May 29, 2025 • 18 mins
A federal appeals court offered President Donald Trump a temporary reprieve from a ruling threatening to throw out the bulk of his sweeping tariff agenda, giving at least some hope to a White House now facing substantial new restrictions on its effort to rewrite the global trading order. Meantime, Asian shares and US stock futures declined as uncertainties around President Trump’s tariffs whipsawed the markets. For more, we spoke to Mary Nicola, Bloomberg MLIV Strategist.
Plus - the US equity market advanced as it grappled with several forces such as solid guidance from Nvidia, legal uncertainty around President Trump's trade war and questions about monetary policy. That is after the fact President Trump pushed Federal Reserve Chair Jerome Powell to lower interest rates. We speak to Scott Ladner, Chief Investment Officer at Horizon Investments.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Daybreak Asia podcast. I'm Doug Chrisner. So
President Trump's tariffs will remain in place, at least for now.
That's because a federal appeals court has stayed a ruling
one that was issued late yesterday by the Court of
International Trade and it found the tariffs to be illegal,
and the court said the President overstepped the use of
(00:31):
the International Economic Emergency Powers Act to justify them. So
in allowing these tariffs to remain, the Federal Appeals Court
said it needs time to consider challenges. For a closer
look at what's happening with the tariff story, I'm joined
now by Bloomberg Markets Live strategist Mary Nicola, who joins
us from Singapore. Good of you to make time to
(00:52):
chat with us, Mary, and there is so much to
talk about when it comes to tariffs. Can you begin
by giving me a sense of what this appeals court
decision has done and what it is set in motion.
Speaker 1 (01:04):
Yeah, I think initially when actually when the ruling came out,
there was a great deal of specticism, and we wrote
that quite a bit on the blog because of the
fact that we knew there would be a lot of
tip for tat and back and forth between the Trump
administration and the courts because of how important they have
seen tariffs not only for trade policy, but also for
(01:27):
the impact and as tariff as a revenue generator as well.
And we heard similar comments from Scott Bessen, the Treasury
Secretary this for my morning essentially, and what I think
overall is it just adds to the policy uncertainty. So
a lot of what was fueling the Cell America trade
was because of policy uncertainty, and I think that just
(01:49):
doesn't go away, but just adds fuel to the fire
because if one thing we know for sure is that
it's likely to drag on, and even if it goes
to the Supreme Court, there's still the possible ability, as
we've seen from previous precedent by the Trump administration, that
it gets ignored.
Speaker 2 (02:05):
It's very interesting because the data is now beginning to
reflect the price that the American economy is paying for
these tariffs. If you take a look at the GDP
revision today that we add for Q one negative two
tens of one percent overall, and you refer to the
fact that Scott Bess and the Treasury secretary was making
comments very recently. He told Fox News that a call
(02:28):
may be required between President Trump and Chinese President chi
Jinping in order to reach a trade deal, because, in
his characterization, these trade talks with China are a bit stalled.
Do you think Beijing is going to take advantage of
this situation at all?
Speaker 1 (02:43):
We have to keep in mind how China is, and
it always plays the long game, so it's always going
to act, obviously, of course, in its own interests. And
I think what we're going to see out of China
is just especially when we saw the exceptionally punitive tariffs
that the US had put out on China, and then
a quick renake as well, so that combination and that
(03:08):
what they saw has also set a precedent and indicated
to other countries that they should do something very similar.
So I think in general, of course, for China, it's
always about what is best for China, not taking into
consideration really what's better for the United States, And of
course they're going to act in their own interests. So overall,
(03:30):
I think what we're going to still see from China
is just a long drawn out process similar to what
we saw from Trump one point zero and how we
saw an actual deal was in sign till twenty twenty,
when we started the rumblings of the trade war at
the very beginning of his administration in early twenty seventeen.
Speaker 2 (03:52):
Let's not forget the fact that there are many trade
negotiations happening right now. We've got Japan, South Korea, Vietnam
among the countries in Asia that are at the negotiating
table right now trying to hammer out agreements. So I'd
like to change gears if we can right now and
talk a little about the inflation story in Japan. I'm
looking at a much stronger yen right now at around
(04:13):
one forty three eighty. We're up against the greenback by
around three tens of one percent. It seems like a
hot print on Tokyo CPI is driving a lot of
this price action. Is that the way you're seeing it?
