1
00:00:02,400 --> 00:00:05,680
Speaker 1: Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner.

2
00:00:05,960 --> 00:00:09,240
Speaker 1: Today we're looking at the risk facing Asian markets in

3
00:00:09,280 --> 00:00:12,120
Speaker 1: the final stretch of twenty twenty four. In a short while,

4
00:00:12,160 --> 00:00:15,800
Speaker 1: we'll hear from Naomi Fink, chief Global strategist at Nico

5
00:00:15,880 --> 00:00:19,560
Speaker 1: Asset Management. But first, the Bank of Korea cut its

6
00:00:19,640 --> 00:00:23,320
Speaker 1: key interest rate today by a quarter point to three percent.

7
00:00:23,440 --> 00:00:26,360
Speaker 1: This move was very much unexpected, and it follows a

8
00:00:26,400 --> 00:00:29,160
Speaker 1: policy pivot last month. For a closer look at the

9
00:00:29,200 --> 00:00:32,800
Speaker 1: Bok's action, we're joined by Bloomberg's Mark Cranfield. He is

10
00:00:32,840 --> 00:00:35,840
Speaker 1: Bloomberg M Live strategist and you can read Mark's writing

11
00:00:35,880 --> 00:00:39,840
Speaker 1: on the terminal at m liv go. Mark. Thanks for

12
00:00:40,000 --> 00:00:42,240
Speaker 1: joining us. I know you're in Singapore today. I'm sure

13
00:00:42,280 --> 00:00:45,040
Speaker 1: you've had a very busy day. Why was this so

14
00:00:45,159 --> 00:00:48,159
Speaker 1: surprising that the BOK decided to cut rates.

15
00:00:48,479 --> 00:00:51,440
Speaker 2: They've been hinting that they were comfortable with taking a

16
00:00:51,560 --> 00:00:55,720
Speaker 2: very gradual approach, and I think some investors were thinking

17
00:00:55,720 --> 00:00:58,520
Speaker 2: that they would take more time to see how things

18
00:00:58,560 --> 00:01:01,600
Speaker 2: played out in terms of the next Donald Trump administration,

19
00:01:02,720 --> 00:01:06,360
Speaker 2: And today only four people were expecting this out of

20
00:01:06,400 --> 00:01:09,640
Speaker 2: twenty two people surveyed for the meeting, so you can

21
00:01:09,640 --> 00:01:12,400
Speaker 2: tell it was definitely a surprise to the market. It

22
00:01:12,440 --> 00:01:15,120
Speaker 2: looks very much as although the Bank of Career cited

23
00:01:15,120 --> 00:01:17,560
Speaker 2: the fact that they do see inflation coming down next year,

24
00:01:18,000 --> 00:01:20,600
Speaker 2: they see growth slowing a bit as well. I think

25
00:01:20,600 --> 00:01:24,000
Speaker 2: there's a big nod to the trade risks which could

26
00:01:24,160 --> 00:01:27,480
Speaker 2: encompass the world next year. So Korea is very dependent

27
00:01:28,000 --> 00:01:31,000
Speaker 2: on its exports sector, and from some of the things

28
00:01:31,040 --> 00:01:32,839
Speaker 2: they would have heard from mister Trump in the last

29
00:01:32,840 --> 00:01:36,640
Speaker 2: few days, they're probably pretty nervous that there could be

30
00:01:36,680 --> 00:01:39,120
Speaker 2: a slowing of global trade next year, which would definitely

31
00:01:39,160 --> 00:01:41,880
Speaker 2: affect them as it would most of Asia. So this

32
00:01:42,200 --> 00:01:44,560
Speaker 2: is beginning to look like a preemptive move. It looks

33
00:01:44,600 --> 00:01:46,840
Speaker 2: like they're getting out ahead of the rest of the pack,

34
00:01:47,360 --> 00:01:49,800
Speaker 2: trying to do something that could help the Korean economy

35
00:01:50,320 --> 00:01:52,800
Speaker 2: before they face too much competition from other people.

