November 10, 2025 • 22 mins
Asian stocks advanced for a second consecutive day as progress toward ending the record-long US government shutdown lifted sentiment, sparking a cross-asset rally from commodities to cryptocurrencies.
President Donald Trump said he "at some point" would reduce the tariff rate on Indian goods, saying the US was getting "pretty close" to a trade deal with New Delhi."Right now they don't love me, but they'll love us again," Trump said. "We're getting a fair deal." Trump later predicted the nations were "pretty close to doing a deal that's good for everybody." The comments were the latest signal of a possible thaw in the trade dispute that has soured the relationship between the US and India. We heard from Kurt Campbell, Chairman and Co-Founder of The Asia Group. He spoke to Bloomberg's Paul Allen at the UBS Australasia Summit.
In the states - Wall Street traders piled into riskier corners of the market, with stocks climbing alongside Bitcoin as the US Senate advanced a plan to end the longest-ever government shutdown, which would remove a significant economic headwind. Bonds lost steam. The risk-on bid lifted the S&P 500 by 1.5%. Technology megacaps, which had been hit the hardest in recent sessions, saw their biggest advance since May. We spoke to Chuck Cumello, President & Chief Executive Officer of Essex Financial.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Daybreak
Asia podcast time. Doug Prisoner Equity markets in the APAC
region are hired today after a rally in US stocks,
we saw plenty of positivity stateside to what appears to
(00:23):
be an end to the US government shutdown, and in
a moment we'll check in on the US side of
things with Chuck Camelo of Essex Financial. We begin in
Australia where the UBS Australasia Conference is underway, and it's
there we caught up with Kurt Campbell. He is co
founder and chairman of the Asia Group. He's also a
former US Deputy Secretary of State. Campbell spoke with Bloomberg's
(00:46):
Paul Allen and they began the discussion by looking at
the prospects of a trade deal between the US and India.
Speaker 2 (00:53):
We heard some remarks from President Trump saying, they don't
love me at the moment, but they'll love me again,
even the difficulties, the tension in this relationship. But do
you see any lasting damage that's been done.
Speaker 3 (01:05):
Well, it's a very important question.
Speaker 4 (01:08):
After the election last year, I would say the government
that I worked with that was most confident that they
could manage President Trump given the first term successes was India,
and of course what we've seen in recent months is
really a whole scale collapse in relations at the highest levels,
(01:28):
Lots of tension and very little communication between President Trump
and Prime Minister Moody. I think some misunderstandings about who
gets nominated for a Nobel Prize and some of the
issues associated with the US role and what went on
between the fighting between Indian Pakistan earlier in the year,
(01:49):
but let's put that aside.
Speaker 3 (01:50):
Now.
Speaker 4 (01:50):
It's clear that both countries want to try to rebuild relations.
Each leader is sensitive about how to do that. But
in the background, trade negotiators have really hammered what I
think hammered out what I think is a very substantial
trade agreement between India and the United States that will
(02:10):
take tariffs down from almost forty percent to I think
a livable range, and you'll see substantial areas where India's
markets will open to further cooperation with American tech firms,
manufacturing and the like.
Speaker 3 (02:28):
So I'm optimistic about this.
Speaker 4 (02:31):
I would simply say that the most important element of
our Indo Pacific strategy is a strong and growing relationship
with India. I was very troubled that relations had fallen
to such a low level. Your important question really is
will there be lasting damage? And the honest answer is
(02:51):
probably some. But we'll just have to see how deep
that is.
Speaker 2 (02:55):
Well, I know it's an appealing idea to stait aside
the India Pakistan conflict, but at the same time President
Trump is also trying to nurture relationship with Pakistan, inviting
an army chief to visit the White House as well.
So how to balance that relationship?
Speaker 4 (03:08):
Well, look, I would say almost all our strategic interests
lie with India, and I think our engagement with Pakistan
is substantially different and much less significant since the Cold
War and the period thereafter.
Speaker 2 (03:26):
Nurturing that relationship does risk alienating India.
Speaker 4 (03:29):
It does, and it is also the case, and I
think we just have to be honest about this, Paul.
Really it is Pakistan that is more, shall we say,
effectively engage the Trump family with a variety of engagements
on cryptocurrency and resorts and the like, But still the
most important relationship for US is India. We should not
(03:52):
just tilt towards India. We should fundamentally embrace India, and.
Speaker 2 (03:56):
Of course in the background is China. This geopolitical positioning
has China family in mind. Do you see a new
Cold War style narrative beginning to emerge in South Asia?
Speaker 4 (04:10):
I don't know if it's a Cold War style narrative,
but I would simply say that for US strategy, a
close relationship with India is absolutely essential. I think increasingly
you see China's support for Pakistan, which is really of
central significance military and nuclear support, and that is the
(04:30):
subject of real concern for Indian interlocketors. I think the
real issue is this enduring relationship with Russia that causes problems.
Speaker 3 (04:41):
With the United States.
Speaker 4 (04:43):
India tends to be loyal to countries that have stood
with it for decades, but at the same time, I
think behind the scenes, India knows and understands that this
horrible conflict in Ukraine has alienated Russia from most countries
across the world, and frankly, India has to be more
(05:03):
responsible about that relationship.
