July 2, 2025 • 18 mins
A rally in several big tech companies fueled gains in US stocks, with the market extending its advance as President Donald Trump said he reached a trade deal with Vietnam. Treasuries fell as a selloff in UK bonds underscored deficit worries. Following earlier losses driven by weak jobs data, the S&P 500 rose to fresh all-time highs. In the run-up to the jobs report, economists forecast employers added 110,000 jobs in June — the fewest in four months — amid a slight rise in the unemployment rate to 4.3%. The Bureau of Labor Statistics report is due Thursday, a day earlier than usual because of the Independence Day holiday. We get reaction to the day's market moves from Brian Krawez, President at Scharf Investments.
Plus - the trade truce between Washington and Beijing may be holding for now, but China is increasingly wary about what's happening elsewhere: US efforts to forge deals that could isolate Chinese firms from global supply chains. Ahead of a July 9 deadline, US officials are deep in talks with major trading partners in Asia and Europe, pushing for new agreements that would include restrictions on Chinese content, or secure commitments to counter what Washington sees as China's unfair trade practices. In the first such deal, President Donald Trump on Wednesday announced a tiered tariff agreement with Vietnam. Exports to the US from the Southeast Asian nation will be charged a 20% rate, Trump said in a social-media post, with 40% levied on any goods deemed to be transshipped through the country. We get the latest from Jill Disis, Bloomberg News Desk Editor in Hong Kong. She speaks with Bloomberg's Shery Ahn and Haidi Stroud-Watts on The Asia Trade.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner.
The US equity market rose to record highs today. That
was after President Trump said he reached a trade deal
with Vietnam and in the process, Vietnam will avoid higher
tariffs that were set to take effect next week. In
a moment, we'll get more on this deal from Bloomberg's
Jill Disis in Hong Kong, but we begin here in
(00:32):
the States for a look at market action. I'm joined
by Brian Krowez. He is the president at Sharf Investments.
Brian is on the line from Los Gatos, California. Brian,
thank you for making time to chat with me. Certainly,
there is still a lot of uncertainty in the market.
Can you justify record high levels today for the S
and P and the Nasdaq comp?
Speaker 3 (00:54):
Well, it's getting harder on a valuation basis. The S
and P is in the ninety fifth percent on evaluation,
and as you said, there's still a lot of uncertainty.
I mean, you just mentioned there's a tariff deal with Vietnam,
but if you look at the last twenty years, the
average tariff has been sort of one to two percent
on the US economy. Now many economists are thinking once
these deals are all done, they're going to be ten,
(01:14):
fifteen to twenty percent in aggregate. I mean, that's a
pretty big change from what we've been used to. So
it's sort of like investors were really really nervous about
tariffs and other policy uncertainty in April, and we've seem
to have forgotten that.
Speaker 4 (01:30):
In fact, last quarter was the first quarter the.
Speaker 3 (01:33):
S and P had gone down ten percent and finished
up by more than five in the history of the
S and P five hundred, So it's been a real
crazy run. I think given where evaluations are now, it's
getting a little harder to justify even with positive news
on tariffs.
Speaker 2 (01:48):
So we're going to get the monthly jobs data tomorrow.
Today we had ADP reporting employment for American private firms
was down for the first time in more than two years.
We've heard from the FED that the labor market remains solid.
If we get evidence tomorrow of maybe a bit of
softening and payroll growth and maybe a spike in the
(02:10):
unemployment rate, is it too much to say that the
FED is behind the curve?
Speaker 3 (02:16):
You know, it's very hard to say that the FED
is in a tough spot because, first of all, as
they've said, you've got tariffs coming. A lot of the
big companies have said, we did pre buying, we've done
other stuff, and so they're out ahead of these tariffs.
But you're starting to see some of it translate through,
and we haven't even really seen the tariffs go into
effect yet. So you've got tariffs as number one, But
(02:37):
i'd also point out, you know, there's other potential risks healthcare.
You saw senteen today down forty percent. They said healthcare
costs or higher than they thought. You've had this consistent
problem in the ACA, which is the is the pool
of ensured buyers that can't quite qualify for Medicaid. Likely
(03:00):
rates they are going to be going up quite a bit.
You could have people coming out of the pool. So
as we go into next year, we think healthcare costs
could be spiking up, and that would be another problem
in terms of inflation. So sure, if we get weakening labor,
you could maybe see inflation come down. Maybe let the FED,
you know, do something. But you know, we're certainly not
out of the woods yet. With terras and I think
(03:21):
healthcare is something that people need to also be looking
at in terms of inflation.
