1 00:00:00,080 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,000 --> 00:00:14,560 Speaker 2: Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. 3 00:00:14,880 --> 00:00:17,439 Speaker 2: We had a mixed finish for US equities given some 4 00:00:17,560 --> 00:00:20,959 Speaker 2: angst ahead of earnings this week from four mag seven members, 5 00:00:21,320 --> 00:00:23,799 Speaker 2: and sentiment was dampened a bit as well by news 6 00:00:23,840 --> 00:00:27,280 Speaker 2: over the weekend. The China's Huawei Technologies is set to 7 00:00:27,360 --> 00:00:30,800 Speaker 2: test a new chip. Here is Bloomberg's Valerie Titel. 8 00:00:31,120 --> 00:00:34,320 Speaker 3: Huawei is reportedly preparing to test a new AI chip 9 00:00:34,600 --> 00:00:37,239 Speaker 3: that it hopes can replace some of those products replaced 10 00:00:37,240 --> 00:00:40,199 Speaker 3: by Navidia. This comes from the Wall Street Journal reporting 11 00:00:40,240 --> 00:00:44,400 Speaker 3: that Huawei has approached some Chinese tech companies about testing 12 00:00:44,479 --> 00:00:47,160 Speaker 3: the new chip. The new processor would put China's capabilities 13 00:00:47,280 --> 00:00:50,080 Speaker 3: around two generations behind Navidia's new Blackwell chip. 14 00:00:50,120 --> 00:00:53,280 Speaker 2: That is Bloomberg's Valerie Titel. Their shares an Nvidia. We're 15 00:00:53,280 --> 00:00:56,240 Speaker 2: down today by more than two percent. Now we're also 16 00:00:56,320 --> 00:00:59,320 Speaker 2: expecting a flurry of economic data this week and in 17 00:00:59,360 --> 00:01:02,160 Speaker 2: a moment speaking with Clayton Trick, he is head of 18 00:01:02,160 --> 00:01:06,480 Speaker 2: portfolio management at angel O Capital Advisors. But we begin 19 00:01:06,560 --> 00:01:10,320 Speaker 2: this morning in the Asia Pacific. The Asian Development Bank 20 00:01:10,360 --> 00:01:13,840 Speaker 2: has lowered its growth forecast for the continent, the institution 21 00:01:14,080 --> 00:01:17,000 Speaker 2: saying that US tariffs will shave growth in the region 22 00:01:17,080 --> 00:01:19,800 Speaker 2: by a third of a percentage point, falling to four 23 00:01:19,840 --> 00:01:23,320 Speaker 2: point nine percent in twenty twenty five, and then dropping 24 00:01:23,400 --> 00:01:26,840 Speaker 2: by a full percentage point in twenty twenty six to 25 00:01:26,959 --> 00:01:30,760 Speaker 2: four point seven percent. Now, the ADB released its annual 26 00:01:30,800 --> 00:01:35,319 Speaker 2: outlook on Wednesday, numbers for which were calculated before the 27 00:01:35,360 --> 00:01:39,040 Speaker 2: April second tariff announcement was made by President Trump, and 28 00:01:39,120 --> 00:01:43,080 Speaker 2: the ADB's chief economist has already said those numbers will 29 00:01:43,120 --> 00:01:46,360 Speaker 2: be revised lower in its July report. For more, we 30 00:01:46,440 --> 00:01:50,440 Speaker 2: heard from the President of the Asian Development Bank, Masato Conda. 31 00:01:50,560 --> 00:01:53,920 Speaker 2: He spoke exclusively with Bloomberg sherry On in Tokyo. 32 00:01:54,240 --> 00:01:57,120 Speaker 1: You're really coming directly from Washington, DC. Tell us a 33 00:01:57,120 --> 00:02:00,400 Speaker 1: little bit about those conversations about the trade negotiations and 34 00:02:00,400 --> 00:02:03,160 Speaker 1: how that's really weighing on developing Asia. 35 00:02:03,400 --> 00:02:06,480 Speaker 4: Yeah, of course, we have talked about the you know, 36 00:02:06,680 --> 00:02:13,000 Speaker 4: the challenges, particularly from the conflict, geopolitical attentions, but also 37 00:02:13,280 --> 00:02:17,720 Speaker 4: we discussed much more about the opportunities because you know, 38 00:02:18,240 --> 00:02:21,040 Speaker 4: of course this is a lot of difficult times, but 39 00:02:21,280 --> 00:02:25,960 Speaker 4: we've got to translated these challenges into the opportunities to improve. 