1 00:00:00,160 --> 00:00:10,480 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 2 00:00:10,520 --> 00:00:13,720 Speaker 1: Daybreak Asia podcast. I'm Doug Krisner. You can join Brian 3 00:00:13,800 --> 00:00:16,640 Speaker 1: Curtis and myself for the stories making news and moving 4 00:00:16,680 --> 00:00:19,560 Speaker 1: markets in the Apec region. You can subscribe to the 5 00:00:19,600 --> 00:00:23,080 Speaker 1: show anywhere you get your podcast and always on Bloomberg Radio, 6 00:00:23,320 --> 00:00:28,080 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business app. Hillary Kramer, 7 00:00:28,200 --> 00:00:31,960 Speaker 1: she is the CIO at Kramer Capital Research. Joining us 8 00:00:32,000 --> 00:00:34,480 Speaker 1: here in the New York studio. Thanks for stopping by 9 00:00:34,560 --> 00:00:38,839 Speaker 1: Sunday night us. Before we get into kind of the 10 00:00:39,760 --> 00:00:42,840 Speaker 1: economics of what's happening right now, I'd like to serve 11 00:00:42,920 --> 00:00:45,240 Speaker 1: a big picture here for a moment. I'd like to 12 00:00:45,280 --> 00:00:48,640 Speaker 1: get from you first the profile of your average client 13 00:00:48,800 --> 00:00:52,520 Speaker 1: and what you're hearing from that person right now, their 14 00:00:52,600 --> 00:00:56,240 Speaker 1: concerns and how they're feeling about not only market action, 15 00:00:56,440 --> 00:00:57,800 Speaker 1: but the economy globally. 16 00:00:58,760 --> 00:01:04,920 Speaker 2: My clients are are diversified internationally. Seventy percent are from 17 00:01:05,160 --> 00:01:10,000 Speaker 2: non USA based, but all of them have a very 18 00:01:10,080 --> 00:01:15,600 Speaker 2: similar profile interestingly, which is many are entrepreneurs, first generation 19 00:01:15,800 --> 00:01:19,920 Speaker 2: professionals who have made money and with ancillary businesses, whether 20 00:01:20,080 --> 00:01:26,240 Speaker 2: rolling up medical, surgical centers or lawyers that have become 21 00:01:28,200 --> 00:01:31,440 Speaker 2: also doing roll ups or expertise in certain areas, a 22 00:01:31,480 --> 00:01:36,080 Speaker 2: lot of manufacturing, a lot of export, especially in Asia. 23 00:01:36,480 --> 00:01:40,759 Speaker 2: But the UF and the US profile is very very similar. Again, 24 00:01:40,880 --> 00:01:44,800 Speaker 2: it's the professional who has made money. Very often in 25 00:01:44,840 --> 00:01:47,720 Speaker 2: the US it's real estate based. They've bought their building, 26 00:01:47,800 --> 00:01:51,080 Speaker 2: bought another building. So it's really important for me to 27 00:01:51,160 --> 00:01:53,920 Speaker 2: be keyed into what they're thinking about. They come to 28 00:01:53,960 --> 00:01:58,600 Speaker 2: me for equities, Okay, it's about stocks, not about wealth 29 00:01:58,680 --> 00:02:04,200 Speaker 2: management or Portfoliolo planning or long term sort of wealth 30 00:02:04,200 --> 00:02:06,760 Speaker 2: and generational interest. They want to know about stocks, what 31 00:02:06,920 --> 00:02:10,359 Speaker 2: stocks to buy. That's my expertise. So what I'm hearing 32 00:02:10,360 --> 00:02:14,160 Speaker 2: from them is concern about the stock market itself, especially 33 00:02:14,160 --> 00:02:17,799 Speaker 2: my US based clients. There's so much concern about what's 34 00:02:17,840 --> 00:02:21,520 Speaker 2: going to happen with tax policy based on who wins 35 00:02:21,560 --> 00:02:27,000 Speaker 2: the election. Concerns that inheritance taxes are going to be 36 00:02:27,000 --> 00:02:32,360 Speaker 2: one hundred percent of wealth, and there's a lot of 37 00:02:32,480 --> 00:02:36,839 Speaker 2: geopolitical concern as well as concern about what the disasters 38 00:02:36,919 --> 00:02:41,120 Speaker 2: might be. People are still traumatized by COVID and the 39 00:02:41,200 --> 00:02:42,640 Speaker 2: unexpectedness of COVID. 40 00:02:43,280 --> 00:02:47,720 Speaker 3: It feels fragile it feels like investors are nervous, and 41 00:02:47,760 --> 00:02:51,400 Speaker 3: you wonder whether or not the asset class is something 42 00:02:51,400 --> 00:02:55,280 Speaker 3: that people feel much trust in. This has been, by 43 00:02:55,360 --> 00:02:58,800 Speaker 3: some accounts, pretty amazing year. You have a killer app, 44 00:02:58,840 --> 00:03:02,280 Speaker 3: you have a killer store, a trend in AI. We're 45 00:03:02,280 --> 00:03:04,040 Speaker 3: still waiting to see how it plays out. But that's 46 00:03:04,040 --> 00:03:06,040 Speaker 3: one good thing. We have the Fed now looking to 47 00:03:06,040 --> 00:03:09,079 Speaker 3: cut interest rates, inflation coming under control, and the economy 48 00:03:09,120 --> 00:03:11,080 Speaker 3: doing well. Why does it feel so fragile? 49 00:03:11,120 --> 00:03:11,280 Speaker 4: Then? 50 00:03:12,360 --> 00:03:16,320 Speaker 2: It feels fragile because we're looking for bad news to 51 00:03:16,320 --> 00:03:19,799 Speaker 2: give us good news. Right, So that job number on Friday, 52 00:03:19,880 --> 00:03:23,079 Speaker 2: you know, the fact that there's a weakness in the 53 00:03:23,480 --> 00:03:28,320 Speaker 2: in the growth in employment and jobs means that rates 54 00:03:28,320 --> 00:03:31,600 Speaker 2: are going to be cut. But now it seems like 55 00:03:32,240 --> 00:03:35,840 Speaker 2: did the Fed not do enough? You know, did they 56 00:03:35,880 --> 00:03:39,920 Speaker 2: not act fast enough? Right, it's been four years since 57 00:03:40,000 --> 00:03:42,560 Speaker 2: since we've had any kind of cuts, since twenty two, 58 00:03:42,640 --> 00:03:46,080 Speaker 2: while we've had all these you know, this raising of 59 00:03:46,160 --> 00:03:49,600 Speaker 2: interest rates. So I think there's this incredible concern that 60 00:03:49,880 --> 00:03:53,640 Speaker 2: people are drowning in debt. And I just wish everyone 61 00:03:53,640 --> 00:03:58,160 Speaker 2: would look at participation, labor rate, participation more to realize 62 00:03:58,200 --> 00:04:01,120 Speaker 2: that we have this whole baby boomer generation here in 63 00:04:01,160 --> 00:04:04,680 Speaker 2: the US born between nineteen forty six and nineteen sixty four. 64 00:04:05,240 --> 00:04:09,120 Speaker 2: And the latter part of that, those that you know 65 00:04:09,320 --> 00:04:11,920 Speaker 2: didn't weren't on the bandwagon fast enough, or the ladder 66 00:04:12,040 --> 00:04:14,720 Speaker 2: was pulled up, you know, when it was their turn 67 00:04:14,800 --> 00:04:17,600 Speaker 2: to climb. They don't have savings, they don't have a 68 00:04:17,600 --> 00:04:21,200 Speaker 2: lot of money, and a lot of people are really 69 00:04:21,320 --> 00:04:25,560 Speaker 2: leveraged up. And we're also in an equity market that's 70 00:04:25,600 --> 00:04:30,560 Speaker 2: about you know, memes and gossip. And the problem is 71 00:04:31,040 --> 00:04:32,479 Speaker 2: all the rules have changed. 72 00:04:32,600 --> 00:04:35,479 Speaker 1: So when you make a recommendation on the equity side, 73 00:04:35,600 --> 00:04:37,760 Speaker 1: is it a defensive position. 