September 15, 2025 • 20 mins
Asian stocks posted modest gains at the open after Wall Street hit fresh highs ahead of an expected Federal Reserve interest-rate cut this week. Shares in Japan, Australia and South Korea opened higher, with the MSCI Asia-Pacific Index hovering near its record high. Bets on Fed easing sent the S&P 500 above 6,600 on Monday, while the Nasdaq 100 posted its longest advance since 2023. Meantime, Donald Trump's economic adviser Stephen Miran is on his way to joining the Federal Reserve board after the Senate confirmed him to the post in a vote Monday evening. The Senate voted largely along party lines to approve Miran's nomination, setting him up to walk into the Fed's Washington offices Tuesday morning in time for this week's FOMC meeting. We get the views of Katy Kaminski, Chief Research Strategist and Portfolio Manager at AlphaSimplex.
Plus - President Trump said he would speak with Chinese leader Xi Jinping on Friday as US and Chinese officials reached a framework deal on keeping the TikTok app running in the US. It would be the first direct engagement between Trump and Xi since June. US Treasury Secretary Scott Bessent, who led the talks in Spain, told reporters that a framework to keep ByteDance's TikTok app running in the US had been reached. China's Vice Commerce Minister Li Chenggang also told reporters in Madrid that a framework of "consensus" had been reached on TikTok, while cautioning that Beijing won't sacrifice principles for a deal. We get reaction from Wendy Cutler, Vice President at the Asia Society Policy Institute. She speaks with Bloomberg's Shery Ahn and Annabelle Droulers on The Asia Trade.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
Welcome to the Daybreak Asia podcast. I'm Deuk Krisner. So
officials from the US and China have reached a framework
on keeping TikTok running in the US. This will set
the stage for a phone call on Friday between President
Trump and Chinese President Chi Jinping. The framework was reached
in Madrid Treasury Secretary Besson confirming a plan for US
(00:31):
ownership of TikTok. Tom Orlick is chief economist for Bloomberg Economics.
Speaker 3 (00:37):
If we think about this from Beijing's perspective, they've got
conflicting objectives. On the one hand, they would dearly love
to have unlimited access to leading edge chips from Nvidia
to accelerate their artificial intelligence progress. On the other hand,
they recognize that the US is using access to chips
(00:58):
as an instrument control and negotiating leverage. They don't like that.
Speaker 2 (01:04):
That is Bloomberg's tom Orlick. Now, we'll get some perspective
from the Asia Pacific momentarily, but we begin here in
the States, where the fed's two day meeting gets underway
in a matter of hours. Joining me now is Katie Kaminski,
Chief for Search strategist, also portfolio manager at Alpha Simplex. Katie,
good to see you. Thank you so much for spending
(01:24):
time with me. So a rate cut, I think we
can agree, seems like it's a sure thing. The question
is whether the FED begins to signal a series of
reductions extending into next year. Is that a fair statement?
Speaker 4 (01:36):
I definitely agree.
Speaker 5 (01:37):
I feel like the market has already priced in and
has really sort of foregone the conclusion that we'll have
rate cuts this week. But what I'm really interested in
is how many and what till do they make so
that we kind of understand the trajectory of the FED
as opposed to just this week.
Speaker 2 (01:57):
What is your sense the probability of a fifty basis
point rate cut this week? Is that too too aggressive?
Do you think?
Speaker 5 (02:06):
Well? I think based on most indications, there's a low
probability of that, but there still is a small probability.
There are a few officials that also probably will dissent
in favor of a fifty point cut, and I think
that sort of indicates the amount of descents that we've had,
and we haven't had a lot of descents in the
(02:27):
FED until recently, so I think that is something to
watch and think about.
Speaker 2 (02:31):
One of the things that we know is that President
Trump has been pressuring the FED to cut interest rates.
David Kelly over at JP Morgan Asset Management was saying
a rate cut will increase risk for stock spawns and
the dollar if it's perceived to be driven by political pressure,
if it's perceived to be driven by political pressure and
(02:53):
doesn't align with the Fed's forecast for the economy. Fair statement.
Speaker 4 (02:59):
I definitely so.
Speaker 5 (03:00):
And the reason for this is if you look at
the dual mandate, I mean, inflation numbers have actually been
going up some so you know, you're really sitting in
a situation where if it's perceived that this is not
given by a sort of economic analysism based on the
fed's view, then real view, that could definitely cause people
(03:22):
to wonder if it could go too far. And I
think there's definitely people out there thinking about that.
