institutional changes to taxes, to governance before you can

325
00:19:37,920 --> 00:19:40,840
Speaker 5: see a truly wholesale improvement in the Korean market.

326
00:19:42,240 --> 00:19:44,760
Speaker 2: So, you know, we're trying to make money in these markets,

327
00:19:44,800 --> 00:19:48,440
Speaker 2: and sometimes we're making choices about how to make money

328
00:19:48,960 --> 00:19:51,760
Speaker 2: rather than you know, what we think should happen or

329
00:19:51,920 --> 00:19:57,119
Speaker 2: what we think, you know might happen. China is an example.

330
00:19:57,400 --> 00:20:00,920
Speaker 2: A lot of people still bemoan what they see happening

331
00:20:01,200 --> 00:20:04,800
Speaker 2: with regulation and with China growth and all that, Yet

332
00:20:04,840 --> 00:20:08,399
Speaker 2: the markets have actually had a bounce. Here, walk me

333
00:20:08,440 --> 00:20:11,160
Speaker 2: through again why you're still cautious on the Chinese equity market.

334
00:20:12,320 --> 00:20:14,800
Speaker 5: Sure, so we invest one company at a time, and

335
00:20:14,880 --> 00:20:17,560
Speaker 5: because of that, we look not just for companies that

336
00:20:17,600 --> 00:20:20,040
Speaker 5: are good businesses and are cheap and are run by

337
00:20:20,040 --> 00:20:23,359
Speaker 5: people who will take care of minority shareholders. In China.

338
00:20:23,880 --> 00:20:27,159
Speaker 5: Ever since say three plus years ago, when jack Ma

339
00:20:27,400 --> 00:20:30,880
Speaker 5: was hauled in, that was almost you know, the sort

340
00:20:30,920 --> 00:20:33,639
Speaker 5: of a mark in time when you could see a

341
00:20:33,720 --> 00:20:37,560
Speaker 5: dramatic change in attitudes toward how businesses retreated and how

342
00:20:37,600 --> 00:20:40,680
Speaker 5: capital be allocated across the economy. So we moved from

343
00:20:40,720 --> 00:20:43,639
Speaker 5: a much more business friendly environment to one which is

344
00:20:43,720 --> 00:20:46,639
Speaker 5: much more centrally controlled and what some people call we

345
00:20:46,640 --> 00:20:49,120
Speaker 5: don't particularly call it that, but the second Cultural Revolution.

346
00:20:49,640 --> 00:20:52,399
Speaker 5: And in those types of conditions, it's very hard for

347
00:20:52,480 --> 00:20:54,760
Speaker 5: us to find companies we invest in because as a

348
00:20:54,760 --> 00:20:57,399
Speaker 5: binary risk, you might invest in a company with all

349
00:20:57,400 --> 00:20:59,920
Speaker 5: the right attributes in the next day, the industry is

350
00:21:00,320 --> 00:21:03,359
Speaker 5: essentially nationalized. So those are not risks that we're willing

351
00:21:03,400 --> 00:21:03,720
Speaker 5: to take.

352
00:21:04,160 --> 00:21:06,840
Speaker 2: Got it. Give me thirty seconds on what you like

353
00:21:06,880 --> 00:21:10,600
Speaker 2: about India.

354
00:21:09,040 --> 00:21:13,160
Speaker 5: In New is fantastic. It's a huge economy. The middle

355
00:21:13,160 --> 00:21:15,639
Speaker 5: class is growing, so there's domestic demand for many of

356
00:21:15,640 --> 00:21:19,439
Speaker 5: the products and services that the companies provide. It is

357
00:21:19,600 --> 00:21:25,399
Speaker 5: very cheap to produce in It has enjoyed many improvements

358
00:21:26,320 --> 00:21:28,679
Speaker 5: from a fundamental standpoint because of the stable government and

359
00:21:28,720 --> 00:21:29,240
Speaker 5: will continue.

360
00:21:29,280 --> 00:21:31,880
Speaker 2: Yeah, all right, Blita, thanks so much for joining us.

361
00:21:31,880 --> 00:21:38,359
Speaker 2: Belita own chairman of Dalton Investments. This is the Bloomberg

362
00:21:38,440 --> 00:21:42,160
Speaker 2: Daybreak Asia podcast, bringing you the stories making news and

363
00:21:42,160 --> 00:21:45,760
Speaker 2: moving markets in the Asia Pacific. Visit the Bloomberg Podcast

364
00:21:45,880 --> 00:21:48,840
Speaker 2: channel on YouTube to get more episodes. Of this and

365
00:21:48,960 --> 00:21:52,679
Speaker 2: other shows from Bloomberg. Subscribe to the podcast on Apple,

366
00:21:53,040 --> 00:21:57,280
Speaker 2: Spotify or anywhere else you listen, and always on Bloomberg Radio,

367
00:21:57,400 --> 00:22:01,240
Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. Two