June 9, 2025 • 16 mins
Asian shares edged up, buoyed by expectations about the US-China trade talks as officials struck a positive tone after the first day of negotiations. While no significant breakthroughs were announced after the first day of talks and stocks pared some of their earlier gains, US officials sounded optimistic about the negotiations. With a key inflation read on tap Wednesday - and the Federal Reserve is entering a blackout period before its June 18 interest-rate decision - money managers are wrestling with what could propel the S&P 500 back to a record after the index soared 20% from its April lows. For a look at how the talks are impacting market action, we hear from Jim Worden, Chief Investment Strategist at the Wealth Consulting Group.
Talks will continue into a second day, according to a US official, as the two sides look to ease tensions over shipments of technology and rare earth elements. The advisers will meet again Tuesday at 10 a.m. in London, the official said. US Commerce Secretary Howard Lutnick said discussions between Washington and Beijing were "fruitful" and Treasury Secretary Scott Bessent cited a "good meeting." Talks will continue into a second day, according to a US official, as the two sides look to ease tensions over shipments of technology and rare earth elements. The advisers will meet again Tuesday at 10 a.m. in London, the official said. For a closer look, we hear from Bloomberg's Jennifer Dlouhy in Washington and Stephen Engle in Hong Kong. They speak with Bloomberg's Shery Ahn and Haidi Stroud-Watts.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:11):
Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner.
So trade talks between the US and China, and it
on Monday after more than six hours at Lancaster House
in London, and we are told that those talks will
continue on Tuesday. Bloomberg's and Marie hor Dern is there
and she says two issues are front and center.
Speaker 3 (00:30):
One critical minerals when it comes to the United States,
those magnets, those rare earths, they say that the licensing
is not quick enough. Kevin Hassett over the weekend that
a HEC director says they want to see a more
advanced pace when it comes to those minerals coming into
the United States. And then for China, they want access
to the semiconductors. And it's very obvious that export controls
potentially was going to be on the table when it
(00:52):
came to the second round of negotiations following the talks
in Geneva just a month ago.
Speaker 2 (00:56):
That is Bloomberg's and Marie hor Dern. Now in terms
of moving those restrictions on tech today, the director of
the National Economic Council, Kevin Hassett told CNBC the US
would stop short of including the most sophisticated AI chips
made by in Nvidia. Joining me now is Jim Warden.
(01:17):
He is the chief investment officer at the Wealth Consulting Group,
joining from Sacramento, California. Jim, thank you so much for
taking time to chat with me. How optimistic are you
that we're going to get a trade deal between the
US and China happening in the near term?
Speaker 4 (01:32):
You know, I'm really optimistic. I think we've seen a
little bit of a pattern with some of these tariffs.
They start off really, really ugly, and they look prettier
as time goes on, things get worked out. You know,
we don't have all the information exactly how things will look,
(01:53):
but you know, I certainly believe with the rare earth
there will be some good news.
Speaker 2 (02:00):
So if you look at the S and P right now,
we're just about two percent from that all time high
that we reached in February. Say we get a deal,
what does that mean for the equity market?
Speaker 4 (02:11):
So I think the equity markets continue grinding higher. Any
good news that comes out of Washington, d C that
is macro related is just a it's just a boon
for the equity markets. I think we I think we'll
get all time highs, even if there is a little
bit of sideways news on the tariffs.
Speaker 5 (02:33):
The AI boom is real. It's it's this fast.
Speaker 4 (02:37):
Moving train that you can slow it down, but it's
it's going to keep going. So any relief that we get,
I believe is going to allow us to accelerate. And
you know, there's still a lot of stocks that we're
looking at, a lot of stocks that are still far
from where they were the February highs, and so a
lot of these are have trends that are reverse, so
(03:00):
we're looking at those. But there's also a number of
stocks that are already hitting all time highs.
Speaker 2 (03:06):
So we have a FED meeting on the eighteenth officials
right now, we're in a blackout period before that decision. Today,
the New York Fed survey found that consumers are expecting
lower inflation over the next year than I did a
month ago when they were last surveyed. And obviously this
week we have a number of price reports Wednesday at CPI, Thursday, PPI.
(03:27):
How are you feeling about the US inflation story right now?
