August 17, 2025 • 20 mins
In Japan, a stronger yen is set to emerge from this week’s gathering of central bankers in Jackson Hole after verbal intervention last week from US Treasury Secretary Scott Bessent gave the currency traction amid what is widely expected to be a dovish period for the US dollar. Governor Ueda has so far balked at preparing markets for another BOJ hike, wary of political blowback at home. But with the US Treasury Secretary now cast as the external foil, there’s still a month to prime investors for a live September meeting. For more, we speak to Bloomberg's Paul Dobson, Executive Editor for Asia Markets.
Plus - Investors will be looking to Fed Chair Jerome Powell’s remarks at Jackson Hole for confirmation that US rate cuts are coming sooner rather than later. A September move is nearly fully priced, and looser US financial conditions have been a key driver of gains for risk assets across the globe. The suspense ahead of this week’s gathering will likely keep investors cautious. We heard from Skyler Weinand, Founder and Chief Investment Officer at Regan Capital.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Daybreak
Asia podcast. I'm Doug Krisner. So the Fed's Economic Policy
Symposium in Jackson Hole, Wyoming will be taking center stage
this week, especially the keynote speech from FED shared Jay
(00:23):
Powell that will happen Friday morning. I think it's fair
to say that markets seem confident that a weakening job
market has opened the door for a more dubvish tone
from Powell. In a moment, will preview his address with
Skyler weinand he is the CIO at Reagan Capital. Now
for markets in Asia, a key question is how the
Japanese he in may react to what we hear this
(00:44):
week from Jackson Hole. To help us understand where we
may go in the week ahead. Paul Dobson joins us.
Paul is executive editor for Asia Markets. Paul joins us
from our studios in Singapore. Paul, thank you so much.
So right now I'm looking at a little bit of
weakness in the ear, but there's no mistaking the fact
that the Japanese secuity market is at record highs. What
(01:05):
is the bet right now, Paul, that the market is
making on the direction of the end this week.
Speaker 2 (01:12):
Yeah, hi there, Doug. As you said, there'll be a
lot of attention on the Jackson Hole right at the
end of the week, but the market will be getting
ready for that, and the assumption is that Powell will
open the door for the Fed to begin cutting interest
rates again in September. The market is pricing a couple
of cuts from the Fed by the end of the year,
maybe a little bit more as well. Meanwhile, the Bank
(01:33):
of Japan is supposed to be moving in the opposite direction.
It's supposed to be getting ready to raise interest rates again.
That's what the market's expecting, and it's sort of been
bringing forwards those estimations just a little bit. Some of
the political uncertainty that's been dock in Japan seems to
be clearing, and that opens opens the door for the
BOJA to get another high kin while they can. So
(01:55):
with the two central banks moving and opposite directions, the
difference in interest rates between the two nations should be
narrowing and that should be supportive for the en all
things considered. So market will be looking for any indications
on either side that this is becoming a more lately
scenario and will be very much trading the en off
(02:16):
the back of that.
Speaker 1 (02:17):
So we know that inflation in Japan is above target,
and last week we had that very very strong GDP report.
Is it the market to you right now that the
BOJ may hike as soon as October?
Speaker 2 (02:29):
I think that that's definitely a possibility that the market
is looking at. As you said, the GDP numbers were really,
you know, kind of a lot better than the market
had anticipated, and that did give the stocks a real
rocket boost as well, and it definitely raised those expectations
for what the BOJ will do. And BOJ you know,
(02:50):
is very very cautious still. It doesn't want to move
so fast that it slows down the economy. It doesn't
want to sort of crush inflation. But inflation has been
running pretty high in Japan for quite a sustained period
of time now, and that's pretty unpopular with the population
as a whole. So about time maybe for the central
bank to feel confident in being able to raise interest
(03:14):
rates again. I think what's really interesting about that GDP
figure is it gives the Prime minister it should be
a little bit more breathing room. He can say, hey,
things aren't as bad as everybody's been saying in the economy,
so maybe that gives him a little bit more confidence
to stay in position, and that political certainty can give
the Central Bank in turn a little bit more certainty
(03:35):
and confidence in moving ahead too.
