June 8, 2025 • 16 mins
Asian stocks opened higher Monday with the US and China set to resume trade negotiations. Adding to the optimism in the stock market was the surprise in labor data. While US job growth moderated in May and prior months were revised lower, Friday's report narrowly exceeded forecasts. We get reaction from Chris Brigati, Chief Investment Officer at SWBC.
Plus - trade tensions appeared to recede between President Donald Trump and China's Xi Jinping as an impasse on critical minerals was broken, paving the way for further trade talks. We get a preview of how the talks may impact the trading week ahead with Alicia Garcia Herrero, Chief Asia-Pacific Economist at Natixis. She speaks with Bloomberg's Shery Ahn and Haidi Stroud-Watts.
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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.
So US China trade talks are set to resume Monday
morning in London. Today we heard from the Director of
the National Economic Council, Kevin Hassett. He told CBS News
Face the Nation, the goal here is to restore the
flow of critical minerals.
Speaker 3 (00:30):
Those exports of critical minerals have been getting released at
a rate that is higher than it was, but not
as high as we believe. We agree to in Geneva
at President Trump being a deal maker, talk with President
Chi and he said, let's take our senior guys, at
the people who are the same level as you. Let's
have them meet somewhere and let's get these things cleared up.
Speaker 2 (00:52):
That is Kevin Hasset. He is the director of the
National Economic Council. Now, on Saturday, Beijing said it approved
some applicants for those rare earth exports, but it didn't
elaborate on the product's applications or destinations. So for a
closer look at how trade is affecting financial markets, I'm
joined by Chris Burgotti. He is the chief investment officer
(01:14):
at SWBC. He joins from just outside of New York City. Chris,
thank you so much for making time to chat with
me on this. I know we've seen a lot more
volatility when it comes to the equity market, certainly, but
the same is true for the bond market. I mean,
yields up one moment down the next. And there's also
this debate as to whether or not tariffs are going
(01:34):
to accelerate inflation and maybe at the same time slow growth.
Then there is the dollar story, which is all a
part of this. So give me your sense kind of
in the big picture when you look at markets, what
are they telling you in a nutshell as it relates
to tariffs.
Speaker 4 (01:49):
Yeah, thanks for having me, Doug.
Speaker 5 (01:51):
My big picture of view is basically that the challenges
to the markets the economy are all around the uncertainty
of the tariff situation. It seems like we might have
some clarity at various points at time, but then things change,
the dynamic changes. Trump says something different. He adjusted his
metric in terms of whether there will be a pause
(02:11):
or not. We hear more news coming out of China
that there might be some resolution, then there might not
be then there's positive news about rare metals, for example.
So the uncertainty is really what's driving the bus here
in my opinion, and markets do not like uncertainty, so
that's being priced in.
Speaker 4 (02:27):
As you see, interest rates have risen remarkably.
Speaker 5 (02:31):
Since the initial tariff discussion started, and I think that's
going to persist until we do have a little bit
more clarity.
Speaker 2 (02:37):
So what's your sense of how tariffs are going to
impact the inflation story.
Speaker 5 (02:41):
I think that the tariff situation will be somewhat inflationary
at some point in time.
Speaker 4 (02:46):
We have not seen that bleed into the data as
of yet.
Speaker 5 (02:48):
The data seems relatively static, and part of the problem
has been the fact that the tariffs brought forward some
customer buying, some purchasing by the US. Therefore, we saw
a lot of certain and imports when the tariffs were
initially announced, and therefore we didn't see the same effect
that we might have seen. It seemed like the markets
might be okay. Prices weren't really driven higher as of
(03:10):
yet due to the big problem with imports coming into
the US and surplus or deficit of goods. Therefore, I'm
seeing some supply chain issues that I expect to transposed
down the road that will affect the markets a little more,
and I expect that tariffs will ultimately add a little
bit more inflation to the picture, higher for longer inflation
(03:32):
as opposed to maybe drifting lower that we had seen
as of late.
Speaker 2 (03:35):
I think we can agree that that's the big concern
for the FED right which is why officials time and
again have been saying we're not ready to cut rates
because there is still so much that is unknown in
terms of the impact that these tariffs will have on prices. Now,
the Fed is in a blackout period. We've got the
meeting June seventeenth and eighteenth. We also have this week
(03:56):
a couple of data points that will give the Fed
its last look inflation before that meeting. We have Wednesday
the CPI Thursday, it's the PPI report. What do you
think these numbers are going to kind of reveal here,
particularly CPI data. Is that going to begin to creep higher?
