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the Bloomberg Terminal, and the Bloomberg Business Apps. Checking with Jay Haffield.
He's plays in this part of the rod a lot.
Jay Haffield is CEO, founder and portfolio manager at Infrastructure Capital Advisors. Jay, I know your long career, You've long looked at, invested in thought about China. What do you make of some of the recent moves by this Chinese government to try to reinvigorate its economy.
Well, we've actually been more op a mystic about the Chinese economy for a while for really two reasons, and that is that, first of all, everybody ignores the fact they save forty five percent of their GDP. We talked to you folks who are talking about that, do we No, we do not do that my personal account when we were talking about or you were talking about before, you know, our fiscal irresponsibility. So we save about twenty percent of
our GDP China forty five. They can invest that badly, like say ten percent and get a five percent growth. So everybody kind of ignores that focus just on property. But we've also been thought actually that this would occur because there's one and really only wanted advantage of a centralized economy. That is, if you have a crisis, you don't have to have Congress arguing about it and saying it's a bailout. It's just a bailout, and it happens
big and anybody complains, you know how plays consequences. So when they decided to deal with this, which is just I guess a week ago, you get this kind of power rally. I noticed a CSI is on. We have nine percent, so it's cooling off a little bit for the days. But so that's the key is a lot of money to put to work and a powerful central government that can solve the problem and also pretty tight monetary policy up until now, so it's not like they've been super loose and now getting even looser.
You know, I talk about a crisis. I'm very curious about why this moment as we head into this holiday, but why they decided to do this now? And then you talk about that savings rate and we're well acquainted with the kind of property crisis we've seen across the country. How difficult is it going to be for them to change what are here kind of economic and cultural habits of the country to get them to spend more and to deal with this property crisis.
Well, I think that actually it all came from policy in the first place. It's really a crackdown on wealthy, influential people, which the party thought was a threat to their power, and so they just were running with that, and then at some point they realize, oh, yeah, that's right, people do care about economic growth, or we do care, so we have to come back to that. So it's really just authoritarian flip flop.
So how does a politics figure into this, because I mean, I would think that the Chinese economy really cannot fully recover without really aggressive trade with the rest of the world. How do they think about the US and the rest of the West in terms of trade, because it just seems like if you just provide some stimulus, that's not going to get it done well.
I would still go back to if you've saved forty five percent, you can paper over a lot of problems. And so there is going to be pressure from additional trade restrictions, particularly if Trump becomes president. But it's important to note that if you have a physical and monetary policy firing, you can deal with a lot of the problems on the trade front.
You mentioned if Trump wins. Let me just get your perspective on the election here in the US and sort of how you're thinking through what may or may not happen to hear in the next couple of six weeks. Six weeks to go here, and there's a lot between now now and then. How are you framing or thinking about the election and the impact it's going to have globally.
We're not far off from your prior guests. Maybe we get there a little bit differently. We're not polsters, so we look at gambling ons as are sort of markets. If you look at the chumulated probabilities, you get the same close to the same result as your prayer guests. Twelve percent chance of a Republican sweep, eight percent democratics, or it's eighty percent. Eighty percent is good in our situation.
Our political situation, you want divided government. Each side kind of fights the other spending, so you have less spending, less change. We don't want an increase in corporate taxes. That's a terrible economic policy and it's terrible for stocks. So democratic sweep, irrespective of politics, wouldn't be good for the stock market in the short run. You get a lot of capital gains harvesting, which we normally don't get, so you would get a really weak market and a
democratic sweep. Case it's only eight percent, so we're focused on the eighty And we still have a six thousand target, which looks too conservative right now, but we're not going to raise it because it's already pretty aggressive. It's twenty one and a half times next year's earnings.
Thirty seconds left.
You still like the banks we do, We think you should be out on the risk curve, so that's banks reads. Tech is probably going to underperform on the fixed income side. Preferred stocks are likely to continue to do well. They've been doing really well, so take more risks, go out on duration because all these global rate cuts are very powerful and drive global rates lower.
Next time you walk in the studio, just say preferred stock, and we're gonna do a whole semeon referred stock because we never talk about stocks. Yes, it remind me because I used to make a lot of money selling those things back in the day, and nobody talks about them anymore. I guess I know interest rates is zero forever. So j Hatfield, CEO, founder and portfolio manager Infrastructure Capital Management, appreciate coming in studio. Talk to your public relations persons
about timing that holding. So anyway, Henrietta tres Joints is managing partner in Vada Partners. Henrietta, what moves the needle if anything between now in November?
