November 20, 2025 • 16 mins
Japan's inflation ticked up in October, and the BOJ may be on track for a rate hike. Masa Takeda, Portfolio Manager at the Hennessy Japan Fund, discusses how Prime Minister Sanae Takaichi's economic package could address inflation.
Plus, the S&P closed lower with morning gains from Nvidia earnings evaporating. Adam Coons, Chief Investment Officer at Winthrop Capital Management, talks today's trading.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:11):
Welcome to the Daybreak Asia podcast. I'm Doug Krisner. We
begin in Japan, where the inflation rate ticked up in
the month of October. Consumer prices excluding fresh food rose
at a rate of three percent compared to last year.
Now that may keep the Bank of Japan on track
for an interest rate hike in the coming months. And
at the same time, this inflation print comes as newly
(00:33):
installed Prime Minister take Ichi is planning to unveil her
first economic package later today. Now she's already vowed to
address the frustration over persistent increases in the cost of
living for a closer look. Now, I'm joined by Masa Takeda.
He is portfolio manager at the Hennessy Japan Fund. Masa,
thank you so much for making time to chat with me.
Speaker 1 (00:53):
I'd like to.
Speaker 2 (00:54):
Begin with the inflation story Visa VI take Ichi and
whether anything that she rolls out today has the potential
to change the inflation story in Japan.
Speaker 3 (01:04):
Does it in terms of impacting inflation? I think it
still remains to be seen. I think Takoiti is largely
known for thus far more proactive fiscal policy and dubvish
stance on monetor policy. So if anything might be inflationary
(01:25):
side effects, but you know, it'll take time whether that
is going that is going to be the case or not.
Short term, I think I think it's more similar stimilative
to the economy, and I think that's what that has
been to be focused on the market.
Speaker 2 (01:39):
One of the culprits in the inflation story in Japan
has been the weakness of the currency. Right now, the
end is trading against the dollar with a one fifty
seven handle. Yeah, a portion of that weakness could be
addressed through a rate hike from the Bank of Japan.
There's also the possibility here masa of intervention from the
Ministry of Finance direct.
Speaker 3 (02:01):
I mean, the end is has been weak, you know,
for good reason, which is the real interest rate of
Japan is deeply negative, and I think the yen is
pretty much the only currency among major economies with real
negative real interest rate that inevitably it pushes up in
poor prices. Now, whether the central back is going to
(02:24):
hike rates or not, the timing is uncertain. However, I
think it's still on a path towards gradual rate hikes.
I say gradual is because the Bank of Japan has
made some mistakes in the past two thousand and two
thousand and six when they prematurely lifted, you know, the
zero rate policy, and you know, each time the economy
(02:46):
fell into recessions. So I think they're going to, you know,
rather gradually hike rates going forward.
Speaker 2 (02:52):
I'm curious to get your take on this recent spike
intention between Tokyo and Beijing, given the recent comments from
Prime Minister Takei Ichi on the issue of Taiwan, this
is clearly deepening the rift between Japan and China, and
I would think that it carries with it a lot
of severe economic implications, many of which could be substantial.
Speaker 3 (03:14):
Well so, of course at the top level there there
there are tensions right now, but it's not the first time,
and I think, you know, the Japan and China always
managed to work out those frictions. And on a more
micro level, you know, we do see the Chinese consumers
always wanting to buy Japanese products and you know, the
(03:37):
high quality products and the services, not to mention the
inbound tourism. Currently some restrictions that may result in slow down,
but I think eventually, you know, the Chinese consumers will
behave according to you know, what they want, so I'm
not too worried about this short term events.
Speaker 2 (03:57):
It's been a pretty amazing year for the Japanese equity market. Yes,
the NK is down from record highs. Nonetheless, I think
in dollar terms the NK is up by more than
twenty percent. Are you constructive on the Japanese equity market?