Speaker 2 (03:27):
So we had records today for the S and P
and the NASDAK. What does it say to you that the
market is trading at record highs at a time when
the FED is going to be easy. Does that make
you constructive on equities or are maybe a little cautious.
Speaker 5 (03:40):
Right now, I'd say it's still constructive in terms of
the signals because it's all about the magnitude. So how
severe is the job situation versus the benefits of lower
rates potentially stimulating the economy, And so I.
Speaker 4 (03:55):
Think that's where the market is right now.
Speaker 5 (03:57):
It's leaning towards having lower rates could be positive, and
it's not more positive than a worsening job situation. So
I think we have to wait and see the next
trajectory because the severity of multiple cuts could actually have
a much more stimulative or a larger effect.
Speaker 4 (04:16):
So it's just the beginning now, I would say.
Speaker 2 (04:19):
So a moment ago, I mentioned the US in China
reaching the framework on keeping TikTok running in the US
maybe step one in trade negotiations between Washington and Beijing. Tariffs,
as we know, are still in effect. How are you
reading the tariff story right now as it relates to inflation.
Speaker 5 (04:38):
Well, the challenge with this particular situation, if you look
at this conversation with China is it just shows how
complex it is that this could really take a long
time to actually come to fruition that there is a
deal which means that these tariffs stay in place, and there.
Speaker 4 (04:55):
Will be ramifications of those tariffs.
Speaker 5 (04:57):
So I think what we've noticed, though, is that headlines
are not moving the markets as much as they were before.
So you're really not seeing as much reaction to such information.
And I think it's going to take a long time
and it's going to be quite complex to understand the
US China situation.
Speaker 2 (05:15):
So we had yields down just a bit today. There's
been a lot of movement in the bond market recently
as players in that space have been discounting an aggressive FED.
How much more room to run is there in the
bond market right now? How far can yields decline further?
Speaker 5 (05:33):
Well, this is a very good question because a lot
of times the market gets ahead.
Speaker 4 (05:38):
Of the FED. So I think a surprising.
Speaker 5 (05:40):
Thing would be that we might actually be underwhelmed and
the market correct. This is because a lot of traders
and investors have been getting in sort of ahead of
the FED, and if the FED sort of slows down
or pumps the brakes, you might actually see a tick
up and yields, which is kind of counterintuitive for some investors.
So my view is that it's going to be touch
(06:03):
and go, and we're going to have to watch and
see how the markets move, but moving abruptly more. I
don't see that at this point, so I think we'll
have to wait until later this week and see how
that reactions.
Speaker 2 (06:14):
So worst case scenario, though we're just above four percent
now in the tenure in yield terms, could we get
back up to a round four and a half?
Speaker 5 (06:23):
I mean it's possible, but I think that would require
us to have signaling that the FED is still being
very steady, and that has not really been the direction
momentum that you've seen with the FED. There's been just
sort of a slow pivot towards easing, and that, in
some sense, I would.
Speaker 4 (06:42):
Suggest, is a little bit less likely.
Speaker 5 (06:45):
You could see yields tick up a little bit if
people where markets are underwhelmed by cuts not coming as
fast as they think, or people pricing in aggressive cuts
that don't.
Speaker 4 (06:56):
Come to fruition.
Speaker 2 (06:57):
I'm just wondering about a negative prints on inflation.
Speaker 5 (07:01):
Right.
Speaker 2 (07:01):
We talk a little bit about the risk of stagflation
in the current environment, and I'm wondering whether that could
precipitate a move up and yield at the long end.
Speaker 5 (07:11):
Oh, definitely, And we started to see some indications in
the technical signals this summer.
Speaker 4 (07:16):
We saw steepening trades.
Speaker 5 (07:18):
Going on for sure, and that could definitely be back
in focus again. If we start to see an acceleration
in inflation and we're cutting rates at the same time,
that always gets everyone concerned about low growth, lots more
inflation aka stagflation. I think that's the corner case that
(07:39):
many investors are concerned about with cutting rates too fast.
Speaker 2 (07:42):
So we had some dollar weakness today that shouldn't surprise you.
It seems like the dollar has been in this process
right now of giving back a lot of the gains
that we saw a short while ago. Are we firmly
now in a new paradigm where the dollar is concerned
against the majors?
Speaker 5 (07:59):
Well this that's a good question because we have seen
a persistent, persistent weakness in the US dollar most of
the year, and there's several factors that are against the
dollar right now. So cutting rates tends to in general
be negative for the dollar. Positive sentiment cash flows regarding
(08:19):
positive sentiment can also be negative for the dollar.
