August 11, 2025 • 20 mins
US President Donald Trump extended a pause of sky-high tariffs on Chinese goods for another 90 days into early November, stabilizing trade ties between the world's two largest economies. Trump signed an order extending the truce through November 10th, deferring a tariff hike set for Tuesday. The de-escalation first took effect when the US and China agreed to reduce tit-for-tat tariff hikes and ease export restrictions on rare earth magnets and certain technologies. China said it too would extend its own suspension for a further 90 days. Meanwhile, Nvidia and Advanced Micro Devices have agreed to pay 15% of their revenues from Chinese AI chip sales to the US government in an unusual, legally questionable deal that reflects the Trump administration's willingness to soften export controls in exchange for financial payouts. We discuss the day's developments with Derek Wallbank, Senior US Economy and Government Editor for Bloomberg News.
Plus - Wall Street refrained from making big bets ahead of a key inflation report, with stocks losing steam after climbing to the brink of all-time highs. With the earnings season almost done, investors are turning to economic data for clues on whether the Federal Reserve will be able cut rates in September. Data due Tuesday is forecast to show US consumers saw a slight pickup in inflation as retailers gradually raised prices on a variety of items subject to higher import duties. We break down the potential market implications with Joy Yang, Head of Product Management at MarketVector Indexes.
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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 Krisner.
So President Trump has extended a tear off truce with
China for another ninety days. This was set to expire
on Tuesday. Sources tell Bloomberg. The President signed the order
for the extension on Monday. And this truce, just so
you remember, eases duties and export restrictions on key goods
(00:30):
like rare earth magnets. And we got reaction from Henrietta Trees,
she is director of Economic policy at Veda Partners.
Speaker 3 (00:37):
Now that all eyes are on inflation data coming out tomorrow.
This is not an opportunity that the president can afford
to have twer rates spike on you know, five hundred
and fifty billion dollars worth of goods coming in from China.
So this had to occur. In my opinion, the President
didn't have another play. He had to delay.
Speaker 2 (00:54):
Henrietta trays there are Veda Partners now. The extension could
also clear the way for further cooperation on chip exports
and AI hardware sales, although to be fair, national security
issues do remain. Coming up. A look at the market
implications with Joey Yang. She is head of product management
at market Vector Indexes. But we begin in San Francisco,
(01:15):
and that's where we find Derek Waaldbank is senior US
ecogov editor for Bloomberg News. Derek, thank you for making
time to chat with me. Remind me what the situation
on tariffs would look like had the President not agreed
to extend this pause.
Speaker 4 (01:31):
Well, thank you for having me. Look, the situation would
look bad. That's that's where you start. You know, when
we first got into this US China sort of tip
for tat, it got it escalated quickly, and it escalated
past I think where either side had planned on it
(01:51):
going to a point that markets got spooked, and so
that that sort of was the was the precepading moment
for a kind of climb down and truce and pullback,
and so that's kind of what that's kind of what
we were looking at. There was there were all of
these sort of worst case scenarios going into place in
(02:12):
terms of tariffs but also potentially non tariff issues, you know,
and all of those have come off the table now
for another ninety days. This extends a truth through November tenth,
which is a really important extension here. You know, not
all extensions are created equal. And one of the things
(02:33):
that we've been trying to track is the prospects of
a potential meeting between Trump and Chi Janping. Now nothing
has been announced, nothing has been said that they're close to,
you know, whatever. But the current noise in Washington is
that is that you can sort of circle a period
of time kind of around the APEX summit in South Korea,
(02:57):
which is which is going to be around Halloween in
time early November, and right around there there's been some
noise you know, maybe on the sidelines of APEC maybe
Trump could go to China, you know, somewhere somewhere in
late October something like that. And so an extension through
November tenth gets you through that potential window when I
(03:19):
think a lot of people in Washington have been saying
that if Trump and she were going to meet this year,
it might make sense for them to meet.
Speaker 2 (03:27):
I'm wondering about the timing in the context of Trump
preparing to meet with Putin in Alaska on Friday, and
whether or not this could be viewed as Trump kind
of putting himself in a weaker position. Is there a
sense that maybe he caved in a little bit and
could that weaken his hand slightly when he meets with
Putin In.
