June 16, 2025 • 17 mins
President Donald Trump called for the evacuation of Iran’s capital Tehran on Monday, hours after he urged the country’s leadership to sign a deal to limit its nuclear program and Israel signaled strikes would continue. It wasn’t clear if Trump knew of a fresh round of attacks Israel may have planned for the city, which has a population of more than 9 million people. Israel had earlier warned one Tehran neighborhood to evacuate and video showed massive traffic jams as people sought to escape. Soon after Trump’s post, Iran’s Fars news agency reported several explosions east of the city. For more, we heard from Middle East Analyst and Author Rodger Shanahan. He spoke to Bloomberg's Paul Allen and Shery Ahn.
Plus- President Trump's comments on evacuating Tehran caused a jolt in global markets, with US futures falling and oil prices rising almost 2%. Despite earlier optimism that the conflict between Israel and Iran wouldn't escalate, Trump's comments contrasted with his earlier statement that Iran wanted to make a deal. For more, we turn to James Abate, Managing Director & Head of Fundamental Strategies at Horizon Investments.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg day Break Asia Podcast. I'm Doug Chrisner.
The mood in global markets earlier today was far less
anxious after Iran signaled it wants to de escalate hostilities
with Israel. However, that could change. A short while ago,
President Trump called for the evacuation of Tehran. He made
those remarks hours after urging Iran's leadership to sign a
(00:33):
deal to limit the Iranian nuclear program, and then President
Trump cut short his visit to the G seven Leader
summit and returned to Washington. So we begin there with
a closer look at the conflict between Israel and Iran
with Middle East analyst Roger Shanahan. He spoke earlier with
Bloomberg's Paul Allen and Sherry On. The first question focused
(00:55):
on Israel's end goal. Is it crippling Iran's nuclear infrastructs, sure,
or the possibility of regime change?
Speaker 3 (01:04):
Yeah, listen, that's the sixty fourth ousand dollar question, because
nobody's quite sure. The initial justification for this campaign was
because of an imminent threat of nuclear weaponization on the
part of Iran that runs count to US intelligence estimates.
(01:24):
Israel has publicly said that regime change is not one
of the issues that the Security Cabinet discussed, but the
range of targets that Israel has selected would indicate that
it's much more than simply trying to degrade their nuclear capability.
It's much more broader than that, where we don't know
exactly how broad.
Speaker 4 (01:48):
So we've just had this tweet, well or a social
media post by President Trump urging an evacuation of Tehran.
The practicalities of that aside, What are the chances of
a popular uprising in Tehran if Israel starts targeting the
population instead of just key infrastructure.
Speaker 3 (02:08):
Yeah, listen, one has to be very careful about the
way that people, particularly large groups of people react, in
your ability to dictate events. There's no doubt that the
Iranian regime is deeply unpopular. There's no doubt that Irani
population is not happy with their economic lot in life.
(02:34):
Every presidential and parliamentary election has seen smaller numbers of
people turning out to vote because they don't believe that
system is representative. There's deep corruption in the country, But
at the same time, people don't normally rise up in
the face of external attack from an external actor, particularly
(02:57):
if it's from Israel. So if that's the aim, and
it's said that it's not, it's unlikely to happen. People
in Iran will if they are going to change the government,
they're going to do it in their own good time
and based on their own circumstances, not those imposed by
external actors.
Speaker 1 (03:20):
Is Israel's goal here bringing the collapse of the Iranian regime?
And then my question would be Israel able to achieve this?
What course would it have to take in order to
get there? Because not achieving this would actually threaten the
rise of a more nuclearly powerfull Iran.
Speaker 3 (03:41):
Yeah, listen, that's the kind of counter argument to expanding
your aims. If they're always doubts about Iran's ambitions is
regarding weaponizing its ucular capability, then attacking directly, attacking Iran
and exhibiting its weakness in its conventional weapons capabilities is
(04:07):
likely to have the opposite effect. You know, if you're
the Iranian political leaders, you're going to say, well, listen,
we're not nuclear capable, we're conventionally weak. Perhaps the best
form of defense is an undeclared nuclear capability, like Israel
(04:28):
has for instance, but certainly the medium term aims it
would appear from Israeli is a further weakening of the
Iranian regime. Certainly it's conventional military capabilities, it's military leadership,
and that's been ongoing since Israel's response to the seventh
of October terrorist attack. And we've seen that in play out,
(04:52):
not only obviously in Gaza with Hummas, but in southern
Lebanon and southern Bay Route with Lebanese Hezbollah and to
a lesser extent, but who he's in Yemen. Iran's external
support forces have been degraded, and now this is Israel
degrading Iranian political and military capabilities as well.
