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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. Let's get to our guest, Todd Walsh's with us. He is the CEO of Alpha Cubed Investments. Todd is normally based in California. Day today we find him in New York City. Todd, good of you to make time to chat with us. I think we can agree that seemed like a lot of panic selling at the end early part of last week. Things have settled down. What do you make of the gyrations that we saw. Was this all about an unwind of the end carrier? Is there something else happening here?

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. Let's get to our guest, Todd Walsh's with us. He is the CEO of Alpha Cubed Investments. Todd is normally based in California. Day today we find him in New York City. Todd, good of you to make time to chat with us. I think we can agree that seemed like a lot of panic selling at the end early part of last week. Things have settled down. What do you make of the gyrations that we saw. Was this all about an unwind of the end carrier? Is there something else happening here?

Well, hey, Doug, thanks for having me on. And of course, trees don't grow to the sky.

Well, hey, Doug, thanks for having me on. And of course, trees don't grow to the sky.

Right.

Right.

We've had eighteen months of a toward increase in the AI ecosystem tech sector stocks, so you know we've all been expecting a little bit of a correction. We got it. We've been looking at questions about, you know, where is the ROI going to be coming from? On all the capex that's going on out there, there's an element of this is kind of normal, but you know, when it happens, it doesn't feel normal. And of course we have the CPI print coming out, we think we're going to see a little bit more volatility at it. It kind of feels like we're at the doctor's office in the waiting room right now.

We've had eighteen months of a toward increase in the AI ecosystem tech sector stocks, so you know we've all been expecting a little bit of a correction. We got it. We've been looking at questions about, you know, where is the ROI going to be coming from? On all the capex that's going on out there, there's an element of this is kind of normal, but you know, when it happens, it doesn't feel normal. And of course we have the CPI print coming out, we think we're going to see a little bit more volatility at it. It kind of feels like we're at the doctor's office in the waiting room right now.

Okay, So if you're expecting some volatility tied to that report on consumer prices, is it possible that we don't get a market friendly report, which is to say, something that confirms that inflation is cooling at the same rate that we have been expecting.

Okay, So if you're expecting some volatility tied to that report on consumer prices, is it possible that we don't get a market friendly report, which is to say, something that confirms that inflation is cooling at the same rate that we have been expecting.

Well, don't say possible. Anything's possible, right. The biggest issues if we stop and really think about what's going on, we kind of need to thread the needle a little bit here. If we get a strong CPI report, meaning you know, it's not coming down, cpis up, rate cuts could be off the table, and we know that's bad news for the market. But if we get a weak CPI report and we start leaning more towards an actual recession that might even be worse for the markets. We did a little study of initial rate cuts when the FED starts cutting rates. Since nineteen eighty three, the market's up about twenty one percent in the first year after the first rate cut, but that's only if there's no recession after the first recession rate cut. When there is a recession two thousand and one, two thousand and eight, the market was down in an average of fifteen percent. So we are looking for what's been happening up to this point, which is marginal slowing, marginal acceleration in the economy with some mixed positive economic data to kind of back that up. And what we want to see again is marginal decrease in that inflation number. We kind of need the right kind of inflation number to get where we need to get here. We think we're going to have it.

Well, don't say possible. Anything's possible, right. The biggest issues if we stop and really think about what's going on, we kind of need to thread the needle a little bit here. If we get a strong CPI report, meaning you know, it's not coming down, cpis up, rate cuts could be off the table, and we know that's bad news for the market. But if we get a weak CPI report and we start leaning more towards an actual recession that might even be worse for the markets. We did a little study of initial rate cuts when the FED starts cutting rates. Since nineteen eighty three, the market's up about twenty one percent in the first year after the first rate cut, but that's only if there's no recession after the first recession rate cut. When there is a recession two thousand and one, two thousand and eight, the market was down in an average of fifteen percent. So we are looking for what's been happening up to this point, which is marginal slowing, marginal acceleration in the economy with some mixed positive economic data to kind of back that up. And what we want to see again is marginal decrease in that inflation number. We kind of need the right kind of inflation number to get where we need to get here. We think we're going to have it.

So I hear what you're saying when it comes to kind of an one of me that shifting into lower gear. All we have to do is remember the market's response to that relatively disappointing employment report for the month of July, and I hear what you're saying too about the lack of ROI when it comes to AI. But I'm wondering whether or not what we have viewed principally in the market up until this point has been confined to let's call it a market event rather than a macro economic event. To go back to the question that I asked at the top of the conversation about the unwind of the carry trade in yen and whether or not this revealed a lot of leverage and maybe a big part of that leverage was tied to your trade on AI.

