WEBVTT - Rocky 2025 Start for APAC Markets

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<v Speaker 1>Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner.

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<v Speaker 1>Twenty twenty five is often running with trading under way

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<v Speaker 1>in the Asia Pacific after Wall Street's first session of

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<v Speaker 1>the new year. It is a market holiday in Japan.

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<v Speaker 1>In a moment, we'll be speaking with Jay Hatfield, CEO

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<v Speaker 1>and CIO at Infrastructure Capital Management. But first we're following

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<v Speaker 1>developments in South Korea. At this hour, anti corruption investigators

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<v Speaker 1>are seeking to arrest impeached President yunsuk yol at his

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<v Speaker 1>residence and Soul Now Yonhap News as reporting officials are

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<v Speaker 1>attempting to exercise a warrant for Yun. His lawyers call

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<v Speaker 1>the warrant quote invalid. Janhapp also reports that a South

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<v Speaker 1>Korean military unit prevented those officials from entering the building.

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<v Speaker 1>Stay with the Bloomberg platforms for the latest developments in

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<v Speaker 1>South Korea. We turn our focus back to markets. Joining

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<v Speaker 1>us now is Eva Lee. She is head of Greater

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<v Speaker 1>China Equities at UBS Global Wealth Management. Iva joins us

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<v Speaker 1>from our studios in Hong Kong. Good morning to you

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<v Speaker 1>and happy New Year. I'm glad you could make time

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<v Speaker 1>to chat with us. You and I were talking a

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<v Speaker 1>moment ago about how busy the fourth quarter was, especially

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<v Speaker 1>the month of December for your business. What was the

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<v Speaker 1>reason for that? Do you think?

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<v Speaker 2>Well, I guess you know Chump being elected, everyone expects

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<v Speaker 2>a lot of changes to happened after he assumed the

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<v Speaker 2>president's office, which is the third week of Jen. So

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<v Speaker 2>in fact, our you know, CIO ubs CIO had revised

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<v Speaker 2>down the expectation in terms of INDUS raycot to fifty

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<v Speaker 2>bibs for twenty five. Obviously we already had the December

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<v Speaker 2>raycot as expected, but originally we were at one hundred

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<v Speaker 2>business point cut. Now we reduced to fifty business points.

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<v Speaker 2>So that will have a big impact across the board,

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<v Speaker 2>which is like the US dollar, the expectation in terms

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<v Speaker 2>of strengthening, strengthening of ekening and also the other currency,

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<v Speaker 2>how much of a ray cut, particularly in Asia, how

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<v Speaker 2>much a ray cuts that they will have as a result.

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<v Speaker 2>So all these would impact of course they will impact

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<v Speaker 2>gold and you know all the the bond yield and everything.

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<v Speaker 2>So that's why we want to have our client prepare,

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<v Speaker 2>you know, have the portfolio positions accordingly.

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<v Speaker 1>So you're in Hong Kong, what are you hearing about

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<v Speaker 1>the economic situation on the mainland right now. Is the

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<v Speaker 1>consumer still lacking in confidence to such a degree that

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<v Speaker 1>domestic demand will kind of remain in a slump or

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<v Speaker 1>are there signs of maybe things turning just a bit

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<v Speaker 1>more positively.

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<v Speaker 2>The December number is definitely better than expected, but if

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<v Speaker 2>you dissect to break it down, what really driving the

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<v Speaker 2>growth was the manufacturing activities. The export side seems to

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<v Speaker 2>be better. But having said that, people it's sort of saying,

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<v Speaker 2>oh yeah, because they want to, you know, get all

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<v Speaker 2>the export done before Trump put in the tariff. But

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<v Speaker 2>on the other hand, the property sales seems to be

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<v Speaker 2>better in December, but that was mainly in Tier one city.

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<v Speaker 2>Low tier cities remains weak. So back to your questions,

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<v Speaker 2>consumption sentiment remains weak. I think structurally, you know, we

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<v Speaker 2>have these property you know, sales. Overall it's still not

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<v Speaker 2>yet you know, sort of recover reviving. And then on

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<v Speaker 2>the other hand, the local government bond seems to be

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<v Speaker 2>you know, sort of they already have a solutions how

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<v Speaker 2>to resolve that. But still the overall in terms of employment,

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<v Speaker 2>the prospects people feeling is not as promising as you know,

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<v Speaker 2>a few years back, so consumption as a result still weak.

