1 00:00:06,059 --> 00:00:09,489 Speaker 1: Welcome to COVIT, a podcast series on markets and economies 2 00:00:09,489 --> 00:00:12,609 Speaker 1: from Devious Group Research. I'm Tim Rubeg, chief economist. Welcoming 3 00:00:12,609 --> 00:00:17,450 Speaker 1: you to our 169th episode. Happy New Year to the 4 00:00:17,450 --> 00:00:22,329 Speaker 1: listeners and viewers of this podcast series. We appreciate your 5 00:00:22,329 --> 00:00:27,049 Speaker 1: participation very, very much. Well, what a start to the year. 6 00:00:27,989 --> 00:00:30,909 Speaker 1: You'd think that 2025 was eventful from the 7 00:00:33,159 --> 00:00:37,180 Speaker 1: Tariff and trade related seismic announcements that Donald Trump made 8 00:00:37,180 --> 00:00:40,418 Speaker 1: in the first quarter, and that led to a tremendous 9 00:00:40,418 --> 00:00:42,830 Speaker 1: amount of consternation. In the second quarter, we had a 10 00:00:42,830 --> 00:00:45,400 Speaker 1: lot of back and forth around trade and tariff. We 11 00:00:45,400 --> 00:00:52,279 Speaker 1: had massive conflicts between Israel and Iran. Uh, there were 12 00:00:52,279 --> 00:00:56,279 Speaker 1: attempts at bringing a deal on Russia-Ukraine, uh, hasn't really 13 00:00:56,279 --> 00:00:59,759 Speaker 1: gone anywhere, but 2025 was eventful to say the least. 14 00:00:59,840 --> 00:01:00,220 Speaker 1: But 15 00:01:00,669 --> 00:01:04,150 Speaker 1: Given the first few weeks of January 2026, this could, 16 00:01:04,790 --> 00:01:07,970 Speaker 1: could well be a year when things are even more eventful. 17 00:01:08,349 --> 00:01:11,970 Speaker 1: Just consider what has happened with respect to the US 18 00:01:11,970 --> 00:01:15,629 Speaker 1: in the first few weeks of this year. We had 19 00:01:15,629 --> 00:01:18,940 Speaker 1: the overtures already. Uh, you could tell that the heat 20 00:01:18,940 --> 00:01:22,029 Speaker 1: with respect to Venezuela was going up a lot uh 21 00:01:22,029 --> 00:01:26,230 Speaker 1: through the buildup of US Navy presence through the summer 22 00:01:26,230 --> 00:01:27,050 Speaker 1: of last year. 23 00:01:27,800 --> 00:01:32,958 Speaker 1: And then of course the strikes on ostensibly drug carrying 24 00:01:32,959 --> 00:01:37,919 Speaker 1: boats around the Caribbean repeatedly. But then we began the 25 00:01:37,919 --> 00:01:44,160 Speaker 1: year with a spectacular abduction, removal of President Maduro, who's 26 00:01:44,160 --> 00:01:48,519 Speaker 1: now in New York facing trial, and then not a 27 00:01:48,519 --> 00:01:51,519 Speaker 1: whole lot more in Venezuela, although Donald Trump has been 28 00:01:51,519 --> 00:01:52,260 Speaker 1: very clear. 29 00:01:52,739 --> 00:01:55,839 Speaker 1: From his perspective, it's about the oil. He wants US 30 00:01:55,839 --> 00:01:58,680 Speaker 1: oil companies to get a big piece of the action 31 00:01:59,220 --> 00:02:03,339 Speaker 1: of extraction and refining of Venezuelan oil. How that pans 32 00:02:03,339 --> 00:02:06,379 Speaker 1: out remains to be seen. Uh, it's not that easy 33 00:02:06,379 --> 00:02:09,619 Speaker 1: to turn around an ailing oil industry like Venezuela's in 34 00:02:09,619 --> 00:02:11,440 Speaker 1: a short time period. 35 00:02:11,940 --> 00:02:16,919 Speaker 1: But nonetheless, uh, the idea of getting somebody who will 36 00:02:17,179 --> 00:02:19,339 Speaker 1: play ball with the US I think has become a 37 00:02:19,339 --> 00:02:22,758 Speaker 1: little more real as opposed to the case with President Maduro. 38 00:02:22,860 --> 00:02:25,619 Speaker 1: And that's just one of many external developments. You could 39 00:02:25,619 --> 00:02:31,100 Speaker 1: tell that the developments out of Venezuela have emboldened Donald 40 00:02:31,100 --> 00:02:37,940 Speaker 1: Trump substantially. He's talking quite extensively about taking over Greenland. 41 00:02:38,369 --> 00:02:43,649 Speaker 1: Intervening in Iran, watching, uh, telling the leaders of Cuba 42 00:02:43,970 --> 00:02:49,288 Speaker 1: and Nicaragua and Colombia to watch their backs, uh, and 43 00:02:49,288 --> 00:02:50,350 Speaker 1: there could well be. 44 00:02:51,229 --> 00:02:56,029 Speaker 1: Developments elsewhere. Uh, you could draw one thread through the 45 00:02:56,029 --> 00:02:59,750 Speaker 1: recent developments with the exception of Iran. I'll bring a 46 00:02:59,750 --> 00:03:02,029 Speaker 1: separate thread to tie all that in in a second. 47 00:03:02,399 --> 00:03:04,788 Speaker 1: But in terms of Latin America, one is the so-called 48 00:03:05,169 --> 00:03:09,990 Speaker 1: Dan Roe doctrine that the US should be surrounded by 49 00:03:10,210 --> 00:03:15,570 Speaker 1: friendly neighbors, acquiescent to its interests, and it will carry 50 00:03:15,570 --> 00:03:19,410 Speaker 1: out regime change or do other actions to make sure 51 00:03:19,410 --> 00:03:23,649 Speaker 1: that it has like-minded neighbors that support its own national 52 00:03:23,649 --> 00:03:27,630 Speaker 1: interests and it will not tolerate anything beyond that. Somewhat imperial, 53 00:03:27,889 --> 00:03:29,199 Speaker 1: but that's the 54 00:03:29,669 --> 00:03:32,500 Speaker 1: Uh doctrine, if you will. I think it is also 55 00:03:32,639 --> 00:03:35,779 Speaker 1: playing to the hand of Marco Rubio, the Secretary of State, 56 00:03:36,399 --> 00:03:41,080 Speaker 1: who has 2028 presidential aspirations and developments in this part 57 00:03:41,080 --> 00:03:43,960 Speaker 1: of the world, particularly with respect to Venezuela and Cuba, 58 00:03:44,600 --> 00:03:47,440 Speaker 1: will certainly give him some talking points to his Hispanic 59 00:03:47,440 --> 00:03:51,119 Speaker 1: base as he prepares for Iran in 2028. But that's 60 00:03:51,119 --> 00:03:53,899 Speaker 1: one threat. The other threat in my view, is China. 61 00:03:55,229 --> 00:03:57,940 Speaker 1: They going after Cuba, Nicaragua, Venezuela, Iran. 62 00:03:58,860 --> 00:04:03,500 Speaker 1: are all part of a great game to reduce China's 63 00:04:03,500 --> 00:04:04,699 Speaker 1: influence with regimes. 