October 8, 2025 • 18 mins
TSMC is poised to release its Q3 earnings report next week. The company is likely to excel, with both revenue and gross margins expected to defeat consensus supported by strong July-August sales data. TSMC is due to release its September sales data and the figures could offer some insight into wider semiconductor demand. We turn to Debby Wu, Team Leader for North Asia Technology at Bloomberg News.
Plus, US stocks closed at a record on Wednesday, thanks to shares benefiting from the artificial-intelligence boom as traders parsed minutes from the Federal Reserve’s September meeting that showed a willingness to lower interest rates further this year. For more, we turn to Chuck Lieberman, Co-Founder & Chief Investment Officer at Advisors Capital Management.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:11):
Welcome to the Daybreak Asia podcast. I'm dog prisner. US
equities advanced to record highs in the last session in
what was described as a resurgence of dip buyers. Even so,
there's still this robust debate over weather stocks have more
room to run given elevated valuations, and on Wednesday, the
Bank of England weighed in. The BOE said stretched valuations
(00:34):
for AI companies, along with challenges related to the fed's independence,
have fueled the risk of a sharp market correction. Well. Nonetheless,
in video rowse more than two percent. That was after
CEO Jensen wongtold CNBC demand for those Blackwell chips is
really really high. And at the same time, Cisco Systems
said it's releasing a new chip and networking system meant
(00:57):
to connect AI data centers across huns of miles. Later
today in Taiwan, TSMC will be releasing sales figures for
the latest quarter. For more on TSMC, let's bring in
Bloomberg's Debbie Wu, team leader for North Asia Tech. Debbie
is in Taipei. Thank you for making time to chat
with me so we get the sales figures today, Debbie.
(01:19):
TSMC will report earnings next week. Help me understand where
the focus will be.
Speaker 1 (01:25):
I think investors and analyst they will be looking for
comments on AI demand. Bloomberg News just pushed out a
story trying to figure out whether all these recent investments
mostly on led by Nvidia, whether it's for real, or
whether it's really a big AI bubble after all. And
(01:46):
I'm hoping and I do believe that comments for not
TSMC management should be able to give investors some insight
into how while the demand for air chips really is.
And in conjunction with that, I think investors analyst they
will be keen to hear whether a TSMC is playing
even more capital expenditure this year in the coming year,
(02:09):
although they are unlikely to offer guidance on spending next
year yet. But who knows.
Speaker 2 (02:14):
What about the competition from chip makers in China? I
know that Huawei has been making a lot of inroads,
particularly in terms of being able to compete with some
of the advanced chips from Nvidia. Is there any concern
here that what's happening on the mainland would represent any
type of threat to TSMC?
Speaker 1 (02:35):
Right No, our sense is not really yet China is
still up at least a few years behind. That's our sense.
And then based on our our latest reporting on Huawei's
our latest AI chip, it is actually made with a
due or what we called an unpackaged chip from TSMC.
(02:59):
So this is the o stockpile or some of the
recent TSMC chips that Huawei obtained via show companies. And yeah,
so that kind of shows that Huawei is still need
foreign technology to make it them a chips happen.
Speaker 2 (03:18):
So one of the things that's very interesting, I'm imagining
that TSMC is still abiding by some of the export
controls that the US and its partners like the Netherlands
and Japan have placed on some of the advanced chip
making equipment. Has there been any concern that perhaps that
relationship is beginning to break down at all, or is
(03:40):
TSMC still playing by the same rules.
Speaker 1 (03:43):
It is definitely not in TSMC's interest not to abide
by the global export control rules, so the company has
been abiding by that. But at the same time, last
year we did report that Huawei was able to obtain
some of tsmcs advanced chips through intermediaries, but TSMC has
(04:05):
cut off from these are show companys, since in TSMC's case,
it is abiding via US and Taiwansa rules and to
make sure that none of its advanced chips is still
going to China, and let's particularly for Huawei for some
of the consumer electronics stuff, TSMC can still provide the
(04:27):
advanced chips as long as the rules allowed lot. So
I think we should understand that the US has not
totally put a blanket ban on all of TSMC's advanced chips.