Speaker 2 (03:26):
As we're talking about the labor market. I'm reminded of
the news today from Microsoft that it's got more job
cuts coming, about nine thousand workers. This is the second
major wave of layoffs this year for Microsoft. The company,
as we know, is looking to control cost. It's also
trying to ramp up artificial intelligence spending. Do we need
(03:46):
to consider the impact now of AI as companies begin
to adopt it more aggressively, the impact that AI is
going to have on the labor market.
Speaker 4 (03:56):
Yeah, that's a very good point.
Speaker 3 (03:57):
I mean, this is sort of a counter argument to
what I just said about healthcare, inflation and tariffs.
Speaker 4 (04:04):
If AI leads to lots.
Speaker 3 (04:05):
Of productivity, you could you could see that being a
deflationary force. It could have an impact on the labor
market for sure. I think Microsoft has already gone on
record of saying they're they're hiring less interns and they're
having a lot more computers doing their actual coding, and
so this is this is definitely already here. It's the
(04:27):
future is going to be a lot more, but it's
already here. It's already impacting the labor market. I've got
several friends who have kids that just graduated from school
with CS degrees, and they're actually struggling getting jobs, which is,
you know, you go back two years ago when they
were getting ten offers and now you've actually got computer
science majors much less, you know, history and English majors.
(04:48):
The job market for new college grads is really tough already,
and I think that's in part because of AI, and
so it's definitely impacting the labor market, you know. And
how much it does, I think is still an open question.
But it's definitely going to have some impacts.
Speaker 2 (05:05):
And the spending on AI continues apace. Today we learned
that open AI is going to be running a massive
amount of computing power from Oracle data centers. How are
you feeling broadly about the AI trade? Still names like Oracle,
names like in Nvidia.
Speaker 4 (05:22):
Yeah, well, we.
Speaker 3 (05:22):
Actually own Oracle. We've own Oracle for a long time.
It's getting a little bit more expensive than it's been
for a while. But you know, as I'd like to
remind people, if they bought the top ten tech stocks
at the end of ninety nine, they actually would have
done pretty poorly over the next twenty years, despite the
fact that the Internet became more ubiquitous than any of
(05:44):
us imagined.
Speaker 4 (05:45):
Cell phones became really big.
Speaker 3 (05:47):
But back then you would have bought Nokia for cell phones,
not Apple. You would have bought Yahoo for the Internet,
not Google. You would have about Aol for email. You
would about Cisco Systems. You know, when I talked to
sort of a lot of people now, the thirty five
year olds, they don't even know Sun Microsystems. Had, you know,
was the dot in the dot com, you would have
(06:07):
bought that for sure. So it's really hard to pick
the winners. So AI will certainly be huge, but investors
might be getting a little over their skis, you know. Really,
it's particularly with these kind of down down the marketcap
ones that are that are going crazy and you're seeing
a lot of speculations. So I think there's some risk there.
Names like Oracle and Microsoft are going to be winners.
(06:29):
It's just a question of you know, what's the right
multiple and so even there I think maybe, uh, you know,
they're starting to get a little bit more pricey, But
certainly I would be very cautious of the kind of
more speculative.
Speaker 2 (06:42):
Names Okay, so away from tech, let's talk about the financials.
A number of the big banks boasted their dividends after
passing the FED stress test. The latest stress test KBW
Bank index today was up one and a half percent.
We've got names like JP, Morgan, Bank of America, Goldman, Sachs, Wells,
far Go, the big guys. Is this a trade that
(07:03):
interest you right now? Taking a position in the big banks?
Speaker 3 (07:06):
Well, we like quality companies for our style, so banks
are typically not as quality as we like to do.
Speaker 4 (07:12):
But I will say for the banks, you know, that
was very good news.
Speaker 3 (07:16):
And some of the reserve requirements are also going down,
so I think the quality of those banks is going
to go up. We talked about AI. AI actually can
be a big help in the financial sector going forward,
and so actually, you know, for the a I tried,
we think things like that that are really going to
able to get benefited from productivity enhancements are probably a
(07:37):
good good way to play it. Within financials, we like
things like insurance, We like insurance brokerage. You know, things
like Visa are going to continue to be winners. FI
Serve is one of our favorite names. So there's a
lot of things within financials we like, but banks are
one of those that are also benefiting. But financials broadly,
I think is a sector that is going to continue
(07:59):
to do well.