64 00:04:05,130 --> 00:04:08,660 Speaker 1: That have shifted away from the US in recent decades 65 00:04:08,660 --> 00:04:12,979 Speaker 1: and years, and to deprive China of access to rare 66 00:04:12,979 --> 00:04:17,760 Speaker 1: earth and Greenland or oil out of Iran or Venezuela 67 00:04:18,260 --> 00:04:20,579 Speaker 1: could well be a part of a bigger gambit, and 68 00:04:20,579 --> 00:04:23,969 Speaker 1: it could be different constituencies of Donald Trump are looking 69 00:04:23,970 --> 00:04:27,459 Speaker 1: at different threads. Uh, the likes of Marco Rubio are 70 00:04:27,459 --> 00:04:30,750 Speaker 1: thinking about the Donro doctrine and the Hispanic base. 71 00:04:31,170 --> 00:04:33,820 Speaker 1: And then those who are thinking about the great game 72 00:04:33,820 --> 00:04:36,178 Speaker 1: between China and the US are thinking about the threat 73 00:04:36,420 --> 00:04:40,579 Speaker 1: of tying Iran as well as the likes of Greenland, 74 00:04:41,019 --> 00:04:42,299 Speaker 1: Venezuela and Cuba together. 75 00:04:43,149 --> 00:04:45,549 Speaker 1: So, it could well be about China. It could well 76 00:04:45,549 --> 00:04:48,350 Speaker 1: be about the Donald docky. It may well, very well 77 00:04:48,350 --> 00:04:50,579 Speaker 1: be about all of the above. But the fact of 78 00:04:50,579 --> 00:04:54,149 Speaker 1: the matter is, a president who came to power saying 79 00:04:54,149 --> 00:04:56,149 Speaker 1: that he was not in favor of a great deal 80 00:04:56,149 --> 00:05:00,089 Speaker 1: of engagement outside his focus was domestic, has really 81 00:05:00,140 --> 00:05:03,820 Speaker 1: Gone off script in that regard, intervening very heavily, but 82 00:05:03,820 --> 00:05:08,178 Speaker 1: I don't think it's going to necessarily hurt his standing 83 00:05:08,178 --> 00:05:11,660 Speaker 1: within his base because these interventions, at least from the 84 00:05:11,660 --> 00:05:14,940 Speaker 1: perspective of the US, are not very costly. It's not 85 00:05:14,940 --> 00:05:17,820 Speaker 1: entailing a massive amount of boots on the ground. It's 86 00:05:17,820 --> 00:05:22,079 Speaker 1: not creating any headlines about US casualties striking Iran from. 87 00:05:22,510 --> 00:05:26,260 Speaker 1: The Persian Gulf with missiles or dropping some special forces 88 00:05:26,260 --> 00:05:29,829 Speaker 1: in Caracas, they, I think, will go down pretty well 89 00:05:29,829 --> 00:05:33,149 Speaker 1: with Trump's base. So I don't think necessarily that shifting 90 00:05:33,149 --> 00:05:34,099 Speaker 1: away from the 91 00:05:34,670 --> 00:05:37,630 Speaker 1: Inward looking MAGA doctrine is going to be that expensive 92 00:05:37,630 --> 00:05:38,368 Speaker 1: for Donald Trump. 93 00:05:39,170 --> 00:05:41,700 Speaker 1: But what about the domestic agenda? Isn't that what it's 94 00:05:41,700 --> 00:05:44,459 Speaker 1: supposed to be all about? And is it creating a 95 00:05:44,459 --> 00:05:46,660 Speaker 1: crowding out, if you will, so much attention on external 96 00:05:46,660 --> 00:05:50,380 Speaker 1: and therefore Donald Trump will have less time for domestic? Well, 97 00:05:50,540 --> 00:05:53,659 Speaker 1: I don't think so. Uh, consider the flurry of announcements 98 00:05:53,660 --> 00:05:56,479 Speaker 1: just in the last couple of weeks, uh, whether it 99 00:05:56,488 --> 00:05:59,019 Speaker 1: is pressure on the Fed, we saw quite a bit 100 00:05:59,019 --> 00:06:02,000 Speaker 1: of pressure last year, culminating into. 101 00:06:02,799 --> 00:06:06,618 Speaker 1: Uh investigation against Lisa Cook, Fed governor, as well as 102 00:06:07,000 --> 00:06:12,149 Speaker 1: significant amount of browbeating against Fed Chair Powell. But then, 103 00:06:12,160 --> 00:06:14,479 Speaker 1: of course, the new year has begun with indictment against 104 00:06:14,480 --> 00:06:20,200 Speaker 1: Fed Chair on account of overspending or not properly accounting 105 00:06:20,200 --> 00:06:23,480 Speaker 1: for the overspending with the renovation of the Federal Reserve 106 00:06:23,480 --> 00:06:26,709 Speaker 1: building in Washington DC that's been 107 00:06:27,089 --> 00:06:31,089 Speaker 1: You know, seismic in terms of people's view on Fed 108 00:06:31,089 --> 00:06:34,969 Speaker 1: independence and Donald Trump's desire to go after what he 109 00:06:34,970 --> 00:06:37,410 Speaker 1: considers are people who are not fully aligned with his views. 110 00:06:38,399 --> 00:06:41,010 Speaker 1: And that's just the tip of the iceberg in terms 111 00:06:41,010 --> 00:06:44,510 Speaker 1: of domestic intervention. We are hearing about price control measures, 112 00:06:45,010 --> 00:06:48,450 Speaker 1: whether it's telling drug companies not to charge more than 113 00:06:48,450 --> 00:06:52,730 Speaker 1: what is considered reasonable, to interest rate curb proposals on 114 00:06:52,730 --> 00:06:57,269 Speaker 1: credit card companies, or dividend payment cap on defense companies, 115 00:06:57,649 --> 00:07:00,839 Speaker 1: or telling private equity companies or institutional investors that they 116 00:07:00,839 --> 00:07:05,769 Speaker 1: should not be allowed to own residential real estate or nudging. 117 00:07:06,290 --> 00:07:09,720 Speaker 1: Fannie and Freddie to buy $200 billion of mortgage backed securities. 118 00:07:10,019 --> 00:07:12,260 Speaker 1: All of these things also have a thread, which is 119 00:07:12,260 --> 00:07:15,820 Speaker 1: the affordability issue, cost of living issue. The president wants 120 00:07:15,820 --> 00:07:19,059 Speaker 1: to come across to a wide range of Americans that 121 00:07:19,059 --> 00:07:19,950 Speaker 1: he cares about. 122 00:07:20,709 --> 00:07:23,260 Speaker 1: Cost of living, and it's trying to reduce the cost 123 00:07:23,260 --> 00:07:29,100 Speaker 1: of drugs and uh credit card debt servicing and 124 00:07:29,760 --> 00:07:32,940 Speaker 1: You know, housing related expenses and so on. And of course, 125 00:07:33,119 --> 00:07:35,160 Speaker 1: all of it can also boil down to his desire 126 00:07:35,160 --> 00:07:38,078 Speaker 1: to see lower interest rates. So the bottom line is 127 00:07:38,079 --> 00:07:42,519 Speaker 1: the domestic agenda has one key lever for 2026, which 128 00:07:42,519 --> 00:07:45,279 Speaker 1: is the cost of living. You saw the other levers 129 00:07:45,279 --> 00:07:50,500 Speaker 1: in 2025, immigration-related issues, the downsizing of the government-related issues. 130 00:07:50,890 --> 00:07:54,130 Speaker 1: And then channeling some of the tariff revenue into supporting 131 00:07:54,130 --> 00:07:58,100 Speaker 1: domestic businesses, particularly the farmers, and some of that will 132 00:07:58,100 --> 00:08:00,489 Speaker 1: also spill over into 2026. But the big push is 133 00:08:00,489 --> 00:08:03,529 Speaker 1: cost of living. And I think the setback that the 134 00:08:03,529 --> 00:08:06,809 Speaker 1: Republicans suffered during the cycle elections in November of last 135 00:08:06,809 --> 00:08:11,559 Speaker 1: year have been the fodder for this shift, and given 136 00:08:11,559 --> 00:08:11,890 Speaker 1: the midterm. 