Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg Daybreak Aisia 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.

Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg Daybreak Aisia 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.

Well, we had the pmis come out in China over the weekend, not particularly strong. We had the manufacturing PMI with a reading of forty nine point five that matched the survey estimate and also match the previous month. Joining us now for some discussion is Shazan Kazi, COO and Managing director at China Beige Book. Chazan, thanks very much for coming on the program with us. Bloomberg Economics says that the GDP target is in doubt of five percent. They say that without stronger stimulus delivery, there's a real risk here that GDP will undersh you your thoughts on where China is heading.

Well, we had the pmis come out in China over the weekend, not particularly strong. We had the manufacturing PMI with a reading of forty nine point five that matched the survey estimate and also match the previous month. Joining us now for some discussion is Shazan Kazi, COO and Managing director at China Beige Book. Chazan, thanks very much for coming on the program with us. Bloomberg Economics says that the GDP target is in doubt of five percent. They say that without stronger stimulus delivery, there's a real risk here that GDP will undersh you your thoughts on where China is heading.

Yeah, look, I think if you want to talk about the GDP, uh, you know, I agree that we may not get to five percent this year despite what the you know what the party claimed up front, but I think pulling back, let's talk about where the economy is. It kicked off on a pretty solid state in the first quarter, and where you're getting to now is that the pace of improvement has faded, There's no question about it. But we are nowhere near I think a level where Beijing starts to feel the pressure to unleash stimulus and large enough quantities, which is exactly which is what the markets are hoping for right now.

Yeah, look, I think if you want to talk about the GDP, uh, you know, I agree that we may not get to five percent this year despite what the you know what the party claimed up front, but I think pulling back, let's talk about where the economy is. It kicked off on a pretty solid state in the first quarter, and where you're getting to now is that the pace of improvement has faded, There's no question about it. But we are nowhere near I think a level where Beijing starts to feel the pressure to unleash stimulus and large enough quantities, which is exactly which is what the markets are hoping for right now.

So considering hope we've are looking forward to the third Plan in the month of July, is anything going to come from this meeting that's meaningful?

So considering hope we've are looking forward to the third Plan in the month of July, is anything going to come from this meeting that's meaningful?

Markets, I think are going to walk away feeling disappointed because if I'm the party, you know what am I looking at? I'm looking at a property sector where housing is beginning to act show possible green shoots. I'm looking at a manufacturing sector that's decelerating but still looking pretty good year over year. Sure, the consumer side of the economy is a bit spotty and not ideal, But does this mean that I need to really ramp up a fiscal spending and and you know, announce a bigger deficit for the year. I don't think so so announcement might be meaningful. Markets I don't think will treat anything as meaningful short of something that's very splashy. I just don't think they get it.

Markets, I think are going to walk away feeling disappointed because if I'm the party, you know what am I looking at? I'm looking at a property sector where housing is beginning to act show possible green shoots. I'm looking at a manufacturing sector that's decelerating but still looking pretty good year over year. Sure, the consumer side of the economy is a bit spotty and not ideal, But does this mean that I need to really ramp up a fiscal spending and and you know, announce a bigger deficit for the year. I don't think so so announcement might be meaningful. Markets I don't think will treat anything as meaningful short of something that's very splashy. I just don't think they get it.

Well, if you're a policymaker, you had been hoping that exports and manufacturing would would help bring the economy along, knowing that the consumer side was a little bit weak, and so that's not really happening. So I think what is being suggested by some is that they need to do something. Maybe it comes out of the third Plan, or maybe the PBOC just sort of increases the oomph of the home buying scheme, which you know, could could do the trick.

Well, if you're a policymaker, you had been hoping that exports and manufacturing would would help bring the economy along, knowing that the consumer side was a little bit weak, and so that's not really happening. So I think what is being suggested by some is that they need to do something. Maybe it comes out of the third Plan, or maybe the PBOC just sort of increases the oomph of the home buying scheme, which you know, could could do the trick.

It's just not big enough at the moment.

It's just not big enough at the moment.

