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Speaker 1: Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner.

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Speaker 1: After the bell, in Vidia forecast revenue for the current

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Speaker 1: quarter below the most lofty expectations. Fiscal fourth quarter sales

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Speaker 1: will be about thirty seven and a half billion dollars.

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Speaker 1: Here's the thing. The range of analyst estimates was as

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Speaker 1: high as forty one billion. Let's take a closer look

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Speaker 1: now at the Nvidia story with Angelo Zeno. He is

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Speaker 1: vice president of equity research at CFR. Angelo, what did

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Speaker 1: you make of what you heard today from in video?

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Speaker 2: Yeah, so thanks for having me.

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Speaker 3: I think overall the results were pretty good and you know,

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Speaker 3: nothing that I'm concerned about here. To your point, they

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Speaker 3: provide guidance that I think was you know, it's about

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Speaker 3: a billion and a half or so below maybe where

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Speaker 3: the whisper numbers were looking for, but definitely above our expectations.

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Speaker 3: We were actually looking for about thirty seven billion in

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Speaker 3: the January quarter, and I think all us equal and

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Speaker 3: you kind of look at the beat that they had

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Speaker 3: in the October quarter, which was about two billion out there,

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Speaker 3: definitely shows that their demand remains very strong for their offerings.

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Speaker 3: I mean in the October quarter was largely driven by

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Speaker 3: their hopper architecture.

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Speaker 2: As we kind of look.

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Speaker 3: Ahead here in the January quarter, it was all about

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Speaker 3: the cadence and trajectory of the Blackwell ramp here. And

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Speaker 3: at least, you know, from the initial kind of view here,

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Speaker 3: it seems like in video is being somewhat conservative in

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Speaker 3: terms of that initial ramp with kind of a stronger

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Speaker 3: ramp kind of going into the April and July quarters.

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Speaker 1: Are you concerned at all that maybe maybe just a

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Speaker 1: bit the excitement that we have seen over artificial intelligence

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Speaker 1: maybe getting a little ahead of reality.

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Speaker 3: Well, I guess what I would say is, you know,

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Speaker 3: at some point in time, investors you know, almost kind

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Speaker 3: of become numb to the stuff. And you know, from

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Speaker 3: that perspective, we could potentially be you know, entering a

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Speaker 3: point in time here where investors might kind of be

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Speaker 3: willing to look elsewhere, at least over kind of the

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Speaker 3: next six to nine month period, especially with kind of

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Speaker 3: a new Trump administration entering, and that kind of you know,

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Speaker 3: typically kind of helping well, maybe some of the higher data,

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Speaker 3: more cyclical type names that maybe have underperformed, So maybe

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Speaker 3: from a sentiment perspective, we can kind of see a

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Speaker 3: period where some of these AI oriented.

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Speaker 2: Names take a step back.

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Speaker 3: But that said, when we start looking at the fundamentals

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Speaker 3: the major drivers for these AI semi stocks as well

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Speaker 3: as mag seven names here over the next three to

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Speaker 3: five years, we still remain extremely optimistic about the fundamentals

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Speaker 3: of these companies and believe that they will continue to

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Speaker 3: be primary drivers of growth for the broader markets here

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Speaker 3: in the coming years.

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Speaker 1: So, as we both know, Nvidia is restrained by the

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Speaker 1: policies of the Biden administration from allowing China to have

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Speaker 1: some of these most advanced and sophisticated graphics processors. You

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Speaker 1: mentioned the Trump administration and perhaps a little bit of

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Speaker 1: change in economic policy. Do you think that Trump administration

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Speaker 1: will continue of the Biden administration's hardline on chips where

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Speaker 1: China is concerned.

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Speaker 2: Well, I think that's a great question.

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Speaker 3: I think we have to wait and see, But I

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Speaker 3: will say this, we do think kind of inn Vidia

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Speaker 3: may be more of a beneficiary under kind of what

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Speaker 3: we would call a transactional based approach under a Trump administration.