Speaker 2 (05:05):
I want to talk a little bit about the US
China relationship as well, because I do wonder what you
make of China's pushback against the US. With a China
had a stronger hand than perhaps President Trump anticipated, and
has the balance of pound between the two countries shifted
a little.
Speaker 3 (05:20):
Well.
Speaker 4 (05:20):
Look, I will simply say this, at the beginning of
the first term, Paul, no country was thrown af ba
Hans more than China. They anticipated a different electoral outcome.
That's not the case for this second term. They come
in with a plan. They're very strategic about how they
are engaging the United States and President Trump. You'll note
(05:43):
President she senior interlocktors in China treat President Trump with
great personal respect, but at the same time, every step
that the United States has taken with respect to tariffs
or sanctions, or any step against Chinese firm or practices,
China responds immediately, and their responses tend to be highly
(06:07):
carefully designed for specific damage or signaling for the United States.
And for instance, rare magnets were shot across our bow,
making clear the vulnerabilities and key areas of technology. China
is prepared to match US step for step, and it
(06:29):
is also the case that China is stepping up in
a variety of vectors, building closer relations with a number
of countries. Just a few years ago, they were busy
alienating countries like Australia, Japan, South Korea, and India. Now
they are again on a kind of modest charm offensive,
and they realize that much of what President Trump has
(06:53):
done has been disruptive to traditional relations.
Speaker 3 (06:57):
They see an opportunity they're trying to seize it. Now.
Speaker 4 (07:00):
Hopefully, the I think relatively positive trip of President Trump
to the Endo Pacific goods stops in Japan and Malaysia
and South Korea, and at least initial engagements with China
were somewhat reassuring to Indo Pacific partners, and the hope
will be we'll be able to build on that into
the future. But I think it is undeniable that in
(07:23):
terms of the Great Game, China has made some important
steps and has some advantages.
Speaker 2 (07:29):
I just want to end on some of your thoughts
about how supply chains have been reorganized as well, and
particularly for the Bloomberg audience. What do you see this
meaning in terms of capital allocation, location and manufacturing hubs, etc.
Speaker 3 (07:42):
Well, look, I will say this, Paul.
Speaker 4 (07:44):
You know, there's obviously a lot of talk about, you know,
in each of the stops that the President made, first
with the visit of Prime Minister Albenizi to the United States,
but also Malaysia, Japan, and South Korea. The President signed
minerals deals. He's launched on a major program in the
United States that will look at new investments in areas
(08:09):
of refinement, also looking at recycling for some of these capabilities.
The truth of the matter is that if you look
at the vast majority of rare earths and critical minerals
of the ninety or so that are important to industrial
and technological pursuits, China has an overriding advantage and dominance
(08:33):
both in terms of supply and refinement, and it will
take years, if not decades for the United States and.
Speaker 3 (08:40):
Partners to match that.
Speaker 4 (08:42):
And so this is a vulnerability that has been built
up over years and it will take years to resolve.
I'm grateful that the United States, working with Australia, has
committed to attack this problem, but it will take time, resources,
and substantial commitment, not just this administration but next administrations.
Speaker 3 (09:02):
Just very quickly. We w had got a few seconds left.
Speaker 2 (09:04):
But since you hear in Australia, I wondered, did you
get a school for Anthony Albanezi in the way he's
balancing the relationship with China, the largest trading popped on
the US such an important la. Just a quick score
and a comment.
Speaker 4 (09:15):
Look, the truth is it's hard for Australians to hear
positive news. They immediately tend to dismiss it or think, oh,
someone's exaggerating. I think Primister Albinizi handled himself extraordinarily well
on his visit to Washington.
Speaker 3 (09:32):
He walked that fine line.
Speaker 4 (09:33):
He has challenges at home in terms of a population
that's skeptical of President Trump, but also a country that
wants a close relationship.
Speaker 3 (09:43):
Over the trenchion with Washington.
Speaker 4 (09:47):
He secured Aucus a variety of areas of common purpose.
Speaker 3 (09:51):
Critical minerals technology AI.
Speaker 4 (09:55):
I thought it was a very good meeting and it
keeps US Australian relations on a positive trajector.
Speaker 1 (10:00):
That is Kurt Campbell, co founder and chairman of the
Asia Group, speaking earlier with Bloomberg TV host Paul Allen
at the UBS Australasia Conference. Welcome back to the Daybreak
Asia podcast. I'm deg Krisner. Stateside, it appears we're nearing
(10:21):
an end to the US government shutdown. On Sunday evening,
eight senators in the Democratic Caucus broke with the party
to vote with Republicans and advanced legislation to end the shutdown,
And now the Senate is taking a series of votes
on a package to fund the government. This will lead
up to final passage of the bill. Now, the legislation
would still need to clear the House of Representatives before
(10:44):
the government will be able to reopen. Nonetheless, markets took
these developments as a breakthrough, since ending the shutdown would
remove a major growth headwind and a lot of uncertainty
over the outlook. For a closer look now at where
things stand, I'm joined by Chuck Camello. He is president
and CEO of Essex Financial. Chuck joins from Connecticut. Thank
(11:06):
you so much, sir for making time to chat with me.
