WEBVTT - Christmas Eve 2024 Special

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<v Speaker 1>Welcome to a special Christmas Eve edition of the Bloomberg

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<v Speaker 1>day Break Asia podcast. I'm Doug Chrisner. Coming up, We'll

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<v Speaker 1>be taking a look at the year ahead for markets.

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<v Speaker 1>I'll be joined here in New York by Rebecca Walzer.

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<v Speaker 1>She is president at Wallser Wealth Management. But we begin

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<v Speaker 1>in Hong Kong, where we find e Katerina be Ghos.

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<v Speaker 1>She is the CIO for Asia ex Japan Core Investments

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<v Speaker 1>at AXA Investment Managers. E Katerina joins us from our

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<v Speaker 1>studios in Hong Kong. Thank you for making time to

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<v Speaker 1>chat with us. I hope you're doing well. All the

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<v Speaker 1>best for the holiday season. I want to begin by

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<v Speaker 1>talking about what appears to be a little bit of

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<v Speaker 1>an excess capacity problem for the auto industry. We've been

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<v Speaker 1>talking a lot about this Honda Nissan deal. We know

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<v Speaker 1>the situation in China, particularly as it relates to evs.

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<v Speaker 1>China appears to have tremendous over capacity. Do you think

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<v Speaker 1>it's likely that we're going to see a lot more

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<v Speaker 1>in the way of consolidation in the year ahead.

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<v Speaker 2>I think it's fair to say that consolidation orto industry

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<v Speaker 2>will probably can but more driving consolidation, rationalization to understand

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<v Speaker 2>where the competitive edge for the auto makers is and

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<v Speaker 2>for different ones will be slightly different. So have European

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<v Speaker 2>automakers in Germany that are being challenged. So certainly the

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<v Speaker 2>behind in terms of the broader innovation when you look

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<v Speaker 2>at Japan, certainly is leading in terms of realization that

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<v Speaker 2>we need to have some degree of consolidation to achieve

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<v Speaker 2>that competitiveness. And of course China has become one of

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<v Speaker 2>the key challenges to drive that need for consolidation, and

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<v Speaker 2>not just consolidation but becoming more competitive on relative basis

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<v Speaker 2>because against China, as we know, leads in the av space,

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<v Speaker 2>and a lot of the demand already in China has

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<v Speaker 2>shifted to home manufacturers and to evs a relative to

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<v Speaker 2>again exporters being competitive or being desired for a market

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<v Speaker 2>which is again been one of the largest for a

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<v Speaker 2>lot of those exporters.

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<v Speaker 1>At the same time, we're talking about the use of

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<v Speaker 1>tariffs as a way of protecting market share. Is this

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<v Speaker 1>something that it will lead in your view to a

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<v Speaker 1>lot more protectionism in twenty twenty five.

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<v Speaker 2>I think terriffs is an element of it. But if

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<v Speaker 2>you had to break it down by markets. I mean,

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<v Speaker 2>US already is ahead in terms of implementing tariffs on evs,

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<v Speaker 2>so largely for Chinese evs, US is inaccessible. I think

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<v Speaker 2>the big question is what happens to the tariffs, and

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<v Speaker 2>then what happens to china ability to export in US

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<v Speaker 2>and other markets being challenged, and if they look into

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<v Speaker 2>potentially offload some of that of a capacity in places

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<v Speaker 2>like Eurozone and creating a broader spillover of those trade tensions.

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<v Speaker 2>And I think this is our key secondary effect from

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<v Speaker 2>the tariffs that we're watching very closely.

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<v Speaker 1>Is your view that the thread of tariffs really will

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<v Speaker 1>be nothing more than a negotiating ploy or will they

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<v Speaker 1>really take effect?

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<v Speaker 2>I think it's somewhere in between. We do. We have

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<v Speaker 2>the view that they'll probably not be as aggressive, or

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<v Speaker 2>the scale that has been projected is probably going to

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<v Speaker 2>be lesser, but we do think they will get implemented.

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<v Speaker 2>There will be selective. I don't think it's going to

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<v Speaker 2>be a blanket tariff implementation, So some of them will

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<v Speaker 2>be used for negotiation and some of them will be

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<v Speaker 2>implemented to just be protectionists and bring some of the

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<v Speaker 2>industries back home to the US.

