November 16, 2025 • 19 mins
Crucial data will arrive for investors this week. Nvidia will report earnings, with the chipmaker seen as a bellwether for the AI trade. US weekly jobless claims data and September payrolls are set to release on Thursday. Chris Maxey, Managing Director and Chief Market Strategist at Wealthspire Advisors, discusses how these reports will impact the markets.
Plus, Japan's 3Q GDP saw its the first decline in six quarters. Trinh Nguyen, Natixis Emerging Markets Asia Economist, provides a cautious outlook for emerging markets in 2026.
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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 Daybreak Asia podcast. I'm Doug Chrisner. The
key event for markets in the week ahead will be
the earnings from Invidia. They are due on Wednesday, and
at the risk of stating the obvious, there has been
tremendous scrutiny over the AI trade lately, and in Vidia's
results could trigger further rotation out of the AI theme.
Even if the company does beat, I think the critical
(00:32):
question here is around sustainability of demand, and if guidance
fails to meet expectations, you can expect this stock to fall,
not just in the US, but in Asia as well.
In Nvidia is almost as closely correlated with Taiwan's tie
X as it is to the SMP five hundred. Remember
TSMC's waiting in the tai X is more than forty percent,
(00:53):
and of course TSMC is the foundry for the production
of those Nvidia chips. Now, at the same time, i'm
here in the States, the government is working to reschedule
economic data. Markets have been forced to rely on a
lot of private surveys for a closer look. Now I'm
joined by Chris Maxi. He is managing director also the
chief market strategist at Wealthspire Advisors. Chris is on the
(01:16):
line from just outside Washington, DC. Thank you, sir for
making time to chat. It seems like the two readings
on the labor market that we will get on Thursday
are the most critical, that being the weekly jobless claims
data and the numbers on September payrolls.
Speaker 3 (01:32):
Wouldn't you agree with that, you know, Doug, I think
the job's data is going to be a very key
focus for participants. What we've seen in just the last
couple of weeks is a lot of irregularities, if you will,
on the labor market, whether it was the ADP report
or the Challenger layoffs. And for a lot of folks
right now they're saying, Okay, where is the job market
(01:55):
If the hiring's not there, but we're beginning to see
a pickup in layoffs. Is that an indication that perhaps
the Federal Reserve is balling a step or two behind
what they need to be doing. It doesn't necessarily look
like that's the case just yet. I would imagine that
we'll find out the labor report is going to suggest
(02:15):
some positive growth or not to the point where layoffs
are really accelerating to the state that would cause any
kind of consternation. But I do suspect there is going
to be a tremendous amount of focus on that report
because of what it leads to in potentially December. Are
we going to get the other rate cut or are
we not?
Speaker 1 (02:34):
So?
Speaker 2 (02:34):
A lot of the fedspig that we've been hearing recently
has focused more on the inflation side of the mandate
than on the labor market side of the mandate. Is
the Fed wrong to be a little concerned about inflation
in the way that we have heard it discussed.
Speaker 3 (02:50):
I don't necessarily know that wrong is how I would characterize,
but I do think that what we're going to find
out is the labor market potentially weakens before we see
inflation rollover and come back down. It has been quite
a while since we've had inflation anywhere near that quote
unquote two percent target, and I can't imagine we're going
(03:11):
to be getting there in the near term. You know,
just as we look at the elections that happened in
America a couple of weeks ago, there was a ton
of focus on cost of living, on prices being too high,
on the voter base being unhappy with that, and I
think that's a big part of why we saw tariff
rollbacks that happened on Thursday and Friday of last week,
with a lot of food products in particular. So what
(03:34):
I would imagine is that the government is going to
work pretty aggressively to try and get cost of living
under control. We have midterm elections next year. They don't
want that to remain a focal point of the election cycle,
and so the FED focus on inflation. I get it,
I understand that. But more importantly, we have weakening in
the labor market that's showing up very presently right in
(03:56):
front of us.
Speaker 2 (03:56):
So when you look at the kind of the weakness
and consumer sentiment, do you see that more as a
reflection of the choppiness of the jobs market or is
it an inflation story.
Speaker 3 (04:06):
I think it's a bit of a mixed picture there.
