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Bloomberg Audio Studios, Podcasts, radio news.

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

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

We are joined on the program now by Andrew Sliman. I am Senior portfolio manager and head of Applied Equity Advisors at Morgan Stanley. Andrew, great to have you back on the program. A lot of the selling that we've seen on Wall Street here and even elsewhere has been in addressing the concentration in megacap names, and we've had some seasonal factors too. But I want to start off with a slightly different direction. The solid economic data that we just reported there. It dents one of the other bear talking points, a weakening economy, and it also kind of adds to the City Economic Surprises Index that has had a huge bounce in July. The economy is not really weakening, is it.

We are joined on the program now by Andrew Sliman. I am Senior portfolio manager and head of Applied Equity Advisors at Morgan Stanley. Andrew, great to have you back on the program. A lot of the selling that we've seen on Wall Street here and even elsewhere has been in addressing the concentration in megacap names, and we've had some seasonal factors too. But I want to start off with a slightly different direction. The solid economic data that we just reported there. It dents one of the other bear talking points, a weakening economy, and it also kind of adds to the City Economic Surprises Index that has had a huge bounce in July. The economy is not really weakening, is it.

Well, it's slowing, but it's not breaking. And I think that's the key thing, and I think that's what is a big reason you're seeing a rotation in leadership is the market is coming around to believing that the FED can cut that inflations come down. But they can cut, but they can do it at their speed. It's not a nervous cut. And in that environment, that's why I think you're seeing small caps working. I think that's why you're seeing cyclical cyclical socks working and a rotation away from gross socks because seemingly the FED is getting what they want, a low inflation and a slowing but not breaking economy.

Well, it's slowing, but it's not breaking. And I think that's the key thing, and I think that's what is a big reason you're seeing a rotation in leadership is the market is coming around to believing that the FED can cut that inflations come down. But they can cut, but they can do it at their speed. It's not a nervous cut. And in that environment, that's why I think you're seeing small caps working. I think that's why you're seeing cyclical cyclical socks working and a rotation away from gross socks because seemingly the FED is getting what they want, a low inflation and a slowing but not breaking economy.

So are you seeing more of a rotation in coney rather than any new money coming off the sideline.

So are you seeing more of a rotation in coney rather than any new money coming off the sideline.

I think there was quite a bit of money that came off the sidelines in early July, but I think this is more a rotation in the markets right now. Now you know, I caveat all this by saying most of the big megacaps tech stocks are yet to report, and I think they will remind investors don't get too negative on us. Our businesses are very very strong, so I'm not I think it's a great What we've learned in the last month is don't just own gross stocks, don't just own megcap tech stocks, because they move together, and when the world decides they don't like them, you're gonna go down. You know, they all move together, So you have to have some balance in your portfolio. For what's happened in the last couple of weeks.

I think there was quite a bit of money that came off the sidelines in early July, but I think this is more a rotation in the markets right now. Now you know, I caveat all this by saying most of the big megacaps tech stocks are yet to report, and I think they will remind investors don't get too negative on us. Our businesses are very very strong, so I'm not I think it's a great What we've learned in the last month is don't just own gross stocks, don't just own megcap tech stocks, because they move together, and when the world decides they don't like them, you're gonna go down. You know, they all move together, So you have to have some balance in your portfolio. For what's happened in the last couple of weeks.

So we've seen Nvidia, broad Comment TSMC all pull back about eighteen percent from inter day highs a couple of weeks ago, and the NASTAC one hundred itself is down about nine percent. We've seen kind of, you know, a change basically in a lot of the momentum plays like Eli Lilly for instance, nothing to do with high technology, really down thirteen percent in eight sessions. So momentum plays have been sort of turned on their head. But given these numbers eighteen percent as I mentioned, and Lily down fourteen percent, is it almost time to say enough already?

So we've seen Nvidia, broad Comment TSMC all pull back about eighteen percent from inter day highs a couple of weeks ago, and the NASTAC one hundred itself is down about nine percent. We've seen kind of, you know, a change basically in a lot of the momentum plays like Eli Lilly for instance, nothing to do with high technology, really down thirteen percent in eight sessions. So momentum plays have been sort of turned on their head. But given these numbers eighteen percent as I mentioned, and Lily down fourteen percent, is it almost time to say enough already?

Yes? Because a question that I would ask you is is there any fundamental change in any of these business Has any of these companies come out and said eight businesses and there is good? And so what I've learned in this what I try to focus on in this business is what companies are doing well that have raised guidance. But for one reason the other Wall Street has fallen out of love on a short term basis. I think that's where you make your most money.

