May 20, 2025 • 19 mins
Benchmarks in Australia, South Korea and Japan all climbed in early trading Wednesday, pushing a gauge of Asian shares 0.4% higher. Geopolitical tensions may add headwinds to the markets, which had calmed recently after a month of turmoil from the tariff blitz unleashed by US President Donald Trump. We look at how the tariff story is resonating through the Asia-Pacific with Helen Zhu, Managing Partner and Chief Investment Officer at NF Trinity.
Plus - oil rose after CNN reported that US intelligence had suggested Israel is making preparations for a possible strike on Iranian nuclear facilities. Stocks in Asia advanced on Wednesday. West Texas Intermediate gained 1.5% to $62.96 a barrel. It's not clear that Israeli leaders had made a final decision to carry out the strikes, CNN said, citing unnamed officials. Contracts for the S&P 500 and the Nasdaq 100 were down 0.1%, paring most of their losses earlier in the day. We get reaction to the day's macro headlines from Brian Vendig, President and Chief Investment Officer at MJP Wealth Advisors.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Bloomberg
Daybreak Asia Podcast. I'm Doug Krisner. So Wall Street took
a bit of a breather in the last session. Equities
drifted lower after a six day advance, and in the
bond market, longer term treasure yields were a bit higher
(00:24):
as US budget negotiations showed little sign of resolution. In
a moment, we'll be speaking with Brian Vendig. He is
the chief investment officer over at MJP Wealth Advisors. But
we start with the US China trade war and the
story on tariffs. Now in the US session, we heard
from the head of the Saint Louis fed Albertumusalom. He
(00:46):
said tariffs will likely weigh on growth and weaken the
labor market, even after the recent ninety day de escalation
between Washington and Beijing. Here is Musalam speaking earlier at
an event in Minneapolis.
Speaker 2 (01:00):
Are higher have been more broadly applied and have prompted
stronger retaliation than I and many others had expected. Ongoing
negotiations with trading partners might dial back tariff significantly and durably,
as we have seen with the recent announcement of a
ninety day reduction in reciprocal tariffs with China.
Speaker 1 (01:20):
That is the head of the Saint Louis fed Albertu
Musalom with a perspective on how tariffs are impacting the US.
So now let's take a look at how tariffs are
impacting China. I'm joined by Helen Ju, managing partner and
Chief investment Officer at NF Trinity. Helen is joining us
from our studios in Hong Kong. Good of you to
make time to chat with us before we get to
(01:41):
the Moody's downgrade on the US credit rating. Can we
start with the April activity data for China, the numbers
that we got on Monday. It seems somewhat surprising that
industrial output performed as well as it did. What do
you make of the activity data that we saw on
Monday for the mainland economy?
Speaker 3 (02:00):
Look, I think there's going to be a lot of
noise in the activity data year today. So there's a
couple of factors to consider. One is that there was
clearly a lot of government support and stimulus in various
parts of the economy, harder for it to reach consumers
or to massively change consumer behavior and then your term.
But certainly in terms of manufacturing, infrastructure, investment, et cetera,
(02:25):
the government policies can have meaningful impacts short term. The
second thing I would mention is that because of the
trade war, there has been a lot of time shifting
of activity as well. So, for example, the exports were
very strong in the first quarter, probably because people wanted
to put in their orders and get the stuff shipped
prior to the trade war or prior to Liberation Day
(02:46):
coming in, and then later on I think it was
not necessarily clear whether you know, things were going to
be potentially extended as we did see in May. So
you know, I think there's a lot of like jerkiness
in terms of the activity because of these types of
one off events.
Speaker 1 (03:04):
So the reading on retail sales was disappointing. Is it
still very much the case that anything related to consumer
sentiment begins and ends with the home market, the property market.
I saw the China's home prices down in the month
of April at a faster clip. Is that really the
eye of the storm still?
Speaker 3 (03:23):
I would say that's one factor, but probably not the
only factor, but certainly it affects, you know, the wealth
effect in terms of high end discretionary spending, but retail
sales itself is not just all high end discretionary spending.
A lot of it could be specific sectors. You know,
for example, autos depending on what you know new models
(03:43):
were coming out that particular month, and you know in
the past, whether there were specific ev subsidy policies that
are less relevant today. There could also be impacts in
terms of other specifics, like you know, were their subsidies
relating to three C products coming from the government. You know,
those types of things I think do tend to have
an impact on the short term. But generally speaking, with
(04:04):
the backdrop of the trade war lurking in the month
of April, it's not a surprise that people would feel
less confident about spending, irrespective of what's happening in terms
of the property market.