137 00:08:12,059 --> 00:08:14,859 Speaker 1: Are coming in in about 10 months' time. This will 138 00:08:14,859 --> 00:08:17,679 Speaker 1: remain a very big source of push from Donald Trump. 139 00:08:17,940 --> 00:08:19,700 Speaker 1: I personally think that this is coming in a bit 140 00:08:19,700 --> 00:08:22,540 Speaker 1: too late in the day. I'm not sure whether one 141 00:08:22,540 --> 00:08:27,660 Speaker 1: can turn cost of affordability issue around so easily. That 142 00:08:27,660 --> 00:08:29,940 Speaker 1: too with the Helter Skelter, some demand side measures, some 143 00:08:29,940 --> 00:08:33,020 Speaker 1: supply side measures. I don't see major. 144 00:08:33,700 --> 00:08:38,609 Speaker 1: Uh, deep thinking around these issues. It's more like performative, uh, 145 00:08:38,780 --> 00:08:41,320 Speaker 1: some to play to the gallery that I am doing 146 00:08:41,320 --> 00:08:44,219 Speaker 1: something as opposed to, you will see substantial decline in 147 00:08:44,219 --> 00:08:48,900 Speaker 1: your cost of living in the near term. And I 148 00:08:48,900 --> 00:08:52,539 Speaker 1: think that's simply not possible, even if the intention was 149 00:08:52,539 --> 00:08:54,580 Speaker 1: substantial and nonperformative. 150 00:08:55,039 --> 00:08:58,260 Speaker 1: The fact of the matter is the US has seen 151 00:08:58,260 --> 00:09:00,719 Speaker 1: significant increase in cost of living in the last 5 years. 152 00:09:01,059 --> 00:09:03,500 Speaker 1: It is not a US centric phenomenon. It's happened around 153 00:09:03,500 --> 00:09:08,449 Speaker 1: the world. Post-pandemic recovery was lopsided, and certain things have 154 00:09:08,450 --> 00:09:11,940 Speaker 1: become more dear. Immigration measures have not helped that. Tax 155 00:09:11,940 --> 00:09:14,380 Speaker 1: cuts have not helped that, and those things are not 156 00:09:14,380 --> 00:09:18,099 Speaker 1: going to be ameliorated under Trump's agenda in 2026 either. 157 00:09:19,429 --> 00:09:23,190 Speaker 1: But uh putting aside the domestic and external push that 158 00:09:23,190 --> 00:09:26,020 Speaker 1: we have seen over the last few weeks, which in 159 00:09:26,020 --> 00:09:29,020 Speaker 1: my view will remain the case, uh, going ahead, uh, 160 00:09:29,030 --> 00:09:32,590 Speaker 1: action against Iran with respect to Greenland or any other 161 00:09:32,590 --> 00:09:35,390 Speaker 1: countries in Latin America, very much on the card. This 162 00:09:35,390 --> 00:09:38,869 Speaker 1: is a very emboldened presidency. But putting all this aside, 163 00:09:39,030 --> 00:09:43,700 Speaker 1: how is the economy looking overall? Well, Atlanta Fed's now 164 00:09:43,700 --> 00:09:47,190 Speaker 1: casting says that growth is extremely strong, 4 to 5%. 165 00:09:47,549 --> 00:09:51,789 Speaker 1: At this moment, we think that the 2025 data, when 166 00:09:51,789 --> 00:09:54,069 Speaker 1: the fourth quarter data comes out, would show US grew 167 00:09:54,070 --> 00:09:57,429 Speaker 1: by over 2% that year. We are still forecasting a 168 00:09:57,429 --> 00:09:58,369 Speaker 1: slower economy. 169 00:09:58,979 --> 00:10:04,228 Speaker 1: Uh, for 2026, uh, but, uh, the very current and 170 00:10:04,229 --> 00:10:09,650 Speaker 1: present outlook for the first quarter looks pretty rosy. Consumption 171 00:10:09,650 --> 00:10:15,659 Speaker 1: is very strong. Households are not fazed by the geopolitical 172 00:10:15,659 --> 00:10:19,090 Speaker 1: uncertainty or the volatility coming out of the White House. 173 00:10:20,200 --> 00:10:24,859 Speaker 1: Their sentiments are not that great, but their consumption behavior 174 00:10:25,090 --> 00:10:27,760 Speaker 1: does not uh necessarily go hand in hand with their 175 00:10:27,760 --> 00:10:30,590 Speaker 1: poor sentiment. They're still spending a lot, buying a lot. Uh, 176 00:10:30,599 --> 00:10:33,960 Speaker 1: the wages, uh, we'll talk about labor market with from 177 00:10:33,960 --> 00:10:36,659 Speaker 1: a job's perspective later, but just from a wage perspective, 178 00:10:37,200 --> 00:10:40,330 Speaker 1: Wages are growing in positive terms in positive real terms 179 00:10:40,590 --> 00:10:45,630 Speaker 1: and therefore consumers are OK. They've seen their equity portfolios 180 00:10:45,630 --> 00:10:48,439 Speaker 1: do very well to those of them who have stocks, 181 00:10:48,789 --> 00:10:52,169 Speaker 1: they have seen their debt GDP ratio. 182 00:10:52,604 --> 00:10:56,765 Speaker 1: From a household perspective, fairly stable or even declining. Not everybody, 183 00:10:56,965 --> 00:10:59,005 Speaker 1: but a large part of the population, because when we 184 00:10:59,005 --> 00:11:02,325 Speaker 1: look at aggregate debt GDP ratio, it is looking very favorable, 185 00:11:02,405 --> 00:11:06,325 Speaker 1: notwithstanding some people's issues with respect to medical debt or 186 00:11:06,325 --> 00:11:08,025 Speaker 1: car debt, or 187 00:11:08,840 --> 00:11:12,919 Speaker 1: Student loan issues, those pain do exist in parts of 188 00:11:12,919 --> 00:11:16,000 Speaker 1: the economy and parts of the households, but overall aggregate 189 00:11:16,320 --> 00:11:19,919 Speaker 1: ratios for the household sector looks pretty good, uh, and 190 00:11:19,919 --> 00:11:22,719 Speaker 1: therefore that is consistent with the strengthened consumption that we 191 00:11:22,719 --> 00:11:27,520 Speaker 1: have seen so far. So consumption-led growth, with of course 192 00:11:27,520 --> 00:11:30,359 Speaker 1: AI investment being a second fiddle to it, uh, is 193 00:11:30,359 --> 00:11:33,239 Speaker 1: certainly helping the US economy grow at trend or above trend. 194 00:11:33,510 --> 00:11:36,030 Speaker 1: And that I think will continue for a while. Now, 195 00:11:36,080 --> 00:11:39,630 Speaker 1: but juxtaposed with that, that, you know, strong asset markets, 196 00:11:39,880 --> 00:11:43,239 Speaker 1: strong GDP growth, strong consumption is the fact that the 197 00:11:43,239 --> 00:11:46,640 Speaker 1: labor market has really, really weakened. We now have data 198 00:11:46,640 --> 00:11:49,510 Speaker 1: for all of 2025 and it's definitely the weakest labor 199 00:11:49,510 --> 00:11:52,640 Speaker 1: market we have seen uh in a very long time. 200 00:11:52,880 --> 00:11:58,840 Speaker 1: In Trump 1.0, during times when Biden was president, COVID pandemic. 