May 21, 2024 • 22 mins
Featuring:
Stephanie Leung, CIO at StashAway, taking a look on the Nvidia-Dell partnership from our Hong Kong studio.
Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners, giving her take on markets from our Sydney studio.
Ariel Cohen, Senior Fellow at the Atlantic Council, discusses the death of Iranian President Ebrahim Raisi and the country's plans for succession.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:09):
This is the.
Speaker 1 (00:10):
Bloomberg Daybreak Aisia podcast. I'm Doug Prisner. You can join
Brian Curtis and myself for the stories, making news and
moving markets in the APAC region. You can subscribe to
the show anywhere you get your podcast and always on
Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app well.
Speaker 3 (00:27):
Joining us now to take a look at market action
and what to expect going forward to Stephanie Lung cioed
stash away with us in our studios here in Hong Kong. Stephanie,
thanks very much for being in. So a lot of
investors are saying it's all about Nvidia this week, but
we should note that the rally in risk assets has
seen a broadening to not only industrials, but financials, other
(00:51):
value and cyclical stocks, also emerging markets. Foreign currencies have
rallied as well. So to what extent do you see
this as bigger than meg seven, bigger than AI and
bigger than in Nvidia or is it really all about
in Vidia?
Speaker 4 (01:05):
Yeah?
Speaker 2 (01:06):
Actually, I mean a lot of action obviously in Nvidia
and the AI related themes. I mean, most recently we've
seen actually the AI theme broadening itself as well to
power companies or kind of infrastructure plays. If you think
about kind of AI usage and compare that with kind
of traditional search, every AI query actually uses ten times
(01:29):
more energy than a Google search. So that explains why
investors are getting actually quite excited about energy in general
and power plays and data center uses. I think also
if you think about kind of the broader economy, I
think about two months ago, we pointed out that we're
seeing some green sheets in terms of the global manufacturing sector,
(01:50):
and when you look at global manufacturing PMIS or USPMIS,
they have been actually slumping for the last twelve to
eighteen months, which has actually made a turn in the
last two months. So I think that in combination with
more supportive policies out of China, that prompts actually a
larger recovery in risky assets. And when there's more things
(02:10):
to choose from, it's not just Max seven anymore. You
can actually invest in the broader market, including industrials, including
even utilities. That actually broadens up the market.
Speaker 1 (02:21):
We heard today from the head of the Cleveland Fed
that Lorettamesters saying that maybe we don't get the three
rate cuts projected in the month of June when the
FED conducted the last dot plot survey. I'm wondering what
that does to your thesis on the market. Let's say
we don't get any rate cuts this year from the FED.
I know that may be away from the consensus viewpoint,
(02:42):
but there's a lot to be said for the robust
nature of the American economy inflation. Yes, it appears to
be a little stubborn. Maybe the FED doesn't cut rates
between now and the end of the year. How does
that change the way you're viewing opportunities.
Speaker 2 (02:56):
Yeah, I think at the beginning of the year, when
the market was actually pricing to six cuts, I mean,
we were saying that that was way too aggressive, and
we don't see inflation coming down as quickly as it
did in the last kind of sixty eight nine months
and in the first quarter. Indeed, what we've seen is
still this inflation, but the pace of that this inflation
(03:17):
has disappoints at market. Now, the market is sort of
pricing in one to two cuts by the end of
the year, and I think we've seen some walk backs
from Fed officials as well to the three cuts forecasts
now when we take a step back, we still think
that there will be this inflation kind of going on
in the next six month or so. However, I mean
that pace is actually going to be more gradual. And
(03:38):
when you think about kind of how the Fed thinks
about the setting of the interest rates, right now, the
real rates is actually above two percent, which is actually
quite tight, and they have actually said that they think
real rates are actually quite tight. That gives them some
room to cut. I mean, whether it's one times, two times,
or even three times. I think it's just a matter
(03:59):
of kind of I guess twenty five basis of one's difference.
But the direction is that the direction is that they
will stop to cut at some point in the second
half of this year.
Speaker 3 (04:09):
So inflation was a concern that was very much front
and center. It seems like it has slipped a little
bit to the backseat, not as far back as as
things like geopolitics, debt and deficits, and these are the
things that Jamie Diamond, you know, commented on and he's
very nervous and he's prone to look at these big
picture themes. But what happens in markets is they don't
(04:31):
always focus on those big picture areas on a day
to day basis, and so I'm curious whether or not,
you know, inflation is kind of sliding into that position where, yeah,
it's out there, it's something to be concerned about, but
it may not affect markets in the very short term.
Speaker 5 (04:45):
Yeah, I think.
