April 15, 2025 • 22 mins
Asian stocks edged lower and US equity-index futures dropped at the open as trade conflicts showed no signs of abating. Nvidia said the US put new restrictions on some chip exports to China. Contracts for the Nasdaq 100 fell more than 1.5% and S&P 500 futures retreated 1% after Nvidia slumped in after-hours trading. That’s even as results from Wall Street’s financial heavyweights on Tuesday underscored an equity-trading boon and still-healthy consumers and businesses. We discuss the day's market headlines with Ken Stern, President and CEO at Lido Advisors.
Plus - TikTok users in the US are being inundated with videos from Chinese influencers encouraging American buyers to overcome punitive Trump tariffs by buying direct from the “world’s factory” — China. Mostly filmed at Chinese factories purporting to supply top US brands from Lululemon Athletica to Nike, the influencers aim to “expose” how the vast majority of consumer goods are made in the world’s second-largest economy. Colum Murphy, China EcoGov Reporter for Bloomberg News, joins us from Beijing to break down the story.
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Episode Transcript
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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 Chrissner.
On today's episode, we'll look at how Chinese manufacturers are
using TikTok influencers in a clever ploy to avoid US tariffs.
In a moment, we'll speak with Colin Murphy. He is
China ecogov reporter for Bloomberg News in Beijing. But we
begin this morning with markets with few signs of progress
(00:33):
in negotiations on trade. The US equity market drifted lower.
We had the S and P five hundred dropping about
two tens to one percent. Joining me now is Ken Stern.
He is president of Leedo Advisors. Ken joins me here
in the Bloomberg Interactive Broker Studio in New York. Thank
you for joining us. I'm curious to get your sense
of where we are right now in terms of the
(00:53):
price action in the market. We're up one day, we're
down the next. I think we can agree we've seen
a lot of volatility, and I'm curious as to how
you're coping with this. How are you understanding things right now?
Speaker 3 (01:05):
Yeah, well, I feel like we've seen this movie and
We're right in the middle of it, and I think
making any knee jerk reaction is probably not the best idea.
The fact of the matter is, though, is what you
need to look at as the macro, and the macro
is is when something comes into your purview, you have
to look at it agnostic of some of the microeconomics
that's going on. I think we have more behavioral economics
(01:27):
happening than micro.
Speaker 2 (01:28):
We got some data points today that I'd like to
explore if we can. The first piece comes from JP
Morgan Chase, and it indicates that through Monday's Clothes, retail
investors have pumped in about seventeen point seven billion dollars
into equities since President Trump unveiled those tariffs. So retail
investors seem to be ignoring some of the warnings coming
(01:50):
from the street. Then, if you look at the latest
fund manager survey from Bank of America, economic prospects the
most negative in about three DECs. So it seems as
though there is a bit of bifurcation happening. What the
retail crowd is expecting versus what the institutional crowd is expecting.
How are you making sense of that?
Speaker 3 (02:10):
But I'd have to really understand what the baseline for
what money comes in from retail investors anyways, because that
actually might not be the greatest data point and the
greatest stamp. The fact is, though, is we tend to
see a knee jerk reaction and then it all kind
of plays out. And if you look at it pragmatically
and you stop trying to read tea leaves in the
(02:30):
short term, if there is an economic slowdown, earnings will contract.
You could argue multiples are high. You could argue if
that's the case, that perhaps we're going to first before
earnings go down, we're going to sell. I mean, consumer
sentiment you just said is really low, and that tends
(02:52):
to be on a contraying perspective, a leading indicator. So
if you look at this, you don't want to time
the market. You might want to have some protections in.
You might want to hedge, you may want to think
about protecting your downside.
Speaker 1 (03:05):
But you don't have the interest rate concerns that we
had anymore.
Speaker 3 (03:08):
Even if there's potential inflation, I don't think even people
are talking stagflation, although it's popular to talk about it.
Speaker 2 (03:16):
It's a possibility.
Speaker 1 (03:17):
It is a possibility.
Speaker 2 (03:18):
So if a client comes to you on a day
when they see Apple down ten percent and they say,
I'd like to take a position, would you advise them
to hold off? Do you think there's more downside another
maybe leg lower for Apple or a name like that.
Speaker 1 (03:32):
That's a really interesting question.
Speaker 3 (03:34):
What I'd say is buying any one stock, as much
as we love Apple or any of the others, is
still gambling compared to building out an incredible portfolio. That said,
if you like Apple and Apple is in your purview
and it hits that, I don't think you should have
your behaviors impact what your price target is, you may
(03:54):
want to hedge it a little bit.
Speaker 1 (03:56):
But the fact of the.
