November 23, 2025 • 20 mins
US officials are having early discussions on whether to let Nvidia sell its H200 artificial intelligence chips to China, according to people familiar with the matter. Helen Zhu, Managing Partner and CIO at NF Trinity, recaps last week in the AI trade, and the current the appetite for risk assets.
Plus, markets are looking ahead to more shutdown-delayed data and the Fed's Beige Book survey. Grace Glockner, Director of National Accounts & Investment Team Member at Scharf Investments, discusses the AI trade, the recent consumer sentiment data, and how "Steady Eddie" companies are shaping her outlook for the New Year.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Daybreak
Asia podcast. I'm Doug Chrisner. The appetite for risk assets
has improved this morning in the Asia Pacific. A couple
of things at work here. First, we are told US
(00:20):
officials were holding early talks on whether to allow Nvidia
to sell its H two hundred AI chips to China.
And last Friday we heard from the head of the
New York Fed, John Williams, and he seemed to suggest
a near term rate cut remains a possibility. Let's take
a look at market action with our guest, Helen ju.
Helen is managing partner also the CIO of the Family
(00:43):
Office n F Trinity. Helen joins us from Hong Kong.
Thank you so much for making time to chat with me.
Let's begin by looking at this unwinding that we saw
last week of the AI trade, not just here in
the States, but in the APAC as well. I think
for all of last week the MSCIS Pacific Index was
down nearly four percent. How do you understand or make
(01:05):
sense of what we have been seeing.
Speaker 2 (01:08):
Well, it's one big trade on a combined basis, because
it's a global ecosystem and value chain, right, so it's
not as surprise that the US and Asia would fall
in tandem or go up in tandem as well. What
we saw in the past few quarters is really, you know,
one after another, major capex hikes for AI companies in
(01:29):
terms of twenty twenty six and maybe even beyond in
terms of expectations. And also obviously in the private market
we saw huge valuation jumps for some of the leading companies.
So it was very much of virtuous feedback loop. So
as valuations went up, then companies that were in fear
of not being able to fund their capex or their
businesses got funded more easily, and so on and so forth,
(01:51):
so positively reinforcing. What happened I think in the last
couple of weeks is really a couple of things. One
is that we have some concerns about, you know, despite
the willingness to spend on AI, whether there is going
to be some supply side constraints. There is a lot
more talk now about power constraints, about labor constraints, about
core weaves, that they had to push back their capex
(02:11):
by a couple of quarters because of data center shell.
So some of this noise I think makes people concern
that maybe the spend and the progress and pace will
potentially miss versus what's already very very elevated expectations.
Speaker 1 (02:23):
What about circular financing some of these deals, the way
that funding is being provided, and then there's the issue
of debt issuance when it comes to financing some of
the capecs. Are they together kind of troubling for you?
Speaker 2 (02:38):
I think the fact that there's debt financing involved by
itself is not necessarily troubling, because there's usually a significant
amount of debt in any large infrastructural project. I think
what's more concerning to the overall market is that it's
basically company A investing into company B, company b's share
price going up, or company BE raising money in order
(02:58):
to buy products from company A. So that in itself
is what people find to be a little bit, you know, disconcerting.
But that said, you know, this is we're talking about
multi year projects and multi year investment and revenue. So
the risk of unraveling in the near term seems to
be relatively low, especially given that most of the CAPEC
(03:18):
spend in twenty twenty five and twenty twenty six by
the hyperscalers is not expected to have any meaningful cash
flow generation or major ROI. Basically, all those guys have
fully committed to the spend irrespective of near term ROI.
So it is an implicit you know, risk over the
medium to longer term, but not necessarily immediate.
Speaker 1 (03:35):
So I want to try to understand adoption of AI,
maybe a little anecdotally. Can you give me a sense
of how your firm, NF Trinity is using AI?
Speaker 2 (03:46):
Of course, I think we actually see that AI tools
are becoming more and more prevalent, and every month we
have new tools, you know, coming out. So for example,
now instead of downloading research reports one by one on
scanning them through with the naked eye looking for references
to the key points that we want, all we have
to do is go into some specific app and ask
(04:07):
it to search for us exactly what we're looking for,
and they will produce it for us and give us
links to the source so that we can click in
and follow through. So that would be one relatively rudimentary way.