Do you think in a worrisome way.
Speaker 5 (04:15):
I think that there's a potential for it to start
to creep higher a little bit. Maybe this month might
be flat to slightly higher. But the bigger challenge and
the issue is we just got through a big employment
report on Friday which did not say that employment unemployment
was rising. And so to me, it's again back to
what you pointed out earlier, the FED focus, which is
(04:36):
on inflation. They've set it time and again they seem
to be putting all of their attention on that. So
for me going forward, that will be what we need
to have measured more appropriately and more specifically. And as
I see CPI and PPI coming out this week, a
flat to slightly higher reading could be on the offing,
and that could start to edge interest rates a little
(04:57):
bit higher. I certainly don't expect to isterhraate to start
plummeting from here by any means.
Speaker 2 (05:02):
So when you look at the corporate response to this,
to what extent are company is going to be willing
to take a hit to margin or, on the other hand,
feel the need to really pass along these higher import duties.
Speaker 4 (05:14):
That's a really great question and a solid point.
Speaker 5 (05:17):
And to me, about two or three weeks ago, we
saw the biggest retailer in the United States being Walmart,
come out and say they might have some problems down
the road passing on these higher prices and they might
have to pass them on to customers. They've been absorbing
them of late, as most retailers have been. But once
that kind of has to change, I expect the dynamic
(05:38):
to be a little bit different, and I do expect
them to have to start to pass on to customers.
They can only absorb for so long and then been
doing it thus far. Once those higher prices have to
be passed along to customers one way or another, that's
not a great thing for the consumer, and I do
expect that impact to happen in short order.
Speaker 2 (05:56):
So we had some pretty sizable moves in the bond
market here in the US on Friday after that employment data.
I think the two year and the ten year we're
each up about ten basis points. What do you feel
about the bond market right now? So if you look
at the ten year around four point fifty, could that
break through it and test maybe four seventy five or
even higher.
Speaker 5 (06:17):
I certainly expect higher rates. I definitively expect that because
of the inflation picture, which we just discussed. So if
inflation should be higher, we should have some challenges going
forward that will put pressure on the long end of
the market. Not to mention the fact that we've got
supply issues coming out, we got deficit hurdles that have
really started to make headlines of late. So I do
(06:37):
expect us to retest that four point eight oh six
I think is the exec level ten year high that
we reached earlier this year, and I expect that to
happen before the end of the summer. I do expect
also a steeper yield curve. We could get some pressure
on the long end of the market, even if the
short end of the market kind of stabilizes or feels
a little bit better, But I don't expect that necessarily,
(07:00):
and I do expect a steeper yil curve than we
have at the moment.
Speaker 2 (07:03):
So the S and P and the Friday session was
up about one percent. I'm curious about how you view
the equity market right now and where you're finding opportunity.
Speaker 5 (07:12):
The opportunity in the equity market is kind of a
little bit of a challenge to identify at various points
in time on a macro basis, Where just over six
thousand was the close on Friday, I do expect us
to possibly retest that high again that we did see
earlier in the year, and that's something that kind of
puts a top on the market, though I think we're
closer to the top than we are to a sell
(07:34):
off potential that could happen. Therefore, the opportunity for me
is things that will perform well in a recessionary environment.
Think of your basics, your utilities, your consumer staples. I
do see opportunity in Europe as well, so there's a
matter of moving money around the globe that could be
a benefit for at least US investors and repositioning themselves
in different ways. But go back to the basics of
(07:56):
what performs well in a recessionary environment, and I think
thoseastic type of entities will perform decently. I also expect
financials to form, although it's start to per form a
little bit better and have some upside potential. It's a
little bit longer runway, but a steeper yield curve, as
we all know, does benefit financial services and banks, So
in the long run, I do expect them to start
(08:16):
to feel a little bit better with regard to their
ability to monetize interest rates.
Speaker 2 (08:21):
We were talking a moment ago about meta Platforms being
in talks to make a multi billion dollar investment into
an AI startup known as Scale Ai. We know the
story on artificial intelligence and how it has helped to
power so many companies, and I'm thinking of Nvidia primarily,
but even a company like Broadcom. How do you feel
(08:44):
about the AI trade right now in the current environment?
