July 7, 2025 • 16 mins
President Donald Trump unveiled the first in a wave of promised letters that threaten to impose higher tariff rates on key trading partners, but suggested that he was still open to additional negotiations and pushed off increased duties until at least Aug. 1. Trump began the notifications with missives announcing his intent to impose 25% levies on goods from Japan and South Korea. A dozen more followed throughout the afternoon, outlining plans to tariff foreign goods from trading partners including South Africa, Indonesia, Thailand and Cambodia. We speak to Ahmed Riesgo, Chief Investment Officer at Insigneo.
And for more analysis, we heard from Skyler Weinand, 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.
Speaker 2 (00:11):
Welcome to the Daybreak Asia podcast. I'm Doug Krisner. So
a new set of US tariffs has been set and
a new trade deal deadline has been issued. In one example,
President Trump will now impose a twenty five percent tariff
on goods from both Japan and South Korea beginning August first,
and Trump also imposed thirty six percent tariffs on goods
(00:32):
from Thailand and Cambodia, also effective August first. Interestingly, Trump
said later the new deadline is not one hundred percent firm.
Even so, the heat on US trading partners has been
turned up, especially now that the current ninety day reprieve
from those reciprocal duties is set to expire on Wednesday.
(00:52):
For a closer look, I'm joined now by Ahmed Riesco.
He is the CIO at Insignio, and Ahmed joins us
from Miami. All men, thank you for making time to.
Speaker 1 (01:01):
Chat with me.
Speaker 2 (01:02):
So today we get a new set of US tariffs
and a new trade deal deadline. Markets reacted adversely, that's
really not a surprise. Does it create a lot more
in the way of uncertainty? In your view?
Speaker 1 (01:16):
I think it does in the near term.
Speaker 3 (01:18):
However, I don't think it changes the longer term narrative,
which is that you know, Trump saw and the members
of his staff saw the uncertainty the market sell off
post Liberation Day, and I don't think they want to
return to that. So I mean we sort of expected this.
This is sort of if you look at the Trump
(01:39):
sort of playbook, this is this is par for the course.
I think if this I think if the market really
thought that these tariffs that were announced today were going
to stick, I think the market would be down a
lot more sharply than it is today. So I think, sure,
this cause is some uncertaining the short term, but I
don't think it changes the overall narrative that you know,
(02:00):
deals will get done and that the effective tariff rate
in the United States will settle somewhere between ten and
fifteen percent.
Speaker 1 (02:06):
Right.
Speaker 3 (02:07):
It's hard to say exactly where, but if it does
along that range, I think we'll be okay. I think
the markets will be able to digest that.
Speaker 2 (02:14):
We heard today from former FED Governor Kevin Walsh. His
name has been floated as a possible successor to FED Share.
J Powell and Warsh told Fox Business today that in
tariffs are not inflationary and that interest rates should be lower.
Do you believe what he's saying in terms of its
sincerity or is he lobbying for the job?
Speaker 1 (02:35):
Do you think? I think it's probably a little bit
of both.
Speaker 3 (02:40):
I do think that, you know, Trump is sort of
negotiating against himself here with Powell, meaning I think I
think Powell probably wants to cut at least one or
two insurance cuts, and I think, you know, but at
the same time, he wants to preserve the independence of
the FED, so he's less likely to cut because of
this political pressure that's being put on Trump. But I
(03:00):
do think the Fed has reasons to cut inflation has
you know, we're just simply not seeing it in the numbers.
And what's happened is that with inflation coming down, the
real FED funds rate has actually gone up quite a bit.
So monetary policy is quite restrictive right now, and given
where the labor market is in a sort of weekend state,
I think it makes sense for the FED to cut
at least two times, possibly three. Let's just hope, you know,
(03:26):
the politics can can sort of allow the Fed to
do its job.
Speaker 2 (03:29):
So do you think that has largely been discounted by
the equity market as of now. The idea that we're
going to get that many rate cuts from the FED,
and that when they do occur, that there's not going
to be a lot in the way of juice that
those right cuts provide the equity market.
