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Bloomberg Audio Studios, Podcasts, radio news.

This is the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. You can join Brian Curtis and myself for the stories, making news and moving markets in the APAC region. You can subscribe to the show anywhere you get your podcast and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App.

This is the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. You can join Brian Curtis and myself for the stories, making news and moving markets in the APAC region. You can subscribe to the show anywhere you get your podcast and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App.

Joining us now is Peter Elstrom, Bloomberg Executive Editor for Asia Technology. To take a look at the chip story right across the globe here, Peter, thanks very much. We've talked quite a bit this morning about the US possibly putting CXMT on the entity list, and we'll also we've talked a little bit about the chip fund that China has put together twenty seven billion dollars, not so much about TSMC, so we can talk about all three. But TSMC set to win something like around five billion dollars in grant for the US chip plant. This is part of a big reshoring story by the Biden administration. If we just take a step back, how is that overall reshoring going in your view?

Joining us now is Peter Elstrom, Bloomberg Executive Editor for Asia Technology. To take a look at the chip story right across the globe here, Peter, thanks very much. We've talked quite a bit this morning about the US possibly putting CXMT on the entity list, and we'll also we've talked a little bit about the chip fund that China has put together twenty seven billion dollars, not so much about TSMC, so we can talk about all three. But TSMC set to win something like around five billion dollars in grant for the US chip plant. This is part of a big reshoring story by the Biden administration. If we just take a step back, how is that overall reshoring going in your view?

Yeah, so you're exactly right. There is a huge chip war going on. Specifically between the United States and China, but more broadly than that, there are other countries involved in trying to build their own domestic chip industries too, and this dates back to really a couple of different things. During the COVID pandemic, there were disruptions to the supply chain that created all sorts of problems for the automotive industry, in particular where they couldn't get enough chips. And beyond that, there's some security concerns because right now most of the advanced chips in the world are made in Taiwan, followed by South Korea. So the United States, Japan, Europe, and China all are trying to build up their domestic chip industries. At this point, the US has been off to a pretty slow start in terms of making that happen. They, of course, the Biden administration unveiled the Chips Act. That's an effort to subsidize some of these efforts with billions and billions of dollars. What we're hearing about now is that the Biden administration is making some progress. They're getting close to being able to award some of the really big numbers to the leading chip companies in the world. So TSMC is the producer of the most advanced chips in the world to make them for Apple and for Nvidia. They've been talking about building this fab in the US and now what we're hearing from our sources is that they could get more than five billion dollars to subsidize that. That's a lot of money, obviously, but it comes as they plan on investing about forty billion dollars into two chip fabs in Arizona to help them build more advanced chips within the United States, which, as you're saying, that's part of this on shoring effort by the United States to make sure that it does have a steady supply of these semiconductors that are so important for the economy.

Yeah, so you're exactly right. There is a huge chip war going on. Specifically between the United States and China, but more broadly than that, there are other countries involved in trying to build their own domestic chip industries too, and this dates back to really a couple of different things. During the COVID pandemic, there were disruptions to the supply chain that created all sorts of problems for the automotive industry, in particular where they couldn't get enough chips. And beyond that, there's some security concerns because right now most of the advanced chips in the world are made in Taiwan, followed by South Korea. So the United States, Japan, Europe, and China all are trying to build up their domestic chip industries. At this point, the US has been off to a pretty slow start in terms of making that happen. They, of course, the Biden administration unveiled the Chips Act. That's an effort to subsidize some of these efforts with billions and billions of dollars. What we're hearing about now is that the Biden administration is making some progress. They're getting close to being able to award some of the really big numbers to the leading chip companies in the world. So TSMC is the producer of the most advanced chips in the world to make them for Apple and for Nvidia. They've been talking about building this fab in the US and now what we're hearing from our sources is that they could get more than five billion dollars to subsidize that. That's a lot of money, obviously, but it comes as they plan on investing about forty billion dollars into two chip fabs in Arizona to help them build more advanced chips within the United States, which, as you're saying, that's part of this on shoring effort by the United States to make sure that it does have a steady supply of these semiconductors that are so important for the economy.

It's a fascinating story when you think back fifty years ago that American chip makers were actually offshoring a lot of production. I think Hong Kong initially was a big beneficiary. Then it migrated to Japan, I think before Taiwan. But if you look at the runway that's necessary, the period of time that has to take place in order for the initial investment to happen construction, you need to get a very experienced labor force at work here. I mean, what is it going to take two years before these plants are fully operational.

