Bloomberg Audio Studios, Podcasts, radio News.

Bloomberg Audio Studios, Podcasts, radio News.

Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner. On today's episode, we'll take a look at how deflation seems to be gripping the Chinese economy, plus a look at how looming tariffs will shape the trading week ahead. In a moment, we'll be speaking with George Schultze. He is founder of Schultzea Wealth Management. But we begin in the Asia Pacific. Over the weekend, we learned China's consumer inflation fell in February by far more than expected. The consumer price index was down seven tens of one percent from last year, falling below zero for the first time in thirteen months. For a closer look, now, I am joined by Chi Lo. He is APAX senior market strategist at BNP Peribah Asset Management. Chi is on the line from Hong Kong. Thank you for making time to chat with us. It's always a pleasure. So how do you make sense of this re Is it an anomaly? I was looking at data from Goldman Sachs. A couple of people are interpreting this reading in a different way. But can we walk away? Can we ignore the fact that China seems to be just trapped in deflation right now.

Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisner. On today's episode, we'll take a look at how deflation seems to be gripping the Chinese economy, plus a look at how looming tariffs will shape the trading week ahead. In a moment, we'll be speaking with George Schultze. He is founder of Schultzea Wealth Management. But we begin in the Asia Pacific. Over the weekend, we learned China's consumer inflation fell in February by far more than expected. The consumer price index was down seven tens of one percent from last year, falling below zero for the first time in thirteen months. For a closer look, now, I am joined by Chi Lo. He is APAX senior market strategist at BNP Peribah Asset Management. Chi is on the line from Hong Kong. Thank you for making time to chat with us. It's always a pleasure. So how do you make sense of this re Is it an anomaly? I was looking at data from Goldman Sachs. A couple of people are interpreting this reading in a different way. But can we walk away? Can we ignore the fact that China seems to be just trapped in deflation right now.

We cannot really walk away. It is very clear that the Chinese economy is still weak, especially the private sector. Confidence is still not fully recovered. When you look at product sector investment growth, it's being close to zero, offering between negative and zero for the past two and a half years. So this CPI negative reading, yes grunted, partly because of the base effects due to the distorsion of the Chinese New Year, but fundamentally we are still not really seeing a turnaround in public sentiment, in private sector spending and the overall momentum of the economy, which argues for further and more aggressive policy easing by Beijing. It seems that you know the government is aware of that and be hopeful that in the coming months we'll see more assertive easing just to make sure the grow co momentum in the Chinese economy doesn't folter further.

We cannot really walk away. It is very clear that the Chinese economy is still weak, especially the private sector. Confidence is still not fully recovered. When you look at product sector investment growth, it's being close to zero, offering between negative and zero for the past two and a half years. So this CPI negative reading, yes grunted, partly because of the base effects due to the distorsion of the Chinese New Year, but fundamentally we are still not really seeing a turnaround in public sentiment, in private sector spending and the overall momentum of the economy, which argues for further and more aggressive policy easing by Beijing. It seems that you know the government is aware of that and be hopeful that in the coming months we'll see more assertive easing just to make sure the grow co momentum in the Chinese economy doesn't folter further.

Does it have to be a massive type stimulus program?

Does it have to be a massive type stimulus program?

Do you think it does have to be more aggressive than what we saw in the past two years.

Do you think it does have to be more aggressive than what we saw in the past two years.

I e.

I e.

Different from the incremental easing stance that Beijing had been pursuing. Until late last year. The point here is that because private sector is not spending, consumers are still not confident in spending more So, it's a simple economics that when the private sector is moving is not moving ahead, the public sector has to step in get things going kick started just to rebuild confidence. So we do need to see Beijing to be more aggressives. How aggressive, but definitely more aggressive than what we saw in the past two years, as I said earlier, but not necessarily you know, in big, big spending stabilis that we saw in the past cycles. Because the trick here is to find the point that can turn around prodit sector confidence. And it seems that we see some green shoots in the economy recently. We may be close to the point that the sector is turning around, but that needs more help from the government. That's the point.