201 00:11:58,955 --> 00:12:03,934 Speaker 1: Notwithstanding the monthly gains of jobs in the goods sector, 202 00:12:04,195 --> 00:12:07,834 Speaker 1: in the services sector, in public sector versus private sector, 203 00:12:08,354 --> 00:12:13,314 Speaker 1: everything has weakened substantially through the course of 2025. In fact, 204 00:12:13,395 --> 00:12:18,025 Speaker 1: the goods sector in 2025 had a net reduction in jobs. 205 00:12:18,395 --> 00:12:23,275 Speaker 1: Same stands for 2025 government sector jobs. So those sectors 206 00:12:23,275 --> 00:12:24,414 Speaker 1: actually shed jobs. 207 00:12:24,780 --> 00:12:27,900 Speaker 1: Uh, last year, I can't see that turning around in 208 00:12:27,900 --> 00:12:32,339 Speaker 1: 206 either. Uh, all that tariff-related work that Donald Trump 209 00:12:32,340 --> 00:12:36,340 Speaker 1: has done has not revitalized US manufacturing, particularly with respect 210 00:12:36,340 --> 00:12:39,739 Speaker 1: to manufacturing jobs. We might see industrial output go up, 211 00:12:39,979 --> 00:12:43,289 Speaker 1: but we're not seeing jobs related to manufacturing go up 212 00:12:43,289 --> 00:12:46,760 Speaker 1: in any meaningful manner on aggregate to help the economy. 213 00:12:47,140 --> 00:12:49,059 Speaker 1: So I think the risk for the rest of the 214 00:12:49,059 --> 00:12:53,619 Speaker 1: year is that the jobless recovery or the jobless growth continues. 215 00:12:54,039 --> 00:12:57,320 Speaker 1: Growth numbers top line are good, but that does not 216 00:12:57,320 --> 00:13:02,140 Speaker 1: necessarily impress the base. That does not necessarily impress the 217 00:13:02,400 --> 00:13:05,799 Speaker 1: middle America or the swing state votes, which will play 218 00:13:05,799 --> 00:13:09,260 Speaker 1: a big role in the midterm elections in November. Uh, 219 00:13:09,320 --> 00:13:14,000 Speaker 1: so I remain fairly pessimistic about the Republicans' chance of 220 00:13:14,000 --> 00:13:18,679 Speaker 1: retaining the House in November, even if the economy delivers 221 00:13:18,679 --> 00:13:20,319 Speaker 1: strong numbers with respect to. 222 00:13:20,840 --> 00:13:24,559 Speaker 1: GDP growth and stock market gains. Now related to that 223 00:13:24,559 --> 00:13:28,079 Speaker 1: issue is also what's happening with inflation and what it 224 00:13:28,080 --> 00:13:31,439 Speaker 1: means for Fed policy. Our official forecast is for just 225 00:13:31,440 --> 00:13:33,559 Speaker 1: one more rate cut, the terminal rate in the cycle 226 00:13:33,559 --> 00:13:36,520 Speaker 1: being 3.5%. We might have to rethink that in the 227 00:13:36,520 --> 00:13:40,659 Speaker 1: coming months and quarters. Uh, when we look at core inflation, 228 00:13:41,190 --> 00:13:45,039 Speaker 1: it probably has further room to ease, not going down 229 00:13:45,039 --> 00:13:49,679 Speaker 1: to 2% anytime soon, but certainly not hovering around the 3. 230 00:13:50,039 --> 00:13:55,429 Speaker 1: Uh, handle that we saw for most of 2024 and 2025, uh, 231 00:13:55,440 --> 00:13:58,799 Speaker 1: the tariff-related inflation has been fairly diffused and protracted. 232 00:13:59,989 --> 00:14:03,549 Speaker 1: The immigration tightness related impact on the service sector again 233 00:14:03,549 --> 00:14:08,299 Speaker 1: has not been seismic. There's been some inflation inertia. It'll 234 00:14:08,299 --> 00:14:11,640 Speaker 1: certainly keep inflation above trend, but it will not take 235 00:14:11,640 --> 00:14:15,590 Speaker 1: to 3% plus area, which would cause huge problems for 236 00:14:15,590 --> 00:14:18,710 Speaker 1: the Fed in terms of monetary policy decision making. Now, 237 00:14:18,750 --> 00:14:22,989 Speaker 1: I don't know who's going to replace Jay Powell, probably 238 00:14:22,989 --> 00:14:25,710 Speaker 1: Kevin Hassett, but we'll see when the decision comes. 239 00:14:26,130 --> 00:14:30,140 Speaker 1: But no matter how dovish the mixture is, uh, I 240 00:14:30,140 --> 00:14:33,299 Speaker 1: don't think the path of the Fed will differ that 241 00:14:33,299 --> 00:14:35,500 Speaker 1: much from what would have been the case even if 242 00:14:35,500 --> 00:14:41,700 Speaker 1: it was Howell through 2026. If inflation does stabilize around 2.5% 243 00:14:41,700 --> 00:14:44,580 Speaker 1: or lower, the Fed will cut more, and I personally 244 00:14:44,580 --> 00:14:48,489 Speaker 1: might have to revise my own forecast. For the time being, uh, 245 00:14:48,539 --> 00:14:50,659 Speaker 1: it's a wait and see. A couple of months of 246 00:14:50,659 --> 00:14:52,979 Speaker 1: data does not tell you the whole story. There are 247 00:14:52,979 --> 00:14:54,859 Speaker 1: many ingredients in place in the economy that. 248 00:14:54,979 --> 00:14:57,619 Speaker 1: Could push prices up. So we will wait for a 249 00:14:57,619 --> 00:15:00,940 Speaker 1: few months and, and revisit this down the road. But 250 00:15:00,940 --> 00:15:03,219 Speaker 1: uh maybe inflation is not going to be the big 251 00:15:03,219 --> 00:15:07,900 Speaker 1: problem for 2026. I still believe that the AI concentration 252 00:15:08,140 --> 00:15:11,159 Speaker 1: with respect to the equity markets valuation, with respect to 253 00:15:11,859 --> 00:15:14,299 Speaker 1: What's happening with the investment dynamic in the economy, even 254 00:15:14,299 --> 00:15:17,359 Speaker 1: in the tech sector, is a source of worry that 255 00:15:17,479 --> 00:15:21,140 Speaker 1: a tremor in that sector would have wide ranging implications 256 00:15:21,140 --> 00:15:24,500 Speaker 1: for the entire economy. The US economy's top line growth 257 00:15:24,500 --> 00:15:29,140 Speaker 1: seems to be a bet on AI and even if slightly, uh, 258 00:15:29,500 --> 00:15:33,080 Speaker 1: of course, with respect to that, could have seismic impact 259 00:15:33,080 --> 00:15:38,039 Speaker 1: on consumer sentiment, asset prices, as well as investment dynamic. 