36
00:01:53,040 --> 00:01:55,000
Speaker 1: So the idea here is to try to weaken the

37
00:01:55,040 --> 00:01:56,840
Speaker 1: currency just a bit to be a little bit more

38
00:01:56,880 --> 00:01:58,360
Speaker 1: competitive with your exports.

39
00:01:58,520 --> 00:02:02,200
Speaker 2: Right, there's nothing on you in Asian central banks doing

40
00:02:02,280 --> 00:02:05,920
Speaker 2: things to help their currency in terms of the trade situation.

41
00:02:06,120 --> 00:02:10,080
Speaker 2: So allowing currencies to be a bit softer than usual

42
00:02:10,200 --> 00:02:13,359
Speaker 2: to maximizing the dollar strength, which we're generally seeing the

43
00:02:13,440 --> 00:02:17,040
Speaker 2: dollar in a pretty good condition since the recent elections.

44
00:02:17,040 --> 00:02:19,000
Speaker 2: It was strong before the elections, but it's got even

45
00:02:19,040 --> 00:02:23,280
Speaker 2: stronger since the presidential elections. But it's not it's typical

46
00:02:23,320 --> 00:02:26,320
Speaker 2: for Asian central banks to allow the currency to take

47
00:02:26,360 --> 00:02:29,400
Speaker 2: the strain by doing it at the same time as

48
00:02:29,480 --> 00:02:32,120
Speaker 2: lowering interest rates obviously gives it even more impetus as well.

49
00:02:32,160 --> 00:02:35,040
Speaker 2: So you've got a competitive situation between the Korea and one,

50
00:02:35,120 --> 00:02:38,560
Speaker 2: the Chinese yu, one the Japanese yen. They're all competing

51
00:02:38,600 --> 00:02:42,080
Speaker 2: in similar areas, so every country obviously wants to do

52
00:02:42,120 --> 00:02:45,200
Speaker 2: the best they can do to help its own trade situation.

53
00:02:45,760 --> 00:02:49,200
Speaker 1: When I think of Trump tariffs and markets in Asia,

54
00:02:49,240 --> 00:02:51,920
Speaker 1: I think of obviously China. Is there a way that

55
00:02:51,919 --> 00:02:55,799
Speaker 1: we're seeing Chinese firms beginning to move some of their

56
00:02:55,919 --> 00:02:59,840
Speaker 1: production line through South Korea as a way of avoiding

57
00:03:00,040 --> 00:03:01,000
Speaker 1: cares in the future.

58
00:03:01,400 --> 00:03:03,639
Speaker 2: There's been plenty of writing on the Bloomberg term where

59
00:03:03,639 --> 00:03:08,320
Speaker 2: itself saying that really since the first presidential term for

60
00:03:08,720 --> 00:03:11,880
Speaker 2: Donald Trump, Chinese companies in general have been very active

61
00:03:12,000 --> 00:03:17,120
Speaker 2: around the world trying to diversify their strategies are away

62
00:03:17,200 --> 00:03:19,680
Speaker 2: from directly going to the United States. So they've been

63
00:03:19,680 --> 00:03:24,200
Speaker 2: making big investments and growing factories in various countries in

64
00:03:24,320 --> 00:03:27,640
Speaker 2: order to try and circumvent any roadblocks that were put

65
00:03:27,680 --> 00:03:31,080
Speaker 2: in with direct China to US trade flows, and that

66
00:03:31,200 --> 00:03:33,400
Speaker 2: has resulted in the fact that now if you look

67
00:03:33,400 --> 00:03:38,000
Speaker 2: at the official import numbers between the United States and China,

68
00:03:38,000 --> 00:03:40,760
Speaker 2: shows that there's been quite a substantial drop in the

69
00:03:40,840 --> 00:03:44,600
Speaker 2: direct imports the United States makes from China. But behind

70
00:03:44,640 --> 00:03:47,800
Speaker 2: the scenes, it appears as though the trade numbers between

71
00:03:47,840 --> 00:03:49,920
Speaker 2: the two are still pretty big, and that's because China's

72
00:03:49,920 --> 00:03:52,520
Speaker 2: done a better job of getting around it than some

73
00:03:52,560 --> 00:03:56,040
Speaker 2: other countries. We would expect something like that to continue.