Yes? Because a question that I would ask you is is there any fundamental change in any of these business Has any of these companies come out and said eight businesses and there is good? And so what I've learned in this what I try to focus on in this business is what companies are doing well that have raised guidance. But for one reason the other Wall Street has fallen out of love on a short term basis. I think that's where you make your most money.

You've got a big bottom. I'm sorry to interrupt you there. You've got a big convention in your town next month. Is politics beginning to become a factor at all in the way the market is kind of working through different scenarios here, different styles of thought.

You've got a big bottom. I'm sorry to interrupt you there. You've got a big convention in your town next month. Is politics beginning to become a factor at all in the way the market is kind of working through different scenarios here, different styles of thought.

Yeah, I think so, because if you think about it, you know, once uh, you know, kind of President Trump you know, looked like he was, you know, pulling ahead when Joe Biden was suffering after the debate. Small cap that was the you know, that was part of the process of small caps in some of the value ares because I think he is perceived as good for those areas. But this past Monday, when it was apparent that Harris Kamala Harris is going to take over being the Democrat canddate, you saw megacap tech stocks actually rally because she is from San Francisco, she has ties to Silicon Valley. So I think there is movement back and forth, as you know, you know, determined by who who's leading in the polls. But having said all that, I worried because we get a lot of inquiry from our investors asking about, you know, the election, presidential election, and I don't hear as much questions about the FED policy. And so I think in general, people focus too much on elections and not it's enough on FED policy. There's no proof really that Democrats or Republicans, you know, the market does better under one or other, but it's it is pretty conclusive that, you know, easier FED policy is better for stocks.

Yeah, I think so, because if you think about it, you know, once uh, you know, kind of President Trump you know, looked like he was, you know, pulling ahead when Joe Biden was suffering after the debate. Small cap that was the you know, that was part of the process of small caps in some of the value ares because I think he is perceived as good for those areas. But this past Monday, when it was apparent that Harris Kamala Harris is going to take over being the Democrat canddate, you saw megacap tech stocks actually rally because she is from San Francisco, she has ties to Silicon Valley. So I think there is movement back and forth, as you know, you know, determined by who who's leading in the polls. But having said all that, I worried because we get a lot of inquiry from our investors asking about, you know, the election, presidential election, and I don't hear as much questions about the FED policy. And so I think in general, people focus too much on elections and not it's enough on FED policy. There's no proof really that Democrats or Republicans, you know, the market does better under one or other, but it's it is pretty conclusive that, you know, easier FED policy is better for stocks.

Well, we had some comments from Bill Dudley and also Ian Shepherdson saying that the FED is dangerously close to being behind the curve and they better act quickly. That doesn't seem to quite gel with the argument you laid out for as the economy is cooling, but it's not really weakening fast.

Well, we had some comments from Bill Dudley and also Ian Shepherdson saying that the FED is dangerously close to being behind the curve and they better act quickly. That doesn't seem to quite gel with the argument you laid out for as the economy is cooling, but it's not really weakening fast.

Well, yeah, I mean I read those comments, and I think that's one of the reason why I think we're getting close to actually a bottom in this little short term correction, because I think he's signaling that he's given that the Fed's going to be, you know, cutting rates. But but I if the economy was collapsing, okay, you would see the yield curve uninvert. You would see the two year, yield plummet relative to the tenure. The yield curve has started to uninvert somewhat, but it's not yet, and so I think, you know it is. I I am of the belief, and I've listened to a few industrial conference calls now where they're saying, yeah, some of our businesses is slowing, but not our government business. Don't lose sight of the fact that we have. It's a lot of fiscal policy this year that is propping up the economy. So I am definitely in the camp of slowing but not breaking. And I think for Bill Dudley, I think he's just saying, Okay, enough's enough. I think they can ease.

Well, yeah, I mean I read those comments, and I think that's one of the reason why I think we're getting close to actually a bottom in this little short term correction, because I think he's signaling that he's given that the Fed's going to be, you know, cutting rates. But but I if the economy was collapsing, okay, you would see the yield curve uninvert. You would see the two year, yield plummet relative to the tenure. The yield curve has started to uninvert somewhat, but it's not yet, and so I think, you know it is. I I am of the belief, and I've listened to a few industrial conference calls now where they're saying, yeah, some of our businesses is slowing, but not our government business. Don't lose sight of the fact that we have. It's a lot of fiscal policy this year that is propping up the economy. So I am definitely in the camp of slowing but not breaking. And I think for Bill Dudley, I think he's just saying, Okay, enough's enough. I think they can ease.

