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

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along

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Speaker 2: with Paul Sweeney. Join us each day for insight from

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Speaker 2: the best in economics, finance, investment, and international relations. You

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Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio,

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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. You got

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Speaker 2: to get an audible questionnaires. Do this, as Ivan finds

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Speaker 2: it perfectly timed. Senior partner grizzled veteran, first heard of

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Speaker 2: at bear Sterns years ago, Tigers Financial Partners. Then I

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Speaker 2: got to go to SMCAI Hindenberg puts out a short

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Speaker 2: report of to stock. Twenty four hours later, the company

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Speaker 2: comes out with OOPS to ten K doesn't look good.

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Speaker 2: What does the fine seth radars say about SMCI going

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Speaker 2: from Hindenburg tank to oops? The ten K doesn't work well?

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Speaker 3: Not good, But they recently switched in twenty three, they

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Speaker 3: switched to de luyteen too, so I guess they're going

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Speaker 3: through the filings again to make sure that there are

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Speaker 3: no issues. I mean Hiddenberg does have a short position

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Speaker 3: in the stock, and then they do publish research that

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Speaker 3: recommends that shortening the stock based on accounting irregularities. So

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Speaker 3: I mean it is Hiddenenberg's work has been questionable. However,

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Speaker 3: I do like super Micro. It is part of the

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Speaker 3: AI play, So I right now feel this weakness is

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Speaker 3: a buying opportunity and they are a tremendous partner with

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Speaker 3: Nvidia so to manage outsourced data centers. So hopefully there

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Speaker 3: are no regularities and we look back and this will

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Speaker 3: have a buying opportunity.

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Speaker 2: You've been doing this forever and you've got a wonderful

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Speaker 2: skepticism built into your securities analysis. I got sixty six

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Speaker 2: buys eight holds no cells on the juggernaut known as Nvidia.

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Speaker 2: What does the ivan radars say when you see everybody

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Speaker 2: on board?

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Speaker 3: Well, I think back in the olden days, I used

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Speaker 3: to view a lot of buy ratings as being a

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Speaker 3: contrarian indicator. Yet it has not been the case with Nvidia.

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Speaker 3: You can see on Bloomberg that my split adjusted initial

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Speaker 3: buy rating going back, I think the twenty fifteen is

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Speaker 3: now like fifty cents. But Invidia is at the core

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Speaker 3: of this products of being able. Originally they were able

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Speaker 3: to take digital information and turn it into visual information

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Speaker 3: at a faster level through their graphics processors. And now

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Speaker 3: they are taking visual information and turning it into digital information,

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Speaker 3: which is really the driver of this oll AI large

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Speaker 3: language or machine learning process. I mean that our brains

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Speaker 3: are analog computers that see things and process visually based

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Speaker 3: on an analog basis, and they give you an example,

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Speaker 3: a computer learning the difference between a cat and a

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Speaker 3: dog is a visual process and that's what Nvidia is

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Speaker 3: enabling these computers to do as we adopt AI to

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Speaker 3: handle data processing.

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Speaker 4: So in terms of what Nvidia needs to do today

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Speaker 4: after the closed Ivan, I guess that is it has

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Speaker 4: to be another beaten raise or the stocks are.

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Speaker 5: Well absolutely well.

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Speaker 3: First of all, there's expectations that the revenue will be

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Speaker 3: up seventy to eighty percent year over year and the

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Speaker 3: earnings will be up almost one hundred percent, and that

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Speaker 3: they will guide higher again for the next quarter. And

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Speaker 3: more importantly, there's been this controversy around whether the next

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Speaker 3: generation processor, the Blackwell, will be delayed or not, which

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Speaker 3: is kind of funny because they haven't. They said it's coming,

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Speaker 3: and they never gave a specific date. So I don't

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Speaker 3: know if it's delayed if you don't really have a

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Speaker 3: specific date, but it will be. There'll be a focus

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Speaker 3: on a discussion of when the Blackwell processor will start

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Speaker 3: to ship. And they already have the next generation Ruben

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Speaker 3: processor that they announced in March of this year that

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Speaker 3: will come out next year. So they continue to make

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Speaker 3: faster and more powerful processor and combining now GPU and CPUs,

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Speaker 3: so the Ruben processor is a major leap forward and

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Speaker 3: they continue to drive this this whole process.

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Speaker 2: Ivan, do you believe, as others have said to us,

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Speaker 2: that basically Nvidia says you're not going to get the

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Speaker 2: Rubin or the Blackwell unless you buy the present ship

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Speaker 2: in that they're basically almost creating a luxury stock scarcity

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Speaker 2: by saying you don't get the twenty twenty six chip

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Speaker 2: unless you load the boat with the twenty twenty four chip.

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Speaker 2: Is there veracity to that?

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Speaker 5: Well, they can.