And look, you know when when they get into the plan, and one of the things I think they may also talk about is claim some victory finally housing, you know, turning in some somewhat better news by comparison. By the way, I should point out, commercial property is starting to suffer a little bit, and so increasingly when we think about the Chinese property market and what needs to be done in terms of a rescue plan, investors might go from worrying solely about housing to worrying still about housing a little bit, but increasingly getting caught up with what's happening to commercial real estate in China.

And look, you know when when they get into the plan, and one of the things I think they may also talk about is claim some victory finally housing, you know, turning in some somewhat better news by comparison. By the way, I should point out, commercial property is starting to suffer a little bit, and so increasingly when we think about the Chinese property market and what needs to be done in terms of a rescue plan, investors might go from worrying solely about housing to worrying still about housing a little bit, but increasingly getting caught up with what's happening to commercial real estate in China.

So we know the story on deflation, to what extent will the PBOC, to Brian's point, kind of lean in and do something that is maybe a little controversial, something very similar to quantitative easy.

So we know the story on deflation, to what extent will the PBOC, to Brian's point, kind of lean in and do something that is maybe a little controversial, something very similar to quantitative easy.

We're increasingly thinking, you know, hearing about the fact that you know, the PBOC wants to get involved in bond buying and that sort of thing. So there's there's there's a likelihood that we get some more information and announcements to that end, and that can help. But but let me point something out. Liquidity in the system has not been a challenge in China, and that is not a challenge today. If anything, I would argue, looking at the data, there's plenty of liquidity out there, and banks are willing to lend, and banks are cutting back on rates, banks are cutting back on rejections the way they used to reject loans a couple of years ago. Companies are just not going out there and borrowing. So what exactly is the problem and what exactly is the solution? We have to always think about that thing.

We're increasingly thinking, you know, hearing about the fact that you know, the PBOC wants to get involved in bond buying and that sort of thing. So there's there's there's a likelihood that we get some more information and announcements to that end, and that can help. But but let me point something out. Liquidity in the system has not been a challenge in China, and that is not a challenge today. If anything, I would argue, looking at the data, there's plenty of liquidity out there, and banks are willing to lend, and banks are cutting back on rates, banks are cutting back on rejections the way they used to reject loans a couple of years ago. Companies are just not going out there and borrowing. So what exactly is the problem and what exactly is the solution? We have to always think about that thing.

Will carefully how important is corporate borrowing, which has ticked down a little bit in China.

Will carefully how important is corporate borrowing, which has ticked down a little bit in China.

The main takeaway I think is Beijing is having a really really hard time stimulating the economy through monetary policy easing. It simply isn't working on in any kind of sustained fashion. You do get a month here or there with the five boring ramps up, because companies are still not expanding investment, and even though they're hiring a little bit more, they're not hiring and large enough quantities investing in large enough quantities to go out there and borrow continuously, And so stimulus through policiesing on the monetary side is just now working out.

The main takeaway I think is Beijing is having a really really hard time stimulating the economy through monetary policy easing. It simply isn't working on in any kind of sustained fashion. You do get a month here or there with the five boring ramps up, because companies are still not expanding investment, and even though they're hiring a little bit more, they're not hiring and large enough quantities investing in large enough quantities to go out there and borrow continuously, And so stimulus through policiesing on the monetary side is just now working out.

What about geopolitics, I mean the thread of maybe more severe tariffs on Chinese goods coming to the United States. That's one angle we were talking about. What's going on with the EV market, not just in the US but in Europe as well. What about the trade relations and geopolitics and how might that affect the economy going forward.

What about geopolitics, I mean the thread of maybe more severe tariffs on Chinese goods coming to the United States. That's one angle we were talking about. What's going on with the EV market, not just in the US but in Europe as well. What about the trade relations and geopolitics and how might that affect the economy going forward.