Speaker 4 (08:22):
So there's just a few.
Speaker 5 (08:23):
Factors at play right now that don't make the dollar
look as desirable. So I think that could continue to
be the case, especially if we continue to see ray
cuts over the next couple of months. So I think
people are positioning in anticipation of that.
Speaker 2 (08:38):
One of the things the market is prepared for is
a Dubvish tilt as the fed's Board of Governors kind
of gets reconfigured here, and I know there's been some
question at the margin about FED independence. We spoke a
moment ago about the influence that the president may be
having on policy right now. Is that something that you're
concerned about a great extent.
Speaker 5 (09:02):
I mean, I think the market is definitely concerned about
that and has moved some on those type of reactions,
especially earlier on.
Speaker 4 (09:11):
I think the fact that you have several.
Speaker 5 (09:14):
More descents and disagreement in the FED is something that
we're not used to seeing for quite some time. So
I think as things start to shift even further, this
question will continue to be at the top of minds,
and if it becomes more apparent, you could see a
market reaction where investors get nervous thinking sort of is
(09:35):
this really the right decision given the current inflation scenario
and unemployment or the current economic situation in the US.
Speaker 2 (09:45):
Katie, before I let you go I have to ask
you about the story in China. We had the monthly
activity data in the prior session, both retail sales industrial
production coming in on the weak side. How do you
see the global economy right now outside the US, how
do you see it performing well?
Speaker 5 (10:04):
The interesting thing is in certain areas like Japan merging markets,
they have been very strong. China, on the other hand,
has lagged, for example em in general. But you're also
seeing positive and mixed signals in other portions of the
Europe and also even in the US across different sectors.
Speaker 4 (10:26):
So I'd say.
Speaker 5 (10:27):
That China is definitely one of the laggards when many
of the markets have been up substantially this month, and
that may be due to that fundamental data that's just
suggesting there's not as much growth.
Speaker 4 (10:38):
There right now.
Speaker 2 (10:39):
Katie, we'll leave it there, Thank you so very much.
Kati Kaminski is chief for Search Strategist, also portfolio manager
at Alpha Simplex. Joining us here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia podcast Time Doug Krisner. So,
(11:01):
as I mentioned a moment ago, officials from the US
and China reached a framework on keeping TikTok running in
the US. President Trump spoke earlier to reporters in the
Oval Office.
Speaker 1 (11:12):
It's important and it can maybe even bring us closer
to Jenna.
Speaker 6 (11:17):
We had a very good meeting with John.
Speaker 7 (11:18):
I was surprised.
Speaker 4 (11:19):
I didn't expect it to that extent.
Speaker 7 (11:22):
And I'm going to speak again with President she on.
Speaker 6 (11:25):
Friday, and you know, I think that'll confirm.
Speaker 2 (11:27):
Things up now. China's Commerce ministry called the deal a consensus.
Although some technical hurdles do remain. This breakthrough, nonetheless could
unlock a long awaited Trump She's summit at APEC next month.
For a closer look, we heard from Wendy Cutler, vice
president at the Asia Society Policy Institute. She formerly served
(11:47):
as acting Deputy US Trade Representative. Cutler spoke with Bloomberg
TV host Sherry On and Annabelle Droolers on the Asia.
Speaker 1 (11:56):
Trade Wendy, always great to have you with us. What
do you make of the Madrid talks because we saw
some progress on TikTok, but at the same time, China
in the backdrop continues to apply pressure to the US
chip settor.
Speaker 6 (12:10):
Look, the TikTok framework deal is a welcome development. This
has been a long term irritant in our relations with China.
So it's good that it's on the path to solution.
But there's so many other issues that are challenging this relationship.
And if it took two days of talks to basically
deal with TikTok, it's hard to see these other issues
(12:33):
being resolved over the coming months. I think it's just
going to take longer.
Speaker 1 (12:38):
Could something of a breakthrough be achieved in the President
cGMP and Trump and Leader summit.
Speaker 6 (12:44):
Well, first, they're going to have a call on Friday.
I think that call is important in that they can
confirm the TikTok deal and hopefully they can set a
direction forward for their staffs to work together in tech
leading up to the APEC meeting. But again there's you know,
(13:05):
between fetanyl and export controls and soybeans, there's just so
many issues that these two countries need to work on intensively.