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Speaker 3: They control the market, and you know there is a

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Speaker 3: huge demand for processors even the CEO of super Micro,

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Speaker 3: who's friends with Jason, I mean Jensen Wong, continues to

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Speaker 3: ask him for more and more chips. You have Mark

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Speaker 3: Zuckerberg at Meta asking for more and more processors. There's

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Speaker 3: huge demand, and the data centers are being built based

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Speaker 3: on each level of the processor, while you're building out

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Speaker 3: the current processor based on the hopper, which is the

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Speaker 3: current processor then will be followed by the blackwell the

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Speaker 3: end in Nvidia has to, like any company, take care

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Speaker 3: of their best customers first.

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Speaker 4: Hey, i'van a very intelligent investor asked me earlier this morning,

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Speaker 4: why aren't some of these other chip companies more competitive

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Speaker 4: with in vidio? Why does the Nvidia have such a

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Speaker 4: strong position in this part of the market.

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Speaker 3: Because they're multiple steps ahead of everybody else. And you

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Speaker 3: know the quote the while everybody's playing checkers, Jensen Wong

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Speaker 3: is playing three D chess. So they pioneered the graphics

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Speaker 3: processor and invented I'm sorry from the beginning, have pioneered

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Speaker 3: it and continue to leapfrog and be just way ahead

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Speaker 3: of anybody else. So and if your business is dependent

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Speaker 3: on this, like the hyperscalers and the cloud service providers,

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Speaker 3: businesses are you want to go with the best, the

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Speaker 3: most reliable, of fastest, and even Jensen Wong has said

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Speaker 3: the more you spend, the more you save, so it

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Speaker 3: also has the cost in processing does present a saving,

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Speaker 3: so that is a factor.

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Speaker 2: There too, Ivan, thank you so much. I really appreciate

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Speaker 2: the comments and smcis the news breaks of questions over

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Speaker 2: their ten K filing and mister Finesith mentioning Deloyte Touche

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Speaker 2: involved there as well. Evan, don't be a stranger. Thank you.

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Speaker 2: With Tigris just incredibly well time. Marilyn Watson is it Blackrock?

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Speaker 2: She got a fancy title. She demanded this title when

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Speaker 2: she came over from JP Morgan Global Fundamental Fixed Income Strategy.

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Speaker 2: Here's what you need to know, tour duty at her

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Speaker 2: Bank of England and also a parchment from the University

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Speaker 2: of Cambridge. Marylynd been dying to talk to you about.

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Speaker 2: What I leave is a reset after the Powell speech.

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Speaker 2: When I look at full faith and credit yields today,

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Speaker 2: it just looks like a massive Dare I say, permanent

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Speaker 2: reset to lower yields? Do you buy that idea?

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Speaker 6: Well?

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Speaker 1: I certainly agree that we have seen a big research

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Speaker 1: in terms of the pricing obviously for you know, treasuries,

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Speaker 1: but the fix income as well. When you look at

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Speaker 1: the roller coaster that you know, fixed income yields have

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Speaker 1: been on, prices have been on this year from pricing

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Speaker 1: at the beginning of the year to then a lot

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Speaker 1: of cuts, then at one point even pricing a further hike.

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Speaker 1: And now I do think, you know, finally after Powell

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Speaker 1: speech at Jackson Hole, then the scene is definitely you know,

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Speaker 1: set for the Fed to.

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Speaker 7: Start cutting rates in September.

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Speaker 1: I think when you look at yields, when you look

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Speaker 1: at also all in rates, you know, I do still

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Speaker 1: think in this environment while we do think obviously the

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Speaker 1: Federal cut in September and they will continue to cut

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Speaker 1: perhaps for the next few meetings. And you know, Powell

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Speaker 1: made it very clear he said that the direction of

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Speaker 1: travel is that you know, rates will be going down.

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Speaker 1: When you look at the all in yiels that you

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Speaker 1: can also get in credit and elsewhere, then they're still

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Speaker 1: very very attractive, I think, particularly when you look at

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Speaker 1: an economy that is still pretty robust, when you look

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Speaker 1: at obviously the labor market is softening, and the said

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Speaker 1: has sort of pivoted now from focusing on prices to

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Speaker 1: focusing on the labor market, and you know, the overall

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Speaker 1: growth of the economy, it is softening, but the US

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Speaker 1: economy is still at this point in time, still doing

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Speaker 1: pretty well.

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Speaker 7: So I think we have seen a big shift.

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Speaker 1: We've seen a shift towards seeing lower rates, you know,

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Speaker 1: commencing next month. But I do still think that now

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Speaker 1: we can see some continue to see very attractive yels

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Speaker 1: in fixed income.

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Speaker 4: Marilyn, what do you expect from our European friends? The

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Speaker 4: ECB in a Bank of England have already begun cutting rates,

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Speaker 4: and will they take a little bit more confidence to

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Speaker 4: continue that trend given that we've heard Chairman Jpal say

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Speaker 4: that the US FED is ready to start cutting rates.

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Speaker 7: Yeah, that's right. So they both already began to cut rates.