Speaker 3 (04:10):
So short term, you know, as you said, the market
has been up quite steadily since the beginning of this year,
and that's that's basically a function of rerating over the
evaluation multiples, and therefore short term, you know, the return
expectations might be more limited for the foreseeable future. However,
(04:31):
I am still very positive on the mid to long
term outlook of Japan, and that's because not just the
improving economic fundamentals, you know, the rising inflation and normalization
interest rates, but I think the most important driving force
is the corporate governance reforms, and it's been going on
for about ten years now, and you know, finally corporate
(04:53):
Japan is embracing the basic principles of Western capitalism. So
the capital efficiency has been improving, and now the last
few years, the main focus was on companies whose share
prices were trading less than one times book, so the
corporate underperformance. But now going forward, the market regulators and
(05:14):
the government are now reviewing the current existing corporate governance
code to deliver stronger message to those that are trading
above one times book because the capital allocation is not
always optimal at those companies as well. So that's the
one key catalyst to watch out for.
Speaker 2 (05:31):
And how are you feeling about the trade relationship between
the US and Japan right now? With higher tariffs and
the impact they represented Japanese exporters.
Speaker 3 (05:41):
Japan had trade deficit with the rest of the world,
but with the US had trades plus, and that was
mainly with carmakers and auto parts suppliers. These companies are
now through internal rationalization, absorb most, if not all, of
the impact from the tariffs. Meanwhile, I think there's also
(06:06):
kind of positive development in terms of foreign direct investment
by Japan into the US. You know, five hundred and
fifty billion dollars you know worth of foreign direct investments
promised by the Japanese government that should take place over
the next I guess four years before Trump leaves the office.
And so there's increasing economic cooperation between the two countries,
(06:31):
and that should benefit some of the Japanese exporters, whether
it's semiconductor, AI or you know others. There are mixed signals,
but I think I'm leaning towards more positive outlook for
these exporters.
Speaker 2 (06:44):
Okay, Massa. Before I let you go, I have to
ask about what your expectations are for the Bank of
Japan when it comes to the December meeting and whether
or not you think the BOJ will hike interest rates.
Speaker 3 (06:57):
Well, so short term, look, my prediction is just as
good as anyone's on the street. But as I said,
I think that Japan is on a on a pathwards
gradual rate highs, and what that means is that the
nominal rates will rise while the real rates will will
(07:18):
like to remain negative or very low at most. That
means the monetary policy overall framework will like or remain accommodative,
and that should favor asset classes like equities. So higher
nominal rates should definitely further improve the fundamentals of financials, banks,
(07:41):
financial services companies, insurance and so on, and in the
broader accommodation and monetored policy should should benefit you know,
the broader market. Also, I think the current economy, current
environment is very favorable.
Speaker 2 (07:55):
Massa will leave it there. Thank you so very much,
Massa de Keta. He is a portfoli olio manager at
the Hennessey Japan Fund. Joining us here on the Daybreak
Asia podcast. Welcome back to the Daybreak Asia Podcast. I'm
Doug Chrisner. We had a dramatic reversal today in the
(08:17):
US equity market. The session began on a big upnote
after those surprisingly strong results from Nvidia and at the
New York Open. Nvidia pop five percent and that led
the S and P to a gain almost immediately of
about one point nine percent. But by midday those gains
began to steadily evaporate, and at the end of the
session the S and P was down by more than
(08:38):
one and a half percent. For a closer look at
the price action, I'm joined by Adam Koons. He is
the co CIO at Winthrop Capital Management. Adam, thank you
for making the time. Let's begin with getting your view
on today's trading, especially that reversal.
Speaker 4 (08:53):
Well, obviously it's a little bit shocking to see almost
a four percent total move and something like that.
Speaker 1 (09:00):
NASDAC for the day.
Speaker 4 (09:01):
And this is really kind of that that exhaustion that
you're feeling in the market, especially heading into year end,
where you cannot forget the fact that the market, like
the S and P five hundred, has been up, you know,
twenty percent for the last three years in a row.
And this is coming off of you know, quite a
volatile springtime when the SMP was down you know, over
(09:24):
ten percent, recovered it really quickly, and then we're off.