Can we focus on this rally that we had in
the chip complex today. I think the semis have become
this proxy for the AI trade, and the Philadelphia Semiconductor
Index was up three percent today. With that, though, volatility
came crashing back down. I know we typically don't use
(11:27):
percentages when we track the VIX, but today the index
fell seven point eight percent. The VIX is sitting right
around seventeen point six. Is everything fine in the equity
market so long as AI is fine.
Speaker 5 (11:41):
Well, I think AI is a very very big theme,
but it certainly isn't everything. Right, So if you look
at what drove the market down last week, right, So
last week we had NASTAC down three percent. Today Monday,
two days later, three days later, it's up two percent.
So AI is a big part of it which is
driving the market, especially all the capital expenditures and any
(12:01):
concerns that might sort of upset that. But there's bigger
macro themes at play here. I mean, big driver today
of the market was the positive news on the government reopening.
That was a big uncertainty hanging over the market, and
it was you know, again you start messing with people's
vacations and airplanes and things of that nature, starts to
(12:22):
get more attention. That was a big one. And you know,
you just got the more positive news and sort of
open AI statement last week about the government maybe coming in.
Speaker 6 (12:33):
I mean they walk that back.
Speaker 5 (12:34):
So I think you had a couple of big blankets
come off the market today and you saw a nice rally.
Speaker 1 (12:38):
So I get the fact that there is optimism today
with the fact that we're likely to have an end
to the government shutdown. That removes a growth headwind, which
in and of itself seems to argue for at least
stable interest rates. But one of the things that's striking
is when you look at the equity market, this knee
jerk response is to go right away to the riskier
(12:58):
corner of the market.
Speaker 5 (13:00):
Well, I think that's where people think the growth is
and that's where they can, you know, try to make
the most money in the market. But that opportunity comes
with a much much higher risk, and we're we're living
and watching that in real time. You know, when you
start talking about AI and we start talking about the
riskiest parts of the market, you know, we're talking about tech,
we're talking about cutting edge tech from for the most part, right,
(13:21):
you're also talking about big companies, you know, with really
good profit margins and making a ton of money, and
you certainly still have the startup side of that. But
we're in this potentially transformative stage of the Again, you've
heard AI called the next Industrial revolution, and it is
just it is just right for tremendous amounts of volatility.
(13:42):
And again, this market's been on edge, so it doesn't
take much to move it one way or the other.
And we're and honestly we're living that. You think back
until all of twenty twenty five, so far, we've we've
seen a tremendous amount of volatility, and look, I just
looked back to last week, what the market did last
week versus what it did today, And who the heck
knows we will be by Friday of this week, but
it will certainly be bouncing around a lot.
Speaker 1 (14:02):
So I'm curious, Chuck, do you want to d risk
a bit on a day like today when the direction
of the market is expressing so much positivity?
Speaker 5 (14:10):
Well, you know, I think the whole concept of d risking,
which which quite candle these is a conversation we're having
with more and more clients given this really strong run
on the market, you know, twenty three, twenty four and
now to twenty five andison, There's there's nothing wrong with
trimming some winners, like we've seem to have gotten away
from that. But there's there's nothing wrong with looking at
(14:30):
each of our clients and reminding them of what their
risk tolerance is, what their overall asset allocation should be.
And the challenge is is like tech now makes up
like thirty some odd percent of the SMP five hundred, Right,
So if you've done nothing, you've become undiversified, and you know,
taking a little bit off money off the table is
not a bad idea. Now, we're not doing that based
upon Friday, the market did this, and today the market's up.
(14:52):
I mean, if you look at the trend, obviously that
correction last week was off of a very high level,
so you know, we've sort of got to put it
in perspective. But we do think that long term trend
is bullish. And then again, when you start to talk
about de risking, well it's like, essentially, are you just
moving equities from one bucket to another?
Speaker 6 (15:09):
Are you taking it from growth to.
Speaker 5 (15:11):
Value, or are you moving more to fixed income to
really really give you some dipversification. But those are the
types of conversations we're having with clients every day.
Speaker 1 (15:18):
So ending the shutdown obviously means a return of economic
data that's been sorely lacking. It will also help maybe
give the markets a little bit of insight into what
the Fed may do next. Where are you right now
in terms of the Fed outlook?
Speaker 5 (15:34):
Well, I think it's you know, the most recent pronouncement
we had one we had you know, jer Powell saying
that he was driving in a fog, right, So hopefully
that fog lifts a little bit with some data that
comes back out. But the data itself has sort of
been all over the place, so I mean not to
hedge it, but the labor market, I think, is really
what's going to drive what the Fed does in December.
(15:55):
And if you get I think labor at best is muddled,
and if we get some really weak employment reports, then
I think the Fed will cut. Inflation seems to be
you know, muted slash, sort of anchored right now, So
I really think it's going to be excuse me, it's
going to be labor and the employment reports that will
drive what the Fed does in December. And honestly, you've
(16:16):
gotten sort of conflicting data on that, so I don't
want to call it fifty to fifty, but I think
you're darn close at this point.