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<v Speaker 1>Let's talk a little bit about global macro right now,

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<v Speaker 1>particularly where central banks are concerned. We know that the

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<v Speaker 1>FED has adopted a strategy as a result of what

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<v Speaker 1>we heard from the last meeting that we can expect

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<v Speaker 1>fewer rate cuts in the new year. What do you

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<v Speaker 1>think is changing the Fed's outlook right now? Is it

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<v Speaker 1>stubborn inflation or is it concerned that maybe we were

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<v Speaker 1>just talking about tariffs, that some of the policies from

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<v Speaker 1>the incoming Trump administration could prove inflationary.

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<v Speaker 2>I think it's a combination of the two, but I

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<v Speaker 2>would say the primary one is what is the state

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<v Speaker 2>of the economy at the moment, less of the projecting

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<v Speaker 2>what one may be the implications as much as it

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<v Speaker 2>is a consideration, but ultimately what the Fed or the

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<v Speaker 2>decision was based on the data that they had at

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<v Speaker 2>hand the other day of the meeting, And suddenly it's

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<v Speaker 2>clear that the inflation is not yet a target with

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<v Speaker 2>in a sickness of that inflation around three point three

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<v Speaker 2>percent for core, and more important, the growth is staying resilient.

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<v Speaker 2>We've seen the labor market adjusting as well, but it

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<v Speaker 2>hasn't crashed again. The catalysts for the FED to continue

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<v Speaker 2>with that accommodation and aggressive mode, it's probably less backed

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<v Speaker 2>by the data. So the data is indicating that needs

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<v Speaker 2>to be a lot more gradual, and the FED is

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<v Speaker 2>done the right decision to adjust the rate expectations that

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<v Speaker 2>the market has priced in past the September card, which

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<v Speaker 2>was quite aggressive starting with and I think the market

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<v Speaker 2>projected quite an aggressive path from that point onwards, and

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<v Speaker 2>I think some recalibration of that, I think it's fair.

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<v Speaker 1>So can we agree then that the path of the

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<v Speaker 1>dollar is going to be that it remains strong against

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<v Speaker 1>the major currencies, and that will in turn prove to

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<v Speaker 1>be a little bit of a headwind for Asia a assessment.

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<v Speaker 2>I think there's a combination of FED staying higher for longer,

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<v Speaker 2>and of course tariffs are deemed to be dollar strengthening.

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<v Speaker 2>And we do think for the Asian economy's biggest risk

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<v Speaker 2>or biggest consideration is the ability of their own central

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<v Speaker 2>banks to be able to support their growth and respective markets.

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<v Speaker 2>Accounting for the fact that the FED of course will

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<v Speaker 2>be a little bit higher, and then the currency is

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<v Speaker 2>a consideration, and the tariffs, of course an implication of

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<v Speaker 2>that will be a consideration.

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<v Speaker 1>So which central bank has more difficulty. Is it the

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<v Speaker 1>Bank of Japan or the People's Bank of China.

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<v Speaker 2>I think it's hard to say, but I mean they

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<v Speaker 2>have slightly different challenges. When you look at a Bank

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<v Speaker 2>of China, of course, the intention is to be a

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<v Speaker 2>commoditive in twenty twenty five, whatever that's fiscal or monitor

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<v Speaker 2>and I think they projected that pretty well as we

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<v Speaker 2>go into the year end. The biggest risk for a

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<v Speaker 2>Bank of China is the monetary policy, the ability of

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<v Speaker 2>that policy to do what it needs to do. And

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<v Speaker 2>I say, because as I said, we have a FED

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<v Speaker 2>that's still be more paid in terms of normalization, but

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<v Speaker 2>tariffs again will have a weakening effect to the currency.

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<v Speaker 2>So we do have it. It has a too double wami,

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<v Speaker 2>if you might say, in terms of the ability to

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<v Speaker 2>maneuver that monetary policy, and I think some realization and

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<v Speaker 2>weakness in the one have to be accepted twenty twenty five.