So I hear what you're saying when it comes to kind of an one of me that shifting into lower gear. All we have to do is remember the market's response to that relatively disappointing employment report for the month of July, and I hear what you're saying too about the lack of ROI when it comes to AI. But I'm wondering whether or not what we have viewed principally in the market up until this point has been confined to let's call it a market event rather than a macro economic event. To go back to the question that I asked at the top of the conversation about the unwind of the carry trade in yen and whether or not this revealed a lot of leverage and maybe a big part of that leverage was tied to your trade on AI.

You know that's possible. We still aren't out of the woods yet, and one of the possible catalysts for volatility does revolve around that carry trade online. Are there unknown victims out there? Is there leverage that we don't know about. But underneath the surface, the recovery that we saw last week was you know, enjoyable. But the daily technicals, relative strength, amount of money flows, a lot of the daily technicals we look at, they are all still in the negative and they haven't crossed into the positive yet. And on top of the CPI report, you know, Iran seems intent on retaliating against Israel, and that's a big unknown. We've got a lot of catalysts for volatility. Sell offs are a lot like earthquakes, right we want to watch for aftershocks, and let's not be too hasty about, you know, going right in and buying. Because the guys have cleared, we think we've got a little more volatility ahead most likely.

You know that's possible. We still aren't out of the woods yet, and one of the possible catalysts for volatility does revolve around that carry trade online. Are there unknown victims out there? Is there leverage that we don't know about. But underneath the surface, the recovery that we saw last week was you know, enjoyable. But the daily technicals, relative strength, amount of money flows, a lot of the daily technicals we look at, they are all still in the negative and they haven't crossed into the positive yet. And on top of the CPI report, you know, Iran seems intent on retaliating against Israel, and that's a big unknown. We've got a lot of catalysts for volatility. Sell offs are a lot like earthquakes, right we want to watch for aftershocks, and let's not be too hasty about, you know, going right in and buying. Because the guys have cleared, we think we've got a little more volatility ahead most likely.

We saw a big move in crude oil in New York today. We were up more than four percent in the regular session. A lot of this is the market really braced for Iran's response to that assassination that took place in Tehran of the Hummas leader. Talk to me broadly about the commodities trade right now? Do you want to be exposed to commodities if you're assuming a down shift in global growth?

We saw a big move in crude oil in New York today. We were up more than four percent in the regular session. A lot of this is the market really braced for Iran's response to that assassination that took place in Tehran of the Hummas leader. Talk to me broadly about the commodities trade right now? Do you want to be exposed to commodities if you're assuming a down shift in global growth?

You've got a short term catalyst with what's going on geopolitically, But we don't think commodities are the place to be. In fact, we think the FED is going to achieve their desire to cut rates. When they pivoted back in November of last year, the value dividend trade caught fire, and for the first time in about two or three years, that trade that had been left for dead has actually returned almost the same amount since that November pivot. As we've seen in the white hot Nasdaq one hundred they're both from that date up plus or minus about twenty five percent. And you know what, Doug, I don't think most people know that. And now if the FED moves to a more dubbish stance and starts cutting rates, we might have the wind at the back of that trade for you know, a year or two as the Fed tries to achieve their dot plot goal of getting you know, rates down to potentially two and a half percent over the next two or three years. So we like the value. We like dividend trade. The dividend trade right here.

You've got a short term catalyst with what's going on geopolitically, But we don't think commodities are the place to be. In fact, we think the FED is going to achieve their desire to cut rates. When they pivoted back in November of last year, the value dividend trade caught fire, and for the first time in about two or three years, that trade that had been left for dead has actually returned almost the same amount since that November pivot. As we've seen in the white hot Nasdaq one hundred they're both from that date up plus or minus about twenty five percent. And you know what, Doug, I don't think most people know that. And now if the FED moves to a more dubbish stance and starts cutting rates, we might have the wind at the back of that trade for you know, a year or two as the Fed tries to achieve their dot plot goal of getting you know, rates down to potentially two and a half percent over the next two or three years. So we like the value. We like dividend trade. The dividend trade right here.

You know, as I'm listening to I'm looking at the bond market and whether wondering whether there's opportunity there as well.

You know, as I'm listening to I'm looking at the bond market and whether wondering whether there's opportunity there as well.

