April 13, 2025 • 19 mins
On today's episode - US President Donald Trump pledged he will still apply tariffs to phones, computers and popular consumer electronics, downplaying a weekend exemption as a procedural step in his overall push to remake American trade. We preview the trading week ahead with Chuck Cumello, President and CEO at Essex Financial Services.
Asian stocks advanced at the open after Washington issued the pause on import duties on a range of consumer electronics, lifting sentiment after a volatile week for markets. We get more perspective on the escalating US-China trade war and what it means for Asian markets with Mark Matthews, Head of Asia Research at Julius Baer. He speaks with Bloomberg’s Shery Ahn and Haidi Stroud-Watts.
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner.
On today's episode, will break down the latest in the
US trade war with China as it enters a second week.
Stocks in the Asia Pacific as well as US equity
index futures pushing higher at this hour. This is after
President Trump exempted certain consumer electronic devices from the latest
(00:32):
reciprocal tariffs, but this relief is temporary. A specific tariff
on semiconductors will be announced in due course, and in
a moment we'll be hearing from Mark Matthews, head of
Asia Research at Julius Behar. But first is a conversation
with Chuck Camello. He is president and CEO of Essex
Financial Services. He joins us from Connecticut. Chuck, it's always
(00:54):
a pleasure to have the chance to benefit from your perspective.
It was quite a week we suffered through last week.
I think we can agree on that much. Things seem
to be stabilizing a bit more right now. I'm curious
as to what you're looking for in the next five
trading days.
Speaker 3 (01:09):
Yeah, boy, it's first ball. It's very nice to be
with you so thank you so much for having me.
But yeah, you know, we're coming off one of the
most volatile and challenging weeks that I think, you know,
anybody who's been in this business for any length of time,
you know, was just shaking their head. It was certainly
a really really stressful one for you know, financial professionals
and clients alike. But you know, I think what we
(01:30):
wanted to see is a little bit of what we
got on Friday night and over the weekend.
Speaker 4 (01:34):
Vic VI the reciprocal tariffs not.
Speaker 3 (01:36):
Being applied to bones, ipadsnap tops, technology, things of that nature.
So they are still you know, getting hit with a
you know, I think believe they're in the twenty percent bucket.
But I think that was very very positive, and you know,
I think the futures are indicating that. But I think
certainly there's been so much uncertainty and you know, borderline
chaos that you know, anything that gives a little bit
(01:59):
of certainty to tear offfs or any type of certainty
of the policy coming out of Washington will be helpful.
And I think it will be very well well received
by the markets. And quite candidly, it's what they're crying
out for.
Speaker 2 (02:11):
Do we need to still discuss recession risk? I mean,
right now looks as though the US equity market is
down about eleven percent from its high, and if there
is a recession on the horizon, I think that we're
going to see a significant repricing inequities. Do we still
need to consider that fact?
Speaker 4 (02:27):
Well? I think you certainly do.
Speaker 3 (02:29):
I mean there's you know, there's no shortage of folks,
you know, saying we're heading for recession or are in recession.
But you know a lot of those same folks have
called twelve the last seven recessions, So but this one
certainly feels different. I think the big difference here is
the overall sentiment. And you know, I think everybody feels it.
(02:49):
Everybody feels this uncertainty, everybody feels this sort of looming threat.
Terrorists are inflationary period, end of story. But you know,
there is the offset. There is maybe you know, some
some tax help and tax cuts coming out of Washington.
So you know, I've given up trying to predict the future.
Speaker 4 (03:06):
But I certainly am not.
Speaker 3 (03:08):
Going on in a lamb, nor am I being unique
in any way of saying the odds for recessions certainly
in the past. This is the crazy thing right over
the past just three weeks have risen, you know, substantially,
So check.
Speaker 2 (03:19):
I'm curious about the extent to what you're using the
credit markets right now as a guide even to put
money to work on the equity side. What are you
seeing in the credit space?
Speaker 3 (03:28):
Well, listen, I think the bond market, you know, and
again that was I think the big driver that you know,
got Wednesday's ninety day freeze because again in abnormal things
happen in abnormal times, and like Wednesday, was that right?
So the market market, you know, uh, market goes down
rather on Tuesday. Usually you're seeing bond prices, you know,
(03:50):
and yields moved down of you know, yields moved down
on fixed income that wasn't happening.