We talk a lot on this show about markets in Asia. How are you viewing opportunities offshore? Are you seeing anything right now that's compelling?

We talk a lot on this show about markets in Asia. How are you viewing opportunities offshore? Are you seeing anything right now that's compelling?

Well, you know, very simple. What I start with is where's the best earnings revisions happening is happening in the US, and is happening in Japan. It's not happening in China. It's certainly not happening in Europe. So those are areas first I want to focus on. But having said that again, as I said before, anytime there is opportunities where stocks diverge from their fundamentals. I'm very interested so stock like Taiwan Semiconductor some noise from politics, but boil Boy, their business is booming. So you know, I think there's specific ideas I just wouldn't make a big regional bet. Yeah.

Well, you know, very simple. What I start with is where's the best earnings revisions happening is happening in the US, and is happening in Japan. It's not happening in China. It's certainly not happening in Europe. So those are areas first I want to focus on. But having said that again, as I said before, anytime there is opportunities where stocks diverge from their fundamentals. I'm very interested so stock like Taiwan Semiconductor some noise from politics, but boil Boy, their business is booming. So you know, I think there's specific ideas I just wouldn't make a big regional bet. Yeah.

I see that. You mentioned the leuxury good makers troubling to a certain degree. They struggled with China. That's so saved that for another day, Andrew. Thank you. Andrew Sliman for Morgan Stanley.

I see that. You mentioned the leuxury good makers troubling to a certain degree. They struggled with China. That's so saved that for another day, Andrew. Thank you. Andrew Sliman for Morgan Stanley.

Rebecca Waltzer. She is president of Walzer Wealth Management, and she happens to be here in the Bloomberg Interactive Broker Studio in New York. Good of you to drop by, Thanks so much.

Rebecca Waltzer. She is president of Walzer Wealth Management, and she happens to be here in the Bloomberg Interactive Broker Studio in New York. Good of you to drop by, Thanks so much.

Thanks for having me.

Thanks for having me.

Before we get into kind of the nuts and bolts, what's happening in markets, I'd like to know what you're hearing from clients right now. Are they worried about a lot of the volatility that we've been seeing in markets.

Before we get into kind of the nuts and bolts, what's happening in markets, I'd like to know what you're hearing from clients right now. Are they worried about a lot of the volatility that we've been seeing in markets.

Yeah, I think anytime you see a twenty percent run up starting at the end of last year, and you kind of see this beautiful number through March and then you start to hit the volatility it's a little bit unerving to anybody. But then you compound that with an election year, you compound that with the crazy things that have happened just in the last ten days Doug, and you really see people start to say, what is going on? Are we in some kind of seed change world turnover? What is happening here? Of course, I have been Mochro macroeconomically focused for the last two and a half years, and I've been definitely talking to clients about the global seed changes that are coming. So they're a lot more aware than I would say the average investor client because we're just so focused on it in our practice.

Yeah, I think anytime you see a twenty percent run up starting at the end of last year, and you kind of see this beautiful number through March and then you start to hit the volatility it's a little bit unerving to anybody. But then you compound that with an election year, you compound that with the crazy things that have happened just in the last ten days Doug, and you really see people start to say, what is going on? Are we in some kind of seed change world turnover? What is happening here? Of course, I have been Mochro macroeconomically focused for the last two and a half years, and I've been definitely talking to clients about the global seed changes that are coming. So they're a lot more aware than I would say the average investor client because we're just so focused on it in our practice.

So the news hasn't really changed for companies like Nvidia and Broadcom, but the theme has changed. Investors now are kind of doubting whether or not, you know, companies will be able to monetize AI. Do you see it that way or do you think that this is just a sort of healthy correction because we ran too far too fast.

So the news hasn't really changed for companies like Nvidia and Broadcom, but the theme has changed. Investors now are kind of doubting whether or not, you know, companies will be able to monetize AI. Do you see it that way or do you think that this is just a sort of healthy correction because we ran too far too fast.

