WEBVTT - Breaking Down Chinese Eco Data, Latest on US Tariffs

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner.

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<v Speaker 2>On today's episode, we'll take a look at how deflation

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<v Speaker 2>seems to be gripping the Chinese economy, plus a look

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<v Speaker 2>at how looming tariffs will shape the trading week ahead.

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<v Speaker 2>In a moment, we'll be speaking with George Schultze. He

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<v Speaker 2>is founder of Schultzea Wealth Management. But we begin in

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<v Speaker 2>the Asia Pacific. Over the weekend, we learned China's consumer

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<v Speaker 2>inflation fell in February by far more than expected. The

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<v Speaker 2>consumer price index was down seven tens of one percent

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<v Speaker 2>from last year, falling below zero for the first time

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<v Speaker 2>in thirteen months. For a closer look, now, I am

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<v Speaker 2>joined by Chi Lo. He is APAX senior market strategist

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<v Speaker 2>at BNP Peribah Asset Management. Chi is on the line

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<v Speaker 2>from Hong Kong. Thank you for making time to chat

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<v Speaker 2>with us. It's always a pleasure. So how do you

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<v Speaker 2>make sense of this re Is it an anomaly? I

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<v Speaker 2>was looking at data from Goldman Sachs. A couple of

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<v Speaker 2>people are interpreting this reading in a different way. But

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<v Speaker 2>can we walk away? Can we ignore the fact that

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<v Speaker 2>China seems to be just trapped in deflation right now.

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<v Speaker 3>We cannot really walk away. It is very clear that

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<v Speaker 3>the Chinese economy is still weak, especially the private sector.

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<v Speaker 3>Confidence is still not fully recovered. When you look at

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<v Speaker 3>product sector investment growth, it's being close to zero, offering

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<v Speaker 3>between negative and zero for the past two and a

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<v Speaker 3>half years. So this CPI negative reading, yes grunted, partly

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<v Speaker 3>because of the base effects due to the distorsion of

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<v Speaker 3>the Chinese New Year, but fundamentally we are still not

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<v Speaker 3>really seeing a turnaround in public sentiment, in private sector

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<v Speaker 3>spending and the overall momentum of the economy, which argues

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<v Speaker 3>for further and more aggressive policy easing by Beijing. It

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<v Speaker 3>seems that you know the government is aware of that

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<v Speaker 3>and be hopeful that in the coming months we'll see

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<v Speaker 3>more assertive easing just to make sure the grow co

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<v Speaker 3>momentum in the Chinese economy doesn't folter further.

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<v Speaker 2>Does it have to be a massive type stimulus program?

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<v Speaker 3>Do you think it does have to be more aggressive

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<v Speaker 3>than what we saw in the past two years.

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<v Speaker 1>I e.

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<v Speaker 3>Different from the incremental easing stance that Beijing had been pursuing.

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<v Speaker 3>Until late last year. The point here is that because

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<v Speaker 3>private sector is not spending, consumers are still not confident

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<v Speaker 3>in spending more So, it's a simple economics that when

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<v Speaker 3>the private sector is moving is not moving ahead, the

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<v Speaker 3>public sector has to step in get things going kick

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<v Speaker 3>started just to rebuild confidence. So we do need to

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<v Speaker 3>see Beijing to be more aggressives. How aggressive, but definitely

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<v Speaker 3>more aggressive than what we saw in the past two years,

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<v Speaker 3>as I said earlier, but not necessarily you know, in big,

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<v Speaker 3>big spending stabilis that we saw in the past cycles.

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<v Speaker 3>Because the trick here is to find the point that

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<v Speaker 3>can turn around prodit sector confidence. And it seems that

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<v Speaker 3>we see some green shoots in the economy recently. We

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<v Speaker 3>may be close to the point that the sector is

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<v Speaker 3>turning around, but that needs more help from the government.

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<v Speaker 3>That's the point.