Speaker 4 (03:45):
Terms of a China to Russia. Probably not. I'm not
getting a read from people that that those two things
might be linked. But in terms of a Russia talks
thing specifically, I do think that you see a lot
from the Ukrainian side, a lot from the Europeans. I'd
very concerned about what Donald Trump might say in a
meeting with Vladimir Putin. You know, Trump has been a
(04:09):
lot more willing to hear Putin out than a lot
of Europeans and a lot of Ukrainian leadership, and there
is some concern that Donald Trump may agree to things
or say, hey, this makes a lot of sense to
things that Putin wants to do that would be far
far reaching demands in practice. Certainly, the news about what
(04:32):
Putin wanted as an offer for Ukraine essentially represents Ukraine
giving up territory in exchange for a ceasefire, with Russia
not really giving up anything at all at the start,
and I think there was a lot of reaction out
of Europe that said something like that would represent a
little bit of a capitulation. Now, Donald Trump does not
(04:53):
want to be seen as someone who capitulates to Vladimir Putin,
And indeed we've seen in recent weeks Trump has been
increasingly exasperated with Putin for not stopping, for continuing to
shell Kiev. But at the same point, this is a
guy who for months and months and months has said
that Ukraine probably needs to sacrifice far more than it
(05:13):
had wanted to in order to get a peace deal,
and someone who has said that he very much prioritizes
getting fighting to stop. How that fighting may stop. He
may be a little bit more malleable on the details
than Kiev and Europeans may wish.
Speaker 2 (05:32):
So has this exercise at the end of the day,
whether we're talking about US China or US Russia, kind
of illustrated to President Trump that may not have the
degree of leverage that he thinks he has in some
of these cases.
Speaker 4 (05:46):
Well, I think that there's a really interesting thing with
the overall Trump administration, right. Donald Trump literally wrote a
book called The Art of the Deal. He sees himself
as the world's consummate deal maker, and in so doing
wants to go at a Nobel Peace Prize right, He's
said that a lot. But this is somebody who really
embraces large headlines. His administration maybe not the one that
(06:11):
sweats the small stuff, right, you know, the Trump administration
I was, I was in I was in Washington last
week meeting with Trump officials, and one of the things
that we talked about was the concept of moving at
Trump speed. Moving at Trump speed does not always leave
you time to check all of of the you know,
cross t's and dotted eyes. And you've seen some examples
(06:33):
over the last several months where something has happened they've said, oh,
it didn't quite mean that. Let's go back and try
and reverse that. So this is just an administration that
very much wants the big headlines. But when details can
get difficult, you know that that can be a little
bit more of a trouble zone. Now, when you're talking
(06:54):
about you know, Vladimir Putin, you're talking about somebody who
has had has swum in the details. And China is,
if anything, an incredibly technocratic, bureaucratic society that loves details,
and so there is a little bit of a mismatch
there where sometimes on the detail side, you know, they
(07:14):
can you know, they may see that they can, you know,
try and try and get one on Trump. But Trump
also moves with a rapidity and has a willingness to
move so fast that maybe sometimes that sets his opponents
on edge. So it's a little bit of each side
vexes each other sometimes.
Speaker 2 (07:33):
Before I let you go, Derek, I have to ask
about the deal that the Trump administration worked out with
both in Nvidia and advanced micro devices. These companies will
be allowed to sell their less advanced chips to the
Chinese market if they were to pay fifteen percent of
the revenue from those Chinese sales to the US government.
Give me your sense of what's at work here.
Speaker 4 (07:55):
Well, there's a couple of things that are interesting there.
One is that it's generally considered that US companies are
not meant to pay duties to the US government for
the privilege of exporting. That's a sort of long held
legal concept. I was really struck with something that our
Cameron Christ wrote for m Live, our markets blog and
(08:15):
any you know, basically saying, look, you know, the latest
US government intervention has been met with barely a shrug
in markets. I was actually interested in that because you know,
these sorts of policies are ones that years gone by,
even months gone by, would have been created with a
great hue and cry from Wall Street and Silicon Valley
(08:38):
and all others. Now it's sort of barely registers on
a Monday. And I think that that's a really interesting
sort of development there. There have been a lot of
things I think that the Trump administration likes to do
in that concept of moving fast and you know, making
demands and doing things and having deals, and you know,
all those sorts of things, and they all kind of
(08:58):
moved together, in trained together, and in that movement together,
there is so much volume that some things become normalized
and it's hard for your opponents to pick out one
or two things because everything else sort of slides by.