Is it a little long in the tooth at least
for this part of the cycle.
Speaker 5 (08:51):
I think the AI trade does have some more opportunity
for it, but there's ebbs and flows in it. I
think we're part closer to the part. It might have
to add a little bit. It might have to back
up a little bit, settle down retrade. We've seen various
points and times the AI trade has going gangbusters and
then has resettled because news comes out that there might
(09:12):
be some competition for Nvidia, for example.
Speaker 4 (09:14):
We saw that earlier this year.
Speaker 5 (09:16):
So as those things come about, I do expect there
to be some challenges in the market to be able
to reprice and absorb them. But the long term AI
trade still has a lot of upside potential and I
do expect there to be some games to be had.
Speaker 2 (09:29):
All right, Chris, Well leave it there, Thank you so much.
Chris Burgotti. He is the chief investment officer at SWBC
on the line from just outside New York City here
on the Daybreak Asia podcast. Welcome back to the Daybreak
Asia Podcast. I'm Doug Chrisner. As we've been discussing, all
(09:53):
eyes will be on the meeting in London on Monday
between trade delegations from the US and China. More, we
heard from Alicia Garcio Horrero. She is the chief apack
economist at ne Tixas. Alicia spoke with Bloomberg, Sharry On
and Heidi Stroud Watts.
Speaker 6 (10:09):
Alicia, always great to have you with us, particularly to
kind of so through everything that's going on. And of
course the big sort of respector or impossible opportunity for
some relief is how these latest round of US China
talks go. And as you mentioned, as we've been kind
of talking about, this potentially becomes more complex if we're
moving on from just straight tariffs to the issue of
(10:32):
export controls, which is sensitive for both sides. Are you
optimistic that an agreement, a meaningful agreement, could be reached.
Speaker 7 (10:41):
I'm optimistic that an agreement will be reached, but it
won't be meaningful. That's even the previous one wasn't very meaningful.
I mean, of course gives were cut, but everybody knew
that they had to be cut.
Speaker 8 (10:53):
They were too high, they were at lock pate level.
That was easy.
Speaker 7 (10:58):
This time around, I think we'll only have a temporary
relief in export controls.
Speaker 8 (11:04):
We have export control from both sides.
Speaker 7 (11:07):
So the US went from you know what we already
had providing export controls on GPUs any semist of advance,
I mean advanced enough to be harmful for China, but
we moved even further if because of retaliation from China's
own export controls on critical row materials. We have airplane engines,
(11:28):
we have components of nuclear nuclear plants, you name it.
So because we've actually expanded, there is a room to
you know, to temporarily lift these export controls both sides.
But that's that won't be you know, a full deal,
so more time is needed. There's too many things happening,
(11:50):
you know, like from student visus, you name it, so
all of that will will just be temporary. That's the
second truth out of the very many way will see
until hopefully things get settled.
Speaker 6 (12:03):
In the meantime, do sort of the economic fundamentals to
the downside continue to become entrenched.
Speaker 8 (12:08):
In China obviously.
Speaker 6 (12:09):
Still have a broadly deflation environment, and sick demand is
still pretty subdued. The expert's obviously getting a temporary benefit.
On the US side, Do you expect costs to continue
rising going into the end of the year.
Speaker 7 (12:24):
Yeah, I mean a Now Texas we have, of course
slightly higher infection, but not to the point of really.
Speaker 8 (12:32):
Unraveling. Stop in cuts from the FED.
Speaker 7 (12:36):
So with think the FED is going took at three
times this year, and the reason is that although employment
data was decent, but we already see the cracks. The
companies are not laying off, but they are thinking about it.
You can see from the data that you know, there's
less sense, less, less confidence in the economy. Rightly, So, yeah,
(12:56):
we have so bad news overall, from tariffs to many
other things happening and in the US, so I think,
just to make a long story, sure, those inflationary pressures
will be creeping up.
Speaker 8 (13:08):
And in China, I don't think the.
Speaker 7 (13:10):
Inflation pressures will be fully off the table with the
data we're waiting.
Speaker 8 (13:17):
Maybe slightly better, but that will be it.
Speaker 7 (13:20):
So that divergence between China and the US in terms
of price movements is there to stay in the US.