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<v Speaker 2>This is undoubtedly being complicated by an increase in trade

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<v Speaker 2>tension between Washington and Beijing. We're talking about new tariffs

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<v Speaker 2>that will take effect on Monday from the China side.

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<v Speaker 2>Is it really a critical moment right now if you're

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<v Speaker 2>a leader in Beijing and you have to kind of

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<v Speaker 2>try to balance the risk here, how critical is this

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<v Speaker 2>moment in time well.

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<v Speaker 3>Indeed, the tariff factor is another drag from the external

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<v Speaker 3>side on Chinese growth. But at this point, if the

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<v Speaker 3>tariff rates still remained at additional twenty percent, it is

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<v Speaker 3>still manageable from China's perspects active because the estimated drag

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<v Speaker 3>that we calculated on the back of the envelope is

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<v Speaker 3>that the twenty percent tariff on Chinese exports to the

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<v Speaker 3>US would trim Chinese growth by about zero one six percent,

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<v Speaker 3>maybe a little less now. But when you look at

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<v Speaker 3>Beijing's announced fiscal spending, the fiscal deficit and so on,

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<v Speaker 3>we estimated that the net fiscal stimulus to the Chinese

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<v Speaker 3>economy at the current physical spending package is around one

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<v Speaker 3>point six percent of GDP, so that would be more

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<v Speaker 3>than enough to offset the tariff drag on growth, So

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<v Speaker 3>that is still manageable. But the point here is, as

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<v Speaker 3>I said, if Chinese public sector parvate sector is not

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<v Speaker 3>turning around, and then if the tariff factor added to

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<v Speaker 3>adds to destroying confidence further, then they would be a

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<v Speaker 3>serious ease with the Beijing has to rethink about. But

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<v Speaker 3>in the end, I still think that if Beijing wants

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<v Speaker 3>to do it, they can do more, they have the

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<v Speaker 3>tools to do it and expand the mestic sector further.

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<v Speaker 3>So it's a policy choice. Down the road, we do

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<v Speaker 3>see that Beijing is shifting to more stabilis.

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<v Speaker 2>So we've talked about the big negative, weak demand, bad sentiment,

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<v Speaker 2>and deflation. Now let's talk about the positivity as it

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<v Speaker 2>relates to the deep seek narrative and from that, the

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<v Speaker 2>interest in AI driven buying of some of the companies,

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<v Speaker 2>smaller firms in China that are high tech related and

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<v Speaker 2>what that has meant for foreign money coming into China.

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<v Speaker 2>What kind of flows are you seeing right now?

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<v Speaker 3>We do see some selective flows going back to the

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<v Speaker 3>Chinese market, partly because they are investors who hold a

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<v Speaker 3>view like us that the probability of more stimbolus going

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<v Speaker 3>forward by Beijing is going to turn around things. But

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<v Speaker 3>they are also cautious and suspicious investors there. So the

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<v Speaker 3>selective flows going back to China now more tactical, and

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<v Speaker 3>many of them, no doubt, as you a little to

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<v Speaker 3>have have gone into the tech sector for the simple

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<v Speaker 3>fact that Chinese tech has been bitten down for more

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<v Speaker 3>than three years. And now the Deepsek shock, I just

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<v Speaker 3>call it a shock because it does shake up the

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<v Speaker 3>global tax sector and ask investors to re evaluate the

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<v Speaker 3>develop market tech companies, the Magnificent seven so to speak,

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<v Speaker 3>you know, questioning their earnings, outloak, their business model, their costs,

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<v Speaker 3>and so on. So when you look at this China

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<v Speaker 3>shock on the tech sector, there is indeed a positive

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<v Speaker 3>implication on Chinese tech stocks, first because of the evaluation,

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<v Speaker 3>and secondly, the Chinese can do similar things like the

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<v Speaker 3>big tech Western companies can do as much cheaper, and

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<v Speaker 3>that means, you know, there is more opportunity in the

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<v Speaker 3>Chinese tech sector to grow and rebound. And if you

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<v Speaker 3>add on the Chinese government's expected stimulus, that is a

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<v Speaker 3>good story for portfolio flows going back to the Chinese

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<v Speaker 3>market and also especially going to the Chinese tex stop.