Speaker 2 (08:00):
So you're very close to Silicon Valley. I'm curious, Brian
about the conversation that you're hearing there. What's it like,
what are people discussing, what's the focal point?
Speaker 4 (08:11):
Yeah, well it's enough.
Speaker 3 (08:12):
My brother's an executive at Microsoft. Definitely, there are conversations about,
you know, cutting, It's it's very interesting to see young
people coming out with engineering degrees suddenly finding themselves struggling
to get jobs.
Speaker 4 (08:27):
And so that's that's the biggest thing. That's a very
big change.
Speaker 3 (08:31):
I haven't heard that kind of thing since say two
thousand and two thousand and one, when you know, a
lot of layoffs are happening and we're still in a
pretty good period.
Speaker 4 (08:41):
Tech stocks are going up, so it's not like back.
Speaker 3 (08:43):
Then when you had a big Internet bubble and a
lot of companies that were just hanging on and a
lot of layoffs.
Speaker 4 (08:50):
But today, even with all the success, you are hearing
a lot of younger people having trouble getting jobs. So
that's that's a very interesting development. That I would say
is really only like.
Speaker 3 (09:02):
In the last six seven months, and that I think
that's in all likelihood AI and kind of where tech
companies are putting their money. You mentioned AI, they're putting
their money into capital investments and less in the labor
and so it definitely is affecting the labor market. I
still think though in silicon value there's a lot of
optimism for AI, and so it's not all doom and gloom,
(09:23):
but it is for people in certain parts of laborpool,
you know, a tougher market.
Speaker 2 (09:28):
So tonight in the US, the House of Representatives is
kind of debating the next procedure here for a President
Trumps signature tax bill. It seems like there's a little
bit of resistance for the moment. Let's just set that
resistance aside and assume that this big beautiful bill does
get done, it moves to the President's desk. Do you
(09:49):
have a sense of the impact that this may have
on the economy.
Speaker 3 (09:53):
Well, it's a big, beautiful bill, so I haven't read it,
and it's hard to know.
Speaker 4 (09:58):
I mentioned sent in earlier.
Speaker 3 (10:00):
I think that you know, if you're going to cut
Medicaid and you're already having problems with one of the
major ACA insurance providers who's already going to have a
big increase before this announcement, and now they're going to
go back and ask for an even bigger.
Speaker 4 (10:13):
Increase in twenty twenty six.
Speaker 3 (10:15):
I think we're going to have, you know, one impact
of it, in my opinion, would be a higher uninsured population,
which always translates into more healthcare inflation. And that might
be an unintended consequence of this bill. You know, obviously
we could be wrong on this, but that that's usually
(10:36):
what you end up with if you have more uninsured population,
and whenever you have health care inflation, it tends to
ripple through the economy and tends to be one of
those issues that your average American really cares about. Your
average Americans really looking at, you know, food, housing, and healthcare.
And so if that's going to really impact them, I
think it could have rapifications for the economy as we
(11:00):
go forward. In terms of the keeping the tax cut,
that's obviously positive for the economy, and there's all kinds
of things like they're taking away solar credits and stuff
like that. But one thing I haven't heard a lot
of people talk about is sort of the impacts of
healthcare translating to the economy. So for us, that's one
of the things we're kind of evaluating.
Speaker 2 (11:17):
Brian will leave it there. It's always a pleasure. Thank
you so much. Brian Crowez. He is the president at
Scharf Investments. Joining from Los Gatos, California, here on the
Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast.
I'm Doug Prisner. President Trump says the US has reached
(11:40):
a trade agreement with Vietnam. It will give American companies
full market access and at the same time, the US
is slapping a twenty percent tariff on all Vietnamese imports. Now,
Hanoi hasn't confirmed the framework deal. For more, we heard
from Bloomberg News Desk editor Jill Desis. She spoke with
Bloomberg Cherry On and Heidi Strout Watts on the Asia trade.
Speaker 5 (12:02):
Joe, what do we know about sort of the contours
of this steal and what's been agreed even though of
course that hasn't been a confirmation from the Vietnam side.