Speaker 3 (03:45):
Yeah, I think if you were not to get a cut,
I think the market would react adversely to that. Right now,
the market has discounted roughly two more cuts this year,
with the first one in September and the next one
in December. Now that has oscillated a bit between two
and three cuts over the last.
Speaker 1 (04:03):
Couple of weeks.
Speaker 3 (04:04):
But surely if we were to get no federate cuts,
which again it's not our expectation and it's not what
we think should happen, I think the market would react
negatively to that.
Speaker 2 (04:13):
So where are you finding opportunity right now in the
stock market?
Speaker 3 (04:18):
Well, that's a great question. Nothing really has a lot
of conviction. I'm not in the mood to short either
equities or treasuries, and I'm certainly not in the mood
to buy the dollar.
Speaker 1 (04:31):
So I'll put it that way.
Speaker 3 (04:32):
I have, you know, sort of low conviction that the
equity rally will continue for the year. In fact, we
expect it to sort of end somewhere in the mid
six thousands. As long as you know our base case
of no recession and the effective teriffory between ten and
fifteen percent, we think that the equity market could continue
to grind higher. At the same time, that would see
(04:53):
the tenure somewhere around four and a quarter, so a
little bit lower than where it is today. But what
we do have higher conviction on is that the do
should continue to fall throughout the year.
Speaker 2 (05:03):
Is there a higher probability that we're going to see
a pullback in stocks than let's say, a grind higher inequities.
Speaker 3 (05:11):
Look, these things are impossible to say in a short term.
Who knows what the market's going to do from one
day to the next. I know we've had a very
strong rally here off the April eight lows, so you know,
some consolidation is you know, probably healthy and warranted. So
this could potentially be you know, if we have a
couple of weeks of uncertainty with the tariffs, this could
(05:32):
be the excuse that the market's looking forward to pullbacks
quite some. But the underlying trend should stay intact.
Speaker 2 (05:39):
How are you viewing market opportunities offshore right now?
Speaker 3 (05:43):
Well, on the offshore space, we we do find some
great opportunities. We like, you know, certain countries quite a lot.
One country that we're really looking at that we find
quite attractive is Argentina. We think the country, you know,
has been going through a generational change that's very positive
for capital markets, for investors, for private capital in general.
(06:07):
We had a strong rally last year, some of it
was given back at the beginning of the year. We
think this is a nice opportunity to if you missed
the original wave of that trade, to potentially go back in.
So there are some pockets of opportunities outside of the
United States, that's one of them.
Speaker 2 (06:24):
Are you holding onto a fair amount of cash right now?
Speaker 3 (06:28):
No, I would say we're pretty neutral at this point.
We had raised cash post Liberation Day and then with
the market sell off, I'm not going to say we
caught the bottom of it, but we have been able
to participate. We were able to deploy some of that
cash once we saw that the market had really already
(06:48):
priced in a good recession. Remember markets were down close
to twenty percent of the Nasdaq and some of these
other like indices. So that's already you know, that's not
too far from the median correction during a tip recession.
Speaker 2 (07:00):
So the big beautiful Bill, as we know, is now law.
It adds if you listen to what the Congressional Budget
Office is estimating about three point four trillion over the
next decade. The bond market at this point doesn't seem
to be very much concerned about that fact, are you.
Speaker 3 (07:17):
Well, Look, I'm concerned about the country's long term fiscal health,
and I'm concerned that there's no political will from either
party to address it. What I will say is that
it looks like the deficit once you factor in the
tariff revenue that's coming in. I think that's a key
component of this, which, by the way, tells you also
(07:37):
that tariffs are going to be sticky, and tariffs are
probably going to be around a lot longer than Trump
because that's revenue coming into the government right now. When
you factor in those terraffs, you're looking at a fiscal
deficit of roughly six and a half percent. Now, that's
a bad number, but we were expecting somewhere between seven
and eight percent. So this is a situation where the
(07:58):
news is bad, but it's not as bad as it
could have been, and I think this is why you're
seeing the bond market largely shrug this off for now.
Speaker 2 (08:06):
So what are your expectations for US economic growth for
the remainder of the year. Let's say I'm talking to
you from Miami. Any indication that I have been receiving
lately about the growth in Miami is that the city
is doing very well. So talk to me about the
broader landscape. How are you seeing overall US economic growth
going forward?