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<v Speaker 2>So I'm wondering about the extent to which the move

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<v Speaker 2>up that we have seen in the market is being

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<v Speaker 2>underpinned by expectations that we're going to see some central

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<v Speaker 2>bank easing in China. We talked a little bit about

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<v Speaker 2>the stimulus side. I get that from a kind of

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<v Speaker 2>a fiscal point of view, but how much of the

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<v Speaker 2>positivity is being supported by the notion that the PBOC

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<v Speaker 2>is going to cut rates here.

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<v Speaker 3>The PBOC will continue to ease. Now, in my view,

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<v Speaker 3>what's important for the stimulus program to work here is

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<v Speaker 3>primarily fiscal spending, which we see Bijing is doing, supported

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<v Speaker 3>or funded by special government bond issues. And then secondary

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<v Speaker 3>is monetary easy which monetary easing role here is to

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<v Speaker 3>facility the physical spending and to make sure the systems

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<v Speaker 3>liquidity will remain ample. It is not primary because there

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<v Speaker 3>is deflictionary forces in the Chinese economy. There's a lack

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<v Speaker 3>of confidence if you rely mainly or only on monetary

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<v Speaker 3>easing in this situation is something like a liquidity trap,

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<v Speaker 3>which means that monetary easing is like pushing on a

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<v Speaker 3>piece of strength. So we do need the fiscal spending

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<v Speaker 3>coming in, but monetary easing is a facilitating factor, and

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<v Speaker 3>we do need to see PBOC to ease further, mainly

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<v Speaker 3>because when you look at the real policy rates in China,

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<v Speaker 3>it is still weighed about ten year average. So from

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<v Speaker 3>that perspective, there is room for the PBOC to continue

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<v Speaker 3>to ease further.

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<v Speaker 2>Are you finding more opportunity on the fixed income side

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<v Speaker 2>in China than you are on the equity side at.

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<v Speaker 3>This point, I think both segments of the asset markets

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<v Speaker 3>offer good opportunities. Now, if there is still a very

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<v Speaker 3>sluggish recovery in confidence, which drags on economic growth and

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<v Speaker 3>yet on the guitar effactor and so on, so that

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<v Speaker 3>means we're not going to see any significant demand push

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<v Speaker 3>on inflation in China which would lead to monetary EA

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<v Speaker 3>is monetary tightening, so that's not really a risk. Now

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<v Speaker 3>in this environment, fixed income is good. But on the

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<v Speaker 3>other hand, if our reading of the steamolant program that

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<v Speaker 3>Beijing is putting in wells eventually, you know, sometimes in

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<v Speaker 3>the second half of this year, shows signs of turning

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<v Speaker 3>around the economy, that would turn around investors centiquent quick

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<v Speaker 3>sharply leading super War info back to China. So that

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<v Speaker 3>would be good for the for the equity market. So

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<v Speaker 3>at this point I would I would say, you know,

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<v Speaker 3>sort of a fifty to fifty portfolio in equity is

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<v Speaker 3>fifty percent in effics income in China is an appropriate stance.

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<v Speaker 3>But going into the second half of this year and

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<v Speaker 3>we have a greater outroop for equity performance there, we

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<v Speaker 3>we can move back to the typical sixty forty sixty

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<v Speaker 3>percent equities and forty percent fixed income.

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<v Speaker 2>Gee, thank you so much for joining us. Chilo there.

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<v Speaker 2>He is APAX senior market strategist at BNP Periba Asset Management.