Yeah, there's been a massive amount of redirection of trade away from directly with the US, even the EU a little bit in our latest data, and then through Southeast Asia and so forth. This is I think threat number one for the Chinese economy as they look at twenty twenty five, there's a trade war part two coming. There's just no question about it. I think at this point, if there's a Trump presidency, it's going to be pretty extreme. And so they are going to have to continuously figure out how to sort of almost jump on the decoupling bandwagon used to that bilateral trade deficit and be able to continuously meet customer demand out here by doing it through third party countries. And that of course is going to ultimately weigh on Chinese factories. I think it's going to take a tickets hit to their bottom lines.

Yeah, there's been a massive amount of redirection of trade away from directly with the US, even the EU a little bit in our latest data, and then through Southeast Asia and so forth. This is I think threat number one for the Chinese economy as they look at twenty twenty five, there's a trade war part two coming. There's just no question about it. I think at this point, if there's a Trump presidency, it's going to be pretty extreme. And so they are going to have to continuously figure out how to sort of almost jump on the decoupling bandwagon used to that bilateral trade deficit and be able to continuously meet customer demand out here by doing it through third party countries. And that of course is going to ultimately weigh on Chinese factories. I think it's going to take a tickets hit to their bottom lines.

Shazzad, just in ten seconds, what's the bright spot at the moment?

Shazzad, just in ten seconds, what's the bright spot at the moment?

Ten seconds?

Ten seconds?

Look, I think the bright spot is that parts of the services economy are holding on. I've said this before. Property is actually looking like the rescue plan my family finally be having an effect overall solid growth year over year.

Look, I think the bright spot is that parts of the services economy are holding on. I've said this before. Property is actually looking like the rescue plan my family finally be having an effect overall solid growth year over year.

Okay, all right, well thanks for leaving us on at least a positive note. Shazad Kanzi there COO, managing director at.

Okay, all right, well thanks for leaving us on at least a positive note. Shazad Kanzi there COO, managing director at.

The China Page Book.

The China Page Book.

Joining us now on my program, we will Addams, chief economists at Comerica Bank to take a closer look at the US economy and some of the data that we'll be having coming out this week. And before we get to that, Bill, I just wanted to get your comments on the stress test and the banks. We had kind of a lackluster day in the broader mark is, but the banks did very well. JP Morgan was up one point six percent, City Group rallied three percent.

Joining us now on my program, we will Addams, chief economists at Comerica Bank to take a closer look at the US economy and some of the data that we'll be having coming out this week. And before we get to that, Bill, I just wanted to get your comments on the stress test and the banks. We had kind of a lackluster day in the broader mark is, but the banks did very well. JP Morgan was up one point six percent, City Group rallied three percent.

Bank of America higher.

Bank of America higher.

I know the market is not really your specialty, but it's it's good if the banks are doing well, is.

I know the market is not really your specialty, but it's it's good if the banks are doing well, is.

It not, Brian, thank you for having me back. I think it's a sign of the broader health of the US economy. The financial system is well capitalized, and it's the economy is growing solidly, and when the economy does well, the banking system does well.

It not, Brian, thank you for having me back. I think it's a sign of the broader health of the US economy. The financial system is well capitalized, and it's the economy is growing solidly, and when the economy does well, the banking system does well.

So that's I have to say.

So that's I have to say.

I'm pleasantly surprised that you're even having me on when the economy is sort of, you know, bubbling along slow and steady, and it's kind of shifted a bit to the backdrop relative to twenty twenty three.

I'm pleasantly surprised that you're even having me on when the economy is sort of, you know, bubbling along slow and steady, and it's kind of shifted a bit to the backdrop relative to twenty twenty three.

But Bill, are all things kind of functioning at equal levels here? Is there not a little bit of weakness? I'm going to bring out. Commercial real estate is one area, and maybe there are pockets of the residential housing market that are starting to falter.

But Bill, are all things kind of functioning at equal levels here? Is there not a little bit of weakness? I'm going to bring out. Commercial real estate is one area, and maybe there are pockets of the residential housing market that are starting to falter.

Sure, interest rate sensitive sectors of the economy are definitely under pressure right now. I think commercial real estate is a prime example of that, as well as some parts of residential Also manufacturing. Of the manufacturing survey out this week is probably going to show some continued softness in that industry because that's a capital intensive, credit intensive industry, and the fed's high rate policy is having its intended effect there.