Speaker 3 (08:27):
Yeah, so, I mean, we're expecting US economic growth to
sort of take a bit of a downstep up, but
nothing too severe. We're expecting GDP to come in at
roughly one and a half percent. If you look at
current levels, it's looking at around one percent, So we
think the second half of the year will look better
for growth. One and a half percent sounds okay considering
(08:48):
what we were staring down the you know, staring down
the barrel come April eighth, But keep in mind, US
trend level growth is two percent, so it's not enough.
It's going to be one of the weaker years for
US growth that we've seen in quite some time.
Speaker 1 (09:03):
So even though that.
Speaker 3 (09:04):
Doesn't sound too terrible, it's not great, especially given the
debt dynamics.
Speaker 2 (09:09):
So how much of that forecast is predicated on the
notion that we're going to get a total of fifty
basis points in FED easing this year.
Speaker 1 (09:17):
Yeah, that's the base case.
Speaker 3 (09:18):
If we don't, I think growth will be slower than that.
You're seeing a lot of weakness in housing, You're seeing
weakness in the labor market.
Speaker 1 (09:30):
Again, I think if.
Speaker 3 (09:31):
Not, but for the political pressure that Trump is putting
on Powell, I think you would. My guess is, obviously
this is a counterfactual. We can't run the simulation. But
my guess is that Powell would have already perhaps cut
already at least once, or at least gearing up to
cut here shortly. But I think, you know, like I said,
Trump is negotiating against himself by putting this political pressure
(09:53):
on Powell.
Speaker 2 (09:54):
So there's a possibility, let's put the tariff story aside
for a moment, that the FED is behind the curve
of what you're saying.
Speaker 1 (10:01):
I think, so, yes, yeah, all.
Speaker 2 (10:03):
Right, we'll leave it there. Amed, Thank you so very much,
Amed Riesco. He is the CIO at Insignio. Joining from
Miami here on the Daybreak Asia podcast. Welcome back to
the Daybreak Asia Podcast. I'm Doug Krisner. Let's take a
closer look at the US tariff story. Earlier today, President
(10:26):
Trump imposed new levy rates on US trading partners beginning
August first. This would include Japan and South Korea. Interestingly,
Trump also left the door open for additional negotiations. We
got some analysis from Skyler weinand the CIO at Reagan Capital.
He joined Bloomberg TV host Heidi Stroud Watts and Avril Hong,
(10:47):
and Heidi asked the first question about the way in
which markets are reacting to the shift in US tariff policy.
Speaker 1 (10:54):
Look at the market today.
Speaker 4 (10:56):
The market's down a little, but US stock market's up
seven percent for the year. So every day that actually
goes by the volatility from that initial Liberation day receipts,
and as time goes by, it's just human nature, right,
(11:17):
So as time goes by, it has less and less
of an effect on the market. And so the market
today is pricing in those tariffs that we just saw
on the screen thirty to forty roughly, and any lower
tariff amount would obviously be very beneficial for the Asian
(11:38):
stock market.
Speaker 5 (11:41):
It's got a function of how good that US rally looks.
Speaker 2 (11:45):
Is also what we've said with.
Speaker 5 (11:47):
The US dollar, right, if you take that out of
the equation, are they better international options?
Speaker 4 (11:54):
Yeah, so you can look at Europe for sure, and
where Pe level are much lower the United States, and
interest rates have been coming down precipitously. A lot of
European countries in the Europe have been cutting, so you
have this stimulus coming in from lower.
Speaker 1 (12:14):
Interest rates, you have a better value in terms of Pe.
Speaker 4 (12:19):
All of those add up to potentially better opportunities in Europe.
Looking to Asia, it's a little bit more difficult, right,
you have Japanese inflation with Japanese wage deceleration. Market's not
doing great, but yeah, it's it's the decline of the
dollar has definitely been beneficial internationally. But as other countries
(12:44):
have been cutting interest rates and have lower interest rates,
and the US interest rates stay high, especially on the
long end, I would anticipate that that ninety seven dollars,
that ten to fifteen percent dollar decline that we've seen
to reverse.