260 00:15:38,460 --> 00:15:44,809 Speaker 1: So that's the issue related to the near term cyclical considerations. Now, 261 00:15:45,179 --> 00:15:48,020 Speaker 1: I do worry a lot about institutional degradation in the 262 00:15:48,020 --> 00:15:51,419 Speaker 1: US that under Donald Trump we've seen huge politicization of 263 00:15:51,419 --> 00:15:54,679 Speaker 1: many parts of the government and, and a lot of 264 00:15:55,030 --> 00:15:59,580 Speaker 1: the inconsistent decision making processes and a lot of deviation 265 00:15:59,580 --> 00:16:03,820 Speaker 1: from longstanding norms. But I think that the impact of 266 00:16:03,820 --> 00:16:05,780 Speaker 1: those developments as 267 00:16:06,609 --> 00:16:10,489 Speaker 1: Worrisome they are for the economy and the nation, therefore 268 00:16:10,489 --> 00:16:14,409 Speaker 1: the medium term. I don't think they will necessarily manifest 269 00:16:14,409 --> 00:16:19,190 Speaker 1: in investors dumping US dollar or US dumping US treasuries 270 00:16:19,190 --> 00:16:22,280 Speaker 1: or selling US stocks. I think generally speaking, there's a 271 00:16:22,280 --> 00:16:24,330 Speaker 1: bit of a tug of war, a lot of worries 272 00:16:24,330 --> 00:16:27,010 Speaker 1: for the medium term, but for the time being, investors 273 00:16:27,010 --> 00:16:29,849 Speaker 1: can take those things and take the US economy, which 274 00:16:29,849 --> 00:16:31,799 Speaker 1: is going through this amazing boom on the back of 275 00:16:31,799 --> 00:16:33,830 Speaker 1: AI into their strides. 276 00:16:34,580 --> 00:16:37,119 Speaker 1: The US dollar will probably stay on the back foot 277 00:16:37,380 --> 00:16:39,979 Speaker 1: on account of weaponization of the currency and the myriad 278 00:16:39,979 --> 00:16:44,239 Speaker 1: of aggressive geopolitical maneuvers. Uh, and, and that in turn 279 00:16:44,340 --> 00:16:46,719 Speaker 1: is a bit of a source of relief for Asia. 280 00:16:47,090 --> 00:16:50,809 Speaker 1: Uh, because, uh, they will, uh, see stable currencies, they 281 00:16:50,809 --> 00:16:56,000 Speaker 1: will see, uh, room for monetary policy, uh, easing, if indeed, uh, 282 00:16:56,330 --> 00:16:58,369 Speaker 1: the US dollar is on the back foot and their 283 00:16:58,369 --> 00:17:02,450 Speaker 1: currencies are stable. Uh, but that was the story for 2025. 284 00:17:02,530 --> 00:17:04,329 Speaker 1: I don't think there's a whole lot to that story 285 00:17:04,329 --> 00:17:07,930 Speaker 1: in 2026, unless, of course, uh, the White House, the 286 00:17:07,930 --> 00:17:12,550 Speaker 1: US administration end up doing things that are even more, um. 287 00:17:13,670 --> 00:17:16,989 Speaker 1: Debilitating for the global economy and global market sentiments than 288 00:17:16,989 --> 00:17:20,750 Speaker 1: it was in 2025. So, as you are all familiar 289 00:17:20,750 --> 00:17:24,819 Speaker 1: with the taco acronym that Trump always chickens out, uh, 290 00:17:25,000 --> 00:17:28,109 Speaker 1: would he chicken out if there was another market sell-off 291 00:17:28,540 --> 00:17:31,810 Speaker 1: around tariffs or his actions in the Middle East? 292 00:17:32,579 --> 00:17:34,938 Speaker 1: We'll see. Uh, it seems to me that on the 293 00:17:34,939 --> 00:17:37,300 Speaker 1: geopolitical side, the president seems to be a little less 294 00:17:37,300 --> 00:17:41,939 Speaker 1: impervious to what others say, uh, because he has had 295 00:17:41,939 --> 00:17:44,459 Speaker 1: a lot of success in this area from his perspective 296 00:17:44,459 --> 00:17:47,579 Speaker 1: over the last 12 months. Now, enough about the US. 297 00:17:47,660 --> 00:17:50,739 Speaker 1: I want to talk a little bit about China and 298 00:17:50,739 --> 00:17:53,379 Speaker 1: where it stands. Now, of course, the story as far 299 00:17:53,380 --> 00:17:57,339 Speaker 1: as the cyclical headwinds on China remain unchanged. There is 300 00:17:57,339 --> 00:18:00,000 Speaker 1: a lot of problem with respect to the property sector. 301 00:18:00,959 --> 00:18:03,959 Speaker 1: Which then spills over to the financial sector, uh growth 302 00:18:03,959 --> 00:18:06,800 Speaker 1: in China, just like the US is most likely also 303 00:18:06,800 --> 00:18:11,479 Speaker 1: fairly jobless, uh, which creates problems for uh social cohesion, 304 00:18:11,579 --> 00:18:13,800 Speaker 1: social stability, if indeed there are a lot of young 305 00:18:13,800 --> 00:18:15,359 Speaker 1: people who just can't get jobs. 306 00:18:15,760 --> 00:18:20,319 Speaker 1: But the Chinese financial markets have gotten a major tailwind, again, 307 00:18:20,439 --> 00:18:24,239 Speaker 1: just like the US around AI and other innovation, and 308 00:18:24,239 --> 00:18:28,159 Speaker 1: that certainly is helping sentiment to some extent. The Chinese 309 00:18:28,160 --> 00:18:32,270 Speaker 1: population is of course, even less exposed to the stock market, uh, 310 00:18:32,280 --> 00:18:35,438 Speaker 1: is substantially less exposed to the stock market than the 311 00:18:35,439 --> 00:18:40,030 Speaker 1: American counterparts. But nonetheless, uh good headlines on paper of 312 00:18:40,030 --> 00:18:43,399 Speaker 1: companies doing well, of entrepreneurs getting wealthy, certainly. 313 00:18:43,574 --> 00:18:47,175 Speaker 1: The national psyche. And the fact that we're seeing a 314 00:18:47,175 --> 00:18:50,454 Speaker 1: relentless flow of innovation coming out of China, the fact 315 00:18:50,454 --> 00:18:54,165 Speaker 1: that despite major US efforts or I would say Western 316 00:18:54,165 --> 00:18:58,415 Speaker 1: efforts to uh degrade China's tech capabilities, China sort of 317 00:18:58,415 --> 00:19:01,974 Speaker 1: kept up pretty well on the AI space and doing 318 00:19:01,974 --> 00:19:05,895 Speaker 1: exceedingly well in various other uh tech areas is a 319 00:19:05,895 --> 00:19:11,415 Speaker 1: testament to the Chinese economy's ability to be resilient. 320 00:19:11,819 --> 00:19:14,020 Speaker 1: Uh, and I think that, that again, I think adds 321 00:19:14,020 --> 00:19:16,410 Speaker 1: to the confidence of the Chinese policymakers, adds to the 322 00:19:16,410 --> 00:19:18,459 Speaker 1: confidence of Chinese entrepreneurs. 323 00:19:19,290 --> 00:19:23,260 Speaker 1: And uh and that certainly should help growth in that 4, 4.5% 324 00:19:23,260 --> 00:19:27,760 Speaker 1: handle for 2026. Now, one thing that we read and 325 00:19:27,760 --> 00:19:31,020 Speaker 1: hear a lot about is that 2025 was a year 326 00:19:31,020 --> 00:19:35,139 Speaker 1: when despite losing access to parts of US markets and 327 00:19:35,140 --> 00:19:38,160 Speaker 1: facing a huge amount of tariff-related pressure, China, 328 00:19:38,770 --> 00:19:41,810 Speaker 1: Continue to expand its exports to the rest of the world, 329 00:19:41,890 --> 00:19:43,989 Speaker 1: dumping cheap goods, and that's going to be a big issue. 