Speaker 6 (12:11):
Well, yeah, I mean, Heidi, I think first of all,
I just want to point out that we do not
yet have a term sheet from the White House. They
haven't released anything, you know, giving a lot of further
details on there. So really I think there's just two
numbers that I can give you here. First of all,
the deal that Trump is announced would include a twenty
percent tariff on Vietnamese exports to the US, as well
as a forty percent levey on goods deemed to be
(12:32):
transshipped through the country. So what that tells me is
that as part of this steal, there's at least somewhat
of a focus perhaps on goods that you know, maybe
shipped through Vietnam from China for example. That's one thing
that the Trump administration has made very clear as it
continues to negotiate these types of deals, that one thing
it's focused on, particularly in some of these Southeast Asian countries,
(12:53):
is that it really wants to try to figure out
a way to box out China or otherwise, you know,
convince more manufacturers to to move goods that they manufacture
from China to other parts of Southeast Asia, including say Vietnam.
So that's one thing that those numbers perhaps tell me.
But again I do want to caution that we don't
have a term sheet. We don't know exactly what the
(13:13):
Vietnamese are saying about this, still obviously waiting more fulsome
confirmation from Hanoi about what exactly we're expecting with this deal.
But yeah, so it does tell you obviously, you know,
we're approaching that July ninth deadline that Trump has set
for you know, kind of coming up with some deals
to announce to address the reciprocal tariffs they'd announced back
in April. But we're still getting a lot of information
(13:35):
that's you know, still coming out. We'll see what ultimately
is in really kind of the nitty gritty of this
particular deal.
Speaker 1 (13:41):
Jill, Let's talk a little bit about China, because, as
you mentioned, they're trying to box in China despite the
fact that they do have the supposed framework in place
that has cool tensions when it comes to those tariffs.
What are they trying to do in terms of using
O their trading partners and new deals in order to
restrict Chinese content.
Speaker 6 (14:02):
Well, again, Sherry, I think you know, you look at
some of them, you know, the strategy that's actually being
you know, uh com here. I think that you know,
first of all, the idea is really kind of putting
pressure on the US trade partners to restrict trade that
they're doing with China. Obviously, we've seen this happen not
just in this latest round of trade deals, but over
the last several years of the US attitude towards China
(14:23):
has been very much particularly with its biggest allies, saying
you know, are there, are there you know, sanctions or
the restrictions you can put in place in terms of
dealing with uh, you know, in terms of working with
the Chinese technology, Chinese good there's a lot of you know,
obviously this more fulsome effort uh to sort of you know,
prevent China from developing you know, advanced technologies or you know,
(14:44):
working with say, you know, manufacturing parts or you know
parts that you know other uh other you know companies
and other countries might make and sending those to China.
So that's always a big part of this equation. But again,
now you're seeing this kind of play out I think
a little bit in some of these trade deals here. Obviously,
you know, we're still waiting for more on that Vietnam deal,
but that transshipment element of this trade deal again does
(15:08):
lead me to believe that there's a component in there
that's kind of directed toward trying to shut out China.
So again, you know, yes, obviously, as the United States
continues to you know, it's made its own trade deal
with China in the wake of all of this, the
fact that you've got all of these other countries that
are still up in the air in terms of what
their individual agreements look like the United States, you know,
(15:29):
I think does suggest that there is a strategy on
the part of the United States here to try to
you know, unite a lot of these countries and kind
of you know, create deals that you know are obviously
favorable to the United States, but that also maybe I'm
ultimately unfavorable to Beijing, which is.
Speaker 5 (15:43):
Also why we've seen Beijing on this you know, multilateral
trade and diplomatic charm offensive right the FORIGN Minister among
Ease in Europe through to this Sunday over the weekend,
for the high level strategic dialogues with the Eues, he's
really you know, pushing home the point of collaboration and
working together confronting differences as such, there's a lot of
(16:04):
sort of really historic trade and diplomacy ties there. Could
that be a point of strength for Beijing.
Speaker 6 (16:12):
I mean potentially and certainly, yes, I'd imagine that if
you're Wang YIV, you're for the foreign Minister, you're trying
to smooth over things in Europe, particularly ahead of there's
a pretty critical EU China summit that's happening in Beijing
later this month. So I think, you know, a lot
of what he's doing in Europe right now is kind
of paving the way for those further talks that they're
going to have at the end of the month. Yes,
(16:34):
obviously there's a ton of incredibly critical trade that goes
through between the EU and China. You know, we know
that Chinese EV's you know are you know, obviously have
a pretty big presence in Europe. I think, you know,
China is obviously, you know, interested in continuing to develop
some of those types of ties. So yes, obviously, if
you're the if you're Beijing in all of this, you're
(16:57):
trying to strengthen your position as well with all of
the trading partners that you had. I would point out that,
you know, as you know Donald Trump and the Trump administration,
we're trying to develop all of these other trade deals.