Speaker 5 (13:03):
Why though, because we've seen in the past couple of
months the greenback hasn't been benefiting from yield differentials.
Speaker 1 (13:12):
Yeah.
Speaker 4 (13:14):
Part of that was given Liberation Day, given the administration
saying hey, basically, your money's no good here. You had
a section I think it was eight ninety nine that
just got stripped out that was going to potentially penalize
foreign investment.
Speaker 1 (13:30):
So it's just a matter of time.
Speaker 4 (13:33):
Before these carry trades set back in and make US
treasuries attractive again and accelerate the value of the dollar.
So you were still dealing with the after shocks of
the administration saying hey, get out of here. That's been
receding in. You know, stock market's gone crazy. I think
(13:57):
interest rates potentially pulling investors back in the US treasuries
will happen. Rates me need to go a little bit
higher in order for that to happen and in order
for the dollar to strengthen again.
Speaker 5 (14:11):
Yeah, it's interesting because I think you believe that the
knicks move by the Fed might actually be a hike.
What are you watching for that would inform that may
become September In terms of the aftershocks from US policy
into inflation into.
Speaker 4 (14:27):
Growth, financial conditions are as easy today as they were
three years ago. Basically right when the FED started hiking
interest rates. You have the highest stock market cap and
the US in history. You have consumer balance sheets flush
with cash, US net wealth at one hundred and seventy
(14:50):
trillion dollars, US corporations utilizing the least amount of leverage
in history. So you add all that up and you
have a tremendous sum amount of dry powder for the
market to keep going.
Speaker 1 (15:03):
Okay, look at the most recent.
Speaker 4 (15:06):
Jobs report, very very bullish for continued growth, but inflation
is still relatively high. And the US government just passed
what a three trillion dollar deficit bill, totally unnecessary spending.
We're not in war currentling hoping that we're going to
grow ourselves out of it.
Speaker 1 (15:25):
So all of these things add up to.
Speaker 4 (15:29):
Hypersonic growth and potential inflation that the FED may have
to walk back the one hundred bases points it cuts
that they put into effect last fall.
Speaker 5 (15:42):
Really interesting prospective, Skyla. Thank you so much, Skylo Wine
and a cio of Reading Capital.
Speaker 2 (15:52):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping marks, 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
(16:15):
and Australia. I'm Doug Prisner, and this is Bloomberg
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:11):
Welcome to the Daybreak Asia podcast. I'm Doug Krisner. So
a new set of US tariffs has been set and
a new trade deal deadline has been issued. In one example,
President Trump will now impose a twenty five percent tariff
on goods from both Japan and South Korea beginning August first,
and Trump also imposed thirty six percent tariffs on goods
(00:32):
from Thailand and Cambodia, also effective August first. Interestingly, Trump
said later the new deadline is not one hundred percent firm.
Even so, the heat on US trading partners has been
turned up, especially now that the current ninety day reprieve
from those reciprocal duties is set to expire on Wednesday.
(00:52):
For a closer look, I'm joined now by Ahmed Riesco.
He is the CIO at Insignio, and Ahmed joins us
from Miami. All men, thank you for making time to.
Speaker 1 (01:01):
Chat with me.
Speaker 2 (01:02):
So today we get a new set of US tariffs
and a new trade deal deadline. Markets reacted adversely, that's
really not a surprise. Does it create a lot more
in the way of uncertainty? In your view?
Speaker 1 (01:16):
I think it does in the near term.
Speaker 3 (01:18):
However, I don't think it changes the longer term narrative,
which is that you know, Trump saw and the members
of his staff saw the uncertainty the market sell off
post Liberation Day, and I don't think they want to
return to that. So I mean we sort of expected this.
This is sort of if you look at the Trump
(01:39):
sort of playbook, this is this is par for the course.
I think if this I think if the market really
thought that these tariffs that were announced today were going
to stick, I think the market would be down a
lot more sharply than it is today. So I think, sure,
this cause is some uncertaining the short term, but I
don't think it changes the overall narrative that you know,
(02:00):
deals will get done and that the effective tariff rate
in the United States will settle somewhere between ten and
fifteen percent.