330 00:19:44,449 --> 00:19:46,290 Speaker 1: I think we need to set the record straight in 331 00:19:46,290 --> 00:19:50,530 Speaker 1: the area. When we look at China's market share in 332 00:19:50,530 --> 00:19:55,489 Speaker 1: various key product categories, it doesn't look like they are 333 00:19:55,489 --> 00:19:58,770 Speaker 1: decimating local industries in Europe or elsewhere, which is a 334 00:19:58,770 --> 00:20:02,030 Speaker 1: popular narrative uh because they're just sort of dumping products 335 00:20:02,170 --> 00:20:04,089 Speaker 1: that they can't sell to the US. That's simply not 336 00:20:04,089 --> 00:20:04,709 Speaker 1: in the data. 337 00:20:05,390 --> 00:20:09,170 Speaker 1: But what is also missed out on a regular basis 338 00:20:09,170 --> 00:20:13,030 Speaker 1: is that China came to this big escalation of trade 339 00:20:13,030 --> 00:20:16,810 Speaker 1: war with a major structural shift in its economy. Uh, 340 00:20:16,989 --> 00:20:19,349 Speaker 1: if you look at some numbers into what is happening 341 00:20:19,349 --> 00:20:23,219 Speaker 1: in China with respect to green transition, this is absolutely jaw-dropping. 342 00:20:23,459 --> 00:20:28,409 Speaker 1: Clean energy contributed nearly $2 trillion to the Chinese economy. 343 00:20:29,109 --> 00:20:32,579 Speaker 1: In 2024 and perhaps a little more in 2025. So, 344 00:20:32,589 --> 00:20:36,069 Speaker 1: we're talking about 1/10 of China's GDP is now directly 345 00:20:36,069 --> 00:20:39,510 Speaker 1: linked to the green economy. 26%, a quarter of China's 346 00:20:39,510 --> 00:20:40,930 Speaker 1: growth is coming from that area. 347 00:20:41,319 --> 00:20:44,239 Speaker 1: So, China is not dumping products. It has actually found 348 00:20:44,239 --> 00:20:47,109 Speaker 1: a whole new category of products to export to the 349 00:20:47,109 --> 00:20:51,579 Speaker 1: rest of the world, from next generation batteries to EVs 350 00:20:51,760 --> 00:20:55,260 Speaker 1: to next generation of solar cells to technologies around wind turbine. 351 00:20:55,680 --> 00:20:58,770 Speaker 1: That's where China's big gains in market share are. In, 352 00:20:58,780 --> 00:21:01,879 Speaker 1: in these areas, China is an undisputed tech leader in 353 00:21:01,880 --> 00:21:05,640 Speaker 1: the world, including the tech companies that are providing these 354 00:21:05,640 --> 00:21:08,680 Speaker 1: solutions from the west. Uh, so China's, 355 00:21:09,109 --> 00:21:15,760 Speaker 1: Uh, EV exports are up something like 75% to ASEAN countries, uh, 10% 356 00:21:15,760 --> 00:21:20,550 Speaker 1: up for Europe, despite freezing tariffs there and almost tripled, uh, 357 00:21:20,560 --> 00:21:21,540 Speaker 1: in Africa. 358 00:21:22,319 --> 00:21:25,650 Speaker 1: I don't see that trend dissipating anytime soon. And, and 359 00:21:25,650 --> 00:21:27,489 Speaker 1: the thing is that there is some positive spillover out 360 00:21:27,489 --> 00:21:30,349 Speaker 1: of that. It's not just about Chinese companies taking out 361 00:21:30,569 --> 00:21:34,290 Speaker 1: other auto companies in the world. Uh, these EV supply 362 00:21:34,290 --> 00:21:38,390 Speaker 1: chains are also elaborate. They don't have all their parts 363 00:21:38,439 --> 00:21:40,660 Speaker 1: in China. There is not 100%. 364 00:21:40,714 --> 00:21:44,754 Speaker 1: And manufacturing in China. As a result, uh ASEAN countries, 365 00:21:44,834 --> 00:21:48,635 Speaker 1: South Asian countries, African countries are beginning to see FDI 366 00:21:48,635 --> 00:21:54,984 Speaker 1: around the EV ecosystem and battery charging on car assembly parts, 367 00:21:55,265 --> 00:21:59,135 Speaker 1: and that is also helping the region, particularly Southeast Asia, 368 00:21:59,474 --> 00:22:04,114 Speaker 1: get another leg up in manufacturing prowess, tech transfer, and 369 00:22:04,114 --> 00:22:06,435 Speaker 1: improved uh exports uh potential. 370 00:22:07,829 --> 00:22:11,849 Speaker 1: So, it is important to take this issue into account 371 00:22:12,310 --> 00:22:16,250 Speaker 1: because uh without sort of taking into account what's happening 372 00:22:16,250 --> 00:22:19,449 Speaker 1: on China's green economy, it's very hard to understand the 373 00:22:19,589 --> 00:22:25,250 Speaker 1: resilience and outperformance of the Chinese economy. I think in 374 00:22:25,250 --> 00:22:28,270 Speaker 1: the second half of this decade, so 26, 27, 208 375 00:22:28,270 --> 00:22:31,770 Speaker 1: and beyond, we will see more innovation coming from China, 376 00:22:32,069 --> 00:22:33,760 Speaker 1: not just in the green side of the economy, but 377 00:22:33,760 --> 00:22:35,969 Speaker 1: also in avionics. 378 00:22:36,979 --> 00:22:42,619 Speaker 1: In drug discovery, uh, and the construction material and so on, uh, 379 00:22:42,709 --> 00:22:44,359 Speaker 1: that again will, 380 00:22:45,209 --> 00:22:48,180 Speaker 1: Persuade many economies in the world, perhaps even the Western economies, 381 00:22:48,410 --> 00:22:50,969 Speaker 1: that they want some of this technology, they want some 382 00:22:50,969 --> 00:22:54,130 Speaker 1: of these products. So I remained fairly constructive about China's 383 00:22:54,130 --> 00:22:58,920 Speaker 1: export potential and I largely reject the dumping argument, uh, 384 00:22:58,930 --> 00:23:00,959 Speaker 1: which I've been hearing a lot in the media and 385 00:23:00,959 --> 00:23:02,390 Speaker 1: among even analysts. 386 00:23:03,000 --> 00:23:05,010 Speaker 1: Um, so now the 387 00:23:05,609 --> 00:23:09,959 Speaker 1: Issue related to uh AI extends both in China and 388 00:23:09,959 --> 00:23:13,199 Speaker 1: the US. But of course, China doesn't have the cutting 389 00:23:13,199 --> 00:23:18,800 Speaker 1: edge uh tools that the American counterparts do. And despite that, 390 00:23:19,079 --> 00:23:21,680 Speaker 1: some of the models that Chinese AI companies are coming 391 00:23:21,680 --> 00:23:26,069 Speaker 1: up with are outperforming many of their US counterpart AI models. 