Different from the incremental easing stance that Beijing had been pursuing. Until late last year. The point here is that because private sector is not spending, consumers are still not confident in spending more So, it's a simple economics that when the private sector is moving is not moving ahead, the public sector has to step in get things going kick started just to rebuild confidence. So we do need to see Beijing to be more aggressives. How aggressive, but definitely more aggressive than what we saw in the past two years, as I said earlier, but not necessarily you know, in big, big spending stabilis that we saw in the past cycles. Because the trick here is to find the point that can turn around prodit sector confidence. And it seems that we see some green shoots in the economy recently. We may be close to the point that the sector is turning around, but that needs more help from the government. That's the point.

This is undoubtedly being complicated by an increase in trade tension between Washington and Beijing. We're talking about new tariffs that will take effect on Monday from the China side. Is it really a critical moment right now if you're a leader in Beijing and you have to kind of try to balance the risk here, how critical is this moment in time well.

This is undoubtedly being complicated by an increase in trade tension between Washington and Beijing. We're talking about new tariffs that will take effect on Monday from the China side. Is it really a critical moment right now if you're a leader in Beijing and you have to kind of try to balance the risk here, how critical is this moment in time well.

Indeed, the tariff factor is another drag from the external side on Chinese growth. But at this point, if the tariff rates still remained at additional twenty percent, it is still manageable from China's perspects active because the estimated drag that we calculated on the back of the envelope is that the twenty percent tariff on Chinese exports to the US would trim Chinese growth by about zero one six percent, maybe a little less now. But when you look at Beijing's announced fiscal spending, the fiscal deficit and so on, we estimated that the net fiscal stimulus to the Chinese economy at the current physical spending package is around one point six percent of GDP, so that would be more than enough to offset the tariff drag on growth, So that is still manageable. But the point here is, as I said, if Chinese public sector parvate sector is not turning around, and then if the tariff factor added to adds to destroying confidence further, then they would be a serious ease with the Beijing has to rethink about. But in the end, I still think that if Beijing wants to do it, they can do more, they have the tools to do it and expand the mestic sector further. So it's a policy choice. Down the road, we do see that Beijing is shifting to more stabilis.

Indeed, the tariff factor is another drag from the external side on Chinese growth. But at this point, if the tariff rates still remained at additional twenty percent, it is still manageable from China's perspects active because the estimated drag that we calculated on the back of the envelope is that the twenty percent tariff on Chinese exports to the US would trim Chinese growth by about zero one six percent, maybe a little less now. But when you look at Beijing's announced fiscal spending, the fiscal deficit and so on, we estimated that the net fiscal stimulus to the Chinese economy at the current physical spending package is around one point six percent of GDP, so that would be more than enough to offset the tariff drag on growth, So that is still manageable. But the point here is, as I said, if Chinese public sector parvate sector is not turning around, and then if the tariff factor added to adds to destroying confidence further, then they would be a serious ease with the Beijing has to rethink about. But in the end, I still think that if Beijing wants to do it, they can do more, they have the tools to do it and expand the mestic sector further. So it's a policy choice. Down the road, we do see that Beijing is shifting to more stabilis.

So we've talked about the big negative, weak demand, bad sentiment, and deflation. Now let's talk about the positivity as it relates to the deep seek narrative and from that, the interest in AI driven buying of some of the companies, smaller firms in China that are high tech related and what that has meant for foreign money coming into China. What kind of flows are you seeing right now?

So we've talked about the big negative, weak demand, bad sentiment, and deflation. Now let's talk about the positivity as it relates to the deep seek narrative and from that, the interest in AI driven buying of some of the companies, smaller firms in China that are high tech related and what that has meant for foreign money coming into China. What kind of flows are you seeing right now?

We do see some selective flows going back to the Chinese market, partly because they are investors who hold a view like us that the probability of more stimbolus going forward by Beijing is going to turn around things. But they are also cautious and suspicious investors there. So the selective flows going back to China now more tactical, and many of them, no doubt, as you a little to have have gone into the tech sector for the simple fact that Chinese tech has been bitten down for more than three years. And now the Deepsek shock, I just call it a shock because it does shake up the global tax sector and ask investors to re evaluate the develop market tech companies, the Magnificent seven so to speak, you know, questioning their earnings, outloak, their business model, their costs, and so on. So when you look at this China shock on the tech sector, there is indeed a positive implication on Chinese tech stocks, first because of the evaluation, and secondly, the Chinese can do similar things like the big tech Western companies can do as much cheaper, and that means, you know, there is more opportunity in the Chinese tech sector to grow and rebound. And if you add on the Chinese government's expected stimulus, that is a good story for portfolio flows going back to the Chinese market and also especially going to the Chinese tex stop.

