June 19, 2025 • 20 mins
US equity futures moderated declines early Friday as President Donald Trump weighs whether to back Israel militarily in its conflict with Iran. Contracts for the S&P 500 were down around 0.3% from Wednesday's close in early Asia hours, compared with a 0.9% drop on Thursday when US markets were closed for the Juneteenth holiday. While traders were offered some short-term clarity as the White House said Trump will decide within two weeks whether to strike Iran, the remarks did little to resolve broader uncertainty around potential US involvement and the risk of renewed energy-driven inflation. For more on what's ahead, we heard from Maria Rost Rublee, Professor of International Relations at the University of Melbourne. She speaks with Bloomberg's Shery Ahn and Haidi Stroud-Watts.
Markets were already on edge after the Federal Reserve downgraded its estimates for growth this year and projected higher inflation. As projected, Fed officials held rates steady at their policy meeting this week. We get some analysis from David Laut, Chief Investment Officer at Abound Financial.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Krisner,
US doc. Index futures are a bit lower after a
market holiday in the US. In a moment, we'll take
a look at market action with David Lott. He is
the chief investment officer at a Bound Financial But we
begin with geopolitics and the White House saying President Trump
will decide within the next two weeks on whether or
(00:33):
not to strike against Iran. Now, the President has publicly
mused for days about having the US increase the stakes
by joining Israel strikes on Iran. Earlier Thursday, in Iranian
missile struck an Israeli hospital, and at the same time
Israel struck at more of Iran's nuclear sites and warned
its attacks could bring down the leadership in Tehran. We
(00:55):
got reaction from Maria Roost Rubie, professor of international relations
at the University of Melbourne. She spoke with Bloomberg, scherry
On and Heidi Stroud Watts.
Speaker 3 (01:05):
Great to have you with us. What would US military
action mean in this conflict? How much worse could the
conflict get from here?
Speaker 4 (01:14):
Well, there is a lot of pressure on Trump from
Israel to get involved, because the only way to take
out the uranium enrichment facilities in FORDOH is with US
bunk or busting bombs.
Speaker 5 (01:26):
These are thirty thousand pounds.
Speaker 4 (01:28):
Only one can be carried in a b two at
a time, and so Israel can't finish the campaign against
Iran's nuclear program unless the US gets involved. But if
the US gets involved, that means that Iran is there
will be a lot of pressure within the Iranian leadership
to attack US facilities, and if that happens, all bets
(01:50):
are off. I mean, the US will really Trump has
already threatened that if you touch our people, if you.
Speaker 5 (01:56):
Touch our facilities, that's it.
Speaker 4 (01:58):
And I do think that then, even though you know
Magda really does not want to see more foreign entanglements,
if there's an attack against US facilities or people.
Speaker 5 (02:09):
Then there will be just basically a war crowd within
the US for a retribution.
Speaker 3 (02:15):
We're hearing from experts that Israel cannot necess can actually
hit Iranian nuclear sides even without the help of the
United States. How much capacity does Israel have right now
to finish this conflict without US involvement. I think you're
alluding to the fact that Washington actually needs to be involved,
especially if there is a need for regime change.
Speaker 4 (02:37):
Yes, look, I mean Israel has already done a lot
of damage to Iranian nuclear facilities. In fact, they just
recently bombed, you know, some of the older closed sites.
Speaker 5 (02:47):
But there's this key.
Speaker 4 (02:48):
Site, the Ford out Uranium and Richmond site. It's buried
under a mountain and the only way to take it
out would be bunker buster bombs. In fact, the US
would have to drop one, then it would have to
drop another on top of it, and possibly another on
top of it.
Speaker 5 (03:06):
Israel does not have that capability.
Speaker 4 (03:08):
By look Nettna who has just said recently in the
past twenty four hours that they don't need US assistance
to finish their campaign. So I guess that depends on
what do they mean by their campaign. But we can
pretty conclusively say that unless Israel is prepared to use
nuclear weapons against Iran, which is extremely unlikely, I mean,
(03:29):
I think that's pretty much off.
Speaker 5 (03:31):
The table, that Israel.
Speaker 4 (03:34):
Cannot get the Ford out urim in Richmond site on
its own.
Speaker 1 (03:39):
Maria, I think you've alluded to this a little bit
earlier about what we're now hearing that the potential for
taking down the entire Iranian leadership in this next phase
of the conflict. If that happens, what are the ramifications
across the region, across the globe? Really, what does it
mean for the Uranian proxies, and what does it mean
for the necessity of US involvement, because you know, at
(04:00):
this point, where are we going to see that sort
of global leadership come from?
Speaker 4 (04:05):
Yes, I mean, that's a great question that nat yall
who has said, you know that regime change could happen,
but it is not the intent of his campaign.
Speaker 5 (04:14):
Of course, that's what he's saying.