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<v Speaker 2>Like of course, the auto sales were strong, the home

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<v Speaker 2>appliance were strong, that was because of subsidies, but apart

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<v Speaker 2>from that, it's still weak.

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<v Speaker 1>So what are you advising clients to do that in

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<v Speaker 1>an environment like this, particularly for clients in Asia, are

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<v Speaker 1>you directing them away from the region and into places

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<v Speaker 1>like the US?

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<v Speaker 2>Diverisfication definitely would be crucial our you know, sort of

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<v Speaker 2>as allocation positioning for china's neutral, for US, it's record

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<v Speaker 2>it attractive. So you are more or less you know,

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<v Speaker 2>can imagine you know, the sort of positioning that we recommend.

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<v Speaker 3>I mean, the.

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<v Speaker 2>Fact is we cannot well we know that China valuation

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<v Speaker 2>is cheap, you know, attractive or undemanding how you put it.

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<v Speaker 2>But uh, the tariff risks, it's definitely a head Now

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<v Speaker 2>It's not about whether tariff will whether we will have

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<v Speaker 2>a terriff height or not, it's how much that will be.

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<v Speaker 2>So I think that's why the the sort of de

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<v Speaker 2>rating multiple de rating risks is still there or the

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<v Speaker 2>pressure is still there. But on the other hand, on

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<v Speaker 2>the you in the U S side, you know, the

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<v Speaker 2>copper earnings has been better than expected that the investments

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<v Speaker 2>in AI continue. We have two themes Ai power resources.

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<v Speaker 2>These are the two, you know, so a big theme

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<v Speaker 2>that will continue to drive growth in US market. SMP

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<v Speaker 2>target we said at sixty six hundred by the end

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<v Speaker 2>of next year, so sorry this year. So you know,

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<v Speaker 2>all these you know, making us you know, recommend investors diversity,

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<v Speaker 2>but not just an equities but aquities bonds. But on

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<v Speaker 2>the equity side, we favor US.

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<v Speaker 1>What about the technology story in China? Are there signs

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<v Speaker 1>that it's beginning to develop in such a way maybe

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<v Speaker 1>because of the restrictions that have been coming from the

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<v Speaker 1>United States, those export controls on things like advanced semiconductor technology.

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<v Speaker 1>Are you seeing the beginnings of another leg up maybe

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<v Speaker 1>for technology in China?

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<v Speaker 2>Well, I mean the technology in China, you name it.

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<v Speaker 2>It's like the e commerce, the gaming partal. You know,

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<v Speaker 2>these stocks actually have been under pressure due to the

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<v Speaker 2>fact that they are proxy of China, so people these

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<v Speaker 2>docks get short particular from overseas investors, when there are

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<v Speaker 2>you know, varying concerns about the micro on the chip side,

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<v Speaker 2>like you're talking about semiconductor and all that. Yes, I mean,

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<v Speaker 2>if you know US has impulsed, it's going to impose

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<v Speaker 2>any restrictions in terms of advance you know chip that

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<v Speaker 2>would affect China, or they broaden, you know, the export

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<v Speaker 2>restrictions onto these sort of chip exports. We're going to

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<v Speaker 2>affect China, but I think that's already somehow expected by

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<v Speaker 2>the market and.

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<v Speaker 1>The diversification of supply chains away from the mainland to

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<v Speaker 1>countries maybe like Indonesia or Vietnam or even India. I mean,

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<v Speaker 1>is this something that's going to be a continued theme

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<v Speaker 1>in twenty twenty five.

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<v Speaker 2>We've got to be very careful. It depends on how

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<v Speaker 2>Chum it's going to impulse all these you know, terriffic

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<v Speaker 2>impact because he has been saying, you know, can say

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<v Speaker 2>sixty percent tariff on US as all on China, but

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<v Speaker 2>ten percent of the rest of the world. If this

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<v Speaker 2>is a ten percent of the rest of the world,

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<v Speaker 2>I don't think the market is fully priced in, and

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<v Speaker 2>that would definitely affect you know, the places that you

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<v Speaker 2>mentioned because of Vietnam, Indonesia, particularly Vietnam. If you compare

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<v Speaker 2>to twenty eighteen until now, there are actually a significant

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<v Speaker 2>increase in terms of export to US. While at the

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<v Speaker 2>same time they if you look at the data, they

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<v Speaker 2>also have import a lot of raw materials from China,

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<v Speaker 2>so you can look at it. It's like a course out,

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<v Speaker 2>you know, China manufacturing platform. So if us you know,

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<v Speaker 2>sort of look at this data and sort of target

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<v Speaker 2>vietnamed will be affected, or some other regions that have

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<v Speaker 2>been you know, receiving the stupifications of manufacturing platforms from

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<v Speaker 2>China will also be affected.