392 00:23:26,439 --> 00:23:27,359 Speaker 1: And uh we saw. 393 00:23:27,449 --> 00:23:29,589 Speaker 1: The deep sea moment last year, I would not rule 394 00:23:29,589 --> 00:23:33,739 Speaker 1: out similar moments coming out in 2026 either. And the 395 00:23:33,739 --> 00:23:37,879 Speaker 1: key metric for that prediction is how closely American tech 396 00:23:37,880 --> 00:23:43,109 Speaker 1: companies are watching Chinese tech companies and following their progress 397 00:23:43,109 --> 00:23:47,170 Speaker 1: and their releases of various G AI models. Uh, so they, 398 00:23:47,209 --> 00:23:49,209 Speaker 1: they genuinely take it very, very seriously. 399 00:23:50,229 --> 00:23:55,170 Speaker 1: So, uh, the AI boom can sustain further investment growth 400 00:23:55,170 --> 00:23:57,839 Speaker 1: both in China and the US in 20216 and beyond. 401 00:23:58,130 --> 00:24:00,728 Speaker 1: But then again, as I said earlier, it does create 402 00:24:00,729 --> 00:24:05,250 Speaker 1: some degree of worries that what would happen if uh 403 00:24:05,890 --> 00:24:07,969 Speaker 1: the revenue side of the AI did not come out 404 00:24:07,969 --> 00:24:12,410 Speaker 1: as persuasively as all these massive investments uh would require 405 00:24:12,410 --> 00:24:12,969 Speaker 1: them to do. 406 00:24:13,790 --> 00:24:17,520 Speaker 1: All right. So, that's the uh key sort of sense of, 407 00:24:17,599 --> 00:24:19,790 Speaker 1: you know, where I stand with respect to the US 408 00:24:19,790 --> 00:24:24,159 Speaker 1: and China and China's resilience, US's outperformance and also the 409 00:24:24,250 --> 00:24:28,359 Speaker 1: spillover positive impact on ASEAN. Americans continue to spend a 410 00:24:28,359 --> 00:24:33,479 Speaker 1: lot that helped ASEAN exports. China is expanding its footprint 411 00:24:33,479 --> 00:24:35,920 Speaker 1: with green energy related uh 412 00:24:36,599 --> 00:24:39,000 Speaker 1: Footprint, as well as some degree of trade diversion. Let's 413 00:24:39,000 --> 00:24:43,109 Speaker 1: not sugarcoat that and ASEAN again benefits from that substantially. 414 00:24:43,489 --> 00:24:46,879 Speaker 1: I want to move away from China, US, ASEAN to 415 00:24:46,880 --> 00:24:49,800 Speaker 1: one particular uh aspect of ASEAN, which is the country 416 00:24:49,800 --> 00:24:53,189 Speaker 1: that I live in, Singapore, and where Singapore stands. 417 00:24:54,099 --> 00:24:57,979 Speaker 1: I think Singapore has many vulnerabilities. It's a very small 418 00:24:57,979 --> 00:25:01,609 Speaker 1: open economy. It absorbs or is bound to absorb global 419 00:25:01,609 --> 00:25:05,020 Speaker 1: shocks readily, but it has shown a tremendous degree of 420 00:25:05,020 --> 00:25:09,500 Speaker 1: resilience and it thrives through the uncertainties of 2025 and 421 00:25:09,500 --> 00:25:12,939 Speaker 1: done very well. I don't think a high 4% growth, 422 00:25:13,180 --> 00:25:16,839 Speaker 1: which is the likely outcome of 2025, is repeatable in 20206, 423 00:25:17,099 --> 00:25:20,359 Speaker 1: but Han Teng Chua, our Singapore senior economist, and I 424 00:25:20,359 --> 00:25:21,020 Speaker 1: both feel that. 425 00:25:21,109 --> 00:25:23,510 Speaker 1: Another year of trend growth is very much on the 426 00:25:23,510 --> 00:25:27,109 Speaker 1: cards for Singapore, notwithstanding all the different things that we 427 00:25:27,109 --> 00:25:30,670 Speaker 1: can focus on in terms of negative drivers. Those are 428 00:25:30,670 --> 00:25:33,790 Speaker 1: obvious in my view, from trade and tariff related additional 429 00:25:33,790 --> 00:25:37,629 Speaker 1: uncertainty to geoeconomic risks. So let's put that aside, we 430 00:25:37,630 --> 00:25:41,430 Speaker 1: recognize all that, but rather focus on what are the 431 00:25:41,430 --> 00:25:48,069 Speaker 1: possible upside levers for Singapore in 2026 and perhaps even beyond. Well, firstly, 432 00:25:48,420 --> 00:25:51,459 Speaker 1: Uh, the issue related to the monetary conditions. 433 00:25:52,109 --> 00:25:54,469 Speaker 1: I think that rates, the way they have come down 434 00:25:54,469 --> 00:25:57,579 Speaker 1: in Singapore over the couple of last year or so, uh, 435 00:25:57,589 --> 00:26:01,719 Speaker 1: that has led to financial conditions becoming significantly more accommodative. 436 00:26:02,140 --> 00:26:06,510 Speaker 1: That will sustain inflation related concerns are few, liquidity is ample, 437 00:26:06,589 --> 00:26:10,989 Speaker 1: it's fueled by strong capital flows, and these factors ought 438 00:26:10,989 --> 00:26:14,709 Speaker 1: to lead to lending and borrowing risks in uh it 439 00:26:14,709 --> 00:26:18,030 Speaker 1: leaves them in check, and this would again support capital 440 00:26:18,030 --> 00:26:20,180 Speaker 1: market activities. And I want to focus on one specific 441 00:26:20,180 --> 00:26:21,739 Speaker 1: aspect of Singapore's capital market. 442 00:26:22,040 --> 00:26:24,630 Speaker 1: That's been long dormant, but it's likely to go through 443 00:26:24,630 --> 00:26:29,180 Speaker 1: a major uplift in 2026, and that is the second 444 00:26:29,599 --> 00:26:34,909 Speaker 1: positive lever, which is the trading activity around Singapore's equity markets. 445 00:26:35,239 --> 00:26:38,160 Speaker 1: On the back of several measures that already began to 446 00:26:38,160 --> 00:26:42,380 Speaker 1: energize Singapore's equity markets in 2025, I think there's fundamental 447 00:26:42,599 --> 00:26:44,160 Speaker 1: further impetus for that. 448 00:26:44,676 --> 00:26:48,385 Speaker 1: Uh, we saw some late year announcements, uh, which will, uh, 449 00:26:48,395 --> 00:26:52,436 Speaker 1: help the equity market in 2026, dual listing bridge between 450 00:26:52,436 --> 00:26:56,755 Speaker 1: SGX and NASDAQ, appointment of the second batch of asset 451 00:26:56,755 --> 00:27:00,805 Speaker 1: managers under the $5 billion Singare dollar equity market development program, 452 00:27:01,036 --> 00:27:06,176 Speaker 1: and several structural measures to enhance market trading and uh. 453 00:27:06,511 --> 00:27:09,702 Speaker 1: Structure of the way Singapore stock market works. Uh, so 454 00:27:09,702 --> 00:27:12,391 Speaker 1: I think that there's a, or I understand that there's 455 00:27:12,391 --> 00:27:15,791 Speaker 1: a pretty impressive line of IPOs as well. So, as 456 00:27:15,791 --> 00:27:21,031 Speaker 1: long as overall global investor sentiments remains stable, I think 457 00:27:21,031 --> 00:27:24,052 Speaker 1: there'll be significant capital raising and significant market making done 458 00:27:24,391 --> 00:27:27,072 Speaker 1: in Singapore's equity sector this year, and that of course 459 00:27:27,071 --> 00:27:28,692 Speaker 1: will help sentiment and growth. 