40 00:02:26,040 --> 00:02:30,320 Speaker 4: So we have talked very much about the for instance, 41 00:02:30,440 --> 00:02:35,920 Speaker 4: the private sector development and private capital mobilizations, and it 42 00:02:36,040 --> 00:02:40,800 Speaker 4: illiginated with the ministers, including the US A tragedy, security, 43 00:02:41,320 --> 00:02:45,840 Speaker 4: a scot Present and all of the mdb has including 44 00:02:45,960 --> 00:02:51,480 Speaker 4: the world of bank prisons A Jabanga and particularly I 45 00:02:51,600 --> 00:02:56,960 Speaker 4: put my ambition to increase private sector lending full forward 46 00:02:57,120 --> 00:03:01,480 Speaker 4: to thirteen billion annually lending to the private sector. 47 00:03:02,440 --> 00:03:06,800 Speaker 1: How feasible are those plans when the global economy faces 48 00:03:06,800 --> 00:03:10,600 Speaker 1: a potential downturn, given of course, all the challenges around trade. 49 00:03:11,080 --> 00:03:13,720 Speaker 4: Yeah, of course this is strange in time, but this 50 00:03:13,840 --> 00:03:18,160 Speaker 4: is a great opportunity to make more resisions under this, 51 00:03:18,600 --> 00:03:24,239 Speaker 4: you know, building the enabling environment for private sector invests, 52 00:03:24,280 --> 00:03:28,120 Speaker 4: for instance, they through the very good deportics including the 53 00:03:28,160 --> 00:03:34,440 Speaker 4: deregations or or even the privatization, and the capital market 54 00:03:34,880 --> 00:03:40,440 Speaker 4: development and the regional corporation, the connectivity all over, then 55 00:03:40,680 --> 00:03:41,440 Speaker 4: we can support. 56 00:03:41,680 --> 00:03:45,120 Speaker 1: Do you see the potential and risk of a downturn globally? 57 00:03:46,040 --> 00:03:49,680 Speaker 4: Of course we have pretty much vigilant because you know, 58 00:03:49,840 --> 00:03:54,200 Speaker 4: as you mentioned, the Asian economy is a lather exposed 59 00:03:54,280 --> 00:04:00,000 Speaker 4: to the global market. So through not only the trade 60 00:04:00,080 --> 00:04:05,640 Speaker 4: it but also the financial capital market. There by the 61 00:04:05,680 --> 00:04:11,840 Speaker 4: decrease the confidence or the you know, rather weak sentiment. 62 00:04:12,360 --> 00:04:17,000 Speaker 4: But I think the agent countries are stronger than in 63 00:04:17,040 --> 00:04:20,720 Speaker 4: the past, but no room for comprecencis. So this is 64 00:04:20,760 --> 00:04:25,960 Speaker 4: the time for Asia to boost the domestic demand. And 65 00:04:26,000 --> 00:04:29,480 Speaker 4: there are parts of the sound economic policy and the 66 00:04:29,520 --> 00:04:34,599 Speaker 4: you know or diversify the uh you know, industries and 67 00:04:34,800 --> 00:04:36,160 Speaker 4: the trade partners as. 68 00:04:36,080 --> 00:04:41,159 Speaker 1: Well, diversified partners and training within the region. Even more 69 00:04:41,240 --> 00:04:44,960 Speaker 1: so when you have when you're facing these incredible rates 70 00:04:44,960 --> 00:04:46,320 Speaker 1: of terists coming from Washington, d C. 71 00:04:46,680 --> 00:04:50,240 Speaker 4: Yeah, I believe that this is the opportunity to you know, 72 00:04:50,800 --> 00:04:58,080 Speaker 4: even open more actually you know, the this is the 73 00:04:58,080 --> 00:05:02,960 Speaker 4: moment the need to find out the more partners the economies, 74 00:05:03,240 --> 00:05:07,000 Speaker 4: but not only from the US or others, but always 75 00:05:07,040 --> 00:05:10,360 Speaker 4: I believe the diversification of the industries is good. 76 00:05:10,560 --> 00:05:14,280 Speaker 1: Does not train include China because Washington wants to restrict 77 00:05:14,360 --> 00:05:16,000 Speaker 1: any conversations with Beijing. 78 00:05:17,400 --> 00:05:20,320 Speaker 4: Not really, but of course the United States is a 79 00:05:20,480 --> 00:05:25,560 Speaker 4: very much important pattern of all us. The foundational, the 80 00:05:25,560 --> 00:05:29,120 Speaker 4: shareholders and the one of the largest that I really value, 81 00:05:29,440 --> 00:05:33,880 Speaker 4: the advices and the looking forward to the even crosser 82 00:05:33,920 --> 00:05:37,760 Speaker 4: partnership with the United States, but also the China is 83 00:05:37,760 --> 00:05:41,360 Speaker 4: a bit important to member countries, so we will try 84 00:05:41,440 --> 00:05:45,599 Speaker 4: to find the solution benefiting benefiting or membership. 