This is actually by design. This is this is one
of the tenets of the idea of why you move
(09:20):
in that sort of you know, in that sort of way.
It's because then things kind of do go by. But
because all of this volatility has kept on going, the
volatility itself becomes a little bit normalized. And that I
think is really a sort of fascinating concept there. You know,
on the on the exports themselves, one thing I think
(09:43):
is important to watch is that a lot of Trump's
biggest China Hawk advisors have really sought for him to
crack down heavily. At the same time, Trump wants an
overall deal with China, and we've seen in the issue
of leverage on Russia's oil exports. Trump has been very
(10:03):
willing to threaten India with increased tariffs. China is another
big buyer of Russian oil. While we have these Chinese
talks goings going on so far, you are not hearing
a lot out of President Trump talking about wanting to
sort of lay the smack down on China as well.
(10:23):
I think that's an interesting note as we consider these
next ninety days.
Speaker 2 (10:28):
Derek will leave it there. Great stuff, Thank you so
very much. Derek Wallbank is senior US ecogov editor for
Bloomberg News, joining from San Francisco here on the Daybreak
Asia podcast. Welcome back to the Daybreak Asia Podcast. I'm
Dog Chrisner. So market's barely budge today. After President Trump
(10:51):
extended a pause of tariffs on Chinese goods for another
ninety days. Meantime, with earning season nearly over, the market
is turning its attention to economic data for clues on
whether the FED will be able to cut infrastrates in September.
To help break things down, I'm joined now by Joe Young.
She is head of product management at Market Vector Indexes. Joy,
(11:12):
Thanks for making time to chat with us today. It
felt like the market was a little bit on pins
and needles as we walk up to that CPI report,
But to be fair, we're not far from record highs.
In fact, the NASDAT comp dropped today from a record high.
Are you still constructive on US equities?
Speaker 4 (11:28):
Yeah?
Speaker 1 (11:28):
So, I mean we're in this is interesting times, isn't it.
So we just saw the announcement of another extension and
markets are just kind of barely flat, right, because this
is really showing how complicated and messy this tariff policy is.
And I think you know that the handshake is just
(11:49):
the easy part, you know, the implementation is really the
difficult part. And the areas that we're seeing cracks and
so that's why you have a lot of investors just
waiting on this eyelines to see what else is going
to be exposed, like we saw with the gold confusion
and then unwinding and getting clarity around what actually happens
(12:09):
when you sign the deal, and you know, the legal
contracts come on board. But clearly, if you look within
the markets, you know AI is definitely still going up
because it's a real story and people want to invest
in something. And the markets have responded on the back
of last week's earnings that there is real growth and
(12:32):
demand in the space and that they're willing to look
beyond some of the short term uncertainties around tariff and
tariff impact.
Speaker 2 (12:40):
Okay, so that's fair, but I want to point out
I was looking today at the latest survey from Bank
of America, our record share of fund managers see the
US equity market is being too expensive after that sharp
rally since April. And if you look at the multiple
right now for the Nasdaq composite thirty five times earnings,
that sounds or feels to me like it's an expensive market.
(13:03):
You don't feel that way.
Speaker 1 (13:04):
It's definitely expensive relative to you know, where we have
seen PA's historic these historically. But I think we're also
trying to understand, you know, how AI story will play out,
and we know that there's there's strong demand and that
innovation is starting to appear across different segments in industry,
(13:28):
So you know, it just depends on how far out
you want to look, but also what else are you
going to invest in, because right now we're seeing this
divergence between AI tech companies and consumer discretionary companies that
are being more impacted by teriffs and exposed by some
of the complexities of the tear fallouts. But even within
(13:53):
and I would say caution investors when they look at
the AI stories not to be so focus on any
single company because we see that even within the AI
tech there's a divergence between some of these large mega
players and some of these smaller players that can't get
away from some of the uncertainties around how the tariff
(14:16):
stories will play out, and they're exposed on both the
import and export side of the costs impact, and so
you know, there's still you know, there's still quite a
lot of strength in these megacat players because they have
a lot of cap X, they can wait it out.