Speaker 1 (13:30):
How much do you think a tax bill from President
Trump could help the broader economy? And how forgiving do
you expect bond investors to be because just all over
the world right now we're seeing borrowing costs surging on
really concerns about those government budget deficits.
Speaker 7 (13:46):
I wouldn't bet for investors to be for billing forgiven,
because they have not been forgiven for a while already.
So I think this build this bbbing big for sure.
I'm not sure it's beautiful. We could we could find
another objective for that one. That bill is a problem
(14:08):
for the US, and I hope I mean that that
there is enough attention for that investors won't take it easily.
And you're right, it's not only the US, So anybody
who is a little bit off the mark, and we
saw the jgb's for that matter, will suffer from very
high cost of funding. I think that's what we are
and this bill will be a problem for sure. I
(14:30):
don't think that's going to support growth because there will
be a lot of investment leaving and that will increase
the cost of funding for the US.
Speaker 8 (14:37):
So I'm not sure that's going to help.
Speaker 1 (14:40):
Yeah, we have seen weak demand for JGB auctions here
in Japan. We're expecting first quarter revise data for GDP
here in the country.
Speaker 7 (14:48):
What are you expecting, Well, yeah, I mean it might
be a little bit better, but let's be clear that
the first potter was very negative. So we do have
a better year for Japan two point three percent, which
is quite high, but because again last year was was weak.
Now we'll revise. Now we'll have to revise down. In
(15:11):
other words, growth isn't really there in Japan. We have
to realize that it's it's We even heard that there
might be a new emergency package, I think nine one
hundred billion additional fiscal package. All of this is going
to be an additional supply of jgbs, going back to
the cost of funding for Japan creeping up as well,
(15:35):
and the reason why they need all of these first
quarter you know, experts were so underwhelming and therefore, I mean,
what to expect from the Japanese economy other than again
additional stimulus on the fiscal side, But that's not going
to solve the problem. We need more productivity, we need
more investment. The Japanese government is very keen to receive
(15:55):
additional FBI. That's true, but it isn't really yet happening
in big scale.
Speaker 1 (16:02):
Yeah yeah, And of course we'll be watching the trade
negotiations at the G seven between Prime Minister Ishiva and
President Trump as well. Alicia Garcierrano. Always good to have
you with us chief APAG Economists and the Texas with
a look ahead on all of the economic news expected
this week.
Speaker 2 (16:20):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us 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
(16:42):
and Australia. I'm Doug Chrisner, and this is Bloomberg
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner.
So US China trade talks are set to resume Monday
morning in London. Today we heard from the Director of
the National Economic Council, Kevin Hassett. He told CBS News
Face the Nation, the goal here is to restore the
flow of critical minerals.
Speaker 3 (00:30):
Those exports of critical minerals have been getting released at
a rate that is higher than it was, but not
as high as we believe. We agree to in Geneva
at President Trump being a deal maker, talk with President
Chi and he said, let's take our senior guys, at
the people who are the same level as you. Let's
have them meet somewhere and let's get these things cleared up.
Speaker 2 (00:52):
That is Kevin Hasset. He is the director of the
National Economic Council. Now, on Saturday, Beijing said it approved
some applicants for those rare earth exports, but it didn't
elaborate on the product's applications or destinations. So for a
closer look at how trade is affecting financial markets, I'm
joined by Chris Burgotti. He is the chief investment officer
(01:14):
at SWBC. He joins from just outside of New York City. Chris,
thank you so much for making time to chat with
me on this. I know we've seen a lot more
volatility when it comes to the equity market, certainly, but
the same is true for the bond market. I mean,
yields up one moment down the next. And there's also
this debate as to whether or not tariffs are going
(01:34):
to accelerate inflation and maybe at the same time slow growth.
Then there is the dollar story, which is all a
part of this. So give me your sense kind of
in the big picture when you look at markets, what
are they telling you in a nutshell as it relates
to tariffs.
Speaker 4 (01:49):
Yeah, thanks for having me, Doug.
Speaker 5 (01:51):
My big picture of view is basically that the challenges
to the markets the economy are all around the uncertainty
of the tariff situation. It seems like we might have
some clarity at various points at time, but then things change,
the dynamic changes. Trump says something different. He adjusted his
metric in terms of whether there will be a pause
(02:11):
or not. We hear more news coming out of China
that there might be some resolution, then there might not
be then there's positive news about rare metals, for example.