Speaker 4 (03:55):
Dollar dropping as well.
Speaker 3 (03:56):
And I think a lot of that is just the
overall concern from a lot of overseas buyers and holders
of just the instability in the US right now. So
the credit market was screaming out that there's a problem,
there's a big problem here, and I think that finally
got the President's attention. And I think that credit market
is a big barometer in terms of how things will
(04:17):
you know, how those winds are going to be blowing.
And I think they got to such an extent and
it got so much attention that it made the president pivot,
and that was obviously extremely helpful for the markets on
Wednesday when you saw these unbelievable increases. The challenge and
what we try to remind everybody is these huge increases
on Wednesday, Historically they're book ended, so we go back
(04:40):
in time and you look of when you've seen those
types of increases in percentage gained of those of the indexes.
They've happened in twenty twenty, and they've happened back in
two thousand, I think was two thousand and eight. So
you have to be very careful because none of us
want to revisit those periods of time. But that's where
you get these types of outsized moves in the market
(05:02):
of when things have just been so crazy, so scary,
and so valuable.
Speaker 2 (05:05):
So I'm glad you brought up the notion of foreign
investors buying US treasuries and maybe what we saw last
week was just a lack of confidence in a lot
of the policies that the US is putting forward on
the trade side, obviously, but I'm wondering whether or not
there has been a significant breakage right now that maybe
it's going to take a lot more to restore confidence.
(05:28):
Is that a possibility.
Speaker 4 (05:30):
I think it is.
Speaker 3 (05:31):
I mean, I think there's a lot of things that
went into that into that you know, big rise in
the ten year and the thirty year last week. It
certainly overseas as part of it. But but you know,
from everything we see, you know, we haven't heard, nor
have we heard from a lot of the folks that
we work with, that that there's any you know, mass
selling going on.
Speaker 4 (05:51):
You know, the huge hedge fund unwind of.
Speaker 3 (05:53):
Treasuries, you know, the the treasuries you know, were hedge funds,
et cetera loaded up on treasuries with thought that you know,
there'd be a little bit more control coming out of Washington,
and that you know, sadly within when the tariff announcement
was made on Liberation Day at just those absurdly high rates,
it just shook everything. So I think between the you know,
(06:14):
very few things end well when the sentence starts with
leverage trades being unwound. So you know that that generally
got us in a pretty bad place as well in
terms of what was driving rates up.
Speaker 2 (06:26):
So I'm curious, how are you approaching the equity side
right now in terms of an investment strategy. Are you
staying along the sidelines maybe and just hoarding a little
bit of cash at the moment, looking for maybe a
little bit more of a pullback and another entry point here,
or is there something else that I should know about
in terms of the way Chuck Camello is approaching the
market right now.
Speaker 3 (06:45):
No, I think we've already had a pretty significant pullback
in and of itself, and there's a tremendous amount of
cash sitting on the sidelines. So I think for the
average investor, and one of the things obviously that this
type of period of time calls four is caution, right
and some patients and some prudence with how you're going
to invest money. So certainly I think, you know, dollar
(07:07):
cost averaging into the market has made sense in the past,
it is tremendously makes sense right now. But you also
have to realize that these periods of time when the
market does sell off like this, for longer term investors,
right it is an opportunity. It's an opportunity wherever. Listen,
if your time frames three or six months, you know,
flip a coin, I couldn't begin to guess where it's
going to be.
Speaker 4 (07:27):
But if you're going out longer, and I think.
Speaker 3 (07:29):
History also shows us when you have this, I mean,
you know, I think the vics last week, I think.
Speaker 4 (07:35):
I saw the highest at fifty six, fifty seven. I
think you got the sixty.
Speaker 3 (07:38):
But regardless, you look at these big sell offs, these
big corrections, that level of VIX, and you look out
historically of market returns looking forward there generally are very good.
So we certainly have been putting some money to work,
whether it's in ETFs or whether individual securities as well
that now have come down to a point, especially some
of these tech names, where you know there there certainly
are a little they're quite a bit more attractive than
(08:00):
they were a few weeks ago. And again we try
to stress you don't have to call the bottom, you
don't have to get it perfect. So right now there
are some pretty attractive entry points in the equity market.