There may be some short term opportunity there. In general, though we think it's going to be marginal. The keyword again is marginal on the on the interest right front. We don't think rates are going to come crashing down. We think the Fed's going to achieve its goal and marginally bring down rates. You know, the FED Fund's futures. I think last week we're looking at about one hundred percent expectation for a fifty basis point rate cut. Where are they at today? Now we're fifty to fifty. I think as we go through as investors, we need to think, catch our breath and think things through. Our thesis this year was hold tack, but look for volatility. Let's not pay too much, Let's slow down a little bit. Trees don't grow to the scot The value dividend trade has the wind at it's back, but we don't think it's going to be an aggressive move. We think it's something we can participate in marginally. And the same old's true for the bond market. Bond market's been inverted depending on which timeframes you're looking at, for a very long time. We think the Fed is going to achieve it's cool bringing rates down, and that'll happen all the way across the curve. But the farther out we go, the more marginal it's going to be. So the answer is yes, but again marginally.

There may be some short term opportunity there. In general, though we think it's going to be marginal. The keyword again is marginal on the on the interest right front. We don't think rates are going to come crashing down. We think the Fed's going to achieve its goal and marginally bring down rates. You know, the FED Fund's futures. I think last week we're looking at about one hundred percent expectation for a fifty basis point rate cut. Where are they at today? Now we're fifty to fifty. I think as we go through as investors, we need to think, catch our breath and think things through. Our thesis this year was hold tack, but look for volatility. Let's not pay too much, Let's slow down a little bit. Trees don't grow to the scot The value dividend trade has the wind at it's back, but we don't think it's going to be an aggressive move. We think it's something we can participate in marginally. And the same old's true for the bond market. Bond market's been inverted depending on which timeframes you're looking at, for a very long time. We think the Fed is going to achieve it's cool bringing rates down, and that'll happen all the way across the curve. But the farther out we go, the more marginal it's going to be. So the answer is yes, but again marginally.

So how do you know when to enter any market if there is a lot of volatility? I mean, and you expect, let's say, whether it's stocks or bonds, you expect those assets to trade in a certain range. How do you know the entry point? I know we're talking about timing here, and most people don't like to discuss timing a market. But that's essentially what you're describing, isn't it.

So how do you know when to enter any market if there is a lot of volatility? I mean, and you expect, let's say, whether it's stocks or bonds, you expect those assets to trade in a certain range. How do you know the entry point? I know we're talking about timing here, and most people don't like to discuss timing a market. But that's essentially what you're describing, isn't it.

Yeah, I love that question. It's the nine trillion dollar question out there right now on the AI ecosystem, the tech and AX. Everybody wants to know when do I get in? How do I get in? Most investors, let's face it, in a lot of professionals kind of missed out on the bulk of that trade. The only way to enter that trade is dollar cost average using volatility, just incrementally move in. But we think of the market has almost two big chunks. There's the AI ecosystem tech trade, which the valuations got astronomical. We're seeing some consolidation there, and we can slowly dollar cost average into some of those areas for people coming in with new money. The rest of the market the other four hundred and ninety three stocks, which I call the forgotten four ninety three. There's value in that value trade, so we want to enter that trade sooner rather than later.

Yeah, I love that question. It's the nine trillion dollar question out there right now on the AI ecosystem, the tech and AX. Everybody wants to know when do I get in? How do I get in? Most investors, let's face it, in a lot of professionals kind of missed out on the bulk of that trade. The only way to enter that trade is dollar cost average using volatility, just incrementally move in. But we think of the market has almost two big chunks. There's the AI ecosystem tech trade, which the valuations got astronomical. We're seeing some consolidation there, and we can slowly dollar cost average into some of those areas for people coming in with new money. The rest of the market the other four hundred and ninety three stocks, which I call the forgotten four ninety three. There's value in that value trade, so we want to enter that trade sooner rather than later.

Todd will leave it there, always a pleasure. Thanks for making time to chat with us. Todd Walsh, there, CEO of Alpha Cubed Investments joining us from New York. Well, Alphabet's Google is holding a major event tomorrow for a tech hardware launch. We have a preview from Bloomberg's Charlie Pellett.

Todd will leave it there, always a pleasure. Thanks for making time to chat with us. Todd Walsh, there, CEO of Alpha Cubed Investments joining us from New York. Well, Alphabet's Google is holding a major event tomorrow for a tech hardware launch. We have a preview from Bloomberg's Charlie Pellett.