Some she jimping himself, the you know, president of China
was going through and trying to you know, foster tie
with you know a lot of you know, trading partners
(17:17):
in Southeast Asia. So this really is a case where
you've got the world's two foremost economic superpowers that are
ultimately trying to strategize and trying to work with you know,
their their individual trading partners. Because these are such important economies,
they do have incredibly strong trading partnerships and relationships, and
you know, they obviously have best of interests in keeping
those you know strong.
Speaker 5 (17:38):
Boom My News desk out to Jode says there with
the lad us on trade.
Speaker 2 (17:43):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
(18:06):
and Australia. I'm Doug Prisoner and this is Bloomberg
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner.
The US equity market rose to record highs today. That
was after President Trump said he reached a trade deal
with Vietnam and in the process, Vietnam will avoid higher
tariffs that were set to take effect next week. In
a moment, we'll get more on this deal from Bloomberg's
Jill Disis in Hong Kong, but we begin here in
(00:32):
the States for a look at market action. I'm joined
by Brian Krowez. He is the president at Sharf Investments.
Brian is on the line from Los Gatos, California. Brian,
thank you for making time to chat with me. Certainly,
there is still a lot of uncertainty in the market.
Can you justify record high levels today for the S
and P and the Nasdaq comp?
Speaker 3 (00:54):
Well, it's getting harder on a valuation basis. The S
and P is in the ninety fifth percent on evaluation,
and as you said, there's still a lot of uncertainty.
I mean, you just mentioned there's a tariff deal with Vietnam,
but if you look at the last twenty years, the
average tariff has been sort of one to two percent
on the US economy. Now many economists are thinking once
these deals are all done, they're going to be ten,
(01:14):
fifteen to twenty percent in aggregate. I mean, that's a
pretty big change from what we've been used to. So
it's sort of like investors were really really nervous about
tariffs and other policy uncertainty in April, and we've seem
to have forgotten that.
Speaker 4 (01:30):
In fact, last quarter was the first quarter the.
Speaker 3 (01:33):
S and P had gone down ten percent and finished
up by more than five in the history of the
S and P five hundred, So it's been a real
crazy run. I think given where evaluations are now, it's
getting a little harder to justify even with positive news
on tariffs.
Speaker 2 (01:48):
So we're going to get the monthly jobs data tomorrow.
Today we had ADP reporting employment for American private firms
was down for the first time in more than two years.
We've heard from the FED that the labor market remains solid.
If we get evidence tomorrow of maybe a bit of
softening and payroll growth and maybe a spike in the
(02:10):
unemployment rate, is it too much to say that the
FED is behind the curve?
Speaker 3 (02:16):
You know, it's very hard to say that the FED
is in a tough spot because, first of all, as
they've said, you've got tariffs coming. A lot of the
big companies have said, we did pre buying, we've done
other stuff, and so they're out ahead of these tariffs.
But you're starting to see some of it translate through,
and we haven't even really seen the tariffs go into
effect yet. So you've got tariffs as number one, But
(02:37):
i'd also point out, you know, there's other potential risks healthcare.
You saw senteen today down forty percent. They said healthcare
costs or higher than they thought. You've had this consistent
problem in the ACA, which is the is the pool
of ensured buyers that can't quite qualify for Medicaid. Likely
(03:00):
rates they are going to be going up quite a bit.
You could have people coming out of the pool. So
as we go into next year, we think healthcare costs
could be spiking up, and that would be another problem
in terms of inflation. So sure, if we get weakening labor,
you could maybe see inflation come down. Maybe let the FED,
you know, do something. But you know, we're certainly not
out of the woods yet. With terras and I think
(03:21):
healthcare is something that people need to also be looking
at in terms of inflation.
Speaker 2 (03:26):
As we're talking about the labor market. I'm reminded of
the news today from Microsoft that it's got more job
cuts coming, about nine thousand workers. This is the second
major wave of layoffs this year for Microsoft. The company,
as we know, is looking to control cost. It's also
trying to ramp up artificial intelligence spending. Do we need
(03:46):
to consider the impact now of AI as companies begin
to adopt it more aggressively, the impact that AI is
going to have on the labor market.
Speaker 4 (03:56):
Yeah, that's a very good point.
Speaker 3 (03:57):
I mean, this is sort of a counter argument to
what I just said about healthcare, inflation and tariffs.