Speaker 4 (04:16):
You know, he may indeed have other plans, you know
that he's not discussing. And Trump has also alluded to
the fact that, you know that assassination of Commandie is possible.
Speaker 5 (04:26):
Of course, there are lots of.
Speaker 4 (04:28):
US executive orders against the US assassinating a foreign official,
and so look, if the regime was taken out, then
sort of all bets are off.
Speaker 5 (04:38):
What's going to happen?
Speaker 4 (04:39):
You know, some people say that Israel clearly has you
know people in mind, you know potential you know Iranian uh,
you know, domestic groups that could step in that would
while you know, not friendly to Israel, would be willing
to back off the nuclear program.
Speaker 5 (04:57):
However, other experts are saying.
Speaker 4 (04:58):
That, you know, if something like that happens Iranian public
opinion and the Iranian military foreign policy elite, it's essentially.
Speaker 5 (05:08):
Going to really harden the need for Iran to.
Speaker 4 (05:11):
Have its own nuclear weapons to be able to prevent
future attacks on Iranian leadership in the future.
Speaker 1 (05:19):
I think it's interesting that the assumption and the rhetoric
right now is that regime change or the toppling the
leadership is not the main goal here for Israel, for
Nstanna who at the same time, we've of course seen
since the October seven attacked, a real redirection of what
Israel's strategy has been in the region. Right there's sort
(05:40):
of you know, deterrence clearly is being.
Speaker 6 (05:43):
Seen as not working.
Speaker 7 (05:44):
They've been a lot more aggressive, and you know, when
it comes to multiple fronts at this point, do you
think that changes the game when it comes to what
we can expect from the Nashiahu government.
Speaker 5 (05:57):
Yes, I think so.
Speaker 4 (05:58):
I think Netna, who sees that he's been able to
carry out things that previously he wouldn't have been able
to I mean, despite all of the you know, protests
worldwide against what's happening in Gaza, and you know, even
you know, certain Israeli foreign Israeli officials being sanctioned by
(06:19):
you know, countries such as Australia, you know, essentially not
now who sees that he's been able to carry these
things out. And now with Trump's implicit approval or or
at least not disapproval, being able to carry out these
strikes on the running and nuclear program. And so you know,
Netanyahu may feel like, you know, now's the time that
(06:41):
he's got the freedom to do who he wants. And
you know, the real question is if this is about
Iran's nuclear weapons program, which it does seem to be,
you know, you can't become a country out of its
nuclear program. I mean, you can set it back, but
unless you're going to sort of erase the universe, cities
and industrial capability, countries can always build back, and they'll
(07:05):
learn to build back in much more secret ways. Of course,
there are ways to detect secret nuclear programs, as we've
seen with Iran. You know, that's how we found out
about the Poo site. But really, you know.
Speaker 8 (07:17):
The question is this effective, and.
Speaker 4 (07:19):
That's why European countries, you know, there are you know
several year countries, European.
Speaker 5 (07:24):
Countries are sending diplomats to.
Speaker 4 (07:27):
Meet with the Ronnie Foreign Minister today in Geneva to say,
you know, how can we fix this before this ends up?
You know, we have a conflagration across entire Middle East
which is going to affect you know, petrol prices. It's
going to essentially affect the cost of everything, even more
so than the Ukrainian Moore.
Speaker 1 (07:50):
That's what it goes to the crux of what happens next, right,
I'll just in the next two weeks, you know, depending
on what the US does, but kind of in the
next I guess generational sense, how quick could Iran potentially
recover when it comes to the damage done to the
nuclear program and does this sort of attack potentially strengthen
the domestic narrative that it needs to have those capabilities?
Speaker 5 (08:13):
Yes, I mean that's a good question.
Speaker 4 (08:16):
So essentially, what Israel has done, They've only set back
the physical infrastructure by maybe three or four months.
Speaker 8 (08:24):
I mean, they've taken out the above ground Uramian Richmond
facility at Naton's, but they haven't taken out the underground
facility there, and of course they haven't taken out Pordoh.
Speaker 5 (08:36):
They have taken out though.
Speaker 4 (08:38):
In terms of personnel, a number of key nuclear scientists
from the reporting that we've seen. But psychologically, look, the
question is, you know, will this harden the Iranian leadership
and people?
Speaker 5 (08:51):
You know, the best way to.
Speaker 4 (08:53):
Prevent this type of attack against you know, from a
nuclear weapons state, which Israel is, is to have your
own nuclear weapons, and so Iran is in a bit
of a hard spot here. You know, they don't have
so they have highly enriched they have enriched uranium, but
it's not highly enriched. However, they could get there and
some people say two to three weeks. But highly enriched
(09:16):
uranium by itself does not give you a deliverable nuclear weapon.
I mean, you've got to convert it from gas to metal.