Speaker 3 (03:57):
Matter is is do you really think that the long
term trend is broken? Do you think we're going to
stop buying smartphones? Do you think we're going to stop
traveling completely? Do you think that the mobility of the world,
United States included is done? Do you think we're going
to stop utilizing healthcare? Recessions? Contract and they usually provide
(04:19):
at least if you believe in a long term market cycle,
you should provide a really great entry point.
Speaker 2 (04:25):
But a lot of the conversation is around a major
reordering of global trade, questions about dollar as a reserve currency,
a real level of risk now in the treasury market.
So we're in a new piece of territory here totally.
Speaker 3 (04:40):
And I don't want to minimize that because that is
exceedingly important. But if I would have told you a
year and a half ago, hey, rates are going up
eleven times, what would you do with your money? It
probably wouldn't have been long in the market. What we've
contracted now, what most of last year? But still, I
mean when you look you over year or year over
(05:01):
the last two years, we haven't contracted to such a
point that you're saying that we've really like thrown the
baby with the bathwater out.
Speaker 2 (05:11):
So if you're constructing a portfolio, then what's wrong with
buying the S and P outright?
Speaker 1 (05:16):
I don't think there's anything wrong with it.
Speaker 3 (05:17):
In fact, I think in many cases you know, fees
is an enemy and performance and so if you can
buy an efficient SMP portfolio and you like the entry point,
I think you should. But I don't think it should
be an all or none. I think that you should
be staging in your buys and averaging.
Speaker 2 (05:34):
What about being more diversified globally in this environment right now, especially,
I don't know whether it's Asia Europe, whether that still
looks attractive, I don't know. I mean, that's been a
pretty phenomenal run that we have seen in Europe so
far this year. But do you want to be diversified
globally right now?
Speaker 1 (05:50):
That is a very interesting question.
Speaker 3 (05:52):
So I think that you have to look at the
overall growth prospects. And we've been talking about the rest
of the world being a great value you for many,
many years. And if you remember the beginning of this year,
the world economies, in the world markets started out in
a pretty good fashion, and now here we are in
this turmoil. I think it's much more important right now
(06:13):
to not be making major major bets, and I think
you should be looking at how this all unfolds. If
you're going to step in, I think you should step
in lightly.
Speaker 2 (06:23):
It's a dynamic environment, you know, and maybe a little
mercurial too. We heard from Nvidia after the bell, the
chip maker saying that the government is going to require
a license for Nvidia to export one of its chips,
the H twenty, to China, and as a result of
this first quarter charge of around five and a half
billion dollars associated with this H twenty product. This really
(06:45):
goes to the tension between the US and China on
artificial intelligence. How are you playing AI as a theme?
I don't think I've met anyone recently that is not
invested in this as a theme for the four cs future.
How they are exposed as a different story.
Speaker 3 (07:03):
Every time we've seen these new ideas come out, you
see all these great investments and all these great markets,
and then it starts to consolidate and starts to consolidate
and starts to consolidate. A couple months ago, before the
tariff conversation, we were talking about data centers and chips
and we were talking about changing.
Speaker 2 (07:22):
The world power too, right power.
Speaker 3 (07:26):
The question is has that theme changed? Have we really
changed the dynamics so much that that has changed? And
so whether you mentioned one chip stock over another chip stock,
the question is is do you believe in the secular
trend of AI? And I think unless you have such
incredible insight on one stock over another, you've got to
(07:46):
look at the sectors and the indexes and decide how
much you want to be.
Speaker 1 (07:49):
Over or underweight.
Speaker 2 (07:51):
So you've been in the markets for a while. I
would assume have you ever seen a period like this
that is kind of giving you a little bit of
an analogue here? How you may approach what we're dealing
with now? Is it like the GFC? Is it like
what we had around COVID? I mean, how are you
making sense of this relative to history?
Speaker 1 (08:09):
COVID was an anomaly, right? I mean here we.
Speaker 3 (08:11):
Had this shelter in place order we all of a sudden,
the markets, you know, shot first, we went straight down,
and then there was within a couple of days a
government response, and that stabilization caused for the markets to
v back up, So you had to point down and
straight back here. I mean, we talk about a trade war.
(08:34):
It usually doesn't abate overnight. Usually there's a lot of
give and take. So I think to have this idea
that we're going to have a v formation would be
something more of an outlier, you know, maybe it's a.
Speaker 2 (08:49):
You Okay, so the Fed, I'm sure as a part
of your thinking about this, what are your expectations here?
How is the FED going to handle this situation? We
talked about stagflation as being apoon possibility. If that's the case,
the FEDS on the sidelines for the foreseeable future, may
be more concerned about inflation than growth.