Speaker 2 (04:46):
I mean the concern for US for inflation really is
that where does long term inflation land. Does it actually
go back to the FETs two percent target. Now we
talked about AI for example, I mean AI actually is
very very power kind of consumptive or very very power hungry,
and when you look at, for example, the latest kind
(05:08):
of iteration of chips from Nvidia, it actually uses even
more power than the previous kind of generations. So I
mean that actually puts some pressure up what pressure on
commodity prices, where we're seeing breakouts in copper, we're seeing
breakouts in gold. I mean that also reflects I think
the market is concerned about the US dollar, and when
(05:28):
we think about commodities, I mean these are priced in
US dollars. So I think in combination, we're actually more
concerned about the long term inflation outlook of settling somewhere
between two to three percent rather than the fits two
percent targets, so that actually has a lot of implication
for long duration bonds. I think that is actually the
(05:48):
bigger longer term concern.
Speaker 1 (05:50):
I'm glad you mentioned US dollar strength because the flip
side is obviously a weak currency for many of the
exporting nations in the APAC region. I was looking at
data today from the Port of Los Angeles. We had
trade volumes total volumes up for a ninth straight month
during the month of April, and then if you look
at import volumes, these are containers that are fully stacked
(06:15):
up twenty one percent in the month of April versus
last year. So I guess there may be a case
that weaker currencies in some of the exporting nations in
Asia is really helping to drive trade right now.
Speaker 2 (06:29):
Yeah, for sure, if you look at how the Japanese
end has been fueling the japan economy recovery, I think
a lot of nations are thinking about their own currencies,
and China in particular is suffering from a cyclical downturn
and exports have been very, very weak, right and I
think that is one of the easy levels that they
can pull to trigger recovery in the Chinese economy. Of course,
(06:53):
they're pulling out all the stops. In latest Politburo meeting
they actually announced that they will try to support the
property sector. They've just issued a one trillion special bond
for the government and there's a lot of speculation on
how they would use that to prop up the property
sector as well.
Speaker 3 (07:11):
But a rally of thirty percent off the lows, that's
a very big rally. I mean, how much is already in.
Speaker 2 (07:17):
Yeah, So if you look at kind of China equity
market from my fundamentals and valuation point of view, let's
take valuations right. Historically it's average PE has been around
eleven point five percent point five times. Right now it's
sort of ten point five, So roughly ten to fifteen
percent upside from there. Yeah, from a valuation perspective.
Speaker 3 (07:38):
All right, Stephanie, Stephanie lung Cio at stash Away, we've
seen a broad advance in risk assets really globally over
the past month or so after weakness in April. But
can that rally continue. We're joined now by Juinbilu, who
(07:59):
is portfolio manager at Tribeca Investment Partners. June, thanks very
much for being with us. A very simple question to
you can the broader markets rally. If Nvidia disappoints.
Speaker 5 (08:12):
Thank you for having me. Look, we do believe so
in Vidia.
Speaker 4 (08:15):
If Divindia did disappoints, it will probably put more pressure
on the more expensive part of the market, which is
the tech and the growth companies. But we do think
heading into the year end, there will be many other
companies sectors, such as the cyclical part of the market
should start to do a little bit better given the
amount of underperformers they have done. So, you know, our
(08:35):
view is that market is going to continue to trend higher.
Speaker 1 (08:39):
How are you feeling about the Chinese markets? Is that
an area that will continue to trend higher as well?
Speaker 5 (08:45):
I do think so.
Speaker 4 (08:46):
I think that, you know, when we come to the
cyclical part or the valuation differential between different sectors. The
evaluation differential between different markets has been incredible, particularly the
Chinese market. You know, the valuation that's presenting many of
its growth companies or even other cyclical businesses, it's just
incredible when comparing to the developed markets. I do think
(09:08):
that market will continue to outperform, and particularly at the
expense of some of the more defensive market within that
whole Asian Pacific region.
Speaker 3 (09:17):
Sometimes geopolitics really rises to the fore, particularly when the
US and China are going at it over, for instance, trade.
Now we have a possible inflection point with latching the
being inaugurated as president and making a speech where he
didn't really say anything all that new in terms of
(09:37):
the basic framework, the way that they look at things
in Taiwan, which is we already have de facto independence.
We don't need to declare it, treat us as an equal.
But China didn't like that hearing it this time around.
Speaker 4 (09:49):
Why look, I do think at this point with geopolitics,
China is wanting to make a stance, although I think
realistically China do prefer the status quo, as you said,
whatever they've been promising before as the way it is.
I think at this point it's perhaps just making a
(10:11):
making a stance, but I would very much think it's
about status quo being maintained.
Speaker 1 (10:17):
June Bay, what are your clients most concerned about these days?