Speaker 1 (03:37):
Let's change gears, because at the end of last week,
as you know, we had that weak data coming out
of China industrial production, retail sales, both numbers below forecast,
and more evidence that home prices in China are continuing
to decline. What is the government going to do in
a situation like this.
Speaker 2 (03:54):
The government has been cautiously adding to stimulus for quite
a while now, making reforms, adding some extra social benefits,
those kinds of things. And we had a report last
week as well that it's looking for extra ways to
try to mop up some of the unsold inventory and
the property market as well to try to stabilize prices there.
(04:17):
It's also pushing ahead with these anti involution measures, trying
to prevent the cutthroat competition among Chinese companies from getting
too damaging for each other and for the economy as well,
to try to bring forward some further benefits and to
continue to stimulate the consumer as well. I feel like
(04:37):
although those data overall were bad and were worse than
what the analyst said been forecasting. Nonetheless, it comes off
that very strong first half of the year where there
was a lot of front loading in terms of exports.
China is still running towards meeting its growth target of
around about five percent for the full year, so the
(04:58):
government won't feel obliged to go extremely hard with any stimulus. Nonetheless,
the market is starting to expect that at some point,
along with continued support in terms of those social measures,
we may get the PBOC acting again at some point
just to keep the economy ticking over, maybe with a
(05:18):
cut in the chip l R rate, or continuing to
keep injections into the money markets and keep liquidity loose.
Speaker 1 (05:25):
So let's talk a little bit about the trade war
with the US and the extent to which exports continue
to hold up reasonably well. We know that there is
a trade truth that is in effect. Now to what
extent is China really working aggressively to diversify itself away
from such dependency on the American market and look at
(05:46):
other jurisdictions, maybe in APAC or other parts of the world,
so that the economy on the export side is not
so reliant on the US.
Speaker 2 (05:56):
Yeah, well, that's definitely going on in the background. I
think China is the deal scenario, is finding some sort
of a truce with Trump where it can keep those
tariffs to a reasonable rate and therefore continue to explore
to the US. But for several years already China has
been looking at opening up new markets and strengthening relationships.
We've seen quite a lot of movement with India. At
(06:18):
the moment, of course, India also under Trump scrutiny and
suddenly sort of sort of having a think about pivoting too,
So there is that. I mean, my view overall though
of China's markets is not negative or bearish at the moment,
quite the opposite. The stock market seems to have been
surviving and weathering the storm from the negative data that
(06:40):
we saw at the end of last week, from all
of this pressure on the trade side as well. And
you know, we have the Shanghai composite at the highest
level since twenty twenty one. It wouldn't take very much
further for it to go to something like a twenty
year sorry, a ten year high, just coming down from
when the last big bubble bursts. So there is pretty
(07:01):
decent momentum on the mainlandages and a little bit more
interest in buying equities in China At the moment, there's
a couple of good growth stories, right there's the AI
deeps Seek revolution, but also the Chinese biotech companies have
really been on a strong tear this year, and the
electric vehicles as well. So lots of technological kind of
(07:23):
support there for the market overall.
Speaker 1 (07:26):
So is China getting what it needs from the Trump
administration to support that continued advancement within AI. I mean,
certainly when it comes to advanced semiconductors, maybe not the
most sophisticated, but that H twenty I think from Nvidia
is necessary, particularly in terms of training various models in AI.
Speaker 2 (07:46):
Right, it seems like it. But at the same time,
China doesn't want to become the same the US doesn't
want China to become used to using US manufacture chips.
China doesn't really want to become dependent on those either.
It would prefer to see the homegrown models coming from
and you know, so there's a little bit of a
delicate balance there. We've been reporting that there's been some
discouraging from going too far with H two o chip
(08:09):
technology noneth US. Having access to those is definitely a
benefit to the Chinese companies as they try to develop
more sophisticated models as well. It feels like China is
doing fine on that front, and probably, you know, visit
a relative to the US if you look at the
energy supply sector and how that matters for the data
(08:30):
centers for the AI industry. Overall, China is certainly, you know,
in a more favorable position, having easier planning rules, having
added a lot of renewable energy capacity recently, and being
able to sort of feed and power those big data centers,
whereas in the US we feel that maybe the eligacy
supply market is getting a little bit tighter as the
(08:50):
demand ramps up for those data centers.