Sure, interest rate sensitive sectors of the economy are definitely under pressure right now. I think commercial real estate is a prime example of that, as well as some parts of residential Also manufacturing. Of the manufacturing survey out this week is probably going to show some continued softness in that industry because that's a capital intensive, credit intensive industry, and the fed's high rate policy is having its intended effect there.

Bill.

Bill.

You know, people don't like to get too comfortable with the sort of steady economy notion because they know that things can turn quickly, or at least they fear that things can turn quickly. Your take on the economy, I guess is that it's taking along okay.

You know, people don't like to get too comfortable with the sort of steady economy notion because they know that things can turn quickly, or at least they fear that things can turn quickly. Your take on the economy, I guess is that it's taking along okay.

There are always challenges.

There are always challenges.

If you had to single out some of the biggest challenges right now, what would they be.

If you had to single out some of the biggest challenges right now, what would they be.

So we've already talked about cr which is an obvious one. Also, the risk of a FED policy error holding rates too high for too long. It's a possibility. On top of that, I'm looking at the startup hurricane season in the United States and in you know, the Western hemisphere. It does seem like we're having an earlier than normal start to that higher ocean temperatures. So I think the risk of uh, you know, severe hurricane hitting some part of the United States and causing property damage, especially like in a metro area that where we've seen home insurance premiums rise a lot and an increase in under insurance or uninsurance, I think we could have macroeconomic effects of that that that could be pretty painful for the US economy.

So we've already talked about cr which is an obvious one. Also, the risk of a FED policy error holding rates too high for too long. It's a possibility. On top of that, I'm looking at the startup hurricane season in the United States and in you know, the Western hemisphere. It does seem like we're having an earlier than normal start to that higher ocean temperatures. So I think the risk of uh, you know, severe hurricane hitting some part of the United States and causing property damage, especially like in a metro area that where we've seen home insurance premiums rise a lot and an increase in under insurance or uninsurance, I think we could have macroeconomic effects of that that that could be pretty painful for the US economy.

Heyil, so tick, let's pivot to the PCE. But what did you make of that reading? Underlying inflation is starting to cool now, I mean, is enough to allow the rate the Fed rather to move more quickly than let's say November.

Heyil, so tick, let's pivot to the PCE. But what did you make of that reading? Underlying inflation is starting to cool now, I mean, is enough to allow the rate the Fed rather to move more quickly than let's say November.

It's a step in the right direction. I think a September rate cut is still on the table, and that is in fact our base case for the FED for this year, one cut in September, a second one in December. The Fed wants to see more normalization of inflation, which I think with the economy operating now with a decent margin of slack and a more balanced relationship between supply and demand and the labor market, it looks like inflation should moderate further and that those rate heights are possible. So the PCE report basically validating that we are in this two steps forward, one step back process back towards more normal inflation.

It's a step in the right direction. I think a September rate cut is still on the table, and that is in fact our base case for the FED for this year, one cut in September, a second one in December. The Fed wants to see more normalization of inflation, which I think with the economy operating now with a decent margin of slack and a more balanced relationship between supply and demand and the labor market, it looks like inflation should moderate further and that those rate heights are possible. So the PCE report basically validating that we are in this two steps forward, one step back process back towards more normal inflation.

So in the data that we got late last week, including personal incomes and spending, personal incomes up and higher than expected, and spending was pretty steady. But I wonder whether or not, you know, if, because you had such a robust stock market in the first half of the year, if that cools down in the second half, whether you might see well off people spending a little bit less. I don't really track the breakdown there as closely as you do, but tell us what you expect in terms of, you know, spending in the second half.

So in the data that we got late last week, including personal incomes and spending, personal incomes up and higher than expected, and spending was pretty steady. But I wonder whether or not, you know, if, because you had such a robust stock market in the first half of the year, if that cools down in the second half, whether you might see well off people spending a little bit less. I don't really track the breakdown there as closely as you do, but tell us what you expect in terms of, you know, spending in the second half.