Speaker 1 (04:25):
Yeah, absolutely, I think there is. It was stronger. It
was an upside surprise on core inflation, and there was
an upside surprise on the what they describe as core core,
which is ex food and energy. So I think there is,
and that's what is keeping the market jittery, especially the
bond markets, where the BOJ is sitting on the sidelines
(04:47):
and has paused rate hikes because of external challenges and
the external headwinds. But inflation is rising and almost looking
that it's becoming unanchored. And then of course you have
the combination of data, so that stagflationary environment is bad
for bonds, but it's also going to be put a
(05:07):
lot of pressure on the BOJ to react.
Speaker 2 (05:10):
Is that the only thing that has been putting upward
pressure on yields in Japan right now? Or is there
something else afoot?
Speaker 1 (05:16):
I think there's a concern just generally about debt sustainability.
So you have rising yields, and that's also stemming from
what we've seen in the US. There's just a concern
of debt sustainability more globally so. But then also there's
less and as a result, there's less demand for longer
(05:36):
dated yields. So we had a forty year auction that
was really that wasn't very good. Earlier this week we've
got a ten year and a thirty year as well.
There's pressure on the Ministry of Finance to reduce issuance
given the lack of demand, because at the end of
the day, if the rise in yields, and then you're
seeing the global rise in yields is just going to
make this ballooning debt that Japan is sitting on just
(06:00):
more and more unsustainable.
Speaker 2 (06:02):
Before I let you go, I want to get your
take on what happened today at the White House, President
Trump meeting with Fed share J. Powell, and basically Trump
pushed Powell to lower infrast rates. This is not really
a surprise. This is something the President has been wanting
Powell to do for some time right now, and apparently
Trump said to Powell that not cutting rates is putting
(06:25):
the US at a disadvantage to China and other countries.
And I'm reading between the lines here and really imagining
that what he's talking about is a weaker currency, that
that's really what he wants. Is that a fair statement?
Speaker 3 (06:37):
Yeah?
Speaker 1 (06:37):
I think so. And overall we've been getting a weaker
dollar largely because of this policy uncertainty, right whether it's
coming from the pressure on the FED to cut rates,
whether it's coming from tariffs, all of that is fueling
a weaker dollar. And then of course you're hearing more
and more murmurings about the currency being on the table,
(06:58):
especially when it comes to trade TALKSCUS trade early and
we were talking about talks coming in with Japan, Korea, Vietnam.
These are some of the countries where the US has
a huge deficit with and also the currencies remain relatively
undervalued when you look at it from a long term perspective.
So the trend for a weeker dollar is very clear
(07:18):
in terms of what the administration wants, and that's again
a way of reading it between the lines, and that's
how traders are interpreting it as well, because and we
saw that we will continue to see that, is that
the dollar takes the brunt of a lot of the
moves into a lot of the headlines coming through in
(07:39):
terms of just what's happening with the administration and the Fed,
as well as what's happening on trade policy.
Speaker 2 (07:46):
We also heard today from Mary Daily. She is the
head of the San Francisco FED, and she dismissed President
Trump's pressure on the FED to lower interest rates. Daily
basically said, this is part of the job. The Fed's
going to do what's right to achieve its congressionally mandated goals.
And then when it came to the issue of monetary policy,
Daily said things are in a good place right now. So, Mary,
(08:10):
we know that the market is still expecting two rate
cuts before the end of the year. Do you think
that's about right?
Speaker 3 (08:16):
Yeah.
Speaker 1 (08:16):
I think we have to go back to what is
the dual mandate of the FED, and the FED is
not going to ignore its dual mandate even if it's
looking at uncertainty, the policy uncertainty. So you start seeing
cracks in the labor market, the FED is likely to react.
You see maybe softer inflation prints, they'll want it, They'll
think about it. In terms of saying that the impact
(08:38):
of tearuffs tariffs is likely to come through. But I
think really the key tipping point will come from the
labor market. And if you start seeing weaker be it,
weaker numbers on a monthly basis, that's really going to
get the FED to perk up and start thinking about
cutting rates and being a little bit more forgiving in
(08:59):
terms of using monetary policy and even forego some of
the expectations on inflation as a result of keeping the
labor market in a good place.
Speaker 2 (09:08):
It's always great to talk to you, Mary, Thank you
so much. I hope you have a great weekend. Mary Nicola,
there Bloomberg m Live strategist joining from Singapore here on
the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast.
I'm Doug Chrisner. So the US equity market advanced in
(09:32):
the last session as it grappled with a number of forces.
