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Bloomberg Audio Studios, podcasts, radio news.

This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis along with Doug Krisner. Join us each day for the stories making news and moving markets in the Asia Pacific. You can subscribe to the show anywhere you get your podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App.

This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis along with Doug Krisner. Join us each day for the stories making news and moving markets in the Asia Pacific. You can subscribe to the show anywhere you get your podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App.

Joining us now in the Bloomberg Interactive Broker Studio in New York is Gene Goldman. He is the CIO of Setera Financial Group in the New York visiting from California. Good of you to drop by. Thanks for making time with us.

Joining us now in the Bloomberg Interactive Broker Studio in New York is Gene Goldman. He is the CIO of Setera Financial Group in the New York visiting from California. Good of you to drop by. Thanks for making time with us.

Thank you.

Thank you.

One of the things that I'm curious about we talk about the PCEE data, the personal spending data. Let's focus on that right now because I think that may have been the data point that the bond market was trading off of. Are you concerned about a meaningful downshift in growth?

One of the things that I'm curious about we talk about the PCEE data, the personal spending data. Let's focus on that right now because I think that may have been the data point that the bond market was trading off of. Are you concerned about a meaningful downshift in growth?

Sure?

Sure?

And Doug first, well, thanks for having me back on your show. I think the pce that data report that came up Friday was a paradigm shift in terms of what the Fed is thinking in terms of our economy. First off, with the FED, the FED, the PC, the flare came in as expected. Basically, rate hikes are off the table. That let's the Fed do nothing. Basically, it suggests that inflation is not as bad as people had anticipated earlier in the year. But the other part of the stories that the Fed needs to pay more attention to is to slow down in economic growth. Personal consumption below expectations, real spending negative. Combine this with first quarter GDP being revised lower, I think we have a growth problem. I think consumers are starting to weigh under the fact of higher rates, the FED, lower savings, student loan repayments, credit card debt delinquencies rising. All this together suggests to me that the FED, not only you know, I know they're dual mandate is to focus on inflation and to focus on make sure we all have jobs. But the other thing they need to focus on is the economic aspect that the economy is slowing down pretty fast and pretty quickly.

And Doug first, well, thanks for having me back on your show. I think the pce that data report that came up Friday was a paradigm shift in terms of what the Fed is thinking in terms of our economy. First off, with the FED, the FED, the PC, the flare came in as expected. Basically, rate hikes are off the table. That let's the Fed do nothing. Basically, it suggests that inflation is not as bad as people had anticipated earlier in the year. But the other part of the stories that the Fed needs to pay more attention to is to slow down in economic growth. Personal consumption below expectations, real spending negative. Combine this with first quarter GDP being revised lower, I think we have a growth problem. I think consumers are starting to weigh under the fact of higher rates, the FED, lower savings, student loan repayments, credit card debt delinquencies rising. All this together suggests to me that the FED, not only you know, I know they're dual mandate is to focus on inflation and to focus on make sure we all have jobs. But the other thing they need to focus on is the economic aspect that the economy is slowing down pretty fast and pretty quickly.

Well, they could focus on the second half of the mandate on jobs by starting to talk down rates. I suppose is that something we should expect now that they'll go in that direction.

Well, they could focus on the second half of the mandate on jobs by starting to talk down rates. I suppose is that something we should expect now that they'll go in that direction.

Yeah, I think we'll see what happens on Friday's payroll report. We think Friday's paywroll report will be lower than expected. We do think if you look at quit rates are following, you look at jobless claims are increasing, You look at the PMI employment indices are all starring the suggestors weakness in the labor market. Average hourly earnings are starting the rollover.

Yeah, I think we'll see what happens on Friday's payroll report. We think Friday's paywroll report will be lower than expected. We do think if you look at quit rates are following, you look at jobless claims are increasing, You look at the PMI employment indices are all starring the suggestors weakness in the labor market. Average hourly earnings are starting the rollover.

Take all this together, But Jeane, these are sort of welcome changes, aren't they. I mean, they haven't crossed over into the danger zone. You're not saying that, are you.

Take all this together, But Jeane, these are sort of welcome changes, aren't they. I mean, they haven't crossed over into the danger zone. You're not saying that, are you.

I think they're getting close to the danger zone. I mean, this is something we're watching very carefully. The consumer. Consumer has kept us out of a recession for the past few years, the past couple of years, but the consumer is slowing down pretty quickly, especially the lower income households. Even listen to some of the retailer's earnings reports. They're talking about there's a dynamic shift going on from general merchandisers saying, hey, there's a shift from discretionary to more stables purchasing. And the major retailer, I can't say their name, but they just cut costs on five thousand different items every day items. There is a shift going on in terms of our consumer right now.