It's a fascinating story when you think back fifty years ago that American chip makers were actually offshoring a lot of production. I think Hong Kong initially was a big beneficiary. Then it migrated to Japan, I think before Taiwan. But if you look at the runway that's necessary, the period of time that has to take place in order for the initial investment to happen construction, you need to get a very experienced labor force at work here. I mean, what is it going to take two years before these plants are fully operational.

Yeah, it's interesting to see some of the contrasts here. In Japan. The Japanese government has also been trying to build up its domestic chip industry, and the speed with which they've moved is sort of startling compared to the United States in particular. So TSMC, again, the leading chip producer in the world, has built most of its fabs in Taiwan. In the past, it has agreed to build in Japan and in the United States. In Japan, it had an opening ceremony for its first fab. Here, they're very far along. They were able to team up with a domestic construction company called Kajema that moved very very quickly. They hired seven thousand workers very quickly. In the United States is almost the opposite. TSMC has already announced two delays in their plans in Arizona. They've had problems with unions there. The US government hasn't been quick to write those checks to make sure that the money is getting out, so that's really slowed down the process in the US. TSMC has talked about this about some of the problems, but it's happening very very slowly there.

Yeah, it's interesting to see some of the contrasts here. In Japan. The Japanese government has also been trying to build up its domestic chip industry, and the speed with which they've moved is sort of startling compared to the United States in particular. So TSMC, again, the leading chip producer in the world, has built most of its fabs in Taiwan. In the past, it has agreed to build in Japan and in the United States. In Japan, it had an opening ceremony for its first fab. Here, they're very far along. They were able to team up with a domestic construction company called Kajema that moved very very quickly. They hired seven thousand workers very quickly. In the United States is almost the opposite. TSMC has already announced two delays in their plans in Arizona. They've had problems with unions there. The US government hasn't been quick to write those checks to make sure that the money is getting out, so that's really slowed down the process in the US. TSMC has talked about this about some of the problems, but it's happening very very slowly there.

And one of the other stories that I mentioned briefly was China ready and another twenty seven billion dollars for a chip fund that they'll call the Big Fund, And we're curious about exactly where this money goes and also how far behind is China in trying to get to the advanced production levels that we see in Taiwan that you've talked about and that Intel has aspired to for all these years.

And one of the other stories that I mentioned briefly was China ready and another twenty seven billion dollars for a chip fund that they'll call the Big Fund, And we're curious about exactly where this money goes and also how far behind is China in trying to get to the advanced production levels that we see in Taiwan that you've talked about and that Intel has aspired to for all these years.

Yeah, well, China is really being driven by necessity at this point. The US government has levied a number of different restrictions on their technology companies and their ability to get chips. In particular, a couple of years ago, the Biden administration imposed a whole series of curbs on their ability to buy AI artificial intelligence chips, as well as chip making equipment to make the most advanced chips. So what you're seeing in China right now is an all out effort to try to build the foundation of an industry that they can develop over the next few years. As you mentioned, they're now looking to raise about twenty seven billion dollars for a chip fund that will invest in chip startups and chip companies. The formal name is National Integrated Circuit Industry Investment Fund. People in China just call the big fund they've had. This is their third fund. They've invested in a bunch of startups there, but they've had a number of problems. I mean, one, they're trying to imitate technology that already the Western companies have spent a lot of time developing, have very very advanced equipment, and there have been some corruption problems within the big for the previous big funds also, which have slowed down their efforts to build up the domestic chip industry.

Yeah, well, China is really being driven by necessity at this point. The US government has levied a number of different restrictions on their technology companies and their ability to get chips. In particular, a couple of years ago, the Biden administration imposed a whole series of curbs on their ability to buy AI artificial intelligence chips, as well as chip making equipment to make the most advanced chips. So what you're seeing in China right now is an all out effort to try to build the foundation of an industry that they can develop over the next few years. As you mentioned, they're now looking to raise about twenty seven billion dollars for a chip fund that will invest in chip startups and chip companies. The formal name is National Integrated Circuit Industry Investment Fund. People in China just call the big fund they've had. This is their third fund. They've invested in a bunch of startups there, but they've had a number of problems. I mean, one, they're trying to imitate technology that already the Western companies have spent a lot of time developing, have very very advanced equipment, and there have been some corruption problems within the big for the previous big funds also, which have slowed down their efforts to build up the domestic chip industry.