Speaker 3 (09:07):
Yeah, they're really in a pickle, right, I mean they're
supposed to be agnostic to what directive of we've given them.
Inflation is still higher than their target, So if inflation
is still harder than their target, they're not supposed to
be ebbing and flowing on the whims of the market.
So they're in a pickle. However, do you really think
(09:28):
rates go higher today? It's a probability question. Do you
think rates stay the same? Do you think rates go down?
And when you start thinking of those probabilities, it may
not be today or tomorrow. But what usually happens is
there is a tomorrow, the sun will rise, there will
be some kind of negotiations. There's negative to positive. I mean,
we don't like what's going on. I mean, we were
(09:49):
all surprised in the bond trading. We were all surprised
in the currency trading. You know, could the US dollar
be you know, knocked off its blocks as a world
say safety currency. There's some real questions that we need
to get through.
Speaker 2 (10:03):
So when you have conversations with clients, number of phone
calls that happen during the course of the day. Is
there something that you hear yourself repeating again and again
and again in these conversations.
Speaker 3 (10:16):
We have to make sure that whatever we've created and
why we created it, we don't let our behaviors get
in the way of it. Timing the market, we know,
is not a great idea. We believe in the long
term effects of the market, the slope being positive. We
believe in global expansion and global growth. But there are
times that you want to push the pedal down and
(10:37):
there are times that you want to be more conservative
and wait and see. This is a time to be
a little bit more hedged in our opinion.
Speaker 2 (10:43):
All right, Ken, we'll leave it there. Thank you so
much for joining us. Great conversation with Ken Stern, President
of Leedo Advisors, joining us here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm Doug Prisner.
US based TikTok users are being inundated with videos from
(11:07):
Chinese influencers. These videos are encouraging them to overcome punitive
Trump tariffs by buying directly from the world's factory China.
In one video, a user named Luna sourcing China stands
outside a factory she says, makes Lululemon yoga leggings for
five to six dollars. That's even though they retail here
(11:28):
in the US for more than one hundred bucks.
Speaker 4 (11:31):
Who are the suppliers, Jehi Lula. Some of their Yugo
wars are actually from Young Lung clothing and Hauntitionom clothing.
And guess what's full factories locating in here? And these
two factoris also supplight clothing for Fila and an Arma.
Speaker 2 (11:45):
Let's bring in Colin Murphy. Now he is China Eco
GUV reporter for Bloomberg News. He joins us from our
studios in Beijing. Thank you so much for making the
time to chat with us. Can we begin column by
having you break down the process? How is this actually happening?
Speaker 1 (12:00):
Okay?
Speaker 5 (12:00):
So basically, the first thing is that TikTok itself is
not available in China. They're using domestic app here called
doing so in order for the Chinese influencers to get
their messages on TikTok, which is already quite surprising. We
are suspecting that there's some element of collaboration here, some
(12:22):
sort of planning. So basically, what they're doing is they
are making short videos to describe some of the reasons
why the US customer and the US buyer has to
pay so much money for products that are available in
China at knockdown prices. And these messages are basically trying
(12:47):
to suggest or encourage, not necessarily ways to avoid the tariffs,
but to let's say, minimize the impact of the tariff.
But the deeper meaning I think is to to show
and to illustrate that China is pushing back against these tariffs,
to show that you know, this is kind of mocking
(13:09):
in a way, and to undermine the Trump tariffs and saying, hey, look,
we have come up with these innovative ways to showcase
and to tell you about our products, and we're going
to swamp TikTok in order to do that.
Speaker 2 (13:25):
So it seems maybe to be less about selling goods
to US consumers and more about creating outrage among the
American consumer right and how tariffs are impacting the prices
of the Chinese made products that they are accustomed to.
Speaker 5 (13:39):
Definitely, I think you know there is this, as I say,
broader push by this campaign, which you know, has picked
up strength and exploded basically over the weekend, we've had
these types of videos from merchants in China saying, you know,
we produce this product and you should buy from us.
(13:59):
I mean, they've been around for a while, but what
we're talking about in this particular instance is, first of all,
the sheer volume of such sort of videos and messaging
has has gone through the roof. A lot of them
display very similar characteristics. They're very polished, most are speaking
in very sort of sophisticated use of language, and in English,
(14:23):
of course, and it's all happening over this short period
of time. So it's hard not to conclude that this
is definitely and an effort to, if not at the
very least sort of mock the US efforts on tariffs,
but probably to you know, in undermine in a way
the Trump tariff regime and call the attention of the
(14:47):
ordinary American citizen to like how the tariffs will and
can impact their bottom line.