Speaker 1 (02:06):
Right.
Speaker 3 (02:07):
It's hard to say exactly where, but if it does
along that range, I think we'll be okay. I think
the markets will be able to digest that.
Speaker 2 (02:14):
We heard today from former FED Governor Kevin Walsh. His
name has been floated as a possible successor to FED Share.
J Powell and Warsh told Fox Business today that in
tariffs are not inflationary and that interest rates should be lower.
Do you believe what he's saying in terms of its
sincerity or is he lobbying for the job?
Speaker 1 (02:35):
Do you think? I think it's probably a little bit
of both.
Speaker 3 (02:40):
I do think that, you know, Trump is sort of
negotiating against himself here with Powell, meaning I think I
think Powell probably wants to cut at least one or
two insurance cuts, and I think, you know, but at
the same time, he wants to preserve the independence of
the FED, so he's less likely to cut because of
this political pressure that's being put on Trump. But I
(03:00):
do think the Fed has reasons to cut inflation has
you know, we're just simply not seeing it in the numbers.
And what's happened is that with inflation coming down, the
real FED funds rate has actually gone up quite a bit.
So monetary policy is quite restrictive right now, and given
where the labor market is in a sort of weekend state,
I think it makes sense for the FED to cut
at least two times, possibly three. Let's just hope, you know,
(03:26):
the politics can can sort of allow the Fed to
do its job.
Speaker 2 (03:29):
So do you think that has largely been discounted by
the equity market as of now. The idea that we're
going to get that many rate cuts from the FED,
and that when they do occur, that there's not going
to be a lot in the way of juice that
those right cuts provide the equity market.
Speaker 3 (03:45):
Yeah, I think if you were not to get a cut,
I think the market would react adversely to that. Right now,
the market has discounted roughly two more cuts this year,
with the first one in September and the next one
in December. Now that has oscillated a bit between two
and three cuts over the last.
Speaker 1 (04:03):
Couple of weeks.
Speaker 3 (04:04):
But surely if we were to get no federate cuts,
which again it's not our expectation and it's not what
we think should happen, I think the market would react
negatively to that.
Speaker 2 (04:13):
So where are you finding opportunity right now in the
stock market?
Speaker 3 (04:18):
Well, that's a great question. Nothing really has a lot
of conviction. I'm not in the mood to short either
equities or treasuries, and I'm certainly not in the mood
to buy the dollar.
Speaker 1 (04:31):
So I'll put it that way.
Speaker 3 (04:32):
I have, you know, sort of low conviction that the
equity rally will continue for the year. In fact, we
expect it to sort of end somewhere in the mid
six thousands. As long as you know our base case
of no recession and the effective teriffory between ten and
fifteen percent, we think that the equity market could continue
to grind higher. At the same time, that would see
(04:53):
the tenure somewhere around four and a quarter, so a
little bit lower than where it is today. But what
we do have higher conviction on is that the do
should continue to fall throughout the year.
Speaker 2 (05:03):
Is there a higher probability that we're going to see
a pullback in stocks than let's say, a grind higher inequities.
Speaker 3 (05:11):
Look, these things are impossible to say in a short term.
Who knows what the market's going to do from one
day to the next. I know we've had a very
strong rally here off the April eight lows, so you know,
some consolidation is you know, probably healthy and warranted. So
this could potentially be you know, if we have a
couple of weeks of uncertainty with the tariffs, this could
(05:32):
be the excuse that the market's looking forward to pullbacks
quite some. But the underlying trend should stay intact.
Speaker 2 (05:39):
How are you viewing market opportunities offshore right now?
Speaker 3 (05:43):
Well, on the offshore space, we we do find some
great opportunities. We like, you know, certain countries quite a lot.
One country that we're really looking at that we find
quite attractive is Argentina. We think the country, you know,
has been going through a generational change that's very positive
for capital markets, for investors, for private capital in general.
(06:07):
We had a strong rally last year, some of it
was given back at the beginning of the year. We
think this is a nice opportunity to if you missed
the original wave of that trade, to potentially go back in.
So there are some pockets of opportunities outside of the
United States, that's one of them.