74
00:03:56,120 --> 00:03:59,320
Speaker 2: China is very aware that they are at risk, there

75
00:03:59,360 --> 00:04:01,600
Speaker 2: could be more risk put on them, and so they

76
00:04:01,680 --> 00:04:03,640
Speaker 2: certainly are going to be working hard to try and

77
00:04:03,680 --> 00:04:05,720
Speaker 2: make sure that they can still sell their products, but

78
00:04:05,720 --> 00:04:07,040
Speaker 2: maybe through a different route.

79
00:04:07,360 --> 00:04:10,000
Speaker 1: So today in the US we got the Fed's preferred

80
00:04:10,120 --> 00:04:14,000
Speaker 1: measure of underlying inflation. The PCEE accelerated a bit in

81
00:04:14,000 --> 00:04:15,880
Speaker 1: the month of October, and I'm referring to kind of

82
00:04:15,880 --> 00:04:19,000
Speaker 1: the core rate. This seems to validate a much more

83
00:04:19,040 --> 00:04:23,760
Speaker 1: cautious approach when it comes to cutting interest rates. And

84
00:04:23,800 --> 00:04:27,200
Speaker 1: then when you hear some analysis coming from the Mexican

85
00:04:27,240 --> 00:04:30,880
Speaker 1: government that these proposed tariffs that the president elect is considering,

86
00:04:30,920 --> 00:04:34,280
Speaker 1: not only for Mexico but for Canada as well, would

87
00:04:34,360 --> 00:04:37,919
Speaker 1: contribute to higher inflation in the US. If we're talking

88
00:04:37,920 --> 00:04:39,400
Speaker 1: about a world where the Fed is going to be

89
00:04:39,400 --> 00:04:42,560
Speaker 1: a little bit more cautious, does it necessarily mean that

90
00:04:42,600 --> 00:04:45,880
Speaker 1: the dollar is going to remain stronger for the foreseeable.

91
00:04:45,360 --> 00:04:49,919
Speaker 2: Future from the FT's point of view. From that angle alone,

92
00:04:50,760 --> 00:04:53,320
Speaker 2: you would expect the US dot to gain a reasonable

93
00:04:53,320 --> 00:04:56,440
Speaker 2: amount of support if the Federal Reserve is slowing the

94
00:04:56,480 --> 00:04:58,919
Speaker 2: pace of interest rate cuts, that would be a typical

95
00:04:58,960 --> 00:05:03,400
Speaker 2: response that markets expect. However, the wildcard, as usual here

96
00:05:03,440 --> 00:05:06,880
Speaker 2: is Donald Trump, who could easily say in a few

97
00:05:06,880 --> 00:05:09,159
Speaker 2: months time, oh, I think the US dollar is too strong,

98
00:05:09,200 --> 00:05:12,600
Speaker 2: and then the whole situation could change dramatically. He has

99
00:05:12,640 --> 00:05:15,080
Speaker 2: been known in the past to say that he doesn't

100
00:05:15,120 --> 00:05:18,839
Speaker 2: really or he favors a slightly weaker US currency to

101
00:05:18,880 --> 00:05:21,960
Speaker 2: help with the trade situation. So, no matter what the

102
00:05:22,000 --> 00:05:25,520
Speaker 2: Central Bank does in terms of slowing the pace of

103
00:05:25,960 --> 00:05:29,720
Speaker 2: rate cuts, if you get a big intervention from the President,

104
00:05:29,800 --> 00:05:32,120
Speaker 2: the whole situation could change very quickly.

105
00:05:32,120 --> 00:05:35,600
Speaker 1: So markets are increasingly pricing in and maybe a potential

106
00:05:35,800 --> 00:05:38,160
Speaker 1: rate cut from the Fed in December a big question

107
00:05:38,240 --> 00:05:40,760
Speaker 1: mark in terms of what happens in twenty twenty five.