They can also absorb some of the price impact. So
(14:41):
you know, this is still you know, it's got legs
to play out, and you know some you know, time
to like see what's really going to happen within this sector.
Speaker 2 (14:50):
So for a while now, many investors have been playing
energy as kind of tangential to the direct AI trade.
Whether you're looking at a company like Microsoft or whether
you're looking at a company like Nvidia. Is the energy
complex still something that you're looking at these days.
Speaker 1 (15:06):
Absolutely, because we know that AI is going to require
a lot of data, and that data consumption is going
to require a lot of energy, and not just any energy,
but reliable energy. So there's a strong demand for the
energy infrastructure and a lot of investment back into that
(15:28):
infrastructure because this data consumption is enormous.
Speaker 2 (15:33):
One of the things that's been a part of the
market's relative strength here, it's been the notion that we're
going to get multiple FED rate cuts this year, and
over the weekend, Governor Michelle Bowman was saying she favors three.
Do you think that's overly optimistic. Will the economy be
in such a state where three rate cuts are required?
Speaker 1 (15:51):
I think it's unclear at the moment, because the data
really is telling a different story from you know, what
the market is trying to price in, and we know
that the market doesn't really reflect the economy. And we
also understand now that the tariff impact will take you
a while to play out, and it's impacting some of
the small cap players more than the megacap and this
(16:11):
small cap players is you know, some of the biggest
support for driving labor numbers. So, you know, I think
that's very optimistic. And you know, what we're seeing now
is strong demand still for alternative assets like gold and
bitcoin that are you know, really a little bit immune
(16:32):
to some of this volatility and noise around inflation, disinflation
and interest rates.
Speaker 2 (16:37):
I want to get your take on a story that
we've been talking about President Trump basically allowing companies like
Nvidia and Advanced micro Devices to sell certain chips to
China if those companies were to pay fifteen percent of
the revenue from these sales to Chinese firms back to
the US government. It's pretty creative approach, isn't it.
Speaker 1 (16:58):
What do you think of that, Well, certainly we're seeing
this shift from these broad based caraff policies to increasingly
what's becoming a play, pay to play model, and this
is you know, Trump's tactic. He really likes these one
on one negotiations and exemptions. It's benefiting the US government
(17:21):
in the short run, but it does, you know, raise
real concerns around what are we trading off for this
type of you know, negotiation tactic. You know, where does
this leave national security? Where does it leave market competition,
and where does it leave some of these smaller players.
Speaker 2 (17:40):
So we've talked a lot about big cap tech high
technology as it's tied into the AI trade. Is there
anything else and we also mentioned power by the way,
but I'm wondering if there's anything else you're looking at
these days that you believe represents value in a compelling way.
Speaker 1 (17:57):
Well aside from like making sure that are diversified across
gold and bitcoin. You know, we think, you know, investors
should be diversified against any single stock exposure. So we're
still looking at groups or baskets within the semiconductor because
you know, you should have a global exposure across semiconductor.
(18:19):
We're looking at, as you mentioned before that the AI infrastructure,
and then we're looking at defense tech and we saw
last week, you know, Palenteers stock price on the back
of their earnings announcement and you know, defense national security,
given kind of the geopolitical risks that are still out
there is definitely a growth and an investment space for investors.
Speaker 2 (18:45):
Joy, before I let you go, are there opportunities offshore
that you have identified something you want to share.
Speaker 1 (18:51):
Definitely, when you know, we think diversification means that investors
should also look beyond US equities and bonds because you know,
this American exceptionalism, you know, it can be a little
bit too inward looking. And we're seeing relative value still
in international markets. In emerging markets as they navigate the
(19:14):
tariff policies, you know, they will ultimately recapture some of
the fundamental growth that you know they've been storing up for.
Speaker 2 (19:23):
Can you give me specific jurisdictions that you'll like right now?