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<v Speaker 1>So, Eva, I'm curious, you seem to be questioning a lot.

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<v Speaker 1>There's a lot of uncertain I get that. I'm curious

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<v Speaker 1>about how much cash you're sitting on right now, waiting

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<v Speaker 1>for opportunities, maybe for the dust to settle and reveal

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<v Speaker 1>some things that may look attractive to you. Are you

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<v Speaker 1>holding a fair amount of cash these days? Or is

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<v Speaker 1>most of the money that people have given you to

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<v Speaker 1>put to work already been allocated.

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<v Speaker 2>You know, our theme within CIO is always they invested.

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<v Speaker 2>It's very difficult to time the market, so how we

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<v Speaker 2>do it? It's a week.

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<v Speaker 3>You know, we.

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<v Speaker 2>Diversified across equity, bonds and private so alternative investment is

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<v Speaker 2>a big thing. So we can rely on you know,

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<v Speaker 2>some of these very professional hash fund managers, pirate equities,

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<v Speaker 2>pirate debt managers. They not being affected that much by

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<v Speaker 2>the up and down of while suits in the market,

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<v Speaker 2>and in fact, on the other hand, they're able to

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<v Speaker 2>invest while people sort of stay put. So that's and

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<v Speaker 2>plus they can react very quickly. So this is a

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<v Speaker 2>theme that we actually have been pushing even before COVID,

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<v Speaker 2>and in fact it worked really well, particularly in the downtime,

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<v Speaker 2>say twenty twenty one, twenty two. So that's the way

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<v Speaker 2>we go pursue in particularly in these sort of holatile moments.

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<v Speaker 1>Yva, I know that you're a head of Greater China

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<v Speaker 1>Equities for UBS Global Wealth Management, but if you can

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<v Speaker 1>give me a little bit of your perspective on the

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<v Speaker 1>political instability that's happening right now in South Korea. I

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<v Speaker 1>was struck today by the fact that the equity market

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<v Speaker 1>is is rallying in the face of the fact that

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<v Speaker 1>we are being told that the impeached president yunsukiol is

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<v Speaker 1>facing arrest. Hard to maybe understand the two as they

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<v Speaker 1>are juxtaposed. But I'm wondering, broadly speaking, when you look

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<v Speaker 1>at the South Korean market, what do you take away.

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<v Speaker 2>In fact, if you look at fundamental. People always sort

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<v Speaker 2>of look at the tech side, which is the Taiwan

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<v Speaker 2>and Korea markets, and in fact there were clear divergence

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<v Speaker 2>like Taiwan market obviously have all performed career market by large,

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<v Speaker 2>and that was relating to the chip side, which I

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<v Speaker 2>cannot mention a company, but you know which one I'm

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<v Speaker 2>talking about, And as a result, the divergence is actually

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<v Speaker 2>because of that the company in Taiwan, it's able we

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<v Speaker 2>need to you know, right on that's ai chipped, very

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<v Speaker 2>advanced hipped technology. Wild career company seems to be sort

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<v Speaker 2>of luck behind. So this fundamental actually explained the divergence

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<v Speaker 2>and also potentially the continue of one market of performing

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<v Speaker 2>the other disregardless of you know, it's sort of the

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<v Speaker 2>political situation or evaluation. I think that is something we

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<v Speaker 2>should focus on rather than obviously the political side would

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<v Speaker 2>effect there was another element of it, but I think

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<v Speaker 2>since this you know, what happened in mauritial law, the

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<v Speaker 2>curfee or whatever, that already people already expect some changes

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<v Speaker 2>of political instability in career market.

