April 29, 2025 • 21 mins
As the S&P 500 closed higher for five consecutive sessions, the American equity benchmark posted its longest winning streak since November. Monday marked the fifth time in the past month the index fully wiped out an intraday gain or drop of 1% or more. The number of reversals already matches the total seen in the entire year of 2024. After the US close, President Donald Trump renewed criticism of Federal Reserve Chairman Jerome Powell as he championed his economic policies and tariff regime during a Tuesday event to mark his 100th day in office. We break down Trump's remarks with Joe Mathieu, Host of Bloomberg's Balance of Power.
As uncertainty around US tariffs looms over global markets, investors in Asia are looking ahead to key economic data from China to get a sense of the macro environment. We speak with Mary Nicola, Bloomberg MLIV Strategist in Singapore.
Plus - four of the so-called Magnificent Seven - Microsoft Corp., Apple Inc., Meta Platforms Inc. and Amazon.com Inc. - are due to report earnings this week. Analysts expect the group — which also includes Google-parent Alphabet, Tesla Inc. and Nvidia Corp. — to deliver an average of 15% profit growth in 2025, a forecast that's barely budged since the start of March despite the flareup in trade tensions. We preview the numbers with David Nicholson, Chief Research Officer at The Futurum Group.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the Bloomberg
Daybreak Asia Podcast. I'm Doug Chrisner. There was a burst
of relief in the equity market state side on reports
that President Trump would sign an executive order to ease
tariffs for the auto industry, and this morning the tone
(00:25):
in the Asia Pacific seems to be mildly positive. In
a moment, we'll look at the market action with our
friend Mary Nicola, Bloomberg Market Live strategist in Singapore, and
a bit later we'll preview tomorrow's mag seven earnings with
David Nicholson. He is the chief research officer at Futurum Group.
But we begin this morning in the US state of Michigan.
(00:45):
President Trump spoke at a rally late Tuesday to mark
his first one hundred days in office for his second term.
Speaker 2 (00:52):
They're coming from India, They're coming from France, They're coming
from Spain. Yeah, they're coming from China to Yeah, they're
coming from China. They're coming from all over the world
to see you. President. They want to make a deal.
They want to make a deal, and you know, we'll
make deals, but we don't have to. We are the
ones that have the product. We are the ones at
(01:15):
the United States. They want a piece of our product,
we can just set the price. But I want to
be respectful and I want to be nice.
Speaker 1 (01:22):
For a little bit of analysis, let's bring in Joe Matthew.
He is co host of Bloomberg's Balance of Power. Joe's
on the line from Washington, DC. Thank you so much
for making time. I'm sure it's been a busy day.
Can you summarize what we heard this evening from the
President and try to make sense of this?
Speaker 3 (01:37):
Well, I'll tell you what. I don't know if I
can do both of those for you, Doug, but I'll try.
The White House frame this as an achievement speech, one
hundred days of greatness, read the signs. But I have
to tell you we heard a lot about the same
issues that we did on the campaign, Trill. This was
largely a campaign style rally, as he did refer to
Democrats cheating on the election, which is an allegation we
(01:58):
cannot support. He talked about it, even set the border,
and he did get into inflation in prices, got into
tariffs and trade. Doug spoke about j Powell and said
about the Fed Shore you're not supposed to criticize him.
Let him do his own thing. But I know much
more than he does about interest rates. It sounds like
an emboldened Donald Trump who really missed being on the
trail stop.
Speaker 1 (02:18):
I'm going to go out on a limb here and
say that underneath a lot of the words that we
heard from the president this sense that he is painfully aware,
well aware of the level of disapproval on some of
his economic policy. And I think center stage is obviously
the story on tariffs. Is that a fair statement?
Speaker 3 (02:35):
Sure? Although he did address the polling, he said it's
the result of bad polling by crooked people who interview
more Democrats than Republicans. We of course see the sampling
that these pollsters use, and they don't call more Democrats
than Republicans, and frequently even put a curve on numbers
to make up for bias when it comes to political standing.
So this is a White House and a president's very
(02:56):
familiar with the approval ratings. They don't always believe what
they are saying, but they do believe that in the
second half of this year, with trade policies in place,
trade deals in place, that we could see growth that
we're not enjoying right now, Doug. The juries out on that,
with the front loading that we've been seeing in the
front running ahead of tariffs, we could be well talking
about a GDP contraction tomorrow morning and continued declines as
(03:19):
we work our way through the year.
Speaker 1 (03:20):
It's very interesting you mentioned the commentary around the Fed chairman,
but very little in the way of discussions about the
volatility in the stock market.
Speaker 3 (03:29):
Isn't that true? And something tells me that if we
were at all time highs, we would be hearing about that.