I think they're getting close to the danger zone. I mean, this is something we're watching very carefully. The consumer. Consumer has kept us out of a recession for the past few years, the past couple of years, but the consumer is slowing down pretty quickly, especially the lower income households. Even listen to some of the retailer's earnings reports. They're talking about there's a dynamic shift going on from general merchandisers saying, hey, there's a shift from discretionary to more stables purchasing. And the major retailer, I can't say their name, but they just cut costs on five thousand different items every day items. There is a shift going on in terms of our consumer right now.

So right now the market is debating one rate cut, maybe none. What's your view on the FED? How aggressive will the FED be? Given what I'm hearing from you, you're a couple of raiate conspts that seem to be baked into your equation.

So right now the market is debating one rate cut, maybe none. What's your view on the FED? How aggressive will the FED be? Given what I'm hearing from you, you're a couple of raiate conspts that seem to be baked into your equation.

I mean love to come in after the payroll report in Friday. I think the payroll report Friday is the last employment of report we get before the next FED meeting. I think it's going to be lower than expected. I don't think the federial cut in June, but I think this gives us potentially maybe July, September, and after the election in November. So we're saying three rate cuts. Still, we still believe this because a inflation is rolling over. If you pull out on PC if you pull out rent, for example, we're about two point one percent in your re year. We're close to the Fed's target on PCE already if you pull out rent. Also, if you think about the economic growth, FED rate hikes takes about twelve to fifteen months to be felled by the economy. We often fell a lot last year's hikes, So I think this is weighing on the economy, This is weighing on the consumer, and we have to watch this very carefully.

I mean love to come in after the payroll report in Friday. I think the payroll report Friday is the last employment of report we get before the next FED meeting. I think it's going to be lower than expected. I don't think the federial cut in June, but I think this gives us potentially maybe July, September, and after the election in November. So we're saying three rate cuts. Still, we still believe this because a inflation is rolling over. If you pull out on PC if you pull out rent, for example, we're about two point one percent in your re year. We're close to the Fed's target on PCE already if you pull out rent. Also, if you think about the economic growth, FED rate hikes takes about twelve to fifteen months to be felled by the economy. We often fell a lot last year's hikes, So I think this is weighing on the economy, This is weighing on the consumer, and we have to watch this very carefully.

I'm always amazed by how these data can be interpreted in different ways. Let me walk you through thirty seconds of earnings revisions here and you tell me what you think. So I was making some notes yesterday. Bloomberg Intelligence has a report saying that earnings revisions turn positive for global equities outside the US and China, so including that a lot of emerging markets. It's turned positive for the first time since twenty twenty two. And yet we have a separate story this morning out on the terminal. It says that companies in the MSCI are Emerging Markets Index, that half of them have missed analyst estimates and average profits have slumped ten percent compared with the prior year period. How do you make sense of that?

I'm always amazed by how these data can be interpreted in different ways. Let me walk you through thirty seconds of earnings revisions here and you tell me what you think. So I was making some notes yesterday. Bloomberg Intelligence has a report saying that earnings revisions turn positive for global equities outside the US and China, so including that a lot of emerging markets. It's turned positive for the first time since twenty twenty two. And yet we have a separate story this morning out on the terminal. It says that companies in the MSCI are Emerging Markets Index, that half of them have missed analyst estimates and average profits have slumped ten percent compared with the prior year period. How do you make sense of that?

That's the same story we're seeing here in the United States and MAG seven versus the rest of the S and P five hundred. Earnings are being driven domestically by the MAG seven, and analysts are raising estimates for the next twelve months. We worry that there's a lot of frothy valuations, a lot of frothiness put into some of these earnings numbers that need to be ratcheted down a little bit. So again it's just you add this with high valuations in the S and P taken together, something we talked about earlier. We do think a pullback in the market is likely, like a short pullback like we saw in October of last year, a correction which provides opportunities for long term investors.

That's the same story we're seeing here in the United States and MAG seven versus the rest of the S and P five hundred. Earnings are being driven domestically by the MAG seven, and analysts are raising estimates for the next twelve months. We worry that there's a lot of frothy valuations, a lot of frothiness put into some of these earnings numbers that need to be ratcheted down a little bit. So again it's just you add this with high valuations in the S and P taken together, something we talked about earlier. We do think a pullback in the market is likely, like a short pullback like we saw in October of last year, a correction which provides opportunities for long term investors.

Were you in terms of the way in which government policy has impacted the economy, whether it's the infrastructure bill, the chips and science ACKed. I was just in Arizona for a few days last week and it was a remarkable to see a couple of things, the enthusiasm around reshoring of semiconductor production and the establishment of a lot of on a massive scale new warehousing.

Were you in terms of the way in which government policy has impacted the economy, whether it's the infrastructure bill, the chips and science ACKed. I was just in Arizona for a few days last week and it was a remarkable to see a couple of things, the enthusiasm around reshoring of semiconductor production and the establishment of a lot of on a massive scale new warehousing.

Yeah, that's a great question.

Yeah, that's a great question.