Speaker 1 (04:14):
So we're still in this period of a truce between
the US and China when it comes to the trade war.
What is going to be the ultimate outcome of this?
Do you think if you had to place a bet
on where we go on the other side of that
ninety day period, what does it look like.
Speaker 3 (04:29):
I think it's highly unlikely that the tariffs that have
been bradscheted back are going to come back in, because
if you actually put those back in, then essentially there
won't be any trade between the US and China because
the tariffs will be so high. So I do think
that there is going to be some decent compromise in
terms of the overall headline. But as with China, similar
to the rest of the world, I think within the
(04:50):
ninety day period there will be specifics coming out not
only on a per country basis, but also exemptions and
adjustments to the teriff rates on a per sector basis.
That actually makes a lot more sense, right. The US
cares much more about what kind of products need to
come back to the US versus can continue to be
made overseas for economic or other supply chain reasons. So
(05:13):
I think there will be a lot more complex adjustments
the headline numbers for not only China but the rest
of the world over the coming weeks. But in the end,
China is still going to end up with a higher
headline tariff versus the rest of the world because the
US does want to incentimize the supply chain to migrate
out of China and into other markets where it feels
more friendly and more diversified.
Speaker 1 (05:35):
So more of a decoupling here, And how bad could
this get? Do you think?
Speaker 3 (05:39):
Well, I think the decoupling already started during the first
Trump administration of the first trade war, right, so it's
just going to continue, but it won't be a full
decoupling the way that people were assuming back in April,
when the reciprocal tariffs had gone out of control into
levels that were basically going to mean that there was
barely any activity on the trade front between the US
(06:00):
and China. So generally speaking, I think where the market
is pricing in is probably a pretty decently mild outcome already.
You can see that in both the Chinese equities as
well as US equities performance.
Speaker 1 (06:11):
So how is this affecting your strategy these days? I mean,
what are you putting money to work in right now?
In Asia?
Speaker 3 (06:17):
Generally, we've actually been looking at other markets outside of China.
So for example, you know, we've added to some of
our positions in Taiwan, Korea, and Japan as well as
Southeast Asia. In Taiwan, we had that massive move in
the NTD, which was unexpected and probably you know, not
as conspiracy much of a conspiracy as what people had
(06:38):
had feared. So some of the you know, tech supply
chain companies got hit aggressively on the back of that.
So we've been adding to that. Korea we've been positive
on for some time. The Korean Wan's been pressured by
the very strong US dollar last year, and that has
eased to some extent, and we actually think that the
value up efforts as well as the political situation are
(06:59):
both going to see some improvement off of relatively low base.
Japan was pressured by the fact that the yen kept
appreciating and you know, earlier this year because the dollar
was plummeting. Now I think the risk reward on the
currency front is a little bit more balanced and the
valuations are still fairly reasonable. In Southeast Asia, you know,
(07:19):
slam with a ton of very aggressive tariffs and people
are quite concerned. But I do think that like Mexico,
like some other places in Latin and Southeast Asia, those
tariffs will probably be brought down to very reasonable levels
going forward. And so as a result of that, we
think that you know, those are looking better. And then
(07:40):
obviously the weaker US dollar helps a lot as well.
Speaker 1 (07:42):
To what extent is your strategy kind of concentrated in
the area of technology. You mentioned South Korea, I'm thinking
semiconductors Taiwan. There are other electronic components that are manufactured there.
Is it mostly centered around high tech?
Speaker 3 (07:58):
Oh no, not necessarily. We're very versified investors across different
ASA classes, across different regions, across different sectors. So no,
it's definitely not purely tech. And you know, tech has
a pretty broad definition as well, everything from internet to software,
to hardware to semi et cetera. So we will pick
and choose between those different areas depending on where they
(08:19):
are in the cycle. We do think that the expectations
now for some of the AI plays is no longer low.
In the last couple of weeks, they've really popped quite
a bit. We do have a lot of those positions.