Speaker 1 (05:16):
So we have seen President Trump continue to make comments
about the conflict, including he wants the evacuation of Tehran.
He thinks that Iran wants to talk. What are the
signals of how involved the US is at first point?
Speaker 3 (05:34):
Now, listen, US is involved in a defensive capability at
the moment in terms of assistance to Israeli air defense
against Iranian attacks. There is no doubt be logistics and
intelligence support going on in the background that doesn't hit
the headlines, but that happens most days of the week.
Speaker 5 (05:57):
The issue is.
Speaker 3 (06:00):
Does President Trump, who has tried to pride himself on
staying out of conflict, want to be part of this conflict?
And most commentators would say at the moment, there's no
real need for the US to become engaged in an
offensive capability, but it's you for Israel to do the
(06:20):
offensive capability so that they can get them back to
the negotiating Tom.
Speaker 1 (06:25):
Roger, really good to have you with us. Roger Shanahan,
Middle East sound lists and author.
Speaker 2 (06:36):
Welcome back to the Debreak Asia podcast. I'm Doug Prisner.
Let's continue to look at how markets are reacting to
this conflict between Israel and Iran. I'm joined now by
James Abate. He is managing director also the head of
Fundamental Strategies at Horizon Investments. James, thank you so much
for making time to chat with me. And I have
to begin with how you're understanding what is evolving in
(07:00):
the Middle East right now. We earlier tonight US Time
received an indication that President Trump has called for the
evacuation of Tehran, saying that everyone should immediately evacuate Tehran.
This situation is dynamic and it's very Dicey absolutely.
Speaker 5 (07:20):
I mean, let's not forget. I mean the conflict between
Israelis and Persians is biblical. I mean those familiar with
the Book of Esther and the Feast of Pum you
know know that very well. However, you know today Iran's
in a very tough spot. There's no friends left in
the region. I mean, remember, Persians are not Arabs. And
(07:42):
you have US support of israel Is explicit. We just
moved a large number are refueling tank or aircraft to
the theater to support, you know, continued long range Israeli attacks.
Iran has no sponsor, even Russia, who has filled that
role in certain points. They have their hands full with Ukraine.
(08:05):
And say what you want about Buten, but he has
shown signs of riint recently. He has he demonstrated by
his classifying the recent attacks on Russia's strategic bombing fleet
as a terrorist attack so as not to trigger Russia's
war doctrine, which would have led to a much more
serious scenario and retaliation, possibly even against NATO and the US.
(08:28):
The question, however, is what does Israel want to do?
Does it want to stimulate a collapse in the regime,
and does the US support this. I think one of
the troubling signs for me was that we saw that
the Israelis destroyed the Tehran Apartment, headquarters, the Intelligence Ministry,
building Justice ministry. So these are things that would be
(08:51):
indicative of regime change. And you never know what you're
going to You never know what you're going to get
when you open up that can of worms. Is the
US on board on not just basically florting and giving
Iran a lesson about its nuclear aspirations, but is it
seriously contemplating a you know, sparking regime change in Iran?
(09:12):
And that will change the dynamic for markets.
Speaker 2 (09:15):
So, in terms of the oil story, so far, from
what we understand, critical Mid East exporting infrastructure has been
spared from these military strikes and we have yet to
see any blockage of the Strait of Horn moves. Does
that take most of the risk out of the oil
space right now or do you think that there is
still some inherent here.
Speaker 5 (09:37):
There's always some inherent risk. Clearly if the Huthis are
able to escalate Jews with regard to you know, further
attacks in the area, as well as Iran being able
to somehow blockade the you know, straight at home moves
that will have profound impacts on Europe more than it
(09:58):
will the United States. However, when we look at the
price of oil, I don't think this is a scenario
akin to what happened back in two thousand and twenty
two when Russia invaded Ukraine. We have a very different
scenario here in the domestic investment of excess production with
the natural gas and liquids. So the price of oil
(10:21):
at this point in time I think will be relatively stable. Saudi's,
who again are no friends of the Iranians, have been
willing to actually increase supply to a great degree, and
we'll see alternative shipping lanes being protected. And you know,
we may just see a very similar scenario where you'll
see the US protect shipping of oil and other transport
(10:47):
much like they did back in nineteen eighty sixteen eighty
seven under President Reagan. So I don't think this is
the same type of risk to a shock that could
somehow paralyze economy that are dependent upon fossil fuels at
this point in time.