But again we're bracing and we're you're setting the expectation
with clients. It is a volatile time. We expect the
volatility to continue. But for a long term investor, you know,
getting long term above average re urns, is the volatility
(08:22):
is the price you pay for that.
Speaker 2 (08:23):
A moment ago we talked about the possibility of recession.
I would imagine that for that reason you want to
avoid anything that is particularly economically sensitive. And I'm curious
that you brought up tech because as part of this
consumer electronics story that we've been talking about today and
the pivot away from the latest reciprocal tariffs, maybe a
little bit of a temporary reprieve here, but what has
(08:46):
been very clear from the White House today is that
a specific tariff on semiconductors is on the horizon, maybe
the next month or two. So within tech, how do
you even play it.
Speaker 3 (08:59):
Yeah, it's a great question, and it's it's not for
the faint of heart. But keep in mind, what comes
out of Washington, but what came out of Washington this
weekend versus what might come out of Washington Tuesday, Wednesday
or Thursday could be two very different things. And so
you know, we're in the business of trying to build
long term investment and wealth management plans for our clients,
and you know, we've had shakes in shocks that the
(09:22):
market is seen now, thankfully, not to the extent like
we've seen this past you know, a week and a
half or so, but with technology again, the way that
the market has pulled back, there are some pretty attractive
there can be some pretty attractive entry points. Now we're
not saying that you're buying now and you're going straight
back up. No, No, these are for long term investors.
And if you've got a long term timeframe, listen you
(09:45):
we might we might be looking at this market drop
another ten or fifteen percent. If it does, we'll put
a little bit more money to work at that time.
But you know, looking forward, looking long term, these are
the times where true wealth can be made.
Speaker 2 (09:59):
Chuck, I'm cure as to whether or not you're seeing
opportunities in the bond market. We were talking about the
volatility and treasuries last week. Let's talk a little bit
about what your expectations from the Fed might be and
whether or not there are opportunities in credit.
Speaker 3 (10:14):
Yeah, well, the Fed's in a tough spot, aren't they.
So you've got inflation, you know, inflation especially you know,
the most recent CPI PPI numbers came down, but again
quite candidly, what the heck does that mean at this point,
you know, looking at the tariffs that.
Speaker 4 (10:30):
We might be dealing with in the future.
Speaker 3 (10:32):
And then again you've got growth certainly slow, and so
they're betwixt and between. I think in the fixed income space,
you know, you know, if you asked me this this
question about a week and a half ago, two weeks ago,
you know, municipal bonds were doing just great and then
they completely blew up last week. And so we had
a great municipal bond manager in the office last week,
you know, talking to us about that. And you can
get close to five percent yields now on UNI. So
(10:52):
we certainly do think that there's an opportunity in the
municipal bond space. But again I think it's going to
be volatile there as well. And we here we go
all the way back to what policy comes out of
Washington is going to drive a lot of this kind
of stuff. And if there is this continuing lack of
confidence or this fear of instability in the US system
from overseas buyers, you know, we're we're going to see
(11:16):
more volatility in the ten and the thirty year. So
again it's it's, you know, somewhat of a similar story
of we're going to expect volatility, but again diversifying. I
think saying short to intermediate and duration is the way
to go better credit quality, you know, high yield acts
more like equities and times like this. But again the
similar story that it also provides an opportunity as you're
(11:38):
looking to put some money to work, and quite candidly,
now you're walking in some pretty pretty attractive returns. So
it isn't It is again for the right buyer and opportunity,
and good old cash is paying four percent, and so
you're certainly getting paid to wait until eventually, whenever, and
if the Fed does cut rates, you're at least getting
four percent to sit in cash and ride this out.
Speaker 2 (11:58):
Chuck, thank you so much for joining us. Chuck Amillo there,
president and CEO of Essex Financial Services, joining us here
on the Daybreak Asia podcast. Welcome back to the Daybreak
Asia Podcast. I'm Derek Chrisner. Asian equities have advanced after
(12:20):
President Trump paused some import duties on a range of
consumer electronics. This appears to be lifting sentiment a bit
after a volatile week for markets last week. For more
we heard from Mark Matthews, he has head of Asia
research at the Bank, Julius Behar, he spoke with Bloomberg's
Cherry On and Heidi Stroud.
