Featuring:
Andrew Giuliani, former Special Assistant to former President Donald Trump and former Republican candidate for Governor of New York
Fred Neumann, Chief Asia Economist at HSBC
Yung-Yu Ma, Chief Investment Officer at BMO Wealth Management
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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 on the program is Andrew Giuliani, former special assistant to former President Donald Trump and former candidate for Governor of New York, to talk a little bit more about the current state of play. Well, mister Giuliani, thank you so much for joining us right off the ball Let's talk about the vice presidential selection. What does jd. Vance bring to the ticket in your view?
I think it's a look right at the rust belt.
I mean, obviously the senator the Junior Center from Ohio carried Ohio was able to win that state. But as we know, Pennsylvania, Michigan, Wisconsin, all three states the President Trump won in twenty sixteen went Biden's way in twenty twenty, and there are three swing states that are going to be very very important to determining who wins the presidency on November fifth, You have to think that jd Vance speaks directly to most of the residents of those three states, including his home state of Ohio, which should be in the red column but has been a swing states recently as twenty twelve. So when you look at the math of the electoral map, I think that's exactly what the Trump team was doing when they selected jd.
Vance.
So it's a good blue collar pick. What about his age? Does jd Vance's age lift a former President Trump's chances?
Yeah? It may.
I mean, look, there's been so much talk, probably more about Biden, but also about President Trump as well, with them being eighty one and seventy eight years old, respectfully, I think you get some youth on this ticket, and it changes it a little bit in terms of what does that conversation like now. I know you'll have other people that will say, well, look, this is somebody who's only served a year and a half in the Senate here, somebody who's young, maybe a little bit inexperienced in some kind of way, but he's also somebody that is connected with the American people, the American masses, through his book, through his Senate run in a way that I think most politicians have not on a national level. And having talked to President Trump just as recently as yesterday, I know that something that he was really really looking at as he was trying to make his final selection here for who was going to join him on the presidential ticket.
After the attempt at assassination of Donald Trump. But we've seen calls from many quarters throughout the country towards seeking seeking more unity in the country, coming together as one America. Do you see these two President Trump and former President Trump and Jade Vance as calling for more unity here or kind of going back to sort of tear the house down type of ideology.
Well, look, I unity, but I also think answers are very important. I don't want unity to lead to ignorance, if you will. In terms of the answers that my Orchis was talking about, I want to make sure that I know exactly what happened in these security ellapses. Have to have a shooter one hundred and twenty five meters away when the longest shots ever made have been thirty times that length. That's something that I sat through hundreds of White House security briefings looking at high points that were outside of security perimeters to make sure that the president was safe even if it was outside of the.
Secret Service security perimeter.
So I think we need answers to exactly what ended up happening on that day. And frankly, I also think this needs to go both ways. Joe Biden needs to have a better answer for why he said just a few short days ago Donald Trump needs to be in the bullseye. I don't think his answer to Lester Holt today was adequate.
Even the way the former president was moved to the van after the shooter down that presupposes there was only one shooter. And you wonder, you know, we have lots of columns getting written like the motive of the shooter is irrelevant, Francis Wilkinson, for instance, writes in our own pages here at Bloomberg. But it does sort of raise the question as to who else might have been involved. Do we have any sense of that? And do you fear that.
Right now?
We don't, And I think that's the problem. I think we need answers as soon as possible on this. We can't allow theories to win the day, right. You want facts to be able to look at this stuff because frankly, this is going to be President Trump is going to be going out and doing rallies, maybe as soon as this weekend. And you think about same thing for Biden as well, and RFK Junior. These candidates, they deserve to be protective. If we believe in the First Amendment in this country, then the public square needs to be safe, whether it's red, whether it's blue, whatever it is there.
So well, let's hope right now, it's just theories.
Let's hope this was the one often that they will be safe. I'm curious about whether or not you think that it will be different this time in terms of former President Trump's aides, because one of the things that we noticed obviously in the prior administration was that so many of his aides eventually left either of their own volition or they were booted out by former President Trump. Will JD. Vance be any different?
I think so.
I mean, I think this is a guy who, obviously, as of eight years ago, he was not the biggest fan of Trump, and I'm sure you guys have run through some of the stuff that he has said, but he's a guy who was really won over, I think to the Trump world by the.
Policies, by the policy successes.
Maybe he didn't fall in love necessarily with the Twitter feed and the current ex feed and truth feed at the time, but was won over by the policies. I think that shows me somebody who was able to keep an open mind even though he came in as so called never Trumper, and realize that this president, while he may have a unique style, he's able to accomplish things that maybe a typical politician is not able to accomplish. And I think you could just look at the successes of the forty fifth president and compare it to the forty sixth president.
Let's talk about foreign policy.
If you talk about the two foreign wars that have started under Joe Biden, with Trump, you saw peace through strength. You can talk about the economy as well. You cover that very very well every single day. I think the success of the Trump administration from a deregulatory standpoint was extremely successful. And you look at the Biden administration, We've seen inflation continue to creep up. I know those numbers are down a little now, but they're still up much higher than it was in twenty nineteen.