It's an issue that the president, of course obsessed over
the markets in his first term and has really turned
away from. He said recently in Washington, Doug almost like
it was a different person that he's more concerned about
Main Street than Wall Street. Whether or not he believes
that is another question. We certainly did not hear about
(03:50):
stocks and bonds tonight.
Speaker 1 (03:51):
So obviously, for the mission and economy, it's very much
tied to the auto industry. And earlier in the day
the President did sign some directives aimed and easing the
impact of these tariffs. Did he talk a lot about manufacturing?
Speaker 3 (04:04):
Look, it was one of many issues that he brought up.
He didn't dwell on anything, and he was really doing
the so called weave. He would talk about something for
maybe a minute or two and go on to something else,
but did speak to the auto sector. He said that
the industry would be slaughtered if he did not reshore manufacturing,
which of course he's trying to do. And he was
there to promote this new idea of getting relief to
(04:27):
the Big three by not stacking multiple tariffs on top
of one another. He had a lot of automakers in
that room, Doug, the hard hats. They loved the idea
of tariffs. Not the same as you would hear in
the C suites when you talk to Jim Farley or
Mary Bara, as we have on Bloomberg. They are deeply
concerned about what this will mean for their business.
Speaker 1 (04:46):
Before I let you go very quickly, Joe, does this
kind of segue into the tax bill at any rate
here in the near.
Speaker 3 (04:53):
Term, Oh, big time, Doug. You're putting your finger on
the real news here. We're not going to get announcements
on trade deals anytime soon. So what starts tomorrow There
is the process of marking up the legislation on the
committee level, that will fulfill that reconciliation build. I need
to get the budget component done here, tax cuts, and
then try to put them all together for a vote.
They say that will take place by the fourth of July.
Speaker 1 (05:15):
Joe, thank you so much. It's always a pleasure. That's
Joe Matthew, co host of Bloomberg's Balance of Power. So
let's get to the market action in the Asia Pacific.
Joining me now is Mary Nicola, Bloomberg Markets Live strategist,
Mary joining from our radio studio in Singapore. I'm sure
it's been a busy day for you. It certainly has
been here in New York. And one of the things
(05:37):
that I've been sifting through a lot of the corporate
results that we have been getting, many companies have withdrawn
their outlooks given a lot of the uncertainty that you
and I have spoken about, given the impact of the
trade war. Is this something that's also kind of happening
across the Asia Pacific? Just there is so much uncertainty
right now, it's difficult to formulate an outlook.
Speaker 4 (05:57):
Yeah.
Speaker 5 (05:58):
Absolutely. I think right now the pressure on these companies
is greater than ever because if we look at some
of the trade deals that are coming through, obviously, they're
going to take time. So even US Treasury Secretary Scott
Bissent had mentioned that, you know, you could see trade
deals and some agreements of understanding as soon as this
(06:18):
week with the likes of Korea Japan. But the reality
is that these trade deals do take time, and if
we look at some of the FTA negotiations over the years,
they take several years to really come through. So looking
for a quick win is not something that these companies
really expect. So as a result, you're going to have
(06:39):
a lot of uncertainty tensions that are ratcheting up between
the US and China, and that's not abating anytime soon.
So of course, yes, you're seeing good earnings results, but
the fact that the outlooks are just completely murky just
lays a very thick cloud over a sustainable equity rally.
Speaker 1 (06:58):
Well, you're kind of suggesting that there are some negotiations
happening at least a conversation going on between Washington and
many other countries right now, but absent is a conversation
between Washington and Beijing. It was an interesting story, and
I'm sure you saw it on the Bloomberg terminal talking
about this new nationalism that is building in China where
(07:19):
it seems as though people are supporting President she and
digging in their heels and fighting back against President Trump.
Speaker 4 (07:26):
Yeah.
Speaker 5 (07:27):
Absolutely, some of the story that you were talking about.
The suggestion was that if they give in, that they're
going to want a little bit too much and how
far could it potentially go. So as a result, China's
going to hold its ground because at the end of
the day, these two are the two largest economies in
the world, so obviously they both have leverage over each other.
(07:49):
It's not like one is in a much weaker position
than the other. Let's say, for a lot of smaller
open economies in the region, for the likes of Korea,
for example, the US probably has the up hand as
a result of its larger market. But if you look
at China, China is in just as a strong position
as the US, So it is being a little bit
(08:10):
stronger in its words against the US, and of course
it's ready to dip in its toolbox if necessary to
keep growth going. And you can tell how they're how
they're going about in terms of their their stimulus. I
think investors will get eventually frustrated if you start seeing
the numbers not coming through, and then the stimulus is
(08:33):
not happening, and I think you'll see a cautious, a
more cautious weary tone, especially from foreign investors on how
far the China stocks will will rally. But at the
end of the day, it's that tensions between the two
nations that's going to really weigh on sentiments.