Speaker 2 (11:02):
So what does that mean for the bond market if
they're at the margin had been a little bit of
concern about the potential inflationary impact of higher oil on
the treasury market. Is it that overstated?
Speaker 5 (11:13):
Do you think a little bit agreed? I, for one,
have been perplected, because in essence, what we're seeing is
actually the things that will retard growth not actually contribute
significantly to inflation. And when you look at the environment
that we're in right now, you know, in terms of
(11:33):
what the data has been showing across the board in
terms of economic activity, I mean, whether it's the base book,
pmis the isms, nonfarm payrolls, et cetera, et cetera, we
have an essence a cyclical slowdown in the US, at
least for this quarter in the next. And in fact
that we're seeing is service catching down to manufacturing. So
(11:57):
to the extent with oil price can somehow further crime
the consumer and put a further pressure on the services
related economy. I think that is more deflationary than actually inflationary.
So to me, long treasuries look like an opportunity here
relative to other asset classes, particularly if the safety trade
(12:19):
comes back into vogue.
Speaker 2 (12:20):
So does that necessarily mean that you want to lighten
up a little bit on US equities?
Speaker 5 (12:25):
Yeah, we're of the belief that margins in the US
stock market and valuations particuleen the large caps the areas
of the market relative to expectations, or just remain elevated.
I mean, let's look where we are today. We're basically
back at levels at the beginning of the year, and
what has changed. We're at an environment where valuations are elevated.
(12:49):
We're starting to see margin pressure, and that's indicative from
the fact that CPI is now less than PPI, which
will contribute to margin pressure. The opportunity when you look
at the market is that we're going to see potentially
if investors look through the environment that we're in currently,
I think you'll start to see a rotation to small
(13:11):
cap companies at some point, because even though they are
depressed and margins are at depressed levels. In fact, if
you look at the EBITDA margin of the Russell two
thousand on equal weated basis is back to recessionary two
thousand and nine levels, whereas the S and P five
hundred is at very elevated levels. And if you look
(13:32):
at some of the stimulus impacts of the President's tax bill,
which one hundred percent bonus appreciation R and D expensing
ax breaks for factory of building. In fact, we saw
tonight one of the things that came out of the
Senate was increasing the tax credit for semiconductor manufacturing in
the US, which was even established on the President Biden's
(13:55):
Chips and Science Acts. So we're seeing more stimulus being
put in place potential for domestic investment, and I tend
to think you look at the asymmetry or the opportunity set,
it's much more favorable in smaller companies at this point
in time than it is in the Magnificent seven or
the top heavy s and P five hundred.
Speaker 2 (14:14):
So given that outlook for the American economy, where do
you think that leaves the Fed? Obviously we've got a
rate decision this week.
Speaker 5 (14:22):
Yeah. I think if the FED was simply looking at
data dependency and relying upon its page book and the
indicators that I mentioned before, such as non farm payrolls,
even labor productivity which was negative, which is the leading
indicator future layos in most cases. You know, I think
if Trump wasn't bullying the Fed, I'd say that would
lower rates this meeting by twenty five basis points. And
(14:46):
if you simply look at the difference between the FED
funds rate and to your treasury. It indicates to twenty
five basis point cuts overcoming months. But again, I think
the FED wants to show some degree of independence, and
we'll likely for goa cut this meeting, but will likely
indicate a twenty five base point cut at the next meeting.
(15:06):
But I think one thing to be concerned about is
the dollar. If we see continued weakness in the dollar here,
that would be an indication of potentially future inflation, and
I think that that would be the one governing factor
on the Fed's aggressive aggressiveness to actually lower interest rates.
Speaker 2 (15:25):
Before I let you go, James, I want to get
your take on markets offshore. How are you viewing opportunities,
let's say, in Europe or in Asia right now?
Speaker 5 (15:34):
You know, I think the environment as it stands now
is that emerging markets looked much more attractive, particularly even
emerging market debt looked much more attractive than developed markets
outside the United States. If you look at Europe, even
though you've had a nice outperformance, most of that's been
due to the currency, and a lot of it has
(15:55):
been due to excitement about infrastructu build as well as
defense rebuilding, but you're not getting away from the regulatory
stranglehold as well as the demographic issues which are impacting Europe.