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Speaker 3: So when you kind of think about the Biden Harris approach,

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Speaker 3: it really has been a kind of limit China to

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Speaker 3: certain advanced chips and equipment like GPUs. EUVS is another

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Speaker 3: great example made by the likes of ASML. But according

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Speaker 3: to our Washington Analysis team, Trump we think might be

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Speaker 3: willing to offer more advanced AI chips to other nations,

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Speaker 3: even China, if the price is right, while kind of

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Speaker 3: maintaining a certain technology lead. So China is held maybe

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Speaker 3: a generation or two behind. So this could drive we

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Speaker 3: think higher related and video revenue in regions like China

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Speaker 3: where the company could potentially be able to sell let's

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Speaker 3: say it's a one hundred.

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Speaker 2: Versus more, maybe more of a performance laid in h two.

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Speaker 3: So we see the potential for Nvidia to potentially actually

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Speaker 3: be better positioned under a Trump administration relative to a

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Speaker 3: Biden Harris administration.

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Speaker 1: I think we can agree that the centerpiece of the

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Speaker 1: Trump policy with respect to China on the economic side tariffs.

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Speaker 1: What do you think the fallout will be as the

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Speaker 1: result of tariffs that may approach at least sixty percent

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Speaker 1: and maybe even more than that.

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Speaker 3: Yeah, I mean, listen, on the surface, if they were

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Speaker 3: to go through the way they.

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Speaker 2: Are intended to come through.

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Speaker 3: If we're looking at sixty percent tariffs in China or

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Speaker 3: in north of twenty percent.

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Speaker 2: Let's say in.

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Speaker 3: Mexico for instance, you know clearly would have a negative

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Speaker 3: impact i'd say in a broader tech sector. And a

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Speaker 3: big reason for that if you think about about a

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Speaker 3: third of all electronic goods within the tech industry is

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Speaker 3: actually manufactured out in China, and when you think about

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Speaker 3: how important Mexico is for.

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Speaker 2: Industries like.

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Speaker 3: The automotive space, the number of industrial markets out there,

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Speaker 3: were a lot of semiconductors goods are kind of important

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Speaker 3: from there, not to mention you know, the number of

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Speaker 3: PC vendors like the Dells of the world. So there,

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Speaker 3: you know, definitely kind of implications. It will have a

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Speaker 3: negative impact and inflationary pressures, i'd say, to the overall

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Speaker 3: tech space as well as broader markets. So it's not

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Speaker 3: necessarily something we want to see. But in the same respect,

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Speaker 3: we think the Trump administration will kind of be a

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Speaker 3: little bit more.

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Speaker 2: Tactical out there.

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Speaker 3: So all in all, it's probably going to be messy

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Speaker 3: here for a little while, and I think investors just

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Speaker 3: have to be kind of willing to kind of go

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Speaker 3: for the roller coaster ride.

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Speaker 2: Angelo.

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Speaker 1: I'm not hearing a lot of concern from your perspective

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Speaker 1: about further decoupling of the trade relationship between the US

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Speaker 1: and China.

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Speaker 3: Is that the case again, I mean, listen, I think

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Speaker 3: it's it's something that we have to, you know, just

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Speaker 3: kind of wait and see how this all plays out.

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Speaker 3: I think kind of initially, the way we would kind

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Speaker 3: of look at it is I don't know if there

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Speaker 3: would necessarily be kind of more of a decoupling to

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Speaker 3: kind of be seen. But again, it's something that we

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Speaker 3: kind of have to wait and see.

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Speaker 1: A lot of what we've been focused on are the

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Speaker 1: nominees for various cabinet positions. We still don't have a

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Speaker 1: nominee for Treasury Secretary. We do know that Howard Lutnik

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Speaker 1: will be at Commerce and part of his portfolio will

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Speaker 1: include the Office of US Trade rep. Generally speaking, when

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Speaker 1: you assess the appointments that have been named so far,

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Speaker 1: what is the takeaway from your point of view on

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Speaker 1: how the Trump administration will proceed with governing.

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Speaker 3: No, I mean, that's listen, that's a good question. I mean,

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Speaker 3: when we kind of think about, at least initially, what

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Speaker 3: you know, what.