Is it geopolitics? Is it the fact that inflation still
remains stubbornly high in many markets. Is the fact that
maybe we don't know that the FED is going to
lower interest rates? This year at all. What are they
concerned about?
Speaker 5 (10:34):
Look, I think it's a really good question.
Speaker 4 (10:36):
I think they concerned a bit about every or everything
at the moment seems to be having a lot of uncertainty. Look,
I think inflation, the interest rate is a big one.
Clearly in the last couple of years has really deterred
a lot of returns for across many class asset classes.
Inflation is falling, but not fast enough. Our view is
that interest rate will fall, but it's perhaps not going
(10:57):
to be this year, and that is a little bit
disap pointing to many of the clients hence that they
are you know, we are seeing a little bit of
volatility in this at this point, but you know, our
advice to clients is really taking a step back. Interest
rate is going to head lower, maybe not this year,
but it will be next year. And with that kind
of stable outlook and corporate's kind of holding up okay
(11:18):
in terms of earnings, and you know, and the economy
is holding up all right.
Speaker 5 (11:23):
I do think that that that that pays.
Speaker 4 (11:26):
Put a pretty good good path for a pretty good
return for the equity market at this point.
Speaker 3 (11:33):
It's funny how you look at these things, because interest
rates are very low in Japan and China and they
don't have all that much growth. And interest rates are
very high in the United States and they have a
lot of growth at the moment. How do you sort
of put that all into the mix.
Speaker 4 (11:48):
That's right, It isn't look I absolutely as a global investor,
it is a little bit harder at the moment. That's
why I think the Chinese markets it does look very
interesting because we're looking at the project growth. So hopefully
the projected growth will come from come back from its
very very low level that's been rebased significantly lower. We
(12:08):
think heading forward next twelve month, the growth will be
there and they will be higher than what is expected
out of the US. Now, the AI thematic is very different.
I think, you know, US has a really fantastic hairstyle
in many of the sectors, well many of its you know,
chip makers and things, and I do think that at
some point the Asian markets will catch up. But you know,
(12:31):
but just as a market itself, I do think the
evaluation will support you know, the markets that sort of
performed the last two a month.
Speaker 1 (12:38):
Let's do a little bit of walk about economics, so
to speak. How are things in Australia these days, particularly
on the East Coast.
Speaker 4 (12:46):
Look at the economy is actually holding up well, but
we are certainly seeing that consumer slowing down very quickly,
particularly in the last couple of months that we have
heard from major retailers across every industry talking about slow
down and trading down by the consumer, you know, Australia.
In fact, if you take out the population growth, our
(13:07):
consumer has been consumer recession for quite some time. That
is really just a result of a variable interest rate,
variable home low interest rate that is really be impacted
you know, the consumer. And yeah, so we're hoping the
budget that which has been very stimulus stimular tree and
then we have the rate cut, the tax cut that's
(13:28):
coming through by July this year. So we do think
that these measures will help consumer to offset its weakness
and its tough environment.
Speaker 3 (13:37):
Let me ask you really briefly flip side of the
first question. If Nvidia does produce really big numbers, can
we rally a lot from here?
Speaker 6 (13:46):
Oh?
Speaker 4 (13:46):
Absolutely, I do think share markers heading higher and if
it's good result, it's heading even higher.
Speaker 6 (13:52):
Yeah, Okay.
Speaker 3 (13:53):
Quim Bailu joining US portfolio manager Tribeca Investment.
Speaker 1 (13:56):
Partners, Dark guest is Ariel Kohane Ariel a senior fellow
at the Atlantic Council. On the death of the Iranian President.
It's a pleasure to have you on the program and
we always benefit from your analysis.
Speaker 2 (14:14):
Here.
Speaker 1 (14:15):
Is this going to change anything inside Iran? Do you think?
Speaker 6 (14:20):
Not much? I mean it may precipitate the transition. I'm
watching like a hawk. What's happening with much about kamen Nai,
the son of the Supreme Leader. The Supreme leaders positioning
his boy to succeed him. Surprise, surprise. So it's going
(14:41):
to be Eshiah North Korea. His son is not a
distincuish scholar. And of course Iran is what is called
the republic of a scholar or the Layatanaki. They call
it the state of scholarly leadership. The first Tiatola, in
(15:04):
the second the current Tiatola were not the most distinguished scholars,
but they were very capable politicians. Clearly, the current title
is eighty five years old, and the death of President
rac comes at an opportune moment in this succession. Now,
(15:25):
at the same time, the Islamic Revolutionary Guard IRGC are
thinking about the future of Iran without these clerics. Basically
as a security services dictatorship. So lack of popularity of
these leaders may play into the hands of the IRGC
(15:48):
generals who are my sources are telling me thinking about
taking over.