Another way would be, you know, for example, if you
think about it, previously, we have loads of databases that
are all separate. Now actually we can take a lot
(04:29):
of the raw data and dump it into a large
language model and ask it to produce certain results and
search up specific things for us. So all of the
stuff is improving our efficiency by leaps and bounds, for sure.
Speaker 1 (04:41):
I'd like to look at a little bit of the
rivalry when it comes to artificial intelligence between the US
and China. The Trump administration, we are told, is considering
some options to ease restrictions on exports of certain chips
to the Chinese market, namely those from Nvidia, and I
think the H two hundred chip is really one of
the focal points here. We are told that the US
(05:03):
officials have had some early discussions as to whether or
not to allow these H two hundred chips into the
Chinese market. How do you view this rivalry right now?
And anecdotally, maybe you can give me a sense of
what you're hearing from companies on the mainland and how
well they are progressing to kind of meet what is
up until this point been an advantage to the US.
Speaker 2 (05:25):
Based on our more recent research, certainly the mainland semi
and foundry space remains lagging versus the US by quite
a bit, so that is why there's still some demand
for the Age twenty, which is a quite outdated model
of Nvidia that has been was banned for a while
but is now allowed for export to China. The H
(05:46):
one hundred is what was previously banned, so if the
H two hundred is actually also allowed, that would actually
be a huge positive surprise for China. I don't actually
agree that by sending these chips to China that is
going to meaningfully stalled China's progress. I actually think that
China is all in into semi irrespective and it will
(06:06):
try its very best to make progress on the most
advanced node, whether they have the H two hundred, the
H one hundred or not. But certainly having more chips
for training and inference in the near term is going
to be very helpful to China. AI also helpful to
Nvidia and the US supply chain, although not necessarily aligned
with US's interests over the medium to longer term.
Speaker 1 (06:28):
So we're approaching the holiday shopping season. We talk a
lot in the States about the wealth effect and the
degree to which a higher equity market has allowed certain
consumers to tap in to their gains and fund more
in the way of consumer spending. Is there a lot
in the way of the wealth effect.
Speaker 2 (06:45):
In the Asia Pacific, I think there is a certain extent.
I think in Hong Kong, for example, you can feel
it more than a year ago, for sure. I think
elsewhere it really depends, right, So certain markets like Taiwan
have done better. In China, I would say it's more
very much the high end has helped a little bit
(07:05):
in terms of the stock market rally, although the continuous
decline in property prices has certainly offset that to some extent.
In the US is very much a K shaped consumer,
So the high end guys are doing relatively well, but
the low end consumer is definitely being squeezed meaningfully by
the inflationary pressures of the past couple of years.
Speaker 1 (07:23):
What about this prevalence of by the dip that whole
mentality is that primarily a retail phenomenon as you understand it.
Speaker 2 (07:30):
I think the US market has become increasingly retail driven,
and so yes, by the dip has actually for sure
been kind of the key moo in the last three
to five years. I would say that it's you know,
some market neutral hedge funds as well as US retail
that have been the key pricemakers in the US market.
(07:52):
You know, in the recent period.
Speaker 1 (07:54):
Are you seeing evidence at all that there is leverage
that has been built up in the system that maybe
a little.
Speaker 2 (08:01):
Of course, there's leverage in the system. Clearly there has
been a period of very significant quantitative easying post COVID
as well as fiscal stimulus. UH, the various parts of
the credit market have been booming, for example, private credit
et cetera. UH. The massive supply of credit has resulted
in very thin credit spreads versus history, and that's you know,
(08:25):
that makes credit probably a little bit less attractive versus
some other periods, although the base rate is still relatively
high and could actually come off a bit. I think
the key thing that one needs to watch out for
is really whether there is any you know, major issue
that results in a lot of stress on the private
credit side, especially given that many private credit funds may
(08:47):
have outsized exposures to sectors like software, some of which
may have you know, disruption over the medium term from
AI related progress. So that's something to keep a very
close eye on you.
Speaker 1 (08:59):
When we talk about the appetite for risk, a lot
of people like to focus on the cryptocurrency market, and
then we've seen a pretty dramatic downdraft in the bitcoin
just to mention one, how do you feel about that
as an indicator for the appetite for risk assets?
Speaker 2 (09:14):
Crypto is indeed a high beta indicator for risk assets.
People say that it's for hedging, but I think it's
much more for just basically risk on risk off market
beta in essence. So it is an indication, and it's
correlated with AI trade unraveling recently, right, So I think,
you know, we'll continue to see ups and downs in
(09:37):
crypto in alignment with overall market and liquidity sentiment.