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<v Speaker 2>When you look at Bank of Japan, of course, the

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<v Speaker 2>situation is slightly different in a sense that they are

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<v Speaker 2>looking and they intend to normalize the monetary policy or

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<v Speaker 2>bring the rates slightly higher, purely because they need to

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<v Speaker 2>get out of the cycle, but also to give them

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<v Speaker 2>additional room to maneuver in the future if they need

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<v Speaker 2>to accommodate again to support the economy. So certainly the

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<v Speaker 2>Bank of Japan has been fairly dorvish at the meeting,

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<v Speaker 2>but it's fair to say that the intention is to

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<v Speaker 2>normalize policy. I think January is a potential move, but

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<v Speaker 2>it depends on where their wage negotiations go, and I

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<v Speaker 2>think this will be a key catalyst. And the second one,

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<v Speaker 2>of course, is what the Trump administration does and the

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<v Speaker 2>policies that implements. And I think March and April is

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<v Speaker 2>probably going to be more a given because again more

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<v Speaker 2>data and transparency will be around those measures.

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<v Speaker 1>So how are you evaluating consumers in both of those jurisdictions,

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<v Speaker 1>first China and then Japan.

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<v Speaker 2>In terms of consumption, you could say in Japan it's

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<v Speaker 2>upward trending or consumption is starting to recover. We've seen

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<v Speaker 2>the data, and I think the indications is that double

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<v Speaker 2>continue in twenty twenty five. That is supported by improving

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<v Speaker 2>disposable income. And I think the trajectory for growth has

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<v Speaker 2>been fairly constructive in twenty twenty four people because global

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<v Speaker 2>has stayed resilient and has provided support for the growth

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<v Speaker 2>in Japan when it looks when you look at China,

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<v Speaker 2>I think the consideration for consumption is related to a

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<v Speaker 2>broader wealth and income creation, which both have been weaker

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<v Speaker 2>and it's been negative. You might say, obviously we've had

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<v Speaker 2>a downturn and property market which has pressed the wealth creation.

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<v Speaker 2>We also had the income effect has been negative because

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<v Speaker 2>of the weaker labor market, and the broader consumption is subdued.

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<v Speaker 2>And I think a key focus for China twenty twenty

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<v Speaker 2>five will be to support that recovery in consumption.

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<v Speaker 1>So I think we can agree that Japan has finally

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<v Speaker 1>emerged from three decades of deflation. Is there a risk still,

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<v Speaker 1>in your view, that China gets miired in something that's

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<v Speaker 1>very similar look.

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<v Speaker 2>I think ultimately there are signs that Japan has exited

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<v Speaker 2>of that deflation period. Again, we need to see a

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<v Speaker 2>lot a few more data points to crystallize that view indefinitely.

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<v Speaker 2>When it comes to China, I think their dynamics in

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<v Speaker 2>China is quite different, and I think it's fair to

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<v Speaker 2>say that policymakers have realized the complexity of the problem,

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<v Speaker 2>of the structural challenges and the micro challenges that they're facing,

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<v Speaker 2>and they're having an intention to use both fiscal as

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<v Speaker 2>and monitor in twenty twenty five to help that growth

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<v Speaker 2>and preshia and not enter into a similar spiral of deflation,

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<v Speaker 2>force sustain or a long prolonged period of time.

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<v Speaker 1>Katerine, it's always a pleasure. Thanks for making time to

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<v Speaker 1>chat with us from our studios in Hong Kong. E

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<v Speaker 1>Katerina Bigos from AXA Investment Managers, joining us here on

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<v Speaker 1>the Daybreak Asia podcast. Welcome back to a special Christmas

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<v Speaker 1>Eve edition of the Bloomberg Daybreak Asia Podcast. I'm Doug Chrisner.

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<v Speaker 1>So with twenty twenty four pretty much in the rear

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<v Speaker 1>view mirror, we want to look ahead at the major

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<v Speaker 1>themes likely to drive market action in the year ahead.

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<v Speaker 1>I'm pleased to welcome Rebecca Waltzer. She is president of

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<v Speaker 1>Walser Wealth Management, joining us here in our studios in

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<v Speaker 1>New York City. Nice of you to drop by, love

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<v Speaker 1>with you looking forward. Thank you. I'm looking forward to

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<v Speaker 1>this conversation. What do you think the new year is

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<v Speaker 1>going to hold when mister Trump takes office and we

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<v Speaker 1>start to get greater clarity on some of these economic policies.