Google is trying to outshine Apple's annual iPhone launch and is letting longtime executive Rick Ostrolo takes out her stage. He's the former president of Motorola who joined Google in twenty sixteen. He will helm the first major product launch after the company this year, unified under his leadership the teams developing hardware and the Android operating system. In a sign of a more aggressive push into consumer devices, Google moved up its annual flagship Pixel smartphone launched to August from October, preempting the next Apple iPhone debut in New York. Charlie Powlett's Bloomberg.

Google is trying to outshine Apple's annual iPhone launch and is letting longtime executive Rick Ostrolo takes out her stage. He's the former president of Motorola who joined Google in twenty sixteen. He will helm the first major product launch after the company this year, unified under his leadership the teams developing hardware and the Android operating system. In a sign of a more aggressive push into consumer devices, Google moved up its annual flagship Pixel smartphone launched to August from October, preempting the next Apple iPhone debut in New York. Charlie Powlett's Bloomberg.

Radio, Well, let's take a closer look at the Google Pixels story with our own Bloomberg Tech editor of Vlad Savov joins us from our studios in Hong Kong Flat. It's always a pleasure. Are we going to be overwhelmed or underwhelmed tomorrow?

Radio, Well, let's take a closer look at the Google Pixels story with our own Bloomberg Tech editor of Vlad Savov joins us from our studios in Hong Kong Flat. It's always a pleasure. Are we going to be overwhelmed or underwhelmed tomorrow?

What do you think?

What do you think?

I think both extremes. There's always a shade of gray with these things. I do believe that one of the interesting things with Google this year is how far ahead they're going to be in terms of their own design and cameras technology and so on. That's kind of being gone under the radar. I do feel like the company is very confident about the how where itself and although these things have kind of become commoditized, it does have a leadership as far as camera software goes. And if the thing that happens, which a lot of people are anticipating, is that Google is going to increase sales, I feel like there'll be much greater awareness of all the things, all the strengths of the Pixel line.

I think both extremes. There's always a shade of gray with these things. I do believe that one of the interesting things with Google this year is how far ahead they're going to be in terms of their own design and cameras technology and so on. That's kind of being gone under the radar. I do feel like the company is very confident about the how where itself and although these things have kind of become commoditized, it does have a leadership as far as camera software goes. And if the thing that happens, which a lot of people are anticipating, is that Google is going to increase sales, I feel like there'll be much greater awareness of all the things, all the strengths of the Pixel line.

To date, on top of all the AI stuff.

To date, on top of all the AI stuff.

So immediately after the event, I guarantee you you will not be overwhelmed, but I do feel like a lot of people will see some of these strengths that just the world hasn't known about with the Pixel line to date.

So immediately after the event, I guarantee you you will not be overwhelmed, but I do feel like a lot of people will see some of these strengths that just the world hasn't known about with the Pixel line to date.

Do you think there's a change inside Alphabet when it comes to the smartphone, I mean, developing your own technology On the hardware side, it seemed like that they were maybe a little bit more willing to allow some of the other companies like Samsung. I'm thinking of primarily to take the lead on that front. I mean, I know that the Pixel story has been out there for a while, but it never felt as though the company was being super aggressive. Here is that beginning to change absolutely.

Do you think there's a change inside Alphabet when it comes to the smartphone, I mean, developing your own technology On the hardware side, it seemed like that they were maybe a little bit more willing to allow some of the other companies like Samsung. I'm thinking of primarily to take the lead on that front. I mean, I know that the Pixel story has been out there for a while, but it never felt as though the company was being super aggressive. Here is that beginning to change absolutely.

I mean, it's such a major change when you think about it.

I mean, it's such a major change when you think about it.

I was just thinking.

I was just thinking.

Google had an event here in Hong Kong launching one of its smartphones in twenty eleven on its own brand. So, like I say, it's been going for a very long time. But when you launch your phone in October, what you're saying is everyone who wanted an iPhone already has a ninth phone, so you're giving up on that audience. Samsung refreshes his devices early in the year and then around this time July August, so you're kind of the afterthought for a whole bunch of people. Coming in the middle of August, coming a month ahead of the iPhone, says we are going to compete directly against Apple. We're going to compete directly against Samsung too. Even though Google rica Osterolo we mentioned he's the leader now, he went immediately as soon as he got the new job to talk to Samsung to signal that the partnership and the collaboration with the two companies is as strong as ever. But the signal is the release date.