85 00:05:46,160 --> 00:05:48,200 Speaker 1: How much of an opportunity is the fact that we 86 00:05:48,279 --> 00:05:52,360 Speaker 1: could see stronger Asian currencies given the sell America sell 87 00:05:52,480 --> 00:05:53,560 Speaker 1: US dollar trade. 88 00:05:54,520 --> 00:05:58,279 Speaker 4: It's quite a difficult to terror because you know, particularly 89 00:05:58,480 --> 00:06:04,040 Speaker 4: the trade street is full of uncertainty and changing ud 90 00:06:04,200 --> 00:06:07,920 Speaker 4: by day. So what we can't do is to protect 91 00:06:08,360 --> 00:06:13,240 Speaker 4: the regional economies against external shocks and the builder resisiens 92 00:06:13,760 --> 00:06:16,160 Speaker 4: uh in the future shocks. 93 00:06:16,880 --> 00:06:19,640 Speaker 1: The fact that, for example here in Japan, the yen 94 00:06:19,800 --> 00:06:23,039 Speaker 1: wasn't incorporated in the trade negotiations. How important is it 95 00:06:23,240 --> 00:06:26,400 Speaker 1: for all of these trading partners to separate those negotiations 96 00:06:26,800 --> 00:06:31,400 Speaker 1: pretending to trade, pretending to financial markets like currencies. 97 00:06:31,720 --> 00:06:33,960 Speaker 4: Or are inter related to the butter trade and the 98 00:06:34,000 --> 00:06:37,360 Speaker 4: currency are quite a different animal, and probably there uh 99 00:06:37,520 --> 00:06:40,960 Speaker 4: you know, needs to be negotiated from the uh you know, 100 00:06:41,440 --> 00:06:45,960 Speaker 4: professional point of views in the respectively, but also for 101 00:06:46,080 --> 00:06:49,599 Speaker 4: the polity side. Always for instance, that we needed to 102 00:06:49,640 --> 00:06:52,440 Speaker 4: pass the sound of Marcro economic apology, which is a 103 00:06:52,440 --> 00:06:58,520 Speaker 4: business protection about the currencies various so and also the 104 00:06:58,680 --> 00:07:02,000 Speaker 4: deepening the capital market. The financial market would be a 105 00:07:02,160 --> 00:07:05,840 Speaker 4: very good in any case. So you know, the what 106 00:07:05,960 --> 00:07:09,000 Speaker 4: we can do and we should do is quite the same. 107 00:07:09,680 --> 00:07:13,239 Speaker 1: Japan is one of the first to negotiate with Washington. 108 00:07:13,280 --> 00:07:16,200 Speaker 1: Could this serve as a model in trade negotiations for 109 00:07:16,280 --> 00:07:17,080 Speaker 1: developing Asia? 110 00:07:17,320 --> 00:07:20,280 Speaker 4: Yeah, not really, I don't think so. But anyway, ADB 111 00:07:20,720 --> 00:07:25,640 Speaker 4: will help all member countries to build their religions against 112 00:07:25,640 --> 00:07:30,400 Speaker 4: these things and the otherwise, and if the shops comes, 113 00:07:31,160 --> 00:07:34,400 Speaker 4: we have a variety of instruments and support, including the 114 00:07:34,480 --> 00:07:39,640 Speaker 4: counta secret COLO assistance and also the UH the data 115 00:07:39,680 --> 00:07:42,960 Speaker 4: management or captain market development. Many things we can do. 116 00:07:44,120 --> 00:07:47,239 Speaker 1: Why don't you think that this trade negotiation model could apply, 117 00:07:47,400 --> 00:07:49,960 Speaker 1: for example for the lights of Thailand Vietnam. We know 118 00:07:50,040 --> 00:07:53,280 Speaker 1: that they also face really stiff tires coming from Washington. 119 00:07:54,800 --> 00:07:58,000 Speaker 4: But as I said, what they can do and we 120 00:07:58,040 --> 00:08:02,800 Speaker 4: can just is to for instance, the divastications of the 121 00:08:03,000 --> 00:08:08,560 Speaker 4: trade partners. Who increases the regigions, so not only inside 122 00:08:08,680 --> 00:08:12,680 Speaker 4: the for instance, the we are supporting their more connectivity 123 00:08:12,720 --> 00:08:17,800 Speaker 4: amongst the same countries or sub regional initiatives, but also 124 00:08:19,160 --> 00:08:23,640 Speaker 4: trying to find the more partners beyond the region and 125 00:08:23,800 --> 00:08:28,720 Speaker 4: Also the deepening the trade agreement inside the region could 126 00:08:28,800 --> 00:08:32,880 Speaker 4: be possible, including the uh you know, you know father 127 00:08:32,960 --> 00:08:35,559 Speaker 4: developing towards the services and sects like. 128 00:08:35,520 --> 00:08:39,120 Speaker 1: Prime Minister issue, for example, was in Thailand in Vietnam. 