Speaker 3 (15:55):
It's interesting because we often hear that there is a
large civil society inside Iran, with elites, with well educated
people who may not be in complete agreement with the
path that the that you've seen from the Islamic leaders.
I'm just curious your thoughts on that. I mean, it's
not like they're out there every day in the streets
(16:17):
or anything, but how strong is civil society there and
could you see a change brought forward by them.
Speaker 6 (16:23):
First of all, the civil society was very strong. In
two thousand and nine, there was a Green Revolution. They
voted a couple of times not in accordance to what
the Ayatola wanted. This is how President Khatami and President
Rukhani were elected. They are of that regime, but they
(16:48):
were of the more reformist wing of that regime. I
spent some time speaking with as Rokani after he retired,
and he was a very impressive man. Now, currently the
(17:09):
crackdown is very strong. There were riots in twenty twenty two. Unfortunately,
both in two thousand and nine and twenty twenty two,
the Obama administration and the Biden administration, respectively did not
go out of their way to support this popular uprisings,
(17:29):
and they were quashed by the regime. In the future,
if the regime is in crisis and different factions of fighting,
civil society may play a major role. But they're not armed,
and they're not very well organized, and unfortunately they do
not have a lot of support, as demonstrated now by
(17:49):
expression of regret with the demise of the president who
was known as the Hangman of Iran. He personally was
responsible for hanging a five thousand ariel.
Speaker 1 (18:04):
Presumably we'll have elections in Iran within fifty days. Would
you trust the results?
Speaker 6 (18:10):
Absolutely not. These are carefully choreographed elections. They are managed,
stage managed by the Supreme Leader. Even people as pious
and as much of the regime as the former presidents
(18:33):
Ruhani and Ahmadinijad. You remember Ahmadinijad was not as sweetheart,
but they are barred from running in these elections. These
elections are anything but democratic.
Speaker 3 (18:48):
What about in Saudi Arabia because the king King Salmon
is being treated for lung inflammation, I don't know the
exact status, but he's elderly, he's eighty eight years old.
Will that succession can there be rather smooth or could
it be turbulent.
Speaker 6 (19:05):
Again? In these autocracies, from Moscow to Tehran to villad,
everything is very opaque. We do not know what is
the extent of opposition and resistance to the crown Prince
Mohammad bin Filman who is actually running the affairs in
Saudi Arabia now. For years, King Solomon is ailing for
(19:31):
many years, not always in full control of his capacities,
of his abilities, and his demise will enthrone literally his
son who is in charge now, MBS Mohammed bin Soilmant. However,
that may be a point where those princes who were
(19:52):
sidelined by him, or those prominent Saudis who were detained
in a five star hotel, if you remember, until they
pay up the taxes or share in their wealth with
the treasury, they may muster in opposition. There were some
reports of an attempted assassination. I don't know how reliable
(20:16):
these reports were, but in a country with a tradition
of assassinations, like King Fod back in the day, and
yet then another king before pod. There is a tradition,
unfortunately in Saudi Arabia to assassinate on desirable kings. If
(20:37):
I were NBS, I would be investing very very hard
and watching my security very carefully. And I'm sure he
has the money for the best security consultants in the world.
Speaker 1 (20:51):
He was scheduled to be in Japan this week, but
he canceled that visit because of the situation with the
King Ariel. Very quickly here at about thirty seconds or so,
if the Trump administration comes back into power, let me
just say it in another way, if Donald Trump is
re elected, how do the situations in Iran and Saudi Arabia?
How are they affected?
Speaker 6 (21:14):
If we are to judge Trump by his performance in
his first term, he will get closer to Saudi Arabia.
He will probably back Israel up more than the current administration,
and he will be more prickly visa the Iran. Iran
is very close to getting a nuclear weapon, or at
(21:35):
least to enrich uranium to ninety percent, which is sufficient
for a bomb, and that is an existential threat not
just for Israel, not just for Saudi Arabia, but for
all American allies. In the region and also because of
the range of the Iranian missiles to our European NATO
allies as well.
Speaker 1 (21:54):
Ariel will leave it there. It's always a pleasure. Thanks
for making time to chat with us, Ariel Cone, Senior
Fellow at the Atlantic Council, helping us understand the latest
developments in the Mid East in both Iran and Saudi Arabia.
Speaker 3 (22:09):
This is the Bloomberg Daybreak Asia podcast, bringing you the
stories making news and moving markets in the Asia Pacific.