Is it Taiwan, is it Japan? Is it South Korea?
Speaker 1 (19:31):
Well, we you know, we always like these emerging market
that have strong trait ties, whether it's Vietnam, Korea, Brazil,
you know, because they were lagging and we see your
gate that they're regaining some of the strength that they
lost previously.
Speaker 2 (19:46):
We'll leave it there, Joe, it's always a pleasure. Thank
you so much for making time to chat with me.
Joe Young there. She is head of product management at
market Vector Indexes, joining us here on the Daybreak Asia podcast.
Thanks for listening to today's episode of The Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
(20:07):
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
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 Krisner.
So President Trump has extended a tear off truce with
China for another ninety days. This was set to expire
on Tuesday. Sources tell Bloomberg. The President signed the order
for the extension on Monday. And this truce, just so
you remember, eases duties and export restrictions on key goods
(00:30):
like rare earth magnets. And we got reaction from Henrietta Trees,
she is director of Economic policy at Veda Partners.
Speaker 3 (00:37):
Now that all eyes are on inflation data coming out tomorrow.
This is not an opportunity that the president can afford
to have twer rates spike on you know, five hundred
and fifty billion dollars worth of goods coming in from China.
So this had to occur. In my opinion, the President
didn't have another play. He had to delay.
Speaker 2 (00:54):
Henrietta trays there are Veda Partners now. The extension could
also clear the way for further cooperation on chip exports
and AI hardware sales, although to be fair, national security
issues do remain. Coming up. A look at the market
implications with Joey Yang. She is head of product management
at market Vector Indexes. But we begin in San Francisco,
(01:15):
and that's where we find Derek Waaldbank is senior US
ecogov editor for Bloomberg News. Derek, thank you for making
time to chat with me. Remind me what the situation
on tariffs would look like had the President not agreed
to extend this pause.
Speaker 4 (01:31):
Well, thank you for having me. Look, the situation would
look bad. That's that's where you start. You know, when
we first got into this US China sort of tip
for tat, it got it escalated quickly, and it escalated
past I think where either side had planned on it
(01:51):
going to a point that markets got spooked, and so
that that sort of was the was the precepading moment
for a kind of climb down and truce and pullback,
and so that's kind of what that's kind of what
we were looking at. There was there were all of
these sort of worst case scenarios going into place in
(02:12):
terms of tariffs but also potentially non tariff issues, you know,
and all of those have come off the table now
for another ninety days. This extends a truth through November tenth,
which is a really important extension here. You know, not
all extensions are created equal. And one of the things
(02:33):
that we've been trying to track is the prospects of
a potential meeting between Trump and Chi Janping. Now nothing
has been announced, nothing has been said that they're close to,
you know, whatever. But the current noise in Washington is
that is that you can sort of circle a period
of time kind of around the APEX summit in South Korea,
(02:57):
which is which is going to be around Halloween in
time early November, and right around there there's been some
noise you know, maybe on the sidelines of APEC maybe
Trump could go to China, you know, somewhere somewhere in
late October something like that. And so an extension through
November tenth gets you through that potential window when I
(03:19):
think a lot of people in Washington have been saying
that if Trump and she were going to meet this year,
it might make sense for them to meet.
Speaker 2 (03:27):
I'm wondering about the timing in the context of Trump
preparing to meet with Putin in Alaska on Friday, and
whether or not this could be viewed as Trump kind
of putting himself in a weaker position. Is there a
sense that maybe he caved in a little bit and
could that weaken his hand slightly when he meets with
Putin In.