Speaker 1 (08:48):
So talk to me about the Chinese markets right now
as we walk up to it. I think is a
three day holiday, right it's the Labor Day holiday.
Speaker 5 (08:55):
Yes, so markets are closed Saursday, Friday, and then also
on Monday. And what you're likely to see is just
more tepid, muted price action, largely because of the fact
that there are so many headwinds along the way. So
you've got your tech earnings from the US coming through,
you have the US labor market report as well, but
also all these headlines coming out, you still have headline risks.
(09:18):
So no matter what is going on in terms of
on the data front, you always have headline risk looming.
And that's sort of the new era that we're now in.
So as a result, I think a lot of investors
are going to be pairing back squaring their positions not
really getting ahead of their themselves, and conviction out there
is a little bit wary. Sure, positive headlines are great
(09:40):
in terms of fueling the equity rally, but it's more
about a sustainable, more convincing rally that really hasn't come
through and is unlikely to come through given the amount
of headwinds that we have in the upcoming days.
Speaker 1 (09:52):
So in the next week, I know we have the
Chinese inflation data, the official readings. What type of data
points have you been looking at for the Chinese economy
right now that may help us understand what's going on
in the macro.
Speaker 5 (10:04):
Yeah, So the pmis today, I think are absolutely critical,
and we have both the I believe we have both
the official pmis and the Kaishin pmis, and those are
really setting the stage of how businesses are thinking, how
businesses are reacting to the trade, because we know in
Q one we had strong numbers because there was a
(10:25):
lot of front loading. Now you're looking at Okay, now
front loading isn't happening. We've seen the impact of the
tariffs are now coming through now that the tariffs have
been have been imposed, and of course we've seen container
and freight traffic collapse to the United States, and that's
been indicative of where things are going in terms of
(10:48):
between trade between the US and China. So I think
PMIS will be absolutely critical in terms of how sentiment
is moving. But of course CPI in the sense of
we've seen a inflation deflation coming through in the economy
and how how much worse does it get?
Speaker 1 (11:05):
Mary, is it your sense that when you look at
the way that the US is going about negotiating these
trade deals with other countries in the APAC, that the
Trump team is really trying to create a unified front
against China and box China in a little bit. And
maybe that's one of the reasons why Beijing is fighting
so fiercely against this type of control.
Speaker 5 (11:26):
I mean, that's the headlines and that's what they're suggesting.
So some of the comments from Scott Descent has been
exactly that, in terms of they want Asian nations to
work together so that they can box in China and
isolate China. But meanwhile you've got China going on a
charm offensive. So I think it was last week or
the week before where President Jijinping was traveling through Southeast
(11:49):
Asia and on the charm offense of saying that we
need to work together. So they're coming out and saying
that we still need to work within the rule B
system and the system that everyone knows, rather than taking
on a very different approach. I think either way, it
just puts these economies in a huge predicament because of
the fact that for a lot of them, it's China
(12:11):
that's the main trading partner, especially with the likes of
let's say Malaysia and the region and other countries, so
it's really hard for them to choose sides at this point.
Speaker 1 (12:22):
Mary, thank you so much. Enjoy the weekend. If I
don't talk to you beforehand, Mary Nicola. There Bloomberg Markets
Live Strategists joining from Singapore here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm Doug Krisner.
So we are gearing up for earnings from four of
(12:45):
the Max seven companies over the next forty eight hours,
and if you add Broadcom to the mix, you have
the collective that future on group calls the eight aces.
Joining me now for a preview of these numbers is
David Nicholson. He is chief re search Officer at future. David,
thank you for making time to chat with us. So
much of the conversation in markets these days has been
(13:06):
around the impact of tariffs. We get that. Is it
likely to show up in anything that we're going to
hear from any of the mag seven members this week?
Speaker 4 (13:15):
I think so. I think it's based it's sort of
baked in implicitly though, and it's based on the unknown
and the chaos that is before us. So I would say,
minus tariffs, everyone would be reporting better guidance, likely better results.
(13:36):
So I think all of the chaos associated with tariffs
is a headwind. It's just nearly impossible to figure out
exactly how much that will impact each of these companies.
Speaker 1 (13:47):
So is it really a lack of confidence in the
c suite and very little in the way of visibility
that can drive the outlook.
Speaker 4 (13:54):
One hundred percent? Look take a step back. Seventy percent
of the US economy is driven by consumer spending. The
number one driver of consumer spending is consumer sentiment, and
we're seeing declining consumer sentiment numbers because people don't like chaos.
People don't like being concerned about losing their jobs, people
(14:14):
don't like people don't like not knowing what things are
going to cost in the future. Do you race out
and buy that new iPhone today for fear that something
will change. Chaos is not good and we're essentially watching
economic sausage being made and it's a bloody affair. It's
not good for anyone, not for consumers, not for the
C suite.