74 00:04:37,480 --> 00:04:41,159 Speaker 2: Inherented I have, well, I buy fur kate it so much. 75 00:04:41,400 --> 00:04:44,360 Speaker 2: I have my growth stocks, you know, and I try 76 00:04:44,400 --> 00:04:47,680 Speaker 2: to get into them very very early. I often recommend 77 00:04:47,720 --> 00:04:52,120 Speaker 2: that my clients sell way too soon, but that's because 78 00:04:52,120 --> 00:04:53,680 Speaker 2: I want to. I want them to live for the 79 00:04:53,680 --> 00:04:55,360 Speaker 2: next day. But of course we've been to this huge 80 00:04:55,400 --> 00:04:58,760 Speaker 2: bull market. But I also love those stocks that are 81 00:04:58,800 --> 00:05:02,400 Speaker 2: the stealth stocks, or the fallen angels as I call it. 82 00:05:02,560 --> 00:05:04,839 Speaker 2: I mean, some of these fallen angels are actually very interesting. 83 00:05:04,880 --> 00:05:06,480 Speaker 2: And now that I mean you've asked me, I can 84 00:05:06,520 --> 00:05:09,800 Speaker 2: even give you an example to explain what I mean 85 00:05:09,800 --> 00:05:12,279 Speaker 2: by the fallen angel. You have a company like newal 86 00:05:12,400 --> 00:05:18,440 Speaker 2: Brands NWL. It's under ten dollars. Newell makes rubber Maid, Sharpies, 87 00:05:18,920 --> 00:05:24,599 Speaker 2: paper Mate, Yankee, Candle, and Coleman for anyone that's camping equipment. 88 00:05:24,640 --> 00:05:26,080 Speaker 2: For anyone who thinks we're going to end up all 89 00:05:26,120 --> 00:05:29,280 Speaker 2: living in caves and using gold and only gold is 90 00:05:29,320 --> 00:05:32,120 Speaker 2: our currency. I mean, this is a great company, it's 91 00:05:32,160 --> 00:05:35,960 Speaker 2: a perfect takeover, but under ten dollars, nobody's buying it 92 00:05:36,000 --> 00:05:39,279 Speaker 2: because institutional investors have these mandates they can only buy 93 00:05:39,279 --> 00:05:43,520 Speaker 2: stocks over fifteen dollars or ten dollars. And yet there's 94 00:05:43,600 --> 00:05:47,400 Speaker 2: there's actual growth maybe single digits, and there's a three 95 00:05:47,400 --> 00:05:49,320 Speaker 2: point seven percent of in yield. So those are the 96 00:05:49,440 --> 00:05:52,520 Speaker 2: kinds of things I find early at eight bucks that 97 00:05:52,680 --> 00:05:55,320 Speaker 2: someone can turn around at sixteen or twenty and sell 98 00:05:55,360 --> 00:05:56,640 Speaker 2: and have one hundred percent return. 99 00:05:57,240 --> 00:06:00,520 Speaker 3: You've got some companies that have been darling, some a 100 00:06:00,520 --> 00:06:04,719 Speaker 3: certain crowd, Palentteer for instance, Mobile Eye. They're in they're 101 00:06:04,720 --> 00:06:07,560 Speaker 3: in areas of the market that people find attractive, but 102 00:06:07,920 --> 00:06:10,839 Speaker 3: there's a lot of volatility there. I look at Palenteer stock, 103 00:06:10,880 --> 00:06:12,640 Speaker 3: I mean, it's pretty much from the lower left to 104 00:06:12,640 --> 00:06:17,200 Speaker 3: the upper right. But with a lot of hurkey jerky movements. 105 00:06:17,880 --> 00:06:20,240 Speaker 3: You know, are you are you? Are you willing to 106 00:06:20,240 --> 00:06:23,760 Speaker 3: put people in some of these seemingly more risky companies. 107 00:06:23,920 --> 00:06:28,320 Speaker 2: Pallenteer one hundred, one hundred percent. Palenteer to me is 108 00:06:28,400 --> 00:06:31,360 Speaker 2: the true AI company. You know, when when we talk 109 00:06:31,440 --> 00:06:35,400 Speaker 2: about Nvidia and arm and Qualcom and all these other 110 00:06:35,440 --> 00:06:38,760 Speaker 2: companies that are in AI, you're really talking about semiconductors. 111 00:06:38,760 --> 00:06:40,680 Speaker 2: And those of us who've been around the block a 112 00:06:40,720 --> 00:06:43,839 Speaker 2: few times, we know that semiconductors are always volatile, and 113 00:06:43,880 --> 00:06:47,000 Speaker 2: that they always have a cyclicality and they always become commoditized. 114 00:06:47,279 --> 00:06:50,159 Speaker 2: A company like Pallenteer is true, true AI. It's just 115 00:06:50,160 --> 00:06:52,039 Speaker 2: that they had to be very secretive because it was 116 00:06:52,320 --> 00:06:56,200 Speaker 2: it's data analysis. It's using software and artificial intelligence to 117 00:06:56,320 --> 00:06:59,920 Speaker 2: understand sets of data. But it was really the equivalent 118 00:06:59,920 --> 00:07:02,920 Speaker 2: of the cias and nsas all over the world that 119 00:07:02,960 --> 00:07:06,640 Speaker 2: we're using that are using Palenteer. But now Palenteer is 120 00:07:06,680 --> 00:07:11,360 Speaker 2: helping companies like everyone from you know, the railroad companies 121 00:07:11,440 --> 00:07:14,240 Speaker 2: to you know, making sure Kellogg's is selling enough pop 122 00:07:14,280 --> 00:07:16,720 Speaker 2: tarts and to the right people. So now that that 123 00:07:16,840 --> 00:07:19,760 Speaker 2: information can be out there, we really see some upside 124 00:07:19,760 --> 00:07:22,920 Speaker 2: and Palenteer and they have the talent. It's not just 125 00:07:22,960 --> 00:07:26,240 Speaker 2: another AI story. And look there's a lot of interesting 126 00:07:26,240 --> 00:07:29,840 Speaker 2: it's actually very interesting. There's a report from Goldman Sachs 127 00:07:29,840 --> 00:07:32,960 Speaker 2: September fifth called AI to Buy or not to buy? 128 00:07:33,000 --> 00:07:35,600 Speaker 2: That is the question. Well, I mean, when you're talking 129 00:07:35,600 --> 00:07:40,160 Speaker 2: about a report that's thirty five pages long, you're realizing that, 130 00:07:40,400 --> 00:07:43,000 Speaker 2: you know, it's the companies like Palenteer that are actually 131 00:07:43,560 --> 00:07:46,720 Speaker 2: like getting the revenue, getting the numbers that you really 132 00:07:46,760 --> 00:07:48,800 Speaker 2: want to be in. And in terms of Mobile eye, 133 00:07:48,840 --> 00:07:49,640 Speaker 2: can I can? 134 00:07:49,640 --> 00:07:51,880 Speaker 1: I you can very quickly. I was going to ask 135 00:07:51,880 --> 00:07:54,960 Speaker 1: you one other questions, Oh to ask So, if I've 136 00:07:55,000 --> 00:07:57,520 Speaker 1: been or a client has been in megacap tech, let's 137 00:07:57,520 --> 00:08:00,400 Speaker 1: say over the last year, what would your vice be? 138 00:08:01,280 --> 00:08:05,440 Speaker 2: Uh, don't try to catch a falling knife, because you 139 00:08:05,520 --> 00:08:09,080 Speaker 2: might think it's a bargain to have Nvidia at something 140 00:08:09,160 --> 00:08:11,520 Speaker 2: under one hundred bucks, which it might go under excuse me, 141 00:08:11,520 --> 00:08:13,840 Speaker 2: one hundred dollars in this week. It's at about one 142 00:08:13,880 --> 00:08:16,280 Speaker 2: hundred and three right now, down from one hundred and forty, 143 00:08:16,320 --> 00:08:19,400 Speaker 2: and it was ninety in early August. But think about this, 144 00:08:19,520 --> 00:08:22,800 Speaker 2: twelve months ago. It was in the forties and video 145 00:08:22,920 --> 00:08:26,840 Speaker 2: was in the forties. So these are companies that you know, yes, 146 00:08:27,240 --> 00:08:30,840 Speaker 2: you know, Tesla's down twenty two percent, but it can 147 00:08:30,880 --> 00:08:33,640 Speaker 2: be down a lot more. I mean, these companies that 148 00:08:33,720 --> 00:08:38,920 Speaker 2: are this mega tech companies. Don't ever think that you 149 00:08:39,120 --> 00:08:41,960 Speaker 2: found a bargain or you're smarter than the market. You know, 150 00:08:42,240 --> 00:08:43,360 Speaker 2: That's that's the key. 151 00:08:43,559 --> 00:08:45,319 Speaker 1: Okay, we'll leave it there. Pleasure to have you on 152 00:08:45,360 --> 00:08:48,760 Speaker 1: the program. Hillary Kramer see iowe it Kramer Capital Research 153 00:08:48,920 --> 00:08:50,400 Speaker 1: joining us here on a daybreak. 