Speaker 5 (09:22):
You've got to.
Speaker 4 (09:22):
Then turn it into a bomb, and then you have
to be able to deliver it. And the only realistic
way for Iran to deliver a nuclear weapon to Israel
would be on missiles. And then that means you have
to miniaturize nuclear weapons, which is a really hard work
and in fact, you know, it took for example, North Korea,
you know, several tests nuclear tests to do that, and
(09:45):
Iran hasn't done.
Speaker 5 (09:45):
Any nuclear testing at all.
Speaker 4 (09:48):
So for the Iranian position is to we back off,
you know, And essentially this is where diplomacy comes in
to say, look, you know, Iran is not likely to
give up enriching uranium, but if we can come up
with a deal that says you can only enrich to
two to three percent, which is what you need for
(10:08):
civilian nuclear power, and have really strict, you know, inspection arrangements.
Speaker 5 (10:15):
So that we can make sure they're not cheating.
Speaker 4 (10:17):
And if we can keep that in for a while,
that could actually then help the Iranian population to say, okay, well,
you know, so sanctions are lesson, you know, things are
getting better and could potentially give time for domestic sentiment
to change to say we actually prefer engaging in the
(10:37):
international economy and international society over the you know, being
hell bent on a nuclear weapons program that's just going
to turn us into an ugly rogue state like North Korea.
Speaker 9 (10:49):
Maria.
Speaker 1 (10:49):
Really great to have you with us. Samara Ross Stribli,
who's the professor of international relations at the University of.
Speaker 2 (10:55):
Melbourne, welcome back. To the Daybreak Asia podcast. I'm Doug Prisner.
Has expected the FED held its policy rates steady at
this week's meeting. Let's get some reaction now from David Lott.
He is the chief investment officer at a Bound Financial.
(11:18):
David is on the line from Granite Bay, California. Thank
you so much for taking the time to chat with me.
A moment ago, we were talking about the FED the
downgrade of the estimate for economic growth this year, while
at the same time the FED is projecting higher inflation.
It seems as though this is kind of a stagflationary
type of scenario. Is that the way that you would
(11:40):
understand it and make sense of it?
Speaker 9 (11:42):
You know, I'm not an economist, but I have to
say I was at a conference, one of the top
conferences in the country about a week and a half ago.
Speaker 6 (11:50):
It's called a NorCal, a Financial Planning.
Speaker 9 (11:52):
Association conference, and one of the most premier economists in
the world spoke for an hour, and he spent an
hour telling all of us.
Speaker 6 (12:00):
Room things to be concerned about.
Speaker 9 (12:02):
You know, he saw maybe eve inflation going to four
percent later this year, A lot of things that would
discourage an investor, but in about the last ninety seconds
of his conversation, he said, but hey, look, investor sentiments
pretty negative, and that's usually a great time to be
investing money. And so I think it's such a great
representation of being an equity or bond market investor and
(12:27):
then looking at this economic forecast component, because at the
end of the day, prices move first, then earnings than
the economy, and vice versa. And that's why we've seen
prices reflate so quickly even though the economic outlook is
still uncertain. So I would actually encourage investors to say, hey,
(12:48):
let's look at prices, let's look at statistics, and what
happens during these types of market environments. I think that
that gives us much more line of sight into what
happens versus, you know, a FED who's just trying to
be careful, trying not to make a mistake, and trying
to really forecast the weather that could change at any time.
Speaker 2 (13:06):
The market is really desiring clarity on many issues. There
is the terriff situation, obviously, there is the conflict between
Israel and Iran, the path of interest rates going forward,
and whether or not the FED is going to be
in a wait and see pattern because of the Fed's
concerned about maybe a stagflationary type environment. Is there something
(13:27):
that is predominating your thinking when you think about the
greatest risk right now, that's overhanging markets?
Speaker 9 (13:34):
You know, I'll say the greatest risk, and then I'm
going to kind of just share something that I think
will be food for thought. My concern, if I had one,
is that longer term rates are going to continue to
float higher. It is not hard, it's not rocket science
to pull up a thirty year chart of the ten
year treasury and see that we're heading in a different
direction than we've been headed in many decades. And so
(13:57):
that becomes challenging people who are trying to create stability
in their portfolio to generate income from it when they're
trying to position conservative, intermediate and long term growth buckets
to generate that income. And so, you know, we may
to start looking at different ways to generate stability and
portfolios outside of buying intermediate bonds.
Speaker 6 (14:20):
And that's something that is a bit of a head scratcher.
Speaker 9 (14:22):
One thing I will say that that I think with
surprise people, you have all these topics you mentioned them, stagflation, wars, tariffs,
geopolitical uncertainty.
Speaker 6 (14:33):
But let me just pose this to you.