Peter, it's always a pleasure. Yeah, good stuff. Thank you so much for being with us. Peter Elstrom from Bloomberg News.

Peter, it's always a pleasure. Yeah, good stuff. Thank you so much for being with us. Peter Elstrom from Bloomberg News.

Well, let's get to our guest, Stephanie lyng CIO. It's stashaway for a closer look at markets. So we've had a week of NPC meetings and we're kind of trying to weigh that up and see whether or not it's positive for markets or not. Your thoughts at this stage, Stephanie.

Well, let's get to our guest, Stephanie lyng CIO. It's stashaway for a closer look at markets. So we've had a week of NPC meetings and we're kind of trying to weigh that up and see whether or not it's positive for markets or not. Your thoughts at this stage, Stephanie.

Yes, good morning.

Yes, good morning.

Indeed, we had the NPC was just quite anticipated, and I mean we were all looking for kind of big numbers coming out from me event. I think mostly if I look kind of GDP targets, inflation targets, everything seems to be quite in line with market expectations or our expectations. For example, on a GDP growth of five percent, inflation of three percent, that's kind of more or less kind of in line with historical presidents and also what we're looking for. However, I think the key question really for markets and for investors now is that how are they going to achieve these targets, and whether or not they can actually achieve these targets by the end of the year when the next NPC actually comes. I think mostly the concern is on the inflation site, and if you remember last year they also had a three percent inflation target, they the economy of the government actually was not able to achieve that.

Indeed, we had the NPC was just quite anticipated, and I mean we were all looking for kind of big numbers coming out from me event. I think mostly if I look kind of GDP targets, inflation targets, everything seems to be quite in line with market expectations or our expectations. For example, on a GDP growth of five percent, inflation of three percent, that's kind of more or less kind of in line with historical presidents and also what we're looking for. However, I think the key question really for markets and for investors now is that how are they going to achieve these targets, and whether or not they can actually achieve these targets by the end of the year when the next NPC actually comes. I think mostly the concern is on the inflation site, and if you remember last year they also had a three percent inflation target, they the economy of the government actually was not able to achieve that.

And for the past year, I think.

And for the past year, I think.

While the world or most developed markets are kind of concerned about inflation, China is actually on a deflation concern and I think if you look at PPI and CPI, these have been negative quite some time. Of course, we just get the latest CPI which is positive, which is a great kind of development, but PPI still seems to be quite negative.

While the world or most developed markets are kind of concerned about inflation, China is actually on a deflation concern and I think if you look at PPI and CPI, these have been negative quite some time. Of course, we just get the latest CPI which is positive, which is a great kind of development, but PPI still seems to be quite negative.

Yeah, I think the longest streak of deflation that we've seen at the wholesale level since about twenty sixteen. Do you think that the economy generally speaking, I hear what you're saying about the growth target right around five percent, maybe or you're doubtful that the government will achieve that. But can you dispute the fact that there seems to be this economic malaise threatening the overall economy.

Yeah, I think the longest streak of deflation that we've seen at the wholesale level since about twenty sixteen. Do you think that the economy generally speaking, I hear what you're saying about the growth target right around five percent, maybe or you're doubtful that the government will achieve that. But can you dispute the fact that there seems to be this economic malaise threatening the overall economy.

Yeah, I think it's of course, it's partly structural with kind of the clamp down or the property sector, which has been a great driver of the economy in the last two decades or so, but partially the kind of economic downturn is cyclical as well. Right, if we look at the global manufacturing indexes or the global manufacturing sector, I mean those actually have been in a downturn for the last kind of talk to eighteen months. We're starting to see some signs of turning points. If you look at the latest kind of PMI, manufacturing in vaccines coming out from the US or even on a global basis, I mean these have been turning around and are positive now. So I mean that actually is a positive development for China. Economy because a significant part of China is still supported by exports.

Yeah, I think it's of course, it's partly structural with kind of the clamp down or the property sector, which has been a great driver of the economy in the last two decades or so, but partially the kind of economic downturn is cyclical as well. Right, if we look at the global manufacturing indexes or the global manufacturing sector, I mean those actually have been in a downturn for the last kind of talk to eighteen months. We're starting to see some signs of turning points. If you look at the latest kind of PMI, manufacturing in vaccines coming out from the US or even on a global basis, I mean these have been turning around and are positive now. So I mean that actually is a positive development for China. Economy because a significant part of China is still supported by exports.