Speaker 1 (14:35):
So to what extent are we going to hear from
these companies increases in cap X spending that are really
aimed at satisfying demands from the Trump administration that corporations,
big corporations in particular invest more in the American economy.
Speaker 4 (14:52):
I think we'll continue to see those moves. We'll hear
those things. A bit of it will be for show.
There are instances way where investments in data center infrastructure
and the like have already been planned. But whenever you
can get credit for investing in the US, you will.
I think it's impossible to deny that we are in
(15:12):
a global economy. There's nothing that we can do to
reverse that. And really the whole tariff question I think
will be settled in the next three to six months,
where I hope we can get to a reasonable insane
trade policy.
Speaker 1 (15:27):
So we heard from super Micro computer After the closing
build a company reported preliminary adjusted earnings for the latest
quarter well below expectations, and super Micro was saying that
some customers have delayed their decisions. Is this something that's
going to be a part of the narrative that the
customers that these companies serve that we'll hear from this
(15:49):
week still have a customer base that's pretty fragile.
Speaker 4 (15:53):
I believe that there is, I wouldn't really call it fragility,
and frankly, frankly, I think that tariffs will be used
as a bit of an excuse for a lot of
these companies, when the real reason is that the answer
to the question AI r O I WTF question Mark
(16:14):
just haven't gotten there yet. And I think that we're
that there is a pent up demand for show me
how I can make money with AI. There's been a
lot of frontloaded investment, a lot of expectations that AI
will deliver us from all of our prior monetary sins
as an example, and those things will come over time.
(16:35):
But there, you know, we sense a rising level of
anxiety around this idea of the value of AI needing
to be proven at the street level. And I think
tariffs will be used as sort of an excuse to
mask that larger fear. That's that's a subcurrent.
Speaker 1 (16:55):
So we also heard from Snap now the company beat
estimates for the revenue side in the first quarter, but
in terms of the outlook they decline to issue a
sales forecast for the current period because of macroeconomic headwinds
affecting the company's AD business. Now, for a company like
Meta that we will hear from this week, also looking
(17:15):
to the ad business as a primary revenue driver, does
that same thing? Could that same thing hold true macroeconomic
uncertainty or macroeconomic headwinds.
Speaker 4 (17:26):
Frankly, I think that's a fair thing to hang your
hat on to say, hey, look, it would be disingenuous
to make to tight a prediction in the face of
such uncertainty. However, I'm not sure that I don't think
Meda can get away with it. The good news for
Meta is, at least based on what we've recently seen
from Alphabet, from Google Ads, the impact that this has
(17:50):
all had on AD revenues has it been as bad
as maybe we would have expected. So I don't think
medic can get away with the same idea of Hey,
We're not going to issue guidance based on chaos, but
I think actually that's a reasonable thing to assert as
the stage of the game.
Speaker 1 (18:05):
So I want to get your reaction to news that
we had today from Meta Platforms, the release of a
news standalone AI app, Meta Ai. This is aimed at
competing with a chatbot like open AI's chat gpt. Is
this something that the company potentially has the ability to
really put out in force. Given the fact that Meta's
(18:26):
tentacles seem to cover so much of the social media landscape,
do they have an inherent competitive advantage?
Speaker 4 (18:33):
I think they're starting from a position of strength. I
still think that Apple has the greatest inherent advantage in
this space. And if the game is And by the way,
what Meta is doing right now with their Lama con
having a developer's conference to foster unity and community in
(18:58):
this space, to create an eco system, to create a
platform that will that people will gravitate to. That's something
that Microsoft is doing. It's something that Aws and Amazon
are doing, It's something that Apple is doing. So the
sort of clash of the titans there is it remains
to be seen who will be successful. I would I
(19:19):
would put Meta at middle of the pack in that race.
I would say that that arguably Google slash Alphabet is
a bit more well positioned withy Gemini two point five.
And I think that Apple will be the quiet dark
horse that will get a lot of criticism over the
next year or so, but I think that they will
(19:39):
emerge looking very very well in the future.
Speaker 1 (19:42):
So how do you understand regulatory risk in the current environment,
the possible breakup or of a company like Alphabet or
even Meta where certain assets have to be spun off.
Is that something that you're considering or do you feel
as though these companies will will avoid that type of outcome.
Speaker 4 (20:02):
It's very very real. It's something to be taken seriously.
But that is a bit of a nuclear option. You know,
we historically we've seen things with and if you go
back to the to AT and T and the Baby
Bells and IBM, you know, attempts to go after IBM
and Microsoft. It never ends well if if something has
(20:22):
to be done legislatively punitively. So I think that in
both cases there will be satisfactory outcomes that will include
the injection of AI into this mix to sort of
take the pressure off both ADS and search as monopolies,
so there is volatility there that people have to consider
(20:45):
when consider owning each of those stocks. But I think
we will get through this and both companies will be
stronger coming out of whatever the resolution is.