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<v Speaker 3>So we've seen a really big divergence with CEOs and

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<v Speaker 3>CFOs specifically really having a positive economic outlook globally under

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<v Speaker 3>the new administration in comparison to you know, the previous

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<v Speaker 3>even you know, i'd say two decades, Like, there's really

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<v Speaker 3>big positive economic momentum that they feel with this Trump

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<v Speaker 3>administration is going to be possible. I don't know, Doug,

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<v Speaker 3>if it's related to his tariff policy, the fact that

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<v Speaker 3>he's been so open and blatant about it that he's

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<v Speaker 3>already having world leaders discussed that. We're already having Europe

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<v Speaker 3>say hey, we're going to buy crude from America instead

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<v Speaker 3>of Russia. We've got a lot of moving parts. So

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<v Speaker 3>there's a lot of positivity which is really great. Which

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<v Speaker 3>is why, too, Doug, that you saw the FED literally

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<v Speaker 3>in the last FOMC meeting come back and say, hey,

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<v Speaker 3>we're going to pare down the expectations from really more

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<v Speaker 3>than three or three or more to two or really two.

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<v Speaker 3>And when you consider that they started saying twenty twenty

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<v Speaker 3>four we're gonna have six and we're only going to

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<v Speaker 3>have three, then you can see that they've already kind

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<v Speaker 3>of backed themselves into a corner. And I think they

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<v Speaker 3>learned a hard lesson.

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<v Speaker 1>Yeah, I think you're right about that, because it's even

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<v Speaker 1>Powell say that there were members of the FOMC, the

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<v Speaker 1>FEDS committee that guides interest rate policy, they expressed some

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<v Speaker 1>uncertainty about where disinflation may be going from here, and

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<v Speaker 1>largely because of exactly what you're talking about the incoming

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<v Speaker 1>Trump administration. And it's not just tariff policy, is it.

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<v Speaker 1>I mean, it's a bit of spending and also the

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<v Speaker 1>possibility that investment, well, tax cuts.

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<v Speaker 3>To cuts two well, I mean, I'm not really happy

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<v Speaker 3>that the political cloud is not there to work on

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<v Speaker 3>the tax extension of his jobs and tax cut of

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<v Speaker 3>seventeen at the beginning of the term, because literally they're

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<v Speaker 3>talking about, we're going to do border stuff. We want

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<v Speaker 3>to do these things first, and then we'll look at

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<v Speaker 3>the tax policy. But we know that the tax jobs

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<v Speaker 3>since at the end of twenty twenty five, beginning of

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<v Speaker 3>twenty six, so we really need the political cloud to

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<v Speaker 3>go after that pretty quickly. So I'm a little concerned

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<v Speaker 3>that they're kind of pushing that more to the backburn

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<v Speaker 3>or later in the year instead of doing it right

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<v Speaker 3>up front when they have the mandate, because you know,

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<v Speaker 3>how things politics get in the way and things change,

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<v Speaker 3>and then if we get some kind of bad economy

0:11:54.720 --> 0:11:57.040
<v Speaker 3>where we need more stimulus, and I do think that

0:11:57.040 --> 0:11:59.280
<v Speaker 3>that is a really big risk, you know, Doug, I've

0:11:59.280 --> 0:12:01.680
<v Speaker 3>been saying that there's a lot of hopism and there's

0:12:01.679 --> 0:12:04.720
<v Speaker 3>a lot of you know, irrational exuberance on the AI sector.

0:12:04.760 --> 0:12:06.720
<v Speaker 3>I believe AI has got a long runway and it

0:12:06.800 --> 0:12:09.440
<v Speaker 3>will deliver just like the Internet did in the two thousand,

0:12:09.440 --> 0:12:11.040
<v Speaker 3>but we still had to go through the dot com

0:12:11.040 --> 0:12:13.760
<v Speaker 3>crash before we realize how to monetize. So that's why

0:12:13.800 --> 0:12:17.280
<v Speaker 3>I'm saying AI's going to bring us real, true results

0:12:17.520 --> 0:12:20.199
<v Speaker 3>long term. But to expect that we're going to keep

0:12:20.200 --> 0:12:24.360
<v Speaker 3>this twenty plus growth rate before the monetization happens is

0:12:24.480 --> 0:12:26.640
<v Speaker 3>not right, And that's more comparable to dot com.