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Speaker 1: Obviously, the Bank of we're going to cut them at

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Speaker 1: the beginning of this month, the ECB a little bit

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Speaker 1: before that, and we think that they're going to continue

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Speaker 1: to cut rates, but probably in a little bit more

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Speaker 1: of a gradual fashion, probably about once a quarter. So

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Speaker 1: we do think in September that the ECB will cut

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Speaker 1: rates again. Obviously at the end of this week, we

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Speaker 1: do get the flash HICP, the inflation data coming out

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Speaker 1: of the Eurozone, we think it's going to keep them

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Speaker 1: on track to cut rates again in September. In terms

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Speaker 1: of the Bank of England, we heard from Governor Andrew

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Speaker 1: Bailey also at Jackson Hall, and he was also very

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Speaker 1: clear that you know, the direction of travel is that

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Speaker 1: rates will probably go lower, but again he's in no

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Speaker 1: hurry and we do think that he will probably also

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Speaker 1: around once a quarter. So we expect that the Bank

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Speaker 1: of England may cut rates again in November. I think

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Speaker 1: when you look at the starting point, as you say,

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Speaker 1: both the ECB and the Bank of England already started there,

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Speaker 1: you know, easing cycle. The FED I think has a

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Speaker 1: little bit of catshup to do. It's a little obviously

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Speaker 1: a bit later than them, and so we do think

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Speaker 1: the FED maybe a little bit more aggressive aggressive in

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Speaker 1: terms of the next few cuts, whereas the Bank of

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Speaker 1: England the ECB will be more gradual. And also their

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Speaker 1: economies are in a different place to the US as well.

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Speaker 4: All right, Maryland, so you're a black rock. You guys

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Speaker 4: are everywhere given that backdrop of global rate declines, where

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Speaker 4: do you guys see value these days?

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Speaker 7: Yeah?

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Speaker 1: So we're in when you look at government once first

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Speaker 1: of all, then we still like some Spanish duration. We're

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Speaker 1: also long UK duration, a bit a little bit in

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Speaker 1: the US, and then we're short duration in Japan because

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Speaker 1: you know, we do think that the Bank of Japan

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Speaker 1: is actually going to continue to hyh rate this year.

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Speaker 1: But we do, like you know, at the front end

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Speaker 1: of the curve, we do like attractive names in investment

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Speaker 1: grade credit in Europe. In the Eurozone, for example, we

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Speaker 1: still think that you can find some very attractive all

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Speaker 1: in yields and some very attractive valuations, particularly when you

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Speaker 1: then hedge that back into the dollar.

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Speaker 7: We think that's pretty attractive. In many cases.

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Speaker 1: We continue to like some securitized assets, some very liquid,

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Speaker 1: very cashionative names as well, where we think, you know,

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Speaker 1: you get decent yields, you know, a decent all in carry,

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Speaker 1: but you also do have I think a lot of flexibility,

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Speaker 1: and where we are now, we want to make sure

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Speaker 1: that we really understand on a risk adjusted level, right.

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Speaker 1: We also do like areas of measure markets. For example,

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Speaker 1: we're long still.

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Speaker 2: Too Maryland, and we've got to be quick here, but

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Speaker 2: this is too important. I just put on Twitter my

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Speaker 2: Marylyn Watson chart of the day. I'm going to discuss it. Marylyn.

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Speaker 2: This is an adult chart. It's global Wall Street talk.

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Speaker 1: Folks.

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Speaker 2: Stay with me, Marylyn. I went back to Paul Voker,

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Speaker 2: and I looked at the Bloomberg Corporate Total returns series

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Speaker 2: not full faith in credit, and I took the regression

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Speaker 2: from nineteen ninety out to the present day. The bond

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Speaker 2: tobacle that you and Blackrock have lived was a three

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Speaker 2: standard deviation move, really elegant. The fact is, with a

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Speaker 2: power speech, I'm back to a negative two standard deviations.

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Speaker 2: Can you envision price up, yield down, where we could

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Speaker 2: get back to twenty and thirty year log trend on

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Speaker 2: the price of bonds.

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Speaker 1: So I think when you look at the corporate market,

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Speaker 1: I mean, we certainly could expect to see yields come

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Speaker 1: a little bit down from here.

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Speaker 7: I certainly think that's possible.

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Speaker 1: I think also when you look at the overall economy,

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Speaker 1: when you look at what is being priced in in

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Speaker 1: terms of then shear number of cuts first of all

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Speaker 1: by the FED, the market is actually pricing in a

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Speaker 1: lot of pretty negative news that we don't necessarily see

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Speaker 1: coming through next year. We do think the lead market

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Speaker 1: will continue to soften, or do you think activity will

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Speaker 1: continue to soften? But we don't see a strong catalyst

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Speaker 1: for certainly for any sort of like you know, sharp

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Speaker 1: procession or anything like that. So when you look at

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Speaker 1: the overall backdrop in terms of corporates, when you look

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Speaker 1: at particularly in the US as well, we do continue

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Speaker 1: to see a pretty strong backdrop in terms of economic

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Speaker 1: activity when it is slowing.

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Speaker 7: But again we do think you know, yields will come down.

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Speaker 1: We do think that prices, however, will remain pretty pretty attractive.