We're holding on to them, but we're not adding to
them at this point. But for example, some of the
smartphone and other hardware supply chain, I think the expectations
are very low at the moment, and you know, that
(08:41):
might be a good time to potentially, you know, add
to those positions. China Internet has rallied pretty dramatically since
the beginning of the year, and so you know, maybe
have to be a little bit more selective versus before.
And you know US software is more idiosyncratic than just
the beta trade, so various parts of tech are not
(09:02):
necessarily the same.
Speaker 1 (09:03):
How are you feeling about US risk assets right now?
Do you have an appetite for US stocks?
Speaker 3 (09:08):
Look, we added to US stocks and April on the selloff,
but now I think the risk reward is no longer
as obvious. This is basically because the market has pretty
much rebounded as if the trade war didn't really happen
to this extent and that there will be a pretty
decent resolution. Also, at some point the market was pricing
(09:29):
a much higher risk of recession. Now I think that
has been priced out to a certain extent, so the
room for further positive surprise on US equities is not
as great as before. But we do still think that
if we have a mild outcome in terms of the
trade negotiations, and Trump ends up being fairly reasonable and
people stop thinking that the US system is going to
(09:52):
be potentially breaking down quickly, then we actually see more
upside for treasury and fixing come versus equities in the
US at the moment will leave it.
Speaker 1 (10:00):
There, Helen, It's always a pleasure. Thank you so much.
Helen Ju, managing partner, also the CIO at NF Trinity
from Hong Kong. Joining us here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm Doug Chrisner.
(10:21):
So the FED seems likely to resist the notion of
rate cuts, at least in the near term, given some
of the mounting headwinds we've been talking about for the
American economy. The founder of Bridgewater Associates, Ray Daalio, says
the FED should not be cutting rates right now. Here
is Dalio in conversation with Bloomberg Shanali Bosik speaking at
the BNP Parabah Annual Global Electric Vehicle and Mobility Conference.
Speaker 4 (10:45):
I think the markets, if they were to see a
too aggressive cut and monetary policy too inappropriate cut, that
it would actually be bad for the bottom market.
Speaker 1 (10:58):
That is Bridgewater founder Dalio speaking to Bloomberg Shanali Bossik
in Hong Kong. For a closer look at the macro
let's bring in Brian Vendig. He is the chief investment
officer at MJP Wealth Advisors. Brian is on the line
from Westport Connecticut. Brian, thank you so much for making
time to chat. How do you understand the economic risk
right now? Given the story on tariffs. I know this
(11:21):
is a very dynamic situation working pretty much in the
middle of a ninety day cooling off period, let's call
it a pause, But I'm curious to get your take
on where you think things stand right now.
Speaker 5 (11:33):
Yeah, thanks, Doug. I mean, I think in the short
term there has been damage to the economy, as we've
seen with business leaders on surveys talking about slowing hiring,
slowing investment in their businesses, and obviously the consumer pulling
back a little bit, even though retail sales numbers in
the past have come in healthy. I think the concern
(11:55):
is moving forward, moving forward price sensitivity there So I
think damage has been done in the short term to
the economy. However, depending on the jump ball, on the
speed of further trade negotiations and are we going to
get to some meaningful trade negotiations of some of our
larger partners over the next sixty days on the first pause,
(12:17):
and of course China later on in the summer, I
think that's really where that economic risk is going to
present itself, because if we have some resolution on trade
and some improving confidence coming back to the business community
and consumers, then I still think over the second half
of the year the economy still has a chance or
(12:37):
some growth. However, of course, if things go to the
contrary and these negotiations are extended, then I think those
A session ods can continue to stay elevated up.
Speaker 1 (12:46):
I'm curious to get your take on price pressure, as
we heard earlier in the week from Jamie Diamond, the
head of JP Morgan, and he was saying, the chances
of elevated inflation, even stagflation, are greater than people think.
Do you think that pretty much a risk?
Speaker 5 (13:01):
I think stagflation is a risk in the short term
in the sense that we're going to start to see
price increases start to flow through. However, going back to
my comment about trade, and also just looking at earnings
forecasts right now, I mean earnings forecasts have been taken down,
but for Q two we're still looking at year over
(13:22):
year profits of about five and a half percent something
very similar. Still on the outlooks for Q three and
some improvement in Q four, and I think once we
get to July earnings we'll get some confirmation there. I
think if there is stagflation, assuming trade negotiation, and those
earnings outlooks cold when we get to July, then I
think Jamie Diamond's comments might be short lived and there
(13:45):
will be some disruption in the short term, but not
necessarily over the longer term. I think also at the
same point in time, when we think about the disruptions
that have happened with supply chains, in the short term,
inventory levels need to be restocked in June. We've heard
from Walmart, for example, saying, you know, we'll do our
best to try to control margin, but we're going to
(14:07):
have to pass on some of these prices. I think
that's a concern that investors have over the next two
to three months.
