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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Welcome to the Daybreak Asia podcast. I'm Doug Risner. After

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Speaker 2: the bell. In the US, Apple reported record sales for

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Speaker 2: the holiday period. Revenue jump sixteen percent to one hundred

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Speaker 2: and forty three point eight billion dollars. Now, this is

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Speaker 2: for the quarter ending December twenty seventh. These results reflect

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Speaker 2: strong demand for the iPhone seventeen, as well as growth

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Speaker 2: in services and a rebound in China. Here is Bloomberg's

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Speaker 2: Mark German.

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Speaker 3: Massive, massive quarter. This is a home run, their greatest

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Speaker 3: quarter ever by orders of magnitude. It's a gigantic bee

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Speaker 3: on overall revenue. China is back. You have a big

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Speaker 3: bet on the iPhone in particular. Eighty five billion dollar

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Speaker 3: quarter is just insane. The installed based two and a

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Speaker 3: half billion. The numbers are just beyond excellent.

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Speaker 2: That was Bloomberg's Mark German shares and Apple. We're up

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Speaker 2: about one percent in late US trading. The dollar weekend

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Speaker 2: slightly in New York trading, with the Bloomberg Dollar Spot

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Speaker 2: Index down a tenth of one percent. That doesn't seem

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Speaker 2: to capture though the story. In the foreign exchange this week,

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Speaker 2: we saw a lot of volatility not just in the dollar,

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Speaker 2: but in the euro and the Japanese yen as well.

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Speaker 2: Let's take a closer look now with David finnerdy Bloomberg's

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Speaker 2: rates and FX strategist. David is on the line from Melbourne.

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Speaker 2: Thank you so much for being here. Can we just

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Speaker 2: take a step back, David, Can you describe for me

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Speaker 2: what this last week has been like for the dollar

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Speaker 2: and some of the forces that have been at play.

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Speaker 1: Well, I think certainly you'd have to go to get

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Speaker 1: starting this sheet is last week. That was Friday, just

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Speaker 1: off the Bank of Japan eating when there was a

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Speaker 1: speculation that the Minister of Funds may have it to

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Speaker 1: be it looks like they didn't. Then later that trading

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Speaker 1: day Bank New York seemed to or at least did

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Speaker 1: to make check, which was a signal pre single point mention.

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Speaker 1: Now that really sparks volatility dollar yen, because the market

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Speaker 1: there was going to we're all long dolly en. We've

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Speaker 1: got to start perversing those positions, particularly as Dotty and

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Speaker 1: sold off. What's happened since then is that volatility, which

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Speaker 1: was more relatively more related to just dolly En, has

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Speaker 1: got a bit more border This week, and what you've

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Speaker 1: seen is President Champ has come out and he said, look,

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Speaker 1: the dollar's decline and he's not too concerned about it.

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Speaker 1: That was basically a green light for traders say, okay,

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Speaker 1: we've been looking for reasons to show mc donald again,

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Speaker 1: and they basically jumped on that. So you've seen for

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Speaker 1: dollar's appreciation pick up speed against a variety of comancy.

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Speaker 1: Now not just the end the euro ulti year highs,

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Speaker 1: so did sturning this year Ossie. Dollar's been on a

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Speaker 1: tail eight league. So it's been basically been certainly the

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Speaker 1: G ten space and EM space. You've seen this poor

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Speaker 1: dollars sell off that's going and has been going on.

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Speaker 1: That was initially triggered by last week's events by Expan,

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Speaker 1: but that was escalated given Trump's comment.

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Speaker 2: So give me your sense of how FED policy enters

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Speaker 2: this conversation, because today we had President Trump saying that

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Speaker 2: he will announce his nominee for FED chairman tomorrow that's

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Speaker 2: Friday in the US, and earlier in the day Trump

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Speaker 2: reiterated his expectation that this new leader will be lowering

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Speaker 2: interest rates. It was curious today we didn't see much

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Speaker 2: in the way of movement in the treasury market. It

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Speaker 2: seems as though the market right now expects that we're

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Speaker 2: going to see lower rates in twenty twenty six, although

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Speaker 2: the swaps market is not pricing in the next rate

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Speaker 2: cut until June.