154 00:08:50,440 --> 00:09:02,360 Speaker 3: Asia Luke Stone, portfolio manager at when Through Capital Management. Luke, So, 155 00:09:02,400 --> 00:09:05,599 Speaker 3: we heard Yellen saying there are no red lights flashing 156 00:09:05,880 --> 00:09:09,520 Speaker 3: in the economy, but the market interpretation of the jobs 157 00:09:09,559 --> 00:09:13,600 Speaker 3: report seems a little bit of a different mindset for you. 158 00:09:14,120 --> 00:09:17,599 Speaker 3: Is this a time to be cautious or to be opportunistic? 159 00:09:19,040 --> 00:09:21,880 Speaker 4: Yeah, First, thank you very much for having me. I 160 00:09:21,920 --> 00:09:25,000 Speaker 4: think Jones or Jenny Allen's remarks this weekend kind of 161 00:09:25,000 --> 00:09:27,960 Speaker 4: flew in the face of the way the market reacted, 162 00:09:28,559 --> 00:09:31,320 Speaker 4: just as you said. I mean, we're starting to see 163 00:09:31,320 --> 00:09:35,679 Speaker 4: some deterioration in the macro economic landscape, with unemployment starting 164 00:09:35,720 --> 00:09:41,480 Speaker 4: to tick upward and continuing to see job growth not 165 00:09:41,520 --> 00:09:45,880 Speaker 4: only fall below expectations, but really growing in places that 166 00:09:45,920 --> 00:09:50,120 Speaker 4: aren't the highest skilled or necessarily the most demanded jobs 167 00:09:50,120 --> 00:09:53,680 Speaker 4: that we're looking for. So I think that there's a 168 00:09:53,679 --> 00:09:56,560 Speaker 4: little bit of room for caution. Now when you translate 169 00:09:56,600 --> 00:09:59,880 Speaker 4: that to FED activity, I think it gets a little difficult. 170 00:10:00,440 --> 00:10:00,640 Speaker 5: Yeah. 171 00:10:00,640 --> 00:10:02,920 Speaker 1: I was struck by the fact that the Atlanta Fed's 172 00:10:03,000 --> 00:10:06,720 Speaker 1: GDP now model is indicating third quarter real growth of 173 00:10:06,760 --> 00:10:10,080 Speaker 1: around two point one. Yeah, that's down from roughly three 174 00:10:10,120 --> 00:10:13,760 Speaker 1: percent just a few weeks ago, but it's not too shabby. 175 00:10:13,840 --> 00:10:15,560 Speaker 1: I mean, given the fact that rates have been as 176 00:10:15,640 --> 00:10:18,600 Speaker 1: high for as you know, as they have been for 177 00:10:18,720 --> 00:10:23,280 Speaker 1: quite some time. I mean, I don't think it's recessionary territory. 178 00:10:23,280 --> 00:10:24,520 Speaker 1: Are you getting that vibe? 179 00:10:25,400 --> 00:10:26,839 Speaker 6: No, I think that's a great point. 180 00:10:26,880 --> 00:10:30,600 Speaker 4: I mean you're seeing what appears to be relatively robust 181 00:10:30,640 --> 00:10:35,400 Speaker 4: GDP GDP growth in economic activity. So when you start 182 00:10:35,440 --> 00:10:39,320 Speaker 4: to see like FED Governor's Fed Governor Waller's comments on 183 00:10:39,920 --> 00:10:43,640 Speaker 4: front loading rate cuts, or you know, look three weeks ago, 184 00:10:43,720 --> 00:10:48,720 Speaker 4: when we were facing the Japanese mini crisis, the larger 185 00:10:48,840 --> 00:10:52,760 Speaker 4: majority of market participants were demanding even emergency rate cuts, 186 00:10:52,760 --> 00:10:56,719 Speaker 4: I think that's a little off base, and you need 187 00:10:56,760 --> 00:10:58,600 Speaker 4: to look at kind of where we are from a 188 00:10:58,640 --> 00:10:59,800 Speaker 4: big picture standpoint. 189 00:11:00,640 --> 00:11:03,440 Speaker 3: When you cling to data dependence, as we heard Chris 190 00:11:03,480 --> 00:11:07,480 Speaker 3: Waller mentioned there, it probably means you're going to be 191 00:11:07,559 --> 00:11:10,880 Speaker 3: late that the horses have already bolted. Do you think 192 00:11:10,920 --> 00:11:12,160 Speaker 3: that's the case now or no? 193 00:11:13,080 --> 00:11:17,360 Speaker 6: Yeah, I think that's probably it's fair. 194 00:11:18,200 --> 00:11:21,080 Speaker 4: But by the same token, I you know, I think 195 00:11:21,080 --> 00:11:23,480 Speaker 4: that's just the mechanism of how this fed that a 196 00:11:23,559 --> 00:11:28,280 Speaker 4: reserve is acting today. You know, I think they're largely 197 00:11:28,360 --> 00:11:32,280 Speaker 4: concerned with the reputational risk that flew when we started 198 00:11:32,320 --> 00:11:35,400 Speaker 4: to see inflation tick upward. And I think that's why 199 00:11:36,040 --> 00:11:38,319 Speaker 4: we're starting to see demands for cuts so that we 200 00:11:38,640 --> 00:11:42,199 Speaker 4: aren't really seeing so we won't see a huge economic 201 00:11:42,240 --> 00:11:43,120 Speaker 4: slowdown coming up. 202 00:11:43,600 --> 00:11:46,560 Speaker 1: So, given everything that you're describing, Luke, how do you 203 00:11:46,600 --> 00:11:49,200 Speaker 1: approach putting money to work in the equity market right now? 204 00:11:50,120 --> 00:11:50,320 Speaker 6: Yeah? 205 00:11:50,400 --> 00:11:53,280 Speaker 4: In the equity space, you know, look, this is this 206 00:11:53,320 --> 00:11:56,600 Speaker 4: is kind of a boring time, at least in my opinion. 207 00:11:56,600 --> 00:12:00,520 Speaker 4: I think we look toward value. I think that we've 208 00:12:00,520 --> 00:12:03,280 Speaker 4: seen some large contractions and year to date, you know, 209 00:12:03,320 --> 00:12:05,680 Speaker 4: the S and P is still up well roughly eighteen 210 00:12:06,240 --> 00:12:08,480 Speaker 4: fifteen percent year to date. I mean that that's still 211 00:12:08,520 --> 00:12:11,199 Speaker 4: pretty strong. I think there's there's room there to kind 212 00:12:11,200 --> 00:12:13,959 Speaker 4: of take some take some wind out and take some profits. 213 00:12:15,080 --> 00:12:17,800 Speaker 4: So that's in the equity space, you know, I think 214 00:12:18,000 --> 00:12:20,720 Speaker 4: we're starting to see more allocations into the fixed income 215 00:12:21,360 --> 00:12:25,959 Speaker 4: world with rates starting to fall as they have. If 216 00:12:25,960 --> 00:12:29,040 Speaker 4: we're expecting rates to continue to fall, that's we kind 217 00:12:29,080 --> 00:12:31,360 Speaker 4: of like defensive names and duration. 