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Welcome to the Daybreak Asia podcast. I'm Doug Risner. After the bell. In the US, Apple reported record sales for the holiday period. Revenue jump sixteen percent to one hundred and forty three point eight billion dollars. Now, this is for the quarter ending December twenty seventh. These results reflect strong demand for the iPhone seventeen, as well as growth in services and a rebound in China. Here is Bloomberg's Mark German.
Massive, massive quarter. This is a home run, their greatest quarter ever by orders of magnitude. It's a gigantic bee on overall revenue. China is back. You have a big bet on the iPhone in particular. Eighty five billion dollar quarter is just insane. The installed based two and a half billion. The numbers are just beyond excellent.
That was Bloomberg's Mark German shares and Apple. We're up about one percent in late US trading. The dollar weekend slightly in New York trading, with the Bloomberg Dollar Spot Index down a tenth of one percent. That doesn't seem to capture though the story. In the foreign exchange this week, we saw a lot of volatility not just in the dollar, but in the euro and the Japanese yen as well. Let's take a closer look now with David finnerdy Bloomberg's
rates and FX strategist. David is on the line from Melbourne. Thank you so much for being here. Can we just take a step back, David, Can you describe for me what this last week has been like for the dollar and some of the forces that have been at play.
Well, I think certainly you'd have to go to get starting this sheet is last week. That was Friday, just off the Bank of Japan eating when there was a speculation that the Minister of Funds may have it to be it looks like they didn't. Then later that trading day Bank New York seemed to or at least did to make check, which was a signal pre single point mention. Now that really sparks volatility dollar yen, because the market
there was going to we're all long dolly en. We've got to start perversing those positions, particularly as Dotty and sold off. What's happened since then is that volatility, which was more relatively more related to just dolly En, has got a bit more border This week, and what you've seen is President Champ has come out and he said, look, the dollar's decline and he's not too concerned about it.
That was basically a green light for traders say, okay, we've been looking for reasons to show mc donald again, and they basically jumped on that. So you've seen for dollar's appreciation pick up speed against a variety of comancy. Now not just the end the euro ulti year highs, so did sturning this year Ossie. Dollar's been on a tail eight league. So it's been basically been certainly the G ten space and EM space. You've seen this poor dollars sell off that's going and has been going on.
That was initially triggered by last week's events by Expan, but that was escalated given Trump's comment.
So give me your sense of how FED policy enters this conversation, because today we had President Trump saying that he will announce his nominee for FED chairman tomorrow that's Friday in the US, and earlier in the day Trump reiterated his expectation that this new leader will be lowering interest rates. It was curious today we didn't see much
in the way of movement in the treasury market. It seems as though the market right now expects that we're going to see lower rates in twenty twenty six, although the swaps market is not pricing in the next rate cut until June.
Right, yeah, I mean basically what the market is saying, whoever is named as the next FED president, the market's going to seem like it's the four penalates are out there, Walla, ride awars, and you're looking for also on the divis end of the scale spectrum. So the markets go, look, whoever Rump picks. Understandably, he's could pick someone who he is aligned with his policies, which cuts. So the market's going, okay,
you're going to cut. The new FED governor won't get in till May, so really the new statement or policy meeting becomes really the first Bible play until then, expectations are you look what present sorry Fred chair Power said this week is markets sort of stabilize only from unemployment rate. So he goes, things are quite balanced. They're looking for
more data if they were to cut. So the market's going to realistically, given everything that's going on with FED, we don't see them in a hurry to cut, so really won't happen until the new FED chair gets in, which will be in May, which makes for summer months of June July realistically the most viable option they think from the first rate cut, and then they look into
another rate cut in the second half the year. Again, I do think whoever comes in though, between now and May, a lot of economic days are coming out, and if that data comes out on the strong side, it will be interesting sees the market actually goes back those expectations. Obviously the data comes in weak, particularly labor force and employment rates, they start start ticking. Then the market it's given any green knights. Oh we're happy passing three rate cuts. It's given any chance.
So we've been talking about US dollar weakness. We've also been talking about much more in the way of FED accommodation, and you look at those two things kind of in total, it's easy to figure out why we're seeing many of the precious metals just rally in the past week, although to be fair, gold and silver did pull back today
from record highs. What do you make of this rally that we have seen among precious metals and whether or not this is a durable move or whether maybe we could see a significant pull back.