So the uncertainty is really what's driving the bus here
in my opinion, and markets do not like uncertainty, so
that's being priced in.
Speaker 4 (02:27):
As you see, interest rates have risen remarkably.
Speaker 5 (02:31):
Since the initial tariff discussion started, and I think that's
going to persist until we do have a little bit
more clarity.
Speaker 2 (02:37):
So what's your sense of how tariffs are going to
impact the inflation story.
Speaker 5 (02:41):
I think that the tariff situation will be somewhat inflationary
at some point in time.
Speaker 4 (02:46):
We have not seen that bleed into the data as
of yet.
Speaker 5 (02:48):
The data seems relatively static, and part of the problem
has been the fact that the tariffs brought forward some
customer buying, some purchasing by the US. Therefore, we saw
a lot of certain and imports when the tariffs were
initially announced, and therefore we didn't see the same effect
that we might have seen. It seemed like the markets
might be okay. Prices weren't really driven higher as of
(03:10):
yet due to the big problem with imports coming into
the US and surplus or deficit of goods. Therefore, I'm
seeing some supply chain issues that I expect to transposed
down the road that will affect the markets a little more,
and I expect that tariffs will ultimately add a little
bit more inflation to the picture, higher for longer inflation
(03:32):
as opposed to maybe drifting lower that we had seen
as of late.
Speaker 2 (03:35):
I think we can agree that that's the big concern
for the FED right which is why officials time and
again have been saying we're not ready to cut rates
because there is still so much that is unknown in
terms of the impact that these tariffs will have on prices. Now,
the Fed is in a blackout period. We've got the
meeting June seventeenth and eighteenth. We also have this week
(03:56):
a couple of data points that will give the Fed
its last look inflation before that meeting. We have Wednesday
the CPI Thursday, it's the PPI report. What do you
think these numbers are going to kind of reveal here,
particularly CPI data. Is that going to begin to creep higher?
Do you think in a worrisome way.
Speaker 5 (04:15):
I think that there's a potential for it to start
to creep higher a little bit. Maybe this month might
be flat to slightly higher. But the bigger challenge and
the issue is we just got through a big employment
report on Friday which did not say that employment unemployment
was rising. And so to me, it's again back to
what you pointed out earlier, the FED focus, which is
(04:36):
on inflation. They've set it time and again they seem
to be putting all of their attention on that. So
for me going forward, that will be what we need
to have measured more appropriately and more specifically. And as
I see CPI and PPI coming out this week, a
flat to slightly higher reading could be on the offing,
and that could start to edge interest rates a little
(04:57):
bit higher. I certainly don't expect to isterhraate to start
plummeting from here by any means.
Speaker 2 (05:02):
So when you look at the corporate response to this,
to what extent are company is going to be willing
to take a hit to margin or, on the other hand,
feel the need to really pass along these higher import duties.
Speaker 4 (05:14):
That's a really great question and a solid point.
Speaker 5 (05:17):
And to me, about two or three weeks ago, we
saw the biggest retailer in the United States being Walmart,
come out and say they might have some problems down
the road passing on these higher prices and they might
have to pass them on to customers. They've been absorbing
them of late, as most retailers have been. But once
that kind of has to change, I expect the dynamic
(05:38):
to be a little bit different, and I do expect
them to have to start to pass on to customers.
They can only absorb for so long and then been
doing it thus far. Once those higher prices have to
be passed along to customers one way or another, that's
not a great thing for the consumer, and I do
expect that impact to happen in short order.
Speaker 2 (05:56):
So we had some pretty sizable moves in the bond
market here in the US on Friday after that employment data.
I think the two year and the ten year we're
each up about ten basis points. What do you feel
about the bond market right now? So if you look
at the ten year around four point fifty, could that
break through it and test maybe four seventy five or
even higher.
Speaker 5 (06:17):
I certainly expect higher rates. I definitively expect that because
of the inflation picture, which we just discussed. So if
inflation should be higher, we should have some challenges going
forward that will put pressure on the long end of
the market. Not to mention the fact that we've got
supply issues coming out, we got deficit hurdles that have
really started to make headlines of late. So I do
(06:37):
expect us to retest that four point eight oh six
I think is the exec level ten year high that
we reached earlier this year, and I expect that to
happen before the end of the summer. I do expect
also a steeper yield curve. We could get some pressure
on the long end of the market, even if the
short end of the market kind of stabilizes or feels
a little bit better, But I don't expect that necessarily,
(07:00):
and I do expect a steeper yil curve than we
have at the moment.