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Speaker 2: So is the clinic. Marilyn Watson, thank you so much,

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Speaker 2: greatly appreciate it. With Black Rocket Emily Rowland Joints from

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Speaker 2: the Johina Hancock Company with the clarity of her belief, Emily,

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Speaker 2: you have nailed by American by MidCap. Do you still

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Speaker 2: believe that?

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Speaker 8: Yeah, we do, Tom, And the way we think about

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Speaker 8: this is you want to identify where are the best

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Speaker 8: earnings trends and where are the best economic trends, as

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Speaker 8: simple as that, a lot of people will tell you

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Speaker 8: the valuations are the key in but for us, we

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Speaker 8: want to look at the denominator of the PE ratio.

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Speaker 8: Is the key here, and the US has simply been

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Speaker 8: able to generate better earnings results. Just this year. We're

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Speaker 8: looking at about eleven percent in the US versus about

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Speaker 8: half that in international markets. High quality stocks, guess where

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Speaker 8: you find those in the United States. Those are ones

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Speaker 8: with great balance sheet, They've got tons of cash. They're

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Speaker 8: going to do a better job defending their margins in

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Speaker 8: an environment where the late cycle dynamics continue to play

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Speaker 8: out very quickly.

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Speaker 2: Our SMCI opening here at nine point thirty two, Paul,

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Speaker 2: I'm going to go back four days before the Hindenburg news,

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Speaker 2: down twenty one percent from where it was August twenty

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Speaker 2: three into a Friday of last week right now, four

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Speaker 2: seventy one worse than it was pricing before the market opened.

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Speaker 4: Absolutely, tom right, thank you for that, Emily. We're just

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Speaker 4: finishing up earnings period here. What did you take away

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Speaker 4: from the earning cycle and maybe the guidance that we

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Speaker 4: saw from some of these companies.

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Speaker 8: Yeah, earnings this quarter, of course, much better than expected.

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Speaker 8: Of course, we have a behemoth after the close today

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Speaker 8: which is going to be highly influential. Hard to forget

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Speaker 8: that that's coming later on today. But better than expected.

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Speaker 8: Technology in particular saw that double the earnings growth as

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Speaker 8: the broad market. So I think, you know, there's so

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Speaker 8: many smoking guns out there that investors are pointing to.

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Speaker 8: Is as you know, negatives. You look at some of

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Speaker 8: the economic data that's coming in worse than expected. You

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Speaker 8: look at especially the labor market data, which is showing

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Speaker 8: some cracks. Earnings is not one of them. The earnings

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Speaker 8: backdrop has been robust, and again that's a key reason

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Speaker 8: that we've continued to emphasize US equities given those positive

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Speaker 8: earnings trends.

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Speaker 4: So we heard from the Fed chairman on Friday pretty

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Speaker 4: clearly looking to cut rates. They're assuming that actually takes

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Speaker 4: place here, maybe beginning in September. What sector's screen well,

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Speaker 4: few in a market where you know, earnings, I mean,

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Speaker 4: the rates seem to be coming down.

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Speaker 8: Yeah, I think you know, the Jackson role speech, by

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Speaker 8: the way, was pretty interesting. You know, we saw exactly

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Speaker 8: what was expected. You know, Powell obviously confirmed that cuts

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Speaker 8: are coming, but I always watched the market reaction, and

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Speaker 8: you know, we saw bonds move a little bit. Market

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Speaker 8: expectations of a rate cut didn't change really one hundred

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Speaker 8: basis points penciled in for this year, but we saw

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Speaker 8: huge moves and equities and in currencies, with the dollar

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Speaker 8: plunging to near two year low, So I think it

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Speaker 8: was a big sort of sentiment driven mood there moved.

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Speaker 8: There is nothing to me really seemed to change in

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Speaker 8: terms of the expectation, So I think that was notable

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Speaker 8: in terms of sectors and parts of the market that

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Speaker 8: we think should do well. It's sort of the opposite

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Speaker 8: of the market reaction that we've seen with areas like

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Speaker 8: small cap value stocks doing the best since that day,

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Speaker 8: areas like international value stocks which have benefited from that

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Speaker 8: week or dollar. We actually think that the FED is

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Speaker 8: probably going to be cutting because something's wrong. Maybe it's

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Speaker 8: as simple as margins are getting compressed and the unemployment

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Speaker 8: rates going up. You know, growth is slowly slowing, so

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Speaker 8: in that case, byclical assets wouldn't be rewarded. This is

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Speaker 8: like the secret life of acid allocators and the way

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Speaker 8: that we think about these process that moves it doesn't

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Speaker 8: really make sense. You have this odd kind of partnership

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Speaker 8: right now of long dated treasuries and gold in international

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Speaker 8: value and small cap stocks being the best performing things

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Speaker 8: out there. It actually doesn't really make a ton of sense.

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Speaker 8: When you open up your textbooks.