Stephanie, are we maybe overplaying the slow down and downturn in China anecdotally? Just talking to people coming back from shen Zen Go for you know a lot of Hong Kong people go for day trips and they talk about, you know, the malls are booming that you know, the buzz is there, people are out, the restaurants are packed. You can't get into this restaurant because it's too full. You know. It's a slightly different story that we see from the big macro numbers, and I wonder how you make sense of that.

Stephanie, are we maybe overplaying the slow down and downturn in China anecdotally? Just talking to people coming back from shen Zen Go for you know a lot of Hong Kong people go for day trips and they talk about, you know, the malls are booming that you know, the buzz is there, people are out, the restaurants are packed. You can't get into this restaurant because it's too full. You know. It's a slightly different story that we see from the big macro numbers, and I wonder how you make sense of that.

Yes, indeed, I think it's a bit of a two speed economy. Right if you look at the consumer data, they have actually been been quite good. Right. It's if if you look at, for example, the service PMI, it has been an expansion while the manufacturing side has been in a slump. So similar things are going on globally as well. Right if you look at the US, I mean, sut side of things are actually very very strong, while manufacturing is also in a slump. So I think it's not just just a China problem. But of course for China because it's still heavily reliant on the manufacturing side, heavily reliant on export, heavily reliant on investment rather than consumption, which is the case in the US.

Yes, indeed, I think it's a bit of a two speed economy. Right if you look at the consumer data, they have actually been been quite good. Right. It's if if you look at, for example, the service PMI, it has been an expansion while the manufacturing side has been in a slump. So similar things are going on globally as well. Right if you look at the US, I mean, sut side of things are actually very very strong, while manufacturing is also in a slump. So I think it's not just just a China problem. But of course for China because it's still heavily reliant on the manufacturing side, heavily reliant on export, heavily reliant on investment rather than consumption, which is the case in the US.

Therefore, I think if you look at kind of.

Therefore, I think if you look at kind of.

The overall economy, just the weight of things makes China kind of I think, makes China's economy more formal vulnerable to a global manufacturing slump.

The overall economy, just the weight of things makes China kind of I think, makes China's economy more formal vulnerable to a global manufacturing slump.

So would you be putting money to work in markets in China right now?

So would you be putting money to work in markets in China right now?

I think, I mean, it's definitely looking more interesting compared with last year.

I think, I mean, it's definitely looking more interesting compared with last year.

For example.

For example.

Of course, everybody knows that China is very, very cheap right in terms of valuation. The problem is the lack of a catalyst for economic upturn. I think Number one, the government has been trying to stimulate the economy from a kind of monetary fiscal perspective. Now, of course, there's a question of how much is enough. And I think if you look at kind of historical examples the Chinese government, once they start kind of injecting liquidity you want to start stimulating, They're not going to stop until the economy actually turns around. So I think also if you look at kind of the ability for the Chinese government to stimulate. There is still potential. So I think the key is still coming back to the global economy, whether or not we see in recovery. And I think there are early signs that we are seeing part of that.

Of course, everybody knows that China is very, very cheap right in terms of valuation. The problem is the lack of a catalyst for economic upturn. I think Number one, the government has been trying to stimulate the economy from a kind of monetary fiscal perspective. Now, of course, there's a question of how much is enough. And I think if you look at kind of historical examples the Chinese government, once they start kind of injecting liquidity you want to start stimulating, They're not going to stop until the economy actually turns around. So I think also if you look at kind of the ability for the Chinese government to stimulate. There is still potential. So I think the key is still coming back to the global economy, whether or not we see in recovery. And I think there are early signs that we are seeing part of that.

Okay, Okay, Now, if we see some money come out of the Japanese and in US markets, you know, which some people think is inevitable given the highs that we've seen, some of that money might go into China. But the thing is that you hear kind of a downbeat picture from investors about policy in China. They don't believe that the policy is there to drive the private sector higher over the coming years. Is the jury still out on that?

Okay, Okay, Now, if we see some money come out of the Japanese and in US markets, you know, which some people think is inevitable given the highs that we've seen, some of that money might go into China. But the thing is that you hear kind of a downbeat picture from investors about policy in China. They don't believe that the policy is there to drive the private sector higher over the coming years. Is the jury still out on that?

Yes?

Yes?