Google had an event here in Hong Kong launching one of its smartphones in twenty eleven on its own brand. So, like I say, it's been going for a very long time. But when you launch your phone in October, what you're saying is everyone who wanted an iPhone already has a ninth phone, so you're giving up on that audience. Samsung refreshes his devices early in the year and then around this time July August, so you're kind of the afterthought for a whole bunch of people. Coming in the middle of August, coming a month ahead of the iPhone, says we are going to compete directly against Apple. We're going to compete directly against Samsung too. Even though Google rica Osterolo we mentioned he's the leader now, he went immediately as soon as he got the new job to talk to Samsung to signal that the partnership and the collaboration with the two companies is as strong as ever. But the signal is the release date.

You know.

You know.

The elephant in the room I think we can agree is artificial intelligence, right when it comes to the handset. I mean, we know that that's what Apple is trying to build in in terms of hype for the launch of the iPhone sixteen. Do you think we're going to get kind of a sense of that from Google tomorrow where the company is going in terms of the smartphone being a device where artificial intelligence is kind of baked into the cake.

The elephant in the room I think we can agree is artificial intelligence, right when it comes to the handset. I mean, we know that that's what Apple is trying to build in in terms of hype for the launch of the iPhone sixteen. Do you think we're going to get kind of a sense of that from Google tomorrow where the company is going in terms of the smartphone being a device where artificial intelligence is kind of baked into the cake.

Oh absolutely.

Oh absolutely.

And in order teasers that Google has done for this event, it was Pixel meets AI, which is a fun thing to say because Google is one of the companies that has been putting AI into smartphones for years and years now. Its own camera software is all about AI and machine learning. But you have to now put it front of mind for everybody. Something has been doing the exact same thing. They talk about Galaxy AI every time they talk about their products. Google likewise Apple with Apple Intelligence. That's going to be the theme at least for the next year or two. Everyone is going to turn AI as the selling point for devices, and the devices we're talking about smartphones and laptops.

And in order teasers that Google has done for this event, it was Pixel meets AI, which is a fun thing to say because Google is one of the companies that has been putting AI into smartphones for years and years now. Its own camera software is all about AI and machine learning. But you have to now put it front of mind for everybody. Something has been doing the exact same thing. They talk about Galaxy AI every time they talk about their products. Google likewise Apple with Apple Intelligence. That's going to be the theme at least for the next year or two. Everyone is going to turn AI as the selling point for devices, and the devices we're talking about smartphones and laptops.

Most people already have one.

Most people already have one.

So each company in the industry now sees AI as the big selling point to get us all to upgrade those devices.

So each company in the industry now sees AI as the big selling point to get us all to upgrade those devices.

Isn't there The risk though, when you jump in whole hog like this so to speak, that as the check technology changes, that you have to do a major kind of re engineering or kind of a major tweak to a device like a smartphone that needs to kind of incorporate a lot of this AI technology, so that the first generation maybe is going to be kind of radically different from the next generation.

Isn't there The risk though, when you jump in whole hog like this so to speak, that as the check technology changes, that you have to do a major kind of re engineering or kind of a major tweak to a device like a smartphone that needs to kind of incorporate a lot of this AI technology, so that the first generation maybe is going to be kind of radically different from the next generation.

Yes, And as far as the companies that concerned, that's great news. Stuff great next year as.

Yes, And as far as the companies that concerned, that's great news. Stuff great next year as.

Well, right, right, So if it's a driver of sales planned obs lescence, I think that's what they call it, right. What are some of the things that you're looking out for in particular.

Well, right, right, So if it's a driver of sales planned obs lescence, I think that's what they call it, right. What are some of the things that you're looking out for in particular.

Well, it really is this whole integration of hardware and software, and I would actually say the ecosystem play again comes to the surface is a very important thing. Samsung set out is still much in the same way that Apple did, and we kind of expect Google to do the same thing. Google already has its Pixel watch. It already has its own in house design process. Going back to the first thing I mentioned, Google has been putting all.

Well, it really is this whole integration of hardware and software, and I would actually say the ecosystem play again comes to the surface is a very important thing. Samsung set out is still much in the same way that Apple did, and we kind of expect Google to do the same thing. Google already has its Pixel watch. It already has its own in house design process. Going back to the first thing I mentioned, Google has been putting all.

The pieces together.

The pieces together.