Speaker 2 (14:54):
And it's a little ironic in the platform right during
his first term, Trump wanted a band TikTok in the
U or force some type of change in ownership. That
position later became reflected in US law, but I believe
it was March twenty twenty four, when President Trump reversed
his position and began advocating against banning the app on
(15:14):
the grounds that, okay, we needed it. But this seems
to be to the point of maybe there's a national
security issue involved here. Is that saying too much?
Speaker 5 (15:24):
Well, I would just say it does show that there
has been a marked increase in the ability of the
Chinese message to get to ordinary citizens in the US
and on the whole, these messages have been pro China. So,
for example, we have this latest incident, which it is
ironic because right now TikTok is still under close scrutiny
(15:48):
with the talk of a ban or sale. So for
this to be happening on this platform right now is
somewhat curious. But you know, it does also remind us
of something that happened a couple of months ago, which
was when the Chinese app Shao Hongshu or Red Note
suddenly became hugely popular when the so called TikTok refugees
(16:11):
were fleeing to that app when the threat of the
ban was imminent. And so this was also the first
time when we saw a real sort of outpouring and
outreach from Chinese citizens to their American counterparts exchanging information.
We saw lots of Americans saying, as a result, oh,
(16:32):
what they've been telling us about China is wrong all along.
It's very developed, it's very sophisticated, and so on and
so forth. So you did have some element of influence
and changing of perceptions. And this again, this particular campaign,
shall we say, looks like hitting similar points, and that
(16:52):
we do have reaction from Americans on the ground who
are saying, you know, I never realized that this was
the reality. And maybe it's not anger, but it's definitely,
you know, increasing awareness and in some cases frustration at
some of the narratives that they seem to sort of
(17:13):
feel have have been thrown on them by their own
government in DC.
Speaker 2 (17:18):
So, the packages with merchandise shipped from China with a
value at less than eight hundred dollars have enjoyed the
deminimous exemption from these added duties, and we have seen
the impact that that has had on online Chinese retailers
like Timu and Chian to sell super cheap items to
American consumers. Now, the President has kind of taken executive
(17:41):
action here to end that loophole, and I think that
begins on May the second. So I'm wondering, just on
the commerce side, whether this let's call it a workaround,
is facing extinction.
Speaker 5 (17:53):
Yes, I think, you know, I mean, whether this would
actually yield to a spike in sales for the Chinese merchant.
I would doubt that at this point for various reasons,
including that you know, a lot of these are not
the equivalent in terms of they don't come with the
brand that they say that they have. So you know,
(18:15):
I mean, how many people are going to turn around
and start buying more because of this campaign. It's a
big question mark. And also, as you mentioned, the Deminimus
rule needs to be clarified and whether that's going to
stay or not. But I do think another point here
is like, yes, this is mocking of the US system.
But at the same time, there's also something that we
need to reflect from the China side, and that is
(18:38):
there are a lot of people here who are dependent
on exports, dependent on selling goods to the US, and
you know, in another way, we could interpret this as
being a sign of desperation. Also on the Chinese side,
we have these vendors who are looking at possible bankruptcy
or possible you know, difficulties commercially, and this could also
(19:02):
be interpreted as an effort by them to try to
change their situation. So while on the one hand, it
is definitely you know, poking fun and mocking a little
bit the US and the tariffs that have been introduced
and stopped and paused and reintroduced by Trump, but there's
also a message for the Chinese as well. Probably not intentionally,
(19:25):
but it does remind us that there's a lot of
people here who do stand to suffer if the tariff
regime goes into full effect and remain so for an
extended period of time.
Speaker 2 (19:37):
Is it too much to say that the government may
be involved in this? Is there any evidence that that
may be happening.
Speaker 5 (19:44):
Well, that's always super difficult to pinpoint right, nobody's going
to come out and say we are allowing this to happen.
But you know, I mean, there is the element that
typically in China, like if there's something online that the
government doesn't like, it will get shut down pretty quickly.
And then of course there are some sort of legal
(20:05):
implications here. For example, many of these brands that are
being exposed would have non disclosure agreements in place with
their suppliers, and also obviously trading and counterfeit goods is
not a legal activity. So the fact that these sort
of videos are allowed to stay online, even if it's
(20:25):
just for a short period of time, it does sort
of suggest some sort of tacit approval at least, or perhaps,
if we want to be generous, maybe it hasn't filtered
to the right authorities yet and there will be a crackdown.
As I say, it did come to the four over
the weekend. It is very early to say definitively what
(20:46):
are the factors at play. We don't have a comment
as of now from the company, from TikTok explaining what's happening.