Speaker 4 (03:45):
Terms of a China to Russia. Probably not. I'm not
getting a read from people that that those two things
might be linked. But in terms of a Russia talks
thing specifically, I do think that you see a lot
from the Ukrainian side, a lot from the Europeans. I'd
very concerned about what Donald Trump might say in a
meeting with Vladimir Putin. You know, Trump has been a
(04:09):
lot more willing to hear Putin out than a lot
of Europeans and a lot of Ukrainian leadership, and there
is some concern that Donald Trump may agree to things
or say, hey, this makes a lot of sense to
things that Putin wants to do that would be far
far reaching demands in practice. Certainly, the news about what
(04:32):
Putin wanted as an offer for Ukraine essentially represents Ukraine
giving up territory in exchange for a ceasefire, with Russia
not really giving up anything at all at the start,
and I think there was a lot of reaction out
of Europe that said something like that would represent a
little bit of a capitulation. Now, Donald Trump does not
(04:53):
want to be seen as someone who capitulates to Vladimir Putin,
And indeed we've seen in recent weeks Trump has been
increasingly exasperated with Putin for not stopping, for continuing to
shell Kiev. But at the same point, this is a
guy who for months and months and months has said
that Ukraine probably needs to sacrifice far more than it
(05:13):
had wanted to in order to get a peace deal,
and someone who has said that he very much prioritizes
getting fighting to stop. How that fighting may stop. He
may be a little bit more malleable on the details
than Kiev and Europeans may wish.
Speaker 2 (05:32):
So has this exercise at the end of the day,
whether we're talking about US China or US Russia, kind
of illustrated to President Trump that may not have the
degree of leverage that he thinks he has in some
of these cases.
Speaker 4 (05:46):
Well, I think that there's a really interesting thing with
the overall Trump administration, right. Donald Trump literally wrote a
book called The Art of the Deal. He sees himself
as the world's consummate deal maker, and in so doing
wants to go at a Nobel Peace Prize right, He's
said that a lot. But this is somebody who really
embraces large headlines. His administration maybe not the one that
(06:11):
sweats the small stuff, right, you know, the Trump administration
I was, I was in I was in Washington last
week meeting with Trump officials, and one of the things
that we talked about was the concept of moving at
Trump speed. Moving at Trump speed does not always leave
you time to check all of of the you know,
cross t's and dotted eyes. And you've seen some examples
(06:33):
over the last several months where something has happened they've said, oh,
it didn't quite mean that. Let's go back and try
and reverse that. So this is just an administration that
very much wants the big headlines. But when details can
get difficult, you know that that can be a little
bit more of a trouble zone. Now, when you're talking
(06:54):
about you know, Vladimir Putin, you're talking about somebody who
has had has swum in the details. And China is,
if anything, an incredibly technocratic, bureaucratic society that loves details,
and so there is a little bit of a mismatch
there where sometimes on the detail side, you know, they
(07:14):
can you know, they may see that they can, you know,
try and try and get one on Trump. But Trump
also moves with a rapidity and has a willingness to
move so fast that maybe sometimes that sets his opponents
on edge. So it's a little bit of each side
vexes each other sometimes.
Speaker 2 (07:33):
Before I let you go, Derek, I have to ask
about the deal that the Trump administration worked out with
both in Nvidia and advanced micro devices. These companies will
be allowed to sell their less advanced chips to the
Chinese market if they were to pay fifteen percent of
the revenue from those Chinese sales to the US government.
Give me your sense of what's at work here.
Speaker 4 (07:55):
Well, there's a couple of things that are interesting there.
One is that it's generally considered that US companies are
not meant to pay duties to the US government for
the privilege of exporting. That's a sort of long held
legal concept. I was really struck with something that our
Cameron Christ wrote for m Live, our markets blog and
(08:15):
any you know, basically saying, look, you know, the latest
US government intervention has been met with barely a shrug
in markets. I was actually interested in that because you know,
these sorts of policies are ones that years gone by,
even months gone by, would have been created with a
great hue and cry from Wall Street and Silicon Valley
(08:38):
and all others. Now it's sort of barely registers on
a Monday. And I think that that's a really interesting
sort of development there. There have been a lot of
things I think that the Trump administration likes to do
in that concept of moving fast and you know, making
demands and doing things and having deals, and you know,
all those sorts of things, and they all kind of
(08:58):
moved together, in trained together, and in that movement together,
there is so much volume that some things become normalized
and it's hard for your opponents to pick out one
or two things because everything else sort of slides by.
This is actually by design. This is this is one
of the tenets of the idea of why you move
(09:20):
in that sort of you know, in that sort of way.