218 00:12:32,840 --> 00:12:35,320 Speaker 3: The S and P five hundred down, you know, more 219 00:12:35,400 --> 00:12:37,520 Speaker 3: than four percent last week, and I just happened to 220 00:12:37,559 --> 00:12:40,920 Speaker 3: have the Wei function up and it's it's up thirteen 221 00:12:41,040 --> 00:12:44,160 Speaker 3: percent now here today. So I'm wondering if we get 222 00:12:44,200 --> 00:12:48,880 Speaker 3: any further downside, does that suggest that this year in aggregate, 223 00:12:49,200 --> 00:12:51,760 Speaker 3: when it's all said and done, will be disappointing even 224 00:12:51,800 --> 00:12:52,360 Speaker 3: with AI. 225 00:12:53,679 --> 00:12:56,160 Speaker 4: Well, look, I mean it's it's it's hard to be 226 00:12:56,200 --> 00:12:59,040 Speaker 4: excited when when you know, I think last week, like 227 00:12:59,080 --> 00:13:01,640 Speaker 4: you said, the S and P was closer to twenty percent, 228 00:13:02,559 --> 00:13:05,640 Speaker 4: and there's these you know, robust technologies that are starting 229 00:13:05,640 --> 00:13:09,240 Speaker 4: to grow, you know, with AI, I don't think that 230 00:13:09,240 --> 00:13:11,160 Speaker 4: the year is completely lost. I mean, I mean, look, 231 00:13:11,160 --> 00:13:13,559 Speaker 4: we're coming off of a year where we. 232 00:13:13,520 --> 00:13:16,040 Speaker 6: Saw a huge detraction in the S and p. So 233 00:13:16,960 --> 00:13:19,760 Speaker 6: you know, anything's good when you're. 234 00:13:19,600 --> 00:13:22,560 Speaker 4: Facing you know, we don't want to be here, right, 235 00:13:23,320 --> 00:13:25,760 Speaker 4: I guess that's that's that's what I'm trying to say there. 236 00:13:25,800 --> 00:13:29,200 Speaker 1: How are you looking at marketsoft shore right now, particularly 237 00:13:29,240 --> 00:13:29,720 Speaker 1: in Asia? 238 00:13:30,640 --> 00:13:33,720 Speaker 4: Yeah, I think we're looking to China. And I feel 239 00:13:33,800 --> 00:13:35,800 Speaker 4: like every time I'm on this program, I start to 240 00:13:35,800 --> 00:13:38,800 Speaker 4: say that we're beginning to think about looking at China, 241 00:13:40,120 --> 00:13:40,400 Speaker 4: and I. 242 00:13:40,360 --> 00:13:43,880 Speaker 6: Think that's that's still fair. I think China. 243 00:13:43,640 --> 00:13:47,439 Speaker 4: Specifically has its own issues with inflation, which is almost 244 00:13:47,440 --> 00:13:48,920 Speaker 4: on the other side of the coin. Right. You know, 245 00:13:48,960 --> 00:13:52,920 Speaker 4: you're seeing deflationary pressure on the business side, and then 246 00:13:52,960 --> 00:13:57,280 Speaker 4: you know, pretty meager inflation in their consumer price index, 247 00:13:57,920 --> 00:14:01,360 Speaker 4: and you're starting to see more and more central bankers 248 00:14:02,000 --> 00:14:04,960 Speaker 4: in the in the region and even some x Chinese 249 00:14:04,960 --> 00:14:10,040 Speaker 4: central bankers start to almost plead for rate cuts or 250 00:14:10,440 --> 00:14:15,120 Speaker 4: more accommodative monetary policy and and uh stimulating fiscal policy. 251 00:14:15,200 --> 00:14:18,800 Speaker 4: So we'd like to ride that wave if we think 252 00:14:18,840 --> 00:14:21,480 Speaker 4: that it's it's going to happen, But it seems like 253 00:14:21,520 --> 00:14:23,120 Speaker 4: there's some reticency on. 254 00:14:24,800 --> 00:14:26,680 Speaker 6: The Chinese government side to provide that. 255 00:14:27,440 --> 00:14:30,320 Speaker 3: Doug mentioned a few moments ago that Yellen maintained that 256 00:14:30,520 --> 00:14:35,040 Speaker 3: she would welcome a meeting with her counterpart Holyphom in 257 00:14:35,360 --> 00:14:38,520 Speaker 3: the United States. Is the climate right now for for 258 00:14:38,600 --> 00:14:40,520 Speaker 3: that sort of visit or do you think that would 259 00:14:40,560 --> 00:14:43,080 Speaker 3: be something that might happen later. 260 00:14:44,120 --> 00:14:47,960 Speaker 4: Well, you know, the climate is is right right now, 261 00:14:48,560 --> 00:14:51,680 Speaker 4: you know, depending on which administration we we see come 262 00:14:51,680 --> 00:14:53,280 Speaker 4: to power in the following year. 263 00:14:55,160 --> 00:14:56,440 Speaker 6: I think that's probably fair. 264 00:14:56,480 --> 00:14:59,880 Speaker 4: I mean, I think, look, I think it benefits, but 265 00:15:00,160 --> 00:15:06,040 Speaker 4: parties to welcome each other with open arms and bringing 266 00:15:06,080 --> 00:15:10,040 Speaker 4: forward to a trade war or having any negative attitude 267 00:15:10,040 --> 00:15:12,920 Speaker 4: is just harmful to both parties. 268 00:15:12,960 --> 00:15:14,960 Speaker 1: So you open the door. How are you feeling about 269 00:15:14,960 --> 00:15:17,800 Speaker 1: the election? We've got a debate tuesday. I think the 270 00:15:17,840 --> 00:15:21,200 Speaker 1: stakes are very, very high. Do you have a sense 271 00:15:21,280 --> 00:15:26,760 Speaker 1: of what one candidate may mean for the economy and 272 00:15:27,000 --> 00:15:28,520 Speaker 1: the markets over the other. 273 00:15:29,480 --> 00:15:34,920 Speaker 4: Well, I think both have their own I'd say can 274 00:15:34,920 --> 00:15:37,920 Speaker 4: of worms when it comes to fiscal policy, right, I 275 00:15:37,920 --> 00:15:42,000 Speaker 4: think both of them are overly stimulative, stimulative to a 276 00:15:42,040 --> 00:15:45,520 Speaker 4: certain extent, and when you couple that with dead policy 277 00:15:45,520 --> 00:15:49,600 Speaker 4: that you know is supposed to remain independent, we might 278 00:15:49,760 --> 00:15:53,760 Speaker 4: see the potential for inflationary pressures, whether that be through 279 00:15:55,040 --> 00:15:59,400 Speaker 4: President Trump's potential tax policy. You know, if he completely 280 00:15:59,400 --> 00:16:01,920 Speaker 4: wipes away the come tax and focuses on tariffs, that's 281 00:16:03,080 --> 00:16:06,720 Speaker 4: even wilder. But then you know the Harris administration's proposals 282 00:16:06,760 --> 00:16:10,640 Speaker 4: for you know, stimulus for first time home buyers, essentially 283 00:16:10,680 --> 00:16:14,200 Speaker 4: putting twenty five thousand dollars in individual's pockets, I think 284 00:16:14,240 --> 00:16:19,240 Speaker 4: that would cause significant price pressure in the housing market, 285 00:16:19,280 --> 00:16:21,040 Speaker 4: which you know doesn't really have much room to go. 286 00:16:21,400 --> 00:16:25,680 Speaker 3: You know, we usually think of inflation as a monetary issue, 287 00:16:25,920 --> 00:16:28,080 Speaker 3: but are we learning through the past couple of years 288 00:16:28,080 --> 00:16:31,760 Speaker 3: that it very much can be a fiscal issue as well. Yeah. 289 00:16:31,800 --> 00:16:32,440 Speaker 6: Absolutely. 290 00:16:32,560 --> 00:16:35,760 Speaker 4: I think when when you when you have an almost 291 00:16:35,760 --> 00:16:39,280 Speaker 4: six percent deficit that you're running the GDP, I think 292 00:16:39,320 --> 00:16:44,080 Speaker 4: that starts to flesh out some some true stimulative base 293 00:16:44,200 --> 00:16:47,200 Speaker 4: on the on the fiscal side. So you know, whatever's 294 00:16:47,240 --> 00:16:49,520 Speaker 4: going on on the on the monetary side, I think 295 00:16:49,560 --> 00:16:52,360 Speaker 4: you have to reconcile that, you know, the government spending 296 00:16:52,400 --> 00:16:56,040 Speaker 4: money is stimulative and has its implications for inflation. 297 00:16:57,240 --> 00:16:59,840 Speaker 3: All right, Luke, out of time unfortunately, but thank you 298 00:16:59,840 --> 00:17:02,680 Speaker 3: for joining us here on a Monday morning in Asia. 299 00:17:02,800 --> 00:17:13,720 Speaker 3: Luke Stone, portfolio manager at Winthrop Capital Management. Frank Lenz, 300 00:17:14,000 --> 00:17:17,719 Speaker 3: founder and CEO of fi L to take a closer 301 00:17:17,760 --> 00:17:21,320 Speaker 3: look at the US presidential election and also the debate 302 00:17:21,359 --> 00:17:24,720 Speaker 3: coming up just in the next couple of days. Mister Lenz, 303 00:17:24,760 --> 00:17:27,480 Speaker 3: thank you very much for joining us. We've had some 304 00:17:27,640 --> 00:17:31,240 Speaker 3: recent polls showing that it's a neck and neck race. 305 00:17:31,480 --> 00:17:34,560 Speaker 3: I'm curious if President Trump or former President Trump is 306 00:17:34,640 --> 00:17:37,720 Speaker 3: losing more Republicans though too, Kamala Harris. 