So in the absence of all that, I think we
have to hold back judgment for a little while. But
coming at this time and in the volume and the
quality of the videos, I can help but be quite
(21:08):
suspicious that this is some sort of collaboration or concerted
effort to send a message.
Speaker 2 (21:17):
Colin, thank you so much for helping us unpack that story.
That is Colin Murphy, China Ecogov, reporter for Bloomberg News
in Beijing, joining us here on the Daybreak Asia podcast.
Thanks for listening. To today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
(21:41):
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 Daybreak Asia podcast. I'm Doug Chrissner.
On today's episode, we'll look at how Chinese manufacturers are
using TikTok influencers in a clever ploy to avoid US tariffs.
In a moment, we'll speak with Colin Murphy. He is
China ecogov reporter for Bloomberg News in Beijing. But we
begin this morning with markets with few signs of progress
(00:33):
in negotiations on trade. The US equity market drifted lower.
We had the S and P five hundred dropping about
two tens to one percent. Joining me now is Ken Stern.
He is president of Leedo Advisors. Ken joins me here
in the Bloomberg Interactive Broker Studio in New York. Thank
you for joining us. I'm curious to get your sense
of where we are right now in terms of the
(00:53):
price action in the market. We're up one day, we're
down the next. I think we can agree we've seen
a lot of volatility, and I'm curious as to how
you're coping with this. How are you understanding things right now?
Speaker 3 (01:05):
Yeah, well, I feel like we've seen this movie and
We're right in the middle of it, and I think
making any knee jerk reaction is probably not the best idea.
The fact of the matter is, though, is what you
need to look at as the macro, and the macro
is is when something comes into your purview, you have
to look at it agnostic of some of the microeconomics
that's going on. I think we have more behavioral economics
(01:27):
happening than micro.
Speaker 2 (01:28):
We got some data points today that I'd like to
explore if we can. The first piece comes from JP
Morgan Chase, and it indicates that through Monday's Clothes, retail
investors have pumped in about seventeen point seven billion dollars
into equities since President Trump unveiled those tariffs. So retail
investors seem to be ignoring some of the warnings coming
(01:50):
from the street. Then, if you look at the latest
fund manager survey from Bank of America, economic prospects the
most negative in about three DECs. So it seems as
though there is a bit of bifurcation happening. What the
retail crowd is expecting versus what the institutional crowd is expecting.
How are you making sense of that?
Speaker 3 (02:10):
But I'd have to really understand what the baseline for
what money comes in from retail investors anyways, because that
actually might not be the greatest data point and the
greatest stamp. The fact is, though, is we tend to
see a knee jerk reaction and then it all kind
of plays out. And if you look at it pragmatically
and you stop trying to read tea leaves in the
(02:30):
short term, if there is an economic slowdown, earnings will contract.
You could argue multiples are high. You could argue if
that's the case, that perhaps we're going to first before
earnings go down, we're going to sell. I mean, consumer
sentiment you just said is really low, and that tends
(02:52):
to be on a contraying perspective, a leading indicator. So
if you look at this, you don't want to time
the market. You might want to have some protections in.
You might want to hedge, you may want to think
about protecting your downside.
Speaker 1 (03:05):
But you don't have the interest rate concerns that we
had anymore.
Speaker 3 (03:08):
Even if there's potential inflation, I don't think even people
are talking stagflation, although it's popular to talk about it.
Speaker 2 (03:16):
It's a possibility.
Speaker 1 (03:17):
It is a possibility.
Speaker 2 (03:18):
So if a client comes to you on a day
when they see Apple down ten percent and they say,
I'd like to take a position, would you advise them
to hold off? Do you think there's more downside another
maybe leg lower for Apple or a name like that.
Speaker 1 (03:32):
That's a really interesting question.
Speaker 3 (03:34):
What I'd say is buying any one stock, as much
as we love Apple or any of the others, is
still gambling compared to building out an incredible portfolio. That said,
if you like Apple and Apple is in your purview
and it hits that, I don't think you should have
your behaviors impact what your price target is, you may
(03:54):
want to hedge it a little bit.
Speaker 1 (03:56):
But the fact of the.
Speaker 3 (03:57):
Matter is is do you really think that the long
term trend is broken? Do you think we're going to
stop buying smartphones? Do you think we're going to stop
traveling completely? Do you think that the mobility of the world,
United States included is done? Do you think we're going
to stop utilizing healthcare? Recessions? Contract and they usually provide
(04:19):
at least if you believe in a long term market cycle,
you should provide a really great entry point.
Speaker 2 (04:25):
But a lot of the conversation is around a major
reordering of global trade, questions about dollar as a reserve currency,
a real level of risk now in the treasury market.