Speaker 1 (13:16):
How big of a priority was TikTok in the grand
scheme of things when it comes to those low hanging
fruits that the two countries can target at the moment
and what could be next?
Speaker 6 (13:27):
So I do TikTok is as of medium importance? What
made it rise to the top was the Wednesday deadline
to reach a decision or else to kick TikTok out
of the United States, And so that deadline I think
served to reach a resolution, you know, in this area.
(13:47):
But again there are issues including semiconductors and soybean purchases
and excess capacity. All of these issues need to be
looked at between the two countries to help stabilize the relationship.
I'm not talking about strengthening or improving it. I'm talking
about stabilizing it. And that is going to take more
(14:09):
work from both sides, particularly if the tariffs are going
to be rolled over. The tariff cuts are going to
be rolled over again on November tenth when their ninety
day clock expires.
Speaker 7 (14:21):
Yeah, you mentioned semiconductors. I mean, how much do we
really need to read into the TikTok deal when you
had as well China targeting and video for instance, over
and I going back to a twenty twenty deal exactly.
Speaker 6 (14:33):
And I have to say, as a trade negotiator, I
have never seen a trading partner overnight in the middle
of trade negotiations to hit the other country with such
a strong measure like finding one of its key tech
companies in violation of its anti monopoly law. So you know,
(14:55):
I don't think that helped contribute to a good atmosphere
in the talks, but I give kudos to both sides
for finding a way forward at least on one issue
of concern TikTok.
Speaker 7 (15:07):
Do you think then enough has been done right now
to sort of set the stage for any travel of
President Trump to Beijing later this year or does that
sort of look unlikely still for now?
Speaker 6 (15:20):
I think we're there's a good start, and Secretary Besson
mentioned that the two sides will get together at his
level within a month, so you could see other issues
being worked at at the working level and then you know,
being put forward to Vice Premier Hoa and Secretary Besson.
So I think there still is a good chance of
at least a meeting in Korea. I'm not sure if
(15:43):
circumstances are right for a President Trump visit to China.
Speaker 1 (15:47):
Yet, Wendy, I find it really funny that you mentioned
imagining being a trade negotiator now and how Nvidia became
targeted while the China used conversations went ongoing. But that
seems to be the case these days, isn't it. Even
in the US. I mean, could you have imagined an
immigration rate in that Georgia plant by South Korea after
(16:07):
that trade agreement was announced? I mean, how big of
an issue is this for Soul Because that issue seems
to be dealt with, But what's happening to all of
those investments going into the US.
Speaker 6 (16:18):
Well, I couldn't agree more. And I've just returned from Korea,
and believe me, I've heard a lot of concerns and
a lot of caution about of investing more in the
United States. And at the same time that we're detaining
we were detaining Korean workers in Georgia, we're pressing the
(16:39):
Korean government to set up an investment fund of three
hundred and fifty billion dollars in the US, where basically
Donald Trump would decide which investments made sense and which
one should go forward. So it's it's kind of a
tense time in Seul, and I think that I was
heartened by the depth the Secretary of State apologizing for
(17:03):
the visa raids and emphasizing the need to find a
way forward on visas, because that's going to be critical
if Korean companies are going to have the confidence to
keep investing at those same levels in the United States.
Speaker 7 (17:18):
Yeah, it certainly was a mere culpa of sorts yesterday.
I mean, it's really hard to not sort of reinforce
just that maybe the level of damage that's been done
from this, and not just the signal that it sends
to Korea, but also the signal it sends to other
places like Taiwan where you're asking businesses to shift investment
to the US. But how much of this is a setback?
Then just go back to what you learn in Soul
(17:40):
and what did you learn more on the ground there
about sort of the inclination or to strike a deal.
Speaker 6 (17:47):
Well, again, I think the Koreans are concerned about going
forward with this huge investment fund, and after they read
the MoU between the US and Japan, which made it
clear that while there's a committee where the Japanese can
input into recommended projects, at the end of the day,
(18:08):
it's a US decision. Japan focused on just getting those
auto tariffs down was willing to make that concession. It's
unclear whether Korea is in a similar position, but still
it places top priority on reaching an agreement with a
close ally and getting the tariff's down, particularly in the
(18:30):
automotive sector and.
Speaker 1 (18:32):
Talk about allies getting blindsided by the Trump administration. India
US officials now they're trying to negotiate a trade agreement.
What are your expectations when we have, of course seen
the threats of fifty percent tariffs on all Indian goods.
Speaker 6 (18:48):
Yeah, actually, I'm kind of optimistic on the India front.