Speaker 1 (14:13):
Let's talk a little bit about the bond market. We
had a backup in yields today, ever so slightly. The
budget negotiations today showed very little in the way of resolution,
and we were told that the President expressed a little
bit of frustration today with demands to significantly boost a
cap on state and local tax deductions. If you look
at all the variables right now that are influencing the
(14:35):
bond market, where is the fiscal story right now? As
something that's carrying weight.
Speaker 5 (14:41):
Yeah, Doug. I mean, I think with the uncertainty around
the level of government spending and how much the new
bill that's getting worked onne in Congress is going to
add two budget deficits going forward, I think the bond
market is telling us, you know, that uncertainty is leading
to an app it's a confidence in holding treasuries right now,
(15:03):
and you're seeing a little bit of selling pressure there
with yields going up, very similar to the reaction that
we saw on the treasury market, you know, back in
the beginning of April with the announcement of tariffs on
Liberation Deck. I also think there's a little bit of
flow through as well with elevated yields because of those
concerns about prices increasing coming from tariffs as well in
(15:25):
the short term. So I really think it's a double
edged sword. But when once we get some resolution later
on this summer, I think with the Reconciliation Bill, and
we get a better clear view on taxes and spending,
I think there's a ceiling on yields in the treasury
market where we'd really be surprised we see yields, you know,
shoot past you know, four point seven or four point
(15:47):
eight on the ten years, So definitely keeping a close
eye on it. But I think it's it's not surprising
in seeing that that slite increase based on today's news.
Speaker 1 (15:55):
Before I get your view on how to put new
money to work in these markets, I want to address
geopolitical risk because we were getting indications from CNN that
US intelligence has suggested that Israel is planning to make
preparations to possibly strike Iranian nuclear facilities, and crude oil
right now is up by more than two percent in
(16:15):
the electronic session. How are you waiting geopolitics, whether it's
in the Mid East or whether we're talking about trying
to find an end to war in Ukraine. Well, when
you look.
Speaker 5 (16:26):
Back historically when geopolitical events come up, you know they're
primarily short lived, and yes they create violatility and disruption
in the market. But if you still have a longer
term view, focusing on earnings, fundamentals and some of the
things we talked about, you know earlier, I think having
a broadly diversified portfolio in this in this environment is
(16:48):
still going to is going to help you weather through
the storm. So you know, I don't see gold, you know,
I see gold appreciating. When you go through these types
of geopolitical uncertainties, yields usually come in which favor more
conservative investments like bonds. And I think when you think
about equities, you know, just making making sure in this
environment was so much going on that you're not overpaying
(17:09):
for growth, uh, and making sure that your your balance
between value stocks, uh, mid cap stocks that really haven't
participated as much in the past in market rallies are
good ways to kind of hedge a little bit in
the short term against those geopolitical events.
Speaker 1 (17:24):
How are you viewing markets offshore right now? Are there
opportunities that you're taking advantage of?
Speaker 5 (17:29):
Oh, definitely, you know, we we added to international equities, uh,
you know, a couple of months ago, especially more on
the news of UH countries wanting to reinvest in themselves,
relooking at fiscal policies that are helping US support domestic
economic growth as the US is evaluating uh, you know,
(17:50):
trade and maybe taking a step back and decoupling from
some aspects of of of a global economy. And I
think valuations there on international equities are definitely a lot
more fair per se than you know than S and
P that's back up to you know, a four pe
with a twenty handle, while international equities are in the
(18:10):
low teams. So I think being selective in developed markets
right now makes a lot of sense. We like Europe,
we like Japan and specific parts of Latin South America.
But I think at the same point in time, there's
been a huge run international equities, Doug, so I wouldn't
be surprised if there's a little consolidation to find a
better edgy point moving forward.
Speaker 1 (18:31):
All right, Brian, we'll leave it there. Thank you so
much for joining us. Brian Vendig there. He is the
chief investment Officer at MJP Wealth Advisors, joining from Westport, Connecticut.
