Bloomberg Audio Studios, Podcasts, Radio News.
Welcome to the Bloomberg Daybreak Asia Podcast. I'm Charlie pellat Doug Prisoners Off. This week coming up, we'll get the latest on the trade front when we hear from Inu Manak Fellow at the Council on Farm Relations. But we begin this morning with markets. The dollar slip for a six consecutive session Friday, poised for its longest losing streak since March of twenty twenty four. That's after President Trump tapped Council of Economic Advisor's chair Stephen Myron to serve
as a Federal Reserve governor. Earlier in the date, Myron threw his support behind Governor Christopher Waller to succeed FED Chair Jerome Powell. Both have echoed Trump's call for lower interest rates. For more, we heard from Ivyng, chief investment officer for the APACK at DWS. She spoke with Bloomberg's Heidi Stroud Watts and Paul Allen.
I'd be great to have you here. I just want to get your thoughts there on this movement at the FED and you governor potentially for a few months at least. In Stephen Myyron, he'll of course just be one voice in the room. But Chris Waller is chair. How does that sound?
I see instead of commenting on like a people movement, we're more focused on the data itself because on last Friday, labor market data is clearly showing the weakness of the labor market, and we really look at the Federal Reserve there that two key mandate they look at is one is invasion. Of course, invasion data is going to move higher with the tariff that we're seeing on the market, but the labor market witness anyway, the federal re civical
for more than dovis stent. So if we look at next showmans, we still believe that there will before weights cut on the table.
The people in the room, though, do make a difference. I mean both Stephen Myron and Chris Waller, you probably describe them as duves. More likely the ease in twenty twenty six.
Make it easy and easier for sure.
So where do you see the cash right hitting in the US next year?
We're saying about like there would be like a four weight each of them about twenty five business point like, so that having more doel federal reserve governor on the table is definitely better, But idea like the federalism is still more data. Jifferins. So we focus a lot of on the economic datas does.
That return the idea of sort of American exceptionalism in US assets or is that still a quandary as long as the trade uncertainty continues.
I think like that still depends on like what is
the data looking at, like when you talk about US exceptionalism. Like, so we look at the economic side, look at the corporate earning size, but if you compare about in terms of the economic growth that we are seeing in US in this year, yes, is still higher than eurosoon, but if you look at the next year, based on our in house reield erosome, we'll be able to deliver higher GDB growth than US pretty much Giffern by the physical stimulus that Germany is going to put on the and
this from the macro perspective, even from the corporate earning perspective, Yes, US in the second quarter is still deliver excellence results that we are seeing in the market, particularly driven by the or the tech company. But if you look at in the Europe company like for the next year, I'm not saying about there would be delivered higher earning than the US company. At least the gap we are seeing between this two region is going to be narrowing. So
is US still leading the market itself? There were still majority of the part of the market, but in terms of incremental money, we believe that there will be some incremental money. Thinking about on top of US, where would be a better place to put in when the difference between US and other region kind of narrative.
And you do you think Europe still has further to run, but maybe more selective? What about in Asia as well?
Asia?
We actually we like Japan, like I guess it's like a pre controversy, like we actually particularly like the Japan like property segments, maybe market we think about if we are expecting about two ways high coming in the bog like, why would we actually like the property seven is cell And the actually market share price is kind of revetting it right now if you look at Japan property particular on Japan, jbets is currently trading about fifteen percent discount
to the NAV versus historical average, the Setter Journey ten percent premium. That's pretty much because of the macro impact I'm not here to call about like we are done with the weight hike in Japan that we're definitely not putting in this case. In fact, our in house we're thinking about there is two more weight hike coming in Japan in the next trow months that we are seeing.
The key part is that when you look at close the global market, which markets still give you a decent spread between like the property and OIU versus like the that cosse even you're take into account of the way time we are putting in, there is still a decent spread in the Japan market is cell So like that's
just the key part. And then we look at all the fundamental data, be it office, be logistic like a multifamily, all the setter isself due to the construction shortage we are facing right now in Japan because of the aging population, the demand suppie story is actually quite attractive. And not to even touch on the like corporate actions that we're
seeing a class or the whole Japan. If you look at this particular setter with a jay with if the buy back a month in twenty twenty four, it's already higher than the last ten year aggregated number of the buy back a month, So like this setter is actually paid pretty well with like all the thematic we're talking about in Japan.
And how about some of those really trade exposed sectors of Japan's equity market. So what's you view on that? And do you see that trade uncertainty now receding or is it just evolving?
I think it's like it's depends on where is the expectations like compared with like on liberation day. Right now it's like basically receding a little bit, but like in terms of before the liberation date, it's like definitely all the export focused company like a trade related company that
we're still getting affected. But like it's also set up by set because since I was touching on the property one logistic was the one people kind of say, oh, does it affected by the trade because there's more related to the tariff matter. But if you look at Japan just etcetera, particular for the property funds, it's more focusing on the domestic consumptions instead of external one. So that CETA itself is actually relatively immal.
How do you feel about China because there's relative calm and it's fully expected that probably that trade truth will continue.
Yes, yes, I think China isself like in terms of the tariff impact, like it's actually not really a key focus on the market, I would say because if you look at between Trump one and Trump two, given like the amount exported to the US is actually reducing, and also the export to US as a percent of China
GDP is also below three percent. At this moment, it's still a news headline people focusing on, but a lot of focus actually have been focusing on the domestic consumption part Like it's a domestic consumption it's really getting better. Like of course a lot of driver is regarding the trading policy, consumer stimulus, but we did see that recently we're in between of the result season in like Hong
Kong China. For some company with more exposure in the China retail market, they actually say that it's more a bot based recovery they're seeing, not on that particular semon, not the particular on high end or like a Circle Star that is very popular. But this is what they're saying is like they see the bottoming, they see that it's a bot based recovery over there.