It's just most people don't know about these picks of phones and the whole lineup. So in this event that's coming up, we're probably going to get another watch, We'll probably going to get several smartphones, and it's the ecosystem of devices is the way that they work together. Also, don't forget, under Rick Osterlo's leadership, you have Google Nests, which are the home devices, home cameras, such things, thermostats. You have a whole bunch of other home devices, personal devices, all the Internet software. If Google makes all these things work together as seamlessly as it hopes, there will be a lot of people who can be swung to the pixel side of things.

It's just most people don't know about these picks of phones and the whole lineup. So in this event that's coming up, we're probably going to get another watch, We'll probably going to get several smartphones, and it's the ecosystem of devices is the way that they work together. Also, don't forget, under Rick Osterlo's leadership, you have Google Nests, which are the home devices, home cameras, such things, thermostats. You have a whole bunch of other home devices, personal devices, all the Internet software. If Google makes all these things work together as seamlessly as it hopes, there will be a lot of people who can be swung to the pixel side of things.

Is this a device that will have an opportunity in the China market?

Is this a device that will have an opportunity in the China market?

You think zero? Google services are not there?

You think zero? Google services are not there?

The Google Play Store, which is a real big selling point for Google because that's where you get all your international apps, it doesn't play there. And the Chinese smartphone manufacturers, let's give them their own new credit. They are right up there in terms of cameras, technology. They have their own app stores, they have we chats, and an entire ecosystem that Google has no presence in. So unfortunately, Google, the world's big smartphone market where Apple is a big player, is out of bounds.

The Google Play Store, which is a real big selling point for Google because that's where you get all your international apps, it doesn't play there. And the Chinese smartphone manufacturers, let's give them their own new credit. They are right up there in terms of cameras, technology. They have their own app stores, they have we chats, and an entire ecosystem that Google has no presence in. So unfortunately, Google, the world's big smartphone market where Apple is a big player, is out of bounds.

Do we know anything about the part suppliers here and where this device is being kind of created or manufactured.

Do we know anything about the part suppliers here and where this device is being kind of created or manufactured.

Well, Fox contends to be the company that Google has been worked has worked with in the past. It does it's manufacturing in Vietnam in Taiwan. Taiwan is actually plays host to Google's hardware engineering hub. We can remember that Google took over HTC smartphone design team. They took on a bunch of design and engineering people, so you can say Taiwan plays a really big role in developing all of this.

Well, Fox contends to be the company that Google has been worked has worked with in the past. It does it's manufacturing in Vietnam in Taiwan. Taiwan is actually plays host to Google's hardware engineering hub. We can remember that Google took over HTC smartphone design team. They took on a bunch of design and engineering people, so you can say Taiwan plays a really big role in developing all of this.

So very quickly vled what markets in Asia might Google kind of target for this new pixel phone.

So very quickly vled what markets in Asia might Google kind of target for this new pixel phone.

Japan absolutely, Japan has always been a really big market for Google. It has good relationships and one of the interesting things in Japan is that the Chinese players don't have that much of a presence, needed does Samsung, so it has the biggest opportunity there. It's a developed market, there's a lot of potential there, but.

Japan absolutely, Japan has always been a really big market for Google. It has good relationships and one of the interesting things in Japan is that the Chinese players don't have that much of a presence, needed does Samsung, so it has the biggest opportunity there. It's a developed market, there's a lot of potential there, but.

It's always a pleasure. Thanks for making time to chat with us on this launch tomorrow taking place for the new Google Epixel phone. Vlat's have off Bloomberg's Tech editor joining us from Hong Kong. So we know that the Democrats are rallying around Vice President Kamala Harris and her running mate Tim Walls. Walls, you may know, has had a long history with China. He taught English in China in nineteen eighty nine and nineteen ninety and since that time he's visited at least thirty times. Let's take a closer look now with Michael Sobolik. He is senior fellow at the American Foreign Policy Council. Michael, good of you to make time to chat with us about this story. Do you have a sense of how mister Walls's backstory regarding China may play out in this campaign.

It's always a pleasure. Thanks for making time to chat with us on this launch tomorrow taking place for the new Google Epixel phone. Vlat's have off Bloomberg's Tech editor joining us from Hong Kong. So we know that the Democrats are rallying around Vice President Kamala Harris and her running mate Tim Walls. Walls, you may know, has had a long history with China. He taught English in China in nineteen eighty nine and nineteen ninety and since that time he's visited at least thirty times. Let's take a closer look now with Michael Sobolik. He is senior fellow at the American Foreign Policy Council. Michael, good of you to make time to chat with us about this story. Do you have a sense of how mister Walls's backstory regarding China may play out in this campaign.