Speaker 4 (03:31):
We continue to feel pretty good about it. The trend
has been that inflation's coming down. Now we may see
a little bit of bump back up with regard to
concerns about tariffs, but it's generally been pushing lower. I'm
a little bit concerned with higher wages. That's not so
(03:52):
much related to the tariffs as it is immigration, and
so these are things that we're keeping an eye on.
But I would generally say that the trend for inflation
has been continues to be lower.
Speaker 2 (04:03):
In terms of the politics in Washington, the Senate right
now is dealing with a President Trump's tax bill, and
we are told that Republicans in the Senate are intending
to propose some revisions, among them, maybe trying to extract
some savings not only from Medicaid, but maybe even Medicare,
and obviously that would depart from the House version. How
(04:25):
are you feeling about the future of this tax bill.
Is that something that is going to be resolved let's
say before the fourth of July, or could this drag
on for some time.
Speaker 4 (04:36):
That's I'm not a political expert. I would say that
it probably does get resolved. I don't think that we're
going to have concessions with regard to Medicare or Medicaid,
and if we do, I believe that there'll be light
I think that that would be too much of an
impact for too many people to try to do that.
Speaker 2 (04:56):
If we're talking about adding much more to the deficit,
maybe as much as two point four trillion, that's the
CBO estimate. What does that mean for the bond market?
Speaker 4 (05:05):
Yeah, so we've gotten a little bit more cautious lately
with bonds. You know that that is partly due to
the technicals of the bonds and just what's happening with
the dollar, what's happening overseas, and you know, kind of
this flight away from US dollar denominated assets. We think
(05:25):
there's still going to be volatility with the bond market,
particularly the longer end of the yield curve. So we're
we've we've shortened duration. We continue to like higher quality credit,
so we're a little bit more cautious on just you know,
the bond market in general than we are with equities.
Speaker 2 (05:45):
That's interesting. So the sell America theme you see impacting
the bond market impacting the dollar more than the stock market.
Speaker 4 (05:53):
Yeah, I think that's that's partly because we we we
see you know a lot of these large companies that
are within technology that the fundamentals are still good, the
earnings growth is still good, the profit margins, there's still
a lot of growth there, you know, And I wish
I could say that across the board every single sector,
(06:15):
but certainly with you know, the megacap technology companies, and
you know, there's also some some trickle down thematic we thematically,
we're also liking some of the energy and utility companies
that have a story with technology, and those have all
been performing really well. There's kind of this mean reversion
(06:36):
trade where they sold off a lot and they've come back.
Speaker 5 (06:39):
But yes, we do like equities more than bonds.
Speaker 2 (06:41):
How are you feeling about the American consumer broadly speaking,
and whether or not you would be encouraged to take
positions either in consumer staples or consumer discretionary stocks.
Speaker 4 (06:54):
Yeah, so we actually did own some consumer staples, you know,
not that long ago.
Speaker 5 (07:00):
Oh and we trim that position.
Speaker 4 (07:02):
We at we actually added to consumer discretionary partly, you know,
because some of those names were just really really sold off.
Speaker 5 (07:11):
There is still some risk there.
Speaker 4 (07:13):
So this is you know, that was kind of a
longer term thesis in terms of macro improvements.
Speaker 5 (07:20):
We we thought that they sold off too much.
Speaker 4 (07:23):
There's still certainly going to be sensitivity when you when
you get names like Apple and uh Tesla and you
know Amazon. There, there's still going to be some some
sensitivity here. But as we look at the big picture,
you know, the consumer still seems to be in pretty
good shape.
Speaker 5 (07:43):
Uh there, They're still spending.
Speaker 4 (07:45):
You know, a lot of the spending is on services,
but you know, we're we're watching that closely to see
kind of, you know, if if that changes in terms
of the trend and earnings.
Speaker 2 (07:58):
Are you monitoring situations offshore, any opportunities there, whether it's
in Asia or Europe or other jurisdictions.
Speaker 4 (08:07):
Yeah, So we have added some individual names, some stocks
that we like that are in Europe as well as Asia.
You know, I would say from a bottom up standpoint,
we're liking international a little bit more than we have before,
and that is really just you know, improving fundamentals as
well as the trend and momentum getting.