Speaker 1 (16:22):
So you were talking a moment ago about diversification maybe
into the fixed income space. Are there opportunities that you
want to share right now in terms of maybe maybe
it's the corporate segment of the bond market. Maybe you're
looking at US treasuries. How are you playing fixed income.
Speaker 6 (16:37):
Yeah, well, you some bonds are behaving like bonds.
Speaker 5 (16:41):
So you know, you've got your average intermediate you know,
core investment grade bond funder bond ETF is up about
seven percent year to date. And in an environment where
the Fed, you know, is going to be being more accommodata,
that generally is a rosy picture for fixed income and
you've seen that. And again you're seeing people that have
been in treasuries for a while and really they probably
(17:03):
would have been better off in the past couple of
years in either you know, ultra short short INTERMD term
bond fund. So we do think there's opportunity there. Mortgage
backed securities, you know, right now, based on some conversation
we had with a really solid PM, seems to provide
an opportunity. And you know, we diversify, We diversify with
credit quality and we diversify with duration.
Speaker 6 (17:23):
But you know that's that party.
Speaker 5 (17:24):
Someone's portfolio is really doing darn wells so far this year.
Speaker 1 (17:28):
Are you fully invested right now or maybe you're sitting
on a little bit of dry powder?
Speaker 3 (17:32):
Which is it?
Speaker 5 (17:34):
Well, you know, as a firm, that question really is
more driven towards you know what are our where are
our clients sitting right? So as a firm, we're not
really investing firm capital. But what I can tell you
is there is still a fair amount of cash sitting
on the sidelines. Now you're you know what direction that's going, right,
So money markets right now or you know, three point
seven three point eight percent down from four and change
(17:56):
so that the Fed keeps cutting, we know which direction
that is going to go. But you know, we generally
have a plan for clients to get them invested. It's
one of the challenges, quite candidly right now, is getting
new money to work given these elevated levels of the
market and elevated levels of pes.
Speaker 6 (18:12):
So sort of using.
Speaker 5 (18:14):
Dollar cost averaging, legging into the market, or if you've
got a solid plan and all of a sudden the
market drops, you know, you get a rollboll of a week,
maybe accelerate that plan a little bit. But it is
interesting because you know, we see politics and people's political
leanings really drive a lot of their thoughts about whether
this is a good market, bad market, you know, a
wonderful time the end of days. So it's it's really
(18:35):
an interesting conversation depending upon which way someone is leaning politically.
Speaker 1 (18:40):
So if you're expecting more volatility in big cap tech,
do you necessarily think that we may be on the
verge of a pullback that would then give you an
opportunity to jump back in.
Speaker 5 (18:51):
Well, look, we just saw one right and two thirds
of it got it got taken back in the day today,
So I think nobody would be surprised given that sort
of how you know, it almost feels like this market
is a rubber band that's especially tech large growth has
been is a rubber band that's been built very tight,
and any little thing can sort of snap it or
cause it to snap back. So I don't think anybody
(19:13):
would be shocked or surprised with, you know, take out
of the picture like some a geopolitical event or something
like that. Let's just sort of stay with the financial markets.
Speaker 6 (19:21):
Who knows.
Speaker 5 (19:22):
You get some new government data and all of a sudden,
employment's really strong and it doesn't look like the Fed's
going to cut rates and that might upset the markets.
Speaker 6 (19:29):
It's going to be an opportunity.
Speaker 5 (19:30):
So I mean, we have been trying and have for
a couple of years now, if not many many years,
trying to set the right expectations with client to expect
now volatility, Good lord, look at what happened back in April, right,
and use that to your advantage and realize that it's
the normal functioning of a market.
Speaker 6 (19:48):
But for the folks that.
Speaker 5 (19:49):
Have money in cash, you know, and if you know,
you think back to April when in the video was
traded below one hundred and I got up to two hundred.
Speaker 6 (19:56):
Now I don't know where it closed today, one eighty something.
Speaker 5 (19:58):
I'm guessing you know, the market will give you an opportunity,
and you just have to have the discipline and quite candidly,
sometimes the intestinal fortitude to stick it out and put
money into the market when psychologically and emotionally it feels
like the worst time to put money in the market.
Speaker 1 (20:13):
So Chuck, what is your view on the use of leverage?
Give me your philosophy in applying leverage to a trade.
Speaker 5 (20:21):
We're generally not fans, you know. I think you're you know,
you generally will understand the bite of leverage.
Speaker 6 (20:29):
You want to.
Speaker 5 (20:29):
Appreciate it many times on the upside, but good lord,
when it works against you, you will feel every ounce
of it. And really, I think leverage certainly does have
a role with certain different types of investment strategies.
Speaker 6 (20:42):
But you really need to make sure.
Speaker 5 (20:44):
That because again you're levering up the risk in the
hopes of a greater return, and so you know, you
just got to be really careful with it. So for
the average client, it's not something where, you know, we
recommend for more sophisticated clients. If it's a know, an
interval fund or private investment that uses leverage and the
(21:05):
clients are more sophisticated in nature and understand the risks
and the returns of it, then certainly we do invest
in certain things like that. But by and large, for
the average investor, you know, the leverage, you don't really
ever appreciate the full upside of it.