We do see some selective flows going back to the Chinese market, partly because they are investors who hold a view like us that the probability of more stimbolus going forward by Beijing is going to turn around things. But they are also cautious and suspicious investors there. So the selective flows going back to China now more tactical, and many of them, no doubt, as you a little to have have gone into the tech sector for the simple fact that Chinese tech has been bitten down for more than three years. And now the Deepsek shock, I just call it a shock because it does shake up the global tax sector and ask investors to re evaluate the develop market tech companies, the Magnificent seven so to speak, you know, questioning their earnings, outloak, their business model, their costs, and so on. So when you look at this China shock on the tech sector, there is indeed a positive implication on Chinese tech stocks, first because of the evaluation, and secondly, the Chinese can do similar things like the big tech Western companies can do as much cheaper, and that means, you know, there is more opportunity in the Chinese tech sector to grow and rebound. And if you add on the Chinese government's expected stimulus, that is a good story for portfolio flows going back to the Chinese market and also especially going to the Chinese tex stop.

So I'm wondering about the extent to which the move up that we have seen in the market is being underpinned by expectations that we're going to see some central bank easing in China. We talked a little bit about the stimulus side. I get that from a kind of a fiscal point of view, but how much of the positivity is being supported by the notion that the PBOC is going to cut rates here.

So I'm wondering about the extent to which the move up that we have seen in the market is being underpinned by expectations that we're going to see some central bank easing in China. We talked a little bit about the stimulus side. I get that from a kind of a fiscal point of view, but how much of the positivity is being supported by the notion that the PBOC is going to cut rates here.

The PBOC will continue to ease. Now, in my view, what's important for the stimulus program to work here is primarily fiscal spending, which we see Bijing is doing, supported or funded by special government bond issues. And then secondary is monetary easy which monetary easing role here is to facility the physical spending and to make sure the systems liquidity will remain ample. It is not primary because there is deflictionary forces in the Chinese economy. There's a lack of confidence if you rely mainly or only on monetary easing in this situation is something like a liquidity trap, which means that monetary easing is like pushing on a piece of strength. So we do need the fiscal spending coming in, but monetary easing is a facilitating factor, and we do need to see PBOC to ease further, mainly because when you look at the real policy rates in China, it is still weighed about ten year average. So from that perspective, there is room for the PBOC to continue to ease further.

The PBOC will continue to ease. Now, in my view, what's important for the stimulus program to work here is primarily fiscal spending, which we see Bijing is doing, supported or funded by special government bond issues. And then secondary is monetary easy which monetary easing role here is to facility the physical spending and to make sure the systems liquidity will remain ample. It is not primary because there is deflictionary forces in the Chinese economy. There's a lack of confidence if you rely mainly or only on monetary easing in this situation is something like a liquidity trap, which means that monetary easing is like pushing on a piece of strength. So we do need the fiscal spending coming in, but monetary easing is a facilitating factor, and we do need to see PBOC to ease further, mainly because when you look at the real policy rates in China, it is still weighed about ten year average. So from that perspective, there is room for the PBOC to continue to ease further.

Are you finding more opportunity on the fixed income side in China than you are on the equity side at.

Are you finding more opportunity on the fixed income side in China than you are on the equity side at.

This point, I think both segments of the asset markets offer good opportunities. Now, if there is still a very sluggish recovery in confidence, which drags on economic growth and yet on the guitar effactor and so on, so that means we're not going to see any significant demand push on inflation in China which would lead to monetary EA is monetary tightening, so that's not really a risk. Now in this environment, fixed income is good. But on the other hand, if our reading of the steamolant program that Beijing is putting in wells eventually, you know, sometimes in the second half of this year, shows signs of turning around the economy, that would turn around investors centiquent quick sharply leading super War info back to China. So that would be good for the for the equity market. So at this point I would I would say, you know, sort of a fifty to fifty portfolio in equity is fifty percent in effics income in China is an appropriate stance. But going into the second half of this year and we have a greater outroop for equity performance there, we we can move back to the typical sixty forty sixty percent equities and forty percent fixed income.