We did have that solid guidance late in the day
on Wednesday from Nvidia, and today those shares were up
by more than three percent. However, the latest data on
the economy shows a slowdown, essentially the revised first quarter
GDP number contracting at a rate of two tenths of
one percent. Also, the legal uncertainty around the President's trade war,
(09:56):
and a few questions about monetary policy after the President
told Fetcher J. Powell he's making a mistake for not
cutting interest rates. For a closer look at some of
these issues and at overall US price action, I'm joined
by Scott Ladner. He is the chief investment officer at
Horizon Investments. Scott, thank you for taking the time. I'm
(10:16):
curious right out of the gate to get the most
important issue for you that has most of your focus
right now.
Speaker 3 (10:24):
Hey, Doug, and thanks for having me on. Look. I mean,
I think it's actually a couple of things.
Speaker 4 (10:27):
I mean, I think the more the more medium term
probably uh, you know, like more striking and interesting thing
is this continued divergence we get we're getting from between
you know, but this so called soft data, you know,
I think surveys isms things like that, and and hard data,
which is, you know, the GDP print this morning, notwithstanding,
you know, really really kind of focused more on labor markets,
(10:48):
which it takes to me pretty robust. And so we've
got this this dichotomy, and this is sort of the
spibrication between soft data and surveys where consumers and people
are just saying that they're really unhappy. They they're very
dour on the economy, very you know, the very dour
in inflation and all these things, and and hard data,
which is, you know, it just just remains to be robust,
and especially on the appointment side, which is you know,
(11:09):
by far the most important of those of those hard data.
I think we're getting a little bit of a clue,
you know, continuing clue as to why we're getting this, uh,
this this sort of bifurcation. And I think it has
to do with with some of the politicalization of how
people feel based on how they voted. You know, the
most striking example is just what what folks inflation expectations
look like. If you're a publican or you're a Democrat
(11:31):
post election, it's you know, if you were if you
vote for Trump, basically you think there's no inflation. If
you didn't vote for Trump and you're a Democrat, you
think that inflation is going to be running you know,
nine ten percent over the next year. That is that's
an incredible, incredible divergence and certainly just sort of guides
how people are feeling about the world. And I think
it really kind of brings in a question how much
weight we can put into those soft data, into those
(11:52):
surveys like the like the conference Forward in University of Michigan,
things like that, And it has been very misleading over
the last couple of years to follow that stuff. Is
that it is paid much better to listen and follow
the hard data in terms of like company earnings and
and and employment data. And I think that's going to
continue here at least for the foreseeable future.
Speaker 2 (12:09):
So do you think most of that uncertainty or maybe
confusion is directly correlated to the tariff story?
Speaker 3 (12:16):
That is definitely a big part of it.
Speaker 4 (12:18):
Yeah, Doug, You know, look, I mean I don't think
anybody really loves the tariffs. I mean, you know, if
if that is one thing that folks had started to
agree on, at least in that first week after Liberation Day,
you saw Trump's poll numbers, even a something like Rasmussen
which is really sort of like Leans Leans Republican, you know,
really tanked and it hit US Nator right as, you know,
(12:38):
right right as as.
Speaker 3 (12:39):
Trump basically reverse verse course and put the paws on everything.
Speaker 4 (12:43):
And and so you know that that that tariff outlook
and sort of what it might do to short term inflation,
would it would definitely do to medium term growth, you know,
definitely definitely put a damper on how folks were feeling
about their job prospects.
Speaker 3 (12:55):
Their their income prospects, and just how you know, just
the overall economy.
Speaker 2 (12:57):
So I mentioned a moment ago, the meeting that to
place earlier today in the US between President Trump and
FED Chair J Powell. Apparently the President puts some pressure
on Powell to lower interest rates. We've been here before.
That wasn't really much of a surprise. Right now, the
market seems to be discounting to twenty five basis point
rate cuts before the end of the year. Do you
(13:19):
think that's about right?
Speaker 3 (13:20):
Yeah? I do, Actually it's I mean, it shouldn't. It's not.
Speaker 4 (13:23):
It's not surprised to any of your listeners that that
Trump would put pressure like that on Powell. He's been
very public and his criticism very public as to what
he wants Powell to do. But the data just don't
don't support what he's saying right now, at least in
the very short term.
Speaker 3 (13:37):
You know, the Fed is is as confused as any
of us in.
Speaker 4 (13:39):
Terms of like what the what these final economic policies
are going to look like, like what is it actually
going to happen? And until they get a little bit
of clarity, they're just in no rush because because you know,
inflation has come down, it's still a little bit sticky,
a little bit too high, but it's not scary right now,
and it's and it's trending still in the right general direction,
and the labor market, as I've said before, you know,
continue to hold up. So you know, time is on
(14:01):
the FED side right now. It won't probably always be
that way, but for now, until the until the Fed
gets a little bit of clarity, So like, what are
these policies really what are these policies really going to be,
what's actually going to get enacted?