I definitely think that we did have a little bit of a rational exuberance since the end of Q four last year, But it is an a monetization problem. Anytime you're on a new dynamic, a new frontier, especially technology. We have this perfect example with the dot com. You know, we knew it would be monetizable at some point, but you know, pets dot com that was worth a billion dollars before it even had a to check a dog bag out wasn't going to work. It's the same thing with the AI runway. There's so many applications, but how do we take it from industrial business to business B to be to actual B two C and make it profitable for both the consumer to use and the business to produce. So that's really what we're seeing, and I think the market has been priced so perfectly that if you look at Google and you have a double beat, but you still see it losing and trading in after hours to the downside or people saying why, it's because there was no real solid guidance on what AI is actually going to deliver in terms of revenue and profitability.

I definitely think that we did have a little bit of a rational exuberance since the end of Q four last year, But it is an a monetization problem. Anytime you're on a new dynamic, a new frontier, especially technology. We have this perfect example with the dot com. You know, we knew it would be monetizable at some point, but you know, pets dot com that was worth a billion dollars before it even had a to check a dog bag out wasn't going to work. It's the same thing with the AI runway. There's so many applications, but how do we take it from industrial business to business B to be to actual B two C and make it profitable for both the consumer to use and the business to produce. So that's really what we're seeing, and I think the market has been priced so perfectly that if you look at Google and you have a double beat, but you still see it losing and trading in after hours to the downside or people saying why, it's because there was no real solid guidance on what AI is actually going to deliver in terms of revenue and profitability.

You mentioned the fact that we're dealing with an election year. Earlier in the show, we had a story on President Trump commenting on the dollar, calling it a big currency problem. One of the things that he highlighted, and Janet Yellen's incidentally pushed back against this idea is that a strong dollar is hurting US export competitiveness. Does he have a point there or is the dollar strength really the reflection of just the Fed trying to get inflation under control and strong American economy and inflows from around the world coming to the United States.

You mentioned the fact that we're dealing with an election year. Earlier in the show, we had a story on President Trump commenting on the dollar, calling it a big currency problem. One of the things that he highlighted, and Janet Yellen's incidentally pushed back against this idea is that a strong dollar is hurting US export competitiveness. Does he have a point there or is the dollar strength really the reflection of just the Fed trying to get inflation under control and strong American economy and inflows from around the world coming to the United States.

Well, I actually think it's both right. We definitely had to strengthen the dollar to create too. It had to become too expensive that we had less demand, we had less economic activity, so we could bring inflation the heat of the market down. So that had to happen. But at the same time, look at our Japanese end situation, you know, and the interventions that we've had with him in just the last eight weeks. That is a problem. This is a problem for you know, our partners globally when they are bringing in and so tied intrically, their currency is so tied to the dollar, and we have you know, not to make the dollar political. I don't like talking about politics, but you know, the rest of the world does a lot of the rest of the world, I should say, I should clarify, does view that America did weaponize the dollar post Russia invasion of Ukraine in March of twenty twenty two, and that has made a lot of things happen a lot faster than maybe they otherwise would have. Meaning d dollarization, the Bricks initiative, the Mbridge initiative with the Bank of International Settlements, these things that have come as a direct result from that action really is a sea change moment in the global world at currencies.

Well, I actually think it's both right. We definitely had to strengthen the dollar to create too. It had to become too expensive that we had less demand, we had less economic activity, so we could bring inflation the heat of the market down. So that had to happen. But at the same time, look at our Japanese end situation, you know, and the interventions that we've had with him in just the last eight weeks. That is a problem. This is a problem for you know, our partners globally when they are bringing in and so tied intrically, their currency is so tied to the dollar, and we have you know, not to make the dollar political. I don't like talking about politics, but you know, the rest of the world does a lot of the rest of the world, I should say, I should clarify, does view that America did weaponize the dollar post Russia invasion of Ukraine in March of twenty twenty two, and that has made a lot of things happen a lot faster than maybe they otherwise would have. Meaning d dollarization, the Bricks initiative, the Mbridge initiative with the Bank of International Settlements, these things that have come as a direct result from that action really is a sea change moment in the global world at currencies.

So you're dealing with high net worth individuals obviously to a certain degree. I'm curious about when we see something like Ford today down eighteen percent, it sort of raises an eyebrow. I wonder whether or not the Wall Street is looking a little bit more like a casino in the past couple of weeks. So maybe you can even say for the whole rally that we've seen. But do you feel comfortable, I mean, how do your clients respond to this kind of volatility in stock trading?

So you're dealing with high net worth individuals obviously to a certain degree. I'm curious about when we see something like Ford today down eighteen percent, it sort of raises an eyebrow. I wonder whether or not the Wall Street is looking a little bit more like a casino in the past couple of weeks. So maybe you can even say for the whole rally that we've seen. But do you feel comfortable, I mean, how do your clients respond to this kind of volatility in stock trading?