Speaker 1 (09:41):
Where you focus these days as you look for opportunity, well,
we have.
Speaker 2 (09:45):
To be focused everywhere. The most important things to watch
out for are really whether you know there is an
AI bubble or not, and whether there's a private credit bubble.
We think that neither of which is likely to have
a significant you know, bursts in the short term at least,
but that's something to keep a very close eye on.
The dollar has rebounded a little bit versus the bottom
(10:06):
a couple of months ago. We still think that there
are some opportunities in some of the emerging markets selectively,
like we like Korea, you know, even excluding the tech sector,
which has done phenomenally well. We like parts of Taiwan
where the Ai trade is, you know, lagging versus their
counterparts in the US, we still like certain parts of
Latin et cetera. For China, we would be a bit
(10:29):
more selective, given the market has rallied quite significantly this
year and the macroeconomic momentum has been slowing.
Speaker 1 (10:35):
And given the level of volatility that we have seen lately,
I'm curious about how you're putting new cash to work.
Are you holding on to a little bit of dry
powder right now looking for better entry points.
Speaker 2 (10:48):
I think most people are waiting for better entry points
at the moment. But of course keep in mind that,
you know, there are other things that one can put
money into that are not as risky, you know, for example,
on the fix income side, or our rates, or other
aspects not necessarily just equities.
Speaker 1 (11:05):
Okay, we'll leave it there, Helen, Thank you so very much.
Helen Ju managing partner and CIO at the Family Office
and f Trinity in Hong Kong, joining us here on
the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast.
I'm deg Krisner. It is a holiday shortened week. Stateside,
(11:28):
markets will be closed Thursday for the Thanksgiving holiday and
the next day Black Friday, you know well as the
biggest day of the year for retailers. Also in the
week ahead, the government will be releasing more of that
economic data that had been delayed by the shutdown, So
we're looking for September numbers on retail sales along with
producer prices and durable goods orders. And then on Wednesday,
(11:52):
the Fed will be releasing its Beije book survey for
a closer look at what the week ahead means for markets.
I'm joined by Grace Blackner of Sharp Investments. Grace is
on the investment team at Sharf. Thank you for making
time to chat with me. If we can begin, Grace
by looking at this consumer I was struck by the
erosion in consumer centiment last week reported by the University
(12:14):
of Michigan. What is your sense in terms of how
well the American consumer is holding up?
Speaker 3 (12:20):
Yeah, I think we are facing some near term headwinds. Right,
We're going into the holiday season with low consumer sentiment
that you touched on, but ultimately we could see some
of that reverse come the beginning of next year. We'll
be getting tax rebates for consumers. But ultimately, when you
think deeply of what the consumer is looking like right now,
(12:42):
we have lowing consumers that have really been in a
recession for a number of months. We have Gen Z
and millennials within unemployment levels in the high single digits.
So it's not a strong consumer picture, but in the
near term we could see some benefits beginning of next
year when we get tax refunds.
Speaker 1 (12:57):
So we talk a lot about the wealth of fact
that the equity market has produced and how maybe higher
income earners or those that have more direct exposure to
the equity market have been able to spend more than
those who don't have exposure to the equity space. Do
you think that's an important distinction that we need to
tease out a bit?
Speaker 3 (13:18):
Absolutely. The k economy has been a key factor in
the markets, and we've seen that with companies like Walmart
doing extremely well able to gain share. This is generally
in a market where they would do really well right
when that lower income consumer is hurting and even the
middle income consumer is not feeling extremely strong. The concern
is when you have equity markets behaving in a volatile manner,
(13:39):
as we've seen over the past couple of weeks, you
start to see that higher income consumer who's been feeling
very strongly start to feel a little bit more concern
and have a little more on ease.
Speaker 1 (13:51):
We have seen a lot of volatility, are absolutely right
to particularly as it's related to the AI trade. Where
are you right now with this theme of artificial intel leigence.
Speaker 3 (14:01):
Yeah, it's an interesting point that we're at right now.
What you saw last week with the launch of Gemini
three showed us a number of things, the first being
that open AI is no longer kind of the end
all be all in terms of functionality or accessibility for
these AI models, and that training can be done at
(14:21):
the highest levels without Nvidia GPUs because gem and I
didn't use GPUs for training the Gemini three model. So
in the end, in the stocks reflected what you saw
was Google performing extremely well, in other AI companies not
holding up as well over the course of the week,
and so we may be entering an era where not
(14:41):
all AI related companies are moving together anymore. And this
is going to be extremely important when you think about
how this trend evolves.