This point, I think both segments of the asset markets offer good opportunities. Now, if there is still a very sluggish recovery in confidence, which drags on economic growth and yet on the guitar effactor and so on, so that means we're not going to see any significant demand push on inflation in China which would lead to monetary EA is monetary tightening, so that's not really a risk. Now in this environment, fixed income is good. But on the other hand, if our reading of the steamolant program that Beijing is putting in wells eventually, you know, sometimes in the second half of this year, shows signs of turning around the economy, that would turn around investors centiquent quick sharply leading super War info back to China. So that would be good for the for the equity market. So at this point I would I would say, you know, sort of a fifty to fifty portfolio in equity is fifty percent in effics income in China is an appropriate stance. But going into the second half of this year and we have a greater outroop for equity performance there, we we can move back to the typical sixty forty sixty percent equities and forty percent fixed income.

Gee, thank you so much for joining us. Chilo there. He is APAX senior market strategist at BNP Periba Asset Management. Joining us here on the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast. I'm Doug Krisner. So in the US last Friday, the equity market closed higher. This was after fed scher J. Powell said he is expecting the path to two percent inflation to continue. Now markets appear to take these remarks to mean any price increase as a result of tariffs could be temporary. Joining me now is George Schultze. He is founder and CEO of Schultze Wealth Management. Joining from just outside of New York City. Thanks for making time to chat with us. George, First of all, is Powell correct you believe in assuming that any price shock as a result of these tariffs would be temporary.

Gee, thank you so much for joining us. Chilo there. He is APAX senior market strategist at BNP Periba Asset Management. Joining us here on the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast. I'm Doug Krisner. So in the US last Friday, the equity market closed higher. This was after fed scher J. Powell said he is expecting the path to two percent inflation to continue. Now markets appear to take these remarks to mean any price increase as a result of tariffs could be temporary. Joining me now is George Schultze. He is founder and CEO of Schultze Wealth Management. Joining from just outside of New York City. Thanks for making time to chat with us. George, First of all, is Powell correct you believe in assuming that any price shock as a result of these tariffs would be temporary.

We think it is here at Schultze Asset Management.

We think it is here at Schultze Asset Management.

Yeah.

Yeah.

There's been a lot of market uncertainty and volatility in the last few days, a lot of concern about tariffs and uncertainty specifically about how they're going to impact economic growth globally. But I think I think power's taken the uh you know the right approach here. I mean, remember, you know, inflation has dropped a fair amount, and you know, let's face that many of these policies that Trump has issued our economic friendly policies. They're pro business policies. So we'll see how the specific tariffs all get rolled out and how many of them will roll off after we have negotiated new deals with different countries. But for sure, the Fed has some ammunition leftic and lower interest rates if it becomes a concern. And you know, I think I think a little bit of this market volatility is a little premature.

There's been a lot of market uncertainty and volatility in the last few days, a lot of concern about tariffs and uncertainty specifically about how they're going to impact economic growth globally. But I think I think power's taken the uh you know the right approach here. I mean, remember, you know, inflation has dropped a fair amount, and you know, let's face that many of these policies that Trump has issued our economic friendly policies. They're pro business policies. So we'll see how the specific tariffs all get rolled out and how many of them will roll off after we have negotiated new deals with different countries. But for sure, the Fed has some ammunition leftic and lower interest rates if it becomes a concern. And you know, I think I think a little bit of this market volatility is a little premature.

I had a colleague pointing out that Powell's remarks were eerily similar to his remarks on transitory inflation that made during the pandemic. They of course turned out to be a mistake. Do you want to be hedged against the possibility that inflation is still a little stubborn and sticky.

I had a colleague pointing out that Powell's remarks were eerily similar to his remarks on transitory inflation that made during the pandemic. They of course turned out to be a mistake. Do you want to be hedged against the possibility that inflation is still a little stubborn and sticky.