Yeah, I mean I think that it's unnerving if you're just watching the tickers right and you don't understand what's going on. Our clients I feel, I mean, maybe they should be speaking on their behalf, but I feel that they are a lot more expected this kind of volatility because I've been talking to them about the underlying you know, fundamentals and technicals, and that I don't see the strength that Wall Street has seemed the last you know, really the just the positive momentum I thought was going to be problematic, just because it was so sector defined and real. Like I mean, if you put a dollar into the S and P five hundred right now, twenty nine cents of that dollar goes to the top five positions. If you look at the top ten positions, it becomes thirty seven cents on the dollar. We've never seen this kinds of concentration. When you have this level of concentration, that means that these stocks have to be perfect, they can't have anything.

Yeah, I mean I think that it's unnerving if you're just watching the tickers right and you don't understand what's going on. Our clients I feel, I mean, maybe they should be speaking on their behalf, but I feel that they are a lot more expected this kind of volatility because I've been talking to them about the underlying you know, fundamentals and technicals, and that I don't see the strength that Wall Street has seemed the last you know, really the just the positive momentum I thought was going to be problematic, just because it was so sector defined and real. Like I mean, if you put a dollar into the S and P five hundred right now, twenty nine cents of that dollar goes to the top five positions. If you look at the top ten positions, it becomes thirty seven cents on the dollar. We've never seen this kinds of concentration. When you have this level of concentration, that means that these stocks have to be perfect, they can't have anything.

Go ahead, Sorry didn't Apple. Didn't Apple just soar right through the global financial crisis and build a business that was, you know, legendary. You know that's a parallel, isn't it. It's a secular A secular change is what AI is.

Go ahead, Sorry didn't Apple. Didn't Apple just soar right through the global financial crisis and build a business that was, you know, legendary. You know that's a parallel, isn't it. It's a secular A secular change is what AI is.

Yeah, you're you're absolutely right, and it will fundamentally change everything that we do, how we work, how we live, how we pay, how we do everything. It is probably it is the largest technological change in the history of time, and who knows what will come after. So yes, I totally agree, But there is always a gap from the runway to the application and the monetization, and so that's what we're going to experience, and that will take time. And unfortunately we don't have enough of a broad based strength in the global economy to make AI carry the tor trust for you know, successfully without any kind of market problems volatility, And I do think I'll pull back.

Yeah, you're you're absolutely right, and it will fundamentally change everything that we do, how we work, how we live, how we pay, how we do everything. It is probably it is the largest technological change in the history of time, and who knows what will come after. So yes, I totally agree, But there is always a gap from the runway to the application and the monetization, and so that's what we're going to experience, and that will take time. And unfortunately we don't have enough of a broad based strength in the global economy to make AI carry the tor trust for you know, successfully without any kind of market problems volatility, And I do think I'll pull back.

I want to drag you back into politics.

I want to drag you back into politics.

Do you mind, No, none at all.

Do you mind, No, none at all.

President Trump proposing tariffs ten percent and in some cases something far greater than that, maybe one hundred percent, and extending tax cuts if there is the opportunity to do so. A lot of the economists that we have spoken with point to those two problems or issues I should say, as new problems on the horizon. Do you agree with that?

President Trump proposing tariffs ten percent and in some cases something far greater than that, maybe one hundred percent, and extending tax cuts if there is the opportunity to do so. A lot of the economists that we have spoken with point to those two problems or issues I should say, as new problems on the horizon. Do you agree with that?

Oh gosh, you know, I am more of a laisse a fair person, so I'm not usually a tariff person. Yes, yes, But that's what exactly I was going to say. I was like, when you see a Trump dealing with tariffs, you're really dealing with him countermeasuring the most Favored Nation status that the China still enjoys from the World Trade Organization, even though they're really the second largest are in some ways the largest economy in the world, So I think that that's a counterbalance to other things that really aren't technically fair and global financial arrangements. From a tax perspective, of course, I would love as amount of taxes as possible, But the truth is this country has a massive debt problem, and I think that the debt problem could be a crackup boom, a debt crisis, even a debt bubble collapse that we could see. So as much as I think that we must cut rates, because we have financed and built acid classes in the last fifteen years on super low cost of capital that cannot be sustained at these higher levels of cost of care capital. If you cut rates and blow up your taxes, the world is going to say that dollar and the country has lost its fiscal stability and we have to look to outside again. It will just pressure again the d dollarization efforts that are already so underway. So we can't go crazy with tax cuts.