Speaker 1 (14:50):
So what are you inclined to do in a situation
like that do you want to take some money off
the table, particularly in some of those high flying names
that have done remarkably well.
Speaker 3 (14:59):
Yeah, it's interesting because the market has been so focused
on AI and it's kind of been just you know,
by now, ask questions later in terms of where the
market eventually evolves and who ends up having the most
competitive models, most competitive chips, et cetera. So what we've
been doing is looking at, Okay, are there quality companies
outside of the AI space where we don't have to
(15:22):
make a bet on these technologies that are still very
early days. It's kind of like betting on who's going
to be the winner in the Internet in nineteen ninety nine, right,
you probably would have said Yahoo, AOL, Right, companies that
ended up not being the strongest in the space. And
so we're looking for what we look for like steady
eddies is what we call them. And these are companies
that are outside of the AI speculation largely and they
(15:46):
have performed really well in past recessions. They're in sectors
like healthcare. Healthcare is training at the most attractive levels
that we've seen in seventy years. It's seen a little
bit of a bid over the past month or so,
but largely it's been forgotten and really high quality companies
that are being missed in this AI ferber So we
see it as an opportunity to buy some of those
(16:06):
study at ease.
Speaker 1 (16:07):
It's always the case that the FED is really the
dominant player when you look at market action, and we
heard last Friday from the head of the New York FED,
John Williams, he sees room for a rate cut in
his words, in the near term, maybe it's December, maybe
it's some time after the first of the year. How
important is the FED right now to your outlook and
(16:29):
trying to remain constructive on the US equity market.
Speaker 3 (16:34):
It all comes down to valuation, right We're now in
a situation where the market is price for perfection, and
it sets you up to see this volatility associated with
any new FED speak that we get. It's actually possible
that the outlook for twenty twenty six that comes out
of that December meeting is more important than whether we
get it cut into summer or not, because people are
(16:56):
starting to look forward, and so our thought is, let's
look for companies that are not price wore perfection, and
that allows us to have some ability for just these
you know, company specific stories to play out and gives
us a little bit more peace of mind when it
comes to these FED announcements.
Speaker 1 (17:16):
So you mentioned healthcare, I'm curious as to how you're
feeling about the financials these days.
Speaker 3 (17:21):
Yeah, financials are tricky. One you've seen the money center
banks do extremely well. An area that we like is insurance.
This is an area that generally performs well in a recession.
You still have to for the most part, maintain whether
it's your home insurance or your auto insurance. And they're
(17:43):
they're trading at a very attractive valuations and so that
would be another area that we would highlight within financials.
I think it's it's tough in an error in a
time of AI to look at, you know, the regional
banks where you know, are they going to be able
to compete with these larger institutions and and that's been
part of the concern in addition to the credit concerns
(18:03):
that they've had as well.
Speaker 1 (18:04):
So what's your outlook for the new year.
Speaker 3 (18:06):
We are cautiously optimistic for the steady eddy companies. I
think it's going to be could it could be another
stock pickers market? Right? What we saw in twenty twenty five.
The setup has been that AI really drove returns, It
drove the earnings growth into twenty twenty five. But what
(18:26):
that did is it allowed opportunities and companies that still
have strong earnings growth double digit earnings growth irrespective of
market cycles, and they're training at low valuation. So we
see an opportunity for those companies to outperform in twenty
twenty six because they do have that valuation support and
potentially could see a mean reversion where some of these
(18:47):
valuations in twenty twenty six from tech AI companies that
are deemed to be not winners for the near term.
It's tough to say how it's going to play out
longer term, but right now, that's how the market's viewing. It.
Could see their valuations come in and you could see
that AI, those AI dollars drive to just a few
companies that are our view to be winners.
Speaker 1 (19:07):
Do you want to be diversified offshore right now globally
or are you looking at other markets outside the US?
Speaker 3 (19:13):
The global equity market is very attractive right It's still
trading even though we saw a little bit of a
run earlier in the year. It's still trading at more
attract evaluations than we have in the US. The key
there is to make sure that you're finding quality companies
with really strong earnings growth, and you can get them
at a discount, so what you'd get in the US.