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Speaker 2: The impact is going to be to the broader tech space.

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Speaker 2: You know, I'd say right now.

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Speaker 3: It's one where you know, hopefully we kind of see

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Speaker 3: the ability for greater M and A potential within the

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Speaker 3: tech space, and I would say that would kind of

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Speaker 3: cause us to lean a little bit more in favor

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Speaker 3: of the software space relative to the semiconductor industry. I

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Speaker 3: think there are a lot more uncertainties as far as

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Speaker 3: this semiconductor industry is concerned, whether it's to your point

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Speaker 3: about tariffs, whether it be the unknowns about Taiwan, but

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Speaker 3: also as far as the M and A environment is concerned,

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Speaker 3: semiconductor names still do a lot of business overseas and

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Speaker 3: need to get approval in areas like China, which would

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Speaker 3: be would still be hard pressed to see, whereas kind

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Speaker 3: of in the software spectrum, you're in a much better

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Speaker 3: position out there.

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Speaker 2: M and A probably is.

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Speaker 3: More kind of fluid, and we think regulatory approval would

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Speaker 3: kind of be met more willingly under this new administration.

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Speaker 3: So I think there are different ways to kind of

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Speaker 3: play the tech space. Under this new administration.

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Speaker 1: You don't see regulatory risk and the possibility that some

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Speaker 1: companies like let's say alphabet would be confronted with the

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Speaker 1: possibility of having to maybe divest I certain assets I'm

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Speaker 1: thinking of the story that we had the other day

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Speaker 1: about maybe Google being forced to sell off the Chrome browser.

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Speaker 3: So possibilities absolutely, But you know that said, you know,

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Speaker 3: with the same respect, I think there's also a possibility

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Speaker 3: for a company like Alpha Bit to be able to

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Speaker 3: kind of go back into the deal making spectrum under

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Speaker 3: an administration, a Trump administration. So think about rumors earlier

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Speaker 3: this year of them potentially looking at a company like

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Speaker 3: a Hubstop or even on the cybersecurity side of.

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Speaker 2: Things with a company like Whiz.

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Speaker 3: I think all of that stuff now become possibilities for

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Speaker 3: a company like Alpha Bit, which is actually flushed with

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Speaker 3: a ton of cash and you know, potentially could further diversify,

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Speaker 3: let's say, their business away from search.

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Speaker 1: Angelo, I'm curious as to whether or not when you

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Speaker 1: are having conversations with your clients that there is one

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Speaker 1: issue that they are expressing a little bit of concern over.

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Speaker 3: You know, I think as far as you know where

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Speaker 3: clients are at right now, I mean, I would say

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Speaker 3: kind of the top of the list right now for

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Speaker 3: our clients we guest asked a lot about from a

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Speaker 3: concerned perspective, is on the valuation side of things, We've

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Speaker 3: had a hell of a run when it comes to

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Speaker 3: the markets here of last two years, especially on the

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Speaker 3: tech side of things. When you start looking at some

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Speaker 3: of the multiple expansion we've seen, I think there is

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Speaker 3: definitely fear out there from some investors that you know,

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Speaker 3: maybe some of those gains that have been pulled in

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Speaker 3: quite a bit kind of going into twenty twenty five.

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Speaker 3: And typically as you kind of go into year three

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Speaker 3: of a bull market, if you kind of view the

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Speaker 3: October twenty twenty two lows as kind of the lows,

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Speaker 3: then you know, the year three kind of period typically

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Speaker 3: tends to be one where you see lower gains relative

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Speaker 3: to those first two years, and especially kind of you know,

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Speaker 3: any environment where policy will kind of be a you know,

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Speaker 3: take kind of center stage here, there's definitely more risk

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Speaker 3: out there than what we've seen we think over the

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Speaker 3: last kind of twelve to eighteen months.