Speaker 9 (14:35):
In the last three to five years, the MAG seven
has accounted for fifty percent of the equity market returns. Okay,
six months ago, those companies had PE ratios in the
mid thirties. Today they're at twenty seven. So when you
think about that and you think about what those companies do,
largely technologically oriented, you really have to consider all those
(14:57):
things we just mentioned.
Speaker 6 (14:58):
How does that impact fail Book's ability to sell ads?
Speaker 9 (15:01):
How does that and Google's ability to sell ads? How
does that impact you know, in video or Microsoft's ability
to have AI be infused into companies' businesses and allow
them to grow their margin. So you know, sometimes it's
not quite as complicated to get higher in the market
as it may seem.
Speaker 2 (15:18):
So that said, would you be overweight those names the
mag seven right now?
Speaker 9 (15:23):
Well, they led the market lower and now they're leading
the market higher, And I personally would be overweight anything
that's leveraged to rates coming down short term rates in particular.
So what are some of those asset classes, Well, you
just mentioned large growth is one why because it's a
long duration asset, it generally doesn't pay you any income today,
(15:43):
and so it tends to do better when rates are falling. Oh,
by the way, so does gold, so does cryptocurrency, so
do small caps and mid cap growth companies. So I
think there's a lot of opportunities to leverage your portfolio.
Speaker 6 (15:56):
To following rates.
Speaker 9 (15:57):
Which, by the way, we had the market and fed
a line around two more cuts this year. That's where
I think the ball is going to continue to roll.
And oh, by the way, tech stocks aren't as expensive
as they've been in the last five years. We're not
even close to the highs of you know, priciness from
a valuation standpoint that we were closer to twenty twenty.
Speaker 6 (16:17):
That didn't even that pailed comparison to where they were
out in the late nineties. So I think that there's
a lot more room and a lot more.
Speaker 9 (16:23):
You know, frankly, if we want to talk about economic
tailwind around those names.
Speaker 2 (16:29):
What about opportunities off shore? We're talking here about stuff
that may be domestically driven. I'm wondering whether you're seeing
anything internationally that has sparked your curiosity or piqued your interest.
Speaker 9 (16:42):
Well, there's no I was teasing by brother today, we're
going to have the opportunity to go skiing in Canada.
Speaker 6 (16:47):
Here this next winner, and he's been.
Speaker 9 (16:49):
Waiting to pay for the second half of his trip
to see if maybe the US Canadian dollar exchange rate
might work in his favor.
Speaker 6 (16:57):
It has not to this point. So what's the story.
Speaker 9 (16:59):
The story is that with a dollar weakening, which maybe
another beginning of a trend that of course is going
to give some buoyancy to international profits as they're repatriated.
So sure, in general, and okay, evaluations has been a
conversation for years and years, it really hasn't moved the needle.
I think that the dollar weakening is certainly starting to
(17:22):
move the needle with international markets. I'm still going to
be oriented on the tech side, and I prefer to
look at China. I'd prefer to look at a place
where the government can come in and make a radical
change to the economy with stimulus. And oh, by the way,
the United States economy's biggest booms in the last ten
(17:42):
years have been from our government.
Speaker 6 (17:44):
Doing stimulative things.
Speaker 9 (17:46):
Right, So when I look overseas to chat and I say, wow,
they seem to.
Speaker 6 (17:50):
Be leading in evs. They seem to be doing darnk
close to leading in Ai.
Speaker 9 (17:54):
And oh, by the way, they're also selling more waway
phones than Apple iPhone over there with a population that's tremendous.
Speaker 6 (18:02):
So I am interested.
Speaker 9 (18:04):
Where I am internationally invested is going to have an
overweight to those Chinese tech names.
Speaker 2 (18:11):
Talk to me a little bit about the themes that
you're avoiding right now. I mean to maybe call it
herd mentality. We talked about the meg seven, But are
there corners of the market that you feel are kind
of overrated right now and that you would be looking
to either lighten up on or to avoid altogether.
Speaker 9 (18:29):
I think that if there's anybody talking about a bear
market rally still that you're listening to, you might want
to change your favorite station or commentator.
Speaker 6 (18:41):
I would not be anywhere in the defensive space.
Speaker 9 (18:45):
I'm just not that interested in utilities or staples.
Speaker 4 (18:51):
You know.
Speaker 9 (18:51):
Of course, in times of uncertainty like this, those tend
to have a little bit of a support. But I
would I really would lean into I mean, look at
consumer descript estionary half that index is Amazon and Tesla,
both of which got really beat up and probably are
going to be turning higher. That's an easy place to
look for opportunity. Obviously within the tech stock tech stack,
(19:12):
the semiconductors are a lot more interesting. So you know,
it just doesn't pay to bet against the market long term,
and it would take a tremendous change for the market
not to hit new highs within the next few months.