108
00:05:41,160 --> 00:05:43,960
Speaker 1: Flip side of that coin is Japan, and I from

109
00:05:43,960 --> 00:05:48,440
Speaker 1: what I understand, wage negotiations are moving toward a positive conclusion.

110
00:05:48,520 --> 00:05:51,800
Speaker 1: Does that necessarily mean that we could see either in

111
00:05:51,839 --> 00:05:55,120
Speaker 1: December or January a rate hike from the Bank of Japan.

112
00:05:55,760 --> 00:05:58,039
Speaker 2: Oh, trade does are certainly warming up, so the idea,

113
00:05:58,040 --> 00:06:00,440
Speaker 2: if you look at the pricing in the future markets

114
00:06:00,480 --> 00:06:02,960
Speaker 2: and derivative markets, we're now at something like a sixty

115
00:06:03,000 --> 00:06:06,280
Speaker 2: percent probability the Bank of Japan will actually go in December.

116
00:06:06,320 --> 00:06:09,080
Speaker 2: They're actually raised by twenty five basis points already, so

117
00:06:09,200 --> 00:06:11,760
Speaker 2: traders are getting certainly more convinced. I think that's part

118
00:06:11,760 --> 00:06:13,760
Speaker 2: of the reason for the recent yeend strength, the fact

119
00:06:13,760 --> 00:06:16,480
Speaker 2: that the yenna's rebounded a bit in the past few days.

120
00:06:17,720 --> 00:06:20,599
Speaker 2: The wage hikes, the proposals for next year look pretty serious.

121
00:06:20,640 --> 00:06:22,960
Speaker 2: They look as though they're going again for big numbers,

122
00:06:23,040 --> 00:06:26,760
Speaker 2: even though they had very substantial rises this year, and

123
00:06:26,800 --> 00:06:29,599
Speaker 2: the Japanese Prime Minister has been consistently saying that he

124
00:06:29,680 --> 00:06:34,400
Speaker 2: supports that he wants to see companies allowing higher wages

125
00:06:34,400 --> 00:06:36,360
Speaker 2: to their workers. He's even talking about a minimum wage

126
00:06:36,360 --> 00:06:38,679
Speaker 2: for the first time in Japan as well. So everything

127
00:06:38,720 --> 00:06:41,839
Speaker 2: is pointing to the fact that the inflationary aspects from

128
00:06:41,880 --> 00:06:44,599
Speaker 2: wages we saw this year will not dampen at all

129
00:06:45,000 --> 00:06:46,760
Speaker 2: when we go in In fact, they might even get worse

130
00:06:47,040 --> 00:06:49,680
Speaker 2: in twenty twenty five. That obviously helps the Bank of

131
00:06:49,800 --> 00:06:52,840
Speaker 2: Japan's case for keeping interest rates high and for raising

132
00:06:52,920 --> 00:06:53,920
Speaker 2: rates again next year.

133
00:06:54,200 --> 00:06:56,039
Speaker 1: Before I let you go, I have to ask you

134
00:06:56,080 --> 00:06:59,000
Speaker 1: about China, because the other day we learned that industrial

135
00:06:59,040 --> 00:07:02,480
Speaker 1: profits in the month of October fell ten percent year

136
00:07:02,560 --> 00:07:06,800
Speaker 1: over years. So we're well aware of this deflationary pressure

137
00:07:06,839 --> 00:07:09,440
Speaker 1: that China has been feeling for some time. Is there

138
00:07:09,440 --> 00:07:13,520
Speaker 1: anything that can be done to begin to resuscitate the

139
00:07:13,560 --> 00:07:16,760
Speaker 1: economy where it can maybe begin to emerge from this

140
00:07:17,200 --> 00:07:18,480
Speaker 1: deflationary period.