I think the problem is that I guess once you I guess once the confidence is diminished, is very very hard to bring that back, right, And a lot of these corporates are making decisions not on a kind of one or two year basis, right, They're making decisions on a ten year or even kind of much longer term basis. And those investments are indeed, I very hard to bring back. But if we look at kind of the market itself, I mean investments money you are fast money globally are much shorter term.

I think the problem is that I guess once you I guess once the confidence is diminished, is very very hard to bring that back, right, And a lot of these corporates are making decisions not on a kind of one or two year basis, right, They're making decisions on a ten year or even kind of much longer term basis. And those investments are indeed, I very hard to bring back. But if we look at kind of the market itself, I mean investments money you are fast money globally are much shorter term.

They're much kind of faster to react.

They're much kind of faster to react.

And I mentioned about kind of the cyclical problems and the structural problems of China. I think if you have the cyclical problems easing, there's still kind of a lot of room for the market to improve, right given that valuations are very cheap. So I do think that there could be a kind of cyclic op turn.

And I mentioned about kind of the cyclical problems and the structural problems of China. I think if you have the cyclical problems easing, there's still kind of a lot of room for the market to improve, right given that valuations are very cheap. So I do think that there could be a kind of cyclic op turn.

Now.

Now.

Of course, we're in the structural issues to resolve, and for a structural kind of tenure bull market to start that the hurdle is actually a lot higher.

Of course, we're in the structural issues to resolve, and for a structural kind of tenure bull market to start that the hurdle is actually a lot higher.

So we have two stories that are kind of interesting today and they clash in a way. One is the Biden administration wing some new sanctions on a few Chinese tech companies, particularly within the realm of semiconductors. That's not new. We know the administration has been focused on restraining China's development on that front. At the same time, though, China seems to be raising a lot more in the way of capital to fund a chip fund that would essentially be used for R and D purposes. Is it possible for China to compensate for what is being withheld from Western technology companies.

So we have two stories that are kind of interesting today and they clash in a way. One is the Biden administration wing some new sanctions on a few Chinese tech companies, particularly within the realm of semiconductors. That's not new. We know the administration has been focused on restraining China's development on that front. At the same time, though, China seems to be raising a lot more in the way of capital to fund a chip fund that would essentially be used for R and D purposes. Is it possible for China to compensate for what is being withheld from Western technology companies.

Yeah, I think that's kind of a tug of war between US and China that's kind of started or accelerated a few years ago. And I think this is one of the structural problems that it's it's very, very hot to see things reverting back to where it was, particularly with the kind of the development chips and technology. Every country or every kind of major power will try to secure their own technology stack, and I mean China and the US is no different. So I think, of course, the US has the election this year, and the China issue is top of concern or kind of like top of a lot of kind of I.

Yeah, I think that's kind of a tug of war between US and China that's kind of started or accelerated a few years ago. And I think this is one of the structural problems that it's it's very, very hot to see things reverting back to where it was, particularly with the kind of the development chips and technology. Every country or every kind of major power will try to secure their own technology stack, and I mean China and the US is no different. So I think, of course, the US has the election this year, and the China issue is top of concern or kind of like top of a lot of kind of I.

Guess everybody wants to China.

Guess everybody wants to China.

Yeah, exactly, everybody wants to play that card.

Yeah, exactly, everybody wants to play that card.

And I think if let's say, if Trump gets kind of into the office, there could be even more acceleration in terms of the rhetoric or action against China.

And I think if let's say, if Trump gets kind of into the office, there could be even more acceleration in terms of the rhetoric or action against China.

So that is one big risk.

So that is one big risk.

I think in terms of China's own development, it's they will try to invest a lot, but I mean from a technology point of view, there's still kind of several years behind, and I think China will actually invest a lot more into not probably not the top end, but still if you look at kind of ship like where chips are used, right, A lot of the chips are used in auto, A lot of chips are used actually in electronic vehicles. I mean those are areas actually where China can excel. So I think that's where a lot of investment will.

I think in terms of China's own development, it's they will try to invest a lot, but I mean from a technology point of view, there's still kind of several years behind, and I think China will actually invest a lot more into not probably not the top end, but still if you look at kind of ship like where chips are used, right, A lot of the chips are used in auto, A lot of chips are used actually in electronic vehicles. I mean those are areas actually where China can excel. So I think that's where a lot of investment will.