Speaker 5 (12:39):
Watts very hard to know what the direction will be
because we just had Commerce Secretary Lutnik and the President
himself saying these exemptions are not temporary. We will have
permanent tariffs. And so it's a ping pong ball. It's
not being very well executed, but you never know what
(13:02):
they could say at the end of this week. I
think last week what was encouraging in a strange way,
if you want to make a positive out of a negative,
is the bond market forced a reaction from the White House,
and so it might do that again, and so many
other markets, like the currency market and the stock market,
and so it may be that tariffs that appear to
(13:26):
be permanent now actually do become not permanent over the
long term. But we don't know, and so in the
absence of any certainty, I'm not surprised that central banks
want to try to help economies along, because it does
look increasingly likely like the largest economy in the world
(13:48):
is heading into a recession in the United States.
Speaker 6 (13:51):
As you say, It's kind of interesting seeing the reaction
that was prompted, presumably by what was really I guess
Trump's pain trade rob was happening in treasuries. Does that
give you more confidence in terms of pivoting to the
markets that the US has targeted?
Speaker 2 (14:07):
Europe?
Speaker 6 (14:07):
China, for example? Where do you see the diversification opportunities there? Now?
Speaker 5 (14:13):
There are lots of good diversification opportunities because in those
places the authorities are starting to stimulate. And once again,
to make a positive out of a negative. I read
somewhere I can't remember who said it. I'm sorry I
can't give them credit that Donald Trump and Vladimir Putin
(14:36):
were the best thing that could have ever happened to
Europe because they've shooken it out of its torpor and
lethargy that it's been in for the last couple of decades.
And so there is lots of good value in Europe.
And now it seems like next year there's going to
be some growth there too, with Germany starting to stimulate
its economy, and it has the resources to do that,
(14:57):
and there's lots of things that German can spend on
which will not be wasteful spending. They actually could use
a lot of new infrastructure, and of course they'll be
increasing their defense spending as well. And in China there's
lots of room to stimulate the economy, and in other
parts of Asia as well. So yes, there are things
(15:18):
to do around the world. But what I have to
say is to the extent that the S and P
five hundred is the benchmark for the world, that index,
we believe is in a bear market, and I highly
suspect it'll be lower at the end of this year
than it was at the beginning of this year, and
(15:39):
so that acts as a weight on risk assets generally.
Speaker 1 (15:43):
Yeah, especially for countries perhaps that are not really headed
towards the easing path, like Japan, which is an anomaly
is sort of among advanced economies. There was a lot
of optimism of our Japanese equities. But could we continue
to see that trend even when the bo is trying
to normalize policy at a time when the external environment
(16:04):
is so uncertain.
Speaker 5 (16:06):
Yes, that's a very complicated situation. But I would say
that I like Japan because within Asia, it's the only
country that has really top quality global brand names, and
the overall return in equity of Japan is very low.
It's less than ten percent because it's dragged down by
conglomerates and banks. But because it's such a big market.
(16:29):
Over I believe, what seven thousand listed companies something like that,
you can construct a portfolio of a dozen or more
very high quality, global brand name, large and liquid companies
with returns on equity in the high teens or twenties.
And that's the way I would approach Japan because it
(16:51):
does have these really high quality companies that don't mean
to be nasty about the rest of Asia, but the
rest of Asia doesn't have that.
Speaker 1 (17:00):
What about China? I mean you mentioned earlier that Europe
was really shaken into action because of this sense of crisis.
Could we actually see Beijing now trying to really boost
the economy and that's stimilars measures really filtering through the
stock market. But on the other hand, of course, you
have all of this pressure coming from tariffs.
Speaker 5 (17:18):
Yes, I think so. Well, the major Chinese industries are
still well below they're all time highs. And when I
say well below, I mean you know, thirty forty fifty
percent or not expensively hang saying index still has something
like a four and a half percent dividend yield. You
don't pay taxes on dividends, by the way in Hong Kong.
And I think the major thing was deep seek back
(17:42):
in January, not only because it proved that China can
operate at the forefront of high technology globally and offer
very competitive products. But the government's response to that I
thought was very good in that it had kind of
been keeping the big technology stocks in the doghouse since
(18:04):
Jackmaw's infamous speech a few years ago, and it's clear
now the government views the big technology companies and technology
in general, and China's a positive force, is a soft
power for the world. So I think that mending offenses
between government and big tech in China is also very important.