Speaker 1 (19:31):
Okay, Grace, we'll leave it there. Thank you so very much.
Grace Glockner is with Sharf Investments. Joining us 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 in
the Asia Pacific. You can find us on Apple, Spotify,
(19:53):
the Bloomberg Podcast YouTube 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 Daybreak
Asia podcast. I'm Doug Chrisner. The appetite for risk assets
has improved this morning in the Asia Pacific. A couple
of things at work here. First, we are told US
(00:20):
officials were holding early talks on whether to allow Nvidia
to sell its H two hundred AI chips to China.
And last Friday we heard from the head of the
New York Fed, John Williams, and he seemed to suggest
a near term rate cut remains a possibility. Let's take
a look at market action with our guest, Helen ju.
Helen is managing partner also the CIO of the Family
(00:43):
Office n F Trinity. Helen joins us from Hong Kong.
Thank you so much for making time to chat with me.
Let's begin by looking at this unwinding that we saw
last week of the AI trade, not just here in
the States, but in the APAC as well. I think
for all of last week the MSCIS Pacific Index was
down nearly four percent. How do you understand or make
(01:05):
sense of what we have been seeing.
Speaker 2 (01:08):
Well, it's one big trade on a combined basis, because
it's a global ecosystem and value chain, right, so it's
not as surprise that the US and Asia would fall
in tandem or go up in tandem as well. What
we saw in the past few quarters is really, you know,
one after another, major capex hikes for AI companies in
(01:29):
terms of twenty twenty six and maybe even beyond in
terms of expectations. And also obviously in the private market
we saw huge valuation jumps for some of the leading companies.
So it was very much of virtuous feedback loop. So
as valuations went up, then companies that were in fear
of not being able to fund their capex or their
businesses got funded more easily, and so on and so forth,
(01:51):
so positively reinforcing. What happened I think in the last
couple of weeks is really a couple of things. One
is that we have some concerns about, you know, despite
the willingness to spend on AI, whether there is going
to be some supply side constraints. There is a lot
more talk now about power constraints, about labor constraints, about
core weaves, that they had to push back their capex
(02:11):
by a couple of quarters because of data center shell.
So some of this noise I think makes people concern
that maybe the spend and the progress and pace will
potentially miss versus what's already very very elevated expectations.
Speaker 1 (02:23):
What about circular financing some of these deals, the way
that funding is being provided, and then there's the issue
of debt issuance when it comes to financing some of
the capecs. Are they together kind of troubling for you?
Speaker 2 (02:38):
I think the fact that there's debt financing involved by
itself is not necessarily troubling, because there's usually a significant
amount of debt in any large infrastructural project. I think
what's more concerning to the overall market is that it's
basically company A investing into company B, company b's share
price going up, or company BE raising money in order
(02:58):
to buy products from company A. So that in itself
is what people find to be a little bit, you know, disconcerting.
But that said, you know, this is we're talking about
multi year projects and multi year investment and revenue. So
the risk of unraveling in the near term seems to
be relatively low, especially given that most of the CAPEC
(03:18):
spend in twenty twenty five and twenty twenty six by
the hyperscalers is not expected to have any meaningful cash
flow generation or major ROI. Basically, all those guys have
fully committed to the spend irrespective of near term ROI.
So it is an implicit you know, risk over the
medium to longer term, but not necessarily immediate.
Speaker 1 (03:35):
So I want to try to understand adoption of AI,
maybe a little anecdotally. Can you give me a sense
of how your firm, NF Trinity is using AI?
Speaker 2 (03:46):
Of course, I think we actually see that AI tools
are becoming more and more prevalent, and every month we
have new tools, you know, coming out. So for example,
now instead of downloading research reports one by one on
scanning them through with the naked eye looking for references
to the key points that we want, all we have
to do is go into some specific app and ask
(04:07):
it to search for us exactly what we're looking for,
and they will produce it for us and give us
links to the source so that we can click in
and follow through. So that would be one relatively rudimentary way.
Another way would be, you know, for example, if you
think about it, previously, we have loads of databases that
are all separate. Now actually we can take a lot
(04:29):
of the raw data and dump it into a large
language model and ask it to produce certain results and
search up specific things for us. So all of the
stuff is improving our efficiency by leaps and bounds, for sure.