And I think vance I think probably that won vance over if you.
Will, could you see yourself playing a role in an administration under President Trump if he were to win, and if so, what might be Well.
Look, I had that conversation with President Trump last week, and I told him I'm always willing to serve, whether it's inside the administration, whether it's outside the administration. You know, I can tell you when when I heard that he was shot on Saturday. This is a guy that I've known for nearly thirty years, had the honor of working four years from in the White House, and I felt like it was a family member in those moments where I didn't know if he was going to live or going to die. And I told him, look, I'll support you, whether it's on the inside, whether it's on the outside.
Most importantly, we need to save our country.
And I also told him, I said, let's make sure we have that conversation on November six.
That's the conversation I want to be at all.
Right, Well, we'll have to leave it there, unfortunately, but a good conversation. Mister Giuliani, thank you very much for joining us. Andrew Giuliani there former special assistant to former President Donald Trump and a former candidate for the Governorship of New York. Say good morning to Fred Numan, Chief Asia missed at HSBC for a few choice words about the Third Planum. Fred, thank you for coming on. Boy, what a contrast between the very public and free wheeling Republican National Convention and the Third Planum in Beijing. It's rather opaque. It's kind of a black box. We don't know exactly what we'll get. What are you expecting?
Well, thank you, Right, we don't have live cameras in Beijing following the meetings that we do with the Republican Convention, but I think we're gonna we have to calibrate a little bit our expectations for the Third planm. Of course, we had a reminder yesterday that the economy is very weak, at least slower, grew slower than expect in the second quarter, and that reminded, I think investor that is still a need for stimulus. But this won't come out of this particular Planum. This is really about long term structural reforms. It's about sort of broad based targets, and therefore it won't really change the cyclical direction of the economy for the time being. There might be some nuggets here and there in terms of long term structural reforms like for example, helping local governments with the finances or maybe addressing the pension system, but nothing that really changes the narrative for the next few quarters.
When we talk about reform in China, it means a different thing than it does in a lot of other places. The traditional meaning of reform might be modernizing and making changes and liberalizing, but it could be just the opposite.
In China, it could be a bit of both, and we've seen certainly in some areas still the state of desire to liberalize that we had, for example, even in recent meetings, indications that they want to continue to liberalize, for example, the exchange rate. That's a modernization process capital flow. Still there's a desire state desire to modernize. There's also a desire to move to a more interest rate based monetary system, for example, monetary policy system. You're right in other areas as well, we've seen, for example, tighter regulations. We've seen kind of a return of maybe government decision making in into the into the economy. But we should also remember that the context years at globally, we actually see a return of the state that we've seen in arise in regulations, for example when it comes to big tech, and so the Chinese are not necessarily alone in this.
So sometimes I'll like to really simplify the question to get to the heart of the matter, and I think this one does. Does President she trust the private sector in China?
He certainly has indicated that he still wants a private sector to drive the economy. There's sort of the the unswerving as they call it, the unswerving intention to have the private sector play a decisive role in the economy. But it doesn't necessarily mean that the public sector is in retreat. We've seen in recent years state on enterprizes place likely larger role. Again, we've seen the share of GDP, for example, increase. China certainly cannot live without the private sector. It is one of the most innovative private sectors in the world if you think about areas like electric vehicles for examples, driven by the private sector. But there is certainly a sense that under cigen paining, we've seen a recalibration between the private and public sector, and at the moment, State on enterprise is certainly benefited in recent years from that trend.
Might we see any policies perhaps not right out of this meeting, but coming soon that would help stimulate the private sector. And what might they be or what would you like to see.
Well, the focus right now is on a third Plan, but we really pay more attention a little bit to the political meeting at the end of this month. This is a monthly meeting and partaking in July. Traditionally they have taken more cyclical measures during that meeting, and that's would be probably the better meeting to announce some sort of near term stimulus because economic data was disappointing for the second quarter. That could be an announcement for more fiscal spending, in particular coming through maybe higher issuance quota for bonds. They did this last year in fact, that that helped to stabilize growth into year end, and so we might see a bit of a rerun in that, but it wouldn't be the Third Plan, and it'd be the political meeting at the end of July.
Yeah. Well, in terms of addressing issues in the property sector, is this going to be a long drawn out fight or is there something that can be done in the shorter term to see some progress.
Well, you could only always throw more money at the problem. You could make a set up asset management companies that essentially clean out the banks and the developers and sort of reset, if you will, the property sector. But it doesn't look like China is choosing that path and it will likely grind us out. We're probably over the worst in general, but it doesn't look like a quick fix is going to come. We've seen maybe steady progress, some green shoots already emerge in a secondary home. Demand has picked up in some areas, but it does feel like it will take quite some time before we are back off to improving property market. I think I'll be here for another year, year and a half until we see that that full turnaround come through.
So we saw prices yesterday down for both used and or existing and new home sales. What we'll move first, Well, transactions pick up first. Is that the key.