Speaker 2 (18:22):
That was Mark Matthews, head of research at the Bank
Julius Bear, speaking with Bloomberg's Sherry On and Heidi Stroud
Watts right 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,
(18:42):
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 and Australia.
I'm Doug Chrisner and this is lumberm
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner.
On today's episode, will break down the latest in the
US trade war with China as it enters a second week.
Stocks in the Asia Pacific as well as US equity
index futures pushing higher at this hour. This is after
President Trump exempted certain consumer electronic devices from the latest
(00:32):
reciprocal tariffs, but this relief is temporary. A specific tariff
on semiconductors will be announced in due course, and in
a moment we'll be hearing from Mark Matthews, head of
Asia Research at Julius Behar. But first is a conversation
with Chuck Camello. He is president and CEO of Essex
Financial Services. He joins us from Connecticut. Chuck, it's always
(00:54):
a pleasure to have the chance to benefit from your perspective.
It was quite a week we suffered through last week.
I think we can agree on that much. Things seem
to be stabilizing a bit more right now. I'm curious
as to what you're looking for in the next five
trading days.
Speaker 3 (01:09):
Yeah, boy, it's first ball. It's very nice to be
with you so thank you so much for having me.
But yeah, you know, we're coming off one of the
most volatile and challenging weeks that I think, you know,
anybody who's been in this business for any length of time,
you know, was just shaking their head. It was certainly
a really really stressful one for you know, financial professionals
and clients alike. But you know, I think what we
(01:30):
wanted to see is a little bit of what we
got on Friday night and over the weekend.
Speaker 4 (01:34):
Vic VI the reciprocal tariffs not.
Speaker 3 (01:36):
Being applied to bones, ipadsnap tops, technology, things of that nature.
So they are still you know, getting hit with a
you know, I think believe they're in the twenty percent bucket.
But I think that was very very positive, and you know,
I think the futures are indicating that. But I think
certainly there's been so much uncertainty and you know, borderline
chaos that you know, anything that gives a little bit
(01:59):
of certainty to tear offfs or any type of certainty
of the policy coming out of Washington will be helpful.
And I think it will be very well well received
by the markets. And quite candidly, it's what they're crying
out for.
Speaker 2 (02:11):
Do we need to still discuss recession risk? I mean,
right now looks as though the US equity market is
down about eleven percent from its high, and if there
is a recession on the horizon, I think that we're
going to see a significant repricing inequities. Do we still
need to consider that fact?
Speaker 4 (02:27):
Well? I think you certainly do.
Speaker 3 (02:29):
I mean there's you know, there's no shortage of folks,
you know, saying we're heading for recession or are in recession.
But you know a lot of those same folks have
called twelve the last seven recessions, So but this one
certainly feels different. I think the big difference here is
the overall sentiment. And you know, I think everybody feels it.
(02:49):
Everybody feels this uncertainty, everybody feels this sort of looming threat.
Terrorists are inflationary period, end of story. But you know,
there is the offset. There is maybe you know, some
some tax help and tax cuts coming out of Washington.
So you know, I've given up trying to predict the future.
Speaker 4 (03:06):
But I certainly am not.
Speaker 3 (03:08):
Going on in a lamb, nor am I being unique
in any way of saying the odds for recessions certainly
in the past. This is the crazy thing right over
the past just three weeks have risen, you know, substantially,
So check.
Speaker 2 (03:19):
I'm curious about the extent to what you're using the
credit markets right now as a guide even to put
money to work on the equity side. What are you
seeing in the credit space?
Speaker 3 (03:28):
Well, listen, I think the bond market, you know, and
again that was I think the big driver that you know,
got Wednesday's ninety day freeze because again in abnormal things
happen in abnormal times, and like Wednesday, was that right?
So the market market, you know, uh, market goes down
rather on Tuesday. Usually you're seeing bond prices, you know,
(03:50):
and yields moved down of you know, yields moved down
on fixed income that wasn't happening.
Speaker 4 (03:55):
Dollar dropping as well.
Speaker 3 (03:56):
And I think a lot of that is just the
overall concern from a lot of overseas buyers and holders
of just the instability in the US right now. So
the credit market was screaming out that there's a problem,
there's a big problem here, and I think that finally
got the President's attention. And I think that credit market
is a big barometer in terms of how things will
(04:17):
you know, how those winds are going to be blowing.