Mostly the restriction is targeted at AIS SAR raiders.
Speaker 2 (04:45):
We know that TSMC is a major customer of ASML,
the Dutch company that manufactures chip making equipment. You mentioned
earlier about the fact that we don't really know whether
or not TSMC is still going to reveal a level
of CAPAC spending. Do you think it's likely the TSMC
is going to be needing a lot more of this
advanced chip making equipment from a company like ASML in
(05:08):
order to meet demand for these high end AI chips.
Speaker 1 (05:13):
So there's a little bit of nuances here. So of
course analyst investors, they will treat TSMC suspending level, say,
leading indicator on how the global demand for AI chips is.
But at the same time, TSMC is also thinking about
its profit margins. And then sml does over the most
(05:38):
cutting edge machines, but at the same time it's some
most SMLS premium offering, what we call the high na
V machines. It costs about three hundred million dollars or
euros per unit, so that's quite a bit pricey, and
TSMC executives have previously said that Dala and SMLS latest
(06:02):
machines a bit expensive. So what the TSMC may do
is not purchasing less machines quite as aggressively as before.
They can still rely on an older generation of SMO
machines to make them. There are most advanced chips, so
it really depends on how TSMC is thinking about the expending.
(06:27):
It's a profit margins and so sometimes we can we
have seen them in the past earnings that when TSMC
delivers really are performing of results. Sometimes when TSMC delivers
better than expected results, SMLS results can be a little
(06:47):
bit diverging from TSMC's performance. And the reason for lot
is not necessarily a global demand is not good, but
it's more like TSMC is being more prudent about its
profitability and then maybe the speed that it is buying
the most cutting edge machines. So yes, SMOs are earnings
(07:09):
is coming up. So I think it will be interesting
to see what the two companies say about the demand
for the most cutting edge chips.
Speaker 2 (07:17):
Before I let you go, Debbie, give me a sense
of how TSMC fits into the economy of Taiwan.
Speaker 1 (07:24):
So TSMC is Taiwan's largest company by market cap, and
it is sort of leading this comprehensive chip making ecosystem
in Taiwan. Hundreds of companies in Taiwan are they exist
to support TSMC and other smaller chip makers in Taiwan.
(07:47):
So Taiwan's colony is really heavily dependent on the chip
exports and this ecosystem. They really are sort of have
TSMC sitting the center.
Speaker 2 (08:01):
Debbie will leave it there. Thank you so very much.
Bloomberg's Wi Wu, who is team leader for North Asia Tech,
joining us on the Daybreak Asia podcast. Welcome back to
the Daybreak Asia Podcast. I'm Doug Chrisner. There certainly has
been a lot of talk in the US around a
(08:23):
bubble in tech stocks, especially those exposed to the ai trade.
Even the Bank of England is worried about stretched valuations
and the risk of a sharp correction in US equities
in the States. We heard from Michael Sheldon, he is
senior portfolio manager at Washington Trust Advisors.
Speaker 3 (08:40):
Evaluation in the market is historically on the high side,
but if you take out the MAC seven stocks, for example,
things are a little more even so. For example, the
S and P five hundred is currently trading at about
twenty two point eight times, but the average stock in
the market is trading at about seventeen point three times.
Speaker 2 (08:58):
Michael Sheldon there from Washing and Trust Advisors for a
closer look. I'm joined now by Charles Lieberman. He is
co founder and chief investment officer at Advisor's Capital Management. Chuck,
thank you so much for making time. Where do you
come down in this debate about valuations in US equities.
Speaker 4 (09:16):
I think they're just trying to discourage the government, the
US government from intervening or trying to continue to push
pale in a particular direction. The fact of the matter is,
if that is independent, they behave that way. They do
what they think is right for the most part, and
(09:36):
I think that's going to continue to be the case
with regard to valuation. One weakness that the Bank of
England has is that its companies are not among the
mag seven. Those companies are really almost unique in Vidia
for trillion dollar market cap but growing it well in
(09:56):
excess of fifty percent a year, which is just astonishing.
So it deserves to trade at a very high multiple.