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<v Speaker 1>We'll leave it there, Eve. It's always a pleasure. Thank

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<v Speaker 1>you for visiting with us in Happy New Year to

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<v Speaker 1>you all. The best for twenty twenty five. Evili is

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<v Speaker 1>head of Greater China Equities at UBS Global Wealth Management.

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<v Speaker 1>Joining us here on the Bloomberg Daybreak Asia podcast. Welcome

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<v Speaker 1>back to the Daybreak Asia Podcast. I'm Doug Chrisner. Joining

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<v Speaker 1>us now is Jay Hatfield. He is the CEO and

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<v Speaker 1>CIO at Infrastructure Capital Management. Jay joins us from here

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<v Speaker 1>in New York City. Jay, Thanks for being with us.

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<v Speaker 1>Happy New year to you. What did you make of

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<v Speaker 1>today's price section on the first day of trading in

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<v Speaker 1>the States?

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<v Speaker 3>Happy to hear, Doug, What we thought, well, actually was

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<v Speaker 3>happening last week was just a normal rebalance, so big

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<v Speaker 3>pension funds buying bonds and selling stocks. So we had

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<v Speaker 3>actually that was going to reverse earlier in the morning

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<v Speaker 3>before Tesla announced their shortfall and deliveries, and that really

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<v Speaker 3>caused the futures to drop and you stabilized the Nasdaq.

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<v Speaker 3>So we had a pretty big drop for a while.

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<v Speaker 3>But we think that as soon as we get into

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<v Speaker 3>earning season next week, then we will the market will

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<v Speaker 3>start rolling and stabilize. Whenever you don't have earnings, you

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<v Speaker 3>get a lot of volatility around very little information.

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<v Speaker 1>One of the other things I think that the market's

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<v Speaker 1>been struggling with is the notion of far fewer rate

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<v Speaker 1>cuts from the Fed in the new year. And I

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<v Speaker 1>was struck by that GDP forecast, the Atlanta Fed's GDP

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<v Speaker 1>now model estimating real growth at two six. Yes, that's

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<v Speaker 1>down from three to one from last week. But am

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<v Speaker 1>I wrong here? Two six is still pretty healthy?

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<v Speaker 3>It absolutely is. We do think though, that that direction

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<v Speaker 3>is going to continue. What the Fed is missing is

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<v Speaker 3>there hawkish rhetoric has caused really the only important financial

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<v Speaker 3>condition to blow out. So we had a ninety basis

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<v Speaker 3>points increase in the ten year already in a housing recession.

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<v Speaker 3>We think that's going to worsen. So we think that

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<v Speaker 3>in the less rates drop, we're going to have only

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<v Speaker 3>growth of one to two percent in the first half

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<v Speaker 3>of this year, and then the Fed will relent, and

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<v Speaker 3>we actually think there will be four cuts this year

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<v Speaker 3>and the tenure will end below four.

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<v Speaker 1>So how are you setting yourself up for twenty twenty

0:13:22.640 --> 0:13:25.040
<v Speaker 1>five then, given everything that you just kind of sketched

0:13:25.040 --> 0:13:25.480
<v Speaker 1>out there.

0:13:25.920 --> 0:13:27.880
<v Speaker 3>So we have a seven thousand target, but that is

0:13:27.960 --> 0:13:33.400
<v Speaker 3>contingent on rates dropping and a eighteen percent corporate tax rate.

0:13:34.080 --> 0:13:37.559
<v Speaker 3>We do think that, at least on a risk adjusted basis,

0:13:38.360 --> 0:13:43.319
<v Speaker 3>that yield and value stocks will outperform. Particularly a number

0:13:43.360 --> 0:13:46.720
<v Speaker 3>one call is investment banks. You know, the large caps

0:13:46.720 --> 0:13:49.839
<v Speaker 3>are Golden Sacks, Morgan Stanley, those are some of the

0:13:49.880 --> 0:13:53.760
<v Speaker 3>biggest holdings in our ICAP fund. But we think there's

0:13:53.840 --> 0:13:58.080
<v Speaker 3>going to be two more legs to the stool this year,

0:13:58.600 --> 0:14:02.120
<v Speaker 3>an m and a boom because of deregulation on the

0:14:02.160 --> 0:14:05.400
<v Speaker 3>antitrust side. But also we think there's going to be,

0:14:05.679 --> 0:14:10.800
<v Speaker 3>particularly in the second half, a ai IPOL boom that

0:14:10.840 --> 0:14:15.080
<v Speaker 3>we haven't seen yet. So we're forecasting thirty percent above

0:14:15.120 --> 0:14:20.080
<v Speaker 3>consensus estimates for Golden Socks, for instance. So we're super

0:14:20.120 --> 0:14:21.800
<v Speaker 3>bowled up on the investment banks.