Well, yes, inflation has been sticking it. Remember how long it took to increase inflation. I think it took about ten years. So yes, we think it probably makes a little sense to have some hedging, you know, against inflation specifically. I think, you know, there's some interesting short selling opportunities as well with certain companies that are facing higher costs that seem to be persistent. And again with with with the tariffs, I think, you know, certain industries, for example, automakers that import a lot of product, you know, they'll face they'll be facing risk of higher prices on their input prices. But on the other hand, many of them will be able to push through some of those price increases to their customers, and some of their customers will be uh, you know, price elastic and willing to pay, you know, to buy new vehicles even with higher component parts.

Well, yes, inflation has been sticking it. Remember how long it took to increase inflation. I think it took about ten years. So yes, we think it probably makes a little sense to have some hedging, you know, against inflation specifically. I think, you know, there's some interesting short selling opportunities as well with certain companies that are facing higher costs that seem to be persistent. And again with with with the tariffs, I think, you know, certain industries, for example, automakers that import a lot of product, you know, they'll face they'll be facing risk of higher prices on their input prices. But on the other hand, many of them will be able to push through some of those price increases to their customers, and some of their customers will be uh, you know, price elastic and willing to pay, you know, to buy new vehicles even with higher component parts.

So the rhetoric around tariffs, combined with the FED being maybe higher for longer, I think that's fair to say at this point. One of the things that those two factors have contributed to is a much stronger dollar. And I'm wondering whether you think that that will still be a significant headwind for any US multinational.

So the rhetoric around tariffs, combined with the FED being maybe higher for longer, I think that's fair to say at this point. One of the things that those two factors have contributed to is a much stronger dollar. And I'm wondering whether you think that that will still be a significant headwind for any US multinational.

Yeah, so, you know, stronger dollar actually, you know works out pretty well for many of the big US companies. You know, I think the important thing is you know where you have your borrowings. I mean, if you're a multinational, you have borrowed in US dollars and you have revenue and income coming from overseas, then you could have an issue, but certainly a strong dollar it actually welcome right now. I mean, you know, one of the things we're seeing with Dog and you know all this government expenditure cutting is you know, a new approach to you know, focus on potentially balancing the budget going forward instead of just spending so much money like a drunk saler. So you know, we think generally these are good business endly things, and you know, to the extent they ultimately ultimately lead to lower taxes for individuals or corporations in the US that could really be good for future economic growth.

Yeah, so, you know, stronger dollar actually, you know works out pretty well for many of the big US companies. You know, I think the important thing is you know where you have your borrowings. I mean, if you're a multinational, you have borrowed in US dollars and you have revenue and income coming from overseas, then you could have an issue, but certainly a strong dollar it actually welcome right now. I mean, you know, one of the things we're seeing with Dog and you know all this government expenditure cutting is you know, a new approach to you know, focus on potentially balancing the budget going forward instead of just spending so much money like a drunk saler. So you know, we think generally these are good business endly things, and you know, to the extent they ultimately ultimately lead to lower taxes for individuals or corporations in the US that could really be good for future economic growth.

So you mentioned those there. The brainchild of Elon Musk, his company Tesla, has been struggling lately. The last figure that I saw on shipments in China showed a decline. I think they've been falling for about five consecutive months now. February sales I think down forty nine percent compared to last year. And at the same time, you have a company like Byd on the mainland that is gaining market share. I think by D last month saw if you can believe this, one hundred and sixty one percent year on year increase, do you have to reconsider some of the let's say Mag seven, the darlings. I use Tesla as an example, but maybe there are other situations where these companies perhaps are a little over extended in their growth prospects.

So you mentioned those there. The brainchild of Elon Musk, his company Tesla, has been struggling lately. The last figure that I saw on shipments in China showed a decline. I think they've been falling for about five consecutive months now. February sales I think down forty nine percent compared to last year. And at the same time, you have a company like Byd on the mainland that is gaining market share. I think by D last month saw if you can believe this, one hundred and sixty one percent year on year increase, do you have to reconsider some of the let's say Mag seven, the darlings. I use Tesla as an example, but maybe there are other situations where these companies perhaps are a little over extended in their growth prospects.