The right multiple is hard to discern, and two different
people can look at it. One can say it's expensive
and another can say it's cheap. But it really depends
on how quickly and video continues to grow over the
next three to five years, and obviously we don't know that.
Speaker 2 (10:19):
So record today for the S and P, for the
Nasdaq comp and the Nasdaq one hundred and gold rising
to another record. We're trading about four thousand dollars an ounce,
a big milestone. There's been a three year bull run
in gold. Some skeptics have kind of been looking at
this and shrugging, Are you one of them?
Speaker 4 (10:41):
Well, I think gold is being driven by a couple
of things, one of which is, oddly enough, the behavior
of China. China had a huge amount of money invested
in it's foreign exchange reserves in US treasuries, and after
the US sort of attack or expropriated Russias for an
(11:03):
exchange reserves. China does not want to be in the
same position if something if there were a conflict between
China and the United States, and there could be over Taiwan.
So China has been systematically reducing its holdings of US
treasuries and it's got to go somewhere else. The question
is where else can it go? There aren't too many options.
(11:25):
Gold is one of the few, and so they've been
consistently buying gold, and that presents a very strong tailwind
for gold prices. And then, of course the environment in
general is very positive for financial assets and that helps
gold as well.
Speaker 2 (11:41):
It's great that you bring up that point because in
terms of financial assets, we had the minutes from the
last FED meeting. Today they show a willingness to lower
rates further this year. And back in September after the
last meeting, we learned that generally speaking, the FED expects
two more quarter point cuts by the end of the year.
The other thing that becomes very clear and looking at
(12:02):
these minutes, many at the FED are very cautious about
where inflation may be headed. And let's talk about the
possibility that there is a little bit of asset inflation
happening right now. We talked about the AI trade, we
talked about what the Bank of England had to say.
We also talked just a moment ago about what's going
(12:22):
on with gold. Is there the possibility that we are
seeing evidence of inflation reflected in asset prices.
Speaker 4 (12:31):
That is definitely a possibility. But also consider that if
interest rates remain relatively low, and I think of them
as low, with the possibility that the FED could cut
a bit more. And then you throw in the fact
that the US economy continues to grow at a pretty
good clip, Corporate earnings are doing very well. We should
(12:52):
start getting the next quarters round of earnings reports beginning
next week, and I think that's going to get and
be good news for the market. So when you put
all of that together, there is every reason for stock
prices to perform quite well. And so we remain positive
on the outlook for the US markets.
Speaker 2 (13:11):
So we know that the economic data from the government
has been essentially non existent given the shutdown. How are
you going about reading what's been happening in the macro
without having access to what the government provides.
Speaker 4 (13:25):
Well, there are some numbers that you get outside of
the government, there are various private sources that produce numbers,
so that's available, and then we will get a lot
of insight from listening to corporate leaders that when they
do their earnings releases and talk about what they're seeing
in their businesses. You sort of get a steady flow
(13:47):
of that anyway through interviews people like you talking to
the leaders of various companies. So you just have to
pay more attention to that kind of information.
Speaker 2 (13:57):
When you look at what the government had to say
today in terms of the budget deficit one point eight
trillion for fiscal twenty twenty five, little changed from twenty four,
even though the Trump administration has been touting this big
surge in tariff revenues. Is the fact that we're at
one point eight trillion dollars now in the budget deficit
(14:19):
of a concern to you.
Speaker 4 (14:22):
Absolutely. The budget deficit is running at a pace that
any outside any objective observer would say is unsupportable and
cannot be continued. The problem with my statement is that
there's no time associated with it. The market at some
(14:43):
point will gag on the volume of treasury debt that
has to be issued to finance the government, but that
gagging may not occur in twenty twenty five. In fact,
it's unlikely to occur in twenty five. I would say
it's unlikely in twenty six, twenty seven. Somewhere out there
the market will be unable to absorb all of that debt.
(15:05):
But it's not on the visible horizon as of yet,
so it's better to address the problem early. You know,
there's this old expression, A stitch in time saves nine.
Much better to address it now than five or ten
years from now, but eventually it's got to be addressed.