And I think they got to such an extent and
it got so much attention that it made the president pivot,
and that was obviously extremely helpful for the markets on
Wednesday when you saw these unbelievable increases. The challenge and
what we try to remind everybody is these huge increases
on Wednesday, Historically they're book ended, so we go back
(04:40):
in time and you look of when you've seen those
types of increases in percentage gained of those of the indexes.
They've happened in twenty twenty, and they've happened back in
two thousand, I think was two thousand and eight. So
you have to be very careful because none of us
want to revisit those periods of time. But that's where
you get these types of outsized moves in the market
(05:02):
of when things have just been so crazy, so scary,
and so valuable.
Speaker 2 (05:05):
So I'm glad you brought up the notion of foreign
investors buying US treasuries and maybe what we saw last
week was just a lack of confidence in a lot
of the policies that the US is putting forward on
the trade side, obviously, but I'm wondering whether or not
there has been a significant breakage right now that maybe
it's going to take a lot more to restore confidence.
(05:28):
Is that a possibility.
Speaker 4 (05:30):
I think it is.
Speaker 3 (05:31):
I mean, I think there's a lot of things that
went into that into that you know, big rise in
the ten year and the thirty year last week. It
certainly overseas as part of it. But but you know,
from everything we see, you know, we haven't heard, nor
have we heard from a lot of the folks that
we work with, that that there's any you know, mass
selling going on.
Speaker 4 (05:51):
You know, the huge hedge fund unwind of.
Speaker 3 (05:53):
Treasuries, you know, the the treasuries you know, were hedge funds,
et cetera loaded up on treasuries with thought that you know,
there'd be a little bit more control coming out of Washington,
and that you know, sadly within when the tariff announcement
was made on Liberation Day at just those absurdly high rates,
it just shook everything. So I think between the you know,
(06:14):
very few things end well when the sentence starts with
leverage trades being unwound. So you know that that generally
got us in a pretty bad place as well in
terms of what was driving rates up.
Speaker 2 (06:26):
So I'm curious, how are you approaching the equity side
right now in terms of an investment strategy. Are you
staying along the sidelines maybe and just hoarding a little
bit of cash at the moment, looking for maybe a
little bit more of a pullback and another entry point here,
or is there something else that I should know about
in terms of the way Chuck Camello is approaching the
market right now.
Speaker 3 (06:45):
No, I think we've already had a pretty significant pullback
in and of itself, and there's a tremendous amount of
cash sitting on the sidelines. So I think for the
average investor, and one of the things obviously that this
type of period of time calls four is caution, right
and some patients and some prudence with how you're going
to invest money. So certainly I think, you know, dollar
(07:07):
cost averaging into the market has made sense in the past,
it is tremendously makes sense right now. But you also
have to realize that these periods of time when the
market does sell off like this, for longer term investors,
right it is an opportunity. It's an opportunity wherever. Listen,
if your time frames three or six months, you know,
flip a coin, I couldn't begin to guess where it's
going to be.
Speaker 4 (07:27):
But if you're going out longer, and I think.
Speaker 3 (07:29):
History also shows us when you have this, I mean,
you know, I think the vics last week, I think.
Speaker 4 (07:35):
I saw the highest at fifty six, fifty seven. I
think you got the sixty.
Speaker 3 (07:38):
But regardless, you look at these big sell offs, these
big corrections, that level of VIX, and you look out
historically of market returns looking forward there generally are very good.
So we certainly have been putting some money to work,
whether it's in ETFs or whether individual securities as well
that now have come down to a point, especially some
of these tech names, where you know there there certainly
are a little they're quite a bit more attractive than
(08:00):
they were a few weeks ago. And again we try
to stress you don't have to call the bottom, you
don't have to get it perfect. So right now there
are some pretty attractive entry points in the equity market.
But again we're bracing and we're you're setting the expectation
with clients. It is a volatile time. We expect the
volatility to continue. But for a long term investor, you know,
getting long term above average re urns, is the volatility
(08:22):
is the price you pay for that.
Speaker 2 (08:23):
A moment ago we talked about the possibility of recession.