Of the year.

Of the year.

The affluent consumer in the United States and wealthy consumers are doing quite well. Household net worth was up about nine percent year over year in the first quarter, which is the last the most timely data we have right now on all assets all liabilities of the household sector, and that is enough to continue to power spending. Consider that the US is an aging society, A lot of consumers are retirees, and so they're much more sensitive to asset markets and financial markets than they are to earned incomes, and I think that's going to keep the US economy growing in the second half of the year.

The affluent consumer in the United States and wealthy consumers are doing quite well. Household net worth was up about nine percent year over year in the first quarter, which is the last the most timely data we have right now on all assets all liabilities of the household sector, and that is enough to continue to power spending. Consider that the US is an aging society, A lot of consumers are retirees, and so they're much more sensitive to asset markets and financial markets than they are to earned incomes, and I think that's going to keep the US economy growing in the second half of the year.

Let's talk about the employment reports. Do at the end of the week. Obviously it's a market holiday on Thursday here in the States when we come back from July fourth, and we're going to jump right into it with non farm payrolls for June. Are you expecting a little bit of moderation.

Let's talk about the employment reports. Do at the end of the week. Obviously it's a market holiday on Thursday here in the States when we come back from July fourth, and we're going to jump right into it with non farm payrolls for June. Are you expecting a little bit of moderation.

I'm expecting a hair more softness on the household survey, So I do think the unemployment rate more likely than not, would rise to four point one percent from four percent in May. I think the payrolls will probably still see a solid report. So we've really had a lot of split personality type jobs reports in the last couple of months, with the unemployment rate rising, a mid solid payrolls growth, and I think we'll still see that mixed message in this latest report, but most likely we'll also see wage growth moderating.

I'm expecting a hair more softness on the household survey, So I do think the unemployment rate more likely than not, would rise to four point one percent from four percent in May. I think the payrolls will probably still see a solid report. So we've really had a lot of split personality type jobs reports in the last couple of months, with the unemployment rate rising, a mid solid payrolls growth, and I think we'll still see that mixed message in this latest report, but most likely we'll also see wage growth moderating.

Speaking of mixed messages, it seems it's very very difficult to get one take on things. For instance, we just got some date out of Japan. You had some slight positivity there with the large manufacturer Tongkon thirteen.

Speaking of mixed messages, it seems it's very very difficult to get one take on things. For instance, we just got some date out of Japan. You had some slight positivity there with the large manufacturer Tongkon thirteen.

The estimate eleven.

The estimate eleven.

But first quarter and this is ancient information admittedly, but first quarter GDP was revised down pretty sharply to minus two point nine percent. How do you read Japan at the moment?

But first quarter and this is ancient information admittedly, but first quarter GDP was revised down pretty sharply to minus two point nine percent. How do you read Japan at the moment?

I think of Japan as a slow growing economy, advanced economy that's being affected by the lagged effects of high interest rates around the world and the headwinds to manufacturing from that. Nice to see the latest survey in more positive territory. I think there's the upside case for Japanese manufacturing for global manufacturing this year is that we've been in a period of inventories de stocking in the goods sector around the world, and maybe we're going to come to the end of that soon and we'll see a little bit stronger demand for inventories and business to business sales because of that.

I think of Japan as a slow growing economy, advanced economy that's being affected by the lagged effects of high interest rates around the world and the headwinds to manufacturing from that. Nice to see the latest survey in more positive territory. I think there's the upside case for Japanese manufacturing for global manufacturing this year is that we've been in a period of inventories de stocking in the goods sector around the world, and maybe we're going to come to the end of that soon and we'll see a little bit stronger demand for inventories and business to business sales because of that.

So the swaps market bill right now is projecting maybe we get too rate cuts between now and the end of the year. Certainly twenty five basis points at least has been fully priced in by November, maybe December as a toss up. I don't know, how are you seeing the path for rate cuts between now and the end of twenty four.

So the swaps market bill right now is projecting maybe we get too rate cuts between now and the end of the year. Certainly twenty five basis points at least has been fully priced in by November, maybe December as a toss up. I don't know, how are you seeing the path for rate cuts between now and the end of twenty four.