Speaker 2 (15:24):
I want to turn our attention quickly to what's going
on in Japan. The country's on the verge of electing
its first female prime minister, so now a Takeiichi may
be able to kind of move a lot of policy
forward in terms of trying to stimulate the economy at
a time when the Bank of Japan is trying to
deal with an inflation rate that's been above target now
(15:47):
for over three years, and before the election of Takeiichi
is head of the LDP, the expectation was that the
boj would be raising interest rates this month. Is that
still your expectation.
Speaker 4 (16:01):
Yeah, that's likely, but obviously less likely there's no doubt
that she would like to stimulate the Japanese economy. In
one area that she may be spending more money on
is defense. So there's some reasons to expect some more spending.
But the BOJ has its own areas of responsibility and
(16:23):
focusing on inflation is clearly one of them. And then
there are other issues that Japan has. The population is aging,
the labor force is shrinking. Those are also constraints, and
it's a lot to juggle.
Speaker 2 (16:36):
Before I let you go, Chuck, can you give me
a sense of where you're finding opportunity in markets these days?
Speaker 4 (16:43):
Well, Golden, back to the US market, if you exclude
the mag seven or the top ten, the average p
multiple in the market is much lower. It's at least
three percentage points lower. And then the whole industries, where
very good companies traded multiples of ten to twelve. The
(17:06):
banking sector is a perfect example, and I'm very positive
there because the administration is likely to be a lot
more favorable or to permit more bank mergers. We saw
a big one announced less than a week ago, so
I think more of that is coming, and I really
like the banking sector. The energy sector is another area
(17:28):
that I think is relatively cheap, especially the pipelines, where
you're taking less commodity risk and just basing the earnings
outlook on volumes. That's going to continue to be positive.
The healthcare sector has gotten quite cheap. It's been a
laggard in terms of its performance, so I think there
(17:48):
are a lot of opportunities there. There's an old joke
you can find a lot if you look.
Speaker 2 (17:54):
Okay, we'll leave it there, Chuck, It's always a pleasure.
Thanks so much. Charles Lieberman, co founder and chief investment
office at Advisors Capital Management, 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
(18:15):
Asia Pacific. You can find us on Apple, Spotify, the
Bloomberg Podcast YouTube channel, or anywhere else you listen. Join
us again tomorrow for insight on the market moves from
Hong Kong to Singapore and Australia. I'm Doug Risner, and
this is Bloomberg
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:11):
Welcome to the Daybreak Asia podcast. I'm dog prisner. US
equities advanced to record highs in the last session in
what was described as a resurgence of dip buyers. Even so,
there's still this robust debate over weather stocks have more
room to run given elevated valuations, and on Wednesday, the
Bank of England weighed in. The BOE said stretched valuations
(00:34):
for AI companies, along with challenges related to the fed's independence,
have fueled the risk of a sharp market correction. Well. Nonetheless,
in video rowse more than two percent. That was after
CEO Jensen wongtold CNBC demand for those Blackwell chips is
really really high. And at the same time, Cisco Systems
said it's releasing a new chip and networking system meant
(00:57):
to connect AI data centers across huns of miles. Later
today in Taiwan, TSMC will be releasing sales figures for
the latest quarter. For more on TSMC, let's bring in
Bloomberg's Debbie Wu, team leader for North Asia Tech. Debbie
is in Taipei. Thank you for making time to chat
with me so we get the sales figures today, Debbie.
(01:19):
TSMC will report earnings next week. Help me understand where
the focus will be.
Speaker 1 (01:25):
I think investors and analyst they will be looking for
comments on AI demand. Bloomberg News just pushed out a
story trying to figure out whether all these recent investments
mostly on led by Nvidia, whether it's for real, or
whether it's really a big AI bubble after all. And
(01:46):
I'm hoping and I do believe that comments for not
TSMC management should be able to give investors some insight
into how while the demand for air chips really is.
And in conjunction with that, I think investors analyst they
will be keen to hear whether a TSMC is playing
even more capital expenditure this year in the coming year,
(02:09):
although they are unlikely to offer guidance on spending next
year yet. But who knows.