I would imagine that for that reason you want to
avoid anything that is particularly economically sensitive. And I'm curious
that you brought up tech because as part of this
consumer electronics story that we've been talking about today and
the pivot away from the latest reciprocal tariffs, maybe a
little bit of a temporary reprieve here, but what has
(08:46):
been very clear from the White House today is that
a specific tariff on semiconductors is on the horizon, maybe
the next month or two. So within tech, how do
you even play it.
Speaker 3 (08:59):
Yeah, it's a great question, and it's it's not for
the faint of heart. But keep in mind, what comes
out of Washington, but what came out of Washington this
weekend versus what might come out of Washington Tuesday, Wednesday
or Thursday could be two very different things. And so
you know, we're in the business of trying to build
long term investment and wealth management plans for our clients,
and you know, we've had shakes in shocks that the
(09:22):
market is seen now, thankfully, not to the extent like
we've seen this past you know, a week and a
half or so, but with technology again, the way that
the market has pulled back, there are some pretty attractive
there can be some pretty attractive entry points. Now we're
not saying that you're buying now and you're going straight
back up. No, No, these are for long term investors.
And if you've got a long term timeframe, listen you
(09:45):
we might we might be looking at this market drop
another ten or fifteen percent. If it does, we'll put
a little bit more money to work at that time.
But you know, looking forward, looking long term, these are
the times where true wealth can be made.
Speaker 2 (09:59):
Chuck, I'm cure as to whether or not you're seeing
opportunities in the bond market. We were talking about the
volatility and treasuries last week. Let's talk a little bit
about what your expectations from the Fed might be and
whether or not there are opportunities in credit.
Speaker 3 (10:14):
Yeah, well, the Fed's in a tough spot, aren't they.
So you've got inflation, you know, inflation especially you know,
the most recent CPI PPI numbers came down, but again
quite candidly, what the heck does that mean at this point,
you know, looking at the tariffs that.
Speaker 4 (10:30):
We might be dealing with in the future.
Speaker 3 (10:32):
And then again you've got growth certainly slow, and so
they're betwixt and between. I think in the fixed income space,
you know, you know, if you asked me this this
question about a week and a half ago, two weeks ago,
you know, municipal bonds were doing just great and then
they completely blew up last week. And so we had
a great municipal bond manager in the office last week,
you know, talking to us about that. And you can
get close to five percent yields now on UNI. So
(10:52):
we certainly do think that there's an opportunity in the
municipal bond space. But again I think it's going to
be volatile there as well. And we here we go
all the way back to what policy comes out of
Washington is going to drive a lot of this kind
of stuff. And if there is this continuing lack of
confidence or this fear of instability in the US system
from overseas buyers, you know, we're we're going to see
(11:16):
more volatility in the ten and the thirty year. So
again it's it's, you know, somewhat of a similar story
of we're going to expect volatility, but again diversifying. I
think saying short to intermediate and duration is the way
to go better credit quality, you know, high yield acts
more like equities and times like this. But again the
similar story that it also provides an opportunity as you're
(11:38):
looking to put some money to work, and quite candidly,
now you're walking in some pretty pretty attractive returns. So
it isn't It is again for the right buyer and opportunity,
and good old cash is paying four percent, and so
you're certainly getting paid to wait until eventually, whenever, and
if the Fed does cut rates, you're at least getting
four percent to sit in cash and ride this out.
Speaker 2 (11:58):
Chuck, thank you so much for joining us. Chuck Amillo there,
president and CEO of Essex Financial Services, joining us here
on the Daybreak Asia podcast. Welcome back to the Daybreak
Asia Podcast. I'm Derek Chrisner. Asian equities have advanced after
(12:20):
President Trump paused some import duties on a range of
consumer electronics. This appears to be lifting sentiment a bit
after a volatile week for markets last week. For more
we heard from Mark Matthews, he has head of Asia
research at the Bank, Julius Behar, he spoke with Bloomberg's
Cherry On and Heidi Stroud.