307 00:17:37,520 --> 00:17:41,280 Speaker 7: He's losing some Republicans. He's been losing some Republicans since 308 00:17:41,320 --> 00:17:45,320 Speaker 7: the very beginning of the race. But she herself is 309 00:17:45,720 --> 00:17:49,000 Speaker 7: in our polling a percenter to a head. So the 310 00:17:49,040 --> 00:17:52,560 Speaker 7: battle right now is really with the independence, the swing voters, 311 00:17:52,600 --> 00:17:56,400 Speaker 7: the undecided. Roughly five percent of Americans have not made 312 00:17:56,440 --> 00:18:00,359 Speaker 7: up their minds, which is actually incredible when the difference 313 00:18:00,400 --> 00:18:04,520 Speaker 7: between the two candidates is wider and broader than any 314 00:18:04,560 --> 00:18:09,000 Speaker 7: campaign that I've experienced in my lifetime, and the two 315 00:18:09,000 --> 00:18:13,200 Speaker 7: of them have completely different personalities, they have different records, 316 00:18:13,359 --> 00:18:16,520 Speaker 7: and it's surprising that people have still not made up 317 00:18:16,520 --> 00:18:18,320 Speaker 7: their minds at this late point. 318 00:18:18,600 --> 00:18:21,639 Speaker 1: Does it surprise you that this race is as close 319 00:18:21,680 --> 00:18:22,359 Speaker 1: as it is. 320 00:18:22,880 --> 00:18:23,600 Speaker 8: Yes, it does. 321 00:18:24,440 --> 00:18:27,560 Speaker 7: I believe that Trump would have beaten Biden if Joe 322 00:18:27,600 --> 00:18:31,760 Speaker 7: Biden was the Democratic nominee. I think that Kamala Harris 323 00:18:31,800 --> 00:18:34,080 Speaker 7: has an advantage over Trump right now, and in fact, 324 00:18:34,080 --> 00:18:37,040 Speaker 7: if the election were held today, I think she would win, 325 00:18:37,640 --> 00:18:40,480 Speaker 7: but only by a percent or two. And remember the 326 00:18:40,640 --> 00:18:45,119 Speaker 7: actual popular vote doesn't matter, and so any discussion of 327 00:18:45,160 --> 00:18:49,240 Speaker 7: polling nationwide polling is really irrelevant. There are seven states 328 00:18:49,280 --> 00:18:52,800 Speaker 7: in play. Those seven states is what matters. And it's 329 00:18:52,880 --> 00:18:57,280 Speaker 7: fascinating to me that the most important issue isn't the economy. 330 00:18:57,359 --> 00:19:02,320 Speaker 7: It isn't actually even inflation. It's affordability, and that is 331 00:19:02,359 --> 00:19:05,320 Speaker 7: a Trump's strength at Harris weakness. But then you go 332 00:19:05,440 --> 00:19:09,720 Speaker 7: to the personalities. You compare Harris and Trump, and Harris 333 00:19:09,800 --> 00:19:12,920 Speaker 7: is more popular as an individual than Trump is, which 334 00:19:13,000 --> 00:19:14,520 Speaker 7: is why this is such a close race. 335 00:19:15,200 --> 00:19:20,280 Speaker 3: It is extraordinary that the two candidates have such different positions. 336 00:19:20,280 --> 00:19:23,760 Speaker 3: You would think that the former president Trump would mainly 337 00:19:24,000 --> 00:19:27,560 Speaker 3: appeal to the core MAGA crowd. And so if you 338 00:19:27,600 --> 00:19:30,239 Speaker 3: look at those seven states that you say are very 339 00:19:30,280 --> 00:19:33,119 Speaker 3: much in play and will determine the outcome of this election, 340 00:19:33,760 --> 00:19:36,400 Speaker 3: is mega particularly strong in those areas or. 341 00:19:36,359 --> 00:19:39,280 Speaker 8: No, it's a different kind of vote. 342 00:19:39,440 --> 00:19:42,520 Speaker 7: For example, in Nevada and Arizona, the key is the 343 00:19:42,600 --> 00:19:46,520 Speaker 7: Latino vote, and in that Trump is doing better than 344 00:19:46,520 --> 00:19:49,520 Speaker 7: the average Republican does. It's a reason why he's tied 345 00:19:49,600 --> 00:19:52,040 Speaker 7: even though he lost those states in twenty twenty. 346 00:19:52,520 --> 00:19:53,240 Speaker 8: Then you have to go to. 347 00:19:53,240 --> 00:19:59,080 Speaker 7: The southern vote, where Trump had a significant advantage over Biden, 348 00:19:59,280 --> 00:20:01,720 Speaker 7: but Harris's caught up or even moved ahead in some 349 00:20:01,760 --> 00:20:05,960 Speaker 7: polls in Georgia and North Carolina. There the young African 350 00:20:06,000 --> 00:20:08,920 Speaker 7: American vote, the young male African American vote, is going 351 00:20:08,960 --> 00:20:13,680 Speaker 7: to be critical. Then you go up north to Pennsylvania, Michigan, 352 00:20:13,760 --> 00:20:17,840 Speaker 7: and Wisconsin, and in those states the union vote matters. Now, 353 00:20:17,880 --> 00:20:20,840 Speaker 7: make no mistake, Harris is winning the vast majority of 354 00:20:20,960 --> 00:20:25,680 Speaker 7: government unions and teachers' union votes, but he's doing surprisingly 355 00:20:25,760 --> 00:20:29,760 Speaker 7: well among the people, the trades, the people work with 356 00:20:29,800 --> 00:20:32,120 Speaker 7: their hands, and it's one of the reasons. Right those 357 00:20:32,160 --> 00:20:35,000 Speaker 7: three states, even though Joe Biden won them, those three 358 00:20:35,040 --> 00:20:36,560 Speaker 7: states are too close to call. 359 00:20:36,600 --> 00:20:40,359 Speaker 1: Frank, imagine a world where you're involved in debate prep 360 00:20:40,560 --> 00:20:43,840 Speaker 1: on both sides. What are the punches that Trump has 361 00:20:43,880 --> 00:20:46,400 Speaker 1: to land? What are the punches that Harris has to land? 362 00:20:46,880 --> 00:20:49,080 Speaker 7: Okay, I was expecting you to ask that question, so 363 00:20:49,119 --> 00:20:50,520 Speaker 7: I've actually prepared an answer. 364 00:20:51,440 --> 00:20:53,640 Speaker 3: Come on, turn the paper over and just speak off 365 00:20:53,640 --> 00:20:53,920 Speaker 3: the cover. 366 00:20:54,119 --> 00:20:56,240 Speaker 7: No, because I actually want to get this right, and 367 00:20:56,280 --> 00:20:58,560 Speaker 7: I suggest listeners write it down and you can do 368 00:20:58,640 --> 00:21:02,639 Speaker 7: your own checklist of whether they succeed. Harris's she is 369 00:21:02,720 --> 00:21:07,320 Speaker 7: doing very well, extremely well among young women. They back 370 00:21:07,359 --> 00:21:10,640 Speaker 7: her overwhelmingly. They were disengaged in the election. I think 371 00:21:10,720 --> 00:21:13,879 Speaker 7: she should appeal to them directly, look straight into the 372 00:21:13,920 --> 00:21:17,399 Speaker 7: camera and speak to them about their future and how 373 00:21:17,640 --> 00:21:21,000 Speaker 7: her future is tied to their future. Second, she needs 374 00:21:21,040 --> 00:21:24,120 Speaker 7: a detailed plan of action because her criticism that Trump's 375 00:21:24,119 --> 00:21:27,200 Speaker 7: been all over on is that she is changing, she's 376 00:21:27,240 --> 00:21:31,080 Speaker 7: flip flopping, and she doesn't have any actual policies. Third, 377 00:21:31,640 --> 00:21:36,320 Speaker 7: her greatest weakness is inflation. And yes it is down, 378 00:21:36,400 --> 00:21:39,760 Speaker 7: as Bloomberg's been reporting for months now, but the Publicicey's 379 00:21:39,840 --> 00:21:43,400 Speaker 7: prices is being significantly higher than twenty twenty. She has 380 00:21:43,480 --> 00:21:48,320 Speaker 7: to have a specific answer to affordability. Fourth, she needs 381 00:21:48,359 --> 00:21:51,960 Speaker 7: to ask a very simple question, which Kennedy's don't do 382 00:21:52,000 --> 00:21:54,480 Speaker 7: them to do five for each one? Do you really 383 00:21:54,520 --> 00:21:57,760 Speaker 7: want this chaos every single day because the public does not. 384 00:21:58,760 --> 00:22:02,720 Speaker 7: And Fifth, and will only happen once when she gets interrupted, 385 00:22:02,800 --> 00:22:07,520 Speaker 7: as Trump will inevitably do. She needs to say something 386 00:22:07,720 --> 00:22:13,520 Speaker 7: like it's time that we had a president who respected mothers, daughters, sisters. 