I think the same issue issue could apply to Japan,
although you're starting to see return on equities in return
(16:17):
on capital improve in Japan. I would prefer Japan over
Europe at this point in time. But I think the
real wild card may be to see the dragon rising
in China to a certain degree with regard to potentially
some stemming of the deflationary spile that they've been in
from real estate, as well as maybe some degree of
the resolution of the trade issues going on between the
(16:40):
United States and China.
Speaker 2 (16:41):
James will leave it there. It's always a pleasure. Thank
you so much. James Debonte, Managing director, also head of
Fundamental Strategies that Verizon 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
(17:05):
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 and Australia. I'm Doug Prisner, and
this is Bloomberg
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg day Break Asia Podcast. I'm Doug Chrisner.
The mood in global markets earlier today was far less
anxious after Iran signaled it wants to de escalate hostilities
with Israel. However, that could change. A short while ago,
President Trump called for the evacuation of Tehran. He made
those remarks hours after urging Iran's leadership to sign a
(00:33):
deal to limit the Iranian nuclear program, and then President
Trump cut short his visit to the G seven Leader
summit and returned to Washington. So we begin there with
a closer look at the conflict between Israel and Iran
with Middle East analyst Roger Shanahan. He spoke earlier with
Bloomberg's Paul Allen and Sherry On. The first question focused
(00:55):
on Israel's end goal. Is it crippling Iran's nuclear infrastructs, sure,
or the possibility of regime change?
Speaker 3 (01:04):
Yeah, listen, that's the sixty fourth ousand dollar question, because
nobody's quite sure. The initial justification for this campaign was
because of an imminent threat of nuclear weaponization on the
part of Iran that runs count to US intelligence estimates.
(01:24):
Israel has publicly said that regime change is not one
of the issues that the Security Cabinet discussed, but the
range of targets that Israel has selected would indicate that
it's much more than simply trying to degrade their nuclear capability.
It's much more broader than that, where we don't know
exactly how broad.
Speaker 4 (01:48):
So we've just had this tweet, well or a social
media post by President Trump urging an evacuation of Tehran.
The practicalities of that aside, What are the chances of
a popular uprising in Tehran if Israel starts targeting the
population instead of just key infrastructure.
Speaker 3 (02:08):
Yeah, listen, one has to be very careful about the
way that people, particularly large groups of people react, in
your ability to dictate events. There's no doubt that the
Iranian regime is deeply unpopular. There's no doubt that Irani
population is not happy with their economic lot in life.
(02:34):
Every presidential and parliamentary election has seen smaller numbers of
people turning out to vote because they don't believe that
system is representative. There's deep corruption in the country, But
at the same time, people don't normally rise up in
the face of external attack from an external actor, particularly
(02:57):
if it's from Israel. So if that's the aim, and
it's said that it's not, it's unlikely to happen. People
in Iran will if they are going to change the government,
they're going to do it in their own good time
and based on their own circumstances, not those imposed by
external actors.
Speaker 1 (03:20):
Is Israel's goal here bringing the collapse of the Iranian regime?
And then my question would be Israel able to achieve this?
What course would it have to take in order to
get there? Because not achieving this would actually threaten the
rise of a more nuclearly powerfull Iran.
Speaker 3 (03:41):
Yeah, listen, that's the kind of counter argument to expanding
your aims. If they're always doubts about Iran's ambitions is
regarding weaponizing its ucular capability, then attacking directly, attacking Iran
and exhibiting its weakness in its conventional weapons capabilities is
(04:07):
likely to have the opposite effect. You know, if you're
the Iranian political leaders, you're going to say, well, listen,
we're not nuclear capable, we're conventionally weak. Perhaps the best
form of defense is an undeclared nuclear capability, like Israel
(04:28):
has for instance, but certainly the medium term aims it
would appear from Israeli is a further weakening of the
Iranian regime. Certainly it's conventional military capabilities, it's military leadership,
and that's been ongoing since Israel's response to the seventh
of October terrorist attack. And we've seen that in play out,
(04:52):
not only obviously in Gaza with Hummas, but in southern
Lebanon and southern Bay Route with Lebanese Hezbollah and to
a lesser extent, but who he's in Yemen. Iran's external
support forces have been degraded, and now this is Israel
degrading Iranian political and military capabilities as well.
Speaker 1 (05:16):
So we have seen President Trump continue to make comments
about the conflict, including he wants the evacuation of Tehran.
He thinks that Iran wants to talk. What are the
signals of how involved the US is at first point?
Speaker 3 (05:34):
Now, listen, US is involved in a defensive capability at
the moment in terms of assistance to Israeli air defense
against Iranian attacks. There is no doubt be logistics and
intelligence support going on in the background that doesn't hit
the headlines, but that happens most days of the week.