Speaker 3 (14:11):
It's really tough to move.
Speaker 4 (14:12):
Ahead of you know what, what what the you know
what the economic impact would be.
Speaker 2 (14:17):
So the bond market seems to have calmed down, at
least for the moment. But let's remember back a few
weeks ago when the House was debating this spending bill,
the bond vigilanties seemed to come out in force and
send yields much higher. And I'm wondering whether you expect
the same type of price action possibly as the Senate
takes up this spending bill, and maybe we see a
(14:38):
stronger effort at reducing the deficit.
Speaker 4 (14:41):
You know, their hands are probably a little bit tied
on this, Doug. It's it's such a thin majority for
the Republicans in the House, and they really had to
twist a bunch of arms to get to even what
they got to, and and and so that, you know,
I don't think they're going to be able to do
a whole lot to this bill because I think they
I think they might end up losing the House.
Speaker 3 (14:58):
And and here's here's the problem.
Speaker 4 (15:01):
The risk for not doing this, the risk for not
for for not getting it done, is that taxes go
up massively, and that is something that the Republicans writ
large certainly don't.
Speaker 3 (15:09):
Want to happen.
Speaker 4 (15:10):
And so, you know, I think they'll end up finding
a way to take a bill that frankly, not a
whole lot of folks are super excited about on the
on the fiscal side. But the alternative is is, you know,
rather a disastrous on the tax side.
Speaker 2 (15:21):
So I mentioned the solid guidance that we had late
in the day on Wednesday from Nvidia. How are you
viewing opportunities in the equity market right now? It seemed
like the Nvidia story helped to push much of the
market higher.
Speaker 4 (15:35):
Yeah, look, I think that, you know, I still think
we are in the in the mid nineties in terms
of the right historical parallels.
Speaker 3 (15:41):
AI is is going to is.
Speaker 4 (15:43):
The big productivity boost globally, the first big one that
we're going to get. You know, you get BASICALLYET one
a generation if you're lucky. We're in the middle of
it right now. And so you know, any any move
for companies you know that look like they're spending more money,
doing more Capex trying to figure out how to actually
use AI in the in their business is you can
actually drive productivity and margins and and and the margin
(16:04):
story is really where this the rubber.
Speaker 3 (16:05):
Is the road for the equity market.
Speaker 4 (16:07):
You know, if you if you get an increase in
earnings that's sort of a linear impact on your stock
is a linear impact on earnings, you get increases on margins,
and that ends up being an exponential impact on on
on your earnings ability. And so you know that as
the market continues to sort of grapple with valuations and
everything that happening to do with all the uncertainty that's
that's been foisted upon us, you've got to kind of
(16:27):
like pull back a little bit and just realize this
technological change that we're going through in the productivity enhancement
capabilities of AI and particularly like agentic AI is just
too massive to to to ignore.
Speaker 2 (16:38):
How are you viewing opportunities outside the US right now?
Are there any let's say, maybe in Europe, maybe in
Latin America, maybe in Asia.
Speaker 4 (16:47):
Yeah, we actually like outside the US a lot right now.
It's and as much a dollar story as it is
anything else. You know, we we do think that the
dollar has started a probably a multi quarter, multi year
down trend. Nothing disastrous by any stretch of the imagination.
It's you know, we're not in that place by you know,
at all. But if you do get the dollar continuing
(17:08):
the week and you know, broadly against you know, gets
a bunch of different currencies, that's going to that's going
to be a boost towards international equity markets relative to
to US equity markets. And you know, we all know
what the valuation story is internationally. It's it is a
much better spot, a much cheaper spot than the US.
And and you've got a couple of catalysts that that
are out there in terms of you know, some potential
possible resolutions someday to the strust of the Ukraine War,
(17:31):
and and China frankly starting to pivot more towards capitalism,
uh than than they than they had over the last
five years. You haven't heard the words common prosperity come
out of President She's mouth for that to the last
couple of years as a signal to the market that
they really need to embrace private sector to to try
to win this AI race and this and this.
Speaker 3 (17:47):
Technological race against against the rest of the world.
Speaker 2 (17:50):
Scott, We'll leave it there. Thank you so much. Scott
Ladner there. He is the chief investment officer at Horizon Investments.