Speaker 5 (08:28):
Better and these are quality names.
Speaker 4 (08:30):
From a macro standpoint, we're also you know, looking at
areas where we can add to International.
Speaker 2 (08:37):
Jim will leave it there. Thank you so much for
joining us. Jim Warden is the chief investment officer at
the Wealth Consulting Group. Joining from Sacramento, California. Here on
the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast.
I'm Doug Christner, and as we have been discussing, trade
(09:00):
talks between the US and China are set to continue
for a second day in London. The aim here is
to ease tension over US shipments of technology to China
and shipments of Chinese rare earth elements to the US.
For a closer look on what these talks may yield,
we heard from Bloomberg's Jennifer de Loki in Washington. She
(09:21):
joined Bloomberg's North Asia correspondent Stephen Engel. Stephen and Jennifer
spoke with Bloomberg's Sherry On and Heidi Stroud Watts.
Speaker 6 (09:29):
Jennifer, let me start with you. I mean President Trump
saying that China is not easy. I mean, what was
he expecting? This is the second largest economy in the world.
But what are we expecting in terms of any concrete
breakthrough in London now that these talks continue for a
second day.
Speaker 7 (09:43):
Well, you know, I think the fact that you know,
the officials from the US and China were able to
meet face to face for more than six hours, and
that they're continuing tomorrow was obviously taken.
Speaker 5 (09:53):
As a good sign.
Speaker 7 (09:54):
It's a development that you know, signals possible progress and
easing these trade tensions, and specifically what you know could
come out of this is an easing of restrictions on
the export of technology from the US. Obviously rare earth
materials from China also on the table and being discussed.
The US has signaled very clearly it's willing to remove
(10:16):
curbs on the export of jet engine parts, nuclear plant equipment, chemicals,
and other technology if it can secure assurances that China
will ease its own limits on rare earth materials that
are used in smartphones and fighter jets and other equipment.
So at this point that seems to be, you know,
the outlines of what's possible. Kevin Hassett, who HUDs Trump's
(10:39):
National Economic Council, said earlier today that you know, his
expectation is an agreement in London that will ensure rare
earths are released in volume from China.
Speaker 1 (10:48):
And Steve we saw in the data right despite this
fragile truth, exports from China to the US falling the
motions twenty twenty. Other than, of course, a more sort
of permanent pause to these tars What does Beijing really want?
And I guess more importantly, what are they willing to
give up? Given how closely held the supply of rarest
earth and technology has been over the past decade or more.
Speaker 8 (11:12):
Well, clearly Beijing is very suspicious of what the United
States is trying to get out of these talks and
of this trade war. They definitely want the reduction, if
not elimination of the tariffs, because again the pause is
only until August and then they resume, so they would
like to see that taken away. They just like some clarity,
(11:33):
and that's why having consistency and talks with the same people,
beit Scott Bessant and then Jamison Greer, the US Trade Representative,
and now in addition we have Howard Lutnik, the Commerce Secretary,
which indicates that those export controls from the United States,
including some of those that were added after that truce
was reached in Geneva, which only added to the suspicion
(11:54):
on the Chinese part. So that's why it's clear that
export controls, perhaps as we just heard, could be a
bargaining chip for the United States to reduce those that
were added after that Geneva truth. So I think the
Chinese side is trying to get a gauge of the
intent and the end result that the White House is
(12:16):
trying to get, and not necessarily whether it's going to
be just unilaterally beneficial to the United States. This is
so far. Let me just say after day one of
the talks, the Chinese have kept really quiet. I scoured
state media. There's hardly anything about the readout of the
day one talks. Holy Funk, who's leading the Chinese delegation,
(12:37):
walked right past the gaggle of reporters in London, did
not say anything. The US side said only a few
words like Howard Ludnox said they were fruitful, Scott Besson
said good talks. Hollyfunk said absolutely nothing. Yesterday the China
Daily said pressure and coercion are not going to work
against China, which is ready to resolutely counter any ill
(12:59):
intention to move by the US side. So that really
indicates how suspicious the Chinese side is. They are willing
to talk, as evidence by the phone call last week
between Trump and She, but they're very skeptical.