First of all, I'm independent, I'm not a Republican, I'm not a Democrats, so keep politics.

First of all, I'm independent, I'm not a Republican, I'm not a Democrats, so keep politics.

Out of this.

Out of this.

But I do believe that the current government administration has not gotten enough credit in terms of what has driven in terms of the bounce back and manufacturing. Remember, manufacturing has been in the recession for eighteen straight months. It's starting to come back. Part of this is the ships sacked. Part of this is this reshoring, and something we talked about earlier. You look at imports from Mexico for the first time in two decades are now exceeding imports from China to the United States. I think the government today needs to get a little bit more credit. Again, I'm not putting politics in this, but we should get a little bit more credit in terms of some of the changes taking place.

But I do believe that the current government administration has not gotten enough credit in terms of what has driven in terms of the bounce back and manufacturing. Remember, manufacturing has been in the recession for eighteen straight months. It's starting to come back. Part of this is the ships sacked. Part of this is this reshoring, and something we talked about earlier. You look at imports from Mexico for the first time in two decades are now exceeding imports from China to the United States. I think the government today needs to get a little bit more credit. Again, I'm not putting politics in this, but we should get a little bit more credit in terms of some of the changes taking place.

But gen does reshoring mean higher costs and does that almost necessarily mean higher inflation? Pressure is going forward?

But gen does reshoring mean higher costs and does that almost necessarily mean higher inflation? Pressure is going forward?

Yeah, definitely reshoring. It is a little bit more expensive here in the same time, but at the opportunity is that you have the opportunity to merge lower input costs, especially with commodities, especially with services. I know labor is a little bit more expensive, but a lot of the commodity costs, especially oil down seventy six dollars a barrow. Import costs are coming down pretty dramatically. I think these two will balance each other out at the end of the day.

Yeah, definitely reshoring. It is a little bit more expensive here in the same time, but at the opportunity is that you have the opportunity to merge lower input costs, especially with commodities, especially with services. I know labor is a little bit more expensive, but a lot of the commodity costs, especially oil down seventy six dollars a barrow. Import costs are coming down pretty dramatically. I think these two will balance each other out at the end of the day.

We were talking about artificial intelligence earlier. Where are you on the AI trade? And I'm curious when you look at the way in which electric utility companies kind of intersect with this theme. I'm looking at one utility right now, Vistra Corporation, which is up by one hundred and sixty percent so far this year.

We were talking about artificial intelligence earlier. Where are you on the AI trade? And I'm curious when you look at the way in which electric utility companies kind of intersect with this theme. I'm looking at one utility right now, Vistra Corporation, which is up by one hundred and sixty percent so far this year.

Yeah, great question, and I really can't comment on individual stocks, but there is a paradigm shift taking place in utilities. Utilities to say, really aren't They're not one of our favorite sectors, but they're starting to get very attractive in terms of the paradigm shift taking place. You have this shift going on from legacy legacy infrastructure into new rebuilds and especially the use of AI to help kind of facilitate the transformation of power grid to make sure that power is being used correctly in the overall power grid. Today's power grids are extremely complex, and try managing that with an old infrastructure system. It's very difficult. But you layer on top of AI to say, okay, where do we allocate more power in the power grid based in the time of day, based and the uses. I think you have a huge opportunity.

Yeah, great question, and I really can't comment on individual stocks, but there is a paradigm shift taking place in utilities. Utilities to say, really aren't They're not one of our favorite sectors, but they're starting to get very attractive in terms of the paradigm shift taking place. You have this shift going on from legacy legacy infrastructure into new rebuilds and especially the use of AI to help kind of facilitate the transformation of power grid to make sure that power is being used correctly in the overall power grid. Today's power grids are extremely complex, and try managing that with an old infrastructure system. It's very difficult. But you layer on top of AI to say, okay, where do we allocate more power in the power grid based in the time of day, based and the uses. I think you have a huge opportunity.

And you add on.

And you add on.

Top of this utilities lower interest rates tends to benefit that sector. As the third worst performing sector in the SMP this year.

Top of this utilities lower interest rates tends to benefit that sector. As the third worst performing sector in the SMP this year.

Doesn't that bring in the independent power producers more than the utilities, which have a lot of constraints.

Doesn't that bring in the independent power producers more than the utilities, which have a lot of constraints.

I think overall, anything paying a high dibend, which they all do at a lower rate, will benefit from this paradigm shift.

I think overall, anything paying a high dibend, which they all do at a lower rate, will benefit from this paradigm shift.

Give me thesis here thirty seconds as to why you're favoring the areas of the market let's say call them materials, call it industrials, cyclical stocks. When you're expecting a slow down in the economy.

Give me thesis here thirty seconds as to why you're favoring the areas of the market let's say call them materials, call it industrials, cyclical stocks. When you're expecting a slow down in the economy.