Visit the Bloomberg Podcast channel on YouTube to get more
episodes of this and other shows from Bloomberg. Subscribe to
the podcast on Apple, Spotify, or anywhere else you listen
and always on Bloomberg Radio, the Bloomberg Terminal, and the
(22:30):
Bloomberg Business App.
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:09):
This is the.
Speaker 1 (00:10):
Bloomberg Daybreak Aisia podcast. I'm Doug Prisner. You can join
Brian Curtis and myself for the stories, making news and
moving markets in the APAC region. You can subscribe to
the show anywhere you get your podcast and always on
Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app well.
Speaker 3 (00:27):
Joining us now to take a look at market action
and what to expect going forward to Stephanie Lung cioed
stash away with us in our studios here in Hong Kong. Stephanie,
thanks very much for being in. So a lot of
investors are saying it's all about Nvidia this week, but
we should note that the rally in risk assets has
seen a broadening to not only industrials, but financials, other
(00:51):
value and cyclical stocks, also emerging markets. Foreign currencies have
rallied as well. So to what extent do you see
this as bigger than meg seven, bigger than AI and
bigger than in Nvidia or is it really all about
in Vidia?
Speaker 4 (01:05):
Yeah?
Speaker 2 (01:06):
Actually, I mean a lot of action obviously in Nvidia
and the AI related themes. I mean, most recently we've
seen actually the AI theme broadening itself as well to
power companies or kind of infrastructure plays. If you think
about kind of AI usage and compare that with kind
of traditional search, every AI query actually uses ten times
(01:29):
more energy than a Google search. So that explains why
investors are getting actually quite excited about energy in general
and power plays and data center uses. I think also
if you think about kind of the broader economy, I
think about two months ago, we pointed out that we're
seeing some green sheets in terms of the global manufacturing sector,
(01:50):
and when you look at global manufacturing PMIS or USPMIS,
they have been actually slumping for the last twelve to
eighteen months, which has actually made a turn in the
last two months. So I think that in combination with
more supportive policies out of China, that prompts actually a
larger recovery in risky assets. And when there's more things
(02:10):
to choose from, it's not just Max seven anymore. You
can actually invest in the broader market, including industrials, including
even utilities. That actually broadens up the market.
Speaker 1 (02:21):
We heard today from the head of the Cleveland Fed
that Lorettamesters saying that maybe we don't get the three
rate cuts projected in the month of June when the
FED conducted the last dot plot survey. I'm wondering what
that does to your thesis on the market. Let's say
we don't get any rate cuts this year from the FED.
I know that may be away from the consensus viewpoint,
(02:42):
but there's a lot to be said for the robust
nature of the American economy inflation. Yes, it appears to
be a little stubborn. Maybe the FED doesn't cut rates
between now and the end of the year. How does
that change the way you're viewing opportunities.
Speaker 2 (02:56):
Yeah, I think at the beginning of the year, when
the market was actually pricing to six cuts, I mean,
we were saying that that was way too aggressive, and
we don't see inflation coming down as quickly as it
did in the last kind of sixty eight nine months
and in the first quarter. Indeed, what we've seen is
still this inflation, but the pace of that this inflation
(03:17):
has disappoints at market. Now, the market is sort of
pricing in one to two cuts by the end of
the year, and I think we've seen some walk backs
from Fed officials as well to the three cuts forecasts
now when we take a step back, we still think
that there will be this inflation kind of going on
in the next six month or so. However, I mean
that pace is actually going to be more gradual. And
(03:38):
when you think about kind of how the Fed thinks
about the setting of the interest rates, right now, the
real rates is actually above two percent, which is actually
quite tight, and they have actually said that they think
real rates are actually quite tight. That gives them some
room to cut. I mean, whether it's one times, two times,
or even three times. I think it's just a matter
(03:59):
of kind of I guess twenty five basis of one's difference.
But the direction is that the direction is that they
will stop to cut at some point in the second
half of this year.
Speaker 3 (04:09):
So inflation was a concern that was very much front
and center. It seems like it has slipped a little
bit to the backseat, not as far back as as
things like geopolitics, debt and deficits, and these are the
things that Jamie Diamond, you know, commented on and he's
very nervous and he's prone to look at these big
picture themes. But what happens in markets is they don't
(04:31):
always focus on those big picture areas on a day
to day basis, and so I'm curious whether or not,
you know, inflation is kind of sliding into that position where, yeah,
it's out there, it's something to be concerned about, but
it may not affect markets in the very short term.
Speaker 5 (04:45):
Yeah, I think.