Speaker 6 (13:15):
Steve, how much pressure are Chinese policymakers on their right
now given the state of the Chinese economy. I mean,
we have seen them trying to make good with other
training partners like the European Union recently.
Speaker 8 (13:28):
Absolutely, and EU is going to be a key one
because EU leaders will be going to China at the
end of next month for the EU China Summit. There
are talks about possible huge air bus deal. There's already
negotiations that are according to the Ministry of Commerce in
China on the minimum price guarantees on evs, possibly reaching
(13:50):
a deal at some point this summer. So again, the
Chinese are definitely engaging with the EU. They're also engaging
throughout the rest of the world in Southeast Asia, as
we saw in those export numbers yesterday, were exports to
the United States fell thirty four percent, Imports fell nearly
eighteen percent in two way trade with the United States,
(14:10):
but they absolutely boomed with else other parts of the world.
So China is diversifying its export destinations and its available markets.
But it's not enough right now to counter what has
been a lot of trade obviously across the Pacific to
the United states. So yes, it adds definitely to the
pressure on the Chinese economy, as evidence as well by
(14:32):
the PPI the factory gate deflation extending its string of
deflationary months to thirty two yesterday down more than three percent.
So there is deflation definitely entrenched in China.
Speaker 1 (14:46):
Jennifer, I'm wondering how much sort of domestic judicial pressure
it is. Obviously we had the sort of lower court
ruling over.
Speaker 5 (14:52):
The legality or the illegality of these tariffs.
Speaker 1 (14:56):
Do we know if the polls on allowing them to
continue to play out might be sustained?
Speaker 7 (15:01):
Yeah, we could know very very soon. You know, a
federal appeals court here could rule at any time on
whether to continue pausing the vast majority of Trump's tariffs,
basically all of those that are predicated on his assertion
that US trade and balances constitute a national emergency warranting
those love levies. And so you know, as we know
(15:23):
as sure, a separate court already ruled against these tariffs
toss them out very swiftly, another appeals court came in
and put that whole order on pause. And the question
before that court now is whether to extend its temporary
pause the Trump administration today went to the court and said,
please keep this going. Really the lower court order, if
(15:45):
you toss these terraffs out, it really interferes with our ability,
the president's ability to conduct foreign policy. And so the
administration is making the case that these need to be
extended because the legal you know, machinations over this will
for months. They could go all the way to the
Supreme Court, and in the meantime, you know, if the
tariffs can't be collected, it really impinges on the President's
(16:08):
ability to do business. So we could see a ruling
at any time, potentially as soon as tomorrow.
Speaker 1 (16:13):
We'll make ten of Adela there and Steven Angel as
well with the latest on those US China trade talks.
Speaker 2 (16:21):
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
(16:43):
and Australia. I'm Doug Prisner and this is Bloomberg,
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:11):
Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner.
So trade talks between the US and China, and it
on Monday after more than six hours at Lancaster House
in London, and we are told that those talks will
continue on Tuesday. Bloomberg's and Marie hor Dern is there
and she says two issues are front and center.
Speaker 3 (00:30):
One critical minerals when it comes to the United States,
those magnets, those rare earths, they say that the licensing
is not quick enough. Kevin Hassett over the weekend that
a HEC director says they want to see a more
advanced pace when it comes to those minerals coming into
the United States. And then for China, they want access
to the semiconductors. And it's very obvious that export controls
potentially was going to be on the table when it
(00:52):
came to the second round of negotiations following the talks
in Geneva just a month ago.
Speaker 2 (00:56):
That is Bloomberg's and Marie hor Dern. Now in terms
of moving those restrictions on tech today, the director of
the National Economic Council, Kevin Hassett told CNBC the US
would stop short of including the most sophisticated AI chips
made by in Nvidia. Joining me now is Jim Warden.
(01:17):
He is the chief investment officer at the Wealth Consulting Group,
joining from Sacramento, California. Jim, thank you so much for
taking time to chat with me. How optimistic are you
that we're going to get a trade deal between the
US and China happening in the near term?
Speaker 4 (01:32):
You know, I'm really optimistic. I think we've seen a
little bit of a pattern with some of these tariffs.