129 00:08:39,320 --> 00:08:41,400 Speaker 1: What sort of cooperation do we need to see more 130 00:08:41,480 --> 00:08:43,960 Speaker 1: between developing and developed countries? 131 00:08:45,480 --> 00:08:49,200 Speaker 4: You know, this is quite simple, deeper under the you know, 132 00:08:49,360 --> 00:08:52,760 Speaker 4: more opener so the you know, in terms of the 133 00:08:53,360 --> 00:08:57,280 Speaker 4: uh you know products, you know, it could be broadened 134 00:08:57,840 --> 00:09:02,200 Speaker 4: including the services sectors and also the uh you know, 135 00:09:02,360 --> 00:09:04,920 Speaker 4: the liberal protection could be a lot of other So 136 00:09:05,000 --> 00:09:07,360 Speaker 4: there are many things we can do, but it depends 137 00:09:07,400 --> 00:09:12,199 Speaker 4: on the specific institutions, particularly the you know, each country 138 00:09:12,480 --> 00:09:18,199 Speaker 4: has their own domestic political stations, so we've got to 139 00:09:18,240 --> 00:09:24,080 Speaker 4: be very capful. But in principle probably the sticking to 140 00:09:24,200 --> 00:09:27,880 Speaker 4: the open economy will be good for the. 141 00:09:27,960 --> 00:09:30,920 Speaker 1: Digital sat Kana really good to have you with us 142 00:09:30,960 --> 00:09:34,080 Speaker 1: here in the Tokyo studio. He's president of the Asian 143 00:09:34,200 --> 00:09:35,160 Speaker 1: Development Bank. 144 00:09:42,600 --> 00:09:45,920 Speaker 2: Welcome back to the Daybreak Asia podcast. I'm Derek Krisner. 145 00:09:46,280 --> 00:09:48,839 Speaker 2: So in the States, it will be a busy week 146 00:09:48,920 --> 00:09:51,800 Speaker 2: for both corporate earnings and economic data, and I think 147 00:09:51,840 --> 00:09:53,960 Speaker 2: it's fair to say that the key question here is 148 00:09:54,000 --> 00:09:57,559 Speaker 2: whether these numbers will begin to illustrate the impacts of 149 00:09:57,600 --> 00:10:00,480 Speaker 2: the trade war. We're joined now by clay and Trick. 150 00:10:00,559 --> 00:10:04,600 Speaker 2: He is head of portfolio management at angel O Capital Advisors. 151 00:10:04,880 --> 00:10:08,280 Speaker 2: Clayton joining us from Atlanta, Georgia. Good of you to 152 00:10:08,280 --> 00:10:10,600 Speaker 2: make time to chat with us. Give me your sense 153 00:10:10,640 --> 00:10:14,200 Speaker 2: of where you think the overall economy is right now 154 00:10:14,320 --> 00:10:17,600 Speaker 2: up against the tariffs that the Trump administration has put 155 00:10:17,640 --> 00:10:18,319 Speaker 2: into effect. 156 00:10:19,080 --> 00:10:22,000 Speaker 5: Yeah, definitely been an interesting start to the year. We 157 00:10:22,480 --> 00:10:26,000 Speaker 5: really had anticipated this year could have a lot of turbulence. 158 00:10:26,600 --> 00:10:29,720 Speaker 5: Investors went into twenty twenty five, you know, very very 159 00:10:29,760 --> 00:10:34,280 Speaker 5: bolish on potential deregulation and tax cut bill at some 160 00:10:34,320 --> 00:10:36,880 Speaker 5: point in twenty twenty five. But we definitely got a 161 00:10:36,920 --> 00:10:39,880 Speaker 5: lot of turbulence. In the short term. The US economy, 162 00:10:39,960 --> 00:10:43,480 Speaker 5: or at least capital markets in the last week really stabilized, 163 00:10:44,040 --> 00:10:46,400 Speaker 5: but we are at different levels. You know, the SMP 164 00:10:46,559 --> 00:10:49,360 Speaker 5: is down about ten percent from the peak in the 165 00:10:49,400 --> 00:10:53,520 Speaker 5: first quarter. Corporate credit spreads are a little bit wider, 166 00:10:54,120 --> 00:10:58,400 Speaker 5: but we are sinsing a stabilization here in the markets. 