Here on the Daybreak Asia Podcast. Thanks for listening to
today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday,
we look at the story shaping markets, finance, and geopolitics
(18:55):
in the Asia Pacific. You can find us on Apple, Spotify,
the Bloomberg Podcast Tube channel, or anywhere else you listen.
Join us again tomorrow for insight on the market moves
from Hong Kong to Singapore and Australia. I'm Doug Prisoner
and this is Bloomberg
Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Bloomberg
Daybreak Asia Podcast. I'm Doug Krisner. So Wall Street took
a bit of a breather in the last session. Equities
drifted lower after a six day advance, and in the
bond market, longer term treasure yields were a bit higher
(00:24):
as US budget negotiations showed little sign of resolution. In
a moment, we'll be speaking with Brian Vendig. He is
the chief investment officer over at MJP Wealth Advisors. But
we start with the US China trade war and the
story on tariffs. Now in the US session, we heard
from the head of the Saint Louis fed Albertumusalom. He
(00:46):
said tariffs will likely weigh on growth and weaken the
labor market, even after the recent ninety day de escalation
between Washington and Beijing. Here is Musalam speaking earlier at
an event in Minneapolis.
Speaker 2 (01:00):
Are higher have been more broadly applied and have prompted
stronger retaliation than I and many others had expected. Ongoing
negotiations with trading partners might dial back tariff significantly and durably,
as we have seen with the recent announcement of a
ninety day reduction in reciprocal tariffs with China.
Speaker 1 (01:20):
That is the head of the Saint Louis fed Albertu
Musalom with a perspective on how tariffs are impacting the US.
So now let's take a look at how tariffs are
impacting China. I'm joined by Helen Ju, managing partner and
Chief investment Officer at NF Trinity. Helen is joining us
from our studios in Hong Kong. Good of you to
make time to chat with us before we get to
(01:41):
the Moody's downgrade on the US credit rating. Can we
start with the April activity data for China, the numbers
that we got on Monday. It seems somewhat surprising that
industrial output performed as well as it did. What do
you make of the activity data that we saw on
Monday for the mainland economy?
Speaker 3 (02:00):
Look, I think there's going to be a lot of
noise in the activity data year today. So there's a
couple of factors to consider. One is that there was
clearly a lot of government support and stimulus in various
parts of the economy, harder for it to reach consumers
or to massively change consumer behavior and then your term.
But certainly in terms of manufacturing, infrastructure, investment, et cetera,
(02:25):
the government policies can have meaningful impacts short term. The
second thing I would mention is that because of the
trade war, there has been a lot of time shifting
of activity as well. So, for example, the exports were
very strong in the first quarter, probably because people wanted
to put in their orders and get the stuff shipped
prior to the trade war or prior to Liberation Day
(02:46):
coming in, and then later on I think it was
not necessarily clear whether you know, things were going to
be potentially extended as we did see in May. So
you know, I think there's a lot of like jerkiness
in terms of the activity because of these types of
one off events.
Speaker 1 (03:04):
So the reading on retail sales was disappointing. Is it
still very much the case that anything related to consumer
sentiment begins and ends with the home market, the property market.
I saw the China's home prices down in the month
of April at a faster clip. Is that really the
eye of the storm still?
Speaker 3 (03:23):
I would say that's one factor, but probably not the
only factor, but certainly it affects, you know, the wealth
effect in terms of high end discretionary spending, but retail
sales itself is not just all high end discretionary spending.
A lot of it could be specific sectors. You know,
for example, autos depending on what you know new models
(03:43):
were coming out that particular month, and you know in
the past, whether there were specific ev subsidy policies that
are less relevant today. There could also be impacts in
terms of other specifics, like you know, were their subsidies
relating to three C products coming from the government. You know,
those types of things I think do tend to have
an impact on the short term. But generally speaking, with
(04:04):
the backdrop of the trade war lurking in the month
of April, it's not a surprise that people would feel
less confident about spending, irrespective of what's happening in terms
of the property market.
Speaker 1 (04:14):
So we're still in this period of a truce between
the US and China when it comes to the trade war.
What is going to be the ultimate outcome of this?
Do you think if you had to place a bet
on where we go on the other side of that
ninety day period, what does it look like.