Speaker 1 (04:41):
I'd like to look at a little bit of the
rivalry when it comes to artificial intelligence between the US
and China. The Trump administration, we are told, is considering
some options to ease restrictions on exports of certain chips
to the Chinese market, namely those from Nvidia, and I
think the H two hundred chip is really one of
the focal points here. We are told that the US
(05:03):
officials have had some early discussions as to whether or
not to allow these H two hundred chips into the
Chinese market. How do you view this rivalry right now?
And anecdotally, maybe you can give me a sense of
what you're hearing from companies on the mainland and how
well they are progressing to kind of meet what is
up until this point been an advantage to the US.
Speaker 2 (05:25):
Based on our more recent research, certainly the mainland semi
and foundry space remains lagging versus the US by quite
a bit, so that is why there's still some demand
for the Age twenty, which is a quite outdated model
of Nvidia that has been was banned for a while
but is now allowed for export to China. The H
(05:46):
one hundred is what was previously banned, so if the
H two hundred is actually also allowed, that would actually
be a huge positive surprise for China. I don't actually
agree that by sending these chips to China that is
going to meaningfully stalled China's progress. I actually think that
China is all in into semi irrespective and it will
(06:06):
try its very best to make progress on the most
advanced node, whether they have the H two hundred, the
H one hundred or not. But certainly having more chips
for training and inference in the near term is going
to be very helpful to China. AI also helpful to
Nvidia and the US supply chain, although not necessarily aligned
with US's interests over the medium to longer term.
Speaker 1 (06:28):
So we're approaching the holiday shopping season. We talk a
lot in the States about the wealth effect and the
degree to which a higher equity market has allowed certain
consumers to tap in to their gains and fund more
in the way of consumer spending. Is there a lot
in the way of the wealth effect.
Speaker 2 (06:45):
In the Asia Pacific, I think there is a certain extent.
I think in Hong Kong, for example, you can feel
it more than a year ago, for sure. I think
elsewhere it really depends, right, So certain markets like Taiwan
have done better. In China, I would say it's more
very much the high end has helped a little bit
(07:05):
in terms of the stock market rally, although the continuous
decline in property prices has certainly offset that to some extent.
In the US is very much a K shaped consumer,
So the high end guys are doing relatively well, but
the low end consumer is definitely being squeezed meaningfully by
the inflationary pressures of the past couple of years.
Speaker 1 (07:23):
What about this prevalence of by the dip that whole
mentality is that primarily a retail phenomenon as you understand it.
Speaker 2 (07:30):
I think the US market has become increasingly retail driven,
and so yes, by the dip has actually for sure
been kind of the key moo in the last three
to five years. I would say that it's you know,
some market neutral hedge funds as well as US retail
that have been the key pricemakers in the US market.
(07:52):
You know, in the recent period.
Speaker 1 (07:54):
Are you seeing evidence at all that there is leverage
that has been built up in the system that maybe
a little.
Speaker 2 (08:01):
Of course, there's leverage in the system. Clearly there has
been a period of very significant quantitative easying post COVID
as well as fiscal stimulus. UH, the various parts of
the credit market have been booming, for example, private credit
et cetera. UH. The massive supply of credit has resulted
in very thin credit spreads versus history, and that's you know,
(08:25):
that makes credit probably a little bit less attractive versus
some other periods, although the base rate is still relatively
high and could actually come off a bit. I think
the key thing that one needs to watch out for
is really whether there is any you know, major issue
that results in a lot of stress on the private
credit side, especially given that many private credit funds may
(08:47):
have outsized exposures to sectors like software, some of which
may have you know, disruption over the medium term from
AI related progress. So that's something to keep a very
close eye on you.
Speaker 1 (08:59):
When we talk about the appetite for risk, a lot
of people like to focus on the cryptocurrency market, and
then we've seen a pretty dramatic downdraft in the bitcoin
just to mention one, how do you feel about that
as an indicator for the appetite for risk assets?
Speaker 2 (09:14):
Crypto is indeed a high beta indicator for risk assets.
People say that it's for hedging, but I think it's
much more for just basically risk on risk off market
beta in essence. So it is an indication, and it's
correlated with AI trade unraveling recently, right, So I think,
you know, we'll continue to see ups and downs in
(09:37):
crypto in alignment with overall market and liquidity sentiment.
Speaker 1 (09:41):
Where you focus these days as you look for opportunity, well,
we have.
Speaker 2 (09:45):
To be focused everywhere. The most important things to watch
out for are really whether you know there is an
AI bubble or not, and whether there's a private credit bubble.