The issue we have is that prices have gone up
and they have not come back down. We see certain pockets,
whether it's auto sales for instance, where the price of
a used auto has come down, but for the most part,
everything else has gone up after twenty twenty two and
just simply never went back down, and that's the part
(04:28):
that people are really wrestling with right now. Are they
feeling that their wages are growing quickly enough to offset
that cost of living that's going up. And I think
the answer that we're seeing from those consumer sentiment reports
is simply know, for the vast majority of people, they're
not feeling like their bank accounts are filling back up.
They're not feeling as though they have the opportunity to
(04:49):
succeed right now. But there is a bit of a
disconnect here, I think, as we all know, and a
lot of people have been talking about, there's the disconnect
of the top income households and those at the bottom.
Twenty twenty two was a story about wages rising for
lower income households. We haven't seen that be the case
over the past two years, and as you think about
consumer sentiment reports, I think it's reflecting that dichotomy beginning
(05:13):
to grow further and further. Apart as asset values have
gone up, home prices have gone up. We see the
stock market having been up quite a bit again this year,
and so that gap continues to widen from the top
and the bottom.
Speaker 2 (05:26):
I understand that, but when you look at the problems
that we have been facing in the labor market. I'm
wondering whether you think there's a bit of structural kind
of redesign that's happened, and maybe immigration is a part
of that story. And the reason that I bring this
up is that is there not a debate over whether
or not lower interest rates is the right prescription to
address labor market weakness. Maybe we've entered an area where
(05:51):
lower rates really won't provide the juice that they have
in the past.
Speaker 3 (05:55):
Yeah, I think you're right on point there. Immigration is
some thing that hasn't gotten as much conversation here recently,
but it's definitely impacting labor markets. And you know, when
we look at something like the wages of a native
born versus a foreign born employee, there's a pretty big
discrepancy where the average non native employee makes about eighty
(06:17):
seven cents on the dollar relative to somebody that was
born here. You know, as you think about the rotation
in the cycle that might be happening underneath the hood
of the labor market, that does place a bit of
pressure on the inflation side, and that could be why
the Federal Reserve is saying no, no, no, no, we still
need to focus on inflation, despite the fact that maybe
tariffs are getting rolled back and that will start to
roll over. But you do have to wonder if the
(06:41):
labor market starts to shrink or gets smaller because of
things like immigration, what does that do to economic growth?
You know, thus far in the year, I think we've
all seen that it's been okay, largely because of the
AI trade and the AI story and that boom and
cap X. But one has to wonder how long can
that persist and go on for.
Speaker 2 (07:00):
Well, that's a great point, and it kind of goes
back to the point that you were talking about earlier
about the wealth effect in the equity market and how
that has helped to empower consumers, particularly at the upper
end of the income strata, those that have exposure to
the equity trade. So if there is some type of
faltering in the stock market that would maybe cause people
(07:21):
to spend less, is there the risk of a recession
in that scenario in your mind?
Speaker 3 (07:28):
I don't know that we're there quite yet. You know,
even as much as we say perhaps the AI trade
could roll over, even what we're seeing in these last
couple of weeks is simply a reset of what was
a pretty concentrated set of positioning in the markets, and
you know, it would be hard to argue that that
wasn't the case. So I think what we're seeing these
last couple of weeks is simply a reset and positioning
(07:49):
before people get ready for this ramp up into the
end of the year. And at that point you can
start to look into twenty twenty six and say, Okay,
what's on the docket, what's on the When you start
to look at twenty twenty six, there are still a
number of positive tailwinds that are in place, whether we're
talking about the One Big Beautiful Bill Act and the
(08:11):
potential for that to really accelerate corporate spending, whether we're
talking about the asset values for top earning households being
high enough such that they're going to want to continue spending.
So you look at the real estate market is a
great example. The real estate market is still very tight,
and as much as people are talking about there's not
been a lot of activity in the real estate in
(08:34):
terms of transactions. The reality is that most people own
their house free and clear right now. The average carrying
cost of mortgage that does exist for those houses where
there's borrowing is still quite low, and so you've got
a different situation going in the housing market where it's
hard to imagine prices resetting all that that much lower.
(08:57):
And so I still think as you look into next year,
you've got these tailwinds that are in place that are
going to be supportive of the overall economy. It's just
a question of when we need to start rethinking the
AI trade and if that's going to begin to push
down economic growth. I think that's a ways off.