Speaker 2 (04:46):
I mean the concern for US for inflation really is
that where does long term inflation land. Does it actually
go back to the FETs two percent target. Now we
talked about AI for example, I mean AI actually is
very very power kind of consumptive or very very power hungry,
and when you look at, for example, the latest kind
(05:08):
of iteration of chips from Nvidia, it actually uses even
more power than the previous kind of generations. So I
mean that actually puts some pressure up what pressure on
commodity prices, where we're seeing breakouts in copper, we're seeing
breakouts in gold. I mean that also reflects I think
the market is concerned about the US dollar, and when
(05:28):
we think about commodities, I mean these are priced in
US dollars. So I think in combination, we're actually more
concerned about the long term inflation outlook of settling somewhere
between two to three percent rather than the fits two
percent targets, so that actually has a lot of implication
for long duration bonds. I think that is actually the
(05:48):
bigger longer term concern.
Speaker 1 (05:50):
I'm glad you mentioned US dollar strength because the flip
side is obviously a weak currency for many of the
exporting nations in the APAC region. I was looking at
data today from the Port of Los Angeles. We had
trade volumes total volumes up for a ninth straight month
during the month of April, and then if you look
at import volumes, these are containers that are fully stacked
(06:15):
up twenty one percent in the month of April versus
last year. So I guess there may be a case
that weaker currencies in some of the exporting nations in
Asia is really helping to drive trade right now.
Speaker 2 (06:29):
Yeah, for sure, if you look at how the Japanese
end has been fueling the japan economy recovery, I think
a lot of nations are thinking about their own currencies,
and China in particular is suffering from a cyclical downturn
and exports have been very, very weak, right and I
think that is one of the easy levels that they
can pull to trigger recovery in the Chinese economy. Of course,
(06:53):
they're pulling out all the stops. In latest Politburo meeting
they actually announced that they will try to support the
property sector. They've just issued a one trillion special bond
for the government and there's a lot of speculation on
how they would use that to prop up the property
sector as well.
Speaker 3 (07:11):
But a rally of thirty percent off the lows, that's
a very big rally. I mean, how much is already in.
Speaker 2 (07:17):
Yeah, So if you look at kind of China equity
market from my fundamentals and valuation point of view, let's
take valuations right. Historically it's average PE has been around
eleven point five percent point five times. Right now it's
sort of ten point five, So roughly ten to fifteen
percent upside from there. Yeah, from a valuation perspective.
Speaker 3 (07:38):
All right, Stephanie, Stephanie lung Cio at stash Away, we've
seen a broad advance in risk assets really globally over
the past month or so after weakness in April. But
can that rally continue. We're joined now by Juinbilu, who
(07:59):
is portfolio manager at Tribeca Investment Partners. June, thanks very
much for being with us. A very simple question to
you can the broader markets rally. If Nvidia disappoints.
Speaker 5 (08:12):
Thank you for having me. Look, we do believe so
in Vidia.
Speaker 4 (08:15):
If Divindia did disappoints, it will probably put more pressure
on the more expensive part of the market, which is
the tech and the growth companies. But we do think
heading into the year end, there will be many other
companies sectors, such as the cyclical part of the market
should start to do a little bit better given the
amount of underperformers they have done. So, you know, our
(08:35):
view is that market is going to continue to trend higher.
Speaker 1 (08:39):
How are you feeling about the Chinese markets? Is that
an area that will continue to trend higher as well?
Speaker 5 (08:45):
I do think so.
Speaker 4 (08:46):
I think that, you know, when we come to the
cyclical part or the valuation differential between different sectors. The
evaluation differential between different markets has been incredible, particularly the
Chinese market. You know, the valuation that's presenting many of
its growth companies or even other cyclical businesses, it's just
incredible when comparing to the developed markets. I do think
(09:08):
that market will continue to outperform, and particularly at the
expense of some of the more defensive market within that
whole Asian Pacific region.
Speaker 3 (09:17):
Sometimes geopolitics really rises to the fore, particularly when the
US and China are going at it over, for instance, trade.
Now we have a possible inflection point with latching the
being inaugurated as president and making a speech where he
didn't really say anything all that new in terms of
(09:37):
the basic framework, the way that they look at things
in Taiwan, which is we already have de facto independence.
We don't need to declare it, treat us as an equal.
But China didn't like that hearing it this time around.
Speaker 4 (09:49):
Why look, I do think at this point with geopolitics,
China is wanting to make a stance, although I think
realistically China do prefer the status quo, as you said,
whatever they've been promising before as the way it is.
I think at this point it's perhaps just making a
(10:11):
making a stance, but I would very much think it's
about status quo being maintained.
Speaker 1 (10:17):
June Bay, what are your clients most concerned about these days?
Is it geopolitics? Is it the fact that inflation still
remains stubbornly high in many markets. Is the fact that
maybe we don't know that the FED is going to
lower interest rates? This year at all. What are they
concerned about?