Market pricing is reasonable. I think that there's a stronger likelihood of a second rate cut by the end of this year, and that's because I think we have seen a more substantial slowdown in the economy than, for example, you'll get by looking at GDP now still has real GDP in the second quarter above two percent. I think probably we'll see a second quarter GDP print of a bit shy of two percent. So with that, you know, businesses don't have the same pricing power that they did when the economy was going gangbusters in the second half of last year, and I think that's going to lead to more discounting announcements and help to slow inflation.

Market pricing is reasonable. I think that there's a stronger likelihood of a second rate cut by the end of this year, and that's because I think we have seen a more substantial slowdown in the economy than, for example, you'll get by looking at GDP now still has real GDP in the second quarter above two percent. I think probably we'll see a second quarter GDP print of a bit shy of two percent. So with that, you know, businesses don't have the same pricing power that they did when the economy was going gangbusters in the second half of last year, and I think that's going to lead to more discounting announcements and help to slow inflation.

All right, Bill, thanks very much for joining us. Spill Adams, chief economist ATQ America Bank to talk about markets, who are joined by Meredith Whitney, founder and CEO at Meredith Whitney Advisory Group. Meredith, thank you for joining us here. So we had some favorable economic data out on Friday with spending and income and the PCEE, yet it was not a risk on session, particularly for markets.

All right, Bill, thanks very much for joining us. Spill Adams, chief economist ATQ America Bank to talk about markets, who are joined by Meredith Whitney, founder and CEO at Meredith Whitney Advisory Group. Meredith, thank you for joining us here. So we had some favorable economic data out on Friday with spending and income and the PCEE, yet it was not a risk on session, particularly for markets.

How are you reading the room at the moment?

How are you reading the room at the moment?

I think it's well.

I think it's well.

First of all, you know, a lot of the outperformance in the market, as you have well covered, is very concentrated. So you know, today I was looking at doing a second quarter audit of the baskets that I look at, and you've got great names that have underperformed and.

First of all, you know, a lot of the outperformance in the market, as you have well covered, is very concentrated. So you know, today I was looking at doing a second quarter audit of the baskets that I look at, and you've got great names that have underperformed and.

For no fundamental reason.

For no fundamental reason.

So I think that, you know, you can have good numbers come out or bad numbers come out. I wouldn't say that the consumer spend numbers are you know, barn you know barn Burner. They're they're relatively softer than they were a year ago, and that's largely because you know, we're seeing that the effects of cumulative inflation, specifically for homeowners, and that's sixty five percent of US households. So I think you're you're seeing you know some you know, most consumers pull back and the smaller portion of consumers caring the economy.

So I think that, you know, you can have good numbers come out or bad numbers come out. I wouldn't say that the consumer spend numbers are you know, barn you know barn Burner. They're they're relatively softer than they were a year ago, and that's largely because you know, we're seeing that the effects of cumulative inflation, specifically for homeowners, and that's sixty five percent of US households. So I think you're you're seeing you know some you know, most consumers pull back and the smaller portion of consumers caring the economy.

Does the market have it right? If we're predicting two ratecouts between now and the end of the year. Is that the way you see things?

Does the market have it right? If we're predicting two ratecouts between now and the end of the year. Is that the way you see things?

I don't.

I don't.

So I came into the year being very skeptical. I thought the biggest risk of the market was the fact that the FED would not cut rates by h six times, and I still think that you have so much fiscal spending that's powering the economy that I think you're going to it's going to be tough. I think you're probably we may get one, but I don't think we're going to get two.

So I came into the year being very skeptical. I thought the biggest risk of the market was the fact that the FED would not cut rates by h six times, and I still think that you have so much fiscal spending that's powering the economy that I think you're going to it's going to be tough. I think you're probably we may get one, but I don't think we're going to get two.

So one interesting aspect of the data was that you had personal income a little higher than was expected and personal spending a little lower. Now, you know, the consumer is seventy percent of the economy, so we don't really want that number low. But in a time when you're trying to fight inflation, is sort of matched up as a pretty decent result. But you think that it's a little too heavily weighted with well off people, Is that right?