387 00:22:13,359 --> 00:22:15,360 Speaker 8: And all women, even cat ladies. 388 00:22:16,080 --> 00:22:18,880 Speaker 7: That response will get tremendous attention. 389 00:22:19,240 --> 00:22:21,760 Speaker 3: Okay, you probably want to do the Trump side, but 390 00:22:21,760 --> 00:22:24,480 Speaker 3: do it quickly. Maybe three important areas. 391 00:22:24,600 --> 00:22:27,040 Speaker 7: Okay, he doesn't need to be nice, but he can't 392 00:22:27,040 --> 00:22:31,280 Speaker 7: be mean. He doesn't need to be effusive, but he 393 00:22:31,320 --> 00:22:35,480 Speaker 7: can't interrupt her again and again. Second, is showed the 394 00:22:35,520 --> 00:22:41,040 Speaker 7: difference in crime, showed the difference in prices between himself 395 00:22:41,080 --> 00:22:47,800 Speaker 7: and the Biden administration. And Third, he has to challenge 396 00:22:47,800 --> 00:22:50,480 Speaker 7: her that she does a lot of talking, but she 397 00:22:50,520 --> 00:22:51,000 Speaker 7: doesn't do. 398 00:22:51,000 --> 00:22:51,680 Speaker 8: A lot doing. 399 00:22:51,920 --> 00:22:55,040 Speaker 3: You said that affordability was that number one issue, And 400 00:22:55,280 --> 00:22:57,440 Speaker 3: I find it interesting that Trump is you know, he's 401 00:22:57,440 --> 00:23:02,040 Speaker 3: talking about raising tariffs one hundred percent on quote unquote 402 00:23:02,080 --> 00:23:05,200 Speaker 3: companies that don't want to do business with US dollar. 403 00:23:05,680 --> 00:23:08,600 Speaker 3: Do people understand that that will drive prices up? 404 00:23:08,720 --> 00:23:11,679 Speaker 7: They absolutely do not understand that. They do not understand 405 00:23:11,720 --> 00:23:14,280 Speaker 7: the impact of trade, which is why there are a 406 00:23:14,320 --> 00:23:17,720 Speaker 7: lot of Americans who back what Trump is saying, not 407 00:23:18,920 --> 00:23:21,800 Speaker 7: realizing that the impact of what he's saying will actually 408 00:23:21,840 --> 00:23:24,800 Speaker 7: cost them dearly. And it's something that Harris is going 409 00:23:24,880 --> 00:23:27,720 Speaker 7: to have to explain because she doesn't get the benefit 410 00:23:27,760 --> 00:23:29,920 Speaker 7: of it since the public doesn't know about it. 411 00:23:30,280 --> 00:23:32,800 Speaker 1: I was looking at a New York Times Siena pol 412 00:23:33,000 --> 00:23:36,200 Speaker 1: and one of the things that struck me that Takamala 413 00:23:36,240 --> 00:23:39,000 Speaker 1: Harris still faces a sizable share of voters who are 414 00:23:39,040 --> 00:23:42,600 Speaker 1: saying that they need to know more about her. Can 415 00:23:42,640 --> 00:23:45,560 Speaker 1: you give me a sense of why the biography, why 416 00:23:45,600 --> 00:23:47,360 Speaker 1: the messaging has yet to penetrate. 417 00:23:48,320 --> 00:23:51,280 Speaker 7: Yes, it's because she hasn't talked about the issues. She's 418 00:23:51,320 --> 00:23:54,320 Speaker 7: only done a single interview. I don't think foreign viewers 419 00:23:54,400 --> 00:23:58,200 Speaker 7: realize that she's been the presumptive nominee now for forty 420 00:23:58,240 --> 00:24:02,040 Speaker 7: five days, and they know we Americans know nothing about 421 00:24:02,040 --> 00:24:04,600 Speaker 7: her because she hasn't engaged the public. And on the 422 00:24:04,640 --> 00:24:07,440 Speaker 7: other side, and on the flip side, Donald Trump engages 423 00:24:07,560 --> 00:24:11,679 Speaker 7: too much, he's too available, He's got opinions or comments 424 00:24:11,760 --> 00:24:15,399 Speaker 7: on everything. So she hasn't told her details, she hasn't 425 00:24:15,400 --> 00:24:18,080 Speaker 7: given her plan, and he doesn't know how to keep quiet. 426 00:24:18,160 --> 00:24:21,879 Speaker 3: Well, she did a little at the DNC in her speech. 427 00:24:22,119 --> 00:24:25,200 Speaker 3: I'm curious whether you think you do Americans want to 428 00:24:25,240 --> 00:24:29,320 Speaker 3: hear from her her great immigrant story, or do they 429 00:24:29,359 --> 00:24:33,440 Speaker 3: want to hear more that she is a red blooded American. 430 00:24:33,880 --> 00:24:36,520 Speaker 8: I don't think either. I actually don't think either is important. 431 00:24:36,840 --> 00:24:38,679 Speaker 7: I think they need to know from her exactly what 432 00:24:38,760 --> 00:24:41,320 Speaker 7: she's going to do on the two issues. Actually, let's 433 00:24:41,320 --> 00:24:43,959 Speaker 7: say it, the four issues that matter. Two of them 434 00:24:44,040 --> 00:24:48,000 Speaker 7: benefit Trump, two of them benefit Harris. Affordability and immigration 435 00:24:48,440 --> 00:24:50,880 Speaker 7: because we have a real problem with that in our country, 436 00:24:51,080 --> 00:24:53,879 Speaker 7: at least a perceived problem. And then abortion, which is 437 00:24:54,000 --> 00:24:57,040 Speaker 7: very good with her and younger women, and healthcare, which 438 00:24:57,040 --> 00:25:00,199 Speaker 7: affects everyone. They want to know exactly what she's going 439 00:25:00,240 --> 00:25:03,720 Speaker 7: to do, how much control of healthcare is the government 440 00:25:03,840 --> 00:25:06,960 Speaker 7: versus private, what she's going to do to secure the border, 441 00:25:07,240 --> 00:25:09,280 Speaker 7: what she's going to do with affordability. She's talked a 442 00:25:09,280 --> 00:25:12,600 Speaker 7: little bit about it, but not enough. And with abortion, 443 00:25:12,720 --> 00:25:15,640 Speaker 7: that's her strong point. And Trump himself has been trying 444 00:25:15,680 --> 00:25:19,119 Speaker 7: to moderate his position from twenty twenty. But yes, the 445 00:25:19,160 --> 00:25:22,119 Speaker 7: public does want to hear more from her on the details. 446 00:25:22,240 --> 00:25:25,040 Speaker 1: Frank, very quickly, thirty seconds. When you hear the fact 447 00:25:25,080 --> 00:25:29,320 Speaker 1: that Liz Cheney has endorsed Kamala Harris, her father has 448 00:25:29,440 --> 00:25:31,760 Speaker 1: as well, does that move the needle in one way 449 00:25:31,840 --> 00:25:32,240 Speaker 1: or another? 