0:14:22.040 --> 0:14:25.000
<v Speaker 1>If you look at what happened since early twenty twenty three,

0:14:25.080 --> 0:14:27.240
<v Speaker 1>so for all of twenty three and twenty four, I

0:14:27.240 --> 0:14:29.120
<v Speaker 1>think the S and P five hundred was up by

0:14:29.200 --> 0:14:33.080
<v Speaker 1>more than fifty percent. Do you have some projection as

0:14:33.080 --> 0:14:35.400
<v Speaker 1>to what we may see from the S and P

0:14:35.520 --> 0:14:36.560
<v Speaker 1>and twenty twenty.

0:14:36.320 --> 0:14:40.560
<v Speaker 3>Five Absolutely so. We have a seven thousand target, which

0:14:40.640 --> 0:14:45.920
<v Speaker 3>is roughly sixteen percent return. The normal return is ten percent.

0:14:46.400 --> 0:14:48.080
<v Speaker 3>So if we didn't get that, we don't get that

0:14:48.160 --> 0:14:51.680
<v Speaker 3>corporate tax reduction, so we're you know, we use the

0:14:51.760 --> 0:14:56.320
<v Speaker 3>terminal to get consensus twenty six earnings because of course,

0:14:56.400 --> 0:14:58.240
<v Speaker 3>if you have a year end twenty five target used

0:14:58.240 --> 0:15:02.160
<v Speaker 3>twenty six estimates number is only three h five, So

0:15:02.240 --> 0:15:05.560
<v Speaker 3>to get to seven thousand, we're adjusting that up, you know,

0:15:05.640 --> 0:15:08.400
<v Speaker 3>to correct for the fact that corporate taxes are lower.

0:15:08.440 --> 0:15:11.400
<v Speaker 3>So it's about a three to twenty estimate. So that's

0:15:11.440 --> 0:15:14.040
<v Speaker 3>the math. We do think we can hold this multiple

0:15:14.160 --> 0:15:17.520
<v Speaker 3>that's quite high if we get lower rates and if

0:15:17.520 --> 0:15:21.360
<v Speaker 3>we get a continued AI boom. So we think three

0:15:21.760 --> 0:15:24.480
<v Speaker 3>seven thousands of most reasonable target right now.

0:15:24.840 --> 0:15:27.880
<v Speaker 1>So if you're thinking there are possibly four rate cuts

0:15:27.920 --> 0:15:30.120
<v Speaker 1>from the Fed in the year ahead, I'm going to

0:15:30.200 --> 0:15:32.920
<v Speaker 1>imagine that there are a few screaming buys in the

0:15:32.920 --> 0:15:34.440
<v Speaker 1>bond market. Am I wrong about that?

0:15:34.880 --> 0:15:38.560
<v Speaker 3>Well, we do think that we favor Our biggest fund

0:15:38.640 --> 0:15:42.000
<v Speaker 3>is PFFA. It's like two thirds of our assets. That's

0:15:42.040 --> 0:15:45.960
<v Speaker 3>a preferred stock fund. We think the riskier portion of

0:15:46.000 --> 0:15:49.360
<v Speaker 3>fixed income will do really well because that's where you

0:15:49.400 --> 0:15:52.400
<v Speaker 3>want to be when rates are dropping or at least stable,

0:15:52.720 --> 0:15:55.680
<v Speaker 3>and the stock market's strong. You want to have spread

0:15:55.760 --> 0:15:59.360
<v Speaker 3>product that typically tightens when the stock market is rallying,

0:16:00.080 --> 0:16:03.160
<v Speaker 3>so we think that preferred stock and Hi You bonds,

0:16:03.160 --> 0:16:09.000
<v Speaker 3>which are pretty similar asset classes, will both outperform other

0:16:09.160 --> 0:16:11.080
<v Speaker 3>asset classes within fixed income.