Speaker 5 (10:34):
Look, I think it's a really good question.
Speaker 4 (10:36):
I think they concerned a bit about every or everything
at the moment seems to be having a lot of uncertainty. Look,
I think inflation, the interest rate is a big one.
Clearly in the last couple of years has really deterred
a lot of returns for across many class asset classes.
Inflation is falling, but not fast enough. Our view is
that interest rate will fall, but it's perhaps not going
(10:57):
to be this year, and that is a little bit
disap pointing to many of the clients hence that they
are you know, we are seeing a little bit of
volatility in this at this point, but you know, our
advice to clients is really taking a step back. Interest
rate is going to head lower, maybe not this year,
but it will be next year. And with that kind
of stable outlook and corporate's kind of holding up okay
(11:18):
in terms of earnings, and you know, and the economy
is holding up all right.
Speaker 5 (11:23):
I do think that that that that pays.
Speaker 4 (11:26):
Put a pretty good good path for a pretty good
return for the equity market at this point.
Speaker 3 (11:33):
It's funny how you look at these things, because interest
rates are very low in Japan and China and they
don't have all that much growth. And interest rates are
very high in the United States and they have a
lot of growth at the moment. How do you sort
of put that all into the mix.
Speaker 4 (11:48):
That's right, It isn't look I absolutely as a global investor,
it is a little bit harder at the moment. That's
why I think the Chinese markets it does look very
interesting because we're looking at the project growth. So hopefully
the projected growth will come from come back from its
very very low level that's been rebased significantly lower. We
(12:08):
think heading forward next twelve month, the growth will be
there and they will be higher than what is expected
out of the US. Now, the AI thematic is very different.
I think, you know, US has a really fantastic hairstyle
in many of the sectors, well many of its you know,
chip makers and things, and I do think that at
some point the Asian markets will catch up. But you know,
(12:31):
but just as a market itself, I do think the
evaluation will support you know, the markets that sort of
performed the last two a month.
Speaker 1 (12:38):
Let's do a little bit of walk about economics, so
to speak. How are things in Australia these days, particularly
on the East Coast.
Speaker 4 (12:46):
Look at the economy is actually holding up well, but
we are certainly seeing that consumer slowing down very quickly,
particularly in the last couple of months that we have
heard from major retailers across every industry talking about slow
down and trading down by the consumer, you know, Australia.
In fact, if you take out the population growth, our
(13:07):
consumer has been consumer recession for quite some time. That
is really just a result of a variable interest rate,
variable home low interest rate that is really be impacted
you know, the consumer. And yeah, so we're hoping the
budget that which has been very stimulus stimular tree and
then we have the rate cut, the tax cut that's
(13:28):
coming through by July this year. So we do think
that these measures will help consumer to offset its weakness
and its tough environment.
Speaker 3 (13:37):
Let me ask you really briefly flip side of the
first question. If Nvidia does produce really big numbers, can
we rally a lot from here?
Speaker 6 (13:46):
Oh?
Speaker 4 (13:46):
Absolutely, I do think share markers heading higher and if
it's good result, it's heading even higher.
Speaker 6 (13:52):
Yeah, Okay.
Speaker 3 (13:53):
Quim Bailu joining US portfolio manager Tribeca Investment.
Speaker 1 (13:56):
Partners, Dark guest is Ariel Kohane Ariel a senior fellow
at the Atlantic Council. On the death of the Iranian President.
It's a pleasure to have you on the program and
we always benefit from your analysis.
Speaker 2 (14:14):
Here.
Speaker 1 (14:15):
Is this going to change anything inside Iran? Do you think?
Speaker 6 (14:20):
Not much? I mean it may precipitate the transition. I'm
watching like a hawk. What's happening with much about kamen Nai,
the son of the Supreme Leader. The Supreme leaders positioning
his boy to succeed him. Surprise, surprise. So it's going
(14:41):
to be Eshiah North Korea. His son is not a
distincuish scholar. And of course Iran is what is called
the republic of a scholar or the Layatanaki. They call
it the state of scholarly leadership. The first Tiatola, in
(15:04):
the second the current Tiatola were not the most distinguished scholars,
but they were very capable politicians. Clearly, the current title
is eighty five years old, and the death of President
rac comes at an opportune moment in this succession. Now,
(15:25):
at the same time, the Islamic Revolutionary Guard IRGC are
thinking about the future of Iran without these clerics. Basically
as a security services dictatorship. So lack of popularity of
these leaders may play into the hands of the IRGC
(15:48):
generals who are my sources are telling me thinking about
taking over.