Sure, I think part of is evaluation. We do believe that more the slow down it's going to take place on the growth side. So especially you look at last week, we saw a lot of software companies, AI companies. They said earning came in above expectations, but the guidance was a little bit lower, and you have fraughthy evaluations and fraughty expectations. We do think the cheaper parts of the market, the more conservative, safer areas should do well. Industrials, financials, and safe growth like healthcare.

Sure, I think part of is evaluation. We do believe that more the slow down it's going to take place on the growth side. So especially you look at last week, we saw a lot of software companies, AI companies. They said earning came in above expectations, but the guidance was a little bit lower, and you have fraughthy evaluations and fraughty expectations. We do think the cheaper parts of the market, the more conservative, safer areas should do well. Industrials, financials, and safe growth like healthcare.

We'll leave it there, Gane, thank you so much for stopping by. Jean Goldman there cio of Satero Financial Group, joining us in the Bloomberg Interactive Broker Studio. Let's go to technology next and in Vidia. The company is planning to upgrade it's AI accelerators every year. The CEO of the company is Jensen Wog. He made this announcement on Sunday, on the eve of the Computex trade show in Taiwan. Now, Huang announced a Blackwell Ultra chip that's for twenty twenty five, and then he went on to say a next generation AI platform called Ruben is set for twenty twenty six. Huang said in Vidio style of accelerating computation will help firms cut cost.

We'll leave it there, Gane, thank you so much for stopping by. Jean Goldman there cio of Satero Financial Group, joining us in the Bloomberg Interactive Broker Studio. Let's go to technology next and in Vidia. The company is planning to upgrade it's AI accelerators every year. The CEO of the company is Jensen Wog. He made this announcement on Sunday, on the eve of the Computex trade show in Taiwan. Now, Huang announced a Blackwell Ultra chip that's for twenty twenty five, and then he went on to say a next generation AI platform called Ruben is set for twenty twenty six. Huang said in Vidio style of accelerating computation will help firms cut cost.

The savings are quite extraordinary. You're getting sixty times performance per dollar, one hundred times speed up. You only increase your power by three x. One hundred times speed up, you only increase your cost by one point five x. There's an enormous amount of captured loss that we can now regain and that will translate into savings, savings and money, savings and energy. And that's the reason why you've heard me say the more you buy, the more you say.

The savings are quite extraordinary. You're getting sixty times performance per dollar, one hundred times speed up. You only increase your power by three x. One hundred times speed up, you only increase your cost by one point five x. There's an enormous amount of captured loss that we can now regain and that will translate into savings, savings and money, savings and energy. And that's the reason why you've heard me say the more you buy, the more you say.

Jensen Wong there the CEO of Nvidia. By the way, the company also introduced some new AI tools as well as software models.

Jensen Wong there the CEO of Nvidia. By the way, the company also introduced some new AI tools as well as software models.

Brian Jane Lennie Lee Bloomberg Technology reporter joins us now from the Computex in Taipei to take a closer look here. So Jane, the man's a good talker and the man has a good product.

Brian Jane Lennie Lee Bloomberg Technology reporter joins us now from the Computex in Taipei to take a closer look here. So Jane, the man's a good talker and the man has a good product.

He was quite a show last nights took place in National Taiwan University's a sports center. He is considered basically Taiwan's you know, tech rock star. He's been running around for a week local TV. He's been shooting him eating noodles, getting his haircut, going to the night market. Yesterday, the one really interesting thing of the show was that he introduced the next generation chips AI chip, which is going to be named Ruben. And this is a bit of a shocker, at least to you know, a chip entrepreneur who was sitting next to me who said he's never done that before. And some speculate that maybe it was because there wasn't any other new news to bring to the show. So you know, that was something that Jensen Quong dangled for everybody to get excited about.

He was quite a show last nights took place in National Taiwan University's a sports center. He is considered basically Taiwan's you know, tech rock star. He's been running around for a week local TV. He's been shooting him eating noodles, getting his haircut, going to the night market. Yesterday, the one really interesting thing of the show was that he introduced the next generation chips AI chip, which is going to be named Ruben. And this is a bit of a shocker, at least to you know, a chip entrepreneur who was sitting next to me who said he's never done that before. And some speculate that maybe it was because there wasn't any other new news to bring to the show. So you know, that was something that Jensen Quong dangled for everybody to get excited about.

Can we assume that the next generation of these AI chips, the processors, the accelerators that are used in these computer servers, are they going to be much more expensive? Does this company have just a pricing power beyond belief.

Can we assume that the next generation of these AI chips, the processors, the accelerators that are used in these computer servers, are they going to be much more expensive? Does this company have just a pricing power beyond belief.

Oh yeah, they are going to be much more expensive. In fact, when we look at the price between the previous chip, which was called an A one hundred, and then we go to the H one hundred, I mean the price has quadrupled. The problem with semiconductors today is that as they improve and they move to the next generation, they use manufacturing technology that is increasingly difficult. The transistors, which are you know, the things that create the zeros and ones on the chip, They're getting smaller and smaller and being measured in the size of numbers of atoms, and so the manufacturing cost is growing exponentially and this is going to be a big challenge in the industry.