We think that neither of which is likely to have
a significant you know, bursts in the short term at least,
but that's something to keep a very close eye on.
The dollar has rebounded a little bit versus the bottom
(10:06):
a couple of months ago. We still think that there
are some opportunities in some of the emerging markets selectively,
like we like Korea, you know, even excluding the tech sector,
which has done phenomenally well. We like parts of Taiwan
where the Ai trade is, you know, lagging versus their
counterparts in the US, we still like certain parts of
Latin et cetera. For China, we would be a bit
(10:29):
more selective, given the market has rallied quite significantly this
year and the macroeconomic momentum has been slowing.
Speaker 1 (10:35):
And given the level of volatility that we have seen lately,
I'm curious about how you're putting new cash to work.
Are you holding on to a little bit of dry
powder right now looking for better entry points.
Speaker 2 (10:48):
I think most people are waiting for better entry points
at the moment. But of course keep in mind that,
you know, there are other things that one can put
money into that are not as risky, you know, for example,
on the fix income side, or our rates, or other
aspects not necessarily just equities.
Speaker 1 (11:05):
Okay, we'll leave it there, Helen, Thank you so very much.
Helen Ju managing partner and CIO at the Family Office
and f Trinity in Hong Kong, joining us here on
the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast.
I'm deg Krisner. It is a holiday shortened week. Stateside,
(11:28):
markets will be closed Thursday for the Thanksgiving holiday and
the next day Black Friday, you know well as the
biggest day of the year for retailers. Also in the
week ahead, the government will be releasing more of that
economic data that had been delayed by the shutdown, So
we're looking for September numbers on retail sales along with
producer prices and durable goods orders. And then on Wednesday,
(11:52):
the Fed will be releasing its Beije book survey for
a closer look at what the week ahead means for markets.
I'm joined by Grace Blackner of Sharp Investments. Grace is
on the investment team at Sharf. Thank you for making
time to chat with me. If we can begin, Grace
by looking at this consumer I was struck by the
erosion in consumer centiment last week reported by the University
(12:14):
of Michigan. What is your sense in terms of how
well the American consumer is holding up?
Speaker 3 (12:20):
Yeah, I think we are facing some near term headwinds. Right,
We're going into the holiday season with low consumer sentiment
that you touched on, but ultimately we could see some
of that reverse come the beginning of next year. We'll
be getting tax rebates for consumers. But ultimately, when you
think deeply of what the consumer is looking like right now,
(12:42):
we have lowing consumers that have really been in a
recession for a number of months. We have Gen Z
and millennials within unemployment levels in the high single digits.
So it's not a strong consumer picture, but in the
near term we could see some benefits beginning of next
year when we get tax refunds.
Speaker 1 (12:57):
So we talk a lot about the wealth of fact
that the equity market has produced and how maybe higher
income earners or those that have more direct exposure to
the equity market have been able to spend more than
those who don't have exposure to the equity space. Do
you think that's an important distinction that we need to
tease out a bit?
Speaker 3 (13:18):
Absolutely. The k economy has been a key factor in
the markets, and we've seen that with companies like Walmart
doing extremely well able to gain share. This is generally
in a market where they would do really well right
when that lower income consumer is hurting and even the
middle income consumer is not feeling extremely strong. The concern
is when you have equity markets behaving in a volatile manner,
(13:39):
as we've seen over the past couple of weeks, you
start to see that higher income consumer who's been feeling
very strongly start to feel a little bit more concern
and have a little more on ease.
Speaker 1 (13:51):
We have seen a lot of volatility, are absolutely right
to particularly as it's related to the AI trade. Where
are you right now with this theme of artificial intel leigence.
Speaker 3 (14:01):
Yeah, it's an interesting point that we're at right now.
What you saw last week with the launch of Gemini
three showed us a number of things, the first being
that open AI is no longer kind of the end
all be all in terms of functionality or accessibility for
these AI models, and that training can be done at
(14:21):
the highest levels without Nvidia GPUs because gem and I
didn't use GPUs for training the Gemini three model. So
in the end, in the stocks reflected what you saw
was Google performing extremely well, in other AI companies not
holding up as well over the course of the week,
and so we may be entering an era where not
(14:41):
all AI related companies are moving together anymore. And this
is going to be extremely important when you think about
how this trend evolves.