Yes.

Yes.

Governor Walls is really unique. He has so much personal experience living in China and working in China, far more than the average American politician and far more than the average vice presidential candidate. It could cut one of two ways. On the one hand, Governor Walls, by all accounts, has one of the strongest records on China human rights that we've seen from any member in the House of Representatives in recent memory. When he was a member of Congress, he got photos with the Dalilama. He and his wife literally got married on the anniversary of the Tenaman Square massacre on June fourth, So he has a strong record on being publicly vocal on the need for human rights in China. On the other hand, he's also an equally vocal proponent on engaging China and promoting exchanges between Washington and Beijing. And in this day and age where national security concerns tend to trump a lot of others, it's unclear how those two competing priorities would play.

Governor Walls is really unique. He has so much personal experience living in China and working in China, far more than the average American politician and far more than the average vice presidential candidate. It could cut one of two ways. On the one hand, Governor Walls, by all accounts, has one of the strongest records on China human rights that we've seen from any member in the House of Representatives in recent memory. When he was a member of Congress, he got photos with the Dalilama. He and his wife literally got married on the anniversary of the Tenaman Square massacre on June fourth, So he has a strong record on being publicly vocal on the need for human rights in China. On the other hand, he's also an equally vocal proponent on engaging China and promoting exchanges between Washington and Beijing. And in this day and age where national security concerns tend to trump a lot of others, it's unclear how those two competing priorities would play.

Out for it. You know, it's very interesting because there was an article written back in nineteen ninety after he returned from a teaching in China. I think it was the Star Herald maybe in Minneapolis, and he was quoted as saying, if the Chinese people had proper leadership, there are no limits on what they could accomplish. They are such kind, generous and capable people. They gave and gave and gave to me. That was nineteen ninety. Relationship between the US and China very very different these days, isn't not.

Out for it. You know, it's very interesting because there was an article written back in nineteen ninety after he returned from a teaching in China. I think it was the Star Herald maybe in Minneapolis, and he was quoted as saying, if the Chinese people had proper leadership, there are no limits on what they could accomplish. They are such kind, generous and capable people. They gave and gave and gave to me. That was nineteen ninety. Relationship between the US and China very very different these days, isn't not.

It is as different as it could possibly be. But I'll say this, Governor Wallas, like when he wrote those words so long ago, tapped into something that is still true today in twenty twenty four, which is, the Chinese people are not the enemies of the American people at all, nor should they be. I've been to China as well, and I've experienced that same hospitality and generosity that Walls experienced when he was there too, and I think many Americans would attest to the same thing. The problem for Washington policymakers is not the Chinese people, it's the Chinese Communist Party. And that distinction is quite meaningful, and I am gratified greatly that Governor Waltz recognizes that difference.

It is as different as it could possibly be. But I'll say this, Governor Wallas, like when he wrote those words so long ago, tapped into something that is still true today in twenty twenty four, which is, the Chinese people are not the enemies of the American people at all, nor should they be. I've been to China as well, and I've experienced that same hospitality and generosity that Walls experienced when he was there too, and I think many Americans would attest to the same thing. The problem for Washington policymakers is not the Chinese people, it's the Chinese Communist Party. And that distinction is quite meaningful, and I am gratified greatly that Governor Waltz recognizes that difference.

Yeah, that's an important distinction to make. But in terms of influencing policy, imagine a world where Kamala Harris is the next president. Is it the role of the vice president at all to kind of get involved with setting the agenda?

Yeah, that's an important distinction to make. But in terms of influencing policy, imagine a world where Kamala Harris is the next president. Is it the role of the vice president at all to kind of get involved with setting the agenda?

So that's going to vary from administration to administration. To be sure, We've had vice presidents like Dick Cheney, who are one of the most prominent presences in any room and played a major hand in national security. I think Vice President Joe Biden when he served Barack Obama, in some cases fit that bill as well. If Kamala Harris wins the presidency, that'll be her decision to make. But ultimately, if she wins, she is going to face this million dollar question in American foreign policy. Is China the Chinese Communist Party a potential competitor or an adversary? And Shijinping, the leader of China, is not really leaving America with much of a choice. We're going to have to choose one or the other.