167 00:10:58,840 --> 00:11:02,800 Speaker 5: It's really trying to see if some of the soft data, 168 00:11:03,080 --> 00:11:05,960 Speaker 5: which has been getting a lot weaker in the last 169 00:11:05,960 --> 00:11:09,520 Speaker 5: thirty days, you know, translates to weakness in hard data, 170 00:11:09,559 --> 00:11:12,000 Speaker 5: and so you know, the jobs numbers coming out Friday, 171 00:11:12,040 --> 00:11:16,480 Speaker 5: We're getting is report very soon, and so there's a 172 00:11:16,520 --> 00:11:20,199 Speaker 5: lot that we're going to have to digest as market participants. 173 00:11:20,480 --> 00:11:23,679 Speaker 2: We had an interesting piece on the Bloomberg today indicating 174 00:11:23,720 --> 00:11:28,560 Speaker 2: that the US is still receiving containerships that departed China 175 00:11:28,679 --> 00:11:31,280 Speaker 2: pre teariff, and if you accept the idea that it 176 00:11:31,320 --> 00:11:34,280 Speaker 2: takes maybe thirty days perhaps a little more for those 177 00:11:34,360 --> 00:11:37,600 Speaker 2: vessels to travel from China to the nearest US port, 178 00:11:37,880 --> 00:11:41,080 Speaker 2: we really haven't felt the full impact quite yet, have we. 179 00:11:42,040 --> 00:11:45,360 Speaker 5: Yeah, I don't think we have. I think that especially 180 00:11:45,440 --> 00:11:48,720 Speaker 5: in DC, things these are moving very quickly. It does 181 00:11:48,760 --> 00:11:52,400 Speaker 5: seem that deals are potentially going to get done very fast. 182 00:11:52,440 --> 00:11:56,760 Speaker 5: So you know, things could evolve in the coming days 183 00:11:56,800 --> 00:12:01,840 Speaker 5: and weeks on what deals get done between mean global leaders. 184 00:12:02,320 --> 00:12:04,120 Speaker 5: But I agree, you know, we haven't seen that full 185 00:12:04,160 --> 00:12:06,720 Speaker 5: impact yet. You know, the hard data has continued to 186 00:12:06,720 --> 00:12:10,440 Speaker 5: be very strong. First quarter data looks to continue to 187 00:12:10,440 --> 00:12:13,880 Speaker 5: be strong. We haven't really seen much of a slowing 188 00:12:14,280 --> 00:12:16,559 Speaker 5: in the labor market. We really haven't seen a big, 189 00:12:16,640 --> 00:12:19,840 Speaker 5: large increase in jobless claims, right in companies laying off. 190 00:12:19,920 --> 00:12:23,200 Speaker 5: So overall, the hard data still looks pretty strong. It's 191 00:12:23,240 --> 00:12:27,000 Speaker 5: really around trying to dissect when when the data potentially 192 00:12:27,040 --> 00:12:30,480 Speaker 5: does change later this year. And for us, you know, 193 00:12:30,679 --> 00:12:33,880 Speaker 5: the big question is there are a lot of cross 194 00:12:33,920 --> 00:12:38,480 Speaker 5: currents right now happening in DC. Some are expansionary policy, 195 00:12:38,800 --> 00:12:43,560 Speaker 5: some are contractionary policy. It's really around what is going 196 00:12:43,600 --> 00:12:46,040 Speaker 5: to outweigh each other. And we think that you know, 197 00:12:46,160 --> 00:12:49,720 Speaker 5: returns for market investors are really going to have much 198 00:12:49,800 --> 00:12:53,240 Speaker 5: larger tails, both in the upside and downside risks. So 199 00:12:53,720 --> 00:12:55,960 Speaker 5: a lot of things can really be evolving here. 200 00:12:56,480 --> 00:12:59,840 Speaker 2: So we had a measure of manufacturing activity today for 201 00:13:00,120 --> 00:13:04,240 Speaker 2: Texas published by the Dallas FED, and it weakened significantly. 202 00:13:04,480 --> 00:13:07,640 Speaker 2: A lot of the businesses that were surveyed used towards 203 00:13:07,800 --> 00:13:11,480 Speaker 2: like chaos and insanity to describe the turmoil as a 204 00:13:11,480 --> 00:13:14,600 Speaker 2: result of these tariffs. And I'm wondering whether or not 205 00:13:15,160 --> 00:13:19,280 Speaker 2: if things follow this same path, whether the level of 206 00:13:19,320 --> 00:13:23,240 Speaker 2: pain expressed in market action is going to put some 207 00:13:23,360 --> 00:13:27,120 Speaker 2: pressure on the administration to get deals done sooner rather 208 00:13:27,160 --> 00:13:30,160 Speaker 2: than later, or whether you think there's a risk that 209 00:13:30,280 --> 00:13:33,400 Speaker 2: the administration may stick to its guns and try to 210 00:13:33,480 --> 00:13:37,200 Speaker 2: get more of what it's after, irrespective of what markets 211 00:13:37,520 --> 00:13:38,040 Speaker 2: are saying. 