Speaker 1 (09:27):
To the races again.
Speaker 4 (09:28):
It seems like everyone just kind of forgets tear OFFFS, inflation,
everything else that's kind of been in the headlines, and
it's worked, but I'm not really surprised that, you know,
you're continuing to see markets start to ask more questions.
And that's really what's happening is, you know, the markets
are starting to think through the AI story, some of
(09:50):
the private credit issues that we're seeing in different pockets
here in the US, and it's just giving investors a
little bit of a you know, more cautious attitude anytime
you see a rally, and that's probably what we're going
to see for the rest of the year, is that
when we see big rallies, we might see just kind
of sell the news type mentality for the rest of
the year.
Speaker 2 (10:08):
Did you hear anything from Nvidia after the bell on
Wednesday that may have justified this type of skittishness on
the AI trade. I thought it was very interesting. We
heard from analyst Kim forrest Over at Boca Capital Partners,
and she was saying the market may have been spooked
a bit by Nvidia's rising net accounts receivables. To quote Kim,
(10:29):
if your chips are flying off the shelves, why aren't
you getting paid for it? Do you think that's a
part of the narrative here when it comes to Nvidia,
that we must take a closer look on what's really
driving revenue and profits for this company.
Speaker 4 (10:41):
Yeah, I mean, I think we've entered that phase of
the market where investors are actually going to start taking
a look and not just taking your word for it.
Like you said, you're seeing account receivable pickup, inventories are
picking up at the same time when management is saying
you're sold out of chips. You know, that raises a
lot of red flags that have already kind of started
to percolate with investors that are trying to understand this
(11:05):
circular nature of kind of the AI stories selling leasing,
and kind of what is really driving revenue?
Speaker 1 (11:13):
Is it just companies selling to themselves? And so yeah,
that is a big That is a big.
Speaker 4 (11:18):
Part of what we saw today, just that you know,
further digestion of how is this really working, who's really
making the money, and who's really going to pay the
price down the road.
Speaker 2 (11:31):
I'm also wondering about the degree to which the FED
is a part of this story. We had some pretty
hawkish FED speak today, we heard from Governor Barr as
well as fedbank presidents schools be and Hammock. And in aggregate,
there seems to be a lot of concern about inflation
in spite of the fact that the labor market continues
to struggle. And I'm wondering Adam is putting greater emphasis
(11:54):
on the inflation story justified.
Speaker 1 (11:56):
In the short term probably, but in the long term no.
Speaker 4 (11:59):
And I think you saw the bomb market eventually come
to grips with that, because by the end of the
US session you had rates start to come down pretty
much across the entire curve. But yes, there was a
period there where some of the FED you know, minutes
were coming out and the thought around that that was
pushing rates up.
Speaker 1 (12:17):
But like I said, by the end.
Speaker 4 (12:18):
Of the day, I think most most investors started to
think through the job's number, the fact that the jobs
market is still I don't want to say weak, but
is fragile, and at the same time just the overall
economy coming into question. So you know, it's going to
be difficult as we start to get numbers that are
a little bit discombobulated with the timing because of.
Speaker 1 (12:41):
The US shutdown.
Speaker 4 (12:43):
What we really saw by the end of the day
was just a pure risk off and less worry about
inflation and more worry about the US economy.
Speaker 2 (12:52):
Speaking of fragility, let's talk a little bit about the
crypto space. The selloff in bitcoin continued. I think we've
been in reach now for more than a month. Today
bitcoin fell below eighty seven thousand for the first time
since April. A number of analysts we're saying crypto is
no longer the canary in the coal mine. It's the
coal mine itself, and it's collapsing under the weight of
(13:13):
its own leverage. I was struck by the fact that,
according to coin Glass, the forced liquidations over the past
twenty four hours totaled eight hundred and forty seven million dollars. Adam,
I'm curious to know how you understand Bitcoin is a
part of this risk off move.