I think certainly what happened with gold. When you start doing things in I couldn't hyperbolic shape, you start going basically skyward than any market that does that tends to have a correction. It's got ahead of itself. Now the question becomes in a long term play, even as a more correction, it's the long trend still upwards, and I think at the moment there's no reason to say that
it's not upwards. It may be not at the same pace, made more of a grind, and the idea of this sort of the basement trade is away from the dollars. We say, given the policies that we see how the market's reacting to President Trump's policies at the moment, it does appear that their stances well basically not necessarily completely dedollarized. I think they'll be too drastic, but there is a move to say, let's move away from dollar and its commodities. Was a safe haven, you could say, so. I think
that trend at the moment will continue. Particularly think look ran, what may developing. Iran is a worry for the market. If and this isn't if if President Trump was to basically launch an attack on Iran, then I would obviously have impact on oil prices and all this sort of stuff, and I think commodities then would even just get an
additional boost. So certainly in the near term, while yes you're seeing the correction in gold and some other quantities, the general trend, I would still say risks US good to them to go higher.
Yeah, we had oil soaring today after the President warned Iran to make a nuclear deal or face military strikes. I think WTI in New York trading was up around three and a half percent. Similar move in Brent crude during New York trading. But as we get ready to wrap up the week and maybe we can look a little bit as to what we may get next week, will volatility be with us still or do you expect markets to kind of calm down at least in the short term.
They'll come down a little bit, But I think volatinity is sully for the near term. Is head to stay with a.
Poison for it.
If you look at option and pie volatility, it's comes a little bit but still relatively elevated. I mean, next week you have an RBA decision where the market is picing about sixty seven cent chance for a great hike. So if that was the philosophy, see the ousix then gains and they could pull Kimi with it. Obviously, developments on Iran that could, if it's happened, could kick off at any time. So I do think sunny for the
near term. Mark is going to stay on edge, given just all the geopolitic events gone going, and with central bank seasons coming. So I think a bit of calm maybe today because we're going to month ends and people will get ready for next week. But the markets could be very wary that you know, it could kick off
again at any one time. All you really need at the moment is President Trump to send one headline on the dollar or on ivan or something like that, and all of a sudden the markets back into you know, back into sell motes or some a dollar moller nightly.
Okay, David, we'll leave it there. Thank you so much for being with ub. Bloomberg's David fennerdy FX and rates strategist, joining from Melbourne today here on the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast. I'm Derek Prisner. Tech stocks across the Asia Pacific are performing significantly better than their US counterparts did in the regular session. Pulse results after the US closed seemed to be driving that positive sentiment across the APEX. And that's where we begin
our conversation with Harold Vonda Linda. He is head of Asia Pacific Equity Strategy at HSBC. Harold spoke with Bloomberg TV host Annabel Drulers and David and Glace.
Let's just kick off on that text story. I know that this is the year that you're going to be looking beyond the AI rally, but at least in the.
Fort the moment, no needs for that.
Ye try to ignore it.
Ignore no, absolutely, So this is the only story in the region. Uh, maybe China's a story as well, but it's basically the only story we said at the beginning year that will be in this year. We're going to also have to look beyond because India's maybe recovering and maybe something in Alsia, but that's not really happening at the moment.
So the story remains in Northeast Asian.
So for the North Asia story, right, Korea, Taiwan, shortages in tech stocks, very strong earnings upgrades in the in these markets.
Absolutely, that's our starting point in Korea to zero in on that market value. I mean, the discounts clearly disappeared, the career discounts. What does the earning story look like? Do you think it will justify a further reradio.
The earning story is very strong. I mean, look at how careers performed.
If you look at the valuations of the market, it's it's moved up a little bit, not so much because the earnings have gone out so much as well. And what we now see in terms of positioning is that people have already got a lot of exposure in Taiwan. They can't really buy them much more because you can't have an Asian portfolio when only one stock in it in Taiwan.
So exactly. So, actually, as that market continues.
To perform, you see that people actually have to sell, so they try to build that exposure somewhere else, and that's helping Korea as well. So you see them rotating into into the SEX and these these talks, of course, and there is still room for that to grow.
Global funds are coming in as well.
You just mentioned earlier on there's a bit of rotation in the US market, so you see that they're looking for a kind of AI place outside of the US, and then careers you offerous choice.
Then so you think there's this is the year that the career really just continues to be the standout in the Asian region or are you looking at other markets as well, of course as Japan, or there's Taiwan Hong Kong. Which one do you think is going to be the biggest beneficiary. I guess of that rotation away.
If there's a rotation, I think there's some interesting things happening in China. There are interesting things happening in India, but it's slow and it's not so visible yet, so that might well be a story that just takes time before the earnings are recovering there. There's a bit more stimulus has taken place, so it looks like the earning story is picking up in India, but it's very slow, so at the moment, it's not something that gets a
lot of attention. So that might be something that happens in an.
XT quarter or so.
But we also see money coming back into China. That's interesting, and this is not mainland Chinese money that was the main driver for last year, but we actually seen money coming from Europe and also from the US, and in particular on the US that's not something we've seen over the last couple of years.