So we're in a new piece of territory here totally.
Speaker 3 (04:40):
And I don't want to minimize that because that is
exceedingly important. But if I would have told you a
year and a half ago, hey, rates are going up
eleven times, what would you do with your money? It
probably wouldn't have been long in the market. What we've
contracted now, what most of last year? But still, I
mean when you look you over year or year over
(05:01):
the last two years, we haven't contracted to such a
point that you're saying that we've really like thrown the
baby with the bathwater out.
Speaker 2 (05:11):
So if you're constructing a portfolio, then what's wrong with
buying the S and P outright?
Speaker 1 (05:16):
I don't think there's anything wrong with it.
Speaker 3 (05:17):
In fact, I think in many cases you know, fees
is an enemy and performance and so if you can
buy an efficient SMP portfolio and you like the entry point,
I think you should. But I don't think it should
be an all or none. I think that you should
be staging in your buys and averaging.
Speaker 2 (05:34):
What about being more diversified globally in this environment right now, especially,
I don't know whether it's Asia Europe, whether that still
looks attractive, I don't know. I mean, that's been a
pretty phenomenal run that we have seen in Europe so
far this year. But do you want to be diversified
globally right now?
Speaker 1 (05:50):
That is a very interesting question.
Speaker 3 (05:52):
So I think that you have to look at the
overall growth prospects. And we've been talking about the rest
of the world being a great value you for many,
many years. And if you remember the beginning of this year,
the world economies, in the world markets started out in
a pretty good fashion, and now here we are in
this turmoil. I think it's much more important right now
(06:13):
to not be making major major bets, and I think
you should be looking at how this all unfolds. If
you're going to step in, I think you should step
in lightly.
Speaker 2 (06:23):
It's a dynamic environment, you know, and maybe a little
mercurial too. We heard from Nvidia after the bell, the
chip maker saying that the government is going to require
a license for Nvidia to export one of its chips,
the H twenty, to China, and as a result of
this first quarter charge of around five and a half
billion dollars associated with this H twenty product. This really
(06:45):
goes to the tension between the US and China on
artificial intelligence. How are you playing AI as a theme?
I don't think I've met anyone recently that is not
invested in this as a theme for the four cs future.
How they are exposed as a different story.
Speaker 3 (07:03):
Every time we've seen these new ideas come out, you
see all these great investments and all these great markets,
and then it starts to consolidate and starts to consolidate
and starts to consolidate. A couple months ago, before the
tariff conversation, we were talking about data centers and chips
and we were talking about changing.
Speaker 2 (07:22):
The world power too, right power.
Speaker 3 (07:26):
The question is has that theme changed? Have we really
changed the dynamics so much that that has changed? And
so whether you mentioned one chip stock over another chip stock,
the question is is do you believe in the secular
trend of AI? And I think unless you have such
incredible insight on one stock over another, you've got to
(07:46):
look at the sectors and the indexes and decide how
much you want to be.
Speaker 1 (07:49):
Over or underweight.
Speaker 2 (07:51):
So you've been in the markets for a while. I
would assume have you ever seen a period like this
that is kind of giving you a little bit of
an analogue here? How you may approach what we're dealing
with now? Is it like the GFC? Is it like
what we had around COVID? I mean, how are you
making sense of this relative to history?
Speaker 1 (08:09):
COVID was an anomaly, right? I mean here we.
Speaker 3 (08:11):
Had this shelter in place order we all of a sudden,
the markets, you know, shot first, we went straight down,
and then there was within a couple of days a
government response, and that stabilization caused for the markets to
v back up, So you had to point down and
straight back here. I mean, we talk about a trade war.
(08:34):
It usually doesn't abate overnight. Usually there's a lot of
give and take. So I think to have this idea
that we're going to have a v formation would be
something more of an outlier, you know, maybe it's a.
Speaker 2 (08:49):
You Okay, so the Fed, I'm sure as a part
of your thinking about this, what are your expectations here?
How is the FED going to handle this situation? We
talked about stagflation as being apoon possibility. If that's the case,
the FEDS on the sidelines for the foreseeable future, may
be more concerned about inflation than growth.
Speaker 3 (09:07):
Yeah, they're really in a pickle, right, I mean they're
supposed to be agnostic to what directive of we've given them.
Inflation is still higher than their target, So if inflation
is still harder than their target, they're not supposed to
be ebbing and flowing on the whims of the market.
So they're in a pickle. However, do you really think
(09:28):
rates go higher today? It's a probability question. Do you
think rates stay the same? Do you think rates go down?