Speaker 1 (08:53):
So we mentioned Jackson Hall, Wyoming and the FED symposium
a moment ago, and I'm wondering about the important and
the key things that you're going to be looking for
in the week ahead, particularly within Asia.
Speaker 2 (09:06):
The key things to look for in the week ahead
from Asia. So, first of all, at the end of
last week, we had a bunch of different budget announcements
from all around the region, some projections of death issuents
for next year. Some spending plans as well in Thailand,
in Singapore, and then in Indonesia and in India in particular,
and India was pretty interesting. The Modi administration announced tax
(09:29):
cuts and quite a lot of fiscal stimulus as well.
So we'll be looking to see how that impacts the
equity market, whether it can turn it around from a
little bit of pressure that it's been under recently. I
think overall, you know, the market just continues to scale
new heights in all sorts of different markets and jurisdictions
at the moment, and we'll be looking to see how
long that positive vibe in the stock space can continue.
(09:51):
It will to a certain extent even for us matter
what the FED and what Pale says at Jackson Hole.
That of course comes right at the end of the
week for Asia and the sort of next week. But
we'll be reacting to that in g course as well.
Speaker 1 (10:05):
All right, Paul, we'll leave it there. It's always a pleasure.
Thank you so much, Paul Dobson, Executive editor for Asia.
Markets joining from Singapore here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm Doug Chrisner.
(10:27):
Markets are bracing for the Fed's Economic Policy Symposium this week.
It'll take place in Jackson Hole, Wyoming, and on Friday,
we'll have the keynote address from Fed Shared J. Powell.
This at a time when there is certainly fair amount
of political pressure on the FED to cut interest rates.
Markets right now seem confident that a weakening job market
(10:47):
has opened the door for a more dubvish tone from
the chairman. Joining us now for a look at what
we may here is Skyler winand he is the CIO
at Reagan Capital. Skyler, thank you so much for making
time to chat with me. What do you think we're
going to hear from Powell this week?
Speaker 3 (11:03):
They're delving into employment and that's what they're meeting about.
I expect the speech to revolve around employment specifically and
what we're seeing, which is a little bit of deterioration
and employment numbers, and specifically for newer entrance to the
(11:28):
job market. Did you know that over eleven percent of
males from twenty to twenty four are currently unemployed that
have college degrees, and so they're getting really worried about that.
But also, you know, inflation is ticking up as well,
so they have this dual mandate, but they're going to
(11:48):
show They're going to show their cards this week. I
think that employment is a much bigger concern for them
than runaway inflation.
Speaker 1 (11:56):
So inflation is picking up, we learned last week. That's
particularly the case to the wholesale level. Seems to be
terror related. But let's go back to the labor market
and try to get a sense of what's happening under
the surface. And I'm wondering whether or not tariff policy
is a part of that story, and maybe to a
lesser extent, artificial intelligence. Are those forces very much at
(12:17):
work right now.
Speaker 3 (12:19):
They're huge, and we're just starting to see the start
of that. And so if you take STEM education, engineers,
computer scientists, programmers, a lot of those jobs are going
to be done away by AI, okay. And then when
(12:41):
you take immigration policy, that's where the big holes are,
which is manual labor. And so for the first time
in recorded history, college graduates have a harder time of
finding a job right now than high school and that's
indicative of what we're seeing, and we're only starting to
(13:04):
see the start of it, which is a huge gap,
a huge need for skilled and unskilled manual labor, whereas
the jobs that STEM graduates were employed in, those aren't
going to be necessary in maths over the next ten years.
Speaker 1 (13:24):
So I'm wondering whether or not lower interest rates can
help address the issue, or whether or not we have
to rethink the labor market in such a way to
perhaps put less emphasis on easier monetary policy as a
remedy when things start to weaken.
Speaker 3 (13:39):
Yeah, I mean that, And they'll say this, and Jerome
Powell say this, interest rates are a blunt tool. They
are a hammer, when what we really need right now
is a you know, a Swiss Army Knight to fix
these issues. So you know it's a blunt tool. But
you have the administration right now that is absolutely coming
(14:02):
down on the FED and specifically the FED share. And
you have this this little wrinkle, which is, you know,
three or four of the current FED governors and folks
that are sitting on the FED want to be FED share,
and so you know, they're starting to let that creep
into their speak and how they're going to vote. And
(14:24):
you're seeing them speak and you're seeing them potentially voting,
you know, potentially against their will and against the economic
will of what they should be doing, which is potentially
raising interest rates.