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Speaker 1: Angelo will leave it there. Thanks for making time to

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Speaker 1: chat with us. Angelo Zeno is the vice president of

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Speaker 1: Equity Research at CFRA, joining us here from New York

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Speaker 1: City on the Daybreak podcast. Welcome back to the Bloomberg

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Speaker 1: Daybreak Asia podcast. I'm Doug Chrisner. As we continue to

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Speaker 1: unpack the results from Nvidia. We also want to take

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Speaker 1: a broader look at what's happening in the Asia Pacific

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Speaker 1: and joining us for that is Stephanie holtza Jen. She

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Speaker 1: is the CIO for the APEC at Deutsche Bank Private Bank,

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Speaker 1: joining from our studios in Singapore. I know you're not

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Speaker 1: allowed to talk about specific stocks, but I have to

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Speaker 1: ask you about the Nvidia story. When you listen to

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Speaker 1: the narrative that the market's received from the company, what

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Speaker 1: conclusion do you come to.

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Speaker 4: The conclusion has to be that right now we're in

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Speaker 4: a setup in regards to companies related to artificial intelligence

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Speaker 4: theme that there has very lofty expectations out there. It's

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Speaker 4: also coming at a time where we had quite a

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Speaker 4: good market rally, where lots of investors are kind of

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Speaker 4: asking the right question, is that here to stay? And

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Speaker 4: of course you know these type of results are getting

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Speaker 4: scrutinized under the magnifying class and if there's any reason

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Speaker 4: to look for short term correction, then you know this

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Speaker 4: is being taken as such. However, it does not derail

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Speaker 4: I think the long term, medium term investment theme that

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Speaker 4: we've been going with on the back of the technological

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Speaker 4: advance you see with the help of companies like Invidia,

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Speaker 4: So you know, these are opportunities to get in at

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Speaker 4: better levels, but it doesn't derail the investment thesis.

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Speaker 1: So when you imagine the applications of artificial intelligence, is

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Speaker 1: there an industry that you would think really could benefit

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Speaker 1: most under these circumstances.

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Speaker 4: Well, we look at everything upstream, downstream around the technology

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Speaker 4: and the broader IT sector, and we have these as

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Speaker 4: our sector pigs for a long time already.

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Speaker 1: Let's talk a little bit about the leadership change that

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Speaker 1: we've been dealing with in Washington. I think for a

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Speaker 1: lot of people it means a new global paradigm where

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Speaker 1: trade is concerned. President Electroump has said that he loves tariffs.

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Speaker 1: He also loves to make deals too, And let's talk

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Speaker 1: a little bit about the dynamic that's playing out between

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Speaker 1: Washington and Beijing or will after the inauguration in January.

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Speaker 1: Do you think that the US and China can reach

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Speaker 1: some sort of grand bargain when it comes to trade

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Speaker 1: and avoid the application of a lot of these tariffs.

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Speaker 4: Well, I think there's a lot of speculation around and

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Speaker 4: I will not join the bandwagon of those because we're

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Speaker 4: not yet there. We can only look at what the

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Speaker 4: history is giving us to try to imply in the future.

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Speaker 4: I think more importantly is what is it that the

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Speaker 4: market is really concerned with at the moment. And there

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Speaker 4: is next to trade and tariffs which could have an

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Speaker 4: inflationary outcome. There's also the understanding that there will be

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Speaker 4: no austerity, that there's a fiscal imbalance and what's been

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Speaker 4: proposed and how it will be financed. Tariffs can only

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Speaker 4: make up for some part of the spend that's been proposed.

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Speaker 4: So you've seen the market has been reprising to that narrative,

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Speaker 4: looking at potentially less of a FED Central Bank reaction

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Speaker 4: function to that new environment being you know, looking at

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Speaker 4: less cuts as we do as well. We see street

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Speaker 4: cuts from the Fed coming towards us until the end

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Speaker 4: of next year only. So I think that is that

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Speaker 4: is the biggest topic right now, and that is also

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Speaker 4: informing how you structure portfolios.

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Speaker 1: I'm very curious about the way that you're viewing China

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Speaker 1: right now, in light of the lot of stimulus that

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Speaker 1: we have seen unleashed on the part of authorities in Beijing.

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Speaker 1: Does that leave you to be optimistic that there is

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Speaker 1: some sort of recovery happening in China right now, or

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Speaker 1: maybe what has been proposed will will fail to stimulate

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Speaker 1: in the way in which markets have been promised.