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<v Speaker 2>Joining us here on the Daybreak Asia podcast. Welcome back

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<v Speaker 2>to the Daybreak Asia Podcast. I'm Doug Krisner. So in

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<v Speaker 2>the US last Friday, the equity market closed higher. This

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<v Speaker 2>was after fed scher J. Powell said he is expecting

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<v Speaker 2>the path to two percent inflation to continue. Now markets

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<v Speaker 2>appear to take these remarks to mean any price increase

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<v Speaker 2>as a result of tariffs could be temporary. Joining me

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<v Speaker 2>now is George Schultze. He is founder and CEO of

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<v Speaker 2>Schultze Wealth Management. Joining from just outside of New York City.

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<v Speaker 2>Thanks for making time to chat with us. George, First

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<v Speaker 2>of all, is Powell correct you believe in assuming that

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<v Speaker 2>any price shock as a result of these tariffs would

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<v Speaker 2>be temporary.

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<v Speaker 1>We think it is here at Schultze Asset Management.

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<v Speaker 3>Yeah.

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<v Speaker 1>There's been a lot of market uncertainty and volatility in

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<v Speaker 1>the last few days, a lot of concern about tariffs

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<v Speaker 1>and uncertainty specifically about how they're going to impact economic

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<v Speaker 1>growth globally. But I think I think power's taken the

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<v Speaker 1>uh you know the right approach here. I mean, remember,

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<v Speaker 1>you know, inflation has dropped a fair amount, and you know,

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<v Speaker 1>let's face that many of these policies that Trump has

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<v Speaker 1>issued our economic friendly policies. They're pro business policies. So

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<v Speaker 1>we'll see how the specific tariffs all get rolled out

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<v Speaker 1>and how many of them will roll off after we

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<v Speaker 1>have negotiated new deals with different countries. But for sure,

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<v Speaker 1>the Fed has some ammunition leftic and lower interest rates

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<v Speaker 1>if it becomes a concern. And you know, I think

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<v Speaker 1>I think a little bit of this market volatility is

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<v Speaker 1>a little premature.

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<v Speaker 2>I had a colleague pointing out that Powell's remarks were

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<v Speaker 2>eerily similar to his remarks on transitory inflation that made

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<v Speaker 2>during the pandemic. They of course turned out to be

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<v Speaker 2>a mistake. Do you want to be hedged against the

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<v Speaker 2>possibility that inflation is still a little stubborn and sticky.

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<v Speaker 1>Well, yes, inflation has been sticking it. Remember how long

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<v Speaker 1>it took to increase inflation. I think it took about

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<v Speaker 1>ten years. So yes, we think it probably makes a

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<v Speaker 1>little sense to have some hedging, you know, against inflation specifically.

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<v Speaker 1>I think, you know, there's some interesting short selling opportunities

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<v Speaker 1>as well with certain companies that are facing higher costs

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<v Speaker 1>that seem to be persistent. And again with with with

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<v Speaker 1>the tariffs, I think, you know, certain industries, for example,

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<v Speaker 1>automakers that import a lot of product, you know, they'll

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<v Speaker 1>face they'll be facing risk of higher prices on their

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<v Speaker 1>input prices. But on the other hand, many of them

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<v Speaker 1>will be able to push through some of those price

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<v Speaker 1>increases to their customers, and some of their customers will

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<v Speaker 1>be uh, you know, price elastic and willing to pay,

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<v Speaker 1>you know, to buy new vehicles even with higher component parts.

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<v Speaker 2>So the rhetoric around tariffs, combined with the FED being

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<v Speaker 2>maybe higher for longer, I think that's fair to say

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<v Speaker 2>at this point. One of the things that those two

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<v Speaker 2>factors have contributed to is a much stronger dollar. And

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<v Speaker 2>I'm wondering whether you think that that will still be

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<v Speaker 2>a significant headwind for any US multinational.

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<v Speaker 1>Yeah, so, you know, stronger dollar actually, you know works

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<v Speaker 1>out pretty well for many of the big US companies.