Speaker 1 (20:55):
David, we'll leave it there. Thank you so much for
joining us. David Nicholson, he is the chief research officer
at the Futuum Group. Joining us here on the Daybreak
Asia Podcast. Thanks for listening to today's episode of the
Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at
the story shaping markets, finance, and geopolitics in the Asia Pacific.
(21:18):
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 Chrisner, and this is
Bloomberg
Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the Bloomberg
Daybreak Asia Podcast. I'm Doug Chrisner. There was a burst
of relief in the equity market state side on reports
that President Trump would sign an executive order to ease
tariffs for the auto industry, and this morning the tone
(00:25):
in the Asia Pacific seems to be mildly positive. In
a moment, we'll look at the market action with our
friend Mary Nicola, Bloomberg Market Live strategist in Singapore, and
a bit later we'll preview tomorrow's mag seven earnings with
David Nicholson. He is the chief research officer at Futurum Group.
But we begin this morning in the US state of Michigan.
(00:45):
President Trump spoke at a rally late Tuesday to mark
his first one hundred days in office for his second term.
Speaker 2 (00:52):
They're coming from India, They're coming from France, They're coming
from Spain. Yeah, they're coming from China to Yeah, they're
coming from China. They're coming from all over the world
to see you. President. They want to make a deal.
They want to make a deal, and you know, we'll
make deals, but we don't have to. We are the
ones that have the product. We are the ones at
(01:15):
the United States. They want a piece of our product,
we can just set the price. But I want to
be respectful and I want to be nice.
Speaker 1 (01:22):
For a little bit of analysis, let's bring in Joe Matthew.
He is co host of Bloomberg's Balance of Power. Joe's
on the line from Washington, DC. Thank you so much
for making time. I'm sure it's been a busy day.
Can you summarize what we heard this evening from the
President and try to make sense of this?
Speaker 3 (01:37):
Well, I'll tell you what. I don't know if I
can do both of those for you, Doug, but I'll try.
The White House frame this as an achievement speech, one
hundred days of greatness, read the signs. But I have
to tell you we heard a lot about the same
issues that we did on the campaign, Trill. This was
largely a campaign style rally, as he did refer to
Democrats cheating on the election, which is an allegation we
(01:58):
cannot support. He talked about it, even set the border,
and he did get into inflation in prices, got into
tariffs and trade. Doug spoke about j Powell and said
about the Fed Shore you're not supposed to criticize him.
Let him do his own thing. But I know much
more than he does about interest rates. It sounds like
an emboldened Donald Trump who really missed being on the
trail stop.
Speaker 1 (02:18):
I'm going to go out on a limb here and
say that underneath a lot of the words that we
heard from the president this sense that he is painfully aware,
well aware of the level of disapproval on some of
his economic policy. And I think center stage is obviously
the story on tariffs. Is that a fair statement?
Speaker 3 (02:35):
Sure? Although he did address the polling, he said it's
the result of bad polling by crooked people who interview
more Democrats than Republicans. We of course see the sampling
that these pollsters use, and they don't call more Democrats
than Republicans, and frequently even put a curve on numbers
to make up for bias when it comes to political standing.
So this is a White House and a president's very
(02:56):
familiar with the approval ratings. They don't always believe what
they are saying, but they do believe that in the
second half of this year, with trade policies in place,
trade deals in place, that we could see growth that
we're not enjoying right now, Doug. The juries out on that,
with the front loading that we've been seeing in the
front running ahead of tariffs, we could be well talking
about a GDP contraction tomorrow morning and continued declines as
(03:19):
we work our way through the year.
Speaker 1 (03:20):
It's very interesting you mentioned the commentary around the Fed chairman,
but very little in the way of discussions about the
volatility in the stock market.
Speaker 3 (03:29):
Isn't that true? And something tells me that if we
were at all time highs, we would be hearing about that.
It's an issue that the president, of course obsessed over
the markets in his first term and has really turned
away from. He said recently in Washington, Doug almost like
it was a different person that he's more concerned about
Main Street than Wall Street. Whether or not he believes
that is another question. We certainly did not hear about
(03:50):
stocks and bonds tonight.
Speaker 1 (03:51):
So obviously, for the mission and economy, it's very much
tied to the auto industry. And earlier in the day
the President did sign some directives aimed and easing the
impact of these tariffs. Did he talk a lot about manufacturing?
Speaker 3 (04:04):
Look, it was one of many issues that he brought up.