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Speaker 4: Yeah, I'm in the camp that I believe that the

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Speaker 4: probability for this stimulus to succeed has definitely picked up

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Speaker 4: and risen quite remarkably. And let me just quickly go

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Speaker 4: back and put this in context, because when we talk stimulus,

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Speaker 4: lots of people only remember the fiscal stimulus one and

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Speaker 4: a half weeks ago. I would want to put it

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Speaker 4: in context of the three different arrows. Let's let's let's

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Speaker 4: lose the analogy of ebinomics, the three arrows of genomics

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Speaker 4: that have been launched. We started out the structural reform

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Speaker 4: package during the third Planum in July. It was followed

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Speaker 4: up in September with the monetary policy stimulus package, which

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Speaker 4: came at the heels of the big, the big fat

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Speaker 4: cut that we saw. So I would I would put

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Speaker 4: the picture out that was when the wind was blowing

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Speaker 4: in China sales, so that was a very timely measure.

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Speaker 4: It was also very large and it had very important

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Speaker 4: components like stock stabilization program. Now the third arrow to

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Speaker 4: this is the fiscal stimulus which everybody been waiting for,

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Speaker 4: which has been finally launched in its first step, focusing

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Speaker 4: really on the local government, you know, re capitalization, recapitalization

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Speaker 4: exactly so right now if you look at it in

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Speaker 4: its entirety and the way it's been delivered timely, and

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Speaker 4: the two elements we hadn't in the past, which is

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Speaker 4: forward guidance that there can be more if there is

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Speaker 4: need be. And also I think there's quite a good

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Speaker 4: communication with the market at this moment in time, so

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Speaker 4: there's definitely listening to what the market is expecting and

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Speaker 4: trying not to underdeliver. Again, it leads me to conclude

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Speaker 4: that the probabilities have gone up that China has been

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Speaker 4: able to create its own kind of revival story without

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Speaker 4: having to necessarily react to you know, the concerns that

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Speaker 4: you mentioned earlier that come their way, and that are

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Speaker 4: of course concerns around tariffs.

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Speaker 1: So you talk about three arrows very similar to ebonomics. Obviously,

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Speaker 1: Japan had to fight deflation for three decades. China seems

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Speaker 1: to be struggling with that still, even though we've seen

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Speaker 1: evidence that retail sales are picking up, industrial production is

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Speaker 1: picking up. We just talked about how local governments may

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Speaker 1: be able to respond to the property market, but is

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Speaker 1: China's still confronted with a major deflationary problem that may

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Speaker 1: be persistent for a while.

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Speaker 4: At this moment, it still is. So I just came

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Speaker 4: back from Shanghai as well confirming this. So I do

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Speaker 4: not want to paint a different picture. But I think

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Speaker 4: it's also a little early to use activity data from

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Speaker 4: today or that are backward looking that are being released

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Speaker 4: in the market as we speak to kind of draw

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Speaker 4: a conclusion on whether these three errors have been successful

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Speaker 4: or art. So you look at a realistic pathway to

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Speaker 4: find out. The jury is out obviously whether all of

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Speaker 4: this works. I think we have to look into next year.

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Speaker 4: Most probably the first and the second quarter will be

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Speaker 4: there to stabilize the market, and then the third quarter

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Speaker 4: I will also see a pickup an activity data that

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Speaker 4: most probably will help to convince the last naser to

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Speaker 4: join the bandwagon also start broadening out investments into China again.

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Speaker 1: So how does everything that you're describing kind of inform

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Speaker 1: an investment strategy? What does it translate into.

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Speaker 4: It translates into not a negative view on China so

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Speaker 4: we are out there highlighting the medium and long term opportunity. Still,

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Speaker 4: you have heard me saying that before. We have now

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Speaker 4: seen that China is able to make a you to

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Speaker 4: date results that are resembling others in the region. So

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Speaker 4: as we're building a base, these are opportunities to build out. Well,

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Speaker 4: it's not just China. We also like Japan's middle and

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Speaker 4: long term story. Then of course this will be a

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Speaker 4: sideways market that also likewise gives opportunities to invest. But

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Speaker 4: having said that, we still prefer the US and equities

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Speaker 4: as to express our views that are fairly constructive.