0:16:11.400 --> 0:16:13.760
<v Speaker 1>You were talking a moment ago about the fact that

0:16:13.800 --> 0:16:16.920
<v Speaker 1>maybe there are opportunities in financials, and I'm wondering about

0:16:17.360 --> 0:16:21.080
<v Speaker 1>kind of the real estate situation, particularly commercial. We've talked

0:16:21.160 --> 0:16:26.320
<v Speaker 1>in the past about how the office complex is still

0:16:26.360 --> 0:16:29.720
<v Speaker 1>in dire straits. Is this an area of concern for

0:16:29.800 --> 0:16:32.920
<v Speaker 1>you still or are you not in an environment where

0:16:33.040 --> 0:16:35.440
<v Speaker 1>you expect rates to fall. Do you think some of

0:16:35.440 --> 0:16:38.280
<v Speaker 1>that risk will be a little bit mitigated by those

0:16:38.800 --> 0:16:39.520
<v Speaker 1>falling rates.

0:16:40.040 --> 0:16:43.040
<v Speaker 3>Well, we've had a non consensus call, which has been

0:16:43.160 --> 0:16:49.680
<v Speaker 3>correct for twenty four that the office freak out was overdone.

0:16:50.600 --> 0:16:54.240
<v Speaker 3>Not to say that for B and C offices that's

0:16:54.240 --> 0:16:56.640
<v Speaker 3>a huge problem, but keep in mind most of the

0:16:56.720 --> 0:17:01.320
<v Speaker 3>reads that are publicly traded have a buildings similar to

0:17:01.320 --> 0:17:05.440
<v Speaker 3>all most of the buildings in Midtown Manhattan, like Bloomberg

0:17:05.480 --> 0:17:09.919
<v Speaker 3>headquarters or we're headquartered. So we've been correct about that

0:17:10.119 --> 0:17:12.439
<v Speaker 3>part of it. The reason I didn't highlight that as

0:17:12.480 --> 0:17:16.440
<v Speaker 3>our number one call is that I do believe that

0:17:16.600 --> 0:17:20.920
<v Speaker 3>it's now dependent on rates going lower to really good,

0:17:20.960 --> 0:17:25.639
<v Speaker 3>good returns. So that's probably our most controversial call, is

0:17:25.640 --> 0:17:27.879
<v Speaker 3>that rates are going to go down, and that's some

0:17:27.960 --> 0:17:31.200
<v Speaker 3>banks will do fine, other banks might not. If rates

0:17:31.200 --> 0:17:34.920
<v Speaker 3>are higher, rates won't do that well. Small caps won't

0:17:34.960 --> 0:17:39.919
<v Speaker 3>do that well. So our call that non tech will

0:17:40.000 --> 0:17:42.880
<v Speaker 3>at least keep up with the tech sector is dependent

0:17:42.960 --> 0:17:43.800
<v Speaker 3>on lower rates.

0:17:44.119 --> 0:17:47.840
<v Speaker 1>Okay, So declining rates, then I'm thinking immediately weaker dollar,

0:17:48.080 --> 0:17:53.080
<v Speaker 1>and then I'm looking to markets offshore and particularly those

0:17:53.160 --> 0:17:56.800
<v Speaker 1>in Asian I'm thinking, okay, valuations that are relatively low

0:17:57.160 --> 0:17:59.680
<v Speaker 1>compared to the US. If the dollar were a week

0:17:59.680 --> 0:18:02.400
<v Speaker 1>and I want to be a buyer of risk assets

0:18:02.400 --> 0:18:03.199
<v Speaker 1>in Asia, do I not?

0:18:03.720 --> 0:18:07.200
<v Speaker 3>Well, there's no question that rates and the dollar are linked.

0:18:07.280 --> 0:18:09.840
<v Speaker 3>So that's why we don't think we can stay where

0:18:09.840 --> 0:18:12.359
<v Speaker 3>we are at this four to fifty level with a

0:18:12.480 --> 0:18:17.840
<v Speaker 3>nine percent appreciation, because it's hugely deflation area in the US.