0:12:26.800 --> 0:12:28.720
<v Speaker 1>You know, it's interesting that you make that point because

0:12:28.760 --> 0:12:31.920
<v Speaker 1>when the FED made its decision, I saw how hard

0:12:32.000 --> 0:12:34.960
<v Speaker 1>hit small capstarts absolutely right, And so you think that's

0:12:35.000 --> 0:12:36.719
<v Speaker 1>going to be a big question mark over some of

0:12:36.760 --> 0:12:39.960
<v Speaker 1>the companies that are more exposed to the domestic economy

0:12:40.000 --> 0:12:43.479
<v Speaker 1>and not so much kind of exposed to what's happening internationally.

0:12:43.640 --> 0:12:46.920
<v Speaker 3>I think, yes, absolutely, But I also Am, As you know,

0:12:47.040 --> 0:12:51.200
<v Speaker 3>I've been very bearish on global economic situations, both in

0:12:51.320 --> 0:12:55.720
<v Speaker 3>Asia and Europe because these theaters have been really experiencing

0:12:56.040 --> 0:12:59.439
<v Speaker 3>economic malaise a lot longer than we have. And I

0:12:59.480 --> 0:13:01.560
<v Speaker 3>would say, you know, we had twenty twenty two that

0:13:01.679 --> 0:13:05.560
<v Speaker 3>was obviously a problem, right, but this last year, this year, hey,

0:13:05.640 --> 0:13:09.120
<v Speaker 3>we've run this AI wave. And yet that's not what

0:13:09.200 --> 0:13:11.680
<v Speaker 3>Germany's experiencing. That's not the US experiencing, and that's what

0:13:11.679 --> 0:13:15.439
<v Speaker 3>the UK's experience, that's what Chinese experiencing. We have big problems.

0:13:15.440 --> 0:13:18.240
<v Speaker 3>They just haven't arrived here yet. So while we have

0:13:18.320 --> 0:13:20.880
<v Speaker 3>Trump and we have all this positive economic outlook, and

0:13:20.920 --> 0:13:25.160
<v Speaker 3>I love that hopiism, I just see the reality. And

0:13:25.240 --> 0:13:27.160
<v Speaker 3>I also do see Doug that we had a lot

0:13:27.200 --> 0:13:30.160
<v Speaker 3>of influences trying to really sort of help look at

0:13:30.200 --> 0:13:32.120
<v Speaker 3>the numbers from a recession basis. You know, we had

0:13:32.160 --> 0:13:33.960
<v Speaker 3>a lot of things triggered that said, hey, we already

0:13:33.960 --> 0:13:37.880
<v Speaker 3>in recession. Yet all of the official administrative reports were no,

0:13:38.040 --> 0:13:40.200
<v Speaker 3>we're fine, we're fine. And now that we have this

0:13:40.240 --> 0:13:42.719
<v Speaker 3>Trump administration coming in, I'm wonderfu we'll see a sea

0:13:42.840 --> 0:13:45.280
<v Speaker 3>change in the data. And started saying Okay, yeah, there

0:13:45.360 --> 0:13:46.160
<v Speaker 3>is some issues here.

0:13:46.200 --> 0:13:48.760
<v Speaker 1>So you're looking out ahead, and I'm interested in knowing

0:13:49.040 --> 0:13:52.080
<v Speaker 1>how your investment strategy is changing for twenty twenty five.

0:13:52.120 --> 0:13:53.120
<v Speaker 1>What are you doing differently?

0:13:53.280 --> 0:13:55.600
<v Speaker 3>We have to broaden out. We've been really a commodity's

0:13:55.640 --> 0:13:58.240
<v Speaker 3>focus because we really did feel that we were going

0:13:58.280 --> 0:14:00.120
<v Speaker 3>to have some kind of retrenchment and pull back, and

0:14:00.160 --> 0:14:02.240
<v Speaker 3>that it was too much optimism too fast on the

0:14:02.240 --> 0:14:05.920
<v Speaker 3>AI sector. I also have a little bit of a concern, honestly, Doug.