Speaker 1 (14:33):
Where are you right now in understanding the degree of
leverage in markets? I mean the S and P right
now is not there far below a record high. I
think we had a record midweek last week. Are you
seeing evidence that there is a great deal of leverage
in the system right now when.
Speaker 3 (14:48):
It comes to leverage and whether we're we're hitting potentially
you know, peak stock market valuations, Yes, that's true. You know,
we're looking down, depending on what measure you want to
look at, you know, between twenty two and twenty four
PE on the S and P, and so you know,
(15:09):
it's starting to get folks a little bit nervous. But
also earnings are catching up to that, and that's what's
bringing that PE ratio down. So yeah, you do get
a little bit nervous about these these daily options zero
data layoffs, and you know by the dip means stocks,
et cetera. The market is getting a little heady here,
(15:31):
But I don't think that's necessarily caused for concern given
the amount of dry powder that's on the sidelines.
Speaker 1 (15:38):
So we had that retail sales report last week. The
control group number, which obviously is used to calculate GDP
was much stronger than forecast. Is that evidence that the
American consumer, in spite of everything that we're talking about
with higher rates, is that evidence that the American consumer
is holding up pretty.
Speaker 3 (15:57):
Well in a good Yes, the American consumer is doing great.
Tons of home equity, tons of built up cash in
the stock market. You have this gigantic wealth effect. You know,
from April first Liberation Day until today, we tropped at
a stock market evaluation of about fifty two trillion, and
(16:20):
today we stand at around sixty seven trillion. So you
have fifteen trillion dollars in wealth that's been added over
the last roughly four months. That's going to put a
wind at in the sales of the American consumer until
it doesn't.
Speaker 2 (16:36):
Right.
Speaker 3 (16:37):
And so whether that wealth effects coming from the stock
market or US real estate and or you know, folks
doubling down on stocks returning another ten percent over the
next four or five months here, who knows. But I
see little cost for concern really when it comes to
(16:57):
the health of the consumer. Now, you know, America is
very bipercated, right, and so you know, and that's who
inflation and tariffs are really going to affect tariffs and
inflation are a regressive tax. They are going to hurt
main Street the most, and so that's that's the cost
for concern obviously, But in aggregate, the consumer is doing
(17:19):
great well.
Speaker 1 (17:20):
At the same time, we learned at the end of
last week from the University of Michigan that consumer expectations
for inflation picked up a bit. And I think, to
go back to where we started the conversation with the FED,
that's got to be pretty concerning.
Speaker 3 (17:34):
Yeah, no doubt. And I saw, you know, a study
done this past week where you know, the way that
they're measuring inflation has changed dramatically since the eighties. If
we were to measure inflation like we did in the eighties,
inflation would appeaked at roughly twenty percent a couple of
years ago. And the way that they changed it primarily
(17:58):
was using owner equivalents versus true housing costs. Okay, so
by using the owner's equivalence rents versus what people actually
pay every month oe R is just an estimate. Inflation
is much much worse than what the numbers are telling us,
and that's what it's being reflected in those consumer surveys.
Speaker 1 (18:20):
Skyler is speaking of the consumer. Before I let you go,
I got to get your take on Walmart and Target
the old report earnings in the week ahead. Are we
going to get decent numbers here or is there going
to be some evidence that margins are under pressure? And
maybe that again is a tariff story, even with the
front running that some of these companies were involved with.
Speaker 3 (18:39):
Yeah, Walmart's already said that tariffs are causing some ripples,
uh in their margins. That's for sure. Now, if you
look at those two as a paris trade, I'm definitely
going to pick Walmart here. H. Targets had some real
issues on a number of different issues they have. They
have trouble getting people and to the store. H. They've
(19:02):
had some bad campaigns over the last three or four years.
They they just got their people back into the office
I think three days a week most recently, you know,
you know, up until recently, Targets employees, I think they
only worked in the office once a quarter. That's at
corporate headquarters. But yeah, it's I would definitely be picking
(19:22):
lower cost retailers like a Walmart, like a TJ Max
or rosstores over a Target over h you know, higher
cost items.