Grow, all right, Stephanie, Unfortunately out of time, I did want to get your view on Japan whether or not you're using a pogo stick to jump higher from forty thousand or a bungee cord to pro blower levels, but we'll save that for the next discussion. We love to have you on the program, Thanks very much, Stephanie. Lung there Cio, it's stash Away. Joining us on the line for this next segment is Joy Young, head of product management Market Vector Indexes. So, Joy, how do you feel with markets at these levels? Here? We had a little bit of a spooky day on Friday on Wall Street.

Grow, all right, Stephanie, Unfortunately out of time, I did want to get your view on Japan whether or not you're using a pogo stick to jump higher from forty thousand or a bungee cord to pro blower levels, but we'll save that for the next discussion. We love to have you on the program, Thanks very much, Stephanie. Lung there Cio, it's stash Away. Joining us on the line for this next segment is Joy Young, head of product management Market Vector Indexes. So, Joy, how do you feel with markets at these levels? Here? We had a little bit of a spooky day on Friday on Wall Street.

Your thoughts, Yeah, thank you. We had a very exciting week last week with you know, several assets heading there all time high, and I don't know if people still remember we started Monday with Nvidia, you know, just with great earnings announcement joining the two trillion dollar club, and then we saw it pushing the SMP up and it's not just the mag seven because we're seeing the equal weighted as and P five hundred also hitting their all time high. So yeah, they were going up, and then it's not unexpected to see when we have these price momentum that we're going to see some pullback in correction. So that's what we see on you know, what we saw on Friday. But you know, we're also seeing that this all time high is spreading globally. You know, we mentioned at the beginning of the program that you know, Japanese markets are hitting their all time high, so you know, we're seeing that, you know, there's now a signaling to the potential end of the Bank of Japan and their negative interest rate policy. In this in turn, we're seeing the unraveling of the very popular carry trade, which is now impacting the dollar. So with dollar a week, we're seeing gold prices also breaking out of their range and hitting their all time highs.

Your thoughts, Yeah, thank you. We had a very exciting week last week with you know, several assets heading there all time high, and I don't know if people still remember we started Monday with Nvidia, you know, just with great earnings announcement joining the two trillion dollar club, and then we saw it pushing the SMP up and it's not just the mag seven because we're seeing the equal weighted as and P five hundred also hitting their all time high. So yeah, they were going up, and then it's not unexpected to see when we have these price momentum that we're going to see some pullback in correction. So that's what we see on you know, what we saw on Friday. But you know, we're also seeing that this all time high is spreading globally. You know, we mentioned at the beginning of the program that you know, Japanese markets are hitting their all time high, so you know, we're seeing that, you know, there's now a signaling to the potential end of the Bank of Japan and their negative interest rate policy. In this in turn, we're seeing the unraveling of the very popular carry trade, which is now impacting the dollar. So with dollar a week, we're seeing gold prices also breaking out of their range and hitting their all time highs.

So with the record highs that we've been talking about or you just highlighted in terms of equity trading, I'm going to add to that list a bitcoin, which I think broke above seventy grand for the first time last week. And to kind of dovetail with the point you just made there about the BOJ perhaps doing away with negative rates here sometime soon, I doubt. I don't know, maybe it's March, maybe it's April. But the question is one of excess liquidity. Do we still have a certain level of excess liquidity and global markets.

So with the record highs that we've been talking about or you just highlighted in terms of equity trading, I'm going to add to that list a bitcoin, which I think broke above seventy grand for the first time last week. And to kind of dovetail with the point you just made there about the BOJ perhaps doing away with negative rates here sometime soon, I doubt. I don't know, maybe it's March, maybe it's April. But the question is one of excess liquidity. Do we still have a certain level of excess liquidity and global markets.

I think there is that people are careful on where they're investing it. So I think, you know, we're seeing this all time high and it's actually quite unusual to see both risk on and risk off assets moving in the same direction with so much uncertainty and quite a lot of risk.

I think there is that people are careful on where they're investing it. So I think, you know, we're seeing this all time high and it's actually quite unusual to see both risk on and risk off assets moving in the same direction with so much uncertainty and quite a lot of risk.

Still out there.

Still out there.

And you know, we know traditionally gold is a defensive asset and it goes up when things are looking down. But the equity markets are saying that the economy is still looking pretty strong. So we also have like bitcoin going up, as you know, a very volatile asset class, and we're seeing that based on the trigger of there's a lot of investors trying to, you know, allocate the money into something that isn't correlated with other asset classes because they just don't know where things may end up in the next few months.