0:14:05.920 --> 0:14:09.800
<v Speaker 3>When I have US officials, President Trump included Senator Loomis

0:14:09.840 --> 0:14:12.880
<v Speaker 3>introducing a Bitcoin bill about a Reserve Act Bitcoin Reserve

0:14:12.880 --> 0:14:15.040
<v Speaker 3>Actor in July of twenty four. And what you're talking

0:14:15.120 --> 0:14:18.240
<v Speaker 3>about is now creating a federal reserve funded by the

0:14:18.240 --> 0:14:20.840
<v Speaker 3>Federal Reserve that is in bitcoin. We're talking about one

0:14:20.880 --> 0:14:23.120
<v Speaker 3>million bitcoins. Is the proposal for the Bitcoin Act of

0:14:23.160 --> 0:14:26.280
<v Speaker 3>twenty four that Loomis proposed. And when you're looking at that, Doug,

0:14:26.360 --> 0:14:29.880
<v Speaker 3>what are you really saying. You're saying, Hm, we are

0:14:29.920 --> 0:14:33.160
<v Speaker 3>the global reserve currency of the world since Bretonwood's that

0:14:33.240 --> 0:14:37.840
<v Speaker 3>has not changed yet. We are acknowledging, admitting, and then

0:14:38.040 --> 0:14:41.840
<v Speaker 3>actually taking action to maybe look at an alternative to

0:14:41.920 --> 0:14:44.880
<v Speaker 3>be a reserve currency, and that says a lot. And

0:14:44.880 --> 0:14:47.120
<v Speaker 3>I think that people are skipping over that, not even

0:14:47.160 --> 0:14:49.880
<v Speaker 3>realizing why can't we hold the reserves and dollars? And

0:14:50.680 --> 0:14:53.080
<v Speaker 3>there's that competition isn't happening, and that's a big problem.

0:14:53.160 --> 0:14:55.840
<v Speaker 1>What about changes in the regulatory regime that the Trump

0:14:55.880 --> 0:14:57.120
<v Speaker 1>administration may.

0:14:56.960 --> 0:15:00.480
<v Speaker 3>Initiate, I mean, very pro business, very pro We're very

0:15:00.480 --> 0:15:02.600
<v Speaker 3>pro crypto. I mean, look at Gary Gensler. Obviously a

0:15:02.640 --> 0:15:05.200
<v Speaker 3>lot of origination of litigation and so yeah, I think

0:15:05.240 --> 0:15:08.280
<v Speaker 3>that will be very much more pro growth on that.

0:15:08.520 --> 0:15:11.040
<v Speaker 1>We've seen how the financials have benefited. Right, maybe we

0:15:11.120 --> 0:15:14.640
<v Speaker 1>get fewer regulations where banks are concerned. But I'm wondering

0:15:14.680 --> 0:15:17.040
<v Speaker 1>about the M and A environment. Are you expecting a

0:15:17.040 --> 0:15:18.120
<v Speaker 1>lot more deal making in that?

0:15:18.160 --> 0:15:21.000
<v Speaker 3>I do, I am, But again, deal making from an

0:15:21.000 --> 0:15:24.920
<v Speaker 3>administrative policy perspective, yes, very you know, let's cut red tape,

0:15:24.960 --> 0:15:28.200
<v Speaker 3>let's make bureaucracy go down. But from an economic perspective,

0:15:28.200 --> 0:15:30.360
<v Speaker 3>and will we still have the momentum and the growth

0:15:30.400 --> 0:15:32.440
<v Speaker 3>momentum to kind of get us out of the quagmar

0:15:32.520 --> 0:15:36.080
<v Speaker 3>that we really are? It has really been siloed Ai

0:15:36.120 --> 0:15:37.920
<v Speaker 3>has done well, Crypto has done well, But if you

0:15:38.040 --> 0:15:40.280
<v Speaker 3>broaden out beyond those two things, that we don't have

0:15:40.360 --> 0:15:43.640
<v Speaker 3>a massive broad support strong economy like we need.

0:15:43.720 --> 0:15:45.640
<v Speaker 1>Well, so you mentioned some of the markets offshore. You

0:15:45.680 --> 0:15:49.840
<v Speaker 1>mentioned Europe, you mentioned Asia, particularly China. Valuations obviously in

0:15:49.880 --> 0:15:53.120
<v Speaker 1>those jurisdictions are much below what we're experiencing now in

0:15:53.160 --> 0:15:55.640
<v Speaker 1>the US. Sure, right, would you be inclined to put

0:15:55.720 --> 0:15:57.200
<v Speaker 1>some money to work in either.