Speaker 6 (21:18):
But boy, when it moves against you, you feel it.
Speaker 5 (21:20):
And a lot of bad market stories start with, oh,
they were highly levered, and those stories generally don't end well.
Speaker 1 (21:29):
You're right about that, Chuck. Always a pleasure, Thank you, sir,
very much. Chuck Camillo there. He is the president and
CEO at Essex Financial, joining us from Essex, Connecticut 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
(21:51):
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. Welcome to the Daybreak
Asia podcast time. Doug Prisoner Equity markets in the APAC
region are hired today after a rally in US stocks,
we saw plenty of positivity stateside to what appears to
(00:23):
be an end to the US government shutdown, and in
a moment we'll check in on the US side of
things with Chuck Camelo of Essex Financial. We begin in
Australia where the UBS Australasia Conference is underway, and it's
there we caught up with Kurt Campbell. He is co
founder and chairman of the Asia Group. He's also a
former US Deputy Secretary of State. Campbell spoke with Bloomberg's
(00:46):
Paul Allen and they began the discussion by looking at
the prospects of a trade deal between the US and India.
Speaker 2 (00:53):
We heard some remarks from President Trump saying, they don't
love me at the moment, but they'll love me again,
even the difficulties, the tension in this relationship. But do
you see any lasting damage that's been done.
Speaker 3 (01:05):
Well, it's a very important question.
Speaker 4 (01:08):
After the election last year, I would say the government
that I worked with that was most confident that they
could manage President Trump given the first term successes was India,
and of course what we've seen in recent months is
really a whole scale collapse in relations at the highest levels,
(01:28):
Lots of tension and very little communication between President Trump
and Prime Minister Moody. I think some misunderstandings about who
gets nominated for a Nobel Prize and some of the
issues associated with the US role and what went on
between the fighting between Indian Pakistan earlier in the year,
(01:49):
but let's put that aside.
Speaker 3 (01:50):
Now.
Speaker 4 (01:50):
It's clear that both countries want to try to rebuild relations.
Each leader is sensitive about how to do that. But
in the background, trade negotiators have really hammered what I
think hammered out what I think is a very substantial
trade agreement between India and the United States that will
(02:10):
take tariffs down from almost forty percent to I think
a livable range, and you'll see substantial areas where India's
markets will open to further cooperation with American tech firms,
manufacturing and the like.
Speaker 3 (02:28):
So I'm optimistic about this.
Speaker 4 (02:31):
I would simply say that the most important element of
our Indo Pacific strategy is a strong and growing relationship
with India. I was very troubled that relations had fallen
to such a low level. Your important question really is
will there be lasting damage? And the honest answer is
(02:51):
probably some. But we'll just have to see how deep
that is.
Speaker 2 (02:55):
Well, I know it's an appealing idea to stait aside
the India Pakistan conflict, but at the same time President
Trump is also trying to nurture relationship with Pakistan, inviting
an army chief to visit the White House as well.
So how to balance that relationship?
Speaker 4 (03:08):
Well, look, I would say almost all our strategic interests
lie with India, and I think our engagement with Pakistan
is substantially different and much less significant since the Cold
War and the period thereafter.
Speaker 2 (03:26):
Nurturing that relationship does risk alienating India.
Speaker 4 (03:29):
It does, and it is also the case, and I
think we just have to be honest about this, Paul.
Really it is Pakistan that is more, shall we say,
effectively engage the Trump family with a variety of engagements
on cryptocurrency and resorts and the like, But still the
most important relationship for US is India. We should not
(03:52):
just tilt towards India. We should fundamentally embrace India, and.
Speaker 2 (03:56):
Of course in the background is China. This geopolitical positioning
has China family in mind. Do you see a new
Cold War style narrative beginning to emerge in South Asia?
Speaker 4 (04:10):
I don't know if it's a Cold War style narrative,
but I would simply say that for US strategy, a
close relationship with India is absolutely essential. I think increasingly
you see China's support for Pakistan, which is really of
central significance military and nuclear support, and that is the
(04:30):
subject of real concern for Indian interlocketors. I think the
real issue is this enduring relationship with Russia that causes problems.
Speaker 3 (04:41):
With the United States.
Speaker 4 (04:43):
India tends to be loyal to countries that have stood
with it for decades, but at the same time, I
think behind the scenes, India knows and understands that this
horrible conflict in Ukraine has alienated Russia from most countries
across the world, and frankly, India has to be more
(05:03):
responsible about that relationship.
Speaker 2 (05:05):
I want to talk a little bit about the US
China relationship as well, because I do wonder what you
make of China's pushback against the US. With a China
had a stronger hand than perhaps President Trump anticipated, and
has the balance of pound between the two countries shifted
a little.
Speaker 3 (05:20):
Well.
Speaker 4 (05:20):
Look, I will simply say this, at the beginning of
the first term, Paul, no country was thrown af ba
Hans more than China. They anticipated a different electoral outcome.