Speaker 2 (07:03):
So the S and P and the Friday session was
up about one percent. I'm curious about how you view
the equity market right now and where you're finding opportunity.
Speaker 5 (07:12):
The opportunity in the equity market is kind of a
little bit of a challenge to identify at various points
in time on a macro basis, Where just over six
thousand was the close on Friday, I do expect us
to possibly retest that high again that we did see
earlier in the year, and that's something that kind of
puts a top on the market, though I think we're
closer to the top than we are to a sell
(07:34):
off potential that could happen. Therefore, the opportunity for me
is things that will perform well in a recessionary environment.
Think of your basics, your utilities, your consumer staples. I
do see opportunity in Europe as well, so there's a
matter of moving money around the globe that could be
a benefit for at least US investors and repositioning themselves
in different ways. But go back to the basics of
(07:56):
what performs well in a recessionary environment, and I think
thoseastic type of entities will perform decently. I also expect
financials to form, although it's start to per form a
little bit better and have some upside potential. It's a
little bit longer runway, but a steeper yield curve, as
we all know, does benefit financial services and banks, So
in the long run, I do expect them to start
(08:16):
to feel a little bit better with regard to their
ability to monetize interest rates.
Speaker 2 (08:21):
We were talking a moment ago about meta Platforms being
in talks to make a multi billion dollar investment into
an AI startup known as Scale Ai. We know the
story on artificial intelligence and how it has helped to
power so many companies, and I'm thinking of Nvidia primarily,
but even a company like Broadcom. How do you feel
(08:44):
about the AI trade right now in the current environment?
Is it a little long in the tooth at least
for this part of the cycle.
Speaker 5 (08:51):
I think the AI trade does have some more opportunity
for it, but there's ebbs and flows in it. I
think we're part closer to the part. It might have
to add a little bit. It might have to back
up a little bit, settle down retrade. We've seen various
points and times the AI trade has going gangbusters and
then has resettled because news comes out that there might
(09:12):
be some competition for Nvidia, for example.
Speaker 4 (09:14):
We saw that earlier this year.
Speaker 5 (09:16):
So as those things come about, I do expect there
to be some challenges in the market to be able
to reprice and absorb them. But the long term AI
trade still has a lot of upside potential and I
do expect there to be some games to be had.
Speaker 2 (09:29):
All right, Chris, Well leave it there, Thank you so much.
Chris Burgotti. He is the chief investment officer at SWBC
on the line from just outside New York City here
on the Daybreak Asia podcast. Welcome back to the Daybreak
Asia Podcast. I'm Doug Chrisner. As we've been discussing, all
(09:53):
eyes will be on the meeting in London on Monday
between trade delegations from the US and China. More, we
heard from Alicia Garcio Horrero. She is the chief apack
economist at ne Tixas. Alicia spoke with Bloomberg, Sharry On
and Heidi Stroud Watts.
Speaker 6 (10:09):
Alicia, always great to have you with us, particularly to
kind of so through everything that's going on. And of
course the big sort of respector or impossible opportunity for
some relief is how these latest round of US China
talks go. And as you mentioned, as we've been kind
of talking about, this potentially becomes more complex if we're
moving on from just straight tariffs to the issue of
(10:32):
export controls, which is sensitive for both sides. Are you
optimistic that an agreement, a meaningful agreement, could be reached.
Speaker 7 (10:41):
I'm optimistic that an agreement will be reached, but it
won't be meaningful. That's even the previous one wasn't very meaningful.
I mean, of course gives were cut, but everybody knew
that they had to be cut.
Speaker 8 (10:53):
They were too high, they were at lock pate level.
That was easy.
Speaker 7 (10:58):
This time around, I think we'll only have a temporary
relief in export controls.
Speaker 8 (11:04):
We have export control from both sides.
Speaker 7 (11:07):
So the US went from you know what we already
had providing export controls on GPUs any semist of advance,
I mean advanced enough to be harmful for China, but
we moved even further if because of retaliation from China's
own export controls on critical row materials. We have airplane engines,
(11:28):
we have components of nuclear nuclear plants, you name it.