And you know, we know traditionally gold is a defensive asset and it goes up when things are looking down. But the equity markets are saying that the economy is still looking pretty strong. So we also have like bitcoin going up, as you know, a very volatile asset class, and we're seeing that based on the trigger of there's a lot of investors trying to, you know, allocate the money into something that isn't correlated with other asset classes because they just don't know where things may end up in the next few months.

You mentioned Japan and I had a question for you. I put a question earlier to a guest saying, you know, if you do get a change in Boja policy, you're going to probably see as stronger yin and that might not be good for the stock market. But the flip side of that, which I also I also think is kind of interesting, is that you're going to get repatriation of Japanese assets abroad, and as that comes back in, you know, it's going to have to go somewhere. Does it go into the bond market there or does it go into the stock market.

You mentioned Japan and I had a question for you. I put a question earlier to a guest saying, you know, if you do get a change in Boja policy, you're going to probably see as stronger yin and that might not be good for the stock market. But the flip side of that, which I also I also think is kind of interesting, is that you're going to get repatriation of Japanese assets abroad, and as that comes back in, you know, it's going to have to go somewhere. Does it go into the bond market there or does it go into the stock market.

I would think probably the stock market is looking pretty good right now for Japan as well as emerging markets in Asia, because they seem to have been undervalued given the rest of global markets. So there are a lot of opportunities, and maybe they will be thinking about how to hedge the dollar and you know where they can put it without being exposed to dollar.

I would think probably the stock market is looking pretty good right now for Japan as well as emerging markets in Asia, because they seem to have been undervalued given the rest of global markets. So there are a lot of opportunities, and maybe they will be thinking about how to hedge the dollar and you know where they can put it without being exposed to dollar.

So here's a question for you. We've been pondering this on the program today. Are there similarities between what we had in the equity market in the late nineteen nineties, what many have called the dot com bubble, and what we're seeing right now, particularly in tech that's related to the AI trade.

So here's a question for you. We've been pondering this on the program today. Are there similarities between what we had in the equity market in the late nineteen nineties, what many have called the dot com bubble, and what we're seeing right now, particularly in tech that's related to the AI trade.

Well, you know, looking at the data, you can always draw similarities, but we don't know what's going to happen next. I think, I think, yeah, A lot of people have kind of called the similar similarity between Nvidia and you know, Cisco, right, because these are like basically when you see some disruptive tech take off, what you're seeing is first the money piles in and the growth starts happening in the underlying infrastructure. But you know, then you'll see, like some domin net players, they will be competed away. Other players will come in and try to eat away at that profit. And you know, Nvidia has a strong mote, but we're seeing like competitors. In fact, some of their clients, like Microsoft, Amazon, they're also building their own design hardware into AI so that they're not relying on just Nvidia. So as that, you know, as we see the shift from kind of these infrastructure players, you know, to adopters, you know, these are the players that are going to be using the AI and that's where the growth will also start to happen. So you have to think about the life cycle of the thing as well as you know, diversifying your bets on which player is going to take off.

Well, you know, looking at the data, you can always draw similarities, but we don't know what's going to happen next. I think, I think, yeah, A lot of people have kind of called the similar similarity between Nvidia and you know, Cisco, right, because these are like basically when you see some disruptive tech take off, what you're seeing is first the money piles in and the growth starts happening in the underlying infrastructure. But you know, then you'll see, like some domin net players, they will be competed away. Other players will come in and try to eat away at that profit. And you know, Nvidia has a strong mote, but we're seeing like competitors. In fact, some of their clients, like Microsoft, Amazon, they're also building their own design hardware into AI so that they're not relying on just Nvidia. So as that, you know, as we see the shift from kind of these infrastructure players, you know, to adopters, you know, these are the players that are going to be using the AI and that's where the growth will also start to happen. So you have to think about the life cycle of the thing as well as you know, diversifying your bets on which player is going to take off.

So Joy, could I at least get you to say that, you know, we've got overblock conditions there, maybe not exactly a bubble, but but over block conditions, and that some sort of correction is nigh.

So Joy, could I at least get you to say that, you know, we've got overblock conditions there, maybe not exactly a bubble, but but over block conditions, and that some sort of correction is nigh.