Speaker 4 (04:04):
If AI leads to lots.
Speaker 3 (04:05):
Of productivity, you could you could see that being a
deflationary force. It could have an impact on the labor
market for sure. I think Microsoft has already gone on
record of saying they're they're hiring less interns and they're
having a lot more computers doing their actual coding, and
so this is this is definitely already here. It's the
(04:27):
future is going to be a lot more, but it's
already here. It's already impacting the labor market. I've got
several friends who have kids that just graduated from school
with CS degrees, and they're actually struggling getting jobs, which is,
you know, you go back two years ago when they
were getting ten offers and now you've actually got computer
science majors much less, you know, history and English majors.
(04:48):
The job market for new college grads is really tough already,
and I think that's in part because of AI, and
so it's definitely impacting the labor market, you know. And
how much it does, I think is still an open question.
But it's definitely going to have some impacts.
Speaker 2 (05:05):
And the spending on AI continues apace. Today we learned
that open AI is going to be running a massive
amount of computing power from Oracle data centers. How are
you feeling broadly about the AI trade? Still names like Oracle,
names like in Nvidia.
Speaker 4 (05:22):
Yeah, well, we.
Speaker 3 (05:22):
Actually own Oracle. We've own Oracle for a long time.
It's getting a little bit more expensive than it's been
for a while. But you know, as I'd like to
remind people, if they bought the top ten tech stocks
at the end of ninety nine, they actually would have
done pretty poorly over the next twenty years, despite the
fact that the Internet became more ubiquitous than any of
(05:44):
us imagined.
Speaker 4 (05:45):
Cell phones became really big.
Speaker 3 (05:47):
But back then you would have bought Nokia for cell phones,
not Apple. You would have bought Yahoo for the Internet,
not Google. You would have about Aol for email. You
would about Cisco Systems. You know, when I talked to
sort of a lot of people now, the thirty five
year olds, they don't even know Sun Microsystems. Had, you know,
was the dot in the dot com, you would have
(06:07):
bought that for sure. So it's really hard to pick
the winners. So AI will certainly be huge, but investors
might be getting a little over their skis, you know. Really,
it's particularly with these kind of down down the marketcap
ones that are that are going crazy and you're seeing
a lot of speculations. So I think there's some risk there.
Names like Oracle and Microsoft are going to be winners.
(06:29):
It's just a question of you know, what's the right
multiple and so even there I think maybe, uh, you know,
they're starting to get a little bit more pricey, But
certainly I would be very cautious of the kind of
more speculative.
Speaker 2 (06:42):
Names Okay, so away from tech, let's talk about the financials.
A number of the big banks boasted their dividends after
passing the FED stress test. The latest stress test KBW
Bank index today was up one and a half percent.
We've got names like JP, Morgan, Bank of America, Goldman, Sachs, Wells,
far Go, the big guys. Is this a trade that
(07:03):
interest you right now? Taking a position in the big banks?
Speaker 3 (07:06):
Well, we like quality companies for our style, so banks
are typically not as quality as we like to do.
Speaker 4 (07:12):
But I will say for the banks, you know, that
was very good news.
Speaker 3 (07:16):
And some of the reserve requirements are also going down,
so I think the quality of those banks is going
to go up. We talked about AI. AI actually can
be a big help in the financial sector going forward,
and so actually, you know, for the a I tried,
we think things like that that are really going to
able to get benefited from productivity enhancements are probably a
(07:37):
good good way to play it. Within financials, we like
things like insurance, We like insurance brokerage. You know, things
like Visa are going to continue to be winners. FI
Serve is one of our favorite names. So there's a
lot of things within financials we like, but banks are
one of those that are also benefiting. But financials broadly,
I think is a sector that is going to continue
(07:59):
to do well.
Speaker 2 (08:00):
So you're very close to Silicon Valley. I'm curious, Brian
about the conversation that you're hearing there. What's it like,
what are people discussing, what's the focal point?
Speaker 4 (08:11):
Yeah, well it's enough.
Speaker 3 (08:12):
My brother's an executive at Microsoft. Definitely, there are conversations about,
you know, cutting, It's it's very interesting to see young
people coming out with engineering degrees suddenly finding themselves struggling
to get jobs.
Speaker 4 (08:27):
And so that's that's the biggest thing. That's a very
big change.
Speaker 3 (08:31):
I haven't heard that kind of thing since say two
thousand and two thousand and one, when you know, a
lot of layoffs are happening and we're still in a
pretty good period.