450 00:25:32,760 --> 00:25:34,440 Speaker 7: It would have been interesting if the two of them 451 00:25:34,480 --> 00:25:38,479 Speaker 7: had endorsed Harris at the same time, rather than Cheney 452 00:25:38,520 --> 00:25:42,200 Speaker 7: going for Liz Channey going first. Does it really matter? Actually, 453 00:25:42,240 --> 00:25:44,440 Speaker 7: I don't think so, and I think that Bobby kennedy 454 00:25:44,520 --> 00:25:47,919 Speaker 7: endorsement of Trump is only worth half a percent. But 455 00:25:48,560 --> 00:25:52,520 Speaker 7: with so many states so close, everything matters. 456 00:25:53,400 --> 00:25:53,560 Speaker 5: Well. 457 00:25:53,560 --> 00:25:56,280 Speaker 3: A fascinating session. And by the way, should they either 458 00:25:56,320 --> 00:25:58,280 Speaker 3: one of them talk about China, give you ten seconds. 459 00:25:58,359 --> 00:26:00,840 Speaker 7: You have to do it because it's new show that matters, 460 00:26:00,960 --> 00:26:04,000 Speaker 7: and there's some really contentious points of view and they 461 00:26:04,000 --> 00:26:04,960 Speaker 7: don't agree on China. 462 00:26:05,040 --> 00:26:08,400 Speaker 3: Yeah, well, if they don't understand affordability and higher tariffs, 463 00:26:08,400 --> 00:26:11,440 Speaker 3: I don't know if they understand a lot of policy 464 00:26:11,440 --> 00:26:14,600 Speaker 3: orient and responses on China. But Frank, thank you very 465 00:26:14,680 --> 00:26:17,640 Speaker 3: much for joining us here. Frank Lunz, founder and CEO. 466 00:26:17,320 --> 00:26:18,520 Speaker 6: Of FI L. 467 00:26:25,040 --> 00:26:28,440 Speaker 3: Well. The thirty first CIDIC CLSA Investor Forum gets under 468 00:26:28,480 --> 00:26:30,920 Speaker 3: way this morning at the Grand Hyatt here in Hong Kong. 469 00:26:31,359 --> 00:26:34,159 Speaker 3: The event brings together some of the region's biggest and 470 00:26:34,280 --> 00:26:36,760 Speaker 3: brightest industry names. One of them joins us now in 471 00:26:36,800 --> 00:26:40,159 Speaker 3: our studios in Hong Kong. It's Christopher Thomas, Chairman of 472 00:26:40,240 --> 00:26:43,680 Speaker 3: Integrated Insights to take a closer look at the Sino 473 00:26:43,920 --> 00:26:47,680 Speaker 3: US chip war. Christopher, thank you for coming into our studios. 474 00:26:47,960 --> 00:26:50,360 Speaker 3: We had an interesting line this morning out of the 475 00:26:50,400 --> 00:26:55,159 Speaker 3: Commercial Times in Taiwan saying that Intel we'll entrust the 476 00:26:55,160 --> 00:26:59,680 Speaker 3: production of all of its chips below three nanometers to TSMC. 477 00:27:00,400 --> 00:27:03,479 Speaker 3: So this is interesting because I mean, that's obviously at 478 00:27:03,520 --> 00:27:07,480 Speaker 3: the cutting edge of development chips that are below three nanometers, 479 00:27:07,960 --> 00:27:11,280 Speaker 3: and since Intel has been trying to develop its foundry further, 480 00:27:11,640 --> 00:27:13,199 Speaker 3: it shows that there's a lot of trust here with 481 00:27:13,280 --> 00:27:17,640 Speaker 3: TSMC and TSMC very much at the heart of this 482 00:27:17,640 --> 00:27:21,840 Speaker 3: sort of Sino US chip war. So I'm curious where 483 00:27:21,840 --> 00:27:23,880 Speaker 3: do you think we are at this? Does it get 484 00:27:23,920 --> 00:27:25,119 Speaker 3: worse from here or better? 485 00:27:27,000 --> 00:27:29,240 Speaker 5: Well, I think there's a few things to keep in 486 00:27:29,280 --> 00:27:31,920 Speaker 5: mind as we look at this. First of all, despite 487 00:27:31,960 --> 00:27:34,080 Speaker 5: the fact that we've had this name of the chip 488 00:27:34,119 --> 00:27:37,280 Speaker 5: war over the last five years, actually the industry has 489 00:27:37,320 --> 00:27:40,440 Speaker 5: been extremely healthy, highly profitable, and actually grown faster during 490 00:27:40,480 --> 00:27:42,199 Speaker 5: the time of the chip war, So this may not 491 00:27:42,240 --> 00:27:44,640 Speaker 5: be the negative for the chip industry that people laid 492 00:27:44,680 --> 00:27:48,600 Speaker 5: out to be. Secondly, specifically looking at Taiwan again, there's 493 00:27:48,640 --> 00:27:51,160 Speaker 5: this been this desire from all parties to de risk 494 00:27:51,200 --> 00:27:55,600 Speaker 5: from Taiwan due to the geopolitical situation, But actually Taiwan's 495 00:27:55,640 --> 00:27:59,080 Speaker 5: percentage share of the global semiconductor industry has risen. 496 00:27:58,880 --> 00:27:59,520 Speaker 8: During that time. 497 00:28:00,880 --> 00:28:04,760 Speaker 5: The world is more leveraged all around to Taiwan than previously. 498 00:28:05,160 --> 00:28:06,480 Speaker 8: Where do things go forward? 499 00:28:06,720 --> 00:28:09,399 Speaker 5: I think I would harken back to a survey that 500 00:28:09,480 --> 00:28:11,760 Speaker 5: I did with a global Semiconductor alliance of about one 501 00:28:11,800 --> 00:28:14,840 Speaker 5: hundred and fifty semi conductor executives that we just published 502 00:28:15,200 --> 00:28:20,040 Speaker 5: a couple weeks back, and eighty five percent of executives 503 00:28:20,040 --> 00:28:22,560 Speaker 5: in the semiconductor industry, and this is a smattering of 504 00:28:22,600 --> 00:28:27,520 Speaker 5: executives from China to Taiwan Island, to Japan, the USA, Europe, 505 00:28:27,560 --> 00:28:30,719 Speaker 5: et cetera. They expect that both the US and China 506 00:28:30,840 --> 00:28:34,960 Speaker 5: will continue to erect barriers and further separate their semiconductor 507 00:28:34,960 --> 00:28:37,840 Speaker 5: industries from each other. So they expect the dispute two, 508 00:28:38,000 --> 00:28:42,200 Speaker 5: as we say, get worse, and that same percentage basically 509 00:28:42,240 --> 00:28:46,000 Speaker 5: expects that there'll be two separate and distinct semiconductor supply 510 00:28:46,120 --> 00:28:49,280 Speaker 5: chains that are built out between the two countries. But 511 00:28:49,400 --> 00:28:52,080 Speaker 5: at the same time, they expect it to take more 512 00:28:52,120 --> 00:28:54,480 Speaker 5: than five to ten years for those supply chains to 513 00:28:54,520 --> 00:28:57,280 Speaker 5: get built. This is a long run industry where changes 514 00:28:57,320 --> 00:28:58,720 Speaker 5: like these don't happen overnight. 515 00:28:59,320 --> 00:29:01,840 Speaker 1: Is there something that we can look to in the 516 00:29:02,440 --> 00:29:05,880 Speaker 1: kind of interregnum, I mean, maybe a period within that 517 00:29:05,920 --> 00:29:10,160 Speaker 1: five year time frame where Japan steps up in a 518 00:29:10,200 --> 00:29:12,840 Speaker 1: way that to add to its capacity to take some 519 00:29:12,920 --> 00:29:13,720 Speaker 1: of the stress out. 520 00:29:14,760 --> 00:29:17,640 Speaker 5: Well, I think that we've already seen Japan's step up. 521 00:29:18,000 --> 00:29:22,960 Speaker 5: They have their own internal leading edge manufacturing company of Rapidness, 522 00:29:23,000 --> 00:29:25,760 Speaker 5: which is building out capacity. There are two Nangus and below, 523 00:29:26,080 --> 00:29:28,920 Speaker 5: and TSMC has been quite successful rapidly ramping up its 524 00:29:29,000 --> 00:29:31,040 Speaker 5: Kromoto fab and they've mentioned that they're going to be 525 00:29:31,040 --> 00:29:34,720 Speaker 5: building more. So Japan is just one example of a 526 00:29:34,800 --> 00:29:38,280 Speaker 5: country that's doubling down and sort of picking up the 527 00:29:38,320 --> 00:29:42,040 Speaker 5: mantle and renewing its interest in semiconductors. But at the 528 00:29:42,080 --> 00:29:45,680 Speaker 5: same time, even if if you just simply do the mathematics, 529 00:29:45,720 --> 00:29:48,120 Speaker 5: even if Japan were to meet all of its objectives 530 00:29:48,160 --> 00:29:50,160 Speaker 5: or share, even if we were to build out the 531 00:29:50,200 --> 00:29:53,320 Speaker 5: TSMC and Intel factories in the United States as per 532 00:29:53,400 --> 00:29:55,960 Speaker 5: their specs, we're still going to have a very large 533 00:29:56,000 --> 00:29:59,239 Speaker 5: percentage of global leading edge capacity on Taiwan island for 534 00:29:59,320 --> 00:30:02,000 Speaker 5: quite some time. I think that's will probably never get 535 00:30:02,000 --> 00:30:03,680 Speaker 5: to a point where the world is totally de risk. 536 00:30:03,800 --> 00:30:05,560 Speaker 5: It's just impossible and too expensive. 