Speaker 3 (15:55):
It's interesting because we often hear that there is a
large civil society inside Iran, with elites, with well educated
people who may not be in complete agreement with the
path that the that you've seen from the Islamic leaders.
I'm just curious your thoughts on that. I mean, it's
not like they're out there every day in the streets
(16:17):
or anything, but how strong is civil society there and
could you see a change brought forward by them.
Speaker 6 (16:23):
First of all, the civil society was very strong. In
two thousand and nine, there was a Green Revolution. They
voted a couple of times not in accordance to what
the Ayatola wanted. This is how President Khatami and President
Rukhani were elected. They are of that regime, but they
(16:48):
were of the more reformist wing of that regime. I
spent some time speaking with as Rokani after he retired,
and he was a very impressive man. Now, currently the
(17:09):
crackdown is very strong. There were riots in twenty twenty two. Unfortunately,
both in two thousand and nine and twenty twenty two,
the Obama administration and the Biden administration, respectively did not
go out of their way to support this popular uprisings,
(17:29):
and they were quashed by the regime. In the future,
if the regime is in crisis and different factions of fighting,
civil society may play a major role. But they're not armed,
and they're not very well organized, and unfortunately they do
not have a lot of support, as demonstrated now by
(17:49):
expression of regret with the demise of the president who
was known as the Hangman of Iran. He personally was
responsible for hanging a five thousand ariel.
Speaker 1 (18:04):
Presumably we'll have elections in Iran within fifty days. Would
you trust the results?
Speaker 6 (18:10):
Absolutely not. These are carefully choreographed elections. They are managed,
stage managed by the Supreme Leader. Even people as pious
and as much of the regime as the former presidents
(18:33):
Ruhani and Ahmadinijad. You remember Ahmadinijad was not as sweetheart,
but they are barred from running in these elections. These
elections are anything but democratic.
Speaker 3 (18:48):
What about in Saudi Arabia because the king King Salmon
is being treated for lung inflammation, I don't know the
exact status, but he's elderly, he's eighty eight years old.
Will that succession can there be rather smooth or could
it be turbulent.
Speaker 6 (19:05):
Again? In these autocracies, from Moscow to Tehran to villad,
everything is very opaque. We do not know what is
the extent of opposition and resistance to the crown Prince
Mohammad bin Filman who is actually running the affairs in
Saudi Arabia now. For years, King Solomon is ailing for
(19:31):
many years, not always in full control of his capacities,
of his abilities, and his demise will enthrone literally his
son who is in charge now, MBS Mohammed bin Soilmant. However,
that may be a point where those princes who were
(19:52):
sidelined by him, or those prominent Saudis who were detained
in a five star hotel, if you remember, until they
pay up the taxes or share in their wealth with
the treasury, they may muster in opposition. There were some
reports of an attempted assassination. I don't know how reliable
(20:16):
these reports were, but in a country with a tradition
of assassinations, like King Fod back in the day, and
yet then another king before pod. There is a tradition,
unfortunately in Saudi Arabia to assassinate on desirable kings. If
(20:37):
I were NBS, I would be investing very very hard
and watching my security very carefully. And I'm sure he
has the money for the best security consultants in the world.
Speaker 1 (20:51):
He was scheduled to be in Japan this week, but
he canceled that visit because of the situation with the
King Ariel. Very quickly here at about thirty seconds or so,
if the Trump administration comes back into power, let me
just say it in another way, if Donald Trump is
re elected, how do the situations in Iran and Saudi Arabia?
How are they affected?
Speaker 6 (21:14):
If we are to judge Trump by his performance in
his first term, he will get closer to Saudi Arabia.
He will probably back Israel up more than the current administration,
and he will be more prickly visa the Iran. Iran
is very close to getting a nuclear weapon, or at
(21:35):
least to enrich uranium to ninety percent, which is sufficient
for a bomb, and that is an existential threat not
just for Israel, not just for Saudi Arabia, but for
all American allies. In the region and also because of
the range of the Iranian missiles to our European NATO
allies as well.
Speaker 1 (21:54):
Ariel will leave it there. It's always a pleasure. Thanks
for making time to chat with us, Ariel Cone, Senior
Fellow at the Atlantic Council, helping us understand the latest
developments in the Mid East in both Iran and Saudi Arabia.
Speaker 3 (22:09):
This is the Bloomberg Daybreak Asia podcast, bringing you the
stories making news and moving markets in the Asia Pacific.
Visit the Bloomberg Podcast channel on YouTube to get more
episodes of this and other shows from Bloomberg. Subscribe to
the podcast on Apple, Spotify, or anywhere else you listen
and always on Bloomberg Radio, the Bloomberg Terminal, and the
(22:30):
Bloomberg Business App.
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