They start off really, really ugly, and they look prettier
as time goes on, things get worked out. You know,
we don't have all the information exactly how things will look,
(01:53):
but you know, I certainly believe with the rare earth
there will be some good news.
Speaker 2 (02:00):
So if you look at the S and P right now,
we're just about two percent from that all time high
that we reached in February. Say we get a deal,
what does that mean for the equity market?
Speaker 4 (02:11):
So I think the equity markets continue grinding higher. Any
good news that comes out of Washington, d C that
is macro related is just a it's just a boon
for the equity markets. I think we I think we'll
get all time highs, even if there is a little
bit of sideways news on the tariffs.
Speaker 5 (02:33):
The AI boom is real. It's it's this fast.
Speaker 4 (02:37):
Moving train that you can slow it down, but it's
it's going to keep going. So any relief that we get,
I believe is going to allow us to accelerate. And
you know, there's still a lot of stocks that we're
looking at, a lot of stocks that are still far
from where they were the February highs, and so a
lot of these are have trends that are reverse, so
(03:00):
we're looking at those. But there's also a number of
stocks that are already hitting all time highs.
Speaker 2 (03:06):
So we have a FED meeting on the eighteenth officials
right now, we're in a blackout period before that decision. Today,
the New York Fed survey found that consumers are expecting
lower inflation over the next year than I did a
month ago when they were last surveyed. And obviously this
week we have a number of price reports Wednesday at CPI, Thursday, PPI.
(03:27):
How are you feeling about the US inflation story right now?
Speaker 4 (03:31):
We continue to feel pretty good about it. The trend
has been that inflation's coming down. Now we may see
a little bit of bump back up with regard to
concerns about tariffs, but it's generally been pushing lower. I'm
a little bit concerned with higher wages. That's not so
(03:52):
much related to the tariffs as it is immigration, and
so these are things that we're keeping an eye on.
But I would generally say that the trend for inflation
has been continues to be lower.
Speaker 2 (04:03):
In terms of the politics in Washington, the Senate right
now is dealing with a President Trump's tax bill, and
we are told that Republicans in the Senate are intending
to propose some revisions, among them, maybe trying to extract
some savings not only from Medicaid, but maybe even Medicare,
and obviously that would depart from the House version. How
(04:25):
are you feeling about the future of this tax bill.
Is that something that is going to be resolved let's
say before the fourth of July, or could this drag
on for some time.
Speaker 4 (04:36):
That's I'm not a political expert. I would say that
it probably does get resolved. I don't think that we're
going to have concessions with regard to Medicare or Medicaid,
and if we do, I believe that there'll be light
I think that that would be too much of an
impact for too many people to try to do that.
Speaker 2 (04:56):
If we're talking about adding much more to the deficit,
maybe as much as two point four trillion, that's the
CBO estimate. What does that mean for the bond market?
Speaker 4 (05:05):
Yeah, so we've gotten a little bit more cautious lately
with bonds. You know that that is partly due to
the technicals of the bonds and just what's happening with
the dollar, what's happening overseas, and you know, kind of
this flight away from US dollar denominated assets. We think
(05:25):
there's still going to be volatility with the bond market,
particularly the longer end of the yield curve. So we're
we've we've shortened duration. We continue to like higher quality credit,
so we're a little bit more cautious on just you know,
the bond market in general than we are with equities.
Speaker 2 (05:45):
That's interesting. So the sell America theme you see impacting
the bond market impacting the dollar more than the stock market.
Speaker 4 (05:53):
Yeah, I think that's that's partly because we we we
see you know a lot of these large companies that
are within technology that the fundamentals are still good, the
earnings growth is still good, the profit margins, there's still
a lot of growth there, you know, And I wish
I could say that across the board every single sector,
(06:15):
but certainly with you know, the megacap technology companies, and
you know, there's also some some trickle down thematic we thematically,
we're also liking some of the energy and utility companies
that have a story with technology, and those have all
been performing really well. There's kind of this mean reversion
(06:36):
trade where they sold off a lot and they've come back.
Speaker 5 (06:39):
But yes, we do like equities more than bonds.
Speaker 2 (06:41):
How are you feeling about the American consumer broadly speaking,
and whether or not you would be encouraged to take
positions either in consumer staples or consumer discretionary stocks.