141
00:07:19,360 --> 00:07:21,520
Speaker 2: It's getting the consumers to do more is really the

142
00:07:21,520 --> 00:07:23,600
Speaker 2: big The thing you keep on hearing from people that

143
00:07:23,680 --> 00:07:27,480
Speaker 2: watch China very closely is that Chinese consumers have become

144
00:07:27,600 --> 00:07:29,920
Speaker 2: very cautious. They need a lot more incentives to get

145
00:07:29,920 --> 00:07:32,880
Speaker 2: out there and spend money. The Chinese government seems to

146
00:07:32,920 --> 00:07:35,240
Speaker 2: be making the right soundbites in that direction, but there's

147
00:07:35,240 --> 00:07:37,760
Speaker 2: probably much more to do. So they've got some big

148
00:07:37,800 --> 00:07:39,600
Speaker 2: meetings coming up in the next few weeks, and it

149
00:07:39,640 --> 00:07:42,640
Speaker 2: will people will be watching very closely to see what

150
00:07:42,960 --> 00:07:46,280
Speaker 2: measures are they doing to help consumers be more active

151
00:07:46,280 --> 00:07:48,360
Speaker 2: in twenty twenty five That will make a huge difference

152
00:07:48,360 --> 00:07:49,440
Speaker 2: to the Chinese economy.

153
00:07:49,600 --> 00:07:51,880
Speaker 1: Mark, It's always a pleasure. Thanks so much for joining us.

154
00:07:51,880 --> 00:07:55,600
Speaker 1: Mark Cranfield, there, Bloomberg m Live strategist, joining us from

155
00:07:55,640 --> 00:07:59,160
Speaker 1: the Lion City of Singapore here on the Daybreak Asia podcast.

156
00:08:06,280 --> 00:08:09,720
Speaker 1: Welcome back to the Bloomberg Daybreak Asia Podcast. I'm Doug Chrisner.

157
00:08:10,080 --> 00:08:13,840
Speaker 1: President elect Trump's announcement of an additional ten percent tariff

158
00:08:13,880 --> 00:08:17,720
Speaker 1: on Chinese goods has sent ripples through the APAC region.

159
00:08:18,040 --> 00:08:20,200
Speaker 1: For more, we heard from Naomi Fink. She is the

160
00:08:20,280 --> 00:08:24,520
Speaker 1: chief Global strategist at Nico Asset Management. She spoke exclusively

161
00:08:24,560 --> 00:08:28,160
Speaker 1: to Bloomberg, Sherry On and Heidi Stroud Watts this week.

162
00:08:28,200 --> 00:08:31,080
Speaker 3: We've been dissecting what the tariff impact could be on

163
00:08:31,160 --> 00:08:34,079
Speaker 3: Asian markets. What's the top of mind for you.

164
00:08:34,480 --> 00:08:38,439
Speaker 4: Well, I think going into year end and next year,

165
00:08:38,480 --> 00:08:41,560
Speaker 4: a new administration in the US, we're all to some

166
00:08:41,600 --> 00:08:44,559
Speaker 4: extent playing the waiting game. We did have the initial

167
00:08:44,600 --> 00:08:47,840
Speaker 4: reaction to the results of the election, but now that's

168
00:08:47,880 --> 00:08:50,360
Speaker 4: all news, and now we're in the difficult situation of

169
00:08:50,400 --> 00:08:53,320
Speaker 4: trying to separate the news from the noise. And while

170
00:08:53,440 --> 00:08:56,360
Speaker 4: there is news, there's also, as tends to be the

171
00:08:56,440 --> 00:08:59,319
Speaker 4: case when new administrations have not yet taken power, a

172
00:08:59,400 --> 00:09:03,320
Speaker 4: lot of noise. So's we don't necessarily want to take

173
00:09:03,360 --> 00:09:06,640
Speaker 4: We want to make big reactions to things, policies that

174
00:09:06,720 --> 00:09:10,520
Speaker 4: may not actually come to fruition. We've had some noise

175
00:09:10,600 --> 00:09:13,680
Speaker 4: about tariffs. Will those actually happen or are they just

176
00:09:13,720 --> 00:09:17,440
Speaker 4: a negotiating tactic. We don't know that yet. So I

177
00:09:17,440 --> 00:09:20,200
Speaker 4: think at the moment, we still see some pretty robust

178
00:09:20,280 --> 00:09:23,959
Speaker 4: fundamentals in the US economy, for example, So I don't

179
00:09:24,000 --> 00:09:27,320
Speaker 4: think there's any reason to think that's suddenly going to stop.