He didn't dwell on anything, and he was really doing
the so called weave. He would talk about something for
maybe a minute or two and go on to something else,
but did speak to the auto sector. He said that
the industry would be slaughtered if he did not reshore manufacturing,
which of course he's trying to do. And he was
there to promote this new idea of getting relief to
(04:27):
the Big three by not stacking multiple tariffs on top
of one another. He had a lot of automakers in
that room, Doug, the hard hats. They loved the idea
of tariffs. Not the same as you would hear in
the C suites when you talk to Jim Farley or
Mary Bara, as we have on Bloomberg. They are deeply
concerned about what this will mean for their business.
Speaker 1 (04:46):
Before I let you go very quickly, Joe, does this
kind of segue into the tax bill at any rate
here in the near.
Speaker 3 (04:53):
Term, Oh, big time, Doug. You're putting your finger on
the real news here. We're not going to get announcements
on trade deals anytime soon. So what starts tomorrow There
is the process of marking up the legislation on the
committee level, that will fulfill that reconciliation build. I need
to get the budget component done here, tax cuts, and
then try to put them all together for a vote.
They say that will take place by the fourth of July.
Speaker 1 (05:15):
Joe, thank you so much. It's always a pleasure. That's
Joe Matthew, co host of Bloomberg's Balance of Power. So
let's get to the market action in the Asia Pacific.
Joining me now is Mary Nicola, Bloomberg Markets Live strategist,
Mary joining from our radio studio in Singapore. I'm sure
it's been a busy day for you. It certainly has
been here in New York. And one of the things
(05:37):
that I've been sifting through a lot of the corporate
results that we have been getting, many companies have withdrawn
their outlooks given a lot of the uncertainty that you
and I have spoken about, given the impact of the
trade war. Is this something that's also kind of happening
across the Asia Pacific? Just there is so much uncertainty
right now, it's difficult to formulate an outlook.
Speaker 4 (05:57):
Yeah.
Speaker 5 (05:58):
Absolutely. I think right now the pressure on these companies
is greater than ever because if we look at some
of the trade deals that are coming through, obviously, they're
going to take time. So even US Treasury Secretary Scott
Bissent had mentioned that, you know, you could see trade
deals and some agreements of understanding as soon as this
(06:18):
week with the likes of Korea Japan. But the reality
is that these trade deals do take time, and if
we look at some of the FTA negotiations over the years,
they take several years to really come through. So looking
for a quick win is not something that these companies
really expect. So as a result, you're going to have
(06:39):
a lot of uncertainty tensions that are ratcheting up between
the US and China, and that's not abating anytime soon.
So of course, yes, you're seeing good earnings results, but
the fact that the outlooks are just completely murky just
lays a very thick cloud over a sustainable equity rally.
Speaker 1 (06:58):
Well, you're kind of suggesting that there are some negotiations
happening at least a conversation going on between Washington and
many other countries right now, but absent is a conversation
between Washington and Beijing. It was an interesting story, and
I'm sure you saw it on the Bloomberg terminal talking
about this new nationalism that is building in China where
(07:19):
it seems as though people are supporting President she and
digging in their heels and fighting back against President Trump.
Speaker 4 (07:26):
Yeah.
Speaker 5 (07:27):
Absolutely, some of the story that you were talking about.
The suggestion was that if they give in, that they're
going to want a little bit too much and how
far could it potentially go. So as a result, China's
going to hold its ground because at the end of
the day, these two are the two largest economies in
the world, so obviously they both have leverage over each other.
(07:49):
It's not like one is in a much weaker position
than the other. Let's say, for a lot of smaller
open economies in the region, for the likes of Korea,
for example, the US probably has the up hand as
a result of its larger market. But if you look
at China, China is in just as a strong position
as the US, So it is being a little bit
(08:10):
stronger in its words against the US, and of course
it's ready to dip in its toolbox if necessary to
keep growth going. And you can tell how they're how
they're going about in terms of their their stimulus. I
think investors will get eventually frustrated if you start seeing
the numbers not coming through, and then the stimulus is
(08:33):
not happening, and I think you'll see a cautious, a
more cautious weary tone, especially from foreign investors on how
far the China stocks will will rally. But at the
end of the day, it's that tensions between the two
nations that's going to really weigh on sentiments.
Speaker 1 (08:48):
So talk to me about the Chinese markets right now
as we walk up to it. I think is a
three day holiday, right it's the Labor Day holiday.
Speaker 5 (08:55):
Yes, so markets are closed Saursday, Friday, and then also
on Monday. And what you're likely to see is just
more tepid, muted price action, largely because of the fact
that there are so many headwinds along the way. So
you've got your tech earnings from the US coming through,
you have the US labor market report as well, but
also all these headlines coming out, you still have headline risks.
(09:18):
So no matter what is going on in terms of
on the data front, you always have headline risk looming.