That's not the case for this second term. They come
in with a plan. They're very strategic about how they
are engaging the United States and President Trump. You'll note
(05:43):
President she senior interlocktors in China treat President Trump with
great personal respect, but at the same time, every step
that the United States has taken with respect to tariffs
or sanctions, or any step against Chinese firm or practices,
China responds immediately, and their responses tend to be highly
(06:07):
carefully designed for specific damage or signaling for the United States.
And for instance, rare magnets were shot across our bow,
making clear the vulnerabilities and key areas of technology. China
is prepared to match US step for step, and it
(06:29):
is also the case that China is stepping up in
a variety of vectors, building closer relations with a number
of countries. Just a few years ago, they were busy
alienating countries like Australia, Japan, South Korea, and India. Now
they are again on a kind of modest charm offensive,
and they realize that much of what President Trump has
(06:53):
done has been disruptive to traditional relations.
Speaker 3 (06:57):
They see an opportunity they're trying to seize it. Now.
Speaker 4 (07:00):
Hopefully, the I think relatively positive trip of President Trump
to the Endo Pacific goods stops in Japan and Malaysia
and South Korea, and at least initial engagements with China
were somewhat reassuring to Indo Pacific partners, and the hope
will be we'll be able to build on that into
the future. But I think it is undeniable that in
(07:23):
terms of the Great Game, China has made some important
steps and has some advantages.
Speaker 2 (07:29):
I just want to end on some of your thoughts
about how supply chains have been reorganized as well, and
particularly for the Bloomberg audience. What do you see this
meaning in terms of capital allocation, location and manufacturing hubs, etc.
Speaker 3 (07:42):
Well, look, I will say this, Paul.
Speaker 4 (07:44):
You know, there's obviously a lot of talk about, you know,
in each of the stops that the President made, first
with the visit of Prime Minister Albenizi to the United States,
but also Malaysia, Japan, and South Korea. The President signed
minerals deals. He's launched on a major program in the
United States that will look at new investments in areas
(08:09):
of refinement, also looking at recycling for some of these capabilities.
The truth of the matter is that if you look
at the vast majority of rare earths and critical minerals
of the ninety or so that are important to industrial
and technological pursuits, China has an overriding advantage and dominance
(08:33):
both in terms of supply and refinement, and it will
take years, if not decades for the United States and.
Speaker 3 (08:40):
Partners to match that.
Speaker 4 (08:42):
And so this is a vulnerability that has been built
up over years and it will take years to resolve.
I'm grateful that the United States, working with Australia, has
committed to attack this problem, but it will take time, resources,
and substantial commitment, not just this administration but next administrations.
Speaker 3 (09:02):
Just very quickly. We w had got a few seconds left.
Speaker 2 (09:04):
But since you hear in Australia, I wondered, did you
get a school for Anthony Albanezi in the way he's
balancing the relationship with China, the largest trading popped on
the US such an important la. Just a quick score
and a comment.
Speaker 4 (09:15):
Look, the truth is it's hard for Australians to hear
positive news. They immediately tend to dismiss it or think, oh,
someone's exaggerating. I think Primister Albinizi handled himself extraordinarily well
on his visit to Washington.
Speaker 3 (09:32):
He walked that fine line.
Speaker 4 (09:33):
He has challenges at home in terms of a population
that's skeptical of President Trump, but also a country that
wants a close relationship.
Speaker 3 (09:43):
Over the trenchion with Washington.
Speaker 4 (09:47):
He secured Aucus a variety of areas of common purpose.
Speaker 3 (09:51):
Critical minerals technology AI.
Speaker 4 (09:55):
I thought it was a very good meeting and it
keeps US Australian relations on a positive trajector.
Speaker 1 (10:00):
That is Kurt Campbell, co founder and chairman of the
Asia Group, speaking earlier with Bloomberg TV host Paul Allen
at the UBS Australasia Conference. Welcome back to the Daybreak
Asia podcast. I'm deg Krisner. Stateside, it appears we're nearing
(10:21):
an end to the US government shutdown. On Sunday evening,
eight senators in the Democratic Caucus broke with the party
to vote with Republicans and advanced legislation to end the shutdown,
And now the Senate is taking a series of votes
on a package to fund the government. This will lead
up to final passage of the bill. Now, the legislation
would still need to clear the House of Representatives before
(10:44):
the government will be able to reopen. Nonetheless, markets took
these developments as a breakthrough, since ending the shutdown would
remove a major growth headwind and a lot of uncertainty
over the outlook. For a closer look now at where
things stand, I'm joined by Chuck Camello. He is president
and CEO of Essex Financial. Chuck joins from Connecticut. Thank
(11:06):
you so much, sir for making time to chat with me.
Can we focus on this rally that we had in
the chip complex today. I think the semis have become
this proxy for the AI trade, and the Philadelphia Semiconductor
Index was up three percent today. With that, though, volatility
came crashing back down. I know we typically don't use
(11:27):
percentages when we track the VIX, but today the index
fell seven point eight percent. The VIX is sitting right
around seventeen point six. Is everything fine in the equity
market so long as AI is fine.