180
00:09:27,720 --> 00:09:31,760
Speaker 4: But what I would advise is to take a healthy

181
00:09:31,920 --> 00:09:34,600
Speaker 4: hedge against some of the tail risks that might be

182
00:09:34,640 --> 00:09:35,280
Speaker 4: coming up.

183
00:09:35,160 --> 00:09:38,079
Speaker 3: Next year, like spiking yields for example.

184
00:09:38,200 --> 00:09:40,560
Speaker 4: For example, we do have one hundred and twenty percent

185
00:09:40,679 --> 00:09:44,160
Speaker 4: US debt to GDP, and even though if we have

186
00:09:44,280 --> 00:09:48,240
Speaker 4: fiscal easing that on its own might look really good

187
00:09:48,320 --> 00:09:53,760
Speaker 4: for stocks. We also do have the fear that eventually

188
00:09:53,800 --> 00:09:57,040
Speaker 4: that might lead to some unwieldiness of the debt, and

189
00:09:57,160 --> 00:09:59,560
Speaker 4: foreign investors who are necessary to fund the US current

190
00:09:59,600 --> 00:10:02,839
Speaker 4: account deficit saying that they're not receiving enough of a

191
00:10:02,920 --> 00:10:05,960
Speaker 4: yield premium, so that that is always a risk, and.

192
00:10:05,920 --> 00:10:08,040
Speaker 3: Of course a stronger US dollar that we continue to

193
00:10:08,040 --> 00:10:11,920
Speaker 3: see right now, and the pressure on their counterparts across Asia.

194
00:10:12,360 --> 00:10:14,440
Speaker 3: How big of a problem could this be for some

195
00:10:14,679 --> 00:10:17,959
Speaker 3: central banks like South Korea? For example? As I mentioned earlier,

196
00:10:17,960 --> 00:10:20,800
Speaker 3: the BOK seems to be really focused on financial stability

197
00:10:20,840 --> 00:10:24,959
Speaker 3: despite the fact that the economy seems to be struggling well.

198
00:10:25,040 --> 00:10:27,880
Speaker 4: Of course, the Bank of Korea's job is probably to

199
00:10:27,920 --> 00:10:32,080
Speaker 4: take a look inwards at the domestic economy and respond

200
00:10:32,160 --> 00:10:34,720
Speaker 4: to that, but I think it cannot ignore what's going

201
00:10:34,720 --> 00:10:38,800
Speaker 4: on with currencies and the weakening one. For example, I

202
00:10:38,840 --> 00:10:42,520
Speaker 4: think it in some ways it might allow the weakening one,

203
00:10:42,600 --> 00:10:46,120
Speaker 4: might allow the luxury to wait a little bit and

204
00:10:47,120 --> 00:10:52,079
Speaker 4: see what actually comes to the foe in terms of news,

205
00:10:53,040 --> 00:10:55,960
Speaker 4: because I think that's probably many of the economies in

206
00:10:56,000 --> 00:10:58,679
Speaker 4: Asia right now that we're actually waiting for the news

207
00:10:58,720 --> 00:11:00,520
Speaker 4: to hit rather than reacting to the noise.

208
00:11:01,080 --> 00:11:04,240
Speaker 5: Yeah, wait, wait, waiting. It's a difficult game, right because

209
00:11:04,240 --> 00:11:06,679
Speaker 5: you've seen a lot of corporates, for example, not wanting

210
00:11:06,720 --> 00:11:08,559
Speaker 5: to wait. They think that they know what's going to happen.

211
00:11:08,559 --> 00:11:11,600
Speaker 5: They're front loading a lot of their moves ahead of

212
00:11:11,760 --> 00:11:12,800
Speaker 5: going into next year.

213
00:11:12,920 --> 00:11:14,560
Speaker 1: Right easy.