Oh gosh, you know, I am more of a laisse a fair person, so I'm not usually a tariff person. Yes, yes, But that's what exactly I was going to say. I was like, when you see a Trump dealing with tariffs, you're really dealing with him countermeasuring the most Favored Nation status that the China still enjoys from the World Trade Organization, even though they're really the second largest are in some ways the largest economy in the world, So I think that that's a counterbalance to other things that really aren't technically fair and global financial arrangements. From a tax perspective, of course, I would love as amount of taxes as possible, But the truth is this country has a massive debt problem, and I think that the debt problem could be a crackup boom, a debt crisis, even a debt bubble collapse that we could see. So as much as I think that we must cut rates, because we have financed and built acid classes in the last fifteen years on super low cost of capital that cannot be sustained at these higher levels of cost of care capital. If you cut rates and blow up your taxes, the world is going to say that dollar and the country has lost its fiscal stability and we have to look to outside again. It will just pressure again the d dollarization efforts that are already so underway. So we can't go crazy with tax cuts.

You'll kill me with this with this question, because I'm giving and give you thirty seconds to answer it. In terms of future massive changes in taxes in the United States, how do you advise people to manage their money.

You'll kill me with this with this question, because I'm giving and give you thirty seconds to answer it. In terms of future massive changes in taxes in the United States, how do you advise people to manage their money.

Well, I can tell you for an absolute certainty that I believe that pre tax deferred retirement build up in iras and four one ks are an absolute tax trap, and that tax policy, mathematically speaking, can only go up from here if we aren't going to actually deal with our domestic social programs and cut benefits. We don't have enough tax revenue to pay for even our baby boomers as they retire in mass by twenty thirty, So we have to deal with that.

Well, I can tell you for an absolute certainty that I believe that pre tax deferred retirement build up in iras and four one ks are an absolute tax trap, and that tax policy, mathematically speaking, can only go up from here if we aren't going to actually deal with our domestic social programs and cut benefits. We don't have enough tax revenue to pay for even our baby boomers as they retire in mass by twenty thirty, So we have to deal with that.

Good conversation, very scary stuff. Thank you so much for joining us, Rebecca, Rebecca Wallser, president of Walls or Wealth Management, joining us here.

Good conversation, very scary stuff. Thank you so much for joining us, Rebecca, Rebecca Wallser, president of Walls or Wealth Management, joining us here.

David Finnerty joins us Bloomberg FX and rate strategist around at a time, but I just wanted to mention briefly David. Singapore'smas maintained the slope, width and center of the currency band, and the MAAS said that the core CPI will fall further to around two percent in twenty twenty five. And also we had inflation numbers in Tokyo accelerating for a third month in July up to two point two percent for consumer prices excluding fresh food. It's not all that hot, but it was a little hotter than the two point one percent, So a very basic question, are the kids all right.

David Finnerty joins us Bloomberg FX and rate strategist around at a time, but I just wanted to mention briefly David. Singapore'smas maintained the slope, width and center of the currency band, and the MAAS said that the core CPI will fall further to around two percent in twenty twenty five. And also we had inflation numbers in Tokyo accelerating for a third month in July up to two point two percent for consumer prices excluding fresh food. It's not all that hot, but it was a little hotter than the two point one percent, So a very basic question, are the kids all right.

At the moment? Yes, I mean if you go to mis first, coinflation is ticking down the MS, it's say the expected to discern the drop in Q four and then further two per set in twenty twenty five, so they've seen the path they're liking it. I think the key thing for the market is, well, how would the recent Sloan gradual slowing of core CPR, which is what MAS focused on, would it change the exchange rate policies because farther than the interest rates, they focus on the exchange rate or a sneer to be exact, And at the moment the market wasn't shut and the moment it's definitely no. In fact, there's signaling they're in no hurry to change it. So if you abolish on a Singapore dollar or you want to think of being outperformer, that's certainly good news. And read chat Tokyo. I think basically came in nine slightly lesson expected. Obviously it's more recent than the national data because it's this month's data. I think, going ahead of boj's decision, is still elevated. So if they want to hike in again, that isn't if the market's certainly thinking they may. If they do hike, they certainly have the argument to back it up.