Speaker 2 (02:14):
What about the competition from chip makers in China? I
know that Huawei has been making a lot of inroads,
particularly in terms of being able to compete with some
of the advanced chips from Nvidia. Is there any concern
here that what's happening on the mainland would represent any
type of threat to TSMC?
Speaker 1 (02:35):
Right No, our sense is not really yet China is
still up at least a few years behind. That's our sense.
And then based on our our latest reporting on Huawei's
our latest AI chip, it is actually made with a
due or what we called an unpackaged chip from TSMC.
(02:59):
So this is the o stockpile or some of the
recent TSMC chips that Huawei obtained via show companies. And yeah,
so that kind of shows that Huawei is still need
foreign technology to make it them a chips happen.
Speaker 2 (03:18):
So one of the things that's very interesting, I'm imagining
that TSMC is still abiding by some of the export
controls that the US and its partners like the Netherlands
and Japan have placed on some of the advanced chip
making equipment. Has there been any concern that perhaps that
relationship is beginning to break down at all, or is
(03:40):
TSMC still playing by the same rules.
Speaker 1 (03:43):
It is definitely not in TSMC's interest not to abide
by the global export control rules, so the company has
been abiding by that. But at the same time, last
year we did report that Huawei was able to obtain
some of tsmcs advanced chips through intermediaries, but TSMC has
(04:05):
cut off from these are show companys, since in TSMC's case,
it is abiding via US and Taiwansa rules and to
make sure that none of its advanced chips is still
going to China, and let's particularly for Huawei for some
of the consumer electronics stuff, TSMC can still provide the
(04:27):
advanced chips as long as the rules allowed lot. So
I think we should understand that the US has not
totally put a blanket ban on all of TSMC's advanced chips.
Mostly the restriction is targeted at AIS SAR raiders.
Speaker 2 (04:45):
We know that TSMC is a major customer of ASML,
the Dutch company that manufactures chip making equipment. You mentioned
earlier about the fact that we don't really know whether
or not TSMC is still going to reveal a level
of CAPAC spending. Do you think it's likely the TSMC
is going to be needing a lot more of this
advanced chip making equipment from a company like ASML in
(05:08):
order to meet demand for these high end AI chips.
Speaker 1 (05:13):
So there's a little bit of nuances here. So of
course analyst investors, they will treat TSMC suspending level, say,
leading indicator on how the global demand for AI chips is.
But at the same time, TSMC is also thinking about
its profit margins. And then sml does over the most
(05:38):
cutting edge machines, but at the same time it's some
most SMLS premium offering, what we call the high na
V machines. It costs about three hundred million dollars or
euros per unit, so that's quite a bit pricey, and
TSMC executives have previously said that Dala and SMLS latest
(06:02):
machines a bit expensive. So what the TSMC may do
is not purchasing less machines quite as aggressively as before.
They can still rely on an older generation of SMO
machines to make them. There are most advanced chips, so
it really depends on how TSMC is thinking about the expending.
(06:27):
It's a profit margins and so sometimes we can we
have seen them in the past earnings that when TSMC
delivers really are performing of results. Sometimes when TSMC delivers
better than expected results, SMLS results can be a little
(06:47):
bit diverging from TSMC's performance. And the reason for lot
is not necessarily a global demand is not good, but
it's more like TSMC is being more prudent about its
profitability and then maybe the speed that it is buying
the most cutting edge machines. So yes, SMOs are earnings
(07:09):
is coming up. So I think it will be interesting
to see what the two companies say about the demand
for the most cutting edge chips.
Speaker 2 (07:17):
Before I let you go, Debbie, give me a sense
of how TSMC fits into the economy of Taiwan.
Speaker 1 (07:24):
So TSMC is Taiwan's largest company by market cap, and
it is sort of leading this comprehensive chip making ecosystem
in Taiwan. Hundreds of companies in Taiwan are they exist
to support TSMC and other smaller chip makers in Taiwan.
(07:47):
So Taiwan's colony is really heavily dependent on the chip
exports and this ecosystem. They really are sort of have
TSMC sitting the center.