Speaker 3 (04:29):
I think it's highly unlikely that the tariffs that have
been bradscheted back are going to come back in, because
if you actually put those back in, then essentially there
won't be any trade between the US and China because
the tariffs will be so high. So I do think
that there is going to be some decent compromise in
terms of the overall headline. But as with China, similar
to the rest of the world, I think within the
(04:50):
ninety day period there will be specifics coming out not
only on a per country basis, but also exemptions and
adjustments to the teriff rates on a per sector basis.
That actually makes a lot more sense, right. The US
cares much more about what kind of products need to
come back to the US versus can continue to be
made overseas for economic or other supply chain reasons. So
(05:13):
I think there will be a lot more complex adjustments
the headline numbers for not only China but the rest
of the world over the coming weeks. But in the end,
China is still going to end up with a higher
headline tariff versus the rest of the world because the
US does want to incentimize the supply chain to migrate
out of China and into other markets where it feels
more friendly and more diversified.
Speaker 1 (05:35):
So more of a decoupling here, And how bad could
this get? Do you think?
Speaker 3 (05:39):
Well, I think the decoupling already started during the first
Trump administration of the first trade war, right, so it's
just going to continue, but it won't be a full
decoupling the way that people were assuming back in April,
when the reciprocal tariffs had gone out of control into
levels that were basically going to mean that there was
barely any activity on the trade front between the US
(06:00):
and China. So generally speaking, I think where the market
is pricing in is probably a pretty decently mild outcome already.
You can see that in both the Chinese equities as
well as US equities performance.
Speaker 1 (06:11):
So how is this affecting your strategy these days? I mean,
what are you putting money to work in right now?
In Asia?
Speaker 3 (06:17):
Generally, we've actually been looking at other markets outside of China.
So for example, you know, we've added to some of
our positions in Taiwan, Korea, and Japan as well as
Southeast Asia. In Taiwan, we had that massive move in
the NTD, which was unexpected and probably you know, not
as conspiracy much of a conspiracy as what people had
(06:38):
had feared. So some of the you know, tech supply
chain companies got hit aggressively on the back of that.
So we've been adding to that. Korea we've been positive
on for some time. The Korean Wan's been pressured by
the very strong US dollar last year, and that has
eased to some extent, and we actually think that the
value up efforts as well as the political situation are
(06:59):
both going to see some improvement off of relatively low base.
Japan was pressured by the fact that the yen kept
appreciating and you know, earlier this year because the dollar
was plummeting. Now I think the risk reward on the
currency front is a little bit more balanced and the
valuations are still fairly reasonable. In Southeast Asia, you know,
(07:19):
slam with a ton of very aggressive tariffs and people
are quite concerned. But I do think that like Mexico,
like some other places in Latin and Southeast Asia, those
tariffs will probably be brought down to very reasonable levels
going forward. And so as a result of that, we
think that you know, those are looking better. And then
(07:40):
obviously the weaker US dollar helps a lot as well.
Speaker 1 (07:42):
To what extent is your strategy kind of concentrated in
the area of technology. You mentioned South Korea, I'm thinking
semiconductors Taiwan. There are other electronic components that are manufactured there.
Is it mostly centered around high tech?
Speaker 3 (07:58):
Oh no, not necessarily. We're very versified investors across different
ASA classes, across different regions, across different sectors. So no,
it's definitely not purely tech. And you know, tech has
a pretty broad definition as well, everything from internet to software,
to hardware to semi et cetera. So we will pick
and choose between those different areas depending on where they
(08:19):
are in the cycle. We do think that the expectations
now for some of the AI plays is no longer low.
In the last couple of weeks, they've really popped quite
a bit. We do have a lot of those positions.
We're holding on to them, but we're not adding to
them at this point. But for example, some of the
smartphone and other hardware supply chain, I think the expectations
are very low at the moment, and you know, that
(08:41):
might be a good time to potentially, you know, add
to those positions. China Internet has rallied pretty dramatically since
the beginning of the year, and so you know, maybe
have to be a little bit more selective versus before.
And you know US software is more idiosyncratic than just
the beta trade, so various parts of tech are not
(09:02):
necessarily the same.
Speaker 1 (09:03):
How are you feeling about US risk assets right now?
Do you have an appetite for US stocks?