It's because then things kind of do go by. But
because all of this volatility has kept on going, the
volatility itself becomes a little bit normalized. And that I
think is really a sort of fascinating concept there. You know,
on the on the exports themselves, one thing I think
(09:43):
is important to watch is that a lot of Trump's
biggest China Hawk advisors have really sought for him to
crack down heavily. At the same time, Trump wants an
overall deal with China, and we've seen in the issue
of leverage on Russia's oil exports. Trump has been very
(10:03):
willing to threaten India with increased tariffs. China is another
big buyer of Russian oil. While we have these Chinese
talks goings going on so far, you are not hearing
a lot out of President Trump talking about wanting to
sort of lay the smack down on China as well.
(10:23):
I think that's an interesting note as we consider these
next ninety days.
Speaker 2 (10:28):
Derek will leave it there. Great stuff, Thank you so
very much. Derek Wallbank is senior US ecogov editor for
Bloomberg News, joining from San Francisco here on the Daybreak
Asia podcast. Welcome back to the Daybreak Asia Podcast. I'm
Dog Chrisner. So market's barely budge today. After President Trump
(10:51):
extended a pause of tariffs on Chinese goods for another
ninety days. Meantime, with earning season nearly over, the market
is turning its attention to economic data for clues on
whether the FED will be able to cut infrastrates in September.
To help break things down, I'm joined now by Joe Young.
She is head of product management at Market Vector Indexes. Joy,
(11:12):
Thanks for making time to chat with us today. It
felt like the market was a little bit on pins
and needles as we walk up to that CPI report,
But to be fair, we're not far from record highs.
In fact, the NASDAT comp dropped today from a record high.
Are you still constructive on US equities?
Speaker 4 (11:28):
Yeah?
Speaker 1 (11:28):
So, I mean we're in this is interesting times, isn't it.
So we just saw the announcement of another extension and
markets are just kind of barely flat, right, because this
is really showing how complicated and messy this tariff policy is.
And I think you know that the handshake is just
(11:49):
the easy part, you know, the implementation is really the
difficult part. And the areas that we're seeing cracks and
so that's why you have a lot of investors just
waiting on this eyelines to see what else is going
to be exposed, like we saw with the gold confusion
and then unwinding and getting clarity around what actually happens
(12:09):
when you sign the deal, and you know, the legal
contracts come on board. But clearly, if you look within
the markets, you know AI is definitely still going up
because it's a real story and people want to invest
in something. And the markets have responded on the back
of last week's earnings that there is real growth and
(12:32):
demand in the space and that they're willing to look
beyond some of the short term uncertainties around tariff and
tariff impact.
Speaker 2 (12:40):
Okay, so that's fair, but I want to point out
I was looking today at the latest survey from Bank
of America, our record share of fund managers see the
US equity market is being too expensive after that sharp
rally since April. And if you look at the multiple
right now for the Nasdaq composite thirty five times earnings,
that sounds or feels to me like it's an expensive market.
(13:03):
You don't feel that way.
Speaker 1 (13:04):
It's definitely expensive relative to you know, where we have
seen PA's historic these historically. But I think we're also
trying to understand, you know, how AI story will play out,
and we know that there's there's strong demand and that
innovation is starting to appear across different segments in industry,
(13:28):
So you know, it just depends on how far out
you want to look, but also what else are you
going to invest in, because right now we're seeing this
divergence between AI tech companies and consumer discretionary companies that
are being more impacted by teriffs and exposed by some
of the complexities of the tear fallouts. But even within
(13:53):
and I would say caution investors when they look at
the AI stories not to be so focus on any
single company because we see that even within the AI
tech there's a divergence between some of these large mega
players and some of these smaller players that can't get
away from some of the uncertainties around how the tariff
(14:16):
stories will play out, and they're exposed on both the
import and export side of the costs impact, and so
you know, there's still you know, there's still quite a
lot of strength in these megacat players because they have
a lot of cap X, they can wait it out.
They can also absorb some of the price impact. So
(14:41):
you know, this is still you know, it's got legs
to play out, and you know some you know, time
to like see what's really going to happen within this sector.
Speaker 2 (14:50):
So for a while now, many investors have been playing
energy as kind of tangential to the direct AI trade.