Speaker 1 (14:50):
So what are you inclined to do in a situation
like that do you want to take some money off
the table, particularly in some of those high flying names
that have done remarkably well.
Speaker 3 (14:59):
Yeah, it's interesting because the market has been so focused
on AI and it's kind of been just you know,
by now, ask questions later in terms of where the
market eventually evolves and who ends up having the most
competitive models, most competitive chips, et cetera. So what we've
been doing is looking at, Okay, are there quality companies
outside of the AI space where we don't have to
(15:22):
make a bet on these technologies that are still very
early days. It's kind of like betting on who's going
to be the winner in the Internet in nineteen ninety nine, right,
you probably would have said Yahoo, AOL, Right, companies that
ended up not being the strongest in the space. And
so we're looking for what we look for like steady
eddies is what we call them. And these are companies
that are outside of the AI speculation largely and they
(15:46):
have performed really well in past recessions. They're in sectors
like healthcare. Healthcare is training at the most attractive levels
that we've seen in seventy years. It's seen a little
bit of a bid over the past month or so,
but largely it's been forgotten and really high quality companies
that are being missed in this AI ferber So we
see it as an opportunity to buy some of those
(16:06):
study at ease.
Speaker 1 (16:07):
It's always the case that the FED is really the
dominant player when you look at market action, and we
heard last Friday from the head of the New York FED,
John Williams, he sees room for a rate cut in
his words, in the near term, maybe it's December, maybe
it's some time after the first of the year. How
important is the FED right now to your outlook and
(16:29):
trying to remain constructive on the US equity market.
Speaker 3 (16:34):
It all comes down to valuation, right We're now in
a situation where the market is price for perfection, and
it sets you up to see this volatility associated with
any new FED speak that we get. It's actually possible
that the outlook for twenty twenty six that comes out
of that December meeting is more important than whether we
get it cut into summer or not, because people are
(16:56):
starting to look forward, and so our thought is, let's
look for companies that are not price wore perfection, and
that allows us to have some ability for just these
you know, company specific stories to play out and gives
us a little bit more peace of mind when it
comes to these FED announcements.
Speaker 1 (17:16):
So you mentioned healthcare, I'm curious as to how you're
feeling about the financials these days.
Speaker 3 (17:21):
Yeah, financials are tricky. One you've seen the money center
banks do extremely well. An area that we like is insurance.
This is an area that generally performs well in a recession.
You still have to for the most part, maintain whether
it's your home insurance or your auto insurance. And they're
(17:43):
they're trading at a very attractive valuations and so that
would be another area that we would highlight within financials.
I think it's it's tough in an error in a
time of AI to look at, you know, the regional
banks where you know, are they going to be able
to compete with these larger institutions and and that's been
part of the concern in addition to the credit concerns
(18:03):
that they've had as well.
Speaker 1 (18:04):
So what's your outlook for the new year.
Speaker 3 (18:06):
We are cautiously optimistic for the steady eddy companies. I
think it's going to be could it could be another
stock pickers market? Right? What we saw in twenty twenty five.
The setup has been that AI really drove returns, It
drove the earnings growth into twenty twenty five. But what
(18:26):
that did is it allowed opportunities and companies that still
have strong earnings growth double digit earnings growth irrespective of
market cycles, and they're training at low valuation. So we
see an opportunity for those companies to outperform in twenty
twenty six because they do have that valuation support and
potentially could see a mean reversion where some of these
(18:47):
valuations in twenty twenty six from tech AI companies that
are deemed to be not winners for the near term.
It's tough to say how it's going to play out
longer term, but right now, that's how the market's viewing. It.
Could see their valuations come in and you could see
that AI, those AI dollars drive to just a few
companies that are our view to be winners.
Speaker 1 (19:07):
Do you want to be diversified offshore right now globally
or are you looking at other markets outside the US?
Speaker 3 (19:13):
The global equity market is very attractive right It's still
trading even though we saw a little bit of a
run earlier in the year. It's still trading at more
attract evaluations than we have in the US. The key
there is to make sure that you're finding quality companies
with really strong earnings growth, and you can get them
at a discount, so what you'd get in the US.
Speaker 1 (19:31):
Okay, Grace, we'll leave it there. Thank you so very much.
Grace Glockner is with Sharf Investments. Joining us 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 in
the Asia Pacific. You can find us on Apple, Spotify,
(19:53):
the Bloomberg Podcast YouTube 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
Popular Podcasts
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.