Joining here on the Daybreak Asia Podcast. Thanks for listening
to today's episode of the Bloomberg Daybreak Asia Edition podcast.
Each weekday, we look at the story shaping markets, finance,
and geopolitics in the Asia Pacific. You can find us
(18:13):
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 Prisner, and this is Bloomberg
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Daybreak Asia podcast. I'm Doug Chrisner. So
President Trump's tariffs will remain in place, at least for now.
That's because a federal appeals court has stayed a ruling
one that was issued late yesterday by the Court of
International Trade and it found the tariffs to be illegal,
and the court said the President overstepped the use of
(00:31):
the International Economic Emergency Powers Act to justify them. So
in allowing these tariffs to remain, the Federal Appeals Court
said it needs time to consider challenges. For a closer
look at what's happening with the tariff story, I'm joined
now by Bloomberg Markets Live strategist Mary Nicola, who joins
us from Singapore. Good of you to make time to
(00:52):
chat with us, Mary, and there is so much to
talk about when it comes to tariffs. Can you begin
by giving me a sense of what this appeals court
decision has done and what it is set in motion.
Speaker 1 (01:04):
Yeah, I think initially when actually when the ruling came out,
there was a great deal of specticism, and we wrote
that quite a bit on the blog because of the
fact that we knew there would be a lot of
tip for tat and back and forth between the Trump
administration and the courts because of how important they have
seen tariffs not only for trade policy, but also for
(01:27):
the impact and as tariff as a revenue generator as well.
And we heard similar comments from Scott Bessen, the Treasury
Secretary this for my morning essentially, and what I think
overall is it just adds to the policy uncertainty. So
a lot of what was fueling the Cell America trade
was because of policy uncertainty, and I think that just
(01:49):
doesn't go away, but just adds fuel to the fire
because if one thing we know for sure is that
it's likely to drag on, and even if it goes
to the Supreme Court, there's still the possible ability, as
we've seen from previous precedent by the Trump administration, that
it gets ignored.
Speaker 2 (02:05):
It's very interesting because the data is now beginning to
reflect the price that the American economy is paying for
these tariffs. If you take a look at the GDP
revision today that we add for Q one negative two
tens of one percent overall, and you refer to the
fact that Scott Bess and the Treasury secretary was making
comments very recently. He told Fox News that a call
(02:28):
may be required between President Trump and Chinese President chi
Jinping in order to reach a trade deal, because, in
his characterization, these trade talks with China are a bit stalled.
Do you think Beijing is going to take advantage of
this situation at all?
Speaker 1 (02:43):
We have to keep in mind how China is, and
it always plays the long game, so it's always going
to act, obviously, of course, in its own interests. And
I think what we're going to see out of China
is just especially when we saw the exceptionally punitive tariffs
that the US had put out on China, and then
a quick renake as well, so that combination and that
(03:08):
what they saw has also set a precedent and indicated
to other countries that they should do something very similar.
So I think in general, of course, for China, it's
always about what is best for China, not taking into
consideration really what's better for the United States, And of
course they're going to act in their own interests. So overall,
(03:30):
I think what we're going to still see from China
is just a long drawn out process similar to what
we saw from Trump one point zero and how we
saw an actual deal was in sign till twenty twenty,
when we started the rumblings of the trade war at
the very beginning of his administration in early twenty seventeen.
Speaker 2 (03:52):
Let's not forget the fact that there are many trade
negotiations happening right now. We've got Japan, South Korea, Vietnam
among the countries in Asia that are at the negotiating
table right now trying to hammer out agreements. So I'd
like to change gears if we can right now and
talk a little about the inflation story in Japan. I'm
looking at a much stronger yen right now at around
(04:13):
one forty three eighty. We're up against the greenback by
around three tens of one percent. It seems like a
hot print on Tokyo CPI is driving a lot of
this price action. Is that the way you're seeing it?
Speaker 1 (04:25):
Yeah, absolutely, I think there is. It was stronger. It
was an upside surprise on core inflation, and there was
an upside surprise on the what they describe as core core,
which is ex food and energy. So I think there is,
and that's what is keeping the market jittery, especially the
bond markets, where the BOJ is sitting on the sidelines
(04:47):
and has paused rate hikes because of external challenges and
the external headwinds. But inflation is rising and almost looking
that it's becoming unanchored. And then of course you have
the combination of data, so that stagflationary environment is bad
for bonds, but it's also going to be put a
(05:07):
lot of pressure on the BOJ to react.