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Speaker 2: Emily Roland, stay with us, don't go away. We've got

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Speaker 2: to follow SMCI where they're having ten K issues. Thank

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Speaker 2: you Ivan find such perspective her moments ago opening can't

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Speaker 2: find a bid. It was a five point fifty and

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Speaker 2: it's now four five nine, four fifty nine off of

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Speaker 2: where it was six fourteen a couple of days ago

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Speaker 2: before the Hindenburg short report. It is down twenty five

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Speaker 2: up percent. Still can't find a bid four fifty six

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Speaker 2: right now, Emily Rowland, when we look at the market,

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Speaker 2: and this is something you can do from old John

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Speaker 2: Hancock or new John Hancock in Boston, you can say,

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Speaker 2: when does the money move? Are we getting near a

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Speaker 2: yield as we see thirty year mortgage down? Are we

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Speaker 2: getting near a cash equivalent out three months or two

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Speaker 2: years where we see money supporting equities?

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Speaker 8: Yeah, you know, I think we're there right now. One

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Speaker 8: of the you know, we think about these sort of

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Speaker 8: timely indicators in the markets that we watch, and right

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Speaker 8: now to us, it's really about initial jobleslans and high

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Speaker 8: yield bond spreads, initial claims. You know, they picked up

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Speaker 8: a little bit last week, they're still in this range

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Speaker 8: of two hundred to two hundred and sixty thousand. High

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Speaker 8: yield bond spreads extremely tame at about three hundred and

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Speaker 8: ten basis points over treasury. That's well below the average

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Speaker 8: over the last twenty years of five hundred basis points.

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Speaker 8: So I think until you see movement on that front,

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Speaker 8: I think markets are going to continue to reward equities.

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Speaker 8: We want to think about again leaning into higher quality stocks,

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Speaker 8: maybe sprinkling in some more defensive equities. But now is

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Speaker 8: the time to think about leaning into high quality bonds

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Speaker 8: because once those two things happen, breads blowout and initial

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Speaker 8: claims rise, it's often too late to capture the income

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Speaker 8: that's available in bonds. So you probably remember, you know,

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Speaker 8: down the street from John Hancock, John F. Kennedy once

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Speaker 8: said that the time to repair the roof is when

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Speaker 8: the sun is shining. And we think this is the

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Speaker 8: time to think about emphasizing bonds, you know, before it's

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Speaker 8: too late to get these great yields.

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Speaker 6: She's going to.

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Speaker 2: Quote Ted Williams next time.

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Speaker 4: She's exactly so Emily, I mean, again, we're in a

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Speaker 4: fixed income space. You can sit there in the treasury

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Speaker 4: two years, get three point eight seven percent. It's not

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Speaker 4: where we were just a little while ago, north of

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Speaker 4: four percent, but still decent. Or do I take credit risk?

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Speaker 4: How much creditrisk should I be taking here?

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Speaker 8: Yeah? So our favorite areas in terms of you know,

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Speaker 8: the risk return trade off right now, or investment grade

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Speaker 8: corporate bonds, which you're yielding you know, four to five percent,

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Speaker 8: and I'm talking about like a single a investment grade

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Speaker 8: corporate bond that's very elevated versus history. We like areas

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Speaker 8: like agency mortgage backed securities, which are also you know,

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Speaker 8: showing solid fundamentals and good valuations there. Even treasuries, hihold's tricky.

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Speaker 8: You know, when you go down the credit spectrum right

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Speaker 8: now with spreads is contained as tight as they are

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Speaker 8: historically when spreads have been at this level of around

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Speaker 8: three hundred basis points, your twelve month forward looking return

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Speaker 8: is around zero to one percent, with a range of

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Speaker 8: positive ten percent to negative ten percent. To us, the

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Speaker 8: risks aren't worth it there. And by the way, you

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Speaker 8: don't even need to go down the credit spectrum in

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Speaker 8: order to generate an elevated road right now, which we

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Speaker 8: think is pretty exciting.

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Speaker 2: Emily, Thank you so much, Emily Rolling with Portant up

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Speaker 2: to co chief investment strategist John Hancock. People go, how

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Speaker 2: do I do it? They're asking me how did to

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Speaker 2: sign autographs? And that's all because of John Tucker. Because

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Speaker 2: John Tucker taught me everything he knows.

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Speaker 5: You know.

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Speaker 2: It was great And with wind Thin it's the same

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Speaker 2: way Audrey Child Freeman was in tears Yep and London.

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Speaker 2: She goes, Win's on after me. We're going from Audrey

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Speaker 2: Child Freeman to win Thinn. That's very cool.

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Speaker 1: She was.

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Speaker 2: He was a great mentor to Audrey years ago. Doctor Finn.

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Speaker 2: Thank you so much for joining from Brown Brothers Harriman.

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Speaker 2: When I don't want to reducts like what's the euro

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Speaker 2: call it Brown Brothers harman I want to take your

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Speaker 2: just a high ownership of Pacific rim Dynamics. What does

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Speaker 2: a China slow down mean for Burma? What does it

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Speaker 2: mean for Singapore? What does it mean for Vietnam and

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Speaker 2: up to Japan?

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Speaker 6: Well, first of all, Tom Paul, thanks for having me.