Speaker 4 (06:54):
Yeah, so we actually did own some consumer staples, you know,
not that long ago.
Speaker 5 (07:00):
Oh and we trim that position.
Speaker 4 (07:02):
We at we actually added to consumer discretionary partly, you know,
because some of those names were just really really sold off.
Speaker 5 (07:11):
There is still some risk there.
Speaker 4 (07:13):
So this is you know, that was kind of a
longer term thesis in terms of macro improvements.
Speaker 5 (07:20):
We we thought that they sold off too much.
Speaker 4 (07:23):
There's still certainly going to be sensitivity when you when
you get names like Apple and uh Tesla and you
know Amazon. There, there's still going to be some some
sensitivity here. But as we look at the big picture,
you know, the consumer still seems to be in pretty
good shape.
Speaker 5 (07:43):
Uh there, They're still spending.
Speaker 4 (07:45):
You know, a lot of the spending is on services,
but you know, we're we're watching that closely to see
kind of, you know, if if that changes in terms
of the trend and earnings.
Speaker 2 (07:58):
Are you monitoring situations offshore, any opportunities there, whether it's
in Asia or Europe or other jurisdictions.
Speaker 4 (08:07):
Yeah, So we have added some individual names, some stocks
that we like that are in Europe as well as Asia.
You know, I would say from a bottom up standpoint,
we're liking international a little bit more than we have before,
and that is really just you know, improving fundamentals as
well as the trend and momentum getting.
Speaker 5 (08:28):
Better and these are quality names.
Speaker 4 (08:30):
From a macro standpoint, we're also you know, looking at
areas where we can add to International.
Speaker 2 (08:37):
Jim will leave it there. Thank you so much for
joining us. Jim Warden is the chief investment officer at
the Wealth Consulting Group. Joining from Sacramento, California. Here on
the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast.
I'm Doug Christner, and as we have been discussing, trade
(09:00):
talks between the US and China are set to continue
for a second day in London. The aim here is
to ease tension over US shipments of technology to China
and shipments of Chinese rare earth elements to the US.
For a closer look on what these talks may yield,
we heard from Bloomberg's Jennifer de Loki in Washington. She
(09:21):
joined Bloomberg's North Asia correspondent Stephen Engel. Stephen and Jennifer
spoke with Bloomberg's Sherry On and Heidi Stroud Watts.
Speaker 6 (09:29):
Jennifer, let me start with you. I mean President Trump
saying that China is not easy. I mean, what was
he expecting? This is the second largest economy in the world.
But what are we expecting in terms of any concrete
breakthrough in London now that these talks continue for a
second day.
Speaker 7 (09:43):
Well, you know, I think the fact that you know,
the officials from the US and China were able to
meet face to face for more than six hours, and
that they're continuing tomorrow was obviously taken.
Speaker 5 (09:53):
As a good sign.
Speaker 7 (09:54):
It's a development that you know, signals possible progress and
easing these trade tensions, and specifically what you know could
come out of this is an easing of restrictions on
the export of technology from the US. Obviously rare earth
materials from China also on the table and being discussed.
The US has signaled very clearly it's willing to remove
(10:16):
curbs on the export of jet engine parts, nuclear plant equipment, chemicals,
and other technology if it can secure assurances that China
will ease its own limits on rare earth materials that
are used in smartphones and fighter jets and other equipment.
So at this point that seems to be, you know,
the outlines of what's possible. Kevin Hassett, who HUDs Trump's
(10:39):
National Economic Council, said earlier today that you know, his
expectation is an agreement in London that will ensure rare
earths are released in volume from China.
Speaker 1 (10:48):
And Steve we saw in the data right despite this
fragile truth, exports from China to the US falling the
motions twenty twenty. Other than, of course, a more sort
of permanent pause to these tars What does Beijing really want?
And I guess more importantly, what are they willing to
give up? Given how closely held the supply of rarest
earth and technology has been over the past decade or more.