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<v Speaker 1>You know, I think the important thing is you know

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<v Speaker 1>where you have your borrowings. I mean, if you're a multinational,

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<v Speaker 1>you have borrowed in US dollars and you have revenue

0:13:36.760 --> 0:13:39.280
<v Speaker 1>and income coming from overseas, then you could have an issue,

0:13:40.000 --> 0:13:43.760
<v Speaker 1>but certainly a strong dollar it actually welcome right now.

0:13:43.800 --> 0:13:45.520
<v Speaker 1>I mean, you know, one of the things we're seeing

0:13:45.559 --> 0:13:49.200
<v Speaker 1>with Dog and you know all this government expenditure cutting

0:13:50.080 --> 0:13:52.760
<v Speaker 1>is you know, a new approach to you know, focus

0:13:52.800 --> 0:13:55.400
<v Speaker 1>on potentially balancing the budget going forward instead of just

0:13:55.440 --> 0:13:57.960
<v Speaker 1>spending so much money like a drunk saler. So you know,

0:13:58.000 --> 0:14:01.320
<v Speaker 1>we think generally these are good business endly things, and

0:14:01.720 --> 0:14:05.040
<v Speaker 1>you know, to the extent they ultimately ultimately lead to

0:14:05.080 --> 0:14:09.160
<v Speaker 1>lower taxes for individuals or corporations in the US that

0:14:09.240 --> 0:14:11.960
<v Speaker 1>could really be good for future economic growth.

0:14:12.440 --> 0:14:15.680
<v Speaker 2>So you mentioned those there. The brainchild of Elon Musk,

0:14:15.760 --> 0:14:19.920
<v Speaker 2>his company Tesla, has been struggling lately. The last figure

0:14:19.960 --> 0:14:23.120
<v Speaker 2>that I saw on shipments in China showed a decline.

0:14:23.120 --> 0:14:26.240
<v Speaker 2>I think they've been falling for about five consecutive months now.

0:14:26.320 --> 0:14:29.480
<v Speaker 2>February sales I think down forty nine percent compared to

0:14:29.560 --> 0:14:32.080
<v Speaker 2>last year. And at the same time, you have a

0:14:32.120 --> 0:14:35.680
<v Speaker 2>company like Byd on the mainland that is gaining market share.

0:14:35.760 --> 0:14:39.440
<v Speaker 2>I think by D last month saw if you can

0:14:39.440 --> 0:14:42.040
<v Speaker 2>believe this, one hundred and sixty one percent year on

0:14:42.160 --> 0:14:46.560
<v Speaker 2>year increase, do you have to reconsider some of the

0:14:46.880 --> 0:14:50.000
<v Speaker 2>let's say Mag seven, the darlings. I use Tesla as

0:14:50.040 --> 0:14:53.160
<v Speaker 2>an example, but maybe there are other situations where these

0:14:53.160 --> 0:14:57.120
<v Speaker 2>companies perhaps are a little over extended in their growth prospects.

0:14:57.640 --> 0:14:59.440
<v Speaker 1>I think that's right. I think you do have to

0:14:59.480 --> 0:15:01.840
<v Speaker 1>be learned about that. And people have been saying that

0:15:01.880 --> 0:15:05.000
<v Speaker 1>for a long time, including US. You know, they've gone

0:15:05.160 --> 0:15:08.760
<v Speaker 1>they've just gone up parabolically, and now you know, you

0:15:09.400 --> 0:15:12.200
<v Speaker 1>wonder whether you know there's really value for some of

0:15:12.200 --> 0:15:14.440
<v Speaker 1>these Mags seven socks. I mean, they've been on such

0:15:14.520 --> 0:15:16.760
<v Speaker 1>a run and there's been so much money chasing them

0:15:17.440 --> 0:15:20.560
<v Speaker 1>that now you're seeing other markets, you know, with with

0:15:20.640 --> 0:15:23.560
<v Speaker 1>big technology or you know, high growth companies outperform, like

0:15:23.600 --> 0:15:26.680
<v Speaker 1>you're seeing in Hong Kong and other international markets like