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Speaker 6: It's always a pleasure. And Audrey is a tough fact

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Speaker 6: to follow. Im misworking with her. She has a pleasure

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Speaker 6: to work with and you guys are locked out and

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Speaker 6: laying her So to me, the China story is just

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Speaker 6: bubbling in the background, and we have some headlines here

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Speaker 6: and there, but we look through all the noise the

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Speaker 6: fact of the matters. They really haven't done much to

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Speaker 6: address the the underlying problem, which is a huge dead

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Speaker 6: overhand that GDP is almost three hundred percent. You know,

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Speaker 6: they've tweaked policy. They're pushing on a string right now

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Speaker 6: and trying to support the housing market. But to me,

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Speaker 6: it's a net negative in sense for a lot of

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Speaker 6: the export oriented countries that just Singapore, Taiwan. But at

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Speaker 6: the same time it's a slow in China and sort

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Speaker 6: of a rotation out of China is a net benefit

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Speaker 6: for some of its rivals such as India, Vietnam and

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Speaker 6: other countries that are that are sort of picking up

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Speaker 6: the near shoring the French shore.

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Speaker 5: So it's it's a mixed bag.

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Speaker 6: But I think in general the world has to come

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Speaker 6: to grips for the fact that China is growing two

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Speaker 6: three percent.

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Speaker 5: You know, I think it's going to continue to struggle.

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Speaker 2: Can you be long Pacific rim Can you be long

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Speaker 2: as a talking point Vietnam.

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Speaker 5: Absolutely? For instance, you mentioned Vietnam.

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Speaker 6: It's it's it's you know, one of the beneficiaries of

438
00:24:12,720 --> 00:24:14,719
Speaker 6: the of the of the French shoring.

439
00:24:15,240 --> 00:24:16,360
Speaker 5: India is another one of them.

440
00:24:16,680 --> 00:24:19,960
Speaker 6: But even the countries such as Korea, Taiwan, Singapore, look,

441
00:24:19,960 --> 00:24:21,120
Speaker 6: they have great fundamentals.

442
00:24:21,440 --> 00:24:24,720
Speaker 5: They just have a solid uh manufacturing.

443
00:24:24,160 --> 00:24:26,399
Speaker 6: Base and there are a source of a lot of

444
00:24:26,400 --> 00:24:29,479
Speaker 6: the world's chips, So there is still great stories there.

445
00:24:29,520 --> 00:24:32,320
Speaker 6: It's just that much of the growth in em over

446
00:24:32,359 --> 00:24:35,040
Speaker 6: the last ten twenty years really was really driven by

447
00:24:35,320 --> 00:24:38,080
Speaker 6: China growing ten percent and that sort of turbo charged it.

448
00:24:39,320 --> 00:24:41,800
Speaker 6: But again, we're sort of a new normal. But that

449
00:24:41,840 --> 00:24:44,720
Speaker 6: doesn't mean these countries can't, you know, can't continue to prosper.

450
00:24:44,800 --> 00:24:49,560
Speaker 6: You know, again, fundamental fundamentally story in the Pacific RIM

451
00:24:49,600 --> 00:24:52,000
Speaker 6: has remains very strong ex China.

452
00:24:52,200 --> 00:24:55,439
Speaker 5: But it's again it's it's it's a new normal.

453
00:24:55,640 --> 00:24:58,119
Speaker 4: So so when I mean, I guess most of our

454
00:24:58,160 --> 00:25:01,240
Speaker 4: audience just knows, as you mentioned earlier, that much of

455
00:25:01,240 --> 00:25:04,000
Speaker 4: the growth coming out of Asia has been China. How

456
00:25:04,040 --> 00:25:07,919
Speaker 4: about the next five to ten years. I can't imagine

457
00:25:08,040 --> 00:25:11,679
Speaker 4: that they're going to be comfortable with low single digit

458
00:25:12,040 --> 00:25:13,960
Speaker 4: kind of growth in their economy. Is there any way

459
00:25:14,760 --> 00:25:17,399
Speaker 4: they can turbo charge that or is there there are

460
00:25:17,400 --> 00:25:18,639
Speaker 4: issues just too fundamental.

461
00:25:19,359 --> 00:25:22,359
Speaker 6: No, No, I think you know, many of the countries

462
00:25:22,520 --> 00:25:25,320
Speaker 6: in that region, I've been very much expert driven, right

463
00:25:25,359 --> 00:25:30,560
Speaker 6: they China's growing, the US was growing, everyone's consuming. But

464
00:25:30,600 --> 00:25:32,560
Speaker 6: you know we're seeing sort of cooling of global growth,

465
00:25:32,600 --> 00:25:35,520
Speaker 6: you know, post Great Financial Crisis and now post pandemic.

466
00:25:36,160 --> 00:25:38,840
Speaker 6: I would say many of these countries are going to

467
00:25:39,280 --> 00:25:41,600
Speaker 6: try and sort of rotate out of being so export

468
00:25:41,640 --> 00:25:46,040
Speaker 6: oriented and trying to be more domestically oriented so to

469
00:25:46,160 --> 00:25:51,000
Speaker 6: encourage domestic consumption, domestic prosperity, and China's trying to mix

470
00:25:51,160 --> 00:25:51,680
Speaker 6: mixed bag.