I think that's right. I think you do have to be learned about that. And people have been saying that for a long time, including US. You know, they've gone they've just gone up parabolically, and now you know, you wonder whether you know there's really value for some of these Mags seven socks. I mean, they've been on such a run and there's been so much money chasing them that now you're seeing other markets, you know, with with big technology or you know, high growth companies outperform, like you're seeing in Hong Kong and other international markets like for instance, in Germany, you know, where you have a you know, close to a twenty percent return year to date for both those those markets versus in the US, you know, you're flat to down. Looks like the NASAC is down already, you know, a fair amount so far this year. So so it seems to be a bit of a rotation. We'll see how long it continues. But certainly. You know, US investors in the MA seven another big socks have have done very well looking back over the last two years, and so I think we're probably we were probably due for a little bit of a correction there. But we'll see how long this continues, whether you know, it stops now or you know, continues to get worse and we wind up having another year like we had in twenty twenty two.

I think that's right. I think you do have to be learned about that. And people have been saying that for a long time, including US. You know, they've gone they've just gone up parabolically, and now you know, you wonder whether you know there's really value for some of these Mags seven socks. I mean, they've been on such a run and there's been so much money chasing them that now you're seeing other markets, you know, with with big technology or you know, high growth companies outperform, like you're seeing in Hong Kong and other international markets like for instance, in Germany, you know, where you have a you know, close to a twenty percent return year to date for both those those markets versus in the US, you know, you're flat to down. Looks like the NASAC is down already, you know, a fair amount so far this year. So so it seems to be a bit of a rotation. We'll see how long it continues. But certainly. You know, US investors in the MA seven another big socks have have done very well looking back over the last two years, and so I think we're probably we were probably due for a little bit of a correction there. But we'll see how long this continues, whether you know, it stops now or you know, continues to get worse and we wind up having another year like we had in twenty twenty two.

How are you positioning yourself offshore right now? If at all.

How are you positioning yourself offshore right now? If at all.

We've made certain investments in certain countries where we think there's opportunity for more appreciation. You know, there are some interesting value investments, and you know around Europe and also in Asia. In China, for instance, it's just been you know, theres a lot of changes, and also in Japan there are a lot of interesting changes, you know, structural changes in Japan, you know, where companies are getting a little bit more shareholder friendly. In China, you know, of course, we had this big property market correction and now you know, there seems to be you know a good amount of stimulus and you know, perhaps a more business friendly attitude and an effort to combat you know, risk of tariffs. In Europe, there's it seems that you know, there's going to be a bazuka of spend, you know, for military and potentially infrastructure spending. So there are some interesting opportunities in overseas markets right now, and we think investment or should be flexible and willing to look at other places if it's likely that you're going to lose money in the US market. However, there are some very interesting and very cheap companies trading in the US market that have been I think over sold in the last couple of weeks here with all this turmoil and all this market volatility.

We've made certain investments in certain countries where we think there's opportunity for more appreciation. You know, there are some interesting value investments, and you know around Europe and also in Asia. In China, for instance, it's just been you know, theres a lot of changes, and also in Japan there are a lot of interesting changes, you know, structural changes in Japan, you know, where companies are getting a little bit more shareholder friendly. In China, you know, of course, we had this big property market correction and now you know, there seems to be you know a good amount of stimulus and you know, perhaps a more business friendly attitude and an effort to combat you know, risk of tariffs. In Europe, there's it seems that you know, there's going to be a bazuka of spend, you know, for military and potentially infrastructure spending. So there are some interesting opportunities in overseas markets right now, and we think investment or should be flexible and willing to look at other places if it's likely that you're going to lose money in the US market. However, there are some very interesting and very cheap companies trading in the US market that have been I think over sold in the last couple of weeks here with all this turmoil and all this market volatility.

So I want to get your view on the macro. Then, over the weekend, President Trump was saying the American economy does face a period of transition, although he declined to predict whether or not a recession will happen this year. What is your sense of whether or not we'll see contraction in growth.

So I want to get your view on the macro. Then, over the weekend, President Trump was saying the American economy does face a period of transition, although he declined to predict whether or not a recession will happen this year. What is your sense of whether or not we'll see contraction in growth.