0:18:18.040 --> 0:18:22.040
<v Speaker 3>It's the inflationary overseas. We still think the US is

0:18:22.040 --> 0:18:24.600
<v Speaker 3>the best place to be. No one else has the

0:18:24.680 --> 0:18:28.199
<v Speaker 3>technology that we have. I mean, we're bullish on Broadcom,

0:18:28.960 --> 0:18:32.040
<v Speaker 3>we're bullish on Amazon, and you really can't find those

0:18:32.040 --> 0:18:35.479
<v Speaker 3>companies in the rest of the world. So we wouldn't

0:18:35.520 --> 0:18:40.360
<v Speaker 3>buy the whole any one market if there's an idea there.

0:18:40.400 --> 0:18:42.639
<v Speaker 3>We don't cover a lot of international stocks, but if

0:18:42.640 --> 0:18:46.080
<v Speaker 3>there's an idea there, fine, But I think it's best

0:18:46.119 --> 0:18:51.119
<v Speaker 3>to be in the US participate in the most capitalist country,

0:18:51.280 --> 0:18:53.720
<v Speaker 3>one of the most capitalist countries in the world, with

0:18:53.960 --> 0:18:55.399
<v Speaker 3>definitely the best technology.

0:18:55.560 --> 0:18:59.080
<v Speaker 1>Are you generally optimistic about the policies that the incoming

0:18:59.119 --> 0:19:01.200
<v Speaker 1>Trump administration is going to deliver.

0:19:01.160 --> 0:19:06.320
<v Speaker 3>Well, we actually had the polar opposite view of consensus. Specifically,

0:19:07.440 --> 0:19:11.520
<v Speaker 3>we think that tariffs. We're not a huge fan of arrifts,

0:19:11.520 --> 0:19:15.960
<v Speaker 3>but if they do happen, they're actually deflationary because it's

0:19:15.960 --> 0:19:19.119
<v Speaker 3>just a one time increase and then it reduces demand

0:19:19.119 --> 0:19:21.080
<v Speaker 3>because it's like a sales tax, and you can use

0:19:21.119 --> 0:19:24.080
<v Speaker 3>those proceeds to cut corporate taxes. So we have the

0:19:24.200 --> 0:19:29.119
<v Speaker 3>opposite view of consensus on that. We also believe that

0:19:29.200 --> 0:19:33.040
<v Speaker 3>if you really listen to what the Trump administration is proposing,

0:19:33.560 --> 0:19:38.000
<v Speaker 3>they're proposing to deport criminals and there's some discussion of

0:19:38.040 --> 0:19:42.440
<v Speaker 3>expanding H one B visas, So those two combined would

0:19:42.480 --> 0:19:48.560
<v Speaker 3>be very deflationary because you get college educated immigrants coming

0:19:48.600 --> 0:19:52.200
<v Speaker 3>in and producing more GDP. So we think that most

0:19:52.240 --> 0:19:56.280
<v Speaker 3>of the concerns about the Trump policies are political talking

0:19:56.280 --> 0:19:57.720
<v Speaker 3>points left over from the election.

0:19:58.320 --> 0:19:59.800
<v Speaker 1>Jay will leave it. They are always a pleasure to

0:19:59.840 --> 0:20:02.440
<v Speaker 1>have a chance to visit with you. All the best

0:20:02.440 --> 0:20:04.360
<v Speaker 1>for the new year. By the way, Jay Hatfield there,

0:20:04.400 --> 0:20:09.000
<v Speaker 1>he is the CEO CIO also at Infrastructure Capital Management.

0:20:09.119 --> 0:20:11.919
<v Speaker 1>Joining us from midtown here in New York City on

0:20:11.960 --> 0:20:18.000
<v Speaker 1>the Daybreak Asia Podcast. Thanks for listening to today's episode

0:20:18.119 --> 0:20:22.080
<v Speaker 1>of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we

0:20:22.119 --> 0:20:25.919
<v Speaker 1>look at the story shaping markets, finance, and geopolitics in

0:20:25.960 --> 0:20:29.080
<v Speaker 1>the Asia Pacific. You can find us on Apple, Spotify,

0:20:29.200 --> 0:20:32.639
<v Speaker 1>the Bloomberg Podcast YouTube channel, or anywhere else you listen.

0:20:33.040 --> 0:20:35.919
<v Speaker 1>Join us again tomorrow for insight on the market moves

0:20:35.960 --> 0:20:40.480
<v Speaker 1>from Hong Kong to Singapore and Australia. I'm Doug Chrisner

0:20:40.600 --> 0:20:41.960
<v Speaker 1>and this is Bloomberg