So because we've actually expanded, there is a room to
you know, to temporarily lift these export controls both sides.
But that's that won't be you know, a full deal,
so more time is needed. There's too many things happening,
(11:50):
you know, like from student visus, you name it, so
all of that will will just be temporary. That's the
second truth out of the very many way will see
until hopefully things get settled.
Speaker 6 (12:03):
In the meantime, do sort of the economic fundamentals to
the downside continue to become entrenched.
Speaker 8 (12:08):
In China obviously.
Speaker 6 (12:09):
Still have a broadly deflation environment, and sick demand is
still pretty subdued. The expert's obviously getting a temporary benefit.
On the US side, Do you expect costs to continue
rising going into the end of the year.
Speaker 7 (12:24):
Yeah, I mean a Now Texas we have, of course
slightly higher infection, but not to the point of really.
Speaker 8 (12:32):
Unraveling. Stop in cuts from the FED.
Speaker 7 (12:36):
So with think the FED is going took at three
times this year, and the reason is that although employment
data was decent, but we already see the cracks. The
companies are not laying off, but they are thinking about it.
You can see from the data that you know, there's
less sense, less, less confidence in the economy. Rightly, So, yeah,
(12:56):
we have so bad news overall, from tariffs to many
other things happening and in the US, so I think,
just to make a long story, sure, those inflationary pressures
will be creeping up.
Speaker 8 (13:08):
And in China, I don't think the.
Speaker 7 (13:10):
Inflation pressures will be fully off the table with the
data we're waiting.
Speaker 8 (13:17):
Maybe slightly better, but that will be it.
Speaker 7 (13:20):
So that divergence between China and the US in terms
of price movements is there to stay in the US.
Speaker 1 (13:30):
How much do you think a tax bill from President
Trump could help the broader economy? And how forgiving do
you expect bond investors to be because just all over
the world right now we're seeing borrowing costs surging on
really concerns about those government budget deficits.
Speaker 7 (13:46):
I wouldn't bet for investors to be for billing forgiven,
because they have not been forgiven for a while already.
So I think this build this bbbing big for sure.
I'm not sure it's beautiful. We could we could find
another objective for that one. That bill is a problem
(14:08):
for the US, and I hope I mean that that
there is enough attention for that investors won't take it easily.
And you're right, it's not only the US, So anybody
who is a little bit off the mark, and we
saw the jgb's for that matter, will suffer from very
high cost of funding. I think that's what we are
and this bill will be a problem for sure. I
(14:30):
don't think that's going to support growth because there will
be a lot of investment leaving and that will increase
the cost of funding for the US.
Speaker 8 (14:37):
So I'm not sure that's going to help.
Speaker 1 (14:40):
Yeah, we have seen weak demand for JGB auctions here
in Japan. We're expecting first quarter revise data for GDP
here in the country.
Speaker 7 (14:48):
What are you expecting, Well, yeah, I mean it might
be a little bit better, but let's be clear that
the first potter was very negative. So we do have
a better year for Japan two point three percent, which
is quite high, but because again last year was was weak.
Now we'll revise. Now we'll have to revise down. In
(15:11):
other words, growth isn't really there in Japan. We have
to realize that it's it's We even heard that there
might be a new emergency package, I think nine one
hundred billion additional fiscal package. All of this is going
to be an additional supply of jgbs, going back to
the cost of funding for Japan creeping up as well,
(15:35):
and the reason why they need all of these first
quarter you know, experts were so underwhelming and therefore, I mean,
what to expect from the Japanese economy other than again
additional stimulus on the fiscal side, But that's not going
to solve the problem. We need more productivity, we need
more investment. The Japanese government is very keen to receive
(15:55):
additional FBI. That's true, but it isn't really yet happening
in big scale.
Speaker 1 (16:02):
Yeah yeah, And of course we'll be watching the trade
negotiations at the G seven between Prime Minister Ishiva and
President Trump as well. Alicia Garcierrano. Always good to have
you with us chief APAG Economists and the Texas with
a look ahead on all of the economic news expected
this week.
Speaker 2 (16:20):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us 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
(16:42):
and Australia. I'm Doug Chrisner, and this is Bloomberg
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