0:15:26.680 --> 0:15:29.800
<v Speaker 1>for instance, in Germany, you know, where you have a

0:15:29.920 --> 0:15:32.080
<v Speaker 1>you know, close to a twenty percent return year to

0:15:32.160 --> 0:15:35.080
<v Speaker 1>date for both those those markets versus in the US,

0:15:35.200 --> 0:15:37.520
<v Speaker 1>you know, you're flat to down. Looks like the NASAC

0:15:37.640 --> 0:15:39.640
<v Speaker 1>is down already, you know, a fair amount so far

0:15:39.720 --> 0:15:41.720
<v Speaker 1>this year. So so it seems to be a bit

0:15:41.760 --> 0:15:45.280
<v Speaker 1>of a rotation. We'll see how long it continues. But certainly.

0:15:45.760 --> 0:15:48.000
<v Speaker 1>You know, US investors in the MA seven another big

0:15:48.040 --> 0:15:50.480
<v Speaker 1>socks have have done very well looking back over the

0:15:50.560 --> 0:15:52.960
<v Speaker 1>last two years, and so I think we're probably we

0:15:52.960 --> 0:15:55.040
<v Speaker 1>were probably due for a little bit of a correction there.

0:15:55.720 --> 0:15:57.920
<v Speaker 1>But we'll see how long this continues, whether you know,

0:15:57.960 --> 0:16:00.760
<v Speaker 1>it stops now or you know, continues to get worse

0:16:01.520 --> 0:16:03.280
<v Speaker 1>and we wind up having another year like we had

0:16:03.320 --> 0:16:04.360
<v Speaker 1>in twenty twenty two.

0:16:04.560 --> 0:16:07.840
<v Speaker 2>How are you positioning yourself offshore right now? If at all.

0:16:08.240 --> 0:16:11.600
<v Speaker 1>We've made certain investments in certain countries where we think

0:16:11.600 --> 0:16:15.080
<v Speaker 1>there's opportunity for more appreciation. You know, there are some

0:16:15.200 --> 0:16:18.520
<v Speaker 1>interesting value investments, and you know around Europe and also

0:16:18.640 --> 0:16:21.880
<v Speaker 1>in Asia. In China, for instance, it's just been you know,

0:16:22.240 --> 0:16:24.480
<v Speaker 1>theres a lot of changes, and also in Japan there

0:16:24.480 --> 0:16:27.000
<v Speaker 1>are a lot of interesting changes, you know, structural changes

0:16:27.000 --> 0:16:30.160
<v Speaker 1>in Japan, you know, where companies are getting a little

0:16:30.160 --> 0:16:33.680
<v Speaker 1>bit more shareholder friendly. In China, you know, of course,

0:16:33.680 --> 0:16:37.680
<v Speaker 1>we had this big property market correction and now you know,

0:16:37.680 --> 0:16:39.280
<v Speaker 1>there seems to be you know a good amount of

0:16:39.320 --> 0:16:42.880
<v Speaker 1>stimulus and you know, perhaps a more business friendly attitude

0:16:42.920 --> 0:16:46.040
<v Speaker 1>and an effort to combat you know, risk of tariffs.

0:16:46.520 --> 0:16:49.720
<v Speaker 1>In Europe, there's it seems that you know, there's going

0:16:49.760 --> 0:16:52.520
<v Speaker 1>to be a bazuka of spend, you know, for military

0:16:52.560 --> 0:16:57.120
<v Speaker 1>and potentially infrastructure spending. So there are some interesting opportunities

0:16:57.120 --> 0:17:00.120
<v Speaker 1>in overseas markets right now, and we think investment or

0:17:00.120 --> 0:17:02.400
<v Speaker 1>should be flexible and willing to look at other places

0:17:02.800 --> 0:17:04.480
<v Speaker 1>if it's likely that you're going to lose money in

0:17:04.480 --> 0:17:07.879
<v Speaker 1>the US market. However, there are some very interesting and

0:17:08.040 --> 0:17:10.399
<v Speaker 1>very cheap companies trading in the US market that have

0:17:10.480 --> 0:17:12.919
<v Speaker 1>been I think over sold in the last couple of

0:17:12.920 --> 0:17:16.639
<v Speaker 1>weeks here with all this turmoil and all this market volatility.