I mean in a PAC chief in investment officer at DWS.
Welcome back to the Daybreak Asia podcast. I'm Charlie Palatine. This week for Doug Chrisner. Indian Prime Minister Narendra Modi spoke with Brazil's President Lola Thursday about strengthening trade ties amid rising US tariffs. Earlier this week, President Trump hit India with fifty percent tariffs to penalize it for its trade barriers and purchases of Russian oil. Modi is also expected to visit China later this month for a summit with President Ji Jinping, his first trip there in seven years.
For more on the tariff story, we heard from Inu Manak, fellow for Trade Policy at the Council on Forim Relations. She spoke with Bloomberg's Heidi Stroud Watts and Paul.
Allen and a great to agree with us. And this is another example of President Trump sort of trying to achieve his foreign policy goals through trade policy. Right, do you think it will be successful? Given that we know for India the issue of purchasing Russian crud is really a deeply structural one for its economy.
This is going to be a very difficult negotiation with India and the use of tariffs as a tool for all sorts of foreign policy objectives has been sort of the method for President Trump. Now with India, what we're looking at is the potential for these tariffs to go into place on August twenty seventh, and that would be bringing it to about a fifty percent rate. That's an enormous amount of taxes that we would apply to Indian imports coming in.
Now.
Some of the products that we're most concerned about, like pharmaceuticals, electronics would not be affected yet, but there's a chance that all of this will be ratcheted up as well in due course, making this a very challenging negotiation that will likely have to be extended.
What does it mean for India that has sort of in recent years become the rising counter an ally to the US against China, right because China also has Russian crew purchases. But those negation negotiations kind of just keep getting extended, and we're seeing the likes of traditional US allies as well, like South Korea, Japan, the Philippines really struggling to get to a point where they can get a compromise with the White House.
You know.
One of the odd things that we've seen during this administration has been the fact that traditional allies have been treated more like adversaries, and our adversaries have seeningly had an easier time dealing with the US president. So this is a very odd time and one where there is a shift in policy that is noticeable. We saw during the Biden years there was a lot of courting of India, trying to get India as a bulwark against China on the US side to adopt some US policies towards China
that were similar. But what we see here is some sort of transactional deal making that President Trump hopes to achieve through these tactics, but it's not really clear that this will pay off. And in the meantime, we see India reaching out to others at Brazil like China, and that could actually threaten long term US objectives.
Yeah, again, to your point on timing, that timing is interesting. Nurentromodi's going to be meeting Lula to Silva first visit to China in seven years. The timing is coincidental, but India of course has a long long history of non alignment. To these meetings to some degree help India position for life outside of the US fere.
In many ways, that's the trajectory that India was taking for a long time, and only more recently have we seen this pivot whereby India is looking to strengthen its ties with the United States in a more productive fashion and to pivot away from some of those relationships. But I think President Trump has has made pretty clear that he is opposed to the bricks countries, including India, from taking on any sort of counter to US power across the world or setting up a currency, for example, that
would be a bricks currency. So I think what we're seeing is sort of the bricks countries again sort of aligning a little bit on some of these issues, and perhaps that could lead to a little bit of pressure on the United States to change course in its current policy.
And we heard from Narentromodia moment ago. I mean he vowed to protect Indian farmers at all costs. I mean domestically, politically, there's a lot on the line for Prime Minister Modi here, isn't that oh absolute?
You know, India is one of the toughest negotiators you'll ever sit across from They have been persistent in maintaining fairly high levels of protection on many markets, and their tariffs remain fairly high, and India has not been willing to back down on that for a very long time. So I think for the Trump administration, this is an attempt to sort of force India to make those systemic changes that have been a problematic for quite a long time. And I'm not quite sure that India is going to
cave across the board and all these things. But as we've seen with the deals that have come out so far, there are certain carrots that have been given in order to lower these terraf rates, and other countries have been willing to give something back to the United States, whether it's in investments or in reducing some targeted terror farrier.
So I can imagine that India could strike some sort of deal that still maintains quite high levels of protection and yet gives the United States something that it can live with.
Do you see sort of fundamental changes when it comes to realignment of strategic relationships within Asia, particularly pertaining to the global self. We've seen efforts by beajing or ready to do that. Do you think some of these changes and sort of re alliances, if you will, might be longer lasting than just this US administration.
It's entirely possible that we could see global realignment of a lot of different economic and diplomatic relationships as a result of the Trump administration's tariff policy. You know, we're already starting to see trade patterns begin to shift. We're seeing some partners of the United States look for other markets to diversify their exports, and so I think that that could lead to more permanent changes the longer that this goes on. Now, of course, there could be a
reversal in the future. The courts are reviewing the current tariffs that have been put in place, and then that could overturn some of these tariffs. Could still come back in terms of other statutes and laws that the president
could use to enact additional tariffs. So I think that for the remainder of President Trump's time in office, this is going to be a rocky couple of years, and allies are going to have to weigh whether or not they're going to wait out any substantive change in US policy before they make substantive shifts in.
Their own all right in my nec fellow for Trade Policy at the Council on Foreign Relations.
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 Prisoner and this is Bloomberg