Speaker 2 (19:24):
David, we'll leave it there. Thank you so much for
joining us. David Lotte is the chief investment officer at
a Bound Financial, joining from Granite Bay, California. 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
(19:48):
the Asia Pacific. You can find us on Apple, Spotify,
the Bloomberg Podcast YouTube channel, or anywhere else you listen.
Join us again tomorrow for insight on the market moves
from Hong Kong to Singapore and Australia. I'm Doug Prisoner
and this is Bloomberg
Speaker 9 (20:07):
M HM.
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Krisner,
US doc. Index futures are a bit lower after a
market holiday in the US. In a moment, we'll take
a look at market action with David Lott. He is
the chief investment officer at a Bound Financial But we
begin with geopolitics and the White House saying President Trump
will decide within the next two weeks on whether or
(00:33):
not to strike against Iran. Now, the President has publicly
mused for days about having the US increase the stakes
by joining Israel strikes on Iran. Earlier Thursday, in Iranian
missile struck an Israeli hospital, and at the same time
Israel struck at more of Iran's nuclear sites and warned
its attacks could bring down the leadership in Tehran. We
(00:55):
got reaction from Maria Roost Rubie, professor of international relations
at the University of Melbourne. She spoke with Bloomberg, scherry
On and Heidi Stroud Watts.
Speaker 3 (01:05):
Great to have you with us. What would US military
action mean in this conflict? How much worse could the
conflict get from here?
Speaker 4 (01:14):
Well, there is a lot of pressure on Trump from
Israel to get involved, because the only way to take
out the uranium enrichment facilities in FORDOH is with US
bunk or busting bombs.
Speaker 5 (01:26):
These are thirty thousand pounds.
Speaker 4 (01:28):
Only one can be carried in a b two at
a time, and so Israel can't finish the campaign against
Iran's nuclear program unless the US gets involved. But if
the US gets involved, that means that Iran is there
will be a lot of pressure within the Iranian leadership
to attack US facilities, and if that happens, all bets
(01:50):
are off. I mean, the US will really Trump has
already threatened that if you touch our people, if you.
Speaker 5 (01:56):
Touch our facilities, that's it.
Speaker 4 (01:58):
And I do think that then, even though you know
Magda really does not want to see more foreign entanglements,
if there's an attack against US facilities or people.
Speaker 5 (02:09):
Then there will be just basically a war crowd within
the US for a retribution.
Speaker 3 (02:15):
We're hearing from experts that Israel cannot necess can actually
hit Iranian nuclear sides even without the help of the
United States. How much capacity does Israel have right now
to finish this conflict without US involvement. I think you're
alluding to the fact that Washington actually needs to be involved,
especially if there is a need for regime change.
Speaker 4 (02:37):
Yes, look, I mean Israel has already done a lot
of damage to Iranian nuclear facilities. In fact, they just
recently bombed, you know, some of the older closed sites.
Speaker 5 (02:47):
But there's this key.
Speaker 4 (02:48):
Site, the Ford out Uranium and Richmond site. It's buried
under a mountain and the only way to take it
out would be bunker buster bombs. In fact, the US
would have to drop one, then it would have to
drop another on top of it, and possibly another on
top of it.
Speaker 5 (03:06):
Israel does not have that capability.
Speaker 4 (03:08):
By look Nettna who has just said recently in the
past twenty four hours that they don't need US assistance
to finish their campaign. So I guess that depends on
what do they mean by their campaign. But we can
pretty conclusively say that unless Israel is prepared to use
nuclear weapons against Iran, which is extremely unlikely, I mean,
(03:29):
I think that's pretty much off.
Speaker 5 (03:31):
The table, that Israel.
Speaker 4 (03:34):
Cannot get the Ford out urim in Richmond site on
its own.
Speaker 1 (03:39):
Maria, I think you've alluded to this a little bit
earlier about what we're now hearing that the potential for
taking down the entire Iranian leadership in this next phase
of the conflict. If that happens, what are the ramifications
across the region, across the globe? Really, what does it
mean for the Uranian proxies, and what does it mean
for the necessity of US involvement, because you know, at
(04:00):
this point, where are we going to see that sort
of global leadership come from?
Speaker 4 (04:05):
Yes, I mean, that's a great question that nat yall
who has said, you know that regime change could happen,
but it is not the intent of his campaign.
Speaker 5 (04:14):
Of course, that's what he's saying.
Speaker 4 (04:16):
You know, he may indeed have other plans, you know
that he's not discussing. And Trump has also alluded to
the fact that, you know that assassination of Commandie is possible.
Speaker 5 (04:26):
Of course, there are lots of.
Speaker 4 (04:28):
US executive orders against the US assassinating a foreign official,
and so look, if the regime was taken out, then
sort of all bets are off.
Speaker 5 (04:38):
What's going to happen?