0:15:57.120 --> 0:15:59.680
<v Speaker 3>Europe or or Asia if I had a long term

0:15:59.760 --> 0:16:02.920
<v Speaker 3>at excess capital play that I knew I wouldn't need

0:16:02.960 --> 0:16:06.400
<v Speaker 3>a return for sixty months if we had a major pullback. Absolutely,

0:16:06.520 --> 0:16:09.240
<v Speaker 3>if you're looking for a long term growth trajectory that

0:16:09.280 --> 0:16:11.360
<v Speaker 3>you don't need a return in the next sixty months, Yes,

0:16:11.520 --> 0:16:13.880
<v Speaker 3>But if you're looking at the next sixty months and

0:16:13.960 --> 0:16:15.880
<v Speaker 3>thinking that while I'm going to buy cheap and get

0:16:15.920 --> 0:16:17.800
<v Speaker 3>a turn around in two to three years, I think

0:16:17.800 --> 0:16:21.680
<v Speaker 3>that again, there is major global economic situations that are

0:16:21.800 --> 0:16:25.600
<v Speaker 3>under penning foundations that we've had for fifty years, and

0:16:25.680 --> 0:16:27.400
<v Speaker 3>so that is going to take its time.

0:16:27.600 --> 0:16:30.480
<v Speaker 1>So I'm curious as to whether your defensiveness is pushing

0:16:30.520 --> 0:16:32.400
<v Speaker 1>you more into the fixed income market.

0:16:32.440 --> 0:16:34.920
<v Speaker 3>Now, Well, that is such a great question. I'm so

0:16:34.920 --> 0:16:37.720
<v Speaker 3>glad you asked it because Honestly, the bond market is

0:16:37.840 --> 0:16:41.560
<v Speaker 3>really kind of forecasting and really a red flagging to

0:16:41.720 --> 0:16:44.800
<v Speaker 3>us that hey, we are seeing more risk than the

0:16:44.840 --> 0:16:48.040
<v Speaker 3>market is acknowledging. And the fact that PAW again, the

0:16:48.080 --> 0:16:50.360
<v Speaker 3>reason that the Fed came out at the last FOMC

0:16:50.480 --> 0:16:53.960
<v Speaker 3>meeting and really paired down expectations is because PO has

0:16:54.000 --> 0:16:57.120
<v Speaker 3>been almost preempted and his last two raises that basically

0:16:57.160 --> 0:16:59.880
<v Speaker 3>he excuse me, cuts, he caught, and the market took

0:16:59.880 --> 0:17:01.280
<v Speaker 3>a right back up to not only the.

0:17:01.240 --> 0:17:02.720
<v Speaker 1>Pre cut level, but higher.

0:17:02.880 --> 0:17:05.080
<v Speaker 3>And that's what happened again in the lastep ever, MCMDI

0:17:05.240 --> 0:17:07.040
<v Speaker 3>he cuts again twenty five BIPs and we're back to

0:17:07.119 --> 0:17:10.600
<v Speaker 3>four five for four four five. This is crazy. So

0:17:10.760 --> 0:17:13.600
<v Speaker 3>I think fixed income I want to say, it's going

0:17:13.640 --> 0:17:15.560
<v Speaker 3>to be another twenty twenty two year, but we are

0:17:15.600 --> 0:17:18.359
<v Speaker 3>going to see that what the Fed and central banks

0:17:18.359 --> 0:17:21.280
<v Speaker 3>are doing globally is not aligning with what the market

0:17:21.320 --> 0:17:22.800
<v Speaker 3>is pricing us from a risk perspective.

0:17:22.800 --> 0:17:24.840
<v Speaker 1>What are you hearing from clients these days? What's their

0:17:24.840 --> 0:17:25.560
<v Speaker 1>biggest concern?