I think we got very close to a trade deal
with them, and the signals coming out of both Washington
and Delhi suggest that both sides do want to finalize
an agreement. That's positive, but again, we need to keep
in mind that trust has been broken and that it's
(19:09):
going to be hard to get back to where we were.
It's going to take time and effort, and hopefully a
trade agreement concluded between the US and India and a
reduction in those high tariffs would be a positive first
step to kind of repairing this relationship.
Speaker 7 (19:26):
Wendy, thanks so much for joining us this morning. That's
Wendy Kutla, their vice president at the Asia Society Policy Institute.
Speaker 2 (19:34):
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, 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
(19:57):
and Australia. I'm Doug Chrisner and this is Bloomberg.
Speaker 4 (20:04):
Hmm
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
Welcome to the Daybreak Asia podcast. I'm Deuk Krisner. So
officials from the US and China have reached a framework
on keeping TikTok running in the US. This will set
the stage for a phone call on Friday between President
Trump and Chinese President Chi Jinping. The framework was reached
in Madrid Treasury Secretary Besson confirming a plan for US
(00:31):
ownership of TikTok. Tom Orlick is chief economist for Bloomberg Economics.
Speaker 3 (00:37):
If we think about this from Beijing's perspective, they've got
conflicting objectives. On the one hand, they would dearly love
to have unlimited access to leading edge chips from Nvidia
to accelerate their artificial intelligence progress. On the other hand,
they recognize that the US is using access to chips
(00:58):
as an instrument control and negotiating leverage. They don't like that.
Speaker 2 (01:04):
That is Bloomberg's tom Orlick. Now, we'll get some perspective
from the Asia Pacific momentarily, but we begin here in
the States, where the fed's two day meeting gets underway
in a matter of hours. Joining me now is Katie Kaminski,
Chief for Search strategist, also portfolio manager at Alpha Simplex. Katie,
good to see you. Thank you so much for spending
(01:24):
time with me. So a rate cut, I think we
can agree, seems like it's a sure thing. The question
is whether the FED begins to signal a series of
reductions extending into next year. Is that a fair statement?
Speaker 4 (01:36):
I definitely agree.
Speaker 5 (01:37):
I feel like the market has already priced in and
has really sort of foregone the conclusion that we'll have
rate cuts this week. But what I'm really interested in
is how many and what till do they make so
that we kind of understand the trajectory of the FED
as opposed to just this week.
Speaker 2 (01:57):
What is your sense the probability of a fifty basis
point rate cut this week? Is that too too aggressive?
Do you think?
Speaker 5 (02:06):
Well? I think based on most indications, there's a low
probability of that, but there still is a small probability.
There are a few officials that also probably will dissent
in favor of a fifty point cut, and I think
that sort of indicates the amount of descents that we've had,
and we haven't had a lot of descents in the
(02:27):
FED until recently, so I think that is something to
watch and think about.
Speaker 2 (02:31):
One of the things that we know is that President
Trump has been pressuring the FED to cut interest rates.
David Kelly over at JP Morgan Asset Management was saying
a rate cut will increase risk for stock spawns and
the dollar if it's perceived to be driven by political pressure,
if it's perceived to be driven by political pressure and
(02:53):
doesn't align with the Fed's forecast for the economy. Fair statement.
Speaker 4 (02:59):
I definitely so.
Speaker 5 (03:00):
And the reason for this is if you look at
the dual mandate, I mean, inflation numbers have actually been
going up some so you know, you're really sitting in
a situation where if it's perceived that this is not
given by a sort of economic analysism based on the
fed's view, then real view, that could definitely cause people
(03:22):
to wonder if it could go too far. And I
think there's definitely people out there thinking about that.
Speaker 2 (03:27):
So we had records today for the S and P
and the NASDAK. What does it say to you that the
market is trading at record highs at a time when
the FED is going to be easy. Does that make
you constructive on equities or are maybe a little cautious.
Speaker 5 (03:40):
Right now, I'd say it's still constructive in terms of
the signals because it's all about the magnitude. So how
severe is the job situation versus the benefits of lower
rates potentially stimulating the economy, And so I.
Speaker 4 (03:55):
Think that's where the market is right now.
Speaker 5 (03:57):
It's leaning towards having lower rates could be positive, and
it's not more positive than a worsening job situation. So
I think we have to wait and see the next
trajectory because the severity of multiple cuts could actually have
a much more stimulative or a larger effect.