Oh yeah, they are going to be much more expensive. In fact, when we look at the price between the previous chip, which was called an A one hundred, and then we go to the H one hundred, I mean the price has quadrupled. The problem with semiconductors today is that as they improve and they move to the next generation, they use manufacturing technology that is increasingly difficult. The transistors, which are you know, the things that create the zeros and ones on the chip, They're getting smaller and smaller and being measured in the size of numbers of atoms, and so the manufacturing cost is growing exponentially and this is going to be a big challenge in the industry.

So, you know, we went from Hopper to the Blackwell, which hasn't even shipped, and now we're talking about Ruben coming in twenty twenty six. That's a lot of cost that companies have to depreciate very quickly if they're going to make these purchases. Are we getting any pushback from companies on that.

So, you know, we went from Hopper to the Blackwell, which hasn't even shipped, and now we're talking about Ruben coming in twenty twenty six. That's a lot of cost that companies have to depreciate very quickly if they're going to make these purchases. Are we getting any pushback from companies on that.

I think companies are starting to talk about the problem, and consultants and analysts are saying, hey, at some point, AI models are going to have to make money for people. You can get you know, CHATCHYPT four. My family just subscribed to it for you know, nineteen dollars a month. Play with this thing. It's at the level still of people playing with it, but the investments going in on the other side to train these models are you know, in the tens of hundreds of billions, and so at some point the world is going to wake up and say, hey, this isn't making money yet, and then we might see, you know, we might see the bubble burst. But for now, because there's such a shortage of these chips, I don't think anyone really dares say that too openly because everybody is still in the mode we're in fomo. We need to get our Nvidia chips, we need to get our data centers, need to get our modeled up and running, and so it's not super public, but underground, there's a you know, an undercurrent of people starting to voice concern.

I think companies are starting to talk about the problem, and consultants and analysts are saying, hey, at some point, AI models are going to have to make money for people. You can get you know, CHATCHYPT four. My family just subscribed to it for you know, nineteen dollars a month. Play with this thing. It's at the level still of people playing with it, but the investments going in on the other side to train these models are you know, in the tens of hundreds of billions, and so at some point the world is going to wake up and say, hey, this isn't making money yet, and then we might see, you know, we might see the bubble burst. But for now, because there's such a shortage of these chips, I don't think anyone really dares say that too openly because everybody is still in the mode we're in fomo. We need to get our Nvidia chips, we need to get our data centers, need to get our modeled up and running, and so it's not super public, but underground, there's a you know, an undercurrent of people starting to voice concern.

Jane, I'm wondering about the openness of the concentration of semiconductor production in Taiwan. Is that an issue for people now as they look at the world, not just the tension between let's say the US China where it relates to Taiwan. But everything we learned coming out of the pandemic supply chains, the degree to which we are overly concentrated in certain areas, I mean, is that being openly discussed now, particularly when you look at the reshoring that some chip companies are involved in and moving production to the US and elsewhere like Japan.

Jane, I'm wondering about the openness of the concentration of semiconductor production in Taiwan. Is that an issue for people now as they look at the world, not just the tension between let's say the US China where it relates to Taiwan. But everything we learned coming out of the pandemic supply chains, the degree to which we are overly concentrated in certain areas, I mean, is that being openly discussed now, particularly when you look at the reshoring that some chip companies are involved in and moving production to the US and elsewhere like Japan.

Oh yeah, that's absolutely been talked about very openly. And that you know TSMC, which has kept most of its production except maybe like a research lab in the US US, it is expanding into Arizona Kumamoto plants in Japan. The first one is already built and we'll go into production later this year. Germany, Dresden, there will be a fact going there or a chip factory, and so yeah, this is definitely a concern. Government and have been pushing their companies to diversify the supply chain, and the companies have been pushing TSMC to diversify the supply chain. And that's what we're seeing now. Whether or not this diversification it will go smoothly is a big question because TSMC is moving the product part of the production overseas. But in reality, if you look at what's happening the packaging, So the end part, the later part of the chip making process is still all happening in Asia. That's not really happening in the US. Arizona. You're going to build a factory and then body is telling me those those wafers that around shiny things are gonna have to get on a plane or a boat and come back to Asia packaged.

Oh yeah, that's absolutely been talked about very openly. And that you know TSMC, which has kept most of its production except maybe like a research lab in the US US, it is expanding into Arizona Kumamoto plants in Japan. The first one is already built and we'll go into production later this year. Germany, Dresden, there will be a fact going there or a chip factory, and so yeah, this is definitely a concern. Government and have been pushing their companies to diversify the supply chain, and the companies have been pushing TSMC to diversify the supply chain. And that's what we're seeing now. Whether or not this diversification it will go smoothly is a big question because TSMC is moving the product part of the production overseas. But in reality, if you look at what's happening the packaging, So the end part, the later part of the chip making process is still all happening in Asia. That's not really happening in the US. Arizona. You're going to build a factory and then body is telling me those those wafers that around shiny things are gonna have to get on a plane or a boat and come back to Asia packaged.