Speaker 2 (06:24):
Are you holding onto a fair amount of cash right now?
Speaker 3 (06:28):
No, I would say we're pretty neutral at this point.
We had raised cash post Liberation Day and then with
the market sell off, I'm not going to say we
caught the bottom of it, but we have been able
to participate. We were able to deploy some of that
cash once we saw that the market had really already
(06:48):
priced in a good recession. Remember markets were down close
to twenty percent of the Nasdaq and some of these
other like indices. So that's already you know, that's not
too far from the median correction during a tip recession.
Speaker 2 (07:00):
So the big beautiful Bill, as we know, is now law.
It adds if you listen to what the Congressional Budget
Office is estimating about three point four trillion over the
next decade. The bond market at this point doesn't seem
to be very much concerned about that fact, are you.
Speaker 3 (07:17):
Well, Look, I'm concerned about the country's long term fiscal health,
and I'm concerned that there's no political will from either
party to address it. What I will say is that
it looks like the deficit once you factor in the
tariff revenue that's coming in. I think that's a key
component of this, which, by the way, tells you also
(07:37):
that tariffs are going to be sticky, and tariffs are
probably going to be around a lot longer than Trump
because that's revenue coming into the government right now. When
you factor in those terraffs, you're looking at a fiscal
deficit of roughly six and a half percent. Now, that's
a bad number, but we were expecting somewhere between seven
and eight percent. So this is a situation where the
(07:58):
news is bad, but it's not as bad as it
could have been, and I think this is why you're
seeing the bond market largely shrug this off for now.
Speaker 2 (08:06):
So what are your expectations for US economic growth for
the remainder of the year. Let's say I'm talking to
you from Miami. Any indication that I have been receiving
lately about the growth in Miami is that the city
is doing very well. So talk to me about the
broader landscape. How are you seeing overall US economic growth
going forward?
Speaker 3 (08:27):
Yeah, so, I mean, we're expecting US economic growth to
sort of take a bit of a downstep up, but
nothing too severe. We're expecting GDP to come in at
roughly one and a half percent. If you look at
current levels, it's looking at around one percent, So we
think the second half of the year will look better
for growth. One and a half percent sounds okay considering
(08:48):
what we were staring down the you know, staring down
the barrel come April eighth, But keep in mind, US
trend level growth is two percent, so it's not enough.
It's going to be one of the weaker years for
US growth that we've seen in quite some time.
Speaker 1 (09:03):
So even though that.
Speaker 3 (09:04):
Doesn't sound too terrible, it's not great, especially given the
debt dynamics.
Speaker 2 (09:09):
So how much of that forecast is predicated on the
notion that we're going to get a total of fifty
basis points in FED easing this year.
Speaker 1 (09:17):
Yeah, that's the base case.
Speaker 3 (09:18):
If we don't, I think growth will be slower than that.
You're seeing a lot of weakness in housing, You're seeing
weakness in the labor market.
Speaker 1 (09:30):
Again, I think if.
Speaker 3 (09:31):
Not, but for the political pressure that Trump is putting
on Powell, I think you would. My guess is, obviously
this is a counterfactual. We can't run the simulation. But
my guess is that Powell would have already perhaps cut
already at least once, or at least gearing up to
cut here shortly. But I think, you know, like I said,
Trump is negotiating against himself by putting this political pressure
(09:53):
on Powell.
Speaker 2 (09:54):
So there's a possibility, let's put the tariff story aside
for a moment, that the FED is behind the curve
of what you're saying.
Speaker 1 (10:01):
I think, so, yes, yeah, all.
Speaker 2 (10:03):
Right, we'll leave it there. Amed, Thank you so very much,
Amed Riesco. He is the CIO at Insignio. Joining from
Miami here on the Daybreak Asia podcast. Welcome back to
the Daybreak Asia Podcast. I'm Doug Krisner. Let's take a
closer look at the US tariff story. Earlier today, President
(10:26):
Trump imposed new levy rates on US trading partners beginning
August first. This would include Japan and South Korea. Interestingly,
Trump also left the door open for additional negotiations. We
got some analysis from Skyler weinand the CIO at Reagan Capital.