Speaker 2 (05:10):
Is that the only thing that has been putting upward
pressure on yields in Japan right now? Or is there
something else afoot?
Speaker 1 (05:16):
I think there's a concern just generally about debt sustainability.
So you have rising yields, and that's also stemming from
what we've seen in the US. There's just a concern
of debt sustainability more globally so. But then also there's
less and as a result, there's less demand for longer
(05:36):
dated yields. So we had a forty year auction that
was really that wasn't very good. Earlier this week we've
got a ten year and a thirty year as well.
There's pressure on the Ministry of Finance to reduce issuance
given the lack of demand, because at the end of
the day, if the rise in yields, and then you're
seeing the global rise in yields is just going to
make this ballooning debt that Japan is sitting on just
(06:00):
more and more unsustainable.
Speaker 2 (06:02):
Before I let you go, I want to get your
take on what happened today at the White House, President
Trump meeting with Fed share J. Powell, and basically Trump
pushed Powell to lower infrast rates. This is not really
a surprise. This is something the President has been wanting
Powell to do for some time right now, and apparently
Trump said to Powell that not cutting rates is putting
(06:25):
the US at a disadvantage to China and other countries.
And I'm reading between the lines here and really imagining
that what he's talking about is a weaker currency, that
that's really what he wants. Is that a fair statement?
Speaker 3 (06:37):
Yeah?
Speaker 1 (06:37):
I think so. And overall we've been getting a weaker
dollar largely because of this policy uncertainty, right whether it's
coming from the pressure on the FED to cut rates,
whether it's coming from tariffs, all of that is fueling
a weaker dollar. And then of course you're hearing more
and more murmurings about the currency being on the table,
(06:58):
especially when it comes to trade TALKSCUS trade early and
we were talking about talks coming in with Japan, Korea, Vietnam.
These are some of the countries where the US has
a huge deficit with and also the currencies remain relatively
undervalued when you look at it from a long term perspective.
So the trend for a weeker dollar is very clear
(07:18):
in terms of what the administration wants, and that's again
a way of reading it between the lines, and that's
how traders are interpreting it as well, because and we
saw that we will continue to see that, is that
the dollar takes the brunt of a lot of the
moves into a lot of the headlines coming through in
(07:39):
terms of just what's happening with the administration and the Fed,
as well as what's happening on trade policy.
Speaker 2 (07:46):
We also heard today from Mary Daily. She is the
head of the San Francisco FED, and she dismissed President
Trump's pressure on the FED to lower interest rates. Daily
basically said, this is part of the job. The Fed's
going to do what's right to achieve its congressionally mandated goals.
And then when it came to the issue of monetary policy,
Daily said things are in a good place right now. So, Mary,
(08:10):
we know that the market is still expecting two rate
cuts before the end of the year. Do you think
that's about right?
Speaker 3 (08:16):
Yeah.
Speaker 1 (08:16):
I think we have to go back to what is
the dual mandate of the FED, and the FED is
not going to ignore its dual mandate even if it's
looking at uncertainty, the policy uncertainty. So you start seeing
cracks in the labor market, the FED is likely to react.
You see maybe softer inflation prints, they'll want it, They'll
think about it. In terms of saying that the impact
(08:38):
of tearuffs tariffs is likely to come through. But I
think really the key tipping point will come from the
labor market. And if you start seeing weaker be it,
weaker numbers on a monthly basis, that's really going to
get the FED to perk up and start thinking about
cutting rates and being a little bit more forgiving in
(08:59):
terms of using monetary policy and even forego some of
the expectations on inflation as a result of keeping the
labor market in a good place.
Speaker 2 (09:08):
It's always great to talk to you, Mary, Thank you
so much. I hope you have a great weekend. Mary Nicola,
there Bloomberg m Live strategist joining from Singapore here on
the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast.
I'm Doug Chrisner. So the US equity market advanced in
(09:32):
the last session as it grappled with a number of forces.
We did have that solid guidance late in the day
on Wednesday from Nvidia, and today those shares were up
by more than three percent. However, the latest data on
the economy shows a slowdown, essentially the revised first quarter
GDP number contracting at a rate of two tenths of
one percent. Also, the legal uncertainty around the President's trade war,
(09:56):
and a few questions about monetary policy after the President
told Fetcher J. Powell he's making a mistake for not
cutting interest rates. For a closer look at some of
these issues and at overall US price action, I'm joined
by Scott Ladner. He is the chief investment officer at
Horizon Investments. Scott, thank you for taking the time. I'm
(10:16):
curious right out of the gate to get the most
important issue for you that has most of your focus
right now.