214
00:11:14,520 --> 00:11:18,599
Speaker 5: Your gut feeling, based on sort of you know, previous expectations,

215
00:11:18,760 --> 00:11:21,000
Speaker 5: is that President Trump the second time around will make

216
00:11:21,040 --> 00:11:23,400
Speaker 5: good on all of his campaign rhetoric and that we

217
00:11:23,679 --> 00:11:25,959
Speaker 5: should expect him to do what he said that he's

218
00:11:26,000 --> 00:11:26,840
Speaker 5: going to do so far.

219
00:11:28,200 --> 00:11:31,040
Speaker 4: So if we're thinking about all the campaign rehetric, I

220
00:11:31,080 --> 00:11:34,839
Speaker 4: would think that's unlikely. Some that's more likely, And I

221
00:11:34,880 --> 00:11:37,160
Speaker 4: think that is the crux of separating the news from

222
00:11:37,160 --> 00:11:39,520
Speaker 4: the noise. Some of its news, but a lot of

223
00:11:39,520 --> 00:11:43,280
Speaker 4: it's probably noise. And we do have the potential for

224
00:11:43,679 --> 00:11:46,720
Speaker 4: some of what looks like news to be a negotiating

225
00:11:46,760 --> 00:11:51,000
Speaker 4: tactic to achieve another end that that's not necessarily a parent.

226
00:11:51,200 --> 00:11:54,640
Speaker 4: So I wouldn't necessarily go hook line and sinker into

227
00:11:54,679 --> 00:11:57,200
Speaker 4: all of the campaign promises. I would take a look

228
00:11:57,240 --> 00:12:00,760
Speaker 4: at the likelihood of these policies material right now it's

229
00:12:00,840 --> 00:12:03,360
Speaker 4: very confusing, but it should become clearer as we go

230
00:12:03,440 --> 00:12:04,720
Speaker 4: into twenty twenty five.

231
00:12:04,960 --> 00:12:07,119
Speaker 5: When you take a look at some of the economies

232
00:12:07,160 --> 00:12:10,360
Speaker 5: that he's targeted so far. Obviously China is one of them.

233
00:12:10,400 --> 00:12:12,240
Speaker 5: And you know, it's quite interesting looking at what his

234
00:12:12,320 --> 00:12:15,360
Speaker 5: potential years trade representative talks about in terms of a

235
00:12:15,400 --> 00:12:20,640
Speaker 5: real fundamental revocation of the existing relationship. Right, do you

236
00:12:20,640 --> 00:12:23,280
Speaker 5: think some of these economies, you know, a better place

237
00:12:23,280 --> 00:12:26,520
Speaker 5: than others to withstand that there's a lot of decorrelated

238
00:12:26,559 --> 00:12:30,800
Speaker 5: assets in China that might be okay.

239
00:12:29,559 --> 00:12:33,440
Speaker 4: Well, yes, let's look at China for a second. The

240
00:12:33,480 --> 00:12:36,320
Speaker 4: one thing that China probably has in its favor is

241
00:12:36,320 --> 00:12:38,960
Speaker 4: that it hasn't dispensed a lot of the fiscal easing

242
00:12:39,000 --> 00:12:42,640
Speaker 4: that it can dispense with just yet. And perhaps that's purposeful.

243
00:12:43,040 --> 00:12:46,559
Speaker 4: Maybe China is waiting for the first move to come

244
00:12:46,679 --> 00:12:50,439
Speaker 4: from the new US administration and then to try and

245
00:12:51,280 --> 00:12:54,960
Speaker 4: react to that. It's keeping its powder dry. Right now,

246
00:12:55,000 --> 00:12:58,240
Speaker 4: there is a pretty good issuance environment for Chinese bonds,

247
00:12:58,320 --> 00:13:02,120
Speaker 4: and with those Chinese bonds probably possible to finance quite

248
00:13:02,120 --> 00:13:04,280
Speaker 4: a lot of new fiscal stimulus. So I don't think

249
00:13:04,280 --> 00:13:07,560
Speaker 4: we're done seeing fiscal stimulus in China just yet. I

250
00:13:07,559 --> 00:13:10,080
Speaker 4: don't think we necessarily want to trade on it right now,

251
00:13:10,200 --> 00:13:13,600
Speaker 4: but there is some potential for things not being as

252
00:13:13,840 --> 00:13:18,920
Speaker 4: verish as initially perceived in China going into twenty twenty five.