212 00:13:38,840 --> 00:13:42,160 Speaker 5: Yeah, no, we think that trying to happen. It seems 213 00:13:42,200 --> 00:13:46,120 Speaker 5: the administration was definitely holding its ground early in April 214 00:13:46,120 --> 00:13:49,320 Speaker 5: when there was the initial saw off in the equity markets. 215 00:13:49,760 --> 00:13:53,960 Speaker 5: It really was the sharp move higher in the treasury 216 00:13:54,040 --> 00:13:57,040 Speaker 5: yield that really happened over one week from four percent 217 00:13:57,360 --> 00:13:59,800 Speaker 5: to north of four and a half percent. They're really 218 00:14:00,040 --> 00:14:04,040 Speaker 5: seemed to create you know, indigestion if you will, in 219 00:14:04,200 --> 00:14:08,280 Speaker 5: d C. And so it does seem like the overall 220 00:14:08,400 --> 00:14:12,280 Speaker 5: tone is shifting, and the data has been slowing. To 221 00:14:12,280 --> 00:14:16,000 Speaker 5: your point that Dallas FED was a pretty shocking lower number. 222 00:14:16,559 --> 00:14:19,760 Speaker 5: There's a lot of soft data through surveys don't look 223 00:14:19,840 --> 00:14:22,520 Speaker 5: quite good in the Beige Book talks about, you know, 224 00:14:22,600 --> 00:14:26,040 Speaker 5: a slowing of hiring. So all those things are starting 225 00:14:26,080 --> 00:14:30,040 Speaker 5: to crab collaborate and create an environment where we do 226 00:14:30,120 --> 00:14:32,640 Speaker 5: think the tone is changing in DC. And so that's 227 00:14:32,680 --> 00:14:35,200 Speaker 5: why we think markets in the short term redly stabilized. 228 00:14:35,440 --> 00:14:39,000 Speaker 5: You know, we're not seeing a return of stock market, 229 00:14:39,280 --> 00:14:42,080 Speaker 5: you know, to previous highs. We do think it's stabilized 230 00:14:42,120 --> 00:14:44,480 Speaker 5: here as to tone and shifting and there's a lot 231 00:14:44,520 --> 00:14:47,520 Speaker 5: more discussion around a tax build that seems a little 232 00:14:47,520 --> 00:14:50,240 Speaker 5: more eminent. So it seems like things are happening in 233 00:14:50,280 --> 00:14:52,880 Speaker 5: the background, but you know, don't feel like markets are 234 00:14:52,880 --> 00:14:53,800 Speaker 5: out of the woods yet. 235 00:14:54,400 --> 00:14:56,320 Speaker 2: It's going to be a very interesting week when it 236 00:14:56,360 --> 00:14:59,120 Speaker 2: comes to the economic data. A couple of data points 237 00:14:59,160 --> 00:15:02,040 Speaker 2: on the growth side GDP and at the end of 238 00:15:02,040 --> 00:15:05,640 Speaker 2: the week the April employment report, and then we've got 239 00:15:05,760 --> 00:15:08,320 Speaker 2: numbers that are more aligned with the inflation story. And 240 00:15:08,360 --> 00:15:12,000 Speaker 2: I'm thinking here of the employment cost Index and the 241 00:15:12,080 --> 00:15:15,480 Speaker 2: report on first quarter PCEE. Where are you right now 242 00:15:15,520 --> 00:15:18,440 Speaker 2: in your view when you look at the balance between 243 00:15:18,560 --> 00:15:20,920 Speaker 2: inflation on one hand and growth on the other. 