Speaker 3 (10:24):
Hey, Doug, and thanks for having me on. Look. I mean,
I think it's actually a couple of things.
Speaker 4 (10:27):
I mean, I think the more the more medium term
probably uh, you know, like more striking and interesting thing
is this continued divergence we get we're getting from between
you know, but this so called soft data, you know,
I think surveys isms things like that, and and hard data,
which is, you know, the GDP print this morning, notwithstanding,
you know, really really kind of focused more on labor markets,
(10:48):
which it takes to me pretty robust. And so we've
got this this dichotomy, and this is sort of the
spibrication between soft data and surveys where consumers and people
are just saying that they're really unhappy. They they're very
dour on the economy, very you know, the very dour
in inflation and all these things, and and hard data,
which is, you know, it just just remains to be robust,
and especially on the appointment side, which is you know,
(11:09):
by far the most important of those of those hard data.
I think we're getting a little bit of a clue,
you know, continuing clue as to why we're getting this, uh,
this this sort of bifurcation. And I think it has
to do with with some of the politicalization of how
people feel based on how they voted. You know, the
most striking example is just what what folks inflation expectations
look like. If you're a publican or you're a Democrat
(11:31):
post election, it's you know, if you were if you
vote for Trump, basically you think there's no inflation. If
you didn't vote for Trump and you're a Democrat, you
think that inflation is going to be running you know,
nine ten percent over the next year. That is that's
an incredible, incredible divergence and certainly just sort of guides
how people are feeling about the world. And I think
it really kind of brings in a question how much
weight we can put into those soft data, into those
(11:52):
surveys like the like the conference Forward in University of Michigan,
things like that, And it has been very misleading over
the last couple of years to follow that stuff. Is
that it is paid much better to listen and follow
the hard data in terms of like company earnings and
and and employment data. And I think that's going to
continue here at least for the foreseeable future.
Speaker 2 (12:09):
So do you think most of that uncertainty or maybe
confusion is directly correlated to the tariff story?
Speaker 3 (12:16):
That is definitely a big part of it.
Speaker 4 (12:18):
Yeah, Doug, You know, look, I mean I don't think
anybody really loves the tariffs. I mean, you know, if
if that is one thing that folks had started to
agree on, at least in that first week after Liberation Day,
you saw Trump's poll numbers, even a something like Rasmussen
which is really sort of like Leans Leans Republican, you know,
really tanked and it hit US Nator right as, you know,
(12:38):
right right as as.
Speaker 3 (12:39):
Trump basically reverse verse course and put the paws on everything.
Speaker 4 (12:43):
And and so you know that that that tariff outlook
and sort of what it might do to short term inflation,
would it would definitely do to medium term growth, you know,
definitely definitely put a damper on how folks were feeling
about their job prospects.
Speaker 3 (12:55):
Their their income prospects, and just how you know, just
the overall economy.
Speaker 2 (12:57):
So I mentioned a moment ago, the meeting that to
place earlier today in the US between President Trump and
FED Chair J Powell. Apparently the President puts some pressure
on Powell to lower interest rates. We've been here before.
That wasn't really much of a surprise. Right now, the
market seems to be discounting to twenty five basis point
rate cuts before the end of the year. Do you
(13:19):
think that's about right?
Speaker 3 (13:20):
Yeah? I do, Actually it's I mean, it shouldn't. It's not.
Speaker 4 (13:23):
It's not surprised to any of your listeners that that
Trump would put pressure like that on Powell. He's been
very public and his criticism very public as to what
he wants Powell to do. But the data just don't
don't support what he's saying right now, at least in
the very short term.
Speaker 3 (13:37):
You know, the Fed is is as confused as any
of us in.
Speaker 4 (13:39):
Terms of like what the what these final economic policies
are going to look like, like what is it actually
going to happen? And until they get a little bit
of clarity, they're just in no rush because because you know,
inflation has come down, it's still a little bit sticky,
a little bit too high, but it's not scary right now,
and it's and it's trending still in the right general direction,
and the labor market, as I've said before, you know,
continue to hold up. So you know, time is on
(14:01):
the FED side right now. It won't probably always be
that way, but for now, until the until the Fed
gets a little bit of clarity, So like, what are
these policies really what are these policies really going to be,
what's actually going to get enacted?
Speaker 3 (14:11):
It's really tough to move.
Speaker 4 (14:12):
Ahead of you know what, what what the you know
what the economic impact would be.