0:17:25.720 --> 0:17:28.800
<v Speaker 3>I think that they are so double minded. And this

0:17:28.920 --> 0:17:30.680
<v Speaker 3>double mind in the sense that they hear the AI,

0:17:30.760 --> 0:17:33.120
<v Speaker 3>they hear the crypto, they hear all of these wonderful

0:17:33.160 --> 0:17:35.760
<v Speaker 3>new technologies that really are going to have decades and

0:17:35.840 --> 0:17:38.880
<v Speaker 3>decades of a long growth trajectory and runway. But yet

0:17:38.960 --> 0:17:42.520
<v Speaker 3>they do know that things just aren't exactly right. They

0:17:42.560 --> 0:17:44.800
<v Speaker 3>do still know that prices are still sticky. Inflation is

0:17:44.920 --> 0:17:47.480
<v Speaker 3>two point seven CPI, now it's going up. We expect

0:17:47.520 --> 0:17:51.040
<v Speaker 3>the unemployment rate, according to policymakers in twenty twenty five,

0:17:51.040 --> 0:17:53.840
<v Speaker 3>to jump to four point three percent. So you're seeing

0:17:53.920 --> 0:17:58.040
<v Speaker 3>these indicators that there are fundamental underlying problems, but yet

0:17:58.320 --> 0:18:01.159
<v Speaker 3>everything seems so positive because they again it's like a

0:18:01.280 --> 0:18:04.359
<v Speaker 3>rational exuberance. Alan greenspan to mention like the dot com

0:18:04.359 --> 0:18:07.040
<v Speaker 3>air again only in the AI crypto space. So it

0:18:07.200 --> 0:18:09.760
<v Speaker 3>feels like a dichotomy of two different messages.

0:18:09.840 --> 0:18:12.080
<v Speaker 1>If you had to put a number on what you

0:18:12.160 --> 0:18:14.400
<v Speaker 1>expect the total return for the S and P five

0:18:14.480 --> 0:18:17.680
<v Speaker 1>hundred to be in twenty twenty five, what is that number?

0:18:17.920 --> 0:18:21.040
<v Speaker 3>Well, I mean, I think if we have another you're

0:18:21.040 --> 0:18:23.600
<v Speaker 3>like twenty twenty four, we could easily see, you know,

0:18:23.640 --> 0:18:25.760
<v Speaker 3>growth is slowing down globally. But I think if we're

0:18:25.800 --> 0:18:27.360
<v Speaker 3>if we're going to have a repeat of this year

0:18:27.359 --> 0:18:29.359
<v Speaker 3>and exactly what happened this year as far as you know,

0:18:29.400 --> 0:18:31.320
<v Speaker 3>how how the growth one, I think we could still

0:18:31.359 --> 0:18:33.800
<v Speaker 3>see you know, anywhere from a seven to twelve percent

0:18:33.840 --> 0:18:38.040
<v Speaker 3>growth rate literally not necessarily broad spectrum the entire market,

0:18:38.040 --> 0:18:40.240
<v Speaker 3>but the sectors. Right. But again though, Doug, if we

0:18:40.280 --> 0:18:42.639
<v Speaker 3>start to see the geopolitical and the economic weaknesses of

0:18:42.680 --> 0:18:45.400
<v Speaker 3>Asia and Europe come to our shores, then we could

0:18:45.440 --> 0:18:47.560
<v Speaker 3>have a loss year. And that's the issue that we're

0:18:47.600 --> 0:18:49.000
<v Speaker 3>not exactly sure which way it's going to go.

0:18:49.240 --> 0:18:50.879
<v Speaker 1>Rebecca, thank you so much for being with as.

0:18:50.880 --> 0:18:52.800
<v Speaker 3>Happy New Year, TA, thank you you as well.

0:18:52.840 --> 0:18:56.080
<v Speaker 1>Thank you. Rebecca Wallser is president at Wallser Wealth Management.

0:18:56.160 --> 0:19:01.679
<v Speaker 1>Joining us here on the Daybreak Asia Podcast. Thanks for

0:19:01.760 --> 0:19:06.280
<v Speaker 1>listening to today's episode of the Bloomberg Daybreak Asia Edition podcast.

0:19:06.600 --> 0:19:09.680
<v Speaker 1>Each weekday, we look at the story shaping markets, finance,

0:19:10.040 --> 0:19:13.080
<v Speaker 1>and geopolitics in the Asia Pacific. You can find us

0:19:13.080 --> 0:19:17.240
<v Speaker 1>on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere

0:19:17.240 --> 0:19:20.280
<v Speaker 1>else you listen. Join us again tomorrow for insight on

0:19:20.320 --> 0:19:24.400
<v Speaker 1>the market moves from Hong Kong to Singapore and Australia.

0:19:24.840 --> 0:19:27.240
<v Speaker 1>I'm Doug Chrisner, and this is Bloomberg