0:17:16.960 --> 0:17:18.879
<v Speaker 2>So I want to get your view on the macro. Then,

0:17:18.960 --> 0:17:21.879
<v Speaker 2>over the weekend, President Trump was saying the American economy

0:17:21.920 --> 0:17:25.480
<v Speaker 2>does face a period of transition, although he declined to

0:17:25.640 --> 0:17:28.440
<v Speaker 2>predict whether or not a recession will happen this year.

0:17:28.480 --> 0:17:30.639
<v Speaker 2>What is your sense of whether or not we'll see

0:17:30.920 --> 0:17:32.160
<v Speaker 2>contraction in growth.

0:17:32.840 --> 0:17:35.160
<v Speaker 1>I don't think we're there yet. I mean, I think

0:17:35.200 --> 0:17:38.000
<v Speaker 1>the economy is still growing. You know, we still have

0:17:38.040 --> 0:17:41.919
<v Speaker 1>some inflation. I think if we're close to there, Powell

0:17:41.920 --> 0:17:43.920
<v Speaker 1>would have been indicating that we're probably going to start

0:17:43.920 --> 0:17:46.520
<v Speaker 1>lowering rates, you know, more quickly. But I do think,

0:17:46.680 --> 0:17:49.680
<v Speaker 1>as I said, earlier that that, you know, the Fed

0:17:49.720 --> 0:17:52.119
<v Speaker 1>has some dry powder now in case, you know, we

0:17:52.200 --> 0:17:55.679
<v Speaker 1>do get risk of you know, recession here, you know,

0:17:55.720 --> 0:17:59.320
<v Speaker 1>he could lower rates or you know, maybe perhaps reduce

0:17:59.400 --> 0:18:02.159
<v Speaker 1>quantitative tightening. Also, not too many people talk about that,

0:18:02.200 --> 0:18:04.560
<v Speaker 1>but you still have quantitative tightening that's going on month

0:18:04.600 --> 0:18:07.320
<v Speaker 1>to month with the Fed still reducing the size of

0:18:07.359 --> 0:18:11.040
<v Speaker 1>its balance sheet each month. So right now, it doesn't

0:18:11.080 --> 0:18:13.320
<v Speaker 1>feel really like, you know, the US is at big

0:18:13.440 --> 0:18:15.879
<v Speaker 1>risk of recession. Sure, there's a lot of change, you know,

0:18:15.920 --> 0:18:20.920
<v Speaker 1>you have tariff policy uncertainty, you have you know, immigration

0:18:21.000 --> 0:18:23.959
<v Speaker 1>policies that have changed, and certainly a lot of layoffs

0:18:24.040 --> 0:18:27.119
<v Speaker 1>that are coming through with the government. You know, I guess,

0:18:27.200 --> 0:18:29.159
<v Speaker 1>I guess all of this is creating a certain amount

0:18:29.160 --> 0:18:33.960
<v Speaker 1>of economic uncertainty and perhaps slow and spending in certain sectors.

0:18:35.200 --> 0:18:37.399
<v Speaker 1>But I don't think we're at the point where, you know,

0:18:37.440 --> 0:18:39.800
<v Speaker 1>we're facing risk of recession yet. The economy is just

0:18:39.800 --> 0:18:43.280
<v Speaker 1>too strong and growing too well, and there's some pretty

0:18:43.280 --> 0:18:44.160
<v Speaker 1>good tail wind still.