So diversification, yeah, yeah, yeah, no, Sorr. I just wanted to to get to some of the heavyweights that are there because we understand that Christiano and on from Qualcomm and Lisa sue Is they'll be speaking. I'm a little bit curious about the Chinese presence. Do you have Smick there and and Huawei?

So diversification, yeah, yeah, yeah, no, Sorr. I just wanted to to get to some of the heavyweights that are there because we understand that Christiano and on from Qualcomm and Lisa sue Is they'll be speaking. I'm a little bit curious about the Chinese presence. Do you have Smick there and and Huawei?

Do you have absolutely.

Do you have absolutely.

Not nothing else?

Not nothing else?

The Yeah, the Chin the Chinese UH chip makers and equipment makers do not show up for for computechs UH. It's still difficult for for some Chinese people to travel directly to Taiwan today. One person I know had to fly to Macau to fly to Taiwan. Only Chinese these days who live outside of China are able to get a path of visa to come to Taiwan. So it's still quite strange.

The Yeah, the Chin the Chinese UH chip makers and equipment makers do not show up for for computechs UH. It's still difficult for for some Chinese people to travel directly to Taiwan today. One person I know had to fly to Macau to fly to Taiwan. Only Chinese these days who live outside of China are able to get a path of visa to come to Taiwan. So it's still quite strange.

So are most of the companies very quickly, Jane, that are being representative US. Are they Japanese? Are they South Korean? How is it distributed?

So are most of the companies very quickly, Jane, that are being representative US. Are they Japanese? Are they South Korean? How is it distributed?

Oh?

Oh?

Yeah again, So it's it's quite interesting. I mean, I myself lived in Korea for quite a long time. I spent my formative years there, and so it was quite interesting when I arrived in Taiwan to see that Korea and Taiwan don't seem to get along. There's this big tension and competition between these two countries, especially with Samson and sa highenex sing in Korea and then CSMC being here. And so when I asked the Korean ship industry people, are you coming to computext thing straight out said no, we don't come back.

Yeah again, So it's it's quite interesting. I mean, I myself lived in Korea for quite a long time. I spent my formative years there, and so it was quite interesting when I arrived in Taiwan to see that Korea and Taiwan don't seem to get along. There's this big tension and competition between these two countries, especially with Samson and sa highenex sing in Korea and then CSMC being here. And so when I asked the Korean ship industry people, are you coming to computext thing straight out said no, we don't come back.

You can't make it. Yeup, all right, Jane, Thanks so much, Jane. LENNI leave Bloomberg Technology Report. Joining us now is Jason Bett's president of Redwood Wealth Advisors and an advisor at Americ Price Financial. So, Jason, the Surgeon stocks that we had in May seems like it's thrown out of gas a bit here. Momentum is down from the highs breadth as well. We just went through the PCEE data that probably helps a little on the inflation side, but then the spending data hurts the on the growth side. Net what we're hearing from some investors is that they fear a retest of the lows in April. Do you.

You can't make it. Yeup, all right, Jane, Thanks so much, Jane. LENNI leave Bloomberg Technology Report. Joining us now is Jason Bett's president of Redwood Wealth Advisors and an advisor at Americ Price Financial. So, Jason, the Surgeon stocks that we had in May seems like it's thrown out of gas a bit here. Momentum is down from the highs breadth as well. We just went through the PCEE data that probably helps a little on the inflation side, but then the spending data hurts the on the growth side. Net what we're hearing from some investors is that they fear a retest of the lows in April. Do you.

We're gonna have to see where how the data plays out, But I would say that you know, for sure, in terms of testing the high we're abound forty k on the Dow in fifty three, one hundred on the S and P those resistance points without any material uptick in data or softening an inflation, I'd be surprised if we test those levels on the upside anytime soon. In terms of retests in the lows, I think, once again, it just depends on what we see in terms of you know, top line and earnings as well as just overall economic data. Specifically the jobs and also the personal savings and the personal spending numbers are a big deal. So we'll see where that goes from here.

We're gonna have to see where how the data plays out, But I would say that you know, for sure, in terms of testing the high we're abound forty k on the Dow in fifty three, one hundred on the S and P those resistance points without any material uptick in data or softening an inflation, I'd be surprised if we test those levels on the upside anytime soon. In terms of retests in the lows, I think, once again, it just depends on what we see in terms of you know, top line and earnings as well as just overall economic data. Specifically the jobs and also the personal savings and the personal spending numbers are a big deal. So we'll see where that goes from here.

Most definitely jobs data on Friday. So what's the house view over at Redwood on fed cuts this year?