Speaker 2 (09:12):
So as long as we're talking about the tolerance for risk,
maybe we can address what's going on in bitcoin in
Sunday trading in New York the price drop below the
closing level of twenty twenty four in early trading, and
with that decline the year to date gain for bitcoin
up thirty percent from the beginning of twenty twenty five.
That has evaporated, and I'm wondering whether you think that
(09:34):
it's any type of reliable indicator when it comes to
the tolerance for risk.
Speaker 3 (09:40):
I don't know that it says anything about the broader economy,
but I think specifically to bitcoin itself, you have levered players,
and lever players come and go, there's a lot of
psychology and behavior that's involved there. Those behaviors can also
ebb and flow, and I think what we're seeing right
now is just one of those moments where the psychology
(10:00):
is stepping into reverse. So much of the conversation was
sec approving bitcoin ets and that's going to lead to
this massive adoption and growth and assets, and it has
done that to a certain degree. But when you have
levered players that are involved in a market like that,
particularly when there's only a single asset class, if you will,
(10:21):
they can flee very rapidly. And when you see drawdowns
that we had in the middle of October where bitcoin
was down ten percent in the course of five or
six hours, it gives you an indication that this event
was likely coming and you're going to have a recent
in positioning before it reaccelerates.
Speaker 2 (10:38):
Right.
Speaker 3 (10:38):
This is just the continuous cycle of cryptocurrencies and bitcoin.
We see this in speculative parts of the stock market too.
It's just human psychology. At the end of the day,
I don't know that I would ascribe a whole lot
more to it than that.
Speaker 2 (10:51):
Chris will leave it there, Thank you so very much.
Chris Maxi is managing Director. He's also the chief market
strategist at Wealth Spire Advisors. Joining from Check Outside Washington,
d C here on the Daybreak Asia podcast. Welcome back
to the Daybreak Asia Podcast. I'm Doug Chrisner. Japan's economy
(11:14):
contracted in Q three for the first time in six
quarters on an annualized basis negative one point eight percent. Now,
contraction was not going to be a surprise at all.
In fact, this is better than what economists did forecast.
They were looking for a negative two point four percent.
And all of it comes as Japan's new Prime Minister
Takei Ichi is preparing some major stimulus. Bloomberg's Paul Jackson
(11:37):
covers the economies of Japan and South Korea.
Speaker 1 (11:40):
The fall was expected. We knew there was going to
be a pullback from exports over the summer because we
had the bringing forward of exports in the previous quarters
companies tried to beat the tariffs of Donald Trump, so
that part was expected. We also knew there was going
to be a sharp drop off in spending on housing.
(12:02):
It's actually a third fall in the amount spent on
the property market, reflecting environmental changes regulations that came in
so there was again a flood of spending before the spring,
and then that's tailed off.
Speaker 2 (12:17):
That is Bloomberg's Paul Jackson. So let's take a look
ahead now to the outlook for emerging markets in the
new year. That would include China. Trin Yuan is the
Emerging Market's Asia economist at the Texas. She spoke earlier
with Bloomberg TV host Paul Allen and April Honng. Now
Tren has a cautious outlook for the new year, and
the conversation began with a question about her trepidation.
Speaker 4 (12:40):
We are starting this year with much more caution, just
because twenty five, despite the bark of tariffs, has been
quite great for em Asia experts pretty strong thanks to
front loading, thanks to the ICT cycle upturn, and of
course the big deployment of AI to helped the big
chippers and that has helped mitigate it a lot of
the drag and more importantly, Asia center bits had plenty
(13:03):
of room giving the soft dollar to cut right. So
we're looking into twenty twenty six with much more trepidation
because a lot of this is running out of sea.
We're looking at almost the end of the cutting cycle
for a lot of emerging Asian economies in raycut, there's
a very limited room for that. But at the same time,
exports are slowing right. Demand is decelerating in China very rapidly.
(13:27):
In the US demand is likely desilling also very rapidly.
So as a result, we're very cautious on the exports
for the next year. Exports outlook for the next year,
especially for Asian big traders and those more exposed to
the chip cycle that have performed extremely well this year.
Speaker 5 (13:46):
Trin we've been seeing in the past two months or
so lots of central bank surprises. Increasingly hard to predict
what policymakers are going to do. I wonder though, going
into nixt year the risks we be talking not just
about rate cuts or holes, but about rate hikes given
the inflation trajectory.