Speaker 4 (04:39):
You know, some people say that Israel clearly has you
know people in mind, you know potential you know Iranian uh,
you know, domestic groups that could step in that would
while you know, not friendly to Israel, would be willing
to back off the nuclear program.
Speaker 5 (04:57):
However, other experts are saying.
Speaker 4 (04:58):
That, you know, if something like that happens Iranian public
opinion and the Iranian military foreign policy elite, it's essentially.
Speaker 5 (05:08):
Going to really harden the need for Iran to.
Speaker 4 (05:11):
Have its own nuclear weapons to be able to prevent
future attacks on Iranian leadership in the future.
Speaker 1 (05:19):
I think it's interesting that the assumption and the rhetoric
right now is that regime change or the toppling the
leadership is not the main goal here for Israel, for
Nstanna who at the same time, we've of course seen
since the October seven attacked, a real redirection of what
Israel's strategy has been in the region. Right there's sort
(05:40):
of you know, deterrence clearly is being.
Speaker 6 (05:43):
Seen as not working.
Speaker 7 (05:44):
They've been a lot more aggressive, and you know, when
it comes to multiple fronts at this point, do you
think that changes the game when it comes to what
we can expect from the Nashiahu government.
Speaker 5 (05:57):
Yes, I think so.
Speaker 4 (05:58):
I think Netna, who sees that he's been able to
carry out things that previously he wouldn't have been able
to I mean, despite all of the you know, protests
worldwide against what's happening in Gaza, and you know, even
you know, certain Israeli foreign Israeli officials being sanctioned by
(06:19):
you know, countries such as Australia, you know, essentially not
now who sees that he's been able to carry these
things out. And now with Trump's implicit approval or or
at least not disapproval, being able to carry out these
strikes on the running and nuclear program. And so you know,
Netanyahu may feel like, you know, now's the time that
(06:41):
he's got the freedom to do who he wants. And
you know, the real question is if this is about
Iran's nuclear weapons program, which it does seem to be,
you know, you can't become a country out of its
nuclear program. I mean, you can set it back, but
unless you're going to sort of erase the universe, cities
and industrial capability, countries can always build back, and they'll
(07:05):
learn to build back in much more secret ways. Of course,
there are ways to detect secret nuclear programs, as we've
seen with Iran. You know, that's how we found out
about the Poo site. But really, you know.
Speaker 8 (07:17):
The question is this effective, and.
Speaker 4 (07:19):
That's why European countries, you know, there are you know
several year countries, European.
Speaker 5 (07:24):
Countries are sending diplomats to.
Speaker 4 (07:27):
Meet with the Ronnie Foreign Minister today in Geneva to say,
you know, how can we fix this before this ends up?
You know, we have a conflagration across entire Middle East
which is going to affect you know, petrol prices. It's
going to essentially affect the cost of everything, even more
so than the Ukrainian Moore.
Speaker 1 (07:50):
That's what it goes to the crux of what happens next, right,
I'll just in the next two weeks, you know, depending
on what the US does, but kind of in the
next I guess generational sense, how quick could Iran potentially
recover when it comes to the damage done to the
nuclear program and does this sort of attack potentially strengthen
the domestic narrative that it needs to have those capabilities?
Speaker 5 (08:13):
Yes, I mean that's a good question.
Speaker 4 (08:16):
So essentially, what Israel has done, They've only set back
the physical infrastructure by maybe three or four months.
Speaker 8 (08:24):
I mean, they've taken out the above ground Uramian Richmond
facility at Naton's, but they haven't taken out the underground
facility there, and of course they haven't taken out Pordoh.
Speaker 5 (08:36):
They have taken out though.
Speaker 4 (08:38):
In terms of personnel, a number of key nuclear scientists
from the reporting that we've seen. But psychologically, look, the
question is, you know, will this harden the Iranian leadership
and people?
Speaker 5 (08:51):
You know, the best way to.
Speaker 4 (08:53):
Prevent this type of attack against you know, from a
nuclear weapons state, which Israel is, is to have your
own nuclear weapons, and so Iran is in a bit
of a hard spot here. You know, they don't have
so they have highly enriched they have enriched uranium, but
it's not highly enriched. However, they could get there and
some people say two to three weeks. But highly enriched
(09:16):
uranium by itself does not give you a deliverable nuclear weapon.
I mean, you've got to convert it from gas to metal.
Speaker 5 (09:22):
You've got to.
Speaker 4 (09:22):
Then turn it into a bomb, and then you have
to be able to deliver it. And the only realistic
way for Iran to deliver a nuclear weapon to Israel
would be on missiles. And then that means you have
to miniaturize nuclear weapons, which is a really hard work
and in fact, you know, it took for example, North Korea,
you know, several tests nuclear tests to do that, and
(09:45):
Iran hasn't done.