So one interesting aspect of the data was that you had personal income a little higher than was expected and personal spending a little lower. Now, you know, the consumer is seventy percent of the economy, so we don't really want that number low. But in a time when you're trying to fight inflation, is sort of matched up as a pretty decent result. But you think that it's a little too heavily weighted with well off people, Is that right?

Well, I think you have.

Well, I think you have.

So you have well off people, but then you also have what I call the avocado toast generation, and it's the younger millennials and Gen Z and they're not burdened by owning a home. Now you could say it's tough for them to get to the housing market, but owning a home has become increasingly expensive, and I think it's actually going to drive a lot of homeowners to be forced to sell.

So you have well off people, but then you also have what I call the avocado toast generation, and it's the younger millennials and Gen Z and they're not burdened by owning a home. Now you could say it's tough for them to get to the housing market, but owning a home has become increasingly expensive, and I think it's actually going to drive a lot of homeowners to be forced to sell.

Because you had homeowners.

Because you had homeowners.

Insurance on average up in the teams each year, and certainly for the past three years it's up over ten percent, over eleven percent. This is nationally, it's been much higher in many of the states. Property taxes over the past three years are up over twenty six percent. Obviously varies state to state, but these are things that you just can't get around. So the average cost of housing for most people have gone up much faster than inflation, and that's what you see that is really the sticking point with consumer spend. So older. The vast majority of homeowners are over fifty, and in fact very they're well under ten percent of homes are owned by people under forty, So you see younger people really driving the leisure spend and the experiential spend. And the fastest category of growth within leisure spend is actually online gaming and sports bedding. So the underlying trends or what's moving the economy are probably not good long term, but it's keeping spending flowing. And the very high end that has been the biggest beneficiary of low interest rates for the longest time are also still spending and not.

Insurance on average up in the teams each year, and certainly for the past three years it's up over ten percent, over eleven percent. This is nationally, it's been much higher in many of the states. Property taxes over the past three years are up over twenty six percent. Obviously varies state to state, but these are things that you just can't get around. So the average cost of housing for most people have gone up much faster than inflation, and that's what you see that is really the sticking point with consumer spend. So older. The vast majority of homeowners are over fifty, and in fact very they're well under ten percent of homes are owned by people under forty, So you see younger people really driving the leisure spend and the experiential spend. And the fastest category of growth within leisure spend is actually online gaming and sports bedding. So the underlying trends or what's moving the economy are probably not good long term, but it's keeping spending flowing. And the very high end that has been the biggest beneficiary of low interest rates for the longest time are also still spending and not.

Having a problem.

Having a problem.

I'm wondering of.

I'm wondering of.

Americans that are really coming up against it.

Americans that are really coming up against it.

I'm wondering how those avocado toasters will influence the election in November. What is your sense in where things stand politically right now in the States, and how might that affect the market going forward.

I'm wondering how those avocado toasters will influence the election in November. What is your sense in where things stand politically right now in the States, and how might that affect the market going forward.

Well, it's very interesting.

Well, it's very interesting.

When I was in Asia with you in March, you asked me such like the best question, which was what's your biggest takeaway from your meetings with investors? And I said that the every investor that I spoke to was preparing for Trump to win, and you know, obviously having no idea about how really shocking and sad the debates were Thursday night. I think that I don't think that the youth is engaged with Biden.

When I was in Asia with you in March, you asked me such like the best question, which was what's your biggest takeaway from your meetings with investors? And I said that the every investor that I spoke to was preparing for Trump to win, and you know, obviously having no idea about how really shocking and sad the debates were Thursday night. I think that I don't think that the youth is engaged with Biden.

I don't think that the youth.

I don't think that the youth.

May be engaged with voting and may set this election out. You've got to get and that's the scariest thing for me about this election, that a smaller percentage of Americans can determine can determine who becomes our stay as president or becomes president.