And when you start thinking of those probabilities, it may
not be today or tomorrow. But what usually happens is
there is a tomorrow, the sun will rise, there will
be some kind of negotiations. There's negative to positive. I mean,
we don't like what's going on. I mean, we were
(09:49):
all surprised in the bond trading. We were all surprised
in the currency trading. You know, could the US dollar
be you know, knocked off its blocks as a world
say safety currency. There's some real questions that we need
to get through.
Speaker 2 (10:03):
So when you have conversations with clients, number of phone
calls that happen during the course of the day. Is
there something that you hear yourself repeating again and again
and again in these conversations.
Speaker 3 (10:16):
We have to make sure that whatever we've created and
why we created it, we don't let our behaviors get
in the way of it. Timing the market, we know,
is not a great idea. We believe in the long
term effects of the market, the slope being positive. We
believe in global expansion and global growth. But there are
times that you want to push the pedal down and
(10:37):
there are times that you want to be more conservative
and wait and see. This is a time to be
a little bit more hedged in our opinion.
Speaker 2 (10:43):
All right, Ken, we'll leave it there. Thank you so
much for joining us. Great conversation with Ken Stern, President
of Leedo Advisors, joining us here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm Doug Prisner.
US based TikTok users are being inundated with videos from
(11:07):
Chinese influencers. These videos are encouraging them to overcome punitive
Trump tariffs by buying directly from the world's factory China.
In one video, a user named Luna sourcing China stands
outside a factory she says, makes Lululemon yoga leggings for
five to six dollars. That's even though they retail here
(11:28):
in the US for more than one hundred bucks.
Speaker 4 (11:31):
Who are the suppliers, Jehi Lula. Some of their Yugo
wars are actually from Young Lung clothing and Hauntitionom clothing.
And guess what's full factories locating in here? And these
two factoris also supplight clothing for Fila and an Arma.
Speaker 2 (11:45):
Let's bring in Colin Murphy. Now he is China Eco
GUV reporter for Bloomberg News. He joins us from our
studios in Beijing. Thank you so much for making the
time to chat with us. Can we begin column by
having you break down the process? How is this actually happening?
Speaker 1 (12:00):
Okay?
Speaker 5 (12:00):
So basically, the first thing is that TikTok itself is
not available in China. They're using domestic app here called
doing so in order for the Chinese influencers to get
their messages on TikTok, which is already quite surprising. We
are suspecting that there's some element of collaboration here, some
(12:22):
sort of planning. So basically, what they're doing is they
are making short videos to describe some of the reasons
why the US customer and the US buyer has to
pay so much money for products that are available in
China at knockdown prices. And these messages are basically trying
(12:47):
to suggest or encourage, not necessarily ways to avoid the tariffs,
but to let's say, minimize the impact of the tariff.
But the deeper meaning I think is to to show
and to illustrate that China is pushing back against these tariffs,
to show that you know, this is kind of mocking
(13:09):
in a way, and to undermine the Trump tariffs and saying, hey, look,
we have come up with these innovative ways to showcase
and to tell you about our products, and we're going
to swamp TikTok in order to do that.
Speaker 2 (13:25):
So it seems maybe to be less about selling goods
to US consumers and more about creating outrage among the
American consumer right and how tariffs are impacting the prices
of the Chinese made products that they are accustomed to.
Speaker 5 (13:39):
Definitely, I think you know there is this, as I say,
broader push by this campaign, which you know, has picked
up strength and exploded basically over the weekend, we've had
these types of videos from merchants in China saying, you know,
we produce this product and you should buy from us.
(13:59):
I mean, they've been around for a while, but what
we're talking about in this particular instance is, first of all,
the sheer volume of such sort of videos and messaging
has has gone through the roof. A lot of them
display very similar characteristics. They're very polished, most are speaking
in very sort of sophisticated use of language, and in English,
(14:23):
of course, and it's all happening over this short period
of time. So it's hard not to conclude that this
is definitely and an effort to, if not at the
very least sort of mock the US efforts on tariffs,
but probably to you know, in undermine in a way
the Trump tariff regime and call the attention of the
(14:47):
ordinary American citizen to like how the tariffs will and
can impact their bottom line.
Speaker 2 (14:54):
And it's a little ironic in the platform right during
his first term, Trump wanted a band TikTok in the
U or force some type of change in ownership. That
position later became reflected in US law, but I believe
it was March twenty twenty four, when President Trump reversed
his position and began advocating against banning the app on
(15:14):
the grounds that, okay, we needed it. But this seems
to be to the point of maybe there's a national
security issue involved here. Is that saying too much?