Speaker 4 (04:16):
So it's just the beginning now, I would say.
Speaker 2 (04:19):
So a moment ago, I mentioned the US in China
reaching the framework on keeping TikTok running in the US
maybe step one in trade negotiations between Washington and Beijing. Tariffs,
as we know, are still in effect. How are you
reading the tariff story right now as it relates to inflation.
Speaker 5 (04:38):
Well, the challenge with this particular situation, if you look
at this conversation with China is it just shows how
complex it is that this could really take a long
time to actually come to fruition that there is a
deal which means that these tariffs stay in place, and there.
Speaker 4 (04:55):
Will be ramifications of those tariffs.
Speaker 5 (04:57):
So I think what we've noticed, though, is that headlines
are not moving the markets as much as they were before.
So you're really not seeing as much reaction to such information.
And I think it's going to take a long time
and it's going to be quite complex to understand the
US China situation.
Speaker 2 (05:15):
So we had yields down just a bit today. There's
been a lot of movement in the bond market recently
as players in that space have been discounting an aggressive FED.
How much more room to run is there in the
bond market right now? How far can yields decline further?
Speaker 5 (05:33):
Well, this is a very good question because a lot
of times the market gets ahead.
Speaker 4 (05:38):
Of the FED. So I think a surprising.
Speaker 5 (05:40):
Thing would be that we might actually be underwhelmed and
the market correct. This is because a lot of traders
and investors have been getting in sort of ahead of
the FED, and if the FED sort of slows down
or pumps the brakes, you might actually see a tick
up and yields, which is kind of counterintuitive for some investors.
So my view is that it's going to be touch
(06:03):
and go, and we're going to have to watch and
see how the markets move, but moving abruptly more. I
don't see that at this point, so I think we'll
have to wait until later this week and see how
that reactions.
Speaker 2 (06:14):
So worst case scenario, though we're just above four percent
now in the tenure in yield terms, could we get
back up to a round four and a half?
Speaker 5 (06:23):
I mean it's possible, but I think that would require
us to have signaling that the FED is still being
very steady, and that has not really been the direction
momentum that you've seen with the FED. There's been just
sort of a slow pivot towards easing, and that, in
some sense, I would.
Speaker 4 (06:42):
Suggest, is a little bit less likely.
Speaker 5 (06:45):
You could see yields tick up a little bit if
people where markets are underwhelmed by cuts not coming as
fast as they think, or people pricing in aggressive cuts
that don't.
Speaker 4 (06:56):
Come to fruition.
Speaker 2 (06:57):
I'm just wondering about a negative prints on inflation.
Speaker 5 (07:01):
Right.
Speaker 2 (07:01):
We talk a little bit about the risk of stagflation
in the current environment, and I'm wondering whether that could
precipitate a move up and yield at the long end.
Speaker 5 (07:11):
Oh, definitely, And we started to see some indications in
the technical signals this summer.
Speaker 4 (07:16):
We saw steepening trades.
Speaker 5 (07:18):
Going on for sure, and that could definitely be back
in focus again. If we start to see an acceleration
in inflation and we're cutting rates at the same time,
that always gets everyone concerned about low growth, lots more
inflation aka stagflation. I think that's the corner case that
(07:39):
many investors are concerned about with cutting rates too fast.
Speaker 2 (07:42):
So we had some dollar weakness today that shouldn't surprise you.
It seems like the dollar has been in this process
right now of giving back a lot of the gains
that we saw a short while ago. Are we firmly
now in a new paradigm where the dollar is concerned
against the majors?
Speaker 5 (07:59):
Well this that's a good question because we have seen
a persistent, persistent weakness in the US dollar most of
the year, and there's several factors that are against the
dollar right now. So cutting rates tends to in general
be negative for the dollar. Positive sentiment cash flows regarding
(08:19):
positive sentiment can also be negative for the dollar.
Speaker 4 (08:22):
So there's just a few.
Speaker 5 (08:23):
Factors at play right now that don't make the dollar
look as desirable. So I think that could continue to
be the case, especially if we continue to see ray
cuts over the next couple of months. So I think
people are positioning in anticipation of that.
Speaker 2 (08:38):
One of the things the market is prepared for is
a Dubvish tilt as the fed's Board of Governors kind
of gets reconfigured here, and I know there's been some
question at the margin about FED independence. We spoke a
moment ago about the influence that the president may be
having on policy right now. Is that something that you're
concerned about a great extent.
Speaker 5 (09:02):
I mean, I think the market is definitely concerned about
that and has moved some on those type of reactions,
especially earlier on.