Speaker 4 (08:41):
Tech stocks are going up, so it's not like back.
Speaker 3 (08:43):
Then when you had a big Internet bubble and a
lot of companies that were just hanging on and a
lot of layoffs.
Speaker 4 (08:50):
But today, even with all the success, you are hearing
a lot of younger people having trouble getting jobs. So
that's that's a very interesting development. That I would say
is really only like.
Speaker 3 (09:02):
In the last six seven months, and that I think
that's in all likelihood AI and kind of where tech
companies are putting their money. You mentioned AI, they're putting
their money into capital investments and less in the labor
and so it definitely is affecting the labor market. I
still think though in silicon value there's a lot of
optimism for AI, and so it's not all doom and gloom,
(09:23):
but it is for people in certain parts of laborpool,
you know, a tougher market.
Speaker 2 (09:28):
So tonight in the US, the House of Representatives is
kind of debating the next procedure here for a President
Trumps signature tax bill. It seems like there's a little
bit of resistance for the moment. Let's just set that
resistance aside and assume that this big beautiful bill does
get done, it moves to the President's desk. Do you
(09:49):
have a sense of the impact that this may have
on the economy.
Speaker 3 (09:53):
Well, it's a big, beautiful bill, so I haven't read it,
and it's hard to know.
Speaker 4 (09:58):
I mentioned sent in earlier.
Speaker 3 (10:00):
I think that you know, if you're going to cut
Medicaid and you're already having problems with one of the
major ACA insurance providers who's already going to have a
big increase before this announcement, and now they're going to
go back and ask for an even bigger.
Speaker 4 (10:13):
Increase in twenty twenty six.
Speaker 3 (10:15):
I think we're going to have, you know, one impact
of it, in my opinion, would be a higher uninsured population,
which always translates into more healthcare inflation. And that might
be an unintended consequence of this bill. You know, obviously
we could be wrong on this, but that that's usually
(10:36):
what you end up with if you have more uninsured population,
and whenever you have health care inflation, it tends to
ripple through the economy and tends to be one of
those issues that your average American really cares about. Your
average Americans really looking at, you know, food, housing, and healthcare.
And so if that's going to really impact them, I
think it could have rapifications for the economy as we
(11:00):
go forward. In terms of the keeping the tax cut,
that's obviously positive for the economy, and there's all kinds
of things like they're taking away solar credits and stuff
like that. But one thing I haven't heard a lot
of people talk about is sort of the impacts of
healthcare translating to the economy. So for us, that's one
of the things we're kind of evaluating.
Speaker 2 (11:17):
Brian will leave it there. It's always a pleasure. Thank
you so much. Brian Crowez. He is the president at
Scharf Investments. Joining from Los Gatos, California, here on the
Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast.
I'm Doug Prisner. President Trump says the US has reached
(11:40):
a trade agreement with Vietnam. It will give American companies
full market access and at the same time, the US
is slapping a twenty percent tariff on all Vietnamese imports. Now,
Hanoi hasn't confirmed the framework deal. For more, we heard
from Bloomberg News Desk editor Jill Desis. She spoke with
Bloomberg Cherry On and Heidi Strout Watts on the Asia trade.
Speaker 5 (12:02):
Joe, what do we know about sort of the contours
of this steal and what's been agreed even though of
course that hasn't been a confirmation from the Vietnam side.
Speaker 6 (12:11):
Well, yeah, I mean, Heidi, I think first of all,
I just want to point out that we do not
yet have a term sheet from the White House. They
haven't released anything, you know, giving a lot of further
details on there. So really I think there's just two
numbers that I can give you here. First of all,
the deal that Trump is announced would include a twenty
percent tariff on Vietnamese exports to the US, as well
as a forty percent levey on goods deemed to be
(12:32):
transshipped through the country. So what that tells me is
that as part of this steal, there's at least somewhat
of a focus perhaps on goods that you know, maybe
shipped through Vietnam from China for example. That's one thing
that the Trump administration has made very clear as it
continues to negotiate these types of deals, that one thing
it's focused on, particularly in some of these Southeast Asian countries,
(12:53):
is that it really wants to try to figure out
a way to box out China or otherwise, you know,
convince more manufacturers to to move goods that they manufacture
from China to other parts of Southeast Asia, including say Vietnam.
So that's one thing that those numbers perhaps tell me.