Speaker 4 (14:07):
Absolutely so. One of the big concerns when the China
data came out in October really is what is the
policy reaction function Given the fact that data has been
very underwhelming, and despite the fact that China has really
high real GDP growth, nominal GDP has been very underwhelming,
meaning real debt has risen for households, for corporate so
(14:27):
they find it easier to pay down debt. So the
move forward obviously is cutting rates, but it's not so
obvious as the dollar is quite uncertain, wey the direction
that we'll lead. So for Asian central banks, we're reaching
at the end of the traditional monetary support, so we
have to look into fiscal support. So when we are
looking at into a twenty twenty six where a monetary
(14:49):
tap is running dry and fiscal policy is getting much
more loose, there's a big question that who is going
to absorb a lot of this debt. Obviously, fiscal policy
is supp order for growth, especially for the pro growth agenda,
and we're looking at South Korea, China, Japan, Indonesia, many
countries easing fiscal policy, so that's a big concerned But
(15:11):
fundamentally we're not as concerned about inflation just yet given
where oil, given the fact that we fundamentally think the
output gap is quite a negative in Asia across the
board still, so demand, domestic demand is the weak link
of the equation for Asian growth. Exports have been strong,
so turning into the next year, fiscal policy we need
(15:32):
to support and oil is an important equation, and food
prices as well. Because oil we expect to be quite
subdued and food has been favoral So the risk factor
is that those factors will rise. We don't think that
is the case, so meaning inflation will remain manageable, But
we don't have a lot of space as we've already
front loaded a lot of these policy supports.
Speaker 6 (15:54):
Yeah, Trind, we've got a case study today. In fact,
you mentioned Indonesia there. I mean, there is a case
in Indonesia for a cut, But to what degree do
your point? Is inflation standing in the way here? And
if you do see fiscal stimulus in Indonesia, that sounds
like it's hardly going to help the problem.
Speaker 4 (16:11):
Absolutely, they've cut the most in Asia. One hundred and
fifty point basis points of cut really surprised markets when
they've been very dovish in front loading that cut to pause.
But the reason why the pause is very clear is
that the gap between the FED and Indonesia is really
very very narrow. If they were to cut this week,
that gap would narrow from seventy five basis point to
(16:31):
fifty And the market is uncertain where December is going
to be for the FED, right, will it cut the
upper bound from four percent to three point seventy five
in December. Given that is so in turn, a lot
of center branks am not going to take that risk,
particularly when their nominal policy rates are so low and
inflationary pressure is actually rising marginally for Indonesia, so real
rates are actually getting worse. Some other center branks have
(16:54):
much more space, like India, for example, inflation has been
very very low, they have a lot of space. But
given uncertainty again this elusive India trade deal putting a
lot of pressure on the rupee, the center rank also
is not really the one that with a lot of
space to cut, are not really cutting. So therefore this
caution is going to continue until we get clarity on
(17:16):
where the growth outlook for the US is. If the
growth outlook it is very very decent, and at the
same time we have a soft enough for the center
brank to cut and inflation is benign, then maybe we
can have a much more optimistic outlook for twenty twenty six.
For now, given the fact that we have the expert
cycle turning down and growth picture very weak, and big
(17:37):
question of course is China reflation trade right, will China
do enough fiscal to really reflate to this economy import
more for the rest of Asia versus this year where
imports have been quite weak.
Speaker 6 (17:48):
Trim We've only got about thirty seconds remaining, But I
do you just want to quickly get your views on
the risk posed to some em Asian economies from the
potential correction in AI stocks, just very quickly.
Speaker 4 (18:01):
So if you look at Korea, what the best stock
market in Asia, I'm not talked about much is really
ships have done really well. Autos have been very much down.
With the trade deal with the lower of tariffs. I
think autos would do next year much better. But the
questions will chips continue and the cyclical factor is fading
(18:21):
giving the cycle turning into here, so we may still
have very strong first quarter, but I think the risks
are really there that chips that have driven a lot
of this exceptional growth in Asia, it's going to decelerate.
So we looking at twenty twenty six with cyclical factors
risk rising, and at the same time fundamental growth is
looking very saggy globally. So the big question is how
(18:44):
big are we're going to get regarding the fiscal bazooka
into twenty twenty six so offset the external stress that
we're going to face.