244 00:15:21,800 --> 00:15:25,400 Speaker 5: Yeah, we're in the camp that you know, typically when 245 00:15:25,400 --> 00:15:27,920 Speaker 5: you get an inflation shock to tear ups, it is 246 00:15:27,920 --> 00:15:31,000 Speaker 5: a little more transitory. We think the bond market right 247 00:15:31,000 --> 00:15:34,160 Speaker 5: now is really pricing a FED that has changed their 248 00:15:34,200 --> 00:15:37,040 Speaker 5: tune from an inflation reducing regime to a more of 249 00:15:37,040 --> 00:15:40,160 Speaker 5: a growth supporter regime. This is the kind of the 250 00:15:40,160 --> 00:15:43,280 Speaker 5: biggest wildcard, and that's where the markets are pricing in 251 00:15:43,520 --> 00:15:45,800 Speaker 5: the FED funds rate to get you know, sub three 252 00:15:45,840 --> 00:15:48,640 Speaker 5: percent in the coming quarters. So that's a that's a 253 00:15:48,680 --> 00:15:52,880 Speaker 5: pretty big change in FED policy in environment where inflation 254 00:15:53,400 --> 00:15:57,320 Speaker 5: you can could rise. Here, that's a huge wildcard that 255 00:15:57,400 --> 00:16:00,760 Speaker 5: the market's pricing in. If we don't get the cuts 256 00:16:00,800 --> 00:16:03,920 Speaker 5: that are expected, it could be quite different our perspective, 257 00:16:03,920 --> 00:16:06,320 Speaker 5: but we think is going to happen. We definitely think 258 00:16:06,320 --> 00:16:09,840 Speaker 5: you could see a slight move higher in inflation. But 259 00:16:09,960 --> 00:16:12,800 Speaker 5: we're in the camp that growth was expected to continue 260 00:16:12,840 --> 00:16:16,720 Speaker 5: to slow into twenty twenty five. So we've been looking 261 00:16:16,760 --> 00:16:21,040 Speaker 5: for slower growth in the United States. The US consumer, 262 00:16:21,600 --> 00:16:26,280 Speaker 5: which is the largest portion of GDP consumer spending, and 263 00:16:26,440 --> 00:16:29,760 Speaker 5: the consumer was extremely strong conteenue to have really strong 264 00:16:29,800 --> 00:16:32,280 Speaker 5: consumer spending through the fourth quarter. If you didn't have 265 00:16:32,680 --> 00:16:34,680 Speaker 5: that strong of a consumer, you would have not had 266 00:16:34,720 --> 00:16:37,240 Speaker 5: a positive GDP print. And so if you get a 267 00:16:37,280 --> 00:16:40,120 Speaker 5: pause in a slowing a consumer spending throughout the middle 268 00:16:40,120 --> 00:16:42,360 Speaker 5: of this year, we think that the FED is going 269 00:16:42,400 --> 00:16:44,480 Speaker 5: to be more focused on the growth side of the equation, 270 00:16:44,560 --> 00:16:47,280 Speaker 5: which we thought was already going to take place before 271 00:16:47,320 --> 00:16:50,040 Speaker 5: this new kind of self inflicted on certain neighbor getting 272 00:16:50,040 --> 00:16:50,360 Speaker 5: in DC. 273 00:16:50,720 --> 00:16:52,920 Speaker 2: So if growth is going to slow and you're confident 274 00:16:53,040 --> 00:16:56,840 Speaker 2: that any inflationary impact from the tariffs will be temporary, 275 00:16:57,120 --> 00:17:00,200 Speaker 2: does that mean there are compelling opportunities right now in 276 00:17:00,200 --> 00:17:02,000 Speaker 2: the bond market, let's say at the long end. 277 00:17:02,760 --> 00:17:06,000 Speaker 5: Yeah, we would definitely agree the bond market looks quite attractive. 278 00:17:06,400 --> 00:17:08,439 Speaker 5: You know, the figures we were talking about as a 279 00:17:08,440 --> 00:17:12,320 Speaker 5: team today was that the fixed income market looks very solid, 280 00:17:12,920 --> 00:17:15,280 Speaker 5: especially amidst a lot of the amount of volatility we 281 00:17:15,320 --> 00:17:19,240 Speaker 5: are facing and headwinds potentially facing here in twenty twenty five, 282 00:17:19,600 --> 00:17:22,880 Speaker 5: and so we think there's great opportunities and really investment 283 00:17:22,920 --> 00:17:27,200 Speaker 5: grade fixed income areas like agency mortgages, even just treasuries, 284 00:17:27,200 --> 00:17:30,280 Speaker 5: you're wrapped around kind of a four percent treasury yield 285 00:17:30,320 --> 00:17:33,400 Speaker 5: that's north of inflation, so positive real rate level. So 286 00:17:34,000 --> 00:17:37,440 Speaker 5: that at this juncture, given the really uncertainty you have 287 00:17:37,640 --> 00:17:40,919 Speaker 5: on growth and the valuations, you see inequities. You know, 288 00:17:40,920 --> 00:17:44,639 Speaker 5: we've been recommending investors look to be overweight US fixed income, 289 00:17:45,160 --> 00:17:49,359 Speaker 5: but really focused on higher quality given the tails seem 290 00:17:49,400 --> 00:17:50,760 