Speaker 4 (13:30):
I see it as a symptom of the cold I
think you've got just a general, like I said, risk
off mentality, and it's being exaggerated because Bitcoin, any crypto
for that matter, is already volatile. You match that with,
like you said, the increased volatility that comes from a
time period where you start to get margin calls, and
(13:51):
so I think that's largely what's you know, kind of
driven the acceleration of the decline, And so as any
investor in the crypto space, I think you've got to
be really careful right now. We need basically see all
of these just all the leverage in this in this space,
at least I want to call it, you know, kind
of the weak leverage. Those that just are are way
over their skis got to let that kind of work
(14:13):
its way out of the market. I don't think this
is the end of the crypto trade by any means.
We're just kind of entering that just higher volatility period
that people.
Speaker 1 (14:23):
Tend to forget when times are good.
Speaker 2 (14:25):
So, given everything that we're talking about I'm curious as
to how you play the market right now. Are you
a little risk averse, are you storing away a little
bit of dry powder? Are you waiting for a further
pullback in risk assets? I mean, what's your strategy right now?
Speaker 1 (14:40):
Obviously where you're coming from matters a lot.
Speaker 4 (14:43):
So in probably the last half of the year, we've
been more defensive generally speaking. So for us, that gives us,
you know, it's difficult when markets are going up and
you're defensive, but we look for times like this because
this has actually been our opportunity to shift more towards neutral.
And that's not a very exciting thing to say, but
(15:05):
when you're coming off of being maybe underweight some certain sectors,
some growth sectors, that sort of thing for us, when
you do have dry powder, when you start to see
these market dislocations, that's actually the time to put money
to work, to put money, you know, to risk a
little bit. Now we're doing it very, very marginally, because
I think there's still probably the higher risk is to
the downside, I'll say that, but we are starting to
(15:28):
kind of rebalance and reallocate towards neutral, which is actually
increasing our allocation to risk right now.
Speaker 1 (15:34):
And I'm happy to do that.
Speaker 4 (15:35):
I'm kind of happy to sit neutral going into year
end because I don't have a high conviction in any
particular large sector heading into your end.
Speaker 2 (15:43):
Okay, Adam, we'll leave it there. Thank you so very much.
Adam Koons is co cio at Win from Capital Management,
joining us here on the Daybreak as your 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 can find us
(16:05):
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 Prisoner and this is Bloomberg
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:11):
Welcome to the Daybreak Asia podcast. I'm Doug Krisner. We
begin in Japan, where the inflation rate ticked up in
the month of October. Consumer prices excluding fresh food rose
at a rate of three percent compared to last year.
Now that may keep the Bank of Japan on track
for an interest rate hike in the coming months. And
at the same time, this inflation print comes as newly
(00:33):
installed Prime Minister take Ichi is planning to unveil her
first economic package later today. Now she's already vowed to
address the frustration over persistent increases in the cost of
living for a closer look. Now, I'm joined by Masa Takeda.
He is portfolio manager at the Hennessy Japan Fund. Masa,
thank you so much for making time to chat with me.
Speaker 1 (00:53):
I'd like to.
Speaker 2 (00:54):
Begin with the inflation story Visa VI take Ichi and
whether anything that she rolls out today has the potential
to change the inflation story in Japan.
Speaker 3 (01:04):
Does it in terms of impacting inflation? I think it
still remains to be seen. I think Takoiti is largely
known for thus far more proactive fiscal policy and dubvish
stance on monetor policy. So if anything might be inflationary
(01:25):
side effects, but you know, it'll take time whether that
is going that is going to be the case or not.
Short term, I think I think it's more similar stimilative
to the economy, and I think that's what that has
been to be focused on the market.
Speaker 2 (01:39):
One of the culprits in the inflation story in Japan
has been the weakness of the currency. Right now, the
end is trading against the dollar with a one fifty
seven handle. Yeah, a portion of that weakness could be
addressed through a rate hike from the Bank of Japan.
There's also the possibility here masa of intervention from the
Ministry of Finance direct.