Well. I mean, I truly think AI is, you know, really has the potential to deliver something really innovative and productive. But not every company is going to participate in it. So some people will overvalue some of these players, and you know, that may be a bubble, but I think over the long term we will see a trend to capture some of the growth opportunities. What's really interesting for us is we're also looking in the digital asset space as a participant or a facilitator of AI because you know, as we saw last week, there are a lot of issues around AI that we're trying to resolve, such as you know, copyright issues. You know, we saw some of those controversies around imaging and also you know, Musk is bringing a legal suit against open AI and digital assets, you know, using blockchain and cryptography. These are technologies that really already have resolved issues around transparency, immutability, or how to define ownership properties so you know, we think that digital assets, crypto assets will have a big, you know, critical component to the growth and innovation.

Well. I mean, I truly think AI is, you know, really has the potential to deliver something really innovative and productive. But not every company is going to participate in it. So some people will overvalue some of these players, and you know, that may be a bubble, but I think over the long term we will see a trend to capture some of the growth opportunities. What's really interesting for us is we're also looking in the digital asset space as a participant or a facilitator of AI because you know, as we saw last week, there are a lot of issues around AI that we're trying to resolve, such as you know, copyright issues. You know, we saw some of those controversies around imaging and also you know, Musk is bringing a legal suit against open AI and digital assets, you know, using blockchain and cryptography. These are technologies that really already have resolved issues around transparency, immutability, or how to define ownership properties so you know, we think that digital assets, crypto assets will have a big, you know, critical component to the growth and innovation.

In a moment ago, you were talking about how unusual it is to see people going a long risk assets and assets that are normally associated with being risk off. And let's put US treasuries in the bundle on the ladder. I mean, what do you make it the way the bond market has been performing.

In a moment ago, you were talking about how unusual it is to see people going a long risk assets and assets that are normally associated with being risk off. And let's put US treasuries in the bundle on the ladder. I mean, what do you make it the way the bond market has been performing.

Yeah, I think and again I think you know, all markets are just sitting in this range bound waiting for the next piece of information, data or news. So this week is quite quite critical with the CPI least, because you know, that'll give everybody maybe a little bit more insight into the direction of where we're headed with inflation an interest rate. So the bond market, again, if you're out on the uh, you know, I wouldn't want to be on the long duration side of the bond market, you know, but there's still some interesting uh.

Yeah, I think and again I think you know, all markets are just sitting in this range bound waiting for the next piece of information, data or news. So this week is quite quite critical with the CPI least, because you know, that'll give everybody maybe a little bit more insight into the direction of where we're headed with inflation an interest rate. So the bond market, again, if you're out on the uh, you know, I wouldn't want to be on the long duration side of the bond market, you know, but there's still some interesting uh.

If you get if you get an inflation print that is kind of more similar to the PCE that we got and you have growth remaining strong. I mean, that's a ticket for risk assets to move back to the upside, isn't it.

If you get if you get an inflation print that is kind of more similar to the PCE that we got and you have growth remaining strong. I mean, that's a ticket for risk assets to move back to the upside, isn't it.

Yes, but as we've seen, like what, this data is just still not really convincing, and people are reading different parts of the data to kind of support whatever underlying bias they have. And and I think that's why we're seeing both gold and bitcoin, as well as the equity and bond markets moving, you know, towards the same direction.

Yes, but as we've seen, like what, this data is just still not really convincing, and people are reading different parts of the data to kind of support whatever underlying bias they have. And and I think that's why we're seeing both gold and bitcoin, as well as the equity and bond markets moving, you know, towards the same direction.

So you sound a little cautious, Joy, thirty seconds, how are you hedged these days?

So you sound a little cautious, Joy, thirty seconds, how are you hedged these days?

We? You know, uh, I always look at gold. Gold is really it, you know, has broken out of its range. So I think gold and gold miners are going to be interesting because gold miners have been undervalued, and certainly bitcoin is on a rally. But there's a lot of other you know, there's a lot of other future acts.

We? You know, uh, I always look at gold. Gold is really it, you know, has broken out of its range. So I think gold and gold miners are going to be interesting because gold miners have been undervalued, and certainly bitcoin is on a rally. But there's a lot of other you know, there's a lot of other future acts.

All right, Joy, thanks very much for joining us. Joe Young, head of product Management, Market Vector Indexes.

All right, Joy, thanks very much for joining us. Joe Young, head of product Management, Market Vector Indexes.

This has been the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always on Bloomberg Radio. The Bloomberg Terminal and the Bloomberg Business app

This has been the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always on Bloomberg Radio. The Bloomberg Terminal and the Bloomberg Business app