Most definitely jobs data on Friday. So what's the house view over at Redwood on fed cuts this year?

Yeah, so we believe somewhere between zero to two. I think the market for much of the beginning of the year was in this la la land of expecting you know, four to six rate cuts. Yeah, the Fed's made it really clear that they're not interested in catering to the market. They want they want to curb inflation. And while they've done a decent job at that, the work isn't done yet. And so while we have seen a few little what i'll call mini misses in terms of data and consumer settiment came in I believe really low a couple of weeks ago, it's not enough. We need to see things softened materially. We need to see inflation come down. I think before the FED really considers reduce rates, and I don't see that happening. Of course, I don't think you see that happened in June. Be surprised that it happens before fourth quarter.

Yeah, so we believe somewhere between zero to two. I think the market for much of the beginning of the year was in this la la land of expecting you know, four to six rate cuts. Yeah, the Fed's made it really clear that they're not interested in catering to the market. They want they want to curb inflation. And while they've done a decent job at that, the work isn't done yet. And so while we have seen a few little what i'll call mini misses in terms of data and consumer settiment came in I believe really low a couple of weeks ago, it's not enough. We need to see things softened materially. We need to see inflation come down. I think before the FED really considers reduce rates, and I don't see that happening. Of course, I don't think you see that happened in June. Be surprised that it happens before fourth quarter.

That said, I mean, we we had earnings, and earnings sort of carried the day in a sense. So we got through this last earning season with about a seven percent average gain in revenue for S and P five hundred companies. I would say this though, that over the past two months, it's been really kind of flat for the equity market. If you take the drop in April and then the modest gains in May. Is that telling a broader story? What does that tell you?

That said, I mean, we we had earnings, and earnings sort of carried the day in a sense. So we got through this last earning season with about a seven percent average gain in revenue for S and P five hundred companies. I would say this though, that over the past two months, it's been really kind of flat for the equity market. If you take the drop in April and then the modest gains in May. Is that telling a broader story? What does that tell you?

What it tells me is that the that this earnings growth was already priced into stocks, and it was expected, and it's and it's common, it's and it's been good. But but the market wants more. And so we'll see where things kind of transpire from there. But I think we need to see continued improvement and earnings, and we need to see continued strong data. If we don't, I think we could see volatility return to the market more materially.

What it tells me is that the that this earnings growth was already priced into stocks, and it was expected, and it's and it's common, it's and it's been good. But but the market wants more. And so we'll see where things kind of transpire from there. But I think we need to see continued improvement and earnings, and we need to see continued strong data. If we don't, I think we could see volatility return to the market more materially.

We just had a story a little moment ago about Nvidia planning to upgrade its AI accelerators every year. That's a pretty aggressive strategy, but I think it's essentially what the market expects with that level of ambition to try to get to the levels of productivity that the market thinks AI will deliver. What's your view on AI right now?

We just had a story a little moment ago about Nvidia planning to upgrade its AI accelerators every year. That's a pretty aggressive strategy, but I think it's essentially what the market expects with that level of ambition to try to get to the levels of productivity that the market thinks AI will deliver. What's your view on AI right now?

I mean, we're still really in the very early stages of it. A lot of the buying is still tied of speculation, right so, you know, we see this with any with any big thing, there's this type of well, it's going to sell a lot more so it must be a great place to invest, and obviously we've seen that play out in appetite for the mag seven stocks. We will see where that goes from here. With added doubt AI is going to be some form of game changer, I'm actually pretty optimistic about what I'll call the S and P four ninety three. These companies have pretty attractive valuations right now, all things considered, and most of these companies have really yet to really implement or to really you know, to really consume AI in a meaningful way that would or will in fact drive revenues potentially and certainly cut costs. So but to that's a big wildcard.

I mean, we're still really in the very early stages of it. A lot of the buying is still tied of speculation, right so, you know, we see this with any with any big thing, there's this type of well, it's going to sell a lot more so it must be a great place to invest, and obviously we've seen that play out in appetite for the mag seven stocks. We will see where that goes from here. With added doubt AI is going to be some form of game changer, I'm actually pretty optimistic about what I'll call the S and P four ninety three. These companies have pretty attractive valuations right now, all things considered, and most of these companies have really yet to really implement or to really you know, to really consume AI in a meaningful way that would or will in fact drive revenues potentially and certainly cut costs. So but to that's a big wildcard.

To your point though about valuation. I mean, when you talk about AI, you obviously are talking about Nvidia and Broadcom and some of those chip makers, But then Microsoft is a name that that comes up. But if you look at Microsoft, it's actually lower now than where it was in February. Yes, now that that I mean part of that is that software generally is getting pummeled in the market, and that's because everybody is you know, throwing money at the at the AI hardware companies. But it seems like, you know, with Microsoft actually down over the last three months that that's a pretty strong message.