Speaker 1 (19:33):
Skyler will leave it there. Thank you so very much
for making time to chat with me as Skyler Wine
and he is the CIO at Reagan Capital on the
line from Dallas, Texas. Here on the Daybreak Asia Podcast.
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
(19:57):
can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
and Australia. I'm Doug Prisoner and this is Bloomberg
Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Daybreak
Asia podcast. I'm Doug Krisner. So the Fed's Economic Policy
Symposium in Jackson Hole, Wyoming will be taking center stage
this week, especially the keynote speech from FED shared Jay
(00:23):
Powell that will happen Friday morning. I think it's fair
to say that markets seem confident that a weakening job
market has opened the door for a more dubvish tone
from Powell. In a moment, will preview his address with
Skyler weinand he is the CIO at Reagan Capital. Now
for markets in Asia, a key question is how the
Japanese he in may react to what we hear this
(00:44):
week from Jackson Hole. To help us understand where we
may go in the week ahead. Paul Dobson joins us.
Paul is executive editor for Asia Markets. Paul joins us
from our studios in Singapore. Paul, thank you so much.
So right now I'm looking at a little bit of
weakness in the ear, but there's no mistaking the fact
that the Japanese secuity market is at record highs. What
(01:05):
is the bet right now, Paul, that the market is
making on the direction of the end this week.
Speaker 2 (01:12):
Yeah, hi there, Doug. As you said, there'll be a
lot of attention on the Jackson Hole right at the
end of the week, but the market will be getting
ready for that, and the assumption is that Powell will
open the door for the Fed to begin cutting interest
rates again in September. The market is pricing a couple
of cuts from the Fed by the end of the year,
maybe a little bit more as well. Meanwhile, the Bank
(01:33):
of Japan is supposed to be moving in the opposite direction.
It's supposed to be getting ready to raise interest rates again.
That's what the market's expecting, and it's sort of been
bringing forwards those estimations just a little bit. Some of
the political uncertainty that's been dock in Japan seems to
be clearing, and that opens opens the door for the
BOJA to get another high kin while they can. So
(01:55):
with the two central banks moving and opposite directions, the
difference in interest rates between the two nations should be
narrowing and that should be supportive for the en all
things considered. So market will be looking for any indications
on either side that this is becoming a more lately
scenario and will be very much trading the en off
(02:16):
the back of that.
Speaker 1 (02:17):
So we know that inflation in Japan is above target,
and last week we had that very very strong GDP report.
Is it the market to you right now that the
BOJ may hike as soon as October?
Speaker 2 (02:29):
I think that that's definitely a possibility that the market
is looking at. As you said, the GDP numbers were really,
you know, kind of a lot better than the market
had anticipated, and that did give the stocks a real
rocket boost as well, and it definitely raised those expectations
for what the BOJ will do. And BOJ you know,
(02:50):
is very very cautious still. It doesn't want to move
so fast that it slows down the economy. It doesn't
want to sort of crush inflation. But inflation has been
running pretty high in Japan for quite a sustained period
of time now, and that's pretty unpopular with the population
as a whole. So about time maybe for the central
bank to feel confident in being able to raise interest
(03:14):
rates again. I think what's really interesting about that GDP
figure is it gives the Prime minister it should be
a little bit more breathing room. He can say, hey,
things aren't as bad as everybody's been saying in the economy,
so maybe that gives him a little bit more confidence
to stay in position, and that political certainty can give
the Central Bank in turn a little bit more certainty
(03:35):
and confidence in moving ahead too.
Speaker 1 (03:37):
Let's change gears, because at the end of last week,
as you know, we had that weak data coming out
of China industrial production, retail sales, both numbers below forecast,
and more evidence that home prices in China are continuing
to decline. What is the government going to do in
a situation like this.
Speaker 2 (03:54):
The government has been cautiously adding to stimulus for quite
a while now, making reforms, adding some extra social benefits,
those kinds of things. And we had a report last
week as well that it's looking for extra ways to
try to mop up some of the unsold inventory and
the property market as well to try to stabilize prices there.