Speaker 5 (11:41):
Well, I think AI is a very very big theme,
but it certainly isn't everything. Right, So if you look
at what drove the market down last week, right, So
last week we had NASTAC down three percent. Today Monday,
two days later, three days later, it's up two percent.
So AI is a big part of it which is
driving the market, especially all the capital expenditures and any
(12:01):
concerns that might sort of upset that. But there's bigger
macro themes at play here. I mean, big driver today
of the market was the positive news on the government reopening.
That was a big uncertainty hanging over the market, and
it was you know, again you start messing with people's
vacations and airplanes and things of that nature, starts to
(12:22):
get more attention. That was a big one. And you know,
you just got the more positive news and sort of
open AI statement last week about the government maybe coming in.
Speaker 6 (12:33):
I mean they walk that back.
Speaker 5 (12:34):
So I think you had a couple of big blankets
come off the market today and you saw a nice rally.
Speaker 1 (12:38):
So I get the fact that there is optimism today
with the fact that we're likely to have an end
to the government shutdown. That removes a growth headwind, which
in and of itself seems to argue for at least
stable interest rates. But one of the things that's striking
is when you look at the equity market, this knee
jerk response is to go right away to the riskier
(12:58):
corner of the market.
Speaker 5 (13:00):
Well, I think that's where people think the growth is
and that's where they can, you know, try to make
the most money in the market. But that opportunity comes
with a much much higher risk, and we're we're living
and watching that in real time. You know, when you
start talking about AI and we start talking about the
riskiest parts of the market, you know, we're talking about tech,
we're talking about cutting edge tech from for the most part, right,
(13:21):
you're also talking about big companies, you know, with really
good profit margins and making a ton of money, and
you certainly still have the startup side of that. But
we're in this potentially transformative stage of the Again, you've
heard AI called the next Industrial revolution, and it is
just it is just right for tremendous amounts of volatility.
(13:42):
And again, this market's been on edge, so it doesn't
take much to move it one way or the other.
And we're and honestly we're living that. You think back
until all of twenty twenty five, so far, we've we've
seen a tremendous amount of volatility, and look, I just
looked back to last week, what the market did last
week versus what it did today, And who the heck
knows we will be by Friday of this week, but
it will certainly be bouncing around a lot.
Speaker 1 (14:02):
So I'm curious, Chuck, do you want to d risk
a bit on a day like today when the direction
of the market is expressing so much positivity?
Speaker 5 (14:10):
Well, you know, I think the whole concept of d risking,
which which quite candle these is a conversation we're having
with more and more clients given this really strong run
on the market, you know, twenty three, twenty four and
now to twenty five andison, There's there's nothing wrong with
trimming some winners, like we've seem to have gotten away
from that. But there's there's nothing wrong with looking at
(14:30):
each of our clients and reminding them of what their
risk tolerance is, what their overall asset allocation should be.
And the challenge is is like tech now makes up
like thirty some odd percent of the SMP five hundred, Right,
So if you've done nothing, you've become undiversified, and you know,
taking a little bit off money off the table is
not a bad idea. Now, we're not doing that based
upon Friday, the market did this, and today the market's up.
(14:52):
I mean, if you look at the trend, obviously that
correction last week was off of a very high level,
so you know, we've sort of got to put it
in perspective. But we do think that long term trend
is bullish. And then again, when you start to talk
about de risking, well it's like, essentially, are you just
moving equities from one bucket to another?
Speaker 6 (15:09):
Are you taking it from growth to.
Speaker 5 (15:11):
Value, or are you moving more to fixed income to
really really give you some dipversification. But those are the
types of conversations we're having with clients every day.
Speaker 1 (15:18):
So ending the shutdown obviously means a return of economic
data that's been sorely lacking. It will also help maybe
give the markets a little bit of insight into what
the Fed may do next. Where are you right now
in terms of the Fed outlook?
Speaker 5 (15:34):
Well, I think it's you know, the most recent pronouncement
we had one we had you know, jer Powell saying
that he was driving in a fog, right, So hopefully
that fog lifts a little bit with some data that
comes back out. But the data itself has sort of
been all over the place, so I mean not to
hedge it, but the labor market, I think, is really
what's going to drive what the Fed does in December.
(15:55):
And if you get I think labor at best is muddled,
and if we get some really weak employment reports, then
I think the Fed will cut. Inflation seems to be
you know, muted slash, sort of anchored right now, So
I really think it's going to be excuse me, it's
going to be labor and the employment reports that will
drive what the Fed does in December. And honestly, you've
(16:16):
gotten sort of conflicting data on that, so I don't
want to call it fifty to fifty, but I think
you're darn close at this point.
Speaker 1 (16:22):
So you were talking a moment ago about diversification maybe
into the fixed income space. Are there opportunities that you
want to share right now in terms of maybe maybe
it's the corporate segment of the bond market. Maybe you're
looking at US treasuries. How are you playing fixed income.
Speaker 6 (16:37):
Yeah, well, you some bonds are behaving like bonds.