At the moment? Yes, I mean if you go to mis first, coinflation is ticking down the MS, it's say the expected to discern the drop in Q four and then further two per set in twenty twenty five, so they've seen the path they're liking it. I think the key thing for the market is, well, how would the recent Sloan gradual slowing of core CPR, which is what MAS focused on, would it change the exchange rate policies because farther than the interest rates, they focus on the exchange rate or a sneer to be exact, And at the moment the market wasn't shut and the moment it's definitely no. In fact, there's signaling they're in no hurry to change it. So if you abolish on a Singapore dollar or you want to think of being outperformer, that's certainly good news. And read chat Tokyo. I think basically came in nine slightly lesson expected. Obviously it's more recent than the national data because it's this month's data. I think, going ahead of boj's decision, is still elevated. So if they want to hike in again, that isn't if the market's certainly thinking they may. If they do hike, they certainly have the argument to back it up.

So the end has strengthened a bit in recent days. Maybe that t has taken a bit of pressure. Is there a call that you'd like to make on the BOJ meeting next week?

So the end has strengthened a bit in recent days. Maybe that t has taken a bit of pressure. Is there a call that you'd like to make on the BOJ meeting next week?

I think, well, I think the call is if they don't hike. I think the market now is looking for high commits, but I think about sixty four percent price in for ten basis points, So I think if they don't hike now, then I think the market becomes disappointed, and the market tends to penalize you by setting your currency if they're disappointed. So what Ironically, even though the BOJ hasn't really done anything, the market likes to get ahead of itself because it's forward thinking. And now I think if the BOJ doesn't deliver, then dolly En starts heading up back up higher again. You have to see what the FED says, that's obviously a key component, and what the US data ism and payroll data says. But if you'd say, just the BOJ by itself, if it doesn't hike next week, I think dotty en starts pushing higher again. That can averse quickly though, if US payroll data was weak.

I think, well, I think the call is if they don't hike. I think the market now is looking for high commits, but I think about sixty four percent price in for ten basis points, So I think if they don't hike now, then I think the market becomes disappointed, and the market tends to penalize you by setting your currency if they're disappointed. So what Ironically, even though the BOJ hasn't really done anything, the market likes to get ahead of itself because it's forward thinking. And now I think if the BOJ doesn't deliver, then dolly En starts heading up back up higher again. You have to see what the FED says, that's obviously a key component, and what the US data ism and payroll data says. But if you'd say, just the BOJ by itself, if it doesn't hike next week, I think dotty en starts pushing higher again. That can averse quickly though, if US payroll data was weak.

So let's take a look at overall risk and you know how the global economy is performing. We had that good economic data out of the United States, but we had weak data in Germany and some warnings in fre and we all know what's happening in China. On balance, should we feel comfortable with the state of play in the global economy or concern I.

So let's take a look at overall risk and you know how the global economy is performing. We had that good economic data out of the United States, but we had weak data in Germany and some warnings in fre and we all know what's happening in China. On balance, should we feel comfortable with the state of play in the global economy or concern I.

Think that there's definitely a slow in economy. As you right said, the US data was yes, there was very strong, and we'll be looking at the data next week to support that. But you he said, in Germany, the PMI data came out in your zone did disappoint and obviously China's been disappointing. But again, I think it's a gradual slow down. No one's expecting a great recession at the moment. I mean, you think yours an economy actually has actually picked up. The German economy has picked up. It was in a worse state just you know, a few months ago or last year, so there has been an improvement. So I don't think you can go by just one piece of data and say that's it. You have to look at the trend. I think the more we have a slow in economic global economy, but once not in overall bad shape. It's growing and we have inflation coming under control. So I think the goldlock scenario to some degree still does exist.

Think that there's definitely a slow in economy. As you right said, the US data was yes, there was very strong, and we'll be looking at the data next week to support that. But you he said, in Germany, the PMI data came out in your zone did disappoint and obviously China's been disappointing. But again, I think it's a gradual slow down. No one's expecting a great recession at the moment. I mean, you think yours an economy actually has actually picked up. The German economy has picked up. It was in a worse state just you know, a few months ago or last year, so there has been an improvement. So I don't think you can go by just one piece of data and say that's it. You have to look at the trend. I think the more we have a slow in economic global economy, but once not in overall bad shape. It's growing and we have inflation coming under control. So I think the goldlock scenario to some degree still does exist.

And raid cuts in China a number of them, I mean loan prime rates, the LF as well. What's your sense. So in terms of the strategy that the PBOC is undertaking at this moment, well.