460 00:27:29,959 --> 00:27:32,959 Speaker 1: Third is the most obvious one, AI related investment and 461 00:27:32,959 --> 00:27:36,239 Speaker 1: policy measures. Singapore's public and private sector both are ramping 462 00:27:36,239 --> 00:27:40,780 Speaker 1: up AI related spending. Uh, efforts to upscale the workforce 463 00:27:40,780 --> 00:27:44,040 Speaker 1: are progressing. AI adoption is being hastened by the data 464 00:27:44,040 --> 00:27:47,879 Speaker 1: and tech infrastructure buildup. There is strong expectation that tech 465 00:27:47,880 --> 00:27:51,359 Speaker 1: services will become more seamless in the coming years as 466 00:27:51,359 --> 00:27:52,319 Speaker 1: the integration. 467 00:27:52,569 --> 00:27:55,488 Speaker 1: AI integration materializes, and again, this is both with respect 468 00:27:55,489 --> 00:27:58,530 Speaker 1: to government service delivery, as well as the various solutions 469 00:27:58,530 --> 00:28:01,430 Speaker 1: that the public sector, private sector is coming up with. 470 00:28:01,959 --> 00:28:05,439 Speaker 1: Fourth area of upside would be continued interest in Singapore's 471 00:28:05,439 --> 00:28:08,889 Speaker 1: trusted business hub. Uh, recent years have seen record private 472 00:28:08,890 --> 00:28:12,760 Speaker 1: banking and FDI flows to Singapore, a testament to its 473 00:28:12,760 --> 00:28:16,329 Speaker 1: reputation of stability, and we're sure that trend will persist 474 00:28:16,530 --> 00:28:17,550 Speaker 1: this year and beyond. 475 00:28:18,719 --> 00:28:21,869 Speaker 1: Then there are regional initiatives. Let's just focus on one, 476 00:28:22,199 --> 00:28:26,359 Speaker 1: which is the uh Singapore, Johor-Singapore Special Economic zone. We're 477 00:28:26,359 --> 00:28:30,520 Speaker 1: expecting further progress there. Billions of dollars are being invested 478 00:28:30,520 --> 00:28:33,280 Speaker 1: by Singaporean firms to take advantage of the synergy between 479 00:28:33,280 --> 00:28:36,719 Speaker 1: the two areas. They will, they encompass a wide range 480 00:28:36,719 --> 00:28:43,189 Speaker 1: of areas, uh, land, talent, tech, tourism, housing, trade, uh, 481 00:28:43,280 --> 00:28:44,239 Speaker 1: and then there's a mass. 482 00:28:44,474 --> 00:28:48,435 Speaker 1: construction boom evident to anybody who passes through the causeways 483 00:28:48,435 --> 00:28:53,545 Speaker 1: this year. Uh, and once the rapid transport system link, 484 00:28:53,594 --> 00:28:57,035 Speaker 1: the RTS gets going at some point this year, it'll 485 00:28:57,035 --> 00:28:59,064 Speaker 1: only go strength to strength in terms of the sym 486 00:28:59,064 --> 00:29:02,074 Speaker 1: biasis between Singapore and Johor. So what's the space, lot's 487 00:29:02,074 --> 00:29:05,155 Speaker 1: coming here. And then finally, uh, not related to the 488 00:29:05,155 --> 00:29:09,994 Speaker 1: regional initiatives, but for domestic initiatives, uh, construction sector in Singapore. 489 00:29:10,400 --> 00:29:13,479 Speaker 1: Multi-year boom is underway. Uh, this year might be the 490 00:29:13,479 --> 00:29:17,000 Speaker 1: best year in a long, long time. Uh, building activity, 491 00:29:17,800 --> 00:29:22,239 Speaker 1: mega projects, Changi Airport Terminal 5, Tua Sport, North-South Corridor, 492 00:29:22,359 --> 00:29:26,640 Speaker 1: Marina Bay Sands, Resource World Centosa, substantial housing rollout, both 493 00:29:26,640 --> 00:29:28,959 Speaker 1: public and private, all sorts of things are going on 494 00:29:29,160 --> 00:29:32,280 Speaker 1: in the construction side. Expect to see substantial contribution of 495 00:29:32,280 --> 00:29:37,170 Speaker 1: that sector into Singapore's GDP growth in 2026. So, 1.5 496 00:29:37,170 --> 00:29:38,959 Speaker 1: to 2% growth, very likely. 497 00:29:39,260 --> 00:29:42,300 Speaker 1: If things just stay stable, could be even more than 498 00:29:42,300 --> 00:29:44,569 Speaker 1: that on the back of these 6 levers that I'm 499 00:29:44,569 --> 00:29:46,060 Speaker 1: talking about. So, 500 00:29:46,810 --> 00:29:51,170 Speaker 1: I think the key takeaway for our listeners for today 501 00:29:51,170 --> 00:29:53,410 Speaker 1: who have been patient enough to listen to me so far, 502 00:29:53,810 --> 00:29:58,099 Speaker 1: should be that while there are many concerns about the outlook, 503 00:29:58,369 --> 00:29:59,650 Speaker 1: given the external worries. 504 00:30:00,979 --> 00:30:03,349 Speaker 1: driven by a highly assertive and 505 00:30:04,030 --> 00:30:10,229 Speaker 1: Deeply hegemonic US, uh, we are focusing on positives, just 506 00:30:10,229 --> 00:30:13,589 Speaker 1: like we did in 2025 and came out ahead of 507 00:30:13,589 --> 00:30:17,209 Speaker 1: the game, despite the myriad negative shocks that were there. 508 00:30:17,469 --> 00:30:20,260 Speaker 1: So I think that 2026 could very well be another year. Uh, 509 00:30:20,349 --> 00:30:23,430 Speaker 1: we should recognize that there are many concrete levers of 510 00:30:23,430 --> 00:30:28,140 Speaker 1: support in place. Uh, the outlook is not entirely comprised 511 00:30:28,140 --> 00:30:31,369 Speaker 1: of negative number of positives out there as well. 512 00:30:31,810 --> 00:30:35,199 Speaker 1: So NetNet, hopefully we come out ahead in 2026, just 513 00:30:35,199 --> 00:30:39,670 Speaker 1: like we did in 2025. So, that's it for today. Uh, 514 00:30:39,689 --> 00:30:45,000 Speaker 1: thank you very much for your time, our listeners and viewers. Um, 515 00:30:45,130 --> 00:30:48,560 Speaker 1: Kobe Time was produced by Ken Delbridge, Spy Studios. Vra 516 00:30:48,560 --> 00:30:53,329 Speaker 1: Lee and Daisy Sherma provided additional assistance. All 169 episodes 517 00:30:53,329 --> 00:30:55,969 Speaker 1: of this podcast are available on YouTube and on all 518 00:30:55,969 --> 00:30:57,630 Speaker 1: major podcast platforms including 519 00:30:57,920 --> 00:31:01,949 Speaker 1: Apple, Google, and Spotify. Mind you, this is a podcast 520 00:31:01,949 --> 00:31:06,040 Speaker 1: for information only. It does not represent any great recommendations. 521 00:31:06,359 --> 00:31:09,599 Speaker 1: As for our research publications, webinars, and live streams, you 522 00:31:09,599 --> 00:31:12,719 Speaker 1: can find them all by Googling DBious research library. Have 523 00:31:12,719 --> 00:31:13,599 Speaker 1: a great day.