537 00:30:06,080 --> 00:30:08,960 Speaker 3: So in this world that you describe with parallel paths 538 00:30:09,040 --> 00:30:12,960 Speaker 3: forward in the chip industry, a key question I think 539 00:30:13,160 --> 00:30:18,320 Speaker 3: for many is does China's development continue apace or does 540 00:30:18,360 --> 00:30:19,040 Speaker 3: it slow? 541 00:30:19,120 --> 00:30:22,800 Speaker 5: Now in that scenario, well, I think that you have 542 00:30:22,880 --> 00:30:27,200 Speaker 5: to agree that or understand that semiconductors is a collection 543 00:30:27,280 --> 00:30:30,160 Speaker 5: of niches. You can't simply look at one technology, one 544 00:30:30,280 --> 00:30:33,080 Speaker 5: chip and say this is advancing, this is declining. And 545 00:30:33,200 --> 00:30:36,240 Speaker 5: what I would say is that in certain specific areas 546 00:30:36,240 --> 00:30:40,120 Speaker 5: where the bearers are lower, where the market in China 547 00:30:40,240 --> 00:30:42,760 Speaker 5: is a very large percentage of the global market, and 548 00:30:42,800 --> 00:30:46,600 Speaker 5: where there's a strong independent or indigenous supply chain in 549 00:30:46,680 --> 00:30:48,960 Speaker 5: China already, you're going to see rapid progress. You see 550 00:30:48,960 --> 00:30:52,360 Speaker 5: this with some compound semiconductors such as silicon carbide and 551 00:30:52,400 --> 00:30:55,320 Speaker 5: in the power space, and then in addition and lagging 552 00:30:55,400 --> 00:30:57,920 Speaker 5: edge semiconductor, So think of them as twenty eight nanimeters 553 00:30:58,000 --> 00:31:01,160 Speaker 5: in below. First of all, there's very little global restrictions 554 00:31:01,160 --> 00:31:03,680 Speaker 5: on the ability of trying to access those technologies, and 555 00:31:03,800 --> 00:31:07,240 Speaker 5: most of those technological supply chains or semiconductor supply chains 556 00:31:07,600 --> 00:31:11,200 Speaker 5: can be built independently in China today with commodity equipment 557 00:31:12,000 --> 00:31:15,480 Speaker 5: at the leading edge. I think this is a real debate. 558 00:31:15,840 --> 00:31:20,360 Speaker 5: It's very clear that under the current regime, it will 559 00:31:20,400 --> 00:31:24,600 Speaker 5: be increasingly difficult to go below five nanimeter to three 560 00:31:24,680 --> 00:31:28,760 Speaker 5: nanimeter to two nanometer under the current restrictions on using 561 00:31:28,840 --> 00:31:31,760 Speaker 5: EUV and we haven't or we have not been able 562 00:31:31,800 --> 00:31:34,600 Speaker 5: to observe a path around that so far to date. 563 00:31:35,640 --> 00:31:38,760 Speaker 5: But you never know what some genius engineer would be 564 00:31:38,760 --> 00:31:41,120 Speaker 5: able to figure out. But I think the thing we 565 00:31:41,160 --> 00:31:43,200 Speaker 5: need to keep in mind when you think about the 566 00:31:43,240 --> 00:31:46,400 Speaker 5: performance of leading EDGAI systems is that it can't be 567 00:31:46,440 --> 00:31:49,640 Speaker 5: brought down simply to a node on a semiconductor chain. 568 00:31:49,920 --> 00:31:52,120 Speaker 8: It's really about the capabilities. 569 00:31:51,440 --> 00:31:55,040 Speaker 5: Of the entire system, which is the advanced packaging, the 570 00:31:55,200 --> 00:31:58,360 Speaker 5: logic to memory integration, the type of models that are 571 00:31:58,400 --> 00:32:00,760 Speaker 5: being used, how the data center set up. So there's 572 00:32:00,800 --> 00:32:03,800 Speaker 5: a lot of things that Chinese companies could do outside 573 00:32:03,800 --> 00:32:07,960 Speaker 5: of having the most advanced semiconductor manufacturing processes in order 574 00:32:08,000 --> 00:32:11,160 Speaker 5: to get close on the performance varrier of an overall 575 00:32:11,200 --> 00:32:12,280 Speaker 5: AI system. 576 00:32:12,080 --> 00:32:14,680 Speaker 1: To say nothing of high bandwidth memory in that South 577 00:32:14,720 --> 00:32:18,920 Speaker 1: Korea for the most part, s k heinech Samsung very quickly. 578 00:32:19,440 --> 00:32:22,160 Speaker 1: Can you imagine a world where one of those companies 579 00:32:22,200 --> 00:32:25,960 Speaker 1: were to kind of expand beyond just memory. 580 00:32:28,080 --> 00:32:29,680 Speaker 8: Well, I mean I think that today. 581 00:32:29,840 --> 00:32:34,800 Speaker 5: You know, Samsung has a successful logic business and it's 582 00:32:35,120 --> 00:32:37,600 Speaker 5: actually making chips for their own phones and has been 583 00:32:37,640 --> 00:32:39,080 Speaker 5: taking a look at aichips et cetera. 584 00:32:39,120 --> 00:32:41,720 Speaker 8: So it's already happened. I think that. 585 00:32:42,000 --> 00:32:44,560 Speaker 5: And you see in the foundry space for Samsung, they 586 00:32:44,560 --> 00:32:48,239 Speaker 5: have a relatively solid foundry process and they've shown some 587 00:32:48,280 --> 00:32:50,800 Speaker 5: good things on the most leading edge logic processes. 588 00:32:51,120 --> 00:32:52,520 Speaker 8: So I think you're going to see that. 589 00:32:53,120 --> 00:32:56,560 Speaker 5: I think I'm not quite sure how you would make 590 00:32:56,600 --> 00:32:58,800 Speaker 5: a new entry into the space if you were just 591 00:32:58,840 --> 00:33:02,240 Speaker 5: starting up today. Extremely expensive, it's crowded, and it's very 592 00:33:02,240 --> 00:33:03,480 Speaker 5: difficult to get in, all. 593 00:33:03,440 --> 00:33:05,640 Speaker 3: Right, Christopher, thank you for joining us here and coming 594 00:33:05,640 --> 00:33:09,360 Speaker 3: into our studio. As Christopher Thomas, Chairman of Integrated Insights. 595 00:33:11,360 --> 00:33:14,280 Speaker 1: This has been the Bloomberg Daybreak Asia podcast, bringing you 596 00:33:14,360 --> 00:33:17,480 Speaker 1: the stories making news and moving markets in the Asia Pacific. 597 00:33:17,960 --> 00:33:21,080 Speaker 1: Visit the Bloomberg Podcast channel on YouTube to get more 598 00:33:21,120 --> 00:33:24,720 Speaker 1: episodes of this and other shows from Bloomberg. Subscribe to 599 00:33:24,760 --> 00:33:28,560 Speaker 1: the podcast on Apple, Spotify, or anywhere else you'll listen 600 00:33:28,640 --> 00:33:31,760 Speaker 1: and always on Bloomberg Radio, the Bloomberg Terminal, and the 601 00:33:31,760 --> 00:33:32,840 Speaker 1: Bloomberg Business app.