471
00:25:51,720 --> 00:25:52,679
Speaker 5: You know. Given this again, is.

472
00:25:52,720 --> 00:25:55,280
Speaker 6: Heap that opening, I think other countries will start to

473
00:25:55,320 --> 00:25:59,120
Speaker 6: look a little bit more inward and in a sense

474
00:25:59,160 --> 00:26:02,800
Speaker 6: that they have to. Again, we're at this old world

475
00:26:02,880 --> 00:26:05,119
Speaker 6: where where China's going ten percent and they could just

476
00:26:05,200 --> 00:26:08,840
Speaker 6: chug and export growth and export the way to prosperity,

477
00:26:08,880 --> 00:26:10,399
Speaker 6: and it's again it's just a new normal.

478
00:26:10,840 --> 00:26:11,119
Speaker 3: Uh.

479
00:26:11,280 --> 00:26:12,879
Speaker 6: I think they can containe to prosper but we have

480
00:26:12,920 --> 00:26:16,240
Speaker 6: to see this rotation away from export orientation, you know totally.

481
00:26:16,600 --> 00:26:19,440
Speaker 5: Of course they're still export but more towards domestic consumption.

482
00:26:20,280 --> 00:26:22,480
Speaker 4: How consistent do you believe the Bank of Japan will

483
00:26:22,520 --> 00:26:26,960
Speaker 4: be and kind of trying to raise rates in that country,

484
00:26:27,119 --> 00:26:29,960
Speaker 4: support the currency. How consistent can they be?

485
00:26:30,040 --> 00:26:30,520
Speaker 6: Do you believed?

486
00:26:31,640 --> 00:26:31,920
Speaker 5: Yeah?

487
00:26:31,960 --> 00:26:33,639
Speaker 6: So, I mean I know you spend I cut the

488
00:26:34,000 --> 00:26:35,680
Speaker 6: tail end of your conversation with Augia.

489
00:26:35,720 --> 00:26:36,879
Speaker 5: I know you spend all the time on so I

490
00:26:36,880 --> 00:26:38,240
Speaker 5: won't sort of regurg to it.

491
00:26:38,240 --> 00:26:40,520
Speaker 6: But I do agree that with Audrey that you know

492
00:26:40,640 --> 00:26:43,399
Speaker 6: they so far they've they've been able to prevent a

493
00:26:43,520 --> 00:26:44,760
Speaker 6: huge major market milth down.

494
00:26:44,840 --> 00:26:46,280
Speaker 5: Yeah, we had that scared a couple of weeks ago,

495
00:26:46,400 --> 00:26:47,119
Speaker 5: but here.

496
00:26:46,960 --> 00:26:50,000
Speaker 6: We are back at the highs with equities, currency are stabilizing,

497
00:26:50,080 --> 00:26:52,200
Speaker 6: so they're managing. I think the bone I would have

498
00:26:52,240 --> 00:26:54,240
Speaker 6: to pick with the Bank of Japan has actually admitted, hey,

499
00:26:54,240 --> 00:26:56,919
Speaker 6: we're on hole because of the market. And you know

500
00:26:56,960 --> 00:26:59,119
Speaker 6: they've been some editorials on your page as well. I

501
00:26:59,119 --> 00:27:01,359
Speaker 6: think it was through l our Air and others, is

502
00:27:01,400 --> 00:27:04,400
Speaker 6: that you know that the central banks, you know, can't

503
00:27:04,440 --> 00:27:07,800
Speaker 6: always be led by the market. It's so the tail

504
00:27:07,960 --> 00:27:11,680
Speaker 6: it's wagged dog, right, the central banks Bank Japans fed,

505
00:27:11,800 --> 00:27:14,119
Speaker 6: they have to lead the markets. Uh, and so far

506
00:27:14,160 --> 00:27:16,000
Speaker 6: fort if you look at the US, if i'd has

507
00:27:16,040 --> 00:27:18,879
Speaker 6: done a fantastic job. The market's been wrong about the

508
00:27:18,920 --> 00:27:21,719
Speaker 6: easing cycle. I don't know, I've lost count I use

509
00:27:21,800 --> 00:27:24,560
Speaker 6: up on my fingers, but you know, I think that's

510
00:27:24,600 --> 00:27:27,760
Speaker 6: the story that the central banks have to be the

511
00:27:27,760 --> 00:27:29,159
Speaker 6: one that set the theme. And so I was a

512
00:27:29,160 --> 00:27:31,679
Speaker 6: little disappointed at the bank Japans sort of blinked. But

513
00:27:31,720 --> 00:27:35,080
Speaker 6: they will continue to be very, very cautious. Remember the

514
00:27:35,160 --> 00:27:37,320
Speaker 6: last two times they've hyped, they've gone into recessions. So

515
00:27:37,400 --> 00:27:40,320
Speaker 6: I don't blame them for being cautious, but I'm a

516
00:27:40,320 --> 00:27:43,719
Speaker 6: little you know, sort of, I think they should have

517
00:27:43,840 --> 00:27:44,600
Speaker 6: stood a little bit.