And that's sort of the new era that we're now in.
So as a result, I think a lot of investors
are going to be pairing back squaring their positions not
really getting ahead of their themselves, and conviction out there
is a little bit wary. Sure, positive headlines are great
(09:40):
in terms of fueling the equity rally, but it's more
about a sustainable, more convincing rally that really hasn't come
through and is unlikely to come through given the amount
of headwinds that we have in the upcoming days.
Speaker 1 (09:52):
So in the next week, I know we have the
Chinese inflation data, the official readings. What type of data
points have you been looking at for the Chinese economy
right now that may help us understand what's going on
in the macro.
Speaker 5 (10:04):
Yeah, So the pmis today, I think are absolutely critical,
and we have both the I believe we have both
the official pmis and the Kaishin pmis, and those are
really setting the stage of how businesses are thinking, how
businesses are reacting to the trade, because we know in
Q one we had strong numbers because there was a
(10:25):
lot of front loading. Now you're looking at Okay, now
front loading isn't happening. We've seen the impact of the
tariffs are now coming through now that the tariffs have
been have been imposed, and of course we've seen container
and freight traffic collapse to the United States, and that's
been indicative of where things are going in terms of
(10:48):
between trade between the US and China. So I think
PMIS will be absolutely critical in terms of how sentiment
is moving. But of course CPI in the sense of
we've seen a inflation deflation coming through in the economy
and how how much worse does it get?
Speaker 1 (11:05):
Mary, is it your sense that when you look at
the way that the US is going about negotiating these
trade deals with other countries in the APAC, that the
Trump team is really trying to create a unified front
against China and box China in a little bit. And
maybe that's one of the reasons why Beijing is fighting
so fiercely against this type of control.
Speaker 5 (11:26):
I mean, that's the headlines and that's what they're suggesting.
So some of the comments from Scott Descent has been
exactly that, in terms of they want Asian nations to
work together so that they can box in China and
isolate China. But meanwhile you've got China going on a
charm offensive. So I think it was last week or
the week before where President Jijinping was traveling through Southeast
(11:49):
Asia and on the charm offense of saying that we
need to work together. So they're coming out and saying
that we still need to work within the rule B
system and the system that everyone knows, rather than taking
on a very different approach. I think either way, it
just puts these economies in a huge predicament because of
the fact that for a lot of them, it's China
(12:11):
that's the main trading partner, especially with the likes of
let's say Malaysia and the region and other countries, so
it's really hard for them to choose sides at this point.
Speaker 1 (12:22):
Mary, thank you so much. Enjoy the weekend. If I
don't talk to you beforehand, Mary Nicola. There Bloomberg Markets
Live Strategists joining from Singapore here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm Doug Krisner.
So we are gearing up for earnings from four of
(12:45):
the Max seven companies over the next forty eight hours,
and if you add Broadcom to the mix, you have
the collective that future on group calls the eight aces.
Joining me now for a preview of these numbers is
David Nicholson. He is chief re search Officer at future. David,
thank you for making time to chat with us. So
much of the conversation in markets these days has been
(13:06):
around the impact of tariffs. We get that. Is it
likely to show up in anything that we're going to
hear from any of the mag seven members this week?
Speaker 4 (13:15):
I think so. I think it's based it's sort of
baked in implicitly though, and it's based on the unknown
and the chaos that is before us. So I would say,
minus tariffs, everyone would be reporting better guidance, likely better results.
(13:36):
So I think all of the chaos associated with tariffs
is a headwind. It's just nearly impossible to figure out
exactly how much that will impact each of these companies.
Speaker 1 (13:47):
So is it really a lack of confidence in the
c suite and very little in the way of visibility
that can drive the outlook.
Speaker 4 (13:54):
One hundred percent? Look take a step back. Seventy percent
of the US economy is driven by consumer spending. The
number one driver of consumer spending is consumer sentiment, and
we're seeing declining consumer sentiment numbers because people don't like chaos.
People don't like being concerned about losing their jobs, people
(14:14):
don't like people don't like not knowing what things are
going to cost in the future. Do you race out
and buy that new iPhone today for fear that something
will change. Chaos is not good and we're essentially watching
economic sausage being made and it's a bloody affair. It's
not good for anyone, not for consumers, not for the
C suite.
Speaker 1 (14:35):
So to what extent are we going to hear from
these companies increases in cap X spending that are really
aimed at satisfying demands from the Trump administration that corporations,
big corporations in particular invest more in the American economy.
Speaker 4 (14:52):
I think we'll continue to see those moves. We'll hear
those things. A bit of it will be for show.
There are instances way where investments in data center infrastructure
and the like have already been planned. But whenever you
can get credit for investing in the US, you will.