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Speaker 1: Are there themes that you like right now? I'm sorry

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Speaker 1: to interrupt, but I'm curious about the themes that you

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Speaker 1: may be pursuing. And I know that when we were

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Speaker 1: talking earlier about artificial intelligence, there is a certain herd

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Speaker 1: mentality when it comes to technology. Maybe you can tell

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Speaker 1: me some of the contrary positions that you're taking kind

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Speaker 1: of avoiding. You know, what the mainstream is is trying

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Speaker 1: to accomplish.

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Speaker 4: Well, but you look at the playbook that we have

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Speaker 4: going into the elections, there is according to the different agendas,

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Speaker 4: some of the sectors were definitely experiencing tailwinds, and of

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Speaker 4: course we have been also riding these. You know, you

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Speaker 4: look at the energy sector, you look at financials that

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Speaker 4: will be benefiting from a more of a deregulatory angle.

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Speaker 4: So it's not necessarily necessary to go against the market

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Speaker 4: when these themes are playing out. Right now, you're looking

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Speaker 4: at long term investment themes as well that look also

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Speaker 4: like short term investment. Seems like the artificial intelligence. I

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Speaker 4: think you can also be joined joined in some of

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Speaker 4: these themes that then become long I think there's health

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Speaker 4: tech that is interesting, there's agritech that is interesting that

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Speaker 4: we keep on highlighting industrials. But the main drivers right now,

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Speaker 4: as we've seen and most probably will continue to see,

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Speaker 4: is writing on the current themes of deregulation benefiting financials, etc.

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Speaker 1: We were talking at the beginning of the conversation about

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Speaker 1: the inflationary impact of a tariff policy. Do you believe

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Speaker 1: there's opportunities still in fixed income right now? I hear

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Speaker 1: a lot of what you're describing more on the equity side,

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Speaker 1: but I'm wondering whether or not you want to be

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Speaker 1: maybe balanced in a way that would allow you to

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Speaker 1: place a bed in the fixed income markets.

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Speaker 4: Absolutely, and a balanced portfolio is also shown to be

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Speaker 4: working better again in signs of stress. So fixed income

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Speaker 4: is a very important part to our portfolios. And as

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Speaker 4: I said, we have never been in the camp of

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Speaker 4: looking for too many cuts from the FED down, never

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Speaker 4: joined the bandwagon when the market was going gung ho

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Speaker 4: and nine, so we didn't have to completely change our

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Speaker 4: views with the new administration coming in. So this higher

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Speaker 4: for longer relatively or relative attractiveness of US assets it's

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Speaker 4: been with us before. So you look at it from

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Speaker 4: a bond perspective, it still argues to have a large

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Speaker 4: fixed income allocations. We still prefer investment grade to express

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Speaker 4: that view, just to be on the higher quality side

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Speaker 4: of the spectrum. And yeah, most probably will also see

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Speaker 4: a lot of this in the short term, given that

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Speaker 4: we will see the Fed not being able to react

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Speaker 4: as swiftly and as pronounced as most probably the market

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Speaker 4: had been pricing in before.

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Speaker 1: We'll leave it there. Stephanie, thank you so much for

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Speaker 1: joining us. Stephanie holtze Jen, she is the CIO for

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Speaker 1: the APAC at Deutsche Bank Private Bank, joining from our

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Speaker 1: studios in Singapore. Thanks for listening to today's episode of

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Speaker 1: Bloomberg Daybreak Asia Edition. Each weekday, we look at stories

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Speaker 1: shaping markets, finance, and geopolitics in the Asia Pacific. You

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Speaker 1: can find us on Apple, Spotify, and the Bloomberg Podcast

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Speaker 1: YouTube channel, or anywhere else you listen. Join us again

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Speaker 1: tomorrow for insight on market moves from Hong Kong to

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Speaker 1: Singapore and Australia. I'm Doug Prisoner and this is Bloomberg