He joined Bloomberg TV host Heidi Stroud Watts and Avril Hong,
(10:47):
and Heidi asked the first question about the way in
which markets are reacting to the shift in US tariff policy.
Speaker 1 (10:54):
Look at the market today.
Speaker 4 (10:56):
The market's down a little, but US stock market's up
seven percent for the year. So every day that actually
goes by the volatility from that initial Liberation day receipts,
and as time goes by, it's just human nature, right,
(11:17):
So as time goes by, it has less and less
of an effect on the market. And so the market
today is pricing in those tariffs that we just saw
on the screen thirty to forty roughly, and any lower
tariff amount would obviously be very beneficial for the Asian
(11:38):
stock market.
Speaker 5 (11:41):
It's got a function of how good that US rally looks.
Speaker 2 (11:45):
Is also what we've said with.
Speaker 5 (11:47):
The US dollar, right, if you take that out of
the equation, are they better international options?
Speaker 4 (11:54):
Yeah, so you can look at Europe for sure, and
where Pe level are much lower the United States, and
interest rates have been coming down precipitously. A lot of
European countries in the Europe have been cutting, so you
have this stimulus coming in from lower.
Speaker 1 (12:14):
Interest rates, you have a better value in terms of Pe.
Speaker 4 (12:19):
All of those add up to potentially better opportunities in Europe.
Looking to Asia, it's a little bit more difficult, right,
you have Japanese inflation with Japanese wage deceleration. Market's not
doing great, but yeah, it's it's the decline of the
dollar has definitely been beneficial internationally. But as other countries
(12:44):
have been cutting interest rates and have lower interest rates,
and the US interest rates stay high, especially on the
long end, I would anticipate that that ninety seven dollars,
that ten to fifteen percent dollar decline that we've seen
to reverse.
Speaker 5 (13:03):
Why though, because we've seen in the past couple of
months the greenback hasn't been benefiting from yield differentials.
Speaker 1 (13:12):
Yeah.
Speaker 4 (13:14):
Part of that was given Liberation Day, given the administration
saying hey, basically, your money's no good here. You had
a section I think it was eight ninety nine that
just got stripped out that was going to potentially penalize
foreign investment.
Speaker 1 (13:30):
So it's just a matter of time.
Speaker 4 (13:33):
Before these carry trades set back in and make US
treasuries attractive again and accelerate the value of the dollar.
So you were still dealing with the after shocks of
the administration saying hey, get out of here. That's been
receding in. You know, stock market's gone crazy. I think
(13:57):
interest rates potentially pulling investors back in the US treasuries
will happen. Rates me need to go a little bit
higher in order for that to happen and in order
for the dollar to strengthen again.
Speaker 5 (14:11):
Yeah, it's interesting because I think you believe that the
knicks move by the Fed might actually be a hike.
What are you watching for that would inform that may
become September In terms of the aftershocks from US policy
into inflation into.
Speaker 4 (14:27):
Growth, financial conditions are as easy today as they were
three years ago. Basically right when the FED started hiking
interest rates. You have the highest stock market cap and
the US in history. You have consumer balance sheets flush
with cash, US net wealth at one hundred and seventy
(14:50):
trillion dollars, US corporations utilizing the least amount of leverage
in history. So you add all that up and you
have a tremendous sum amount of dry powder for the
market to keep going.
Speaker 1 (15:03):
Okay, look at the most recent.
Speaker 4 (15:06):
Jobs report, very very bullish for continued growth, but inflation
is still relatively high. And the US government just passed
what a three trillion dollar deficit bill, totally unnecessary spending.
We're not in war currentling hoping that we're going to
grow ourselves out of it.
Speaker 1 (15:25):
So all of these things add up to.
Speaker 4 (15:29):
Hypersonic growth and potential inflation that the FED may have
to walk back the one hundred bases points it cuts
that they put into effect last fall.
Speaker 5 (15:42):
Really interesting prospective, Skyla. Thank you so much, Skylo Wine
and a cio of Reading Capital.
Speaker 2 (15:52):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping marks, 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
(16:15):
and Australia. I'm Doug Prisner, and this is Bloomberg
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