Whether you're looking at a company like Microsoft or whether
you're looking at a company like Nvidia. Is the energy
complex still something that you're looking at these days.
Speaker 1 (15:06):
Absolutely, because we know that AI is going to require
a lot of data, and that data consumption is going
to require a lot of energy, and not just any energy,
but reliable energy. So there's a strong demand for the
energy infrastructure and a lot of investment back into that
(15:28):
infrastructure because this data consumption is enormous.
Speaker 2 (15:33):
One of the things that's been a part of the
market's relative strength here, it's been the notion that we're
going to get multiple FED rate cuts this year, and
over the weekend, Governor Michelle Bowman was saying she favors three.
Do you think that's overly optimistic. Will the economy be
in such a state where three rate cuts are required?
Speaker 1 (15:51):
I think it's unclear at the moment, because the data
really is telling a different story from you know, what
the market is trying to price in, and we know
that the market doesn't really reflect the economy. And we
also understand now that the tariff impact will take you
a while to play out, and it's impacting some of
the small cap players more than the megacap and this
(16:11):
small cap players is you know, some of the biggest
support for driving labor numbers. So, you know, I think
that's very optimistic. And you know, what we're seeing now
is strong demand still for alternative assets like gold and
bitcoin that are you know, really a little bit immune
(16:32):
to some of this volatility and noise around inflation, disinflation
and interest rates.
Speaker 2 (16:37):
I want to get your take on a story that
we've been talking about President Trump basically allowing companies like
Nvidia and Advanced micro Devices to sell certain chips to
China if those companies were to pay fifteen percent of
the revenue from these sales to Chinese firms back to
the US government. It's pretty creative approach, isn't it.
Speaker 1 (16:58):
What do you think of that, Well, certainly we're seeing
this shift from these broad based caraff policies to increasingly
what's becoming a play, pay to play model, and this
is you know, Trump's tactic. He really likes these one
on one negotiations and exemptions. It's benefiting the US government
(17:21):
in the short run, but it does, you know, raise
real concerns around what are we trading off for this
type of you know, negotiation tactic. You know, where does
this leave national security? Where does it leave market competition,
and where does it leave some of these smaller players.
Speaker 2 (17:40):
So we've talked a lot about big cap tech high
technology as it's tied into the AI trade. Is there
anything else and we also mentioned power by the way,
but I'm wondering if there's anything else you're looking at
these days that you believe represents value in a compelling way.
Speaker 1 (17:57):
Well aside from like making sure that are diversified across
gold and bitcoin. You know, we think, you know, investors
should be diversified against any single stock exposure. So we're
still looking at groups or baskets within the semiconductor because
you know, you should have a global exposure across semiconductor.
(18:19):
We're looking at, as you mentioned before that the AI infrastructure,
and then we're looking at defense tech and we saw
last week, you know, Palenteers stock price on the back
of their earnings announcement and you know, defense national security,
given kind of the geopolitical risks that are still out
there is definitely a growth and an investment space for investors.
Speaker 2 (18:45):
Joy, before I let you go, are there opportunities offshore
that you have identified something you want to share.
Speaker 1 (18:51):
Definitely, when you know, we think diversification means that investors
should also look beyond US equities and bonds because you know,
this American exceptionalism, you know, it can be a little
bit too inward looking. And we're seeing relative value still
in international markets. In emerging markets as they navigate the
(19:14):
tariff policies, you know, they will ultimately recapture some of
the fundamental growth that you know they've been storing up for.
Speaker 2 (19:23):
Can you give me specific jurisdictions that you'll like right now?
Is it Taiwan, is it Japan? Is it South Korea?
Speaker 1 (19:31):
Well, we you know, we always like these emerging market
that have strong trait ties, whether it's Vietnam, Korea, Brazil,
you know, because they were lagging and we see your
gate that they're regaining some of the strength that they
lost previously.
Speaker 2 (19:46):
We'll leave it there, Joe, it's always a pleasure. Thank
you so much for making time to chat with me.
Joe Young there. She is head of product management at
market Vector Indexes, joining us here on the Daybreak Asia podcast.
Thanks for listening to today's episode of The Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
(20:07):
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
and Australia. I'm Doug Prisoner and this is Bloomberg
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