0:18:44.520 --> 0:18:48.160
<v Speaker 2>So underneath that uncertainty, I'm wondering whether you're still optimistic

0:18:48.240 --> 0:18:51.879
<v Speaker 2>that the strategy on imposing tariffs will contribute to a

0:18:52.000 --> 0:18:56.119
<v Speaker 2>really significant move in reshoring. Do you think that's going

0:18:56.160 --> 0:18:58.920
<v Speaker 2>to move the needle when you look at American manufacturing

0:18:59.160 --> 0:19:01.960
<v Speaker 2>of products like deal and aluminum.

0:19:01.359 --> 0:19:06.120
<v Speaker 1>So they're big changes. And unfortunately, you know, a change

0:19:06.119 --> 0:19:08.960
<v Speaker 1>like this doesn't happen overnight. I mean, think of how

0:19:09.000 --> 0:19:11.520
<v Speaker 1>long it took for all these manufacturing companies to get

0:19:11.560 --> 0:19:14.760
<v Speaker 1>out of the US. It took decades, you know, decades

0:19:14.840 --> 0:19:18.840
<v Speaker 1>of of really weak policies that allowed all the you know,

0:19:19.080 --> 0:19:22.480
<v Speaker 1>all the other good industry to go overseas. So it's

0:19:22.480 --> 0:19:24.440
<v Speaker 1>not going to happen overnight. And I think that's what

0:19:24.440 --> 0:19:26.439
<v Speaker 1>what Trump was trying to telegraph in the in the

0:19:26.480 --> 0:19:29.639
<v Speaker 1>State of the Union address that you know, bear with me,

0:19:29.760 --> 0:19:31.080
<v Speaker 1>it is going to be you know, it might not

0:19:31.160 --> 0:19:33.640
<v Speaker 1>be you know, so pretty in the short term, but

0:19:33.640 --> 0:19:35.439
<v Speaker 1>but over the long term, it's probably going to be

0:19:35.440 --> 0:19:38.480
<v Speaker 1>better for the for the economy. I think that's true. Unfortunately,

0:19:38.480 --> 0:19:41.920
<v Speaker 1>it doesn't happen overnight. But you are seeing certain indications.

0:19:41.960 --> 0:19:44.639
<v Speaker 1>You know, I think a number of auto companies are

0:19:44.680 --> 0:19:48.400
<v Speaker 1>talking about, you know, reshoring into the US or expanding

0:19:48.400 --> 0:19:52.400
<v Speaker 1>their production here and reducing production in Canada and Mexico.

0:19:52.960 --> 0:19:56.840
<v Speaker 1>And you have periodic announcements of new you know, multi

0:19:56.840 --> 0:20:00.560
<v Speaker 1>billion dollar investment plans, you know, coming into technology space

0:20:00.640 --> 0:20:02.440
<v Speaker 1>and others. I think that will continue.

0:20:02.600 --> 0:20:05.200
<v Speaker 2>George will leave it there. Thank you so much. George Schultzee,

0:20:05.400 --> 0:20:08.720
<v Speaker 2>founder and CEO of Shultzee Wealth Management, joining us here

0:20:08.760 --> 0:20:13.560
<v Speaker 2>on the Daybreak Asia Podcast. Thanks for listening to today's

0:20:13.600 --> 0:20:18.080
<v Speaker 2>episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday,

0:20:18.119 --> 0:20:22.040
<v Speaker 2>we look at the story shaping markets, finance, and geopolitics

0:20:22.080 --> 0:20:25.360
<v Speaker 2>in the Asia Pacific. You can find us on Apple, Spotify,

0:20:25.480 --> 0:20:29.000
<v Speaker 2>the Bloomberg Podcast YouTube channel, or anywhere else you listen.

0:20:29.400 --> 0:20:32.320
<v Speaker 2>Join us again tomorrow for insight on the market moves

0:20:32.359 --> 0:20:36.920
<v Speaker 2>from Hong Kong to Singapore and Australia. I'm Doug Chrisner,

0:20:37.040 --> 0:20:38.440
<v Speaker 2>and this is Bloomberg