Speaker 3 (09:08):
Look, we added to US stocks and April on the selloff,
but now I think the risk reward is no longer
as obvious. This is basically because the market has pretty
much rebounded as if the trade war didn't really happen
to this extent and that there will be a pretty
decent resolution. Also, at some point the market was pricing
(09:29):
a much higher risk of recession. Now I think that
has been priced out to a certain extent, so the
room for further positive surprise on US equities is not
as great as before. But we do still think that
if we have a mild outcome in terms of the
trade negotiations, and Trump ends up being fairly reasonable and
people stop thinking that the US system is going to
(09:52):
be potentially breaking down quickly, then we actually see more
upside for treasury and fixing come versus equities in the
US at the moment will leave it.
Speaker 1 (10:00):
There, Helen, It's always a pleasure. Thank you so much.
Helen Ju, managing partner, also the CIO at NF Trinity
from Hong Kong. Joining us here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm Doug Chrisner.
(10:21):
So the FED seems likely to resist the notion of
rate cuts, at least in the near term, given some
of the mounting headwinds we've been talking about for the
American economy. The founder of Bridgewater Associates, Ray Daalio, says
the FED should not be cutting rates right now. Here
is Dalio in conversation with Bloomberg Shanali Bosik speaking at
the BNP Parabah Annual Global Electric Vehicle and Mobility Conference.
Speaker 4 (10:45):
I think the markets, if they were to see a
too aggressive cut and monetary policy too inappropriate cut, that
it would actually be bad for the bottom market.
Speaker 1 (10:58):
That is Bridgewater founder Dalio speaking to Bloomberg Shanali Bossik
in Hong Kong. For a closer look at the macro
let's bring in Brian Vendig. He is the chief investment
officer at MJP Wealth Advisors. Brian is on the line
from Westport Connecticut. Brian, thank you so much for making
time to chat. How do you understand the economic risk
right now? Given the story on tariffs. I know this
(11:21):
is a very dynamic situation working pretty much in the
middle of a ninety day cooling off period, let's call
it a pause, But I'm curious to get your take
on where you think things stand right now.
Speaker 5 (11:33):
Yeah, thanks, Doug. I mean, I think in the short
term there has been damage to the economy, as we've
seen with business leaders on surveys talking about slowing hiring,
slowing investment in their businesses, and obviously the consumer pulling
back a little bit, even though retail sales numbers in
the past have come in healthy. I think the concern
(11:55):
is moving forward, moving forward price sensitivity there So I
think damage has been done in the short term to
the economy. However, depending on the jump ball, on the
speed of further trade negotiations and are we going to
get to some meaningful trade negotiations of some of our
larger partners over the next sixty days on the first pause,
(12:17):
and of course China later on in the summer, I
think that's really where that economic risk is going to
present itself, because if we have some resolution on trade
and some improving confidence coming back to the business community
and consumers, then I still think over the second half
of the year the economy still has a chance or
(12:37):
some growth. However, of course, if things go to the
contrary and these negotiations are extended, then I think those
A session ods can continue to stay elevated up.
Speaker 1 (12:46):
I'm curious to get your take on price pressure, as
we heard earlier in the week from Jamie Diamond, the
head of JP Morgan, and he was saying, the chances
of elevated inflation, even stagflation, are greater than people think.
Do you think that pretty much a risk?
Speaker 5 (13:01):
I think stagflation is a risk in the short term
in the sense that we're going to start to see
price increases start to flow through. However, going back to
my comment about trade, and also just looking at earnings
forecasts right now, I mean earnings forecasts have been taken down,
but for Q two we're still looking at year over
(13:22):
year profits of about five and a half percent something
very similar. Still on the outlooks for Q three and
some improvement in Q four, and I think once we
get to July earnings we'll get some confirmation there. I
think if there is stagflation, assuming trade negotiation, and those
earnings outlooks cold when we get to July, then I
think Jamie Diamond's comments might be short lived and there
(13:45):
will be some disruption in the short term, but not
necessarily over the longer term. I think also at the
same point in time, when we think about the disruptions
that have happened with supply chains, in the short term,
inventory levels need to be restocked in June. We've heard
from Walmart, for example, saying, you know, we'll do our
best to try to control margin, but we're going to
(14:07):
have to pass on some of these prices. I think
that's a concern that investors have over the next two
to three months.