Speaker 2 (18:54):
That was trinun Emerging Markets Asia economists at the Texas
speaking earlier with Bloomberg TV hosts Paul Allen and April
Honk bringing it to you here on the Daybreak Asia Podcast.
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
(19:17):
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.
Speaker 2 (00:10):
Welcome to the Daybreak Asia podcast. I'm Doug Chrisner. The
key event for markets in the week ahead will be
the earnings from Invidia. They are due on Wednesday, and
at the risk of stating the obvious, there has been
tremendous scrutiny over the AI trade lately, and in Vidia's
results could trigger further rotation out of the AI theme.
Even if the company does beat, I think the critical
(00:32):
question here is around sustainability of demand, and if guidance
fails to meet expectations, you can expect this stock to fall,
not just in the US, but in Asia as well.
In Nvidia is almost as closely correlated with Taiwan's tie
X as it is to the SMP five hundred. Remember
TSMC's waiting in the tai X is more than forty percent,
(00:53):
and of course TSMC is the foundry for the production
of those Nvidia chips. Now, at the same time, i'm
here in the States, the government is working to reschedule
economic data. Markets have been forced to rely on a
lot of private surveys for a closer look. Now I'm
joined by Chris Maxi. He is managing director also the
chief market strategist at Wealthspire Advisors. Chris is on the
(01:16):
line from just outside Washington, DC. Thank you, sir for
making time to chat. It seems like the two readings
on the labor market that we will get on Thursday
are the most critical, that being the weekly jobless claims
data and the numbers on September payrolls.
Speaker 3 (01:32):
Wouldn't you agree with that, you know, Doug, I think
the job's data is going to be a very key
focus for participants. What we've seen in just the last
couple of weeks is a lot of irregularities, if you will,
on the labor market, whether it was the ADP report
or the Challenger layoffs. And for a lot of folks
right now they're saying, Okay, where is the job market
(01:55):
If the hiring's not there, but we're beginning to see
a pickup in layoffs. Is that an indication that perhaps
the Federal Reserve is balling a step or two behind
what they need to be doing. It doesn't necessarily look
like that's the case just yet. I would imagine that
we'll find out the labor report is going to suggest
(02:15):
some positive growth or not to the point where layoffs
are really accelerating to the state that would cause any
kind of consternation. But I do suspect there is going
to be a tremendous amount of focus on that report
because of what it leads to in potentially December. Are
we going to get the other rate cut or are
we not?
Speaker 1 (02:34):
So?
Speaker 2 (02:34):
A lot of the fedspig that we've been hearing recently
has focused more on the inflation side of the mandate
than on the labor market side of the mandate. Is
the Fed wrong to be a little concerned about inflation
in the way that we have heard it discussed.
Speaker 3 (02:50):
I don't necessarily know that wrong is how I would characterize,
but I do think that what we're going to find
out is the labor market potentially weakens before we see
inflation rollover and come back down. It has been quite
a while since we've had inflation anywhere near that quote
unquote two percent target, and I can't imagine we're going
(03:11):
to be getting there in the near term. You know,
just as we look at the elections that happened in
America a couple of weeks ago, there was a ton
of focus on cost of living, on prices being too high,
on the voter base being unhappy with that, and I
think that's a big part of why we saw tariff
rollbacks that happened on Thursday and Friday of last week,
with a lot of food products in particular. So what
(03:34):
I would imagine is that the government is going to
work pretty aggressively to try and get cost of living
under control. We have midterm elections next year. They don't
want that to remain a focal point of the election cycle,
and so the FED focus on inflation. I get it,
I understand that. But more importantly, we have weakening in
the labor market that's showing up very presently right in
(03:56):
front of us.
Speaker 2 (03:56):
So when you look at the kind of the weakness
and consumer sentiment, do you see that more as a
reflection of the choppiness of the jobs market or is
it an inflation story.
Speaker 3 (04:06):
I think it's a bit of a mixed picture there.
The issue we have is that prices have gone up
and they have not come back down. We see certain pockets,
whether it's auto sales for instance, where the price of
a used auto has come down, but for the most part,
everything else has gone up after twenty twenty two and
just simply never went back down, and that's the part
(04:28):
that people are really wrestling with right now. Are they
feeling that their wages are growing quickly enough to offset
that cost of living that's going up. And I think
the answer that we're seeing from those consumer sentiment reports
is simply know, for the vast majority of people, they're
not feeling like their bank accounts are filling back up.