Speaker 5 (05:57):
The issue is.
Speaker 3 (06:00):
Does President Trump, who has tried to pride himself on
staying out of conflict, want to be part of this conflict?
And most commentators would say at the moment, there's no
real need for the US to become engaged in an
offensive capability, but it's you for Israel to do the
(06:20):
offensive capability so that they can get them back to
the negotiating Tom.
Speaker 1 (06:25):
Roger, really good to have you with us. Roger Shanahan,
Middle East sound lists and author.
Speaker 2 (06:36):
Welcome back to the Debreak Asia podcast. I'm Doug Prisner.
Let's continue to look at how markets are reacting to
this conflict between Israel and Iran. I'm joined now by
James Abate. He is managing director also the head of
Fundamental Strategies at Horizon Investments. James, thank you so much
for making time to chat with me. And I have
to begin with how you're understanding what is evolving in
(07:00):
the Middle East right now. We earlier tonight US Time
received an indication that President Trump has called for the
evacuation of Tehran, saying that everyone should immediately evacuate Tehran.
This situation is dynamic and it's very Dicey absolutely.
Speaker 5 (07:20):
I mean, let's not forget. I mean the conflict between
Israelis and Persians is biblical. I mean those familiar with
the Book of Esther and the Feast of Pum you
know know that very well. However, you know today Iran's
in a very tough spot. There's no friends left in
the region. I mean, remember, Persians are not Arabs. And
(07:42):
you have US support of israel Is explicit. We just
moved a large number are refueling tank or aircraft to
the theater to support, you know, continued long range Israeli attacks.
Iran has no sponsor, even Russia, who has filled that
role in certain points. They have their hands full with Ukraine.
(08:05):
And say what you want about Buten, but he has
shown signs of riint recently. He has he demonstrated by
his classifying the recent attacks on Russia's strategic bombing fleet
as a terrorist attack so as not to trigger Russia's
war doctrine, which would have led to a much more
serious scenario and retaliation, possibly even against NATO and the US.
(08:28):
The question, however, is what does Israel want to do?
Does it want to stimulate a collapse in the regime,
and does the US support this. I think one of
the troubling signs for me was that we saw that
the Israelis destroyed the Tehran Apartment, headquarters, the Intelligence Ministry,
building Justice ministry. So these are things that would be
(08:51):
indicative of regime change. And you never know what you're
going to You never know what you're going to get
when you open up that can of worms. Is the
US on board on not just basically florting and giving
Iran a lesson about its nuclear aspirations, but is it
seriously contemplating a you know, sparking regime change in Iran?
(09:12):
And that will change the dynamic for markets.
Speaker 2 (09:15):
So, in terms of the oil story, so far, from
what we understand, critical Mid East exporting infrastructure has been
spared from these military strikes and we have yet to
see any blockage of the Strait of Horn moves. Does
that take most of the risk out of the oil
space right now or do you think that there is
still some inherent here.
Speaker 5 (09:37):
There's always some inherent risk. Clearly if the Huthis are
able to escalate Jews with regard to you know, further
attacks in the area, as well as Iran being able
to somehow blockade the you know, straight at home moves
that will have profound impacts on Europe more than it
(09:58):
will the United States. However, when we look at the
price of oil, I don't think this is a scenario
akin to what happened back in two thousand and twenty
two when Russia invaded Ukraine. We have a very different
scenario here in the domestic investment of excess production with
the natural gas and liquids. So the price of oil
(10:21):
at this point in time I think will be relatively stable. Saudi's,
who again are no friends of the Iranians, have been
willing to actually increase supply to a great degree, and
we'll see alternative shipping lanes being protected. And you know,
we may just see a very similar scenario where you'll
see the US protect shipping of oil and other transport
(10:47):
much like they did back in nineteen eighty sixteen eighty
seven under President Reagan. So I don't think this is
the same type of risk to a shock that could
somehow paralyze economy that are dependent upon fossil fuels at
this point in time.
Speaker 2 (11:02):
So what does that mean for the bond market if
they're at the margin had been a little bit of
concern about the potential inflationary impact of higher oil on
the treasury market. Is it that overstated?