Speaker 5 (09:45):
Any nuclear testing at all.
Speaker 4 (09:48):
So for the Iranian position is to we back off,
you know, And essentially this is where diplomacy comes in
to say, look, you know, Iran is not likely to
give up enriching uranium, but if we can come up
with a deal that says you can only enrich to
two to three percent, which is what you need for
(10:08):
civilian nuclear power, and have really strict, you know, inspection arrangements.
Speaker 5 (10:15):
So that we can make sure they're not cheating.
Speaker 4 (10:17):
And if we can keep that in for a while,
that could actually then help the Iranian population to say, okay, well,
you know, so sanctions are lesson, you know, things are
getting better and could potentially give time for domestic sentiment
to change to say we actually prefer engaging in the
(10:37):
international economy and international society over the you know, being
hell bent on a nuclear weapons program that's just going
to turn us into an ugly rogue state like North Korea.
Speaker 9 (10:49):
Maria.
Speaker 1 (10:49):
Really great to have you with us. Samara Ross Stribli,
who's the professor of international relations at the University of.
Speaker 2 (10:55):
Melbourne, welcome back. To the Daybreak Asia podcast. I'm Doug Prisner.
Has expected the FED held its policy rates steady at
this week's meeting. Let's get some reaction now from David Lott.
He is the chief investment officer at a Bound Financial.
(11:18):
David is on the line from Granite Bay, California. Thank
you so much for taking the time to chat with me.
A moment ago, we were talking about the FED the
downgrade of the estimate for economic growth this year, while
at the same time the FED is projecting higher inflation.
It seems as though this is kind of a stagflationary
type of scenario. Is that the way that you would
(11:40):
understand it and make sense of it?
Speaker 9 (11:42):
You know, I'm not an economist, but I have to
say I was at a conference, one of the top
conferences in the country about a week and a half ago.
Speaker 6 (11:50):
It's called a NorCal, a Financial Planning.
Speaker 9 (11:52):
Association conference, and one of the most premier economists in
the world spoke for an hour, and he spent an
hour telling all of us.
Speaker 6 (12:00):
Room things to be concerned about.
Speaker 9 (12:02):
You know, he saw maybe eve inflation going to four
percent later this year, A lot of things that would
discourage an investor, but in about the last ninety seconds
of his conversation, he said, but hey, look, investor sentiments
pretty negative, and that's usually a great time to be
investing money. And so I think it's such a great
representation of being an equity or bond market investor and
(12:27):
then looking at this economic forecast component, because at the
end of the day, prices move first, then earnings than
the economy, and vice versa. And that's why we've seen
prices reflate so quickly even though the economic outlook is
still uncertain. So I would actually encourage investors to say, hey,
(12:48):
let's look at prices, let's look at statistics, and what
happens during these types of market environments. I think that
that gives us much more line of sight into what
happens versus, you know, a FED who's just trying to
be careful, trying not to make a mistake, and trying
to really forecast the weather that could change at any time.
Speaker 2 (13:06):
The market is really desiring clarity on many issues. There
is the terriff situation, obviously, there is the conflict between
Israel and Iran, the path of interest rates going forward,
and whether or not the FED is going to be
in a wait and see pattern because of the Fed's
concerned about maybe a stagflationary type environment. Is there something
(13:27):
that is predominating your thinking when you think about the
greatest risk right now, that's overhanging markets?
Speaker 9 (13:34):
You know, I'll say the greatest risk, and then I'm
going to kind of just share something that I think
will be food for thought. My concern, if I had one,
is that longer term rates are going to continue to
float higher. It is not hard, it's not rocket science
to pull up a thirty year chart of the ten
year treasury and see that we're heading in a different
direction than we've been headed in many decades. And so
(13:57):
that becomes challenging people who are trying to create stability
in their portfolio to generate income from it when they're
trying to position conservative, intermediate and long term growth buckets
to generate that income. And so, you know, we may
to start looking at different ways to generate stability and
portfolios outside of buying intermediate bonds.
Speaker 6 (14:20):
And that's something that is a bit of a head scratcher.
Speaker 9 (14:22):
One thing I will say that that I think with
surprise people, you have all these topics you mentioned them, stagflation, wars, tariffs,
geopolitical uncertainty.
Speaker 6 (14:33):
But let me just pose this to you.
Speaker 9 (14:35):
In the last three to five years, the MAG seven
has accounted for fifty percent of the equity market returns. Okay,
six months ago, those companies had PE ratios in the
mid thirties. Today they're at twenty seven. So when you
think about that and you think about what those companies do,
largely technologically oriented, you really have to consider all those
(14:57):
things we just mentioned.
Speaker 6 (14:58):
How does that impact fail Book's ability to sell ads?