Speaker 3 (02:01):
I mean, the end is has been weak, you know,
for good reason, which is the real interest rate of
Japan is deeply negative, and I think the yen is
pretty much the only currency among major economies with real
negative real interest rate that inevitably it pushes up in
poor prices. Now, whether the central back is going to
(02:24):
hike rates or not, the timing is uncertain. However, I
think it's still on a path towards gradual rate hikes.
I say gradual is because the Bank of Japan has
made some mistakes in the past two thousand and two
thousand and six when they prematurely lifted, you know, the
zero rate policy, and you know, each time the economy
(02:46):
fell into recessions. So I think they're going to, you know,
rather gradually hike rates going forward.
Speaker 2 (02:52):
I'm curious to get your take on this recent spike
intention between Tokyo and Beijing, given the recent comments from
Prime Minister Takei Ichi on the issue of Taiwan, this
is clearly deepening the rift between Japan and China, and
I would think that it carries with it a lot
of severe economic implications, many of which could be substantial.
Speaker 3 (03:14):
Well so, of course at the top level there there
there are tensions right now, but it's not the first time,
and I think, you know, the Japan and China always
managed to work out those frictions. And on a more
micro level, you know, we do see the Chinese consumers
always wanting to buy Japanese products and you know, the
(03:37):
high quality products and the services, not to mention the
inbound tourism. Currently some restrictions that may result in slow down,
but I think eventually, you know, the Chinese consumers will
behave according to you know, what they want, so I'm
not too worried about this short term events.
Speaker 2 (03:57):
It's been a pretty amazing year for the Japanese equity market. Yes,
the NK is down from record highs. Nonetheless, I think
in dollar terms the NK is up by more than
twenty percent. Are you constructive on the Japanese equity market?
Speaker 3 (04:10):
So short term, you know, as you said, the market
has been up quite steadily since the beginning of this year,
and that's that's basically a function of rerating over the
evaluation multiples, and therefore short term, you know, the return
expectations might be more limited for the foreseeable future. However,
(04:31):
I am still very positive on the mid to long
term outlook of Japan, and that's because not just the
improving economic fundamentals, you know, the rising inflation and normalization
interest rates, but I think the most important driving force
is the corporate governance reforms, and it's been going on
for about ten years now, and you know, finally corporate
(04:53):
Japan is embracing the basic principles of Western capitalism. So
the capital efficiency has been improving, and now the last
few years, the main focus was on companies whose share
prices were trading less than one times book, so the
corporate underperformance. But now going forward, the market regulators and
(05:14):
the government are now reviewing the current existing corporate governance
code to deliver stronger message to those that are trading
above one times book because the capital allocation is not
always optimal at those companies as well. So that's the
one key catalyst to watch out for.
Speaker 2 (05:31):
And how are you feeling about the trade relationship between
the US and Japan right now? With higher tariffs and
the impact they represented Japanese exporters.
Speaker 3 (05:41):
Japan had trade deficit with the rest of the world,
but with the US had trades plus, and that was
mainly with carmakers and auto parts suppliers. These companies are
now through internal rationalization, absorb most, if not all, of
the impact from the tariffs. Meanwhile, I think there's also
(06:06):
kind of positive development in terms of foreign direct investment
by Japan into the US. You know, five hundred and
fifty billion dollars you know worth of foreign direct investments
promised by the Japanese government that should take place over
the next I guess four years before Trump leaves the office.
And so there's increasing economic cooperation between the two countries,
(06:31):
and that should benefit some of the Japanese exporters, whether
it's semiconductor, AI or you know others. There are mixed signals,
but I think I'm leaning towards more positive outlook for
these exporters.
Speaker 2 (06:44):
Okay, Massa. Before I let you go, I have to
ask about what your expectations are for the Bank of
Japan when it comes to the December meeting and whether
or not you think the BOJ will hike interest rates.