(04:17):
It's also pushing ahead with these anti involution measures, trying
to prevent the cutthroat competition among Chinese companies from getting
too damaging for each other and for the economy as well,
to try to bring forward some further benefits and to
continue to stimulate the consumer as well. I feel like
(04:37):
although those data overall were bad and were worse than
what the analyst said been forecasting. Nonetheless, it comes off
that very strong first half of the year where there
was a lot of front loading in terms of exports.
China is still running towards meeting its growth target of
around about five percent for the full year, so the
(04:58):
government won't feel obliged to go extremely hard with any stimulus. Nonetheless,
the market is starting to expect that at some point,
along with continued support in terms of those social measures,
we may get the PBOC acting again at some point
just to keep the economy ticking over, maybe with a
(05:18):
cut in the chip l R rate, or continuing to
keep injections into the money markets and keep liquidity loose.
Speaker 1 (05:25):
So let's talk a little bit about the trade war
with the US and the extent to which exports continue
to hold up reasonably well. We know that there is
a trade truth that is in effect. Now to what
extent is China really working aggressively to diversify itself away
from such dependency on the American market and look at
(05:46):
other jurisdictions, maybe in APAC or other parts of the world,
so that the economy on the export side is not
so reliant on the US.
Speaker 2 (05:56):
Yeah, well, that's definitely going on in the background. I
think China is the deal scenario, is finding some sort
of a truce with Trump where it can keep those
tariffs to a reasonable rate and therefore continue to explore
to the US. But for several years already China has
been looking at opening up new markets and strengthening relationships.
We've seen quite a lot of movement with India. At
(06:18):
the moment, of course, India also under Trump scrutiny and
suddenly sort of sort of having a think about pivoting too,
So there is that. I mean, my view overall though
of China's markets is not negative or bearish at the moment,
quite the opposite. The stock market seems to have been
surviving and weathering the storm from the negative data that
(06:40):
we saw at the end of last week, from all
of this pressure on the trade side as well. And
you know, we have the Shanghai composite at the highest
level since twenty twenty one. It wouldn't take very much
further for it to go to something like a twenty
year sorry, a ten year high, just coming down from
when the last big bubble bursts. So there is pretty
(07:01):
decent momentum on the mainlandages and a little bit more
interest in buying equities in China At the moment, there's
a couple of good growth stories, right there's the AI
deeps Seek revolution, but also the Chinese biotech companies have
really been on a strong tear this year, and the
electric vehicles as well. So lots of technological kind of
(07:23):
support there for the market overall.
Speaker 1 (07:26):
So is China getting what it needs from the Trump
administration to support that continued advancement within AI. I mean,
certainly when it comes to advanced semiconductors, maybe not the
most sophisticated, but that H twenty I think from Nvidia
is necessary, particularly in terms of training various models in AI.
Speaker 2 (07:46):
Right, it seems like it. But at the same time,
China doesn't want to become the same the US doesn't
want China to become used to using US manufacture chips.
China doesn't really want to become dependent on those either.
It would prefer to see the homegrown models coming from
and you know, so there's a little bit of a
delicate balance there. We've been reporting that there's been some
discouraging from going too far with H two o chip
(08:09):
technology noneth US. Having access to those is definitely a
benefit to the Chinese companies as they try to develop
more sophisticated models as well. It feels like China is
doing fine on that front, and probably, you know, visit
a relative to the US if you look at the
energy supply sector and how that matters for the data
(08:30):
centers for the AI industry. Overall, China is certainly, you know,
in a more favorable position, having easier planning rules, having
added a lot of renewable energy capacity recently, and being
able to sort of feed and power those big data centers,
whereas in the US we feel that maybe the eligacy
supply market is getting a little bit tighter as the
(08:50):
demand ramps up for those data centers.
Speaker 1 (08:53):
So we mentioned Jackson Hall, Wyoming and the FED symposium
a moment ago, and I'm wondering about the important and
the key things that you're going to be looking for
in the week ahead, particularly within Asia.
Speaker 2 (09:06):
The key things to look for in the week ahead
from Asia. So, first of all, at the end of
last week, we had a bunch of different budget announcements
from all around the region, some projections of death issuents
for next year. Some spending plans as well in Thailand,
in Singapore, and then in Indonesia and in India in particular,
and India was pretty interesting. The Modi administration announced tax
(09:29):
cuts and quite a lot of fiscal stimulus as well.