Speaker 2 (14:17):
So the bond market seems to have calmed down, at
least for the moment. But let's remember back a few
weeks ago when the House was debating this spending bill,
the bond vigilanties seemed to come out in force and
send yields much higher. And I'm wondering whether you expect
the same type of price action possibly as the Senate
takes up this spending bill, and maybe we see a
(14:38):
stronger effort at reducing the deficit.
Speaker 4 (14:41):
You know, their hands are probably a little bit tied
on this, Doug. It's it's such a thin majority for
the Republicans in the House, and they really had to
twist a bunch of arms to get to even what
they got to, and and and so that, you know,
I don't think they're going to be able to do
a whole lot to this bill because I think they
I think they might end up losing the House.
Speaker 3 (14:58):
And and here's here's the problem.
Speaker 4 (15:01):
The risk for not doing this, the risk for not
for for not getting it done, is that taxes go
up massively, and that is something that the Republicans writ
large certainly don't.
Speaker 3 (15:09):
Want to happen.
Speaker 4 (15:10):
And so, you know, I think they'll end up finding
a way to take a bill that frankly, not a
whole lot of folks are super excited about on the
on the fiscal side. But the alternative is is, you know,
rather a disastrous on the tax side.
Speaker 2 (15:21):
So I mentioned the solid guidance that we had late
in the day on Wednesday from Nvidia. How are you
viewing opportunities in the equity market right now? It seemed
like the Nvidia story helped to push much of the
market higher.
Speaker 4 (15:35):
Yeah, look, I think that, you know, I still think
we are in the in the mid nineties in terms
of the right historical parallels.
Speaker 3 (15:41):
AI is is going to is.
Speaker 4 (15:43):
The big productivity boost globally, the first big one that
we're going to get. You know, you get BASICALLYET one
a generation if you're lucky. We're in the middle of
it right now. And so you know, any any move
for companies you know that look like they're spending more money,
doing more Capex trying to figure out how to actually
use AI in the in their business is you can
actually drive productivity and margins and and and the margin
(16:04):
story is really where this the rubber.
Speaker 3 (16:05):
Is the road for the equity market.
Speaker 4 (16:07):
You know, if you if you get an increase in
earnings that's sort of a linear impact on your stock
is a linear impact on earnings, you get increases on margins,
and that ends up being an exponential impact on on
on your earnings ability. And so you know that as
the market continues to sort of grapple with valuations and
everything that happening to do with all the uncertainty that's
that's been foisted upon us, you've got to kind of
(16:27):
like pull back a little bit and just realize this
technological change that we're going through in the productivity enhancement
capabilities of AI and particularly like agentic AI is just
too massive to to to ignore.
Speaker 2 (16:38):
How are you viewing opportunities outside the US right now?
Are there any let's say, maybe in Europe, maybe in
Latin America, maybe in Asia.
Speaker 4 (16:47):
Yeah, we actually like outside the US a lot right now.
It's and as much a dollar story as it is
anything else. You know, we we do think that the
dollar has started a probably a multi quarter, multi year
down trend. Nothing disastrous by any stretch of the imagination.
It's you know, we're not in that place by you know,
at all. But if you do get the dollar continuing
(17:08):
the week and you know, broadly against you know, gets
a bunch of different currencies, that's going to that's going
to be a boost towards international equity markets relative to
to US equity markets. And you know, we all know
what the valuation story is internationally. It's it is a
much better spot, a much cheaper spot than the US.
And and you've got a couple of catalysts that that
are out there in terms of you know, some potential
possible resolutions someday to the strust of the Ukraine War,
(17:31):
and and China frankly starting to pivot more towards capitalism,
uh than than they than they had over the last
five years. You haven't heard the words common prosperity come
out of President She's mouth for that to the last
couple of years as a signal to the market that
they really need to embrace private sector to to try
to win this AI race and this and this.
Speaker 3 (17:47):
Technological race against against the rest of the world.
Speaker 2 (17:50):
Scott, We'll leave it there. Thank you so much. Scott
Ladner there. He is the chief investment officer at Horizon Investments.
Joining here on the Daybreak Asia Podcast. Thanks for listening
to today's episode of the Bloomberg Daybreak Asia Edition podcast.
Each weekday, we look at the story shaping markets, finance,
and geopolitics in the Asia Pacific. You can find us
(18:13):
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 Prisner, and this is Bloomberg
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Special Summer Offer: Exclusively on Apple Podcasts, try our Dateline Premium subscription completely free for one month! With Dateline Premium, you get every episode ad-free plus exclusive bonus content.