Speaker 3 (06:57):
Well, so short term, look, my prediction is just as
good as anyone's on the street. But as I said,
I think that Japan is on a on a pathwards
gradual rate highs, and what that means is that the
nominal rates will rise while the real rates will will
(07:18):
like to remain negative or very low at most. That
means the monetary policy overall framework will like or remain accommodative,
and that should favor asset classes like equities. So higher
nominal rates should definitely further improve the fundamentals of financials, banks,
(07:41):
financial services companies, insurance and so on, and in the
broader accommodation and monetored policy should should benefit you know,
the broader market. Also, I think the current economy, current
environment is very favorable.
Speaker 2 (07:55):
Massa will leave it there. Thank you so very much,
Massa de Keta. He is a portfoli olio manager at
the Hennessey Japan Fund. Joining us here on the Daybreak
Asia podcast. Welcome back to the Daybreak Asia Podcast. I'm
Doug Chrisner. We had a dramatic reversal today in the
(08:17):
US equity market. The session began on a big upnote
after those surprisingly strong results from Nvidia and at the
New York Open. Nvidia pop five percent and that led
the S and P to a gain almost immediately of
about one point nine percent. But by midday those gains
began to steadily evaporate, and at the end of the
session the S and P was down by more than
(08:38):
one and a half percent. For a closer look at
the price action, I'm joined by Adam Koons. He is
the co CIO at Winthrop Capital Management. Adam, thank you
for making the time. Let's begin with getting your view
on today's trading, especially that reversal.
Speaker 4 (08:53):
Well, obviously it's a little bit shocking to see almost
a four percent total move and something like that.
Speaker 1 (09:00):
NASDAC for the day.
Speaker 4 (09:01):
And this is really kind of that that exhaustion that
you're feeling in the market, especially heading into year end,
where you cannot forget the fact that the market, like
the S and P five hundred, has been up, you know,
twenty percent for the last three years in a row.
And this is coming off of you know, quite a
volatile springtime when the SMP was down you know, over
(09:24):
ten percent, recovered it really quickly, and then we're off.
Speaker 1 (09:27):
To the races again.
Speaker 4 (09:28):
It seems like everyone just kind of forgets tear OFFFS, inflation,
everything else that's kind of been in the headlines, and
it's worked, but I'm not really surprised that, you know,
you're continuing to see markets start to ask more questions.
And that's really what's happening is, you know, the markets
are starting to think through the AI story, some of
(09:50):
the private credit issues that we're seeing in different pockets
here in the US, and it's just giving investors a
little bit of a you know, more cautious attitude anytime
you see a rally, and that's probably what we're going
to see for the rest of the year, is that
when we see big rallies, we might see just kind
of sell the news type mentality for the rest of
the year.
Speaker 2 (10:08):
Did you hear anything from Nvidia after the bell on
Wednesday that may have justified this type of skittishness on
the AI trade. I thought it was very interesting. We
heard from analyst Kim forrest Over at Boca Capital Partners,
and she was saying the market may have been spooked
a bit by Nvidia's rising net accounts receivables. To quote Kim,
(10:29):
if your chips are flying off the shelves, why aren't
you getting paid for it? Do you think that's a
part of the narrative here when it comes to Nvidia,
that we must take a closer look on what's really
driving revenue and profits for this company.
Speaker 4 (10:41):
Yeah, I mean, I think we've entered that phase of
the market where investors are actually going to start taking
a look and not just taking your word for it.
Like you said, you're seeing account receivable pickup, inventories are
picking up at the same time when management is saying
you're sold out of chips. You know, that raises a
lot of red flags that have already kind of started
to percolate with investors that are trying to understand this
(11:05):
circular nature of kind of the AI stories selling leasing,
and kind of what is really driving revenue?
Speaker 1 (11:13):
Is it just companies selling to themselves? And so yeah,
that is a big That is a big.
Speaker 4 (11:18):
Part of what we saw today, just that you know,
further digestion of how is this really working, who's really
making the money, and who's really going to pay the
price down the road.
Speaker 2 (11:31):
I'm also wondering about the degree to which the FED
is a part of this story. We had some pretty
hawkish FED speak today, we heard from Governor Barr as
well as fedbank presidents schools be and Hammock. And in aggregate,
there seems to be a lot of concern about inflation
in spite of the fact that the labor market continues
to struggle. And I'm wondering Adam is putting greater emphasis
(11:54):
on the inflation story justified.