So we'll be looking to see how that impacts the
equity market, whether it can turn it around from a
little bit of pressure that it's been under recently. I
think overall, you know, the market just continues to scale
new heights in all sorts of different markets and jurisdictions
at the moment, and we'll be looking to see how
long that positive vibe in the stock space can continue.
(09:51):
It will to a certain extent even for us matter
what the FED and what Pale says at Jackson Hole.
That of course comes right at the end of the
week for Asia and the sort of next week. But
we'll be reacting to that in g course as well.
Speaker 1 (10:05):
All right, Paul, we'll leave it there. It's always a pleasure.
Thank you so much, Paul Dobson, Executive editor for Asia.
Markets joining from Singapore here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm Doug Chrisner.
(10:27):
Markets are bracing for the Fed's Economic Policy Symposium this week.
It'll take place in Jackson Hole, Wyoming, and on Friday,
we'll have the keynote address from Fed Shared J. Powell.
This at a time when there is certainly fair amount
of political pressure on the FED to cut interest rates.
Markets right now seem confident that a weakening job market
(10:47):
has opened the door for a more dubvish tone from
the chairman. Joining us now for a look at what
we may here is Skyler winand he is the CIO
at Reagan Capital. Skyler, thank you so much for making
time to chat with me. What do you think we're
going to hear from Powell this week?
Speaker 3 (11:03):
They're delving into employment and that's what they're meeting about.
I expect the speech to revolve around employment specifically and
what we're seeing, which is a little bit of deterioration
and employment numbers, and specifically for newer entrance to the
(11:28):
job market. Did you know that over eleven percent of
males from twenty to twenty four are currently unemployed that
have college degrees, and so they're getting really worried about that.
But also, you know, inflation is ticking up as well,
so they have this dual mandate, but they're going to
(11:48):
show They're going to show their cards this week. I
think that employment is a much bigger concern for them
than runaway inflation.
Speaker 1 (11:56):
So inflation is picking up, we learned last week. That's
particularly the case to the wholesale level. Seems to be
terror related. But let's go back to the labor market
and try to get a sense of what's happening under
the surface. And I'm wondering whether or not tariff policy
is a part of that story, and maybe to a
lesser extent, artificial intelligence. Are those forces very much at
(12:17):
work right now.
Speaker 3 (12:19):
They're huge, and we're just starting to see the start
of that. And so if you take STEM education, engineers,
computer scientists, programmers, a lot of those jobs are going
to be done away by AI, okay. And then when
(12:41):
you take immigration policy, that's where the big holes are,
which is manual labor. And so for the first time
in recorded history, college graduates have a harder time of
finding a job right now than high school and that's
indicative of what we're seeing, and we're only starting to
(13:04):
see the start of it, which is a huge gap,
a huge need for skilled and unskilled manual labor, whereas
the jobs that STEM graduates were employed in, those aren't
going to be necessary in maths over the next ten years.
Speaker 1 (13:24):
So I'm wondering whether or not lower interest rates can
help address the issue, or whether or not we have
to rethink the labor market in such a way to
perhaps put less emphasis on easier monetary policy as a
remedy when things start to weaken.
Speaker 3 (13:39):
Yeah, I mean that, And they'll say this, and Jerome
Powell say this, interest rates are a blunt tool. They
are a hammer, when what we really need right now
is a you know, a Swiss Army Knight to fix
these issues. So you know it's a blunt tool. But
you have the administration right now that is absolutely coming
(14:02):
down on the FED and specifically the FED share. And
you have this this little wrinkle, which is, you know,
three or four of the current FED governors and folks
that are sitting on the FED want to be FED share,
and so you know, they're starting to let that creep
into their speak and how they're going to vote. And
(14:24):
you're seeing them speak and you're seeing them potentially voting,
you know, potentially against their will and against the economic
will of what they should be doing, which is potentially
raising interest rates.
Speaker 1 (14:33):
Where are you right now in understanding the degree of
leverage in markets? I mean the S and P right
now is not there far below a record high. I
think we had a record midweek last week. Are you
seeing evidence that there is a great deal of leverage
in the system right now when.