518
00:27:44,480 --> 00:27:49,240
Speaker 2: Stronger when there are tentative meetings an orchestrated ballet between

519
00:27:49,280 --> 00:27:53,200
Speaker 2: the United States of America and China involving Jake Sullivan.

520
00:27:53,240 --> 00:27:54,720
Speaker 2: This has been in the news in the last couple

521
00:27:54,720 --> 00:27:58,640
Speaker 2: of days, folks. In one of the themes there, obviously,

522
00:27:58,640 --> 00:28:01,760
Speaker 2: Taiwan is front and center. One of the themes is

523
00:28:01,760 --> 00:28:05,199
Speaker 2: the South China. See. I think maybe more than anyone

524
00:28:05,359 --> 00:28:08,600
Speaker 2: we talked to doctor Thinn, you've lived it. How do

525
00:28:08,680 --> 00:28:13,119
Speaker 2: we how do we have confidence in investment in the

526
00:28:13,160 --> 00:28:18,240
Speaker 2: Pacific Rim. Well, we've got ships bumping into each other, uh,

527
00:28:19,119 --> 00:28:22,399
Speaker 2: bumping into each other in the South China Sea.

528
00:28:22,680 --> 00:28:24,639
Speaker 6: Yeah, Tom that means like one of the sort of

529
00:28:24,640 --> 00:28:27,280
Speaker 6: age old dilemmas as any kind of market strategies, how

530
00:28:27,280 --> 00:28:31,320
Speaker 6: do you really position for some of these black swan events,

531
00:28:31,359 --> 00:28:35,240
Speaker 6: you know, tail risk events on a political sphere, It's difficult.

532
00:28:35,240 --> 00:28:37,800
Speaker 6: I would sort of say, point out the fact that

533
00:28:37,800 --> 00:28:41,600
Speaker 6: we are basically running two ground wars in Europe and

534
00:28:41,640 --> 00:28:44,040
Speaker 6: Middle East with risk of maybe three and four, and

535
00:28:44,120 --> 00:28:45,800
Speaker 6: yet the markets are sort of overlooking it.

536
00:28:45,840 --> 00:28:48,800
Speaker 9: So yeah, I think a political noise, it's it's always there.

537
00:28:49,000 --> 00:28:50,600
Speaker 9: It's it's I don't mean the Diminish ship Tom. I

538
00:28:50,640 --> 00:28:52,800
Speaker 9: mean it's it's a serious risk. But you know, if

539
00:28:52,800 --> 00:28:56,840
Speaker 9: you're an investor, if you're a multinational and portfolio manager,

540
00:28:56,920 --> 00:28:58,120
Speaker 9: you sort of have to look through.

541
00:28:58,000 --> 00:29:00,520
Speaker 6: It and and really just kind of cross anders hold

542
00:29:00,560 --> 00:29:02,800
Speaker 6: for the best. So to me, China is provoking, is

543
00:29:02,840 --> 00:29:04,480
Speaker 6: no doubt about it. I we've had some ship as

544
00:29:04,480 --> 00:29:07,320
Speaker 6: you point up ships pumping in the Philippines, then unprecedented

545
00:29:08,880 --> 00:29:11,840
Speaker 6: encouraging into japan airspace A is the first time it's

546
00:29:11,880 --> 00:29:15,920
Speaker 6: been confirmed. I think they're provoking. What I worry about,

547
00:29:15,920 --> 00:29:17,920
Speaker 6: and I always write, is something accidental happen? You know

548
00:29:18,080 --> 00:29:20,840
Speaker 6: something I don't think China's looking to to really cause

549
00:29:21,160 --> 00:29:24,120
Speaker 6: any kind of major converagation in the area they are provoking.

550
00:29:24,360 --> 00:29:27,160
Speaker 6: But what if something accidentally happens where playing ghost pimps?

551
00:29:27,280 --> 00:29:29,400
Speaker 6: And that's what I worry about, and so to me,

552
00:29:29,440 --> 00:29:31,280
Speaker 6: I wish everyone would sort of dial back.

553
00:29:32,080 --> 00:29:33,560
Speaker 5: I think we're unfortunately far from that.

554
00:29:33,840 --> 00:29:38,560
Speaker 2: Winton, Thank you so much, greatly appreciated. This is the

555
00:29:38,560 --> 00:29:43,560
Speaker 2: Bloomberg Surveillance Podcast, bringing you the best in economics, finance, investment,

556
00:29:43,760 --> 00:29:47,360
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557
00:29:47,600 --> 00:29:51,920
Speaker 2: on YouTube. Visit the Bloomberg Podcast channel on YouTube to

558
00:29:52,040 --> 00:29:55,440
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559
00:29:55,480 --> 00:29:59,520
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560
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561
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562
00:30:07,040 --> 00:30:08,840
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