I don't think we're there yet. I mean, I think the economy is still growing. You know, we still have some inflation. I think if we're close to there, Powell would have been indicating that we're probably going to start lowering rates, you know, more quickly. But I do think, as I said, earlier that that, you know, the Fed has some dry powder now in case, you know, we do get risk of you know, recession here, you know, he could lower rates or you know, maybe perhaps reduce quantitative tightening. Also, not too many people talk about that, but you still have quantitative tightening that's going on month to month with the Fed still reducing the size of its balance sheet each month. So right now, it doesn't feel really like, you know, the US is at big risk of recession. Sure, there's a lot of change, you know, you have tariff policy uncertainty, you have you know, immigration policies that have changed, and certainly a lot of layoffs that are coming through with the government. You know, I guess, I guess all of this is creating a certain amount of economic uncertainty and perhaps slow and spending in certain sectors. But I don't think we're at the point where, you know, we're facing risk of recession yet. The economy is just too strong and growing too well, and there's some pretty good tail wind still.

I don't think we're there yet. I mean, I think the economy is still growing. You know, we still have some inflation. I think if we're close to there, Powell would have been indicating that we're probably going to start lowering rates, you know, more quickly. But I do think, as I said, earlier that that, you know, the Fed has some dry powder now in case, you know, we do get risk of you know, recession here, you know, he could lower rates or you know, maybe perhaps reduce quantitative tightening. Also, not too many people talk about that, but you still have quantitative tightening that's going on month to month with the Fed still reducing the size of its balance sheet each month. So right now, it doesn't feel really like, you know, the US is at big risk of recession. Sure, there's a lot of change, you know, you have tariff policy uncertainty, you have you know, immigration policies that have changed, and certainly a lot of layoffs that are coming through with the government. You know, I guess, I guess all of this is creating a certain amount of economic uncertainty and perhaps slow and spending in certain sectors. But I don't think we're at the point where, you know, we're facing risk of recession yet. The economy is just too strong and growing too well, and there's some pretty good tail wind still.

So underneath that uncertainty, I'm wondering whether you're still optimistic that the strategy on imposing tariffs will contribute to a really significant move in reshoring. Do you think that's going to move the needle when you look at American manufacturing of products like deal and aluminum.

So underneath that uncertainty, I'm wondering whether you're still optimistic that the strategy on imposing tariffs will contribute to a really significant move in reshoring. Do you think that's going to move the needle when you look at American manufacturing of products like deal and aluminum.

So they're big changes. And unfortunately, you know, a change like this doesn't happen overnight. I mean, think of how long it took for all these manufacturing companies to get out of the US. It took decades, you know, decades of of really weak policies that allowed all the you know, all the other good industry to go overseas. So it's not going to happen overnight. And I think that's what what Trump was trying to telegraph in the in the State of the Union address that you know, bear with me, it is going to be you know, it might not be you know, so pretty in the short term, but but over the long term, it's probably going to be better for the for the economy. I think that's true. Unfortunately, it doesn't happen overnight. But you are seeing certain indications. You know, I think a number of auto companies are talking about, you know, reshoring into the US or expanding their production here and reducing production in Canada and Mexico. And you have periodic announcements of new you know, multi billion dollar investment plans, you know, coming into technology space and others. I think that will continue.

So they're big changes. And unfortunately, you know, a change like this doesn't happen overnight. I mean, think of how long it took for all these manufacturing companies to get out of the US. It took decades, you know, decades of of really weak policies that allowed all the you know, all the other good industry to go overseas. So it's not going to happen overnight. And I think that's what what Trump was trying to telegraph in the in the State of the Union address that you know, bear with me, it is going to be you know, it might not be you know, so pretty in the short term, but but over the long term, it's probably going to be better for the for the economy. I think that's true. Unfortunately, it doesn't happen overnight. But you are seeing certain indications. You know, I think a number of auto companies are talking about, you know, reshoring into the US or expanding their production here and reducing production in Canada and Mexico. And you have periodic announcements of new you know, multi billion dollar investment plans, you know, coming into technology space and others. I think that will continue.

George will leave it there. Thank you so much. George Schultzee, founder and CEO of Shultzee Wealth Management, joining us here on the Daybreak Asia Podcast. Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at the story shaping markets, finance, and geopolitics in the 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 Chrisner, and this is Bloomberg

George will leave it there. Thank you so much. George Schultzee, founder and CEO of Shultzee Wealth Management, joining us here on the Daybreak Asia Podcast. Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at the story shaping markets, finance, and geopolitics in the 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 Chrisner, and this is Bloomberg