Yeah, it's all about transactions. You know, people look at prices, but ultimately prices are a lagging indicator. You almost want prices to adjust lower to kind of bring demand back in. And prices have declined again last month, and maybe that's just part of the of the medicine you need to revive the sector.
Yeah, all right, Frederick, thank you very much for joining us. Bred Newman there, Chief Asia Economists Toda hsb See Jung you Ma, Chief investment Officer, BEMO Wealth Management. So do you see a case here for a sort of continued broadening in the market.
Hi, Brian, great to be here. We do think there's a good case for continued broadening the market. We think the market is really solidified on two ideas right now, one of them being that the trended inflation is solidly downward, and the second one being that the FED is on the cusp of cutting rates and due to beginning September, and that's going to be not just one or two cuts, but probably a rate cutting campaign that goes into twenty twenty five and probably through the end of twenty twenty five. So we think that is pretty supportive of a broadening the rally. It's helpful to ease some of the pressures that have been on small caps mid caps and really just take the focus towards some of the other stocks, even large cap stocks that are not the make it cap technology stocks. So we do see a good prospect for broadening here. We don't necessarily think the map technology stocks are going to underperform, but we do think that a lot of the market will come along with those stocks have been leading the way.
Do you worry that if the economy is weakening that it sort of gathers momentum and weakens too sharply and that the market would not respond well to that.
Yeah, that's a great question. It is somewhat of a narrow lane. The economy is walking here, but we don't see the prospects in place for a sustained down momentum in economic growth. We think there's some softness, some moderation, but we actually think the stabilizing forces such as wage growth being above inflation, business spending kicking in in the second half of the year, and next year profit growth being high, all these things should stabilize the economy. And there are no sectors that are overly leveraged, such as the consumer sect or the business sector. There aren't major imbalances that we think are going to lead to a doward spiral. So we think we're probably in for a little bit of soft data in the coming weeks, but we don't think this is going to gather momentum to the downside.
To what degree is there some danger that markets have already priced in a lot of the good news. I mean, we've seen this coming from a long way, that the Fed would be cutting interest rates perhaps toward the end of the year, that we had a soft landing inside, and that earnings were pretty solid. I mean, there's a lot that markets have already discounted.
That's a great point. I do think the markets have discounted some of it, but I don't believe the markets have fully discounted it. And a lot of these things, even though we expect them to happen, they look likely on the horizon, it's really until they get closer in time that the market starts fully incorporating that. And we saw that actually with the CPI report in the US that came out last week, when it really took the third month in a row of good inflation readings for the market truly get excited about the prospect of rate cuts, in the prospect of a doward trajectory. I think that just shows us that the market prices these developments in in clumps, and it's not all it's not all front loaded, but should be happening over time as you go forward, especially if we have continued low inflation continued rate cuts into twenty twenty five. I think that should add a sustained benefit to the markets, even though some of that's been priced in.
For sure, we all know that mister market can be vicious and can hurt sometimes the most people at any given time. I'm wondering about people piling into small caps now whether or not that's actually sustainable also, And one of the things that might happen, I think is that you know, people pile into some of those small caps and then all of a sudden, the earnings come out from some of the big AI players like Nvidia and broad Common others, and the money just sweeps back into those What are you expecting out of those AI firms and what do you think about those notions of the market hurting people.
Well, that's another good point, because this can happen in waves. And as we go through earning season, we're going to hear a lot about AI, a lot about spending. I think we're going to even here start to hear more about companies' productivity gains from AI, even if they're early cases or early anecdotes. I think that's going to become more of a narrative that takes place, but of course a spending is going to continue to be very large in this area, so there could be a bit of back and forth in terms of where investors' interest swings to and and some of that short term money swinging like a pendulum from one area to the other. I do think that there's enough of a catch up trade in small and mid caps and even large caps that aren't in those megacap technology space that this probably still has room to run. We don't think that there's been surely there's been enthusiasm in the last few days for small caps, but we don't think that that catch up trade is really played out. If you look at small caps as especially small cap value, the valuations are better there. If you look at what took place in twenty sixteen after President Trump was elected the first time, small caps had a tremendous rally after that on the expectation that large caps might have a more difficult time in the context of a trade war or trade frictions with other partners where they get a lot of their revenue from. So I do think that's another element where some of these medium small caps will start to generate more consistent interests for investors, but there could be some back and forth.
For sure, you're positive on US infrastructure and technology and financials, so what are you cautious on.
We're a little bit cautious on consumer staples. We think a lot of the spending and consumer staples is taking place among consumers have somewhat strained budgets on the lower half or lower third of the income spectrum in the US. A lot of those that group has been strained by the inflation a lot more than the upper half of the income spectrum. There's a lot of trade down plays that are taking place, even in consumer staples. Not all consumer staples are equal, right, Some are still trade down plays that take place in that area, and growth is just not going to be high in that space.
All right. Thank you so much for joining us. Jo you Ma, chief investment Officer at BEMO Wealth Management. This is the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always on Bloomberg Radio the Bloomberg terminal and the Bloomberg Business app.