253
00:13:19,200 --> 00:13:21,640
Speaker 3: No, I mean, what's happening with the Japanese yen right now?

254
00:13:21,640 --> 00:13:23,400
Speaker 3: I mean this week. I was a little bit surprised

255
00:13:23,440 --> 00:13:26,880
Speaker 3: to see the strength that seemed to get started around

256
00:13:26,920 --> 00:13:29,360
Speaker 3: the time when we heard about the tariff threats from

257
00:13:29,400 --> 00:13:33,640
Speaker 3: Trump and before especially the past year. I mean, the

258
00:13:33,640 --> 00:13:35,920
Speaker 3: downside pressure on the yen has been so strong that

259
00:13:35,960 --> 00:13:39,079
Speaker 3: anytime we had some geopolitical risk or what we were

260
00:13:39,120 --> 00:13:41,360
Speaker 3: supposed to think we could see some haven flows into

261
00:13:41,400 --> 00:13:45,040
Speaker 3: the Japanese yen, we haven't. So what's changed this week?

262
00:13:45,440 --> 00:13:47,960
Speaker 4: Well, I think during the last year we didn't really

263
00:13:48,000 --> 00:13:52,920
Speaker 4: see haven flows into almost anything, even when geopolitical risk grows. Yes,

264
00:13:52,960 --> 00:13:55,199
Speaker 4: for example, we saw strong gold, but that seemed to

265
00:13:55,240 --> 00:13:59,000
Speaker 4: be to really try and gain a diversification away from

266
00:13:59,200 --> 00:14:03,920
Speaker 4: the main event, which is basically major concentration in US stocks.

267
00:14:04,240 --> 00:14:08,240
Speaker 4: It's concentrated in seven names, and perhaps we too don't

268
00:14:08,280 --> 00:14:10,600
Speaker 4: think that it's time to get barish on US stocks

269
00:14:10,640 --> 00:14:15,120
Speaker 4: just yet, but you need a good diversification tool, and

270
00:14:15,320 --> 00:14:17,040
Speaker 4: I think that the yen right now is one of

271
00:14:17,080 --> 00:14:20,960
Speaker 4: those diversification tools. Yes, it's not a relatively favorable yield

272
00:14:21,040 --> 00:14:23,440
Speaker 4: that's attached to the end, but maybe you can sacrifice

273
00:14:23,440 --> 00:14:26,160
Speaker 4: a little bit of that yield, especially on the bond side,

274
00:14:26,200 --> 00:14:29,240
Speaker 4: in order to hedge against some of the downside risk.

275
00:14:29,360 --> 00:14:33,560
Speaker 4: And when markets do actually get a little bit frightened

276
00:14:33,760 --> 00:14:36,320
Speaker 4: and there are risk off trades, then the en usually

277
00:14:36,360 --> 00:14:38,640
Speaker 4: does benefit. So I think the yen is an important

278
00:14:38,640 --> 00:14:40,120
Speaker 4: part of your global.

279
00:14:39,760 --> 00:14:44,080
Speaker 5: Portfolio now, me think, chief Global strategists at Nico Asset Management.

280
00:14:46,800 --> 00:14:50,120
Speaker 1: Thanks for listening to today's episode of the Bloomberg Daybreak

281
00:14:50,280 --> 00:14:53,600
Speaker 1: Asia Edition podcast. Each weekday, we look at the story

282
00:14:53,680 --> 00:14:57,960
Speaker 1: shaping markets, finance, and geopolitics in the Asia Pacific. You

283
00:14:57,960 --> 00:15:02,000
Speaker 1: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,

284
00:15:02,120 --> 00:15:05,080
Speaker 1: or anywhere else you listen. Join us again tomorrow for

285
00:15:05,200 --> 00:15:08,640
Speaker 1: insight on the market moves from Hong Kong to Singapore

286
00:15:09,040 --> 00:15:12,760
Speaker 1: and Australia. I'm Doug Prisoner and this is Bloomberg