Speaker 9 (15:01):
How does that and Google's ability to sell ads? How
does that impact you know, in video or Microsoft's ability
to have AI be infused into companies' businesses and allow
them to grow their margin. So you know, sometimes it's
not quite as complicated to get higher in the market
as it may seem.
Speaker 2 (15:18):
So that said, would you be overweight those names the
mag seven right now?
Speaker 9 (15:23):
Well, they led the market lower and now they're leading
the market higher, And I personally would be overweight anything
that's leveraged to rates coming down short term rates in particular.
So what are some of those asset classes, Well, you
just mentioned large growth is one why because it's a
long duration asset, it generally doesn't pay you any income today,
(15:43):
and so it tends to do better when rates are falling. Oh,
by the way, so does gold, so does cryptocurrency, so
do small caps and mid cap growth companies. So I
think there's a lot of opportunities to leverage your portfolio.
Speaker 6 (15:56):
To following rates.
Speaker 9 (15:57):
Which, by the way, we had the market and fed
a line around two more cuts this year. That's where
I think the ball is going to continue to roll.
And oh, by the way, tech stocks aren't as expensive
as they've been in the last five years. We're not
even close to the highs of you know, priciness from
a valuation standpoint that we were closer to twenty twenty.
Speaker 6 (16:17):
That didn't even that pailed comparison to where they were
out in the late nineties. So I think that there's
a lot more room and a lot more.
Speaker 9 (16:23):
You know, frankly, if we want to talk about economic
tailwind around those names.
Speaker 2 (16:29):
What about opportunities off shore? We're talking here about stuff
that may be domestically driven. I'm wondering whether you're seeing
anything internationally that has sparked your curiosity or piqued your interest.
Speaker 9 (16:42):
Well, there's no I was teasing by brother today, we're
going to have the opportunity to go skiing in Canada.
Speaker 6 (16:47):
Here this next winner, and he's been.
Speaker 9 (16:49):
Waiting to pay for the second half of his trip
to see if maybe the US Canadian dollar exchange rate
might work in his favor.
Speaker 6 (16:57):
It has not to this point. So what's the story.
Speaker 9 (16:59):
The story is that with a dollar weakening, which maybe
another beginning of a trend that of course is going
to give some buoyancy to international profits as they're repatriated.
So sure, in general, and okay, evaluations has been a
conversation for years and years, it really hasn't moved the needle.
I think that the dollar weakening is certainly starting to
(17:22):
move the needle with international markets. I'm still going to
be oriented on the tech side, and I prefer to
look at China. I'd prefer to look at a place
where the government can come in and make a radical
change to the economy with stimulus. And oh, by the way,
the United States economy's biggest booms in the last ten
(17:42):
years have been from our government.
Speaker 6 (17:44):
Doing stimulative things.
Speaker 9 (17:46):
Right, So when I look overseas to chat and I say, wow,
they seem to.
Speaker 6 (17:50):
Be leading in evs. They seem to be doing darnk
close to leading in Ai.
Speaker 9 (17:54):
And oh, by the way, they're also selling more waway
phones than Apple iPhone over there with a population that's tremendous.
Speaker 6 (18:02):
So I am interested.
Speaker 9 (18:04):
Where I am internationally invested is going to have an
overweight to those Chinese tech names.
Speaker 2 (18:11):
Talk to me a little bit about the themes that
you're avoiding right now. I mean to maybe call it
herd mentality. We talked about the meg seven, But are
there corners of the market that you feel are kind
of overrated right now and that you would be looking
to either lighten up on or to avoid altogether.
Speaker 9 (18:29):
I think that if there's anybody talking about a bear
market rally still that you're listening to, you might want
to change your favorite station or commentator.
Speaker 6 (18:41):
I would not be anywhere in the defensive space.
Speaker 9 (18:45):
I'm just not that interested in utilities or staples.
Speaker 4 (18:51):
You know.
Speaker 9 (18:51):
Of course, in times of uncertainty like this, those tend
to have a little bit of a support. But I
would I really would lean into I mean, look at
consumer descript estionary half that index is Amazon and Tesla,
both of which got really beat up and probably are
going to be turning higher. That's an easy place to
look for opportunity. Obviously within the tech stock tech stack,
(19:12):
the semiconductors are a lot more interesting. So you know,
it just doesn't pay to bet against the market long term,
and it would take a tremendous change for the market
not to hit new highs within the next few months.
Speaker 2 (19:24):
David, we'll leave it there. Thank you so much for
joining us. David Lotte is the chief investment officer at
a Bound Financial, joining from Granite Bay, California. 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
(19:48):
the Asia Pacific. You can find us on Apple, Spotify,
the Bloomberg Podcast YouTube channel, or anywhere else you listen.
Join us again tomorrow for insight on the market moves
from Hong Kong to Singapore and Australia. I'm Doug Prisoner
and this is Bloomberg
Speaker 9 (20:07):
M HM.
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