Speaker 5 (16:41):
So you know, you've got your average intermediate you know,
core investment grade bond funder bond ETF is up about
seven percent year to date. And in an environment where
the Fed, you know, is going to be being more accommodata,
that generally is a rosy picture for fixed income and
you've seen that. And again you're seeing people that have
been in treasuries for a while and really they probably
(17:03):
would have been better off in the past couple of
years in either you know, ultra short short INTERMD term
bond fund. So we do think there's opportunity there. Mortgage
backed securities, you know, right now, based on some conversation
we had with a really solid PM, seems to provide
an opportunity. And you know, we diversify, We diversify with
credit quality and we diversify with duration.
Speaker 6 (17:23):
But you know that's that party.
Speaker 5 (17:24):
Someone's portfolio is really doing darn wells so far this year.
Speaker 1 (17:28):
Are you fully invested right now or maybe you're sitting
on a little bit of dry powder?
Speaker 3 (17:32):
Which is it?
Speaker 5 (17:34):
Well, you know, as a firm, that question really is
more driven towards you know what are our where are
our clients sitting right? So as a firm, we're not
really investing firm capital. But what I can tell you
is there is still a fair amount of cash sitting
on the sidelines. Now you're you know what direction that's going, right,
So money markets right now or you know, three point
seven three point eight percent down from four and change
(17:56):
so that the Fed keeps cutting, we know which direction
that is going to go. But you know, we generally
have a plan for clients to get them invested. It's
one of the challenges, quite candidly right now, is getting
new money to work given these elevated levels of the
market and elevated levels of pes.
Speaker 6 (18:12):
So sort of using.
Speaker 5 (18:14):
Dollar cost averaging, legging into the market, or if you've
got a solid plan and all of a sudden the
market drops, you know, you get a rollboll of a week,
maybe accelerate that plan a little bit. But it is
interesting because you know, we see politics and people's political
leanings really drive a lot of their thoughts about whether
this is a good market, bad market, you know, a
wonderful time the end of days. So it's it's really
(18:35):
an interesting conversation depending upon which way someone is leaning politically.
Speaker 1 (18:40):
So if you're expecting more volatility in big cap tech,
do you necessarily think that we may be on the
verge of a pullback that would then give you an
opportunity to jump back in.
Speaker 5 (18:51):
Well, look, we just saw one right and two thirds
of it got it got taken back in the day today,
So I think nobody would be surprised given that sort
of how you know, it almost feels like this market
is a rubber band that's especially tech large growth has
been is a rubber band that's been built very tight,
and any little thing can sort of snap it or
cause it to snap back. So I don't think anybody
(19:13):
would be shocked or surprised with, you know, take out
of the picture like some a geopolitical event or something
like that. Let's just sort of stay with the financial markets.
Speaker 6 (19:21):
Who knows.
Speaker 5 (19:22):
You get some new government data and all of a sudden,
employment's really strong and it doesn't look like the Fed's
going to cut rates and that might upset the markets.
Speaker 6 (19:29):
It's going to be an opportunity.
Speaker 5 (19:30):
So I mean, we have been trying and have for
a couple of years now, if not many many years,
trying to set the right expectations with client to expect
now volatility, Good lord, look at what happened back in April, right,
and use that to your advantage and realize that it's
the normal functioning of a market.
Speaker 6 (19:48):
But for the folks that.
Speaker 5 (19:49):
Have money in cash, you know, and if you know,
you think back to April when in the video was
traded below one hundred and I got up to two hundred.
Speaker 6 (19:56):
Now I don't know where it closed today, one eighty something.
Speaker 5 (19:58):
I'm guessing you know, the market will give you an opportunity,
and you just have to have the discipline and quite candidly,
sometimes the intestinal fortitude to stick it out and put
money into the market when psychologically and emotionally it feels
like the worst time to put money in the market.
Speaker 1 (20:13):
So Chuck, what is your view on the use of leverage?
Give me your philosophy in applying leverage to a trade.
Speaker 5 (20:21):
We're generally not fans, you know. I think you're you know,
you generally will understand the bite of leverage.
Speaker 6 (20:29):
You want to.
Speaker 5 (20:29):
Appreciate it many times on the upside, but good lord,
when it works against you, you will feel every ounce
of it. And really, I think leverage certainly does have
a role with certain different types of investment strategies.
Speaker 6 (20:42):
But you really need to make sure.
Speaker 5 (20:44):
That because again you're levering up the risk in the
hopes of a greater return, and so you know, you
just got to be really careful with it. So for
the average client, it's not something where, you know, we
recommend for more sophisticated clients. If it's a know, an
interval fund or private investment that uses leverage and the
(21:05):
clients are more sophisticated in nature and understand the risks
and the returns of it, then certainly we do invest
in certain things like that. But by and large, for
the average investor, you know, the leverage, you don't really
ever appreciate the full upside of it.
Speaker 6 (21:18):
But boy, when it moves against you, you feel it.
Speaker 5 (21:20):
And a lot of bad market stories start with, oh,
they were highly levered, and those stories generally don't end well.
Speaker 1 (21:29):
You're right about that, Chuck. Always a pleasure, Thank you, sir,
very much. Chuck Camillo there. He is the president and
CEO at Essex Financial, joining us from Essex, Connecticut 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
(21:51):
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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