Speaker 5: like you could have a lot more, it could be 291 00:17:50,800 --> 00:17:53,960 Speaker 5: a lot fatter. Later in twenty twenty five, you were 292 00:17:53,960 --> 00:17:56,800 Speaker 5: a little more cautious on lower quality areas of US 293 00:17:56,840 --> 00:17:59,679 Speaker 5: fixed income. So we're more focused on the front end 294 00:17:59,680 --> 00:18:01,600 Speaker 5: of the year curve relative to the long end but 295 00:18:01,880 --> 00:18:04,160 Speaker 5: US high quality looks really attractive right now. 296 00:18:04,160 --> 00:18:08,359 Speaker 2: In terms of corporate versus munis versus sovereign. How are 297 00:18:08,440 --> 00:18:09,520 Speaker 2: you balanced right now? 298 00:18:09,920 --> 00:18:13,760 Speaker 5: Yeah, so we're more weighted to two areas, one being 299 00:18:13,760 --> 00:18:19,240 Speaker 5: the US homeowner and then also US corporate high investment 300 00:18:19,280 --> 00:18:22,399 Speaker 5: great corporate credit. So while corporate credit is going to 301 00:18:22,400 --> 00:18:26,720 Speaker 5: be more correlated with equity returns, we think that below 302 00:18:26,760 --> 00:18:29,600 Speaker 5: investment grade corporate credit will be more correlated. We think 303 00:18:29,680 --> 00:18:32,760 Speaker 5: high quality should actually perform quite well. The best real 304 00:18:32,760 --> 00:18:36,400 Speaker 5: opportunity to rere tilted toward is the US homeowner. Agency 305 00:18:36,440 --> 00:18:39,000 Speaker 5: mortgages being the primary example, one of the largest bond 306 00:18:39,000 --> 00:18:41,240 Speaker 5: markets in the world. That is an area that is 307 00:18:41,280 --> 00:18:44,800 Speaker 5: really benefiting from this higher rate volatility. Ie, you get 308 00:18:44,840 --> 00:18:49,240 Speaker 5: a much higher income historically today than you do relative 309 00:18:49,280 --> 00:18:53,159 Speaker 5: to treasury yields. Also, investors tend to overlook areas like 310 00:18:53,280 --> 00:18:57,639 Speaker 5: non agency mortgages and asset back bonds. Those markets certainly 311 00:18:57,720 --> 00:19:00,840 Speaker 5: never fully retraced from the seller off in twenty twenty 312 00:19:00,920 --> 00:19:06,720 Speaker 5: two that we saw equities and corporate credit retrays, not 313 00:19:06,800 --> 00:19:08,800 Speaker 5: agency mortgages and asset bag bonds, and they never go 314 00:19:08,920 --> 00:19:10,480 Speaker 5: back to the levels that we had in twenty one, 315 00:19:10,520 --> 00:19:13,640 Speaker 5: And so we see that as really the best opportunity 316 00:19:14,040 --> 00:19:16,520 Speaker 5: for later in this year. We've been overweight those areas 317 00:19:16,560 --> 00:19:19,080 Speaker 5: of the market, you know, really throughout twenty and twenty 318 00:19:19,080 --> 00:19:21,159 Speaker 5: five to start, and we plan to continue to do 319 00:19:21,200 --> 00:19:22,159 Speaker 5: that in the second world. 320 00:19:22,200 --> 00:19:24,160 Speaker 2: All Right, we'll leave it there, Clayton, Thank you so much. 321 00:19:24,200 --> 00:19:27,679 Speaker 2: Clayton Trick, he is head of portfolio management at angel 322 00:19:27,760 --> 00:19:31,280 Speaker 2: Oak Capital Advisors. Joining us from Atlanta, Georgia here on 323 00:19:31,280 --> 00:19:37,200 Speaker 2: the Daybreak Asia Podcast. Thanks for listening to today's episode 324 00:19:37,280 --> 00:19:41,280 Speaker 2: of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we 325 00:19:41,320 --> 00:19:45,200 Speaker 2: look at the story shaping markets, finance, and geopolitics in 326 00:19:45,240 --> 00:19:48,399 Speaker 2: the Asia Pacific. You can find us on Apple, Spotify, 327 00:19:48,560 --> 00:19:52,040 Speaker 2: the Bloomberg Podcast YouTube channel, or anywhere else you listen. 328 00:19:52,480 --> 00:19:55,359 Speaker 2: Join us again tomorrow for insight on the market moves 329 00:19:55,440 --> 00:19:59,920 Speaker 2: from Hong Kong to Singapore and Australia. I'm Doug Krisner 330 00:20:00,119 --> 00:20:01,480 Speaker 2: and this is Bloomberg 331 00:20:08,640 --> 00:20:09,000 Speaker 1: MHM.