Speaker 1 (14:13):
Let's talk a little bit about the bond market. We
had a backup in yields today, ever so slightly. The
budget negotiations today showed very little in the way of resolution,
and we were told that the President expressed a little
bit of frustration today with demands to significantly boost a
cap on state and local tax deductions. If you look
at all the variables right now that are influencing the
(14:35):
bond market, where is the fiscal story right now? As
something that's carrying weight.
Speaker 5 (14:41):
Yeah, Doug. I mean, I think with the uncertainty around
the level of government spending and how much the new
bill that's getting worked onne in Congress is going to
add two budget deficits going forward, I think the bond
market is telling us, you know, that uncertainty is leading
to an app it's a confidence in holding treasuries right now,
(15:03):
and you're seeing a little bit of selling pressure there
with yields going up, very similar to the reaction that
we saw on the treasury market, you know, back in
the beginning of April with the announcement of tariffs on
Liberation Deck. I also think there's a little bit of
flow through as well with elevated yields because of those
concerns about prices increasing coming from tariffs as well in
(15:25):
the short term. So I really think it's a double
edged sword. But when once we get some resolution later
on this summer, I think with the Reconciliation Bill, and
we get a better clear view on taxes and spending,
I think there's a ceiling on yields in the treasury
market where we'd really be surprised we see yields, you know,
shoot past you know, four point seven or four point
(15:47):
eight on the ten years, So definitely keeping a close
eye on it. But I think it's it's not surprising
in seeing that that slite increase based on today's news.
Speaker 1 (15:55):
Before I get your view on how to put new
money to work in these markets, I want to address
geopolitical risk because we were getting indications from CNN that
US intelligence has suggested that Israel is planning to make
preparations to possibly strike Iranian nuclear facilities, and crude oil
right now is up by more than two percent in
(16:15):
the electronic session. How are you waiting geopolitics, whether it's
in the Mid East or whether we're talking about trying
to find an end to war in Ukraine. Well, when
you look.
Speaker 5 (16:26):
Back historically when geopolitical events come up, you know they're
primarily short lived, and yes they create violatility and disruption
in the market. But if you still have a longer
term view, focusing on earnings, fundamentals and some of the
things we talked about, you know earlier, I think having
a broadly diversified portfolio in this in this environment is
(16:48):
still going to is going to help you weather through
the storm. So you know, I don't see gold, you know,
I see gold appreciating. When you go through these types
of geopolitical uncertainties, yields usually come in which favor more
conservative investments like bonds. And I think when you think
about equities, you know, just making making sure in this
environment was so much going on that you're not overpaying
(17:09):
for growth, uh, and making sure that your your balance
between value stocks, uh, mid cap stocks that really haven't
participated as much in the past in market rallies are
good ways to kind of hedge a little bit in
the short term against those geopolitical events.
Speaker 1 (17:24):
How are you viewing markets offshore right now? Are there
opportunities that you're taking advantage of?
Speaker 5 (17:29):
Oh, definitely, you know, we we added to international equities, uh,
you know, a couple of months ago, especially more on
the news of UH countries wanting to reinvest in themselves,
relooking at fiscal policies that are helping US support domestic
economic growth as the US is evaluating uh, you know,
(17:50):
trade and maybe taking a step back and decoupling from
some aspects of of of a global economy. And I
think valuations there on international equities are definitely a lot
more fair per se than you know than S and
P that's back up to you know, a four pe
with a twenty handle, while international equities are in the
(18:10):
low teams. So I think being selective in developed markets
right now makes a lot of sense. We like Europe,
we like Japan and specific parts of Latin South America.
But I think at the same point in time, there's
been a huge run international equities, Doug, so I wouldn't
be surprised if there's a little consolidation to find a
better edgy point moving forward.
Speaker 1 (18:31):
All right, Brian, we'll leave it there. Thank you so
much for joining us. Brian Vendig there. He is the
chief investment Officer at MJP Wealth Advisors, joining from Westport, Connecticut.
Here on the Daybreak Asia Podcast. Thanks for listening to
today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday,
we look at the story shaping markets, finance, and geopolitics
(18:55):
in the Asia Pacific. You can find us on Apple, Spotify,
the Bloomberg Podcast Tube channel, or anywhere else you listen.
Join us again tomorrow for insight on the market moves
from Hong Kong to Singapore and Australia. I'm Doug Prisoner
and this is Bloomberg
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