Speaker 3 (14:48):
It comes to leverage and whether we're we're hitting potentially
you know, peak stock market valuations, Yes, that's true. You know,
we're looking down, depending on what measure you want to
look at, you know, between twenty two and twenty four
PE on the S and P, and so you know,
(15:09):
it's starting to get folks a little bit nervous. But
also earnings are catching up to that, and that's what's
bringing that PE ratio down. So yeah, you do get
a little bit nervous about these these daily options zero
data layoffs, and you know by the dip means stocks,
et cetera. The market is getting a little heady here,
(15:31):
But I don't think that's necessarily caused for concern given
the amount of dry powder that's on the sidelines.
Speaker 1 (15:38):
So we had that retail sales report last week. The
control group number, which obviously is used to calculate GDP
was much stronger than forecast. Is that evidence that the
American consumer, in spite of everything that we're talking about
with higher rates, is that evidence that the American consumer
is holding up pretty.
Speaker 3 (15:57):
Well in a good Yes, the American consumer is doing great.
Tons of home equity, tons of built up cash in
the stock market. You have this gigantic wealth effect. You know,
from April first Liberation Day until today, we tropped at
a stock market evaluation of about fifty two trillion, and
(16:20):
today we stand at around sixty seven trillion. So you
have fifteen trillion dollars in wealth that's been added over
the last roughly four months. That's going to put a
wind at in the sales of the American consumer until
it doesn't.
Speaker 2 (16:36):
Right.
Speaker 3 (16:37):
And so whether that wealth effects coming from the stock
market or US real estate and or you know, folks
doubling down on stocks returning another ten percent over the
next four or five months here, who knows. But I
see little cost for concern really when it comes to
(16:57):
the health of the consumer. Now, you know, America is
very bipercated, right, and so you know, and that's who
inflation and tariffs are really going to affect tariffs and
inflation are a regressive tax. They are going to hurt
main Street the most, and so that's that's the cost
for concern obviously, But in aggregate, the consumer is doing
(17:19):
great well.
Speaker 1 (17:20):
At the same time, we learned at the end of
last week from the University of Michigan that consumer expectations
for inflation picked up a bit. And I think, to
go back to where we started the conversation with the FED,
that's got to be pretty concerning.
Speaker 3 (17:34):
Yeah, no doubt. And I saw, you know, a study
done this past week where you know, the way that
they're measuring inflation has changed dramatically since the eighties. If
we were to measure inflation like we did in the eighties,
inflation would appeaked at roughly twenty percent a couple of
years ago. And the way that they changed it primarily
(17:58):
was using owner equivalents versus true housing costs. Okay, so
by using the owner's equivalence rents versus what people actually
pay every month oe R is just an estimate. Inflation
is much much worse than what the numbers are telling us,
and that's what it's being reflected in those consumer surveys.
Speaker 1 (18:20):
Skyler is speaking of the consumer. Before I let you go,
I got to get your take on Walmart and Target
the old report earnings in the week ahead. Are we
going to get decent numbers here or is there going
to be some evidence that margins are under pressure? And
maybe that again is a tariff story, even with the
front running that some of these companies were involved with.
Speaker 3 (18:39):
Yeah, Walmart's already said that tariffs are causing some ripples,
uh in their margins. That's for sure. Now, if you
look at those two as a paris trade, I'm definitely
going to pick Walmart here. H. Targets had some real
issues on a number of different issues they have. They
have trouble getting people and to the store. H. They've
(19:02):
had some bad campaigns over the last three or four years.
They they just got their people back into the office
I think three days a week most recently, you know,
you know, up until recently, Targets employees, I think they
only worked in the office once a quarter. That's at
corporate headquarters. But yeah, it's I would definitely be picking
(19:22):
lower cost retailers like a Walmart, like a TJ Max
or rosstores over a Target over h you know, higher
cost items.
Speaker 1 (19:33):
Skyler will leave it there. Thank you so very much
for making time to chat with me as Skyler Wine
and he is the CIO at Reagan Capital on the
line from Dallas, Texas. Here on the Daybreak Asia Podcast.
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
(19:57):
can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
and Australia. I'm Doug Prisoner and this is Bloomberg
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