But again I do want to caution that we don't
have a term sheet. We don't know exactly what the
(13:13):
Vietnamese are saying about this, still obviously waiting more fulsome
confirmation from Hanoi about what exactly we're expecting with this deal.
But yeah, so it does tell you obviously, you know,
we're approaching that July ninth deadline that Trump has set
for you know, kind of coming up with some deals
to announce to address the reciprocal tariffs they'd announced back
in April. But we're still getting a lot of information
(13:35):
that's you know, still coming out. We'll see what ultimately
is in really kind of the nitty gritty of this
particular deal.
Speaker 1 (13:41):
Jill, Let's talk a little bit about China, because, as
you mentioned, they're trying to box in China despite the
fact that they do have the supposed framework in place
that has cool tensions when it comes to those tariffs.
What are they trying to do in terms of using
O their trading partners and new deals in order to
restrict Chinese content.
Speaker 6 (14:02):
Well, again, Sherry, I think you know, you look at
some of them, you know, the strategy that's actually being
you know, uh com here. I think that you know,
first of all, the idea is really kind of putting
pressure on the US trade partners to restrict trade that
they're doing with China. Obviously, we've seen this happen not
just in this latest round of trade deals, but over
the last several years of the US attitude towards China
(14:23):
has been very much particularly with its biggest allies, saying
you know, are there, are there you know, sanctions or
the restrictions you can put in place in terms of
dealing with uh, you know, in terms of working with
the Chinese technology, Chinese good there's a lot of you know,
obviously this more fulsome effort uh to sort of you know,
prevent China from developing you know, advanced technologies or you know,
(14:44):
working with say, you know, manufacturing parts or you know
parts that you know other uh other you know companies
and other countries might make and sending those to China.
So that's always a big part of this equation. But again,
now you're seeing this kind of play out I think
a little bit in some of these trade deals here. Obviously,
you know, we're still waiting for more on that Vietnam deal,
but that transshipment element of this trade deal again does
(15:08):
lead me to believe that there's a component in there
that's kind of directed toward trying to shut out China.
So again, you know, yes, obviously, as the United States
continues to you know, it's made its own trade deal
with China in the wake of all of this, the
fact that you've got all of these other countries that
are still up in the air in terms of what
their individual agreements look like the United States, you know,
(15:29):
I think does suggest that there is a strategy on
the part of the United States here to try to
you know, unite a lot of these countries and kind
of you know, create deals that you know are obviously
favorable to the United States, but that also maybe I'm
ultimately unfavorable to Beijing, which is.
Speaker 5 (15:43):
Also why we've seen Beijing on this you know, multilateral
trade and diplomatic charm offensive right the FORIGN Minister among
Ease in Europe through to this Sunday over the weekend,
for the high level strategic dialogues with the Eues, he's
really you know, pushing home the point of collaboration and
working together confronting differences as such, there's a lot of
(16:04):
sort of really historic trade and diplomacy ties there. Could
that be a point of strength for Beijing.
Speaker 6 (16:12):
I mean potentially and certainly, yes, I'd imagine that if
you're Wang YIV, you're for the foreign Minister, you're trying
to smooth over things in Europe, particularly ahead of there's
a pretty critical EU China summit that's happening in Beijing
later this month. So I think, you know, a lot
of what he's doing in Europe right now is kind
of paving the way for those further talks that they're
going to have at the end of the month. Yes,
(16:34):
obviously there's a ton of incredibly critical trade that goes
through between the EU and China. You know, we know
that Chinese EV's you know are you know, obviously have
a pretty big presence in Europe. I think, you know,
China is obviously, you know, interested in continuing to develop
some of those types of ties. So yes, obviously, if
you're the if you're Beijing in all of this, you're
(16:57):
trying to strengthen your position as well with all of
the trading partners that you had. I would point out that,
you know, as you know Donald Trump and the Trump administration,
we're trying to develop all of these other trade deals.
Some she jimping himself, the you know, president of China
was going through and trying to you know, foster tie
with you know a lot of you know, trading partners
(17:17):
in Southeast Asia. So this really is a case where
you've got the world's two foremost economic superpowers that are
ultimately trying to strategize and trying to work with you know,
their their individual trading partners. Because these are such important economies,
they do have incredibly strong trading partnerships and relationships, and
you know, they obviously have best of interests in keeping
those you know strong.
Speaker 5 (17:38):
Boom My News desk out to Jode says there with
the lad us on trade.
Speaker 2 (17:43):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
(18:06):
and Australia. I'm Doug Prisoner and this is Bloomberg
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