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Speaker 1: Right, yeah, I mean basically what the market is saying,

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Speaker 1: whoever is named as the next FED president, the market's

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Speaker 1: going to seem like it's the four penalates are out there, Walla,

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Speaker 1: ride awars, and you're looking for also on the divis

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Speaker 1: end of the scale spectrum. So the markets go, look,

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Speaker 1: whoever Rump picks. Understandably, he's could pick someone who he

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Speaker 1: is aligned with his policies, which cuts. So the market's going, okay,

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Speaker 1: you're going to cut. The new FED governor won't get

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Speaker 1: in till May, so really the new statement or policy

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Speaker 1: meeting becomes really the first Bible play until then, expectations

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Speaker 1: are you look what present sorry Fred chair Power said

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Speaker 1: this week is markets sort of stabilize only from unemployment rate.

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Speaker 1: So he goes, things are quite balanced. They're looking for

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Speaker 1: more data if they were to cut. So the market's

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Speaker 1: going to realistically, given everything that's going on with FED,

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Speaker 1: we don't see them in a hurry to cut, so

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Speaker 1: really won't happen until the new FED chair gets in,

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Speaker 1: which will be in May, which makes for summer months

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Speaker 1: of June July realistically the most viable option they think

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Speaker 1: from the first rate cut, and then they look into

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Speaker 1: another rate cut in the second half the year. Again,

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Speaker 1: I do think whoever comes in though, between now and May,

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Speaker 1: a lot of economic days are coming out, and if

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Speaker 1: that data comes out on the strong side, it will

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Speaker 1: be interesting sees the market actually goes back those expectations.

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Speaker 1: Obviously the data comes in weak, particularly labor force and

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Speaker 1: employment rates, they start start ticking. Then the market it's

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Speaker 1: given any green knights. Oh we're happy passing three rate cuts.

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Speaker 1: It's given any chance.

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Speaker 2: So we've been talking about US dollar weakness. We've also

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Speaker 2: been talking about much more in the way of FED accommodation,

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Speaker 2: and you look at those two things kind of in total,

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Speaker 2: it's easy to figure out why we're seeing many of

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Speaker 2: the precious metals just rally in the past week, although

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Speaker 2: to be fair, gold and silver did pull back today

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Speaker 2: from record highs. What do you make of this rally

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Speaker 2: that we have seen among precious metals and whether or

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Speaker 2: not this is a durable move or whether maybe we

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Speaker 2: could see a significant pull back.

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Speaker 1: I think certainly what happened with gold. When you start

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Speaker 1: doing things in I couldn't hyperbolic shape, you start going

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Speaker 1: basically skyward than any market that does that tends to

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Speaker 1: have a correction. It's got ahead of itself. Now the

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Speaker 1: question becomes in a long term play, even as a

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Speaker 1: more correction, it's the long trend still upwards, and I

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Speaker 1: think at the moment there's no reason to say that

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Speaker 1: it's not upwards. It may be not at the same pace,

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Speaker 1: made more of a grind, and the idea of this

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Speaker 1: sort of the basement trade is away from the dollars.

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Speaker 1: We say, given the policies that we see how the

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Speaker 1: market's reacting to President Trump's policies at the moment, it

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Speaker 1: does appear that their stances well basically not necessarily completely dedollarized.

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Speaker 1: I think they'll be too drastic, but there is a

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Speaker 1: move to say, let's move away from dollar and its commodities.

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Speaker 1: Was a safe haven, you could say, so. I think

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Speaker 1: that trend at the moment will continue. Particularly think look ran,

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Speaker 1: what may developing. Iran is a worry for the market.

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Speaker 1: If and this isn't if if President Trump was to

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Speaker 1: basically launch an attack on Iran, then I would obviously

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Speaker 1: have impact on oil prices and all this sort of stuff,

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Speaker 1: and I think commodities then would even just get an

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Speaker 1: additional boost. So certainly in the near term, while yes

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Speaker 1: you're seeing the correction in gold and some other quantities,

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Speaker 1: the general trend, I would still say risks US good

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Speaker 1: to them to go higher.

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Speaker 2: Yeah, we had oil soaring today after the President warned

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Speaker 2: Iran to make a nuclear deal or face military strikes.

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Speaker 2: I think WTI in New York trading was up around

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Speaker 2: three and a half percent. Similar move in Brent crude

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Speaker 2: during New York trading. But as we get ready to

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Speaker 2: wrap up the week and maybe we can look a

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Speaker 2: little bit as to what we may get next week,

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Speaker 2: will volatility be with us still or do you expect

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Speaker 2: markets to kind of calm down at least in the

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Speaker 2: short term.

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Speaker 1: They'll come down a little bit, But I think volatinity

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Speaker 1: is sully for the near term. Is head to stay

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Speaker 1: with a.