Speaker 5 (12:39):
Watts very hard to know what the direction will be
because we just had Commerce Secretary Lutnik and the President
himself saying these exemptions are not temporary. We will have
permanent tariffs. And so it's a ping pong ball. It's
not being very well executed, but you never know what
(13:02):
they could say at the end of this week. I
think last week what was encouraging in a strange way,
if you want to make a positive out of a negative,
is the bond market forced a reaction from the White House,
and so it might do that again, and so many
other markets, like the currency market and the stock market,
and so it may be that tariffs that appear to
(13:26):
be permanent now actually do become not permanent over the
long term. But we don't know, and so in the
absence of any certainty, I'm not surprised that central banks
want to try to help economies along, because it does
look increasingly likely like the largest economy in the world
(13:48):
is heading into a recession in the United States.
Speaker 6 (13:51):
As you say, It's kind of interesting seeing the reaction
that was prompted, presumably by what was really I guess
Trump's pain trade rob was happening in treasuries. Does that
give you more confidence in terms of pivoting to the
markets that the US has targeted?
Speaker 2 (14:07):
Europe?
Speaker 6 (14:07):
China, for example? Where do you see the diversification opportunities there? Now?
Speaker 5 (14:13):
There are lots of good diversification opportunities because in those
places the authorities are starting to stimulate. And once again,
to make a positive out of a negative. I read
somewhere I can't remember who said it. I'm sorry I
can't give them credit that Donald Trump and Vladimir Putin
(14:36):
were the best thing that could have ever happened to
Europe because they've shooken it out of its torpor and
lethargy that it's been in for the last couple of decades.
And so there is lots of good value in Europe.
And now it seems like next year there's going to
be some growth there too, with Germany starting to stimulate
its economy, and it has the resources to do that,
(14:57):
and there's lots of things that German can spend on
which will not be wasteful spending. They actually could use
a lot of new infrastructure, and of course they'll be
increasing their defense spending as well. And in China there's
lots of room to stimulate the economy, and in other
parts of Asia as well. So yes, there are things
(15:18):
to do around the world. But what I have to
say is to the extent that the S and P
five hundred is the benchmark for the world, that index,
we believe is in a bear market, and I highly
suspect it'll be lower at the end of this year
than it was at the beginning of this year, and
(15:39):
so that acts as a weight on risk assets generally.
Speaker 1 (15:43):
Yeah, especially for countries perhaps that are not really headed
towards the easing path, like Japan, which is an anomaly
is sort of among advanced economies. There was a lot
of optimism of our Japanese equities. But could we continue
to see that trend even when the bo is trying
to normalize policy at a time when the external environment
(16:04):
is so uncertain.
Speaker 5 (16:06):
Yes, that's a very complicated situation. But I would say
that I like Japan because within Asia, it's the only
country that has really top quality global brand names, and
the overall return in equity of Japan is very low.
It's less than ten percent because it's dragged down by
conglomerates and banks. But because it's such a big market.
(16:29):
Over I believe, what seven thousand listed companies something like that,
you can construct a portfolio of a dozen or more
very high quality, global brand name, large and liquid companies
with returns on equity in the high teens or twenties.
And that's the way I would approach Japan because it
(16:51):
does have these really high quality companies that don't mean
to be nasty about the rest of Asia, but the
rest of Asia doesn't have that.
Speaker 1 (17:00):
What about China? I mean you mentioned earlier that Europe
was really shaken into action because of this sense of crisis.
Could we actually see Beijing now trying to really boost
the economy and that's stimilars measures really filtering through the
stock market. But on the other hand, of course, you
have all of this pressure coming from tariffs.
Speaker 5 (17:18):
Yes, I think so. Well, the major Chinese industries are
still well below they're all time highs. And when I
say well below, I mean you know, thirty forty fifty
percent or not expensively hang saying index still has something
like a four and a half percent dividend yield. You
don't pay taxes on dividends, by the way in Hong Kong.
And I think the major thing was deep seek back
(17:42):
in January, not only because it proved that China can
operate at the forefront of high technology globally and offer
very competitive products. But the government's response to that I
thought was very good in that it had kind of
been keeping the big technology stocks in the doghouse since
(18:04):
Jackmaw's infamous speech a few years ago, and it's clear
now the government views the big technology companies and technology
in general, and China's a positive force, is a soft
power for the world. So I think that mending offenses
between government and big tech in China is also very important.
Speaker 2 (18:22):
That was Mark Matthews, head of research at the Bank
Julius Bear, speaking with Bloomberg's Sherry On and Heidi Stroud
Watts right 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,
(18:42):
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 and Australia.
I'm Doug Chrisner and this is lumberm
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