But they're starting to go back into Chinese stocks as well.
Do you get a sense that that will will continue, because that, I mean, that was for many years the potentially the incremental buyer of this Chinese market. You know, you know, we're underweight China. We've been massively still underweight when you look at the positioning, right, So I want to get a sense of I.
Mean, you're absolutely right. Two years ago, I think we actually spoke about this one. Everybody said, oh, it's about Asia x China or emerging markets x China. That story is gone. A lot of US funds said, no, we're not going to buy China. Is there's no interest in this whatsoever. Difficult to sell. But now we have a different dynamic. We have a wik dollar, so you want non US assets. Europe is already they went last year
into Europe. Now they're looking somewhere else. Emerging market shows up, and then you need to find markets where there's a good growth story. You know, we just spoke about Korea, but in China things are picking up as well, look at the Apple results right. That gives another confidence, Hey there are there is something going on there. The market has performed pretty well last year, so I think the interest is starting to come.
Back in there.
Do you get is the four Do you think the formula for China this year will be what worked last year, which is you know your your platform company, some of the financials on income and dividends, and I think materials did quite well. Or is there a cyclical story, a rebound that we might be sleeping.
I think there will be a bit of a cyclical story. I think. Okay.
So the interest is to a large extent, has been in dividend yielding stock sort of safe investments, and this is mainland Chinese buying Chinese stocks, initially in Hong Kong. Then they went to the Asia market later on and they bought Bank of China and these sort of companies gave you a good yield, ye have very safe sort of investment.
What we now see is interest going into other sectors.
So Ai China Ai biotech is coming up quite often, and then you have these other sort of sectors that.
Do pretty well.
Power equipment is doing very well because you're building out all sorts of UH networks in China as you need that. So there are these industries where there is no walk supply where things are happening. This is where the focus is shifting in that direction as well.
The IPA pipeline, though in Hong Kong is still very.
Robust, coming into robust is under statements.
Sure, and I'm wondering if you think that there's any concerns about liquidity being drained from the secondary market on that basis.
Yeah, we have.
Last time we looked three hundred and sixty IPOs in the pipeline, so that's a lot and some of them are big, some of them are smaller companies as well. There's a lot of these Ai companies that need capital so they're listing.
There is a lot of As I said, there's.
The Chinese local money, mainland Chinese money coming into Hong Kong. You now have foreign money coming there as well, so there's a lot of lacidity around. So I'm not worried that that will drain money out of the secondary market. It might happen from one week to another if there's a real big IPO, but not structurally so at least
not at the moment if that would happen. Though, Let's say it's difficult to sell your IPO, you get to lower your then you see that that three sixty number probably goes lower, because then some companies might say, let's wait a little to the market is a bit stronger. So that's a moving target as well. But I'm not overly worried. Liquidity is really.
Good to them.
Key to the liquidity issue formula will be will be the fed we heard from the US President earlier. I want to play it out for years, and we'll talk about it soon. Let's play it out, guys, please, what day.
Will you be announcing your bet here.
Peck next week?
Tomorrow morning, tomorrow morning?
What day will you be announcing your.
Bet here peck next week?
Tomorrow morning, tomorrow morning?
Do you know I'm Lage was saying tomorrow. But just an outstanding person and a person that won't be too surprising to people. It's going to be somebody that is very respected, somebody that's known to everybody in the financial world. And I think it's going to be a very good choice. I hope so much. On your short listen on my reasonably short list year.
So Harold Kevin Hasset, Chris Waller, Kevin warsh Rake, Wrider. Doesn't matter who among the four eventually gets us.
No, this is an important position, so it matters, and in conversations that we have a client, it comes up with who it might be.
I mean, we don't know it, so every second guess.
But it does matter because uh, we need the independence of the fat.
That's really important.
We're also in a strange situation whereby we now actually see that the inflationary prescires remain. The market is saying, you know, in the beginning of the year as well, there's going to be raate cuts coming through, but increasingly saying, ah, maybe not so much. We actually don't think there will be a rad cut this year. We don't even see a ray cut next year. So there's a bit of a recalibration in the market in the opposite direction.
So you need somebody who can, who.
Can who can lead an institution of course with yeah and and co credible policies.
It's incredibly important.
That was Harold von de Linda, head of Asia Pacific Equity Strategy at HSPs. He was speaking with Bloomberg's Annabel Drulers and David Nglace bringing it to you here on the Daybreak Asia Podcast. Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at the story shaping markets, finance, and geopolitics in the Asia Pacific. You can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere else you listen.
Join us again tomorrow for insight on the market moves from Hong Kong to Singapore and Australia. I'm Doug Chrisner, and this is Bloomberg