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Speaker 4: Poison for it.

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Speaker 1: If you look at option and pie volatility, it's comes

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Speaker 1: a little bit but still relatively elevated. I mean, next

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Speaker 1: week you have an RBA decision where the market is

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Speaker 1: picing about sixty seven cent chance for a great hike.

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Speaker 1: So if that was the philosophy, see the ousix then

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Speaker 1: gains and they could pull Kimi with it. Obviously, developments

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Speaker 1: on Iran that could, if it's happened, could kick off

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Speaker 1: at any time. So I do think sunny for the

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Speaker 1: near term. Mark is going to stay on edge, given

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Speaker 1: just all the geopolitic events gone going, and with central

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Speaker 1: bank seasons coming. So I think a bit of calm

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Speaker 1: maybe today because we're going to month ends and people

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Speaker 1: will get ready for next week. But the markets could

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Speaker 1: be very wary that you know, it could kick off

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Speaker 1: again at any one time. All you really need at

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Speaker 1: the moment is President Trump to send one headline on

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Speaker 1: the dollar or on ivan or something like that, and

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Speaker 1: all of a sudden the markets back into you know,

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Speaker 1: back into sell motes or some a dollar moller nightly.

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Speaker 2: Okay, David, we'll leave it there. Thank you so much

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Speaker 2: for being with ub. Bloomberg's David fennerdy FX and rates strategist,

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Speaker 2: joining from Melbourne today here on the Daybreak Asia podcast.

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Speaker 2: Welcome back to the Daybreak Asia Podcast. I'm Derek Prisner.

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Speaker 2: Tech stocks across the Asia Pacific are performing significantly better

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Speaker 2: than their US counterparts did in the regular session. Pulse

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Speaker 2: results after the US closed seemed to be driving that

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Speaker 2: positive sentiment across the APEX. And that's where we begin

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Speaker 2: our conversation with Harold Vonda Linda. He is head of

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Speaker 2: Asia Pacific Equity Strategy at HSBC. Harold spoke with Bloomberg

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Speaker 2: TV host Annabel Drulers and David and Glace.

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Speaker 5: Let's just kick off on that text story. I know

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Speaker 5: that this is the year that you're going to be

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Speaker 5: looking beyond the AI rally, but at least in the.

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Speaker 4: Fort the moment, no needs for that.

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Speaker 6: Ye try to ignore it.

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Speaker 7: Ignore no, absolutely, So this is the only story in

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Speaker 7: the region. Uh, maybe China's a story as well, but

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Speaker 7: it's basically the only story we said at the beginning

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Speaker 7: year that will be in this year. We're going to

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Speaker 7: also have to look beyond because India's maybe recovering and

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Speaker 7: maybe something in Alsia, but that's not really happening at

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Speaker 7: the moment.

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Speaker 4: So the story remains in Northeast Asian.

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Speaker 7: So for the North Asia story, right, Korea, Taiwan, shortages

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Speaker 7: in tech stocks, very strong earnings upgrades in the in

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Speaker 7: these markets.

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Speaker 6: Absolutely, that's our starting point in Korea to zero in

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Speaker 6: on that market value. I mean, the discounts clearly disappeared,

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Speaker 6: the career discounts. What does the earning story look like?

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Speaker 6: Do you think it will justify a further reradio.

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Speaker 4: The earning story is very strong. I mean, look at

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Speaker 4: how careers performed.

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Speaker 7: If you look at the valuations of the market, it's

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Speaker 7: it's moved up a little bit, not so much because

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Speaker 7: the earnings have gone out so much as well. And

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Speaker 7: what we now see in terms of positioning is that

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Speaker 7: people have already got a lot of exposure in Taiwan.

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Speaker 7: They can't really buy them much more because you can't

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Speaker 7: have an Asian portfolio when only one stock in it

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Speaker 7: in Taiwan.

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Speaker 4: So exactly. So, actually, as that market continues.

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Speaker 7: To perform, you see that people actually have to sell,

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Speaker 7: so they try to build that exposure somewhere else, and

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Speaker 7: that's helping Korea as well. So you see them rotating

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Speaker 7: into into the SEX and these these talks, of course,

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Speaker 7: and there is still room for that to grow.

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Speaker 4: Global funds are coming in as well.

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Speaker 7: You just mentioned earlier on there's a bit of rotation

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Speaker 7: in the US market, so you see that they're looking

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Speaker 7: for a kind of AI place outside of the US,

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Speaker 7: and then careers you offerous choice.