So that's going to vary from administration to administration. To be sure, We've had vice presidents like Dick Cheney, who are one of the most prominent presences in any room and played a major hand in national security. I think Vice President Joe Biden when he served Barack Obama, in some cases fit that bill as well. If Kamala Harris wins the presidency, that'll be her decision to make. But ultimately, if she wins, she is going to face this million dollar question in American foreign policy. Is China the Chinese Communist Party a potential competitor or an adversary? And Shijinping, the leader of China, is not really leaving America with much of a choice. We're going to have to choose one or the other.

How do you.

How do you.

Imagine Beijing would react to this type of situation where you have someone in the administration who knows so much about China.

Imagine Beijing would react to this type of situation where you have someone in the administration who knows so much about China.

I think they'll probably try to play this much like they have attempted to work with President Joe Biden. So President Biden talks regularly about how many hours he spent meeting with Schijingping when he was Barack Obama's vice president, and that was quite intentional. Barack Obama and the US government around twenty twelve twenty, even as early as twenty ten and twenty eleven, knew that Chijingping was the heir apparent in China, and Joe Biden spent a lot of time cultivating a very personal relationship with Chijingping and what not, just she at the most highest levels. But what Chinese diplomats will often do is try to fall back on mutual feelings of friendship and cooperation and shared cultural experiences to try to get American politicians to give a little bit on the competitive agenda. I am certain they will try to do the same thing with Walls if he assumes the vice presidency. In fact, as governor of Minnesota, he's already received some of those diplomatic overtures.

I think they'll probably try to play this much like they have attempted to work with President Joe Biden. So President Biden talks regularly about how many hours he spent meeting with Schijingping when he was Barack Obama's vice president, and that was quite intentional. Barack Obama and the US government around twenty twelve twenty, even as early as twenty ten and twenty eleven, knew that Chijingping was the heir apparent in China, and Joe Biden spent a lot of time cultivating a very personal relationship with Chijingping and what not, just she at the most highest levels. But what Chinese diplomats will often do is try to fall back on mutual feelings of friendship and cooperation and shared cultural experiences to try to get American politicians to give a little bit on the competitive agenda. I am certain they will try to do the same thing with Walls if he assumes the vice presidency. In fact, as governor of Minnesota, he's already received some of those diplomatic overtures.

So we know, and you mentioned the Walls record on when it comes to human rights, particularly in China. How do you think he's going to frame the conversation around the South China Sea.

So we know, and you mentioned the Walls record on when it comes to human rights, particularly in China. How do you think he's going to frame the conversation around the South China Sea.

So he's on record as a member of Congress saying that the United States needs to stand up to China and call out their illegal territorial claims in the South China Sea, and listen, that's great. We need to hold the Chinese Communist Party accountable for their illegal actions with our rhetoric. But we are at a point in our security situation where we need to move beyond words. We need to start making the Chinese Communist Party pay for dangering the security of our allies and our partners and frankly American interests in the South China Sea. And this is the big question with Governor Wallas. He has a strong rhetorical record on human rights with China, but he hasn't, in the position of a representative, really been in a position to make those hard executive level decisions on how do you assess those trade offs, because if you want to hold them accountable, you're probably going to have to give a bit on the cooperative agenda with Beijing. And it's really unclear how he's going to make that calculation if he wins the selection.

So he's on record as a member of Congress saying that the United States needs to stand up to China and call out their illegal territorial claims in the South China Sea, and listen, that's great. We need to hold the Chinese Communist Party accountable for their illegal actions with our rhetoric. But we are at a point in our security situation where we need to move beyond words. We need to start making the Chinese Communist Party pay for dangering the security of our allies and our partners and frankly American interests in the South China Sea. And this is the big question with Governor Wallas. He has a strong rhetorical record on human rights with China, but he hasn't, in the position of a representative, really been in a position to make those hard executive level decisions on how do you assess those trade offs, because if you want to hold them accountable, you're probably going to have to give a bit on the cooperative agenda with Beijing. And it's really unclear how he's going to make that calculation if he wins the selection.

With Kamala Harris, I'm sure that this topic will come up during the vice presidential debate. Michael, thank you so much for making time to chat with us. Michael Soberlik, Senior Fellow at the American Foreign Policy Council. He was speaking to us from right outside the District of Columbia in Alexandria, Virginia. This has been the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets.

With Kamala Harris, I'm sure that this topic will come up during the vice presidential debate. Michael, thank you so much for making time to chat with us. Michael Soberlik, Senior Fellow at the American Foreign Policy Council. He was speaking to us from right outside the District of Columbia in Alexandria, Virginia. This has been the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets.

In the Asia PAS.

In the Asia PAS.

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.

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.