And raid cuts in China a number of them, I mean loan prime rates, the LF as well. What's your sense. So in terms of the strategy that the PBOC is undertaking at this moment, well.

It certainly seems that they are directing the policy more towards the shorter term rates seven day versus repo rates. But obviously when the people look at the third Plenum last week, and if we're honest, no one's really surprised that it didn't come out with a real stimulating growth program. And therefore we're seeing some policy support from monetary policy. And then that you can't do it all by itself. It does need fiscal support to do some of the heavy lifting. But certainly it seems to be that they are comfortable easy rates. I say comfortable because obviously it puts pressure normally you think on that will weakened the yuan. Obviously we saw it rally yesterday, but I think some of that was really more to do with the global unwinding of positions that we've seen this whole week, with obviously then being the main beneficiary. I think if US data continues to be strong, I think the dollar ye one will slightly grown higher. But at the moment, just this easy of policy rates does indicate that they are more tolerant s we say of a slightly weaky on.

It certainly seems that they are directing the policy more towards the shorter term rates seven day versus repo rates. But obviously when the people look at the third Plenum last week, and if we're honest, no one's really surprised that it didn't come out with a real stimulating growth program. And therefore we're seeing some policy support from monetary policy. And then that you can't do it all by itself. It does need fiscal support to do some of the heavy lifting. But certainly it seems to be that they are comfortable easy rates. I say comfortable because obviously it puts pressure normally you think on that will weakened the yuan. Obviously we saw it rally yesterday, but I think some of that was really more to do with the global unwinding of positions that we've seen this whole week, with obviously then being the main beneficiary. I think if US data continues to be strong, I think the dollar ye one will slightly grown higher. But at the moment, just this easy of policy rates does indicate that they are more tolerant s we say of a slightly weaky on.

Well, this is the seasonally tough period for equities and other risk assets. If we do see a lot more selling in global equities, would that be positive for the dollar? Would we see you know, sort of the dollar as a haven play benefit and you know, throw some of these movements in the yuan and the un and the yen off to.

Well, this is the seasonally tough period for equities and other risk assets. If we do see a lot more selling in global equities, would that be positive for the dollar? Would we see you know, sort of the dollar as a haven play benefit and you know, throw some of these movements in the yuan and the un and the yen off to.

Something to go. Yes, I think that does the dollar tend to benefit? And say in risk off it does, But then so does the en, and so does the Swiss rank. So I think the move against the end gets more muddied, shall we say, by this risk off, I think more of the policies of the Fed and BOJA will come to play. But certainly, if you're looking at the dollar versus other counties, say the year one or against Asian currencies, then yes, the risk off really should be, in theory be dollars supportive. And I think what's interesting you have. I've had this big rally in equities and it's gone on. No, no, no, no, on and on and markets historically at some point they all correct. They just do it. And I'm not saying they crash. I'm just saying they correct. Could it be twenty percent correction, could be a fifteen percent correction, and all you really had in this say, look can SP five hundred is this light correction in April vishyere and it chugged on and really it's gone from about forty one hundred to fifty six hundred and fifty seven hundred, so very big rally. So if early next week a week, I think there's room for that correction to be bigger.

Something to go. Yes, I think that does the dollar tend to benefit? And say in risk off it does, But then so does the en, and so does the Swiss rank. So I think the move against the end gets more muddied, shall we say, by this risk off, I think more of the policies of the Fed and BOJA will come to play. But certainly, if you're looking at the dollar versus other counties, say the year one or against Asian currencies, then yes, the risk off really should be, in theory be dollars supportive. And I think what's interesting you have. I've had this big rally in equities and it's gone on. No, no, no, no, on and on and markets historically at some point they all correct. They just do it. And I'm not saying they crash. I'm just saying they correct. Could it be twenty percent correction, could be a fifteen percent correction, and all you really had in this say, look can SP five hundred is this light correction in April vishyere and it chugged on and really it's gone from about forty one hundred to fifty six hundred and fifty seven hundred, so very big rally. So if early next week a week, I think there's room for that correction to be bigger.

Yeah, it's only been about five percent for the S and P five hundred, And it's interesting that we've seen the yen strengthened by five percent, the Nike correct, the Nasdaq one hundred correct. David, Thank you, David Finnerty, Bloomberg FX strategist.

Yeah, it's only been about five percent for the S and P five hundred, And it's interesting that we've seen the yen strengthened by five percent, the Nike correct, the Nasdaq one hundred correct. David, Thank you, David Finnerty, Bloomberg FX strategist.

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

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