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Speaker 5: Then so you think there's this is the year that

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Speaker 5: the career really just continues to be the standout in

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Speaker 5: the Asian region or are you looking at other markets

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Speaker 5: as well, of course as Japan, or there's Taiwan Hong Kong.

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Speaker 5: Which one do you think is going to be the

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Speaker 5: biggest beneficiary. I guess of that rotation away.

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Speaker 7: If there's a rotation, I think there's some interesting things

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Speaker 7: happening in China. There are interesting things happening in India,

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Speaker 7: but it's slow and it's not so visible yet, so

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Speaker 7: that might well be a story that just takes time

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Speaker 7: before the earnings are recovering there. There's a bit more

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Speaker 7: stimulus has taken place, so it looks like the earning

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Speaker 7: story is picking up in India, but it's very slow,

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Speaker 7: so at the moment, it's not something that gets a

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Speaker 7: lot of attention. So that might be something that happens

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Speaker 7: in an.

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Speaker 4: XT quarter or so.

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Speaker 7: But we also see money coming back into China. That's interesting,

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Speaker 7: and this is not mainland Chinese money that was the

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Speaker 7: main driver for last year, but we actually seen money

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Speaker 7: coming from Europe and also from the US, and in

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Speaker 7: particular on the US that's not something we've seen over

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Speaker 7: the last couple of years.

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Speaker 4: But they're starting to go back into Chinese stocks as well.

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Speaker 6: Do you get a sense that that will will continue,

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Speaker 6: because that, I mean, that was for many years the

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Speaker 6: potentially the incremental buyer of this Chinese market. You know,

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Speaker 6: you know, we're underweight China. We've been massively still underweight

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Speaker 6: when you look at the positioning, right, So I want

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Speaker 6: to get a sense of I.

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Speaker 7: Mean, you're absolutely right. Two years ago, I think we

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Speaker 7: actually spoke about this one. Everybody said, oh, it's about

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Speaker 7: Asia x China or emerging markets x China. That story

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Speaker 7: is gone. A lot of US funds said, no, we're

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Speaker 7: not going to buy China. Is there's no interest in

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Speaker 7: this whatsoever. Difficult to sell. But now we have a

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Speaker 7: different dynamic. We have a wik dollar, so you want

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Speaker 7: non US assets. Europe is already they went last year

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Speaker 7: into Europe. Now they're looking somewhere else. Emerging market shows up,

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Speaker 7: and then you need to find markets where there's a

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Speaker 7: good growth story. You know, we just spoke about Korea,

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Speaker 7: but in China things are picking up as well, look

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Speaker 7: at the Apple results right. That gives another confidence, Hey

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Speaker 7: there are there is something going on there. The market

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Speaker 7: has performed pretty well last year, so I think the

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Speaker 7: interest is starting to come.

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Speaker 4: Back in there.

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Speaker 6: Do you get is the four Do you think the

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Speaker 6: formula for China this year will be what worked last year,

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Speaker 6: which is you know your your platform company, some of

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Speaker 6: the financials on income and dividends, and I think materials

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Speaker 6: did quite well. Or is there a cyclical story, a

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Speaker 6: rebound that we might be sleeping.

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Speaker 4: I think there will be a bit of a cyclical story.

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Speaker 4: I think. Okay.

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Speaker 7: So the interest is to a large extent, has been

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Speaker 7: in dividend yielding stock sort of safe investments, and this

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Speaker 7: is mainland Chinese buying Chinese stocks, initially in Hong Kong.

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Speaker 7: Then they went to the Asia market later on and

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Speaker 7: they bought Bank of China and these sort of companies

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Speaker 7: gave you a good yield, ye have very safe sort

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Speaker 7: of investment.

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Speaker 4: What we now see is interest going into other sectors.

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Speaker 7: So Ai China Ai biotech is coming up quite often,

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Speaker 7: and then you have these other sort of sectors that.

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Speaker 4: Do pretty well.

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Speaker 7: Power equipment is doing very well because you're building out

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Speaker 7: all sorts of UH networks in China as you need that.

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Speaker 7: So there are these industries where there is no walk

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Speaker 7: supply where things are happening. This is where the focus

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Speaker 7: is shifting in that direction as well.

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Speaker 5: The IPA pipeline, though in Hong Kong is still very.

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Speaker 4: Robust, coming into robust is under statements.