Speaker 1 (11:56):
In the short term probably, but in the long term no.
Speaker 4 (11:59):
And I think you saw the bomb market eventually come
to grips with that, because by the end of the
US session you had rates start to come down pretty
much across the entire curve. But yes, there was a
period there where some of the FED you know, minutes
were coming out and the thought around that that was
pushing rates up.
Speaker 1 (12:17):
But like I said, by the end.
Speaker 4 (12:18):
Of the day, I think most most investors started to
think through the job's number, the fact that the jobs
market is still I don't want to say weak, but
is fragile, and at the same time just the overall
economy coming into question. So you know, it's going to
be difficult as we start to get numbers that are
a little bit discombobulated with the timing because of.
Speaker 1 (12:41):
The US shutdown.
Speaker 4 (12:43):
What we really saw by the end of the day
was just a pure risk off and less worry about
inflation and more worry about the US economy.
Speaker 2 (12:52):
Speaking of fragility, let's talk a little bit about the
crypto space. The selloff in bitcoin continued. I think we've
been in reach now for more than a month. Today
bitcoin fell below eighty seven thousand for the first time
since April. A number of analysts we're saying crypto is
no longer the canary in the coal mine. It's the
coal mine itself, and it's collapsing under the weight of
(13:13):
its own leverage. I was struck by the fact that,
according to coin Glass, the forced liquidations over the past
twenty four hours totaled eight hundred and forty seven million dollars. Adam,
I'm curious to know how you understand Bitcoin is a
part of this risk off move.
Speaker 4 (13:30):
I see it as a symptom of the cold I
think you've got just a general, like I said, risk
off mentality, and it's being exaggerated because Bitcoin, any crypto
for that matter, is already volatile. You match that with,
like you said, the increased volatility that comes from a
time period where you start to get margin calls, and
(13:51):
so I think that's largely what's you know, kind of
driven the acceleration of the decline, And so as any
investor in the crypto space, I think you've got to
be really careful right now. We need basically see all
of these just all the leverage in this in this space,
at least I want to call it, you know, kind
of the weak leverage. Those that just are are way
over their skis got to let that kind of work
(14:13):
its way out of the market. I don't think this
is the end of the crypto trade by any means.
We're just kind of entering that just higher volatility period
that people.
Speaker 1 (14:23):
Tend to forget when times are good.
Speaker 2 (14:25):
So, given everything that we're talking about I'm curious as
to how you play the market right now. Are you
a little risk averse, are you storing away a little
bit of dry powder? Are you waiting for a further
pullback in risk assets? I mean, what's your strategy right now?
Speaker 1 (14:40):
Obviously where you're coming from matters a lot.
Speaker 4 (14:43):
So in probably the last half of the year, we've
been more defensive generally speaking. So for us, that gives us,
you know, it's difficult when markets are going up and
you're defensive, but we look for times like this because
this has actually been our opportunity to shift more towards neutral.
And that's not a very exciting thing to say, but
(15:05):
when you're coming off of being maybe underweight some certain sectors,
some growth sectors, that sort of thing for us, when
you do have dry powder, when you start to see
these market dislocations, that's actually the time to put money
to work, to put money, you know, to risk a
little bit. Now we're doing it very, very marginally, because
I think there's still probably the higher risk is to
the downside, I'll say that, but we are starting to
(15:28):
kind of rebalance and reallocate towards neutral, which is actually
increasing our allocation to risk right now.
Speaker 1 (15:34):
And I'm happy to do that.
Speaker 4 (15:35):
I'm kind of happy to sit neutral going into year
end because I don't have a high conviction in any
particular large sector heading into your end.
Speaker 2 (15:43):
Okay, Adam, we'll leave it there. Thank you so very much.
Adam Koons is co cio at Win from Capital Management,
joining us here on the Daybreak as your 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 can find us
(16:05):
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 Prisoner and this is Bloomberg
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