Speaker 4 (09:11):
I think the fact that you have several.
Speaker 5 (09:14):
More descents and disagreement in the FED is something that
we're not used to seeing for quite some time. So
I think as things start to shift even further, this
question will continue to be at the top of minds,
and if it becomes more apparent, you could see a
market reaction where investors get nervous thinking sort of is
(09:35):
this really the right decision given the current inflation scenario
and unemployment or the current economic situation in the US.
Speaker 2 (09:45):
Katie, before I let you go I have to ask
you about the story in China. We had the monthly
activity data in the prior session, both retail sales industrial
production coming in on the weak side. How do you
see the global economy right now outside the US, how
do you see it performing well?
Speaker 5 (10:04):
The interesting thing is in certain areas like Japan merging markets,
they have been very strong. China, on the other hand,
has lagged, for example em in general. But you're also
seeing positive and mixed signals in other portions of the
Europe and also even in the US across different sectors.
Speaker 4 (10:26):
So I'd say.
Speaker 5 (10:27):
That China is definitely one of the laggards when many
of the markets have been up substantially this month, and
that may be due to that fundamental data that's just
suggesting there's not as much growth.
Speaker 4 (10:38):
There right now.
Speaker 2 (10:39):
Katie, we'll leave it there, Thank you so very much.
Kati Kaminski is chief for Search Strategist, also portfolio manager
at Alpha Simplex. Joining us here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia podcast Time Doug Krisner. So,
(11:01):
as I mentioned a moment ago, officials from the US
and China reached a framework on keeping TikTok running in
the US. President Trump spoke earlier to reporters in the
Oval Office.
Speaker 1 (11:12):
It's important and it can maybe even bring us closer
to Jenna.
Speaker 6 (11:17):
We had a very good meeting with John.
Speaker 7 (11:18):
I was surprised.
Speaker 4 (11:19):
I didn't expect it to that extent.
Speaker 7 (11:22):
And I'm going to speak again with President she on.
Speaker 6 (11:25):
Friday, and you know, I think that'll confirm.
Speaker 2 (11:27):
Things up now. China's Commerce ministry called the deal a consensus.
Although some technical hurdles do remain. This breakthrough, nonetheless could
unlock a long awaited Trump She's summit at APEC next month.
For a closer look, we heard from Wendy Cutler, vice
president at the Asia Society Policy Institute. She formerly served
(11:47):
as acting Deputy US Trade Representative. Cutler spoke with Bloomberg
TV host Sherry On and Annabelle Droolers on the Asia.
Speaker 1 (11:56):
Trade Wendy, always great to have you with us. What
do you make of the Madrid talks because we saw
some progress on TikTok, but at the same time, China
in the backdrop continues to apply pressure to the US
chip settor.
Speaker 6 (12:10):
Look, the TikTok framework deal is a welcome development. This
has been a long term irritant in our relations with China.
So it's good that it's on the path to solution.
But there's so many other issues that are challenging this relationship.
And if it took two days of talks to basically
deal with TikTok, it's hard to see these other issues
(12:33):
being resolved over the coming months. I think it's just
going to take longer.
Speaker 1 (12:38):
Could something of a breakthrough be achieved in the President
cGMP and Trump and Leader summit.
Speaker 6 (12:44):
Well, first, they're going to have a call on Friday.
I think that call is important in that they can
confirm the TikTok deal and hopefully they can set a
direction forward for their staffs to work together in tech
leading up to the APEC meeting. But again there's you know,
(13:05):
between fetanyl and export controls and soybeans, there's just so
many issues that these two countries need to work on intensively.
Speaker 1 (13:16):
How big of a priority was TikTok in the grand
scheme of things when it comes to those low hanging
fruits that the two countries can target at the moment
and what could be next?
Speaker 6 (13:27):
So I do TikTok is as of medium importance? What
made it rise to the top was the Wednesday deadline
to reach a decision or else to kick TikTok out
of the United States, And so that deadline I think
served to reach a resolution, you know, in this area.
(13:47):
But again there are issues including semiconductors and soybean purchases
and excess capacity. All of these issues need to be
looked at between the two countries to help stabilize the relationship.
I'm not talking about strengthening or improving it. I'm talking
about stabilizing it. And that is going to take more
(14:09):
work from both sides, particularly if the tariffs are going
to be rolled over. The tariff cuts are going to
be rolled over again on November tenth when their ninety
day clock expires.