To your point though about valuation. I mean, when you talk about AI, you obviously are talking about Nvidia and Broadcom and some of those chip makers, But then Microsoft is a name that that comes up. But if you look at Microsoft, it's actually lower now than where it was in February. Yes, now that that I mean part of that is that software generally is getting pummeled in the market, and that's because everybody is you know, throwing money at the at the AI hardware companies. But it seems like, you know, with Microsoft actually down over the last three months that that's a pretty strong message.

Yeah, it's it's a tough it's it's it's a tough one because Microsoft obviously has its hands in a lot of coping jars. And so to your point, there's there's this, there's the hype of AI, and there's the excitement of AI. But then there's also been the you know, the tough waters that we've seen play out as well with with with software. So I don't really have a strong opinion one way or the other, other than it really comes down at the end of the day, what happens with jobs, what happens with continued consumption or lack thereof moving forward?

Yeah, it's it's a tough it's it's it's a tough one because Microsoft obviously has its hands in a lot of coping jars. And so to your point, there's there's this, there's the hype of AI, and there's the excitement of AI. But then there's also been the you know, the tough waters that we've seen play out as well with with with software. So I don't really have a strong opinion one way or the other, other than it really comes down at the end of the day, what happens with jobs, what happens with continued consumption or lack thereof moving forward?

And I think that you know what it tells me. It tells me that the market is actually very discerning here. It's not like willy nilly, It's not willy nilly to the upside, I mean, and that might be that might actually be a positive.

And I think that you know what it tells me. It tells me that the market is actually very discerning here. It's not like willy nilly, It's not willy nilly to the upside, I mean, and that might be that might actually be a positive.

Oh, I think it's definitely a positive when you when you put it in that perspective. I think we've seen a lot of probably excessive buying, some hype buying, and what we're seeing now is a market that's a little bit more sobered to your point, a little bit more discerning, a little bit more patient to wait and see kind of how things play out, and for lack of ready to put it put it maybe a little bit more pessimistic.

Oh, I think it's definitely a positive when you when you put it in that perspective. I think we've seen a lot of probably excessive buying, some hype buying, and what we're seeing now is a market that's a little bit more sobered to your point, a little bit more discerning, a little bit more patient to wait and see kind of how things play out, and for lack of ready to put it put it maybe a little bit more pessimistic.

What do you see when you look off shore foreign markets, particularly in Asia. Are there opportunities there that maybe are a little compelling?

What do you see when you look off shore foreign markets, particularly in Asia. Are there opportunities there that maybe are a little compelling?

There are there are. I'm we encourage our clients to be measured. We think international has a place in almost every portfolio, obviously from a diversification standpoint and a hedge on the US dollar, but we do take a measured stance with that. Now that said with Asia, I'd say the two areas I like the most would be Japan and India. I'll start with India. India has had it's coming off an incredible year, and it may be a bit toppy, but I do like India for the long term. I think that just the fundamentals look good, and I think that there's continued foreign investment there. There's a growing, continued, growing appetite for labor in the offshore market. So I think India is a good long term play. Maybe look at buying that on some dips if possible. And then as far as Japan, is concerned. Gosh, isn't it so nice that Japan finally got out of deflation? Right, and so now we've got these these we got these stocks that are undervalued. We've got a pretty decent looking backdrop. In general, we've got an investor friendly government, and I think there's a lot of opportunity and moving forward.

There are there are. I'm we encourage our clients to be measured. We think international has a place in almost every portfolio, obviously from a diversification standpoint and a hedge on the US dollar, but we do take a measured stance with that. Now that said with Asia, I'd say the two areas I like the most would be Japan and India. I'll start with India. India has had it's coming off an incredible year, and it may be a bit toppy, but I do like India for the long term. I think that just the fundamentals look good, and I think that there's continued foreign investment there. There's a growing, continued, growing appetite for labor in the offshore market. So I think India is a good long term play. Maybe look at buying that on some dips if possible. And then as far as Japan, is concerned. Gosh, isn't it so nice that Japan finally got out of deflation? Right, and so now we've got these these we got these stocks that are undervalued. We've got a pretty decent looking backdrop. In general, we've got an investor friendly government, and I think there's a lot of opportunity and moving forward.

Yeah, we often hear about, you know, governance getting a lot better and the fact that in the past owners just sat on the money in Japan and now they're raising dividends and raising buybacks, and that money is kind of getting recirculated back into the economy, which is a good thing. So we'll see if that continues. Jason, thank you so much for joining us. Jason Betts, Resident of Redwood Wealth Advisors and private wealth advisor over at Americorprise Financial.

Yeah, we often hear about, you know, governance getting a lot better and the fact that in the past owners just sat on the money in Japan and now they're raising dividends and raising buybacks, and that money is kind of getting recirculated back into the economy, which is a good thing. So we'll see if that continues. Jason, thank you so much for joining us. Jason Betts, Resident of Redwood Wealth Advisors and private wealth advisor over at Americorprise Financial.

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

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