I think it's impossible to deny that we are in
(15:12):
a global economy. There's nothing that we can do to
reverse that. And really the whole tariff question I think
will be settled in the next three to six months,
where I hope we can get to a reasonable insane
trade policy.
Speaker 1 (15:27):
So we heard from super Micro computer After the closing
build a company reported preliminary adjusted earnings for the latest
quarter well below expectations, and super Micro was saying that
some customers have delayed their decisions. Is this something that's
going to be a part of the narrative that the
customers that these companies serve that we'll hear from this
(15:49):
week still have a customer base that's pretty fragile.
Speaker 4 (15:53):
I believe that there is, I wouldn't really call it fragility,
and frankly, frankly, I think that tariffs will be used
as a bit of an excuse for a lot of
these companies, when the real reason is that the answer
to the question AI r O I WTF question Mark
(16:14):
just haven't gotten there yet. And I think that we're
that there is a pent up demand for show me
how I can make money with AI. There's been a
lot of frontloaded investment, a lot of expectations that AI
will deliver us from all of our prior monetary sins
as an example, and those things will come over time.
(16:35):
But there, you know, we sense a rising level of
anxiety around this idea of the value of AI needing
to be proven at the street level. And I think
tariffs will be used as sort of an excuse to
mask that larger fear. That's that's a subcurrent.
Speaker 1 (16:55):
So we also heard from Snap now the company beat
estimates for the revenue side in the first quarter, but
in terms of the outlook they decline to issue a
sales forecast for the current period because of macroeconomic headwinds
affecting the company's AD business. Now, for a company like
Meta that we will hear from this week, also looking
(17:15):
to the ad business as a primary revenue driver, does
that same thing? Could that same thing hold true macroeconomic
uncertainty or macroeconomic headwinds.
Speaker 4 (17:26):
Frankly, I think that's a fair thing to hang your
hat on to say, hey, look, it would be disingenuous
to make to tight a prediction in the face of
such uncertainty. However, I'm not sure that I don't think
Meda can get away with it. The good news for
Meta is, at least based on what we've recently seen
from Alphabet, from Google Ads, the impact that this has
(17:50):
all had on AD revenues has it been as bad
as maybe we would have expected. So I don't think
medic can get away with the same idea of Hey,
We're not going to issue guidance based on chaos, but
I think actually that's a reasonable thing to assert as
the stage of the game.
Speaker 1 (18:05):
So I want to get your reaction to news that
we had today from Meta Platforms, the release of a
news standalone AI app, Meta Ai. This is aimed at
competing with a chatbot like open AI's chat gpt. Is
this something that the company potentially has the ability to
really put out in force. Given the fact that Meta's
(18:26):
tentacles seem to cover so much of the social media landscape,
do they have an inherent competitive advantage?
Speaker 4 (18:33):
I think they're starting from a position of strength. I
still think that Apple has the greatest inherent advantage in
this space. And if the game is And by the way,
what Meta is doing right now with their Lama con
having a developer's conference to foster unity and community in
(18:58):
this space, to create an eco system, to create a
platform that will that people will gravitate to. That's something
that Microsoft is doing. It's something that Aws and Amazon
are doing, It's something that Apple is doing. So the
sort of clash of the titans there is it remains
to be seen who will be successful. I would I
(19:19):
would put Meta at middle of the pack in that race.
I would say that that arguably Google slash Alphabet is
a bit more well positioned withy Gemini two point five.
And I think that Apple will be the quiet dark
horse that will get a lot of criticism over the
next year or so, but I think that they will
(19:39):
emerge looking very very well in the future.
Speaker 1 (19:42):
So how do you understand regulatory risk in the current environment,
the possible breakup or of a company like Alphabet or
even Meta where certain assets have to be spun off.
Is that something that you're considering or do you feel
as though these companies will will avoid that type of outcome.
Speaker 4 (20:02):
It's very very real. It's something to be taken seriously.
But that is a bit of a nuclear option. You know,
we historically we've seen things with and if you go
back to the to AT and T and the Baby
Bells and IBM, you know, attempts to go after IBM
and Microsoft. It never ends well if if something has
(20:22):
to be done legislatively punitively. So I think that in
both cases there will be satisfactory outcomes that will include
the injection of AI into this mix to sort of
take the pressure off both ADS and search as monopolies,
so there is volatility there that people have to consider
(20:45):
when consider owning each of those stocks. But I think
we will get through this and both companies will be
stronger coming out of whatever the resolution is.
Speaker 1 (20:55):
David, we'll leave it there. Thank you so much for
joining us. David Nicholson, he is the chief research officer
at the Futuum Group. Joining us here on the Daybreak
Asia Podcast. Thanks for listening to today's episode of the
Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at
the story shaping markets, finance, and geopolitics in the Asia Pacific.
(21:18):
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 Chrisner, and this is
Bloomberg
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