May be engaged with voting and may set this election out. You've got to get and that's the scariest thing for me about this election, that a smaller percentage of Americans can determine can determine who becomes our stay as president or becomes president.

So I think we got you.

So I think we got you.

I was just gonna say, we got some time to get to that. I wanted to squeeze in a question about the banking sector because you're you're a wizard of that. So away from the avocado toast express to the stress test express. The stress test was tough. I mean, these banks did very well in passing. It is the banking community now in really good shape.

I was just gonna say, we got some time to get to that. I wanted to squeeze in a question about the banking sector because you're you're a wizard of that. So away from the avocado toast express to the stress test express. The stress test was tough. I mean, these banks did very well in passing. It is the banking community now in really good shape.

It depends on which banks you're looking at. So the banks that you know, the over the banks that are over two hundred and fifty billion in assets, the original systemically important financial institutions, they're great, right, So they've de risked, they're sitting on a lot of capital. They've been in for you know, most banks, well at least JP Morgan and Bank of America, when those banks have been cus you know, really right sizing their businesses for the past fifteen years. And I think Wells Fargo is has been in the penalty the regulatory penalty box and is doing a lot of the right things to get itself back on track. And City has a you know, restructuring plan, and you know, godspeed to them. But the smaller banks, I think are are still in a precarious position and really need to consolidate.

It depends on which banks you're looking at. So the banks that you know, the over the banks that are over two hundred and fifty billion in assets, the original systemically important financial institutions, they're great, right, So they've de risked, they're sitting on a lot of capital. They've been in for you know, most banks, well at least JP Morgan and Bank of America, when those banks have been cus you know, really right sizing their businesses for the past fifteen years. And I think Wells Fargo is has been in the penalty the regulatory penalty box and is doing a lot of the right things to get itself back on track. And City has a you know, restructuring plan, and you know, godspeed to them. But the smaller banks, I think are are still in a precarious position and really need to consolidate.

So these are the banks under one hundred billion.

So these are the banks under one hundred billion.

And you know what's been frustrating for me is that that would be the best thing for the system. And those are the banks that are have have you know, commercial lending exposure, and are in precarious positions and don't have economies of scale and need to spend a ton on cybersecurity and technology, and they really need UH to consolidate.

And you know what's been frustrating for me is that that would be the best thing for the system. And those are the banks that are have have you know, commercial lending exposure, and are in precarious positions and don't have economies of scale and need to spend a ton on cybersecurity and technology, and they really need UH to consolidate.

I think the d o JS.

I think the d o JS.

And UH and the fd I SEE have been against consolidation.

And UH and the fd I SEE have been against consolidation.

Maybe the fd I see UH it gets better.

Maybe the fd I see UH it gets better.

Elizabeth Warren has been against consolidation. We really need this for the better.

Elizabeth Warren has been against consolidation. We really need this for the better.

Men of the Meredith very quickly. It's an interesting point. Is that going to be more peer to peer kind of lateral consolidation or cannibalization where some of the bigger players come in and kind of digest the smaller ones very quickly.

Men of the Meredith very quickly. It's an interesting point. Is that going to be more peer to peer kind of lateral consolidation or cannibalization where some of the bigger players come in and kind of digest the smaller ones very quickly.

Well, well, look, the big banks have been effectively acquiring the smaller banks businesses just by stealing market share. When depositors get scared, they go to the big bank. So it's been happening, but you need to have it happen on a more institutionally sponsored basis through smart consolidation of the smaller players.

Well, well, look, the big banks have been effectively acquiring the smaller banks businesses just by stealing market share. When depositors get scared, they go to the big bank. So it's been happening, but you need to have it happen on a more institutionally sponsored basis through smart consolidation of the smaller players.

Meredith, thanks so much for joining us here on a Sunday early Monday morning in Asia. We appreciated Meredith Whitney, founder and CEO at Meredith Whitney Advisory Group.

Meredith, thanks so much for joining us here on a Sunday early Monday morning in Asia. We appreciated Meredith Whitney, founder and CEO at Meredith Whitney Advisory Group.

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 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 else you listen and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.