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Speaker 5: Sure, and I'm wondering if you think that there's any

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Speaker 5: concerns about liquidity being drained from the secondary market on

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Speaker 5: that basis.

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Speaker 4: Yeah, we have.

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Speaker 7: Last time we looked three hundred and sixty IPOs in

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Speaker 7: the pipeline, so that's a lot and some of them

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Speaker 7: are big, some of them are smaller companies as well.

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Speaker 7: There's a lot of these Ai companies that need capital

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Speaker 7: so they're listing.

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Speaker 4: There is a lot of As I said, there's.

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Speaker 7: The Chinese local money, mainland Chinese money coming into Hong Kong.

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Speaker 7: You now have foreign money coming there as well, so

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Speaker 7: there's a lot of lacidity around. So I'm not worried

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Speaker 7: that that will drain money out of the secondary market.

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Speaker 7: It might happen from one week to another if there's

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Speaker 7: a real big IPO, but not structurally so at least

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Speaker 7: not at the moment if that would happen. Though, Let's

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Speaker 7: say it's difficult to sell your IPO, you get to

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Speaker 7: lower your then you see that that three sixty number

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Speaker 7: probably goes lower, because then some companies might say, let's

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Speaker 7: wait a little to the market is a bit stronger.

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Speaker 7: So that's a moving target as well. But I'm not

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Speaker 7: overly worried. Liquidity is really.

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Speaker 4: Good to them.

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Speaker 6: Key to the liquidity issue formula will be will be

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Speaker 6: the fed we heard from the US President earlier. I

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Speaker 6: want to play it out for years, and we'll talk

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Speaker 6: about it soon. Let's play it out, guys, please, what day.

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Speaker 3: Will you be announcing your bet here.

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Speaker 2: Peck next week?

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Speaker 4: Tomorrow morning, tomorrow morning?

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Speaker 3: What day will you be announcing your.

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Speaker 2: Bet here peck next week?

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Speaker 4: Tomorrow morning, tomorrow morning?

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Speaker 8: Do you know I'm Lage was saying tomorrow. But just

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Speaker 8: an outstanding person and a person that won't be too

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Speaker 8: surprising to people. It's going to be somebody that is

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Speaker 8: very respected, somebody that's known to everybody in the financial world.

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Speaker 8: And I think it's going to be a very good choice.

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Speaker 8: I hope so much. On your short listen on my

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Speaker 8: reasonably short list year.

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Speaker 6: So Harold Kevin Hasset, Chris Waller, Kevin warsh Rake, Wrider.

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Speaker 6: Doesn't matter who among the four eventually gets us.

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Speaker 7: No, this is an important position, so it matters, and

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Speaker 7: in conversations that we have a client, it comes up

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Speaker 7: with who it might be.

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Speaker 4: I mean, we don't know it, so every second guess.

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Speaker 7: But it does matter because uh, we need the independence

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Speaker 7: of the fat.

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Speaker 4: That's really important.

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Speaker 7: We're also in a strange situation whereby we now actually

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Speaker 7: see that the inflationary prescires remain. The market is saying,

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Speaker 7: you know, in the beginning of the year as well,

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Speaker 7: there's going to be raate cuts coming through, but increasingly saying, ah,

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Speaker 7: maybe not so much. We actually don't think there will

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Speaker 7: be a rad cut this year. We don't even see

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Speaker 7: a ray cut next year. So there's a bit of

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Speaker 7: a recalibration in the market in the opposite direction.

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Speaker 4: So you need somebody who can, who.

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Speaker 7: Can who can lead an institution of course with yeah

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Speaker 7: and and co credible policies.

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Speaker 4: It's incredibly important.

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Speaker 2: That was Harold von de Linda, head of Asia Pacific

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Speaker 2: Equity Strategy at HSPs. He was speaking with Bloomberg's Annabel

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Speaker 2: Drulers and David Nglace bringing it to you here on

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Speaker 2: the Daybreak Asia Podcast. Thanks for listening to today's episode

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Speaker 2: of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we

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Speaker 2: look at the story shaping markets, finance, and geopolitics in

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Speaker 2: the Asia Pacific. You can find us on Apple, Spotify,

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Speaker 2: the Bloomberg Podcast YouTube channel, or anywhere else you listen.

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Speaker 2: Join us again tomorrow for insight on the market moves

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Speaker 2: from Hong Kong to Singapore and Australia. I'm Doug Chrisner,

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Speaker 2: and this is Bloomberg