They're not feeling as though they have the opportunity to
(04:49):
succeed right now. But there is a bit of a
disconnect here, I think, as we all know, and a
lot of people have been talking about, there's the disconnect
of the top income households and those at the bottom.
Twenty twenty two was a story about wages rising for
lower income households. We haven't seen that be the case
over the past two years, and as you think about
consumer sentiment reports, I think it's reflecting that dichotomy beginning
(05:13):
to grow further and further. Apart as asset values have
gone up, home prices have gone up. We see the
stock market having been up quite a bit again this year,
and so that gap continues to widen from the top
and the bottom.
Speaker 2 (05:26):
I understand that, but when you look at the problems
that we have been facing in the labor market. I'm
wondering whether you think there's a bit of structural kind
of redesign that's happened, and maybe immigration is a part
of that story. And the reason that I bring this
up is that is there not a debate over whether
or not lower interest rates is the right prescription to
address labor market weakness. Maybe we've entered an area where
(05:51):
lower rates really won't provide the juice that they have
in the past.
Speaker 3 (05:55):
Yeah, I think you're right on point there. Immigration is
some thing that hasn't gotten as much conversation here recently,
but it's definitely impacting labor markets. And you know, when
we look at something like the wages of a native
born versus a foreign born employee, there's a pretty big
discrepancy where the average non native employee makes about eighty
(06:17):
seven cents on the dollar relative to somebody that was
born here. You know, as you think about the rotation
in the cycle that might be happening underneath the hood
of the labor market, that does place a bit of
pressure on the inflation side, and that could be why
the Federal Reserve is saying no, no, no, no, we still
need to focus on inflation, despite the fact that maybe
tariffs are getting rolled back and that will start to
roll over. But you do have to wonder if the
(06:41):
labor market starts to shrink or gets smaller because of
things like immigration, what does that do to economic growth?
You know, thus far in the year, I think we've
all seen that it's been okay, largely because of the
AI trade and the AI story and that boom and
cap X. But one has to wonder how long can
that persist and go on for.
Speaker 2 (07:00):
Well, that's a great point, and it kind of goes
back to the point that you were talking about earlier
about the wealth effect in the equity market and how
that has helped to empower consumers, particularly at the upper
end of the income strata, those that have exposure to
the equity trade. So if there is some type of
faltering in the stock market that would maybe cause people
(07:21):
to spend less, is there the risk of a recession
in that scenario in your mind?
Speaker 3 (07:28):
I don't know that we're there quite yet. You know,
even as much as we say perhaps the AI trade
could roll over, even what we're seeing in these last
couple of weeks is simply a reset of what was
a pretty concentrated set of positioning in the markets, and
you know, it would be hard to argue that that
wasn't the case. So I think what we're seeing these
last couple of weeks is simply a reset and positioning
(07:49):
before people get ready for this ramp up into the
end of the year. And at that point you can
start to look into twenty twenty six and say, Okay,
what's on the docket, what's on the When you start
to look at twenty twenty six, there are still a
number of positive tailwinds that are in place, whether we're
talking about the One Big Beautiful Bill Act and the
(08:11):
potential for that to really accelerate corporate spending, whether we're
talking about the asset values for top earning households being
high enough such that they're going to want to continue spending.
So you look at the real estate market is a
great example. The real estate market is still very tight,
and as much as people are talking about there's not
been a lot of activity in the real estate in
(08:34):
terms of transactions. The reality is that most people own
their house free and clear right now. The average carrying
cost of mortgage that does exist for those houses where
there's borrowing is still quite low, and so you've got
a different situation going in the housing market where it's
hard to imagine prices resetting all that that much lower.
(08:57):
And so I still think as you look into next year,
you've got these tailwinds that are in place that are
going to be supportive of the overall economy. It's just
a question of when we need to start rethinking the
AI trade and if that's going to begin to push
down economic growth. I think that's a ways off.
Speaker 2 (09:12):
So as long as we're talking about the tolerance for risk,
maybe we can address what's going on in bitcoin in
Sunday trading in New York the price drop below the
closing level of twenty twenty four in early trading, and
with that decline the year to date gain for bitcoin
up thirty percent from the beginning of twenty twenty five.