Speaker 2 (08:01):
Debbie will leave it there. Thank you so very much.
Bloomberg's Wi Wu, who is team leader for North Asia Tech,
joining us on the Daybreak Asia podcast. Welcome back to
the Daybreak Asia Podcast. I'm Doug Chrisner. There certainly has
been a lot of talk in the US around a
(08:23):
bubble in tech stocks, especially those exposed to the ai trade.
Even the Bank of England is worried about stretched valuations
and the risk of a sharp correction in US equities
in the States. We heard from Michael Sheldon, he is
senior portfolio manager at Washington Trust Advisors.
Speaker 3 (08:40):
Evaluation in the market is historically on the high side,
but if you take out the MAC seven stocks, for example,
things are a little more even so. For example, the
S and P five hundred is currently trading at about
twenty two point eight times, but the average stock in
the market is trading at about seventeen point three times.
Speaker 2 (08:58):
Michael Sheldon there from Washing and Trust Advisors for a
closer look. I'm joined now by Charles Lieberman. He is
co founder and chief investment officer at Advisor's Capital Management. Chuck,
thank you so much for making time. Where do you
come down in this debate about valuations in US equities.
Speaker 4 (09:16):
I think they're just trying to discourage the government, the
US government from intervening or trying to continue to push
pale in a particular direction. The fact of the matter is,
if that is independent, they behave that way. They do
what they think is right for the most part, and
(09:36):
I think that's going to continue to be the case
with regard to valuation. One weakness that the Bank of
England has is that its companies are not among the
mag seven. Those companies are really almost unique in Vidia
for trillion dollar market cap but growing it well in
(09:56):
excess of fifty percent a year, which is just astonishing.
So it deserves to trade at a very high multiple.
The right multiple is hard to discern, and two different
people can look at it. One can say it's expensive
and another can say it's cheap. But it really depends
on how quickly and video continues to grow over the
next three to five years, and obviously we don't know that.
Speaker 2 (10:19):
So record today for the S and P, for the
Nasdaq comp and the Nasdaq one hundred and gold rising
to another record. We're trading about four thousand dollars an ounce,
a big milestone. There's been a three year bull run
in gold. Some skeptics have kind of been looking at
this and shrugging, Are you one of them?
Speaker 4 (10:41):
Well, I think gold is being driven by a couple
of things, one of which is, oddly enough, the behavior
of China. China had a huge amount of money invested
in it's foreign exchange reserves in US treasuries, and after
the US sort of attack or expropriated Russias for an
(11:03):
exchange reserves. China does not want to be in the
same position if something if there were a conflict between
China and the United States, and there could be over Taiwan.
So China has been systematically reducing its holdings of US
treasuries and it's got to go somewhere else. The question
is where else can it go? There aren't too many options.
(11:25):
Gold is one of the few, and so they've been
consistently buying gold, and that presents a very strong tailwind
for gold prices. And then, of course the environment in
general is very positive for financial assets and that helps
gold as well.
Speaker 2 (11:41):
It's great that you bring up that point because in
terms of financial assets, we had the minutes from the
last FED meeting. Today they show a willingness to lower
rates further this year. And back in September after the
last meeting, we learned that generally speaking, the FED expects
two more quarter point cuts by the end of the year.
The other thing that becomes very clear and looking at
(12:02):
these minutes, many at the FED are very cautious about
where inflation may be headed. And let's talk about the
possibility that there is a little bit of asset inflation
happening right now. We talked about the AI trade, we
talked about what the Bank of England had to say.
We also talked just a moment ago about what's going
(12:22):
on with gold. Is there the possibility that we are
seeing evidence of inflation reflected in asset prices.
Speaker 4 (12:31):
That is definitely a possibility. But also consider that if
interest rates remain relatively low, and I think of them
as low, with the possibility that the FED could cut
a bit more. And then you throw in the fact
that the US economy continues to grow at a pretty
good clip, Corporate earnings are doing very well. We should
(12:52):
start getting the next quarters round of earnings reports beginning
next week, and I think that's going to get and
be good news for the market. So when you put
all of that together, there is every reason for stock
prices to perform quite well. And so we remain positive
on the outlook for the US markets.