Speaker 5 (11:13):
Do you think a little bit agreed? I, for one,
have been perplected, because in essence, what we're seeing is
actually the things that will retard growth not actually contribute
significantly to inflation. And when you look at the environment
that we're in right now, you know, in terms of
(11:33):
what the data has been showing across the board in
terms of economic activity, I mean, whether it's the base book,
pmis the isms, nonfarm payrolls, et cetera, et cetera, we
have an essence a cyclical slowdown in the US, at
least for this quarter in the next. And in fact
that we're seeing is service catching down to manufacturing. So
(11:57):
to the extent with oil price can somehow further crime
the consumer and put a further pressure on the services
related economy. I think that is more deflationary than actually inflationary.
So to me, long treasuries look like an opportunity here
relative to other asset classes, particularly if the safety trade
(12:19):
comes back into vogue.
Speaker 2 (12:20):
So does that necessarily mean that you want to lighten
up a little bit on US equities?
Speaker 5 (12:25):
Yeah, we're of the belief that margins in the US
stock market and valuations particuleen the large caps the areas
of the market relative to expectations, or just remain elevated.
I mean, let's look where we are today. We're basically
back at levels at the beginning of the year, and
what has changed. We're at an environment where valuations are elevated.
(12:49):
We're starting to see margin pressure, and that's indicative from
the fact that CPI is now less than PPI, which
will contribute to margin pressure. The opportunity when you look
at the market is that we're going to see potentially
if investors look through the environment that we're in currently,
I think you'll start to see a rotation to small
(13:11):
cap companies at some point, because even though they are
depressed and margins are at depressed levels. In fact, if
you look at the EBITDA margin of the Russell two
thousand on equal weated basis is back to recessionary two
thousand and nine levels, whereas the S and P five
hundred is at very elevated levels. And if you look
(13:32):
at some of the stimulus impacts of the President's tax bill,
which one hundred percent bonus appreciation R and D expensing
ax breaks for factory of building. In fact, we saw
tonight one of the things that came out of the
Senate was increasing the tax credit for semiconductor manufacturing in
the US, which was even established on the President Biden's
(13:55):
Chips and Science Acts. So we're seeing more stimulus being
put in place potential for domestic investment, and I tend
to think you look at the asymmetry or the opportunity set,
it's much more favorable in smaller companies at this point
in time than it is in the Magnificent seven or
the top heavy s and P five hundred.
Speaker 2 (14:14):
So given that outlook for the American economy, where do
you think that leaves the Fed? Obviously we've got a
rate decision this week.
Speaker 5 (14:22):
Yeah. I think if the FED was simply looking at
data dependency and relying upon its page book and the
indicators that I mentioned before, such as non farm payrolls,
even labor productivity which was negative, which is the leading
indicator future layos in most cases. You know, I think
if Trump wasn't bullying the Fed, I'd say that would
lower rates this meeting by twenty five basis points. And
(14:46):
if you simply look at the difference between the FED
funds rate and to your treasury. It indicates to twenty
five basis point cuts overcoming months. But again, I think
the FED wants to show some degree of independence, and
we'll likely for goa cut this meeting, but will likely
indicate a twenty five base point cut at the next meeting.
(15:06):
But I think one thing to be concerned about is
the dollar. If we see continued weakness in the dollar here,
that would be an indication of potentially future inflation, and
I think that that would be the one governing factor
on the Fed's aggressive aggressiveness to actually lower interest rates.
Speaker 2 (15:25):
Before I let you go, James, I want to get
your take on markets offshore. How are you viewing opportunities,
let's say, in Europe or in Asia right now?
Speaker 5 (15:34):
You know, I think the environment as it stands now
is that emerging markets looked much more attractive, particularly even
emerging market debt looked much more attractive than developed markets
outside the United States. If you look at Europe, even
though you've had a nice outperformance, most of that's been
due to the currency, and a lot of it has
(15:55):
been due to excitement about infrastructu build as well as
defense rebuilding, but you're not getting away from the regulatory
stranglehold as well as the demographic issues which are impacting Europe.
I think the same issue issue could apply to Japan,
although you're starting to see return on equities in return
(16:17):
on capital improve in Japan. I would prefer Japan over
Europe at this point in time. But I think the
real wild card may be to see the dragon rising
in China to a certain degree with regard to potentially
some stemming of the deflationary spile that they've been in
from real estate, as well as maybe some degree of
the resolution of the trade issues going on between the
(16:40):
United States and China.
Speaker 2 (16:41):
James will leave it there. It's always a pleasure. Thank
you so much. James Debonte, Managing director, also head of
Fundamental Strategies that Verizon 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
(17:05):
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 and Australia. I'm Doug Prisner, and
this is Bloomberg
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