That has evaporated, and I'm wondering whether you think that
(09:34):
it's any type of reliable indicator when it comes to
the tolerance for risk.
Speaker 3 (09:40):
I don't know that it says anything about the broader economy,
but I think specifically to bitcoin itself, you have levered players,
and lever players come and go, there's a lot of
psychology and behavior that's involved there. Those behaviors can also
ebb and flow, and I think what we're seeing right
now is just one of those moments where the psychology
(10:00):
is stepping into reverse. So much of the conversation was
sec approving bitcoin ets and that's going to lead to
this massive adoption and growth and assets, and it has
done that to a certain degree. But when you have
levered players that are involved in a market like that,
particularly when there's only a single asset class, if you will,
(10:21):
they can flee very rapidly. And when you see drawdowns
that we had in the middle of October where bitcoin
was down ten percent in the course of five or
six hours, it gives you an indication that this event
was likely coming and you're going to have a recent
in positioning before it reaccelerates.
Speaker 2 (10:38):
Right.
Speaker 3 (10:38):
This is just the continuous cycle of cryptocurrencies and bitcoin.
We see this in speculative parts of the stock market too.
It's just human psychology. At the end of the day,
I don't know that I would ascribe a whole lot
more to it than that.
Speaker 2 (10:51):
Chris will leave it there, Thank you so very much.
Chris Maxi is managing Director. He's also the chief market
strategist at Wealth Spire Advisors. Joining from Check Outside Washington,
d C here on the Daybreak Asia podcast. Welcome back
to the Daybreak Asia Podcast. I'm Doug Chrisner. Japan's economy
(11:14):
contracted in Q three for the first time in six
quarters on an annualized basis negative one point eight percent. Now,
contraction was not going to be a surprise at all.
In fact, this is better than what economists did forecast.
They were looking for a negative two point four percent.
And all of it comes as Japan's new Prime Minister
Takei Ichi is preparing some major stimulus. Bloomberg's Paul Jackson
(11:37):
covers the economies of Japan and South Korea.
Speaker 1 (11:40):
The fall was expected. We knew there was going to
be a pullback from exports over the summer because we
had the bringing forward of exports in the previous quarters
companies tried to beat the tariffs of Donald Trump, so
that part was expected. We also knew there was going
to be a sharp drop off in spending on housing.
(12:02):
It's actually a third fall in the amount spent on
the property market, reflecting environmental changes regulations that came in
so there was again a flood of spending before the spring,
and then that's tailed off.
Speaker 2 (12:17):
That is Bloomberg's Paul Jackson. So let's take a look
ahead now to the outlook for emerging markets in the
new year. That would include China. Trin Yuan is the
Emerging Market's Asia economist at the Texas. She spoke earlier
with Bloomberg TV host Paul Allen and April Honng. Now
Tren has a cautious outlook for the new year, and
the conversation began with a question about her trepidation.
Speaker 4 (12:40):
We are starting this year with much more caution, just
because twenty five, despite the bark of tariffs, has been
quite great for em Asia experts pretty strong thanks to
front loading, thanks to the ICT cycle upturn, and of
course the big deployment of AI to helped the big
chippers and that has helped mitigate it a lot of
the drag and more importantly, Asia center bits had plenty
(13:03):
of room giving the soft dollar to cut right. So
we're looking into twenty twenty six with much more trepidation
because a lot of this is running out of sea.
We're looking at almost the end of the cutting cycle
for a lot of emerging Asian economies in raycut, there's
a very limited room for that. But at the same time,
exports are slowing right. Demand is decelerating in China very rapidly.
(13:27):
In the US demand is likely desilling also very rapidly.
So as a result, we're very cautious on the exports
for the next year. Exports outlook for the next year,
especially for Asian big traders and those more exposed to
the chip cycle that have performed extremely well this year.
Speaker 5 (13:46):
Trin we've been seeing in the past two months or
so lots of central bank surprises. Increasingly hard to predict
what policymakers are going to do. I wonder though, going
into nixt year the risks we be talking not just
about rate cuts or holes, but about rate hikes given
the inflation trajectory.