Speaker 2 (13:11):
So we know that the economic data from the government
has been essentially non existent given the shutdown. How are
you going about reading what's been happening in the macro
without having access to what the government provides.
Speaker 4 (13:25):
Well, there are some numbers that you get outside of
the government, there are various private sources that produce numbers,
so that's available, and then we will get a lot
of insight from listening to corporate leaders that when they
do their earnings releases and talk about what they're seeing
in their businesses. You sort of get a steady flow
(13:47):
of that anyway through interviews people like you talking to
the leaders of various companies. So you just have to
pay more attention to that kind of information.
Speaker 2 (13:57):
When you look at what the government had to say
today in terms of the budget deficit one point eight
trillion for fiscal twenty twenty five, little changed from twenty four,
even though the Trump administration has been touting this big
surge in tariff revenues. Is the fact that we're at
one point eight trillion dollars now in the budget deficit
(14:19):
of a concern to you.
Speaker 4 (14:22):
Absolutely. The budget deficit is running at a pace that
any outside any objective observer would say is unsupportable and
cannot be continued. The problem with my statement is that
there's no time associated with it. The market at some
(14:43):
point will gag on the volume of treasury debt that
has to be issued to finance the government, but that
gagging may not occur in twenty twenty five. In fact,
it's unlikely to occur in twenty five. I would say
it's unlikely in twenty six, twenty seven. Somewhere out there
the market will be unable to absorb all of that debt.
(15:05):
But it's not on the visible horizon as of yet,
so it's better to address the problem early. You know,
there's this old expression, A stitch in time saves nine.
Much better to address it now than five or ten
years from now, but eventually it's got to be addressed.
Speaker 2 (15:24):
I want to turn our attention quickly to what's going
on in Japan. The country's on the verge of electing
its first female prime minister, so now a Takeiichi may
be able to kind of move a lot of policy
forward in terms of trying to stimulate the economy at
a time when the Bank of Japan is trying to
deal with an inflation rate that's been above target now
(15:47):
for over three years, and before the election of Takeiichi
is head of the LDP, the expectation was that the
boj would be raising interest rates this month. Is that
still your expectation.
Speaker 4 (16:01):
Yeah, that's likely, but obviously less likely there's no doubt
that she would like to stimulate the Japanese economy. In
one area that she may be spending more money on
is defense. So there's some reasons to expect some more spending.
But the BOJ has its own areas of responsibility and
(16:23):
focusing on inflation is clearly one of them. And then
there are other issues that Japan has. The population is aging,
the labor force is shrinking. Those are also constraints, and
it's a lot to juggle.
Speaker 2 (16:36):
Before I let you go, Chuck, can you give me
a sense of where you're finding opportunity in markets these days?
Speaker 4 (16:43):
Well, Golden, back to the US market, if you exclude
the mag seven or the top ten, the average p
multiple in the market is much lower. It's at least
three percentage points lower. And then the whole industries, where
very good companies traded multiples of ten to twelve. The
(17:06):
banking sector is a perfect example, and I'm very positive
there because the administration is likely to be a lot
more favorable or to permit more bank mergers. We saw
a big one announced less than a week ago, so
I think more of that is coming, and I really
like the banking sector. The energy sector is another area
(17:28):
that I think is relatively cheap, especially the pipelines, where
you're taking less commodity risk and just basing the earnings
outlook on volumes. That's going to continue to be positive.
The healthcare sector has gotten quite cheap. It's been a
laggard in terms of its performance, so I think there
(17:48):
are a lot of opportunities there. There's an old joke
you can find a lot if you look.
Speaker 2 (17:54):
Okay, we'll leave it there, Chuck, It's always a pleasure.
Thanks so much. Charles Lieberman, co founder and chief investment
office at Advisors Capital Management, 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
(18:15):
Asia Pacific. You can find us on Apple, Spotify, the
Bloomberg Podcast YouTube channel, or anywhere else you listen. Join
us again tomorrow for insight on the market moves from
Hong Kong to Singapore and Australia. I'm Doug Risner, and
this is Bloomberg
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