Speaker 5 (15:24):
Well, I would just say it does show that there
has been a marked increase in the ability of the
Chinese message to get to ordinary citizens in the US
and on the whole, these messages have been pro China. So,
for example, we have this latest incident, which it is
ironic because right now TikTok is still under close scrutiny
(15:48):
with the talk of a ban or sale. So for
this to be happening on this platform right now is
somewhat curious. But you know, it does also remind us
of something that happened a couple of months ago, which
was when the Chinese app Shao Hongshu or Red Note
suddenly became hugely popular when the so called TikTok refugees
(16:11):
were fleeing to that app when the threat of the
ban was imminent. And so this was also the first
time when we saw a real sort of outpouring and
outreach from Chinese citizens to their American counterparts exchanging information.
We saw lots of Americans saying, as a result, oh,
(16:32):
what they've been telling us about China is wrong all along.
It's very developed, it's very sophisticated, and so on and
so forth. So you did have some element of influence
and changing of perceptions. And this again, this particular campaign,
shall we say, looks like hitting similar points, and that
(16:52):
we do have reaction from Americans on the ground who
are saying, you know, I never realized that this was
the reality. And maybe it's not anger, but it's definitely,
you know, increasing awareness and in some cases frustration at
some of the narratives that they seem to sort of
(17:13):
feel have have been thrown on them by their own
government in DC.
Speaker 2 (17:18):
So, the packages with merchandise shipped from China with a
value at less than eight hundred dollars have enjoyed the
deminimous exemption from these added duties, and we have seen
the impact that that has had on online Chinese retailers
like Timu and Chian to sell super cheap items to
American consumers. Now, the President has kind of taken executive
(17:41):
action here to end that loophole, and I think that
begins on May the second. So I'm wondering, just on
the commerce side, whether this let's call it a workaround,
is facing extinction.
Speaker 5 (17:53):
Yes, I think, you know, I mean, whether this would
actually yield to a spike in sales for the Chinese merchant.
I would doubt that at this point for various reasons,
including that you know, a lot of these are not
the equivalent in terms of they don't come with the
brand that they say that they have. So you know,
(18:15):
I mean, how many people are going to turn around
and start buying more because of this campaign. It's a
big question mark. And also, as you mentioned, the Deminimus
rule needs to be clarified and whether that's going to
stay or not. But I do think another point here
is like, yes, this is mocking of the US system.
But at the same time, there's also something that we
need to reflect from the China side, and that is
(18:38):
there are a lot of people here who are dependent
on exports, dependent on selling goods to the US, and
you know, in another way, we could interpret this as
being a sign of desperation. Also on the Chinese side,
we have these vendors who are looking at possible bankruptcy
or possible you know, difficulties commercially, and this could also
(19:02):
be interpreted as an effort by them to try to
change their situation. So while on the one hand, it
is definitely you know, poking fun and mocking a little
bit the US and the tariffs that have been introduced
and stopped and paused and reintroduced by Trump, but there's
also a message for the Chinese as well. Probably not intentionally,
(19:25):
but it does remind us that there's a lot of
people here who do stand to suffer if the tariff
regime goes into full effect and remain so for an
extended period of time.
Speaker 2 (19:37):
Is it too much to say that the government may
be involved in this? Is there any evidence that that
may be happening.
Speaker 5 (19:44):
Well, that's always super difficult to pinpoint right, nobody's going
to come out and say we are allowing this to happen.
But you know, I mean, there is the element that
typically in China, like if there's something online that the
government doesn't like, it will get shut down pretty quickly.
And then of course there are some sort of legal
(20:05):
implications here. For example, many of these brands that are
being exposed would have non disclosure agreements in place with
their suppliers, and also obviously trading and counterfeit goods is
not a legal activity. So the fact that these sort
of videos are allowed to stay online, even if it's
(20:25):
just for a short period of time, it does sort
of suggest some sort of tacit approval at least, or perhaps,
if we want to be generous, maybe it hasn't filtered
to the right authorities yet and there will be a crackdown.
As I say, it did come to the four over
the weekend. It is very early to say definitively what
(20:46):
are the factors at play. We don't have a comment
as of now from the company, from TikTok explaining what's happening.
So in the absence of all that, I think we
have to hold back judgment for a little while. But
coming at this time and in the volume and the
quality of the videos, I can help but be quite
(21:08):
suspicious that this is some sort of collaboration or concerted
effort to send a message.
Speaker 2 (21:17):
Colin, thank you so much for helping us unpack that story.
That is Colin Murphy, China Ecogov, reporter for Bloomberg News
in Beijing, joining us here on the Daybreak Asia podcast.
Thanks for listening. To today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
(21:41):
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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