Speaker 8 (11:12):
Well, clearly Beijing is very suspicious of what the United
States is trying to get out of these talks and
of this trade war. They definitely want the reduction, if
not elimination of the tariffs, because again the pause is
only until August and then they resume, so they would
like to see that taken away. They just like some clarity,
(11:33):
and that's why having consistency and talks with the same people,
beit Scott Bessant and then Jamison Greer, the US Trade Representative,
and now in addition we have Howard Lutnik, the Commerce Secretary,
which indicates that those export controls from the United States,
including some of those that were added after that truce
was reached in Geneva, which only added to the suspicion
(11:54):
on the Chinese part. So that's why it's clear that
export controls, perhaps as we just heard, could be a
bargaining chip for the United States to reduce those that
were added after that Geneva truth. So I think the
Chinese side is trying to get a gauge of the
intent and the end result that the White House is
(12:16):
trying to get, and not necessarily whether it's going to
be just unilaterally beneficial to the United States. This is
so far. Let me just say after day one of
the talks, the Chinese have kept really quiet. I scoured
state media. There's hardly anything about the readout of the
day one talks. Holy Funk, who's leading the Chinese delegation,
(12:37):
walked right past the gaggle of reporters in London, did
not say anything. The US side said only a few
words like Howard Ludnox said they were fruitful, Scott Besson
said good talks. Hollyfunk said absolutely nothing. Yesterday the China
Daily said pressure and coercion are not going to work
against China, which is ready to resolutely counter any ill
(12:59):
intention to move by the US side. So that really
indicates how suspicious the Chinese side is. They are willing
to talk, as evidence by the phone call last week
between Trump and She, but they're very skeptical.
Speaker 6 (13:15):
Steve, how much pressure are Chinese policymakers on their right
now given the state of the Chinese economy. I mean,
we have seen them trying to make good with other
training partners like the European Union recently.
Speaker 8 (13:28):
Absolutely, and EU is going to be a key one
because EU leaders will be going to China at the
end of next month for the EU China Summit. There
are talks about possible huge air bus deal. There's already
negotiations that are according to the Ministry of Commerce in
China on the minimum price guarantees on evs, possibly reaching
(13:50):
a deal at some point this summer. So again, the
Chinese are definitely engaging with the EU. They're also engaging
throughout the rest of the world in Southeast Asia, as
we saw in those export numbers yesterday, were exports to
the United States fell thirty four percent, Imports fell nearly
eighteen percent in two way trade with the United States,
(14:10):
but they absolutely boomed with else other parts of the world.
So China is diversifying its export destinations and its available markets.
But it's not enough right now to counter what has
been a lot of trade obviously across the Pacific to
the United states. So yes, it adds definitely to the
pressure on the Chinese economy, as evidence as well by
(14:32):
the PPI the factory gate deflation extending its string of
deflationary months to thirty two yesterday down more than three percent.
So there is deflation definitely entrenched in China.
Speaker 1 (14:46):
Jennifer, I'm wondering how much sort of domestic judicial pressure
it is. Obviously we had the sort of lower court
ruling over.
Speaker 5 (14:52):
The legality or the illegality of these tariffs.
Speaker 1 (14:56):
Do we know if the polls on allowing them to
continue to play out might be sustained?
Speaker 7 (15:01):
Yeah, we could know very very soon. You know, a
federal appeals court here could rule at any time on
whether to continue pausing the vast majority of Trump's tariffs,
basically all of those that are predicated on his assertion
that US trade and balances constitute a national emergency warranting
those love levies. And so you know, as we know
(15:23):
as sure, a separate court already ruled against these tariffs
toss them out very swiftly, another appeals court came in
and put that whole order on pause. And the question
before that court now is whether to extend its temporary
pause the Trump administration today went to the court and said,
please keep this going. Really the lower court order, if
(15:45):
you toss these terraffs out, it really interferes with our ability,
the president's ability to conduct foreign policy. And so the
administration is making the case that these need to be
extended because the legal you know, machinations over this will
for months. They could go all the way to the
Supreme Court, and in the meantime, you know, if the
tariffs can't be collected, it really impinges on the President's
(16:08):
ability to do business. So we could see a ruling
at any time, potentially as soon as tomorrow.
Speaker 1 (16:13):
We'll make ten of Adela there and Steven Angel as
well with the latest on those US China trade talks.
Speaker 2 (16:21):
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
(16:43):
and Australia. I'm Doug Prisner and this is Bloomberg,
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