Speaker 4 (14:07):
Absolutely so. One of the big concerns when the China
data came out in October really is what is the
policy reaction function Given the fact that data has been
very underwhelming, and despite the fact that China has really
high real GDP growth, nominal GDP has been very underwhelming,
meaning real debt has risen for households, for corporate so
(14:27):
they find it easier to pay down debt. So the
move forward obviously is cutting rates, but it's not so
obvious as the dollar is quite uncertain, wey the direction
that we'll lead. So for Asian central banks, we're reaching
at the end of the traditional monetary support, so we
have to look into fiscal support. So when we are
looking at into a twenty twenty six where a monetary
(14:49):
tap is running dry and fiscal policy is getting much
more loose, there's a big question that who is going
to absorb a lot of this debt. Obviously, fiscal policy
is supp order for growth, especially for the pro growth agenda,
and we're looking at South Korea, China, Japan, Indonesia, many
countries easing fiscal policy, so that's a big concerned But
(15:11):
fundamentally we're not as concerned about inflation just yet given
where oil, given the fact that we fundamentally think the
output gap is quite a negative in Asia across the
board still, so demand, domestic demand is the weak link
of the equation for Asian growth. Exports have been strong,
so turning into the next year, fiscal policy we need
(15:32):
to support and oil is an important equation, and food
prices as well. Because oil we expect to be quite
subdued and food has been favoral So the risk factor
is that those factors will rise. We don't think that
is the case, so meaning inflation will remain manageable, But
we don't have a lot of space as we've already
front loaded a lot of these policy supports.
Speaker 6 (15:54):
Yeah, Trind, we've got a case study today. In fact,
you mentioned Indonesia there. I mean, there is a case
in Indonesia for a cut, But to what degree do
your point? Is inflation standing in the way here? And
if you do see fiscal stimulus in Indonesia, that sounds
like it's hardly going to help the problem.
Speaker 4 (16:11):
Absolutely, they've cut the most in Asia. One hundred and
fifty point basis points of cut really surprised markets when
they've been very dovish in front loading that cut to pause.
But the reason why the pause is very clear is
that the gap between the FED and Indonesia is really
very very narrow. If they were to cut this week,
that gap would narrow from seventy five basis point to
(16:31):
fifty And the market is uncertain where December is going
to be for the FED, right, will it cut the
upper bound from four percent to three point seventy five
in December. Given that is so in turn, a lot
of center branks am not going to take that risk,
particularly when their nominal policy rates are so low and
inflationary pressure is actually rising marginally for Indonesia, so real
rates are actually getting worse. Some other center branks have
(16:54):
much more space, like India, for example, inflation has been
very very low, they have a lot of space. But
given uncertainty again this elusive India trade deal putting a
lot of pressure on the rupee, the center rank also
is not really the one that with a lot of
space to cut, are not really cutting. So therefore this
caution is going to continue until we get clarity on
(17:16):
where the growth outlook for the US is. If the
growth outlook it is very very decent, and at the
same time we have a soft enough for the center
brank to cut and inflation is benign, then maybe we
can have a much more optimistic outlook for twenty twenty six.
For now, given the fact that we have the expert
cycle turning down and growth picture very weak, and big
(17:37):
question of course is China reflation trade right, will China
do enough fiscal to really reflate to this economy import
more for the rest of Asia versus this year where
imports have been quite weak.
Speaker 6 (17:48):
Trim We've only got about thirty seconds remaining, But I
do you just want to quickly get your views on
the risk posed to some em Asian economies from the
potential correction in AI stocks, just very quickly.
Speaker 4 (18:01):
So if you look at Korea, what the best stock
market in Asia, I'm not talked about much is really
ships have done really well. Autos have been very much down.
With the trade deal with the lower of tariffs. I
think autos would do next year much better. But the
questions will chips continue and the cyclical factor is fading
(18:21):
giving the cycle turning into here, so we may still
have very strong first quarter, but I think the risks
are really there that chips that have driven a lot
of this exceptional growth in Asia, it's going to decelerate.
So we looking at twenty twenty six with cyclical factors
risk rising, and at the same time fundamental growth is
looking very saggy globally. So the big question is how
(18:44):
big are we're going to get regarding the fiscal bazooka
into twenty twenty six so offset the external stress that
we're going to face.
Speaker 2 (18:54):
That was trinun Emerging Markets Asia economists at the Texas
speaking earlier with Bloomberg TV hosts Paul Allen and April
Honk bringing it to you here on the Daybreak Asia Podcast.
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
(19:17):
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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