Speaker 7 (14:21):
Yeah, you mentioned semiconductors. I mean, how much do we
really need to read into the TikTok deal when you
had as well China targeting and video for instance, over
and I going back to a twenty twenty deal exactly.
Speaker 6 (14:33):
And I have to say, as a trade negotiator, I
have never seen a trading partner overnight in the middle
of trade negotiations to hit the other country with such
a strong measure like finding one of its key tech
companies in violation of its anti monopoly law. So you know,
(14:55):
I don't think that helped contribute to a good atmosphere
in the talks, but I give kudos to both sides
for finding a way forward at least on one issue
of concern TikTok.
Speaker 7 (15:07):
Do you think then enough has been done right now
to sort of set the stage for any travel of
President Trump to Beijing later this year or does that
sort of look unlikely still for now?
Speaker 6 (15:20):
I think we're there's a good start, and Secretary Besson
mentioned that the two sides will get together at his
level within a month, so you could see other issues
being worked at at the working level and then you know,
being put forward to Vice Premier Hoa and Secretary Besson.
So I think there still is a good chance of
at least a meeting in Korea. I'm not sure if
(15:43):
circumstances are right for a President Trump visit to China.
Speaker 1 (15:47):
Yet, Wendy, I find it really funny that you mentioned
imagining being a trade negotiator now and how Nvidia became
targeted while the China used conversations went ongoing. But that
seems to be the case these days, isn't it. Even
in the US. I mean, could you have imagined an
immigration rate in that Georgia plant by South Korea after
(16:07):
that trade agreement was announced? I mean, how big of
an issue is this for Soul Because that issue seems
to be dealt with, But what's happening to all of
those investments going into the US.
Speaker 6 (16:18):
Well, I couldn't agree more. And I've just returned from Korea,
and believe me, I've heard a lot of concerns and
a lot of caution about of investing more in the
United States. And at the same time that we're detaining
we were detaining Korean workers in Georgia, we're pressing the
(16:39):
Korean government to set up an investment fund of three
hundred and fifty billion dollars in the US, where basically
Donald Trump would decide which investments made sense and which
one should go forward. So it's it's kind of a
tense time in Seul, and I think that I was
heartened by the depth the Secretary of State apologizing for
(17:03):
the visa raids and emphasizing the need to find a
way forward on visas, because that's going to be critical
if Korean companies are going to have the confidence to
keep investing at those same levels in the United States.
Speaker 7 (17:18):
Yeah, it certainly was a mere culpa of sorts yesterday.
I mean, it's really hard to not sort of reinforce
just that maybe the level of damage that's been done
from this, and not just the signal that it sends
to Korea, but also the signal it sends to other
places like Taiwan where you're asking businesses to shift investment
to the US. But how much of this is a setback?
Then just go back to what you learn in Soul
(17:40):
and what did you learn more on the ground there
about sort of the inclination or to strike a deal.
Speaker 6 (17:47):
Well, again, I think the Koreans are concerned about going
forward with this huge investment fund, and after they read
the MoU between the US and Japan, which made it
clear that while there's a committee where the Japanese can
input into recommended projects, at the end of the day,
(18:08):
it's a US decision. Japan focused on just getting those
auto tariffs down was willing to make that concession. It's
unclear whether Korea is in a similar position, but still
it places top priority on reaching an agreement with a
close ally and getting the tariff's down, particularly in the
(18:30):
automotive sector and.
Speaker 1 (18:32):
Talk about allies getting blindsided by the Trump administration. India
US officials now they're trying to negotiate a trade agreement.
What are your expectations when we have, of course seen
the threats of fifty percent tariffs on all Indian goods.
Speaker 6 (18:48):
Yeah, actually, I'm kind of optimistic on the India front.
I think we got very close to a trade deal
with them, and the signals coming out of both Washington
and Delhi suggest that both sides do want to finalize
an agreement. That's positive, but again, we need to keep
in mind that trust has been broken and that it's
(19:09):
going to be hard to get back to where we were.
It's going to take time and effort, and hopefully a
trade agreement concluded between the US and India and a
reduction in those high tariffs would be a positive first
step to kind of repairing this relationship.
Speaker 7 (19:26):
Wendy, thanks so much for joining us this morning. That's
Wendy Kutla, their vice president at the Asia Society Policy Institute.
Speaker 2 (19:34):
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, 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
(19:57):
and Australia. I'm Doug Chrisner and this is Bloomberg.
Speaker 4 (20:04):
Hmm
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