Fifth, great question. We really only have one predictable event left and that is tomorrow night's vice presidential debate between Jadie Bance, who is currently over ten points underwater in the favorability ratings scale, and Tim Waltz, who is ahead
by about three and a half points. So I'm expecting a more of attention on turning out the vote as opposed to specific policy prescriptions out of the ninety minute to bate tomorrow night, I imagine they're going to try to not just reach voters for watching in real time, but all the ones who will catch up the next day on social media with the memes and everything. That I'm anticipating is really just expecting a meme worthy event more than a policy heavy event.
A meme worthy event, Henriette, how much does this debate matter? I think back on past vice presidential debates and more conventional campaigns often sandwich between presidential debates. Seems like we're not going to get another one of those. How much does this matter? And let's take each of the two candidates in kind, what does each have to do on stage tomorrow here in New York?
Yeah? I don't think that. Based off what we saw on the first presidential debate, which has a lot more at stake, there wasn't a ton of movement in the polls following. People did get to learn about Kamal Hyris's policies and they were received favorably, and the most memorable moment of the night was probably Trump saying, you know, eating the cats, eating the dogs, something along those lines
is more of what I'm expecting to come out. Tim Wallas is the most non understood, least known candidate on the field versus JD Vance, and so I think that there's potential for him to lose vote share and see that plus three percent favoritability rating drop. That's usually what happens, people like you less after a debate than they saw you before. That's not the case that we saw with
Kamala Harris. But there is a lot of room for Waltz to go in either direction, whereas JD Vance's numbers are pretty baked in and then been very consistently underwater since he got into the race. Negative ten, negative thirteen and thereabout. So I think jd Vance is the most to gain tomorrow night, and Tim Watz is at risk of becoming more well known and then therefore less popular. So that's probably the starting point I'm going to go into it with Henrietta.
I saw over the weekend that Kamala Harris raised fifty five million dollars in California fundraisers. Does that even matter anymore? I mean, I just don't know how you appeal to those five to ten to fifteen million voters that suppose are going to decide this thing.
Yeah, I was actually just looking at the numbers and I have to read them a couple of times. The Harris Waltz campaign raised two hundred and eighty seven million dollars in August versus eighty five million for the Republican ticket. There is this huge deluge of an enthusiasm represented by these numbers. But what I would anticipate and what I focus on a lot, because I think it's more important for the tax bill is where that money is being spent,
and a lot of it is trickling down ballot. So you see Republicans now defending Senate seats where they should otherwise have no business spending money. States like Texas and Florida for example, even Iowa and then you in Nebraska would be another example, and then down ballot even further on the House side. The Democrats have just expanded the map into non swing states, into states and districts where maybe Biden one, but maybe Harris is potentially going to
pick up tiny little pockets in the population. And that's her campaign strategy. Go into the suburbs, go into some of the rural areas, whether it's in Pennsylvania or North Carolina or Georgia and really try to speak to voters exactly where they are. So think of the money not in terms of what it can do from a big picture perspective. You know, everybody's already bought their ad campaigns, but think about how it fuels up a gas, fuels up the gas for a tour bus for House and
Senate members to go on tour in their districts. That's where all that money's being plowed into, and that's going to be the difference between a split ticket excuse me, split control of Congress next year, or a suite for one party or the other.
The Harris campaign spending an average of seven and a half million dollars a day in August compared with two point six million a day Donald Trump hender. You mentioned the tax bill. How are you thinking through the likelihood of there being significant changes to the tax code. You mentioned that debate between Vice President Harris and former President Trump in Philadelphia, and we got more economic policy points
from her on the heels of that. So much of this hinges on who's in Congress, what the dynamics there are. Walk us through sort of how you're thinking about that amidst all this uncertainty at the presidential level. Looking, how should we interpret what these two candidates are saying about taxes in light of the fact that they're going to have limited power to do much without Congress.
Well, I'm going to be kind of aggressive here and say the two sides are not far apart at all, and the election outcome I think is going to be pretty easy to translate to tax policy. Here's why. If Trump wins with ninety percent odds, I anticipate he'll have a Republican Senate and with sixty percent odds they'll have a Republican House, So that's one party control. All of the tax peds will be extended at their current rates. I do not think the corporate tax rate will drop,
there are not enough votes for that. The United States set at the salt cap will go to twenty k or thereabouts. We will not repeal the IRA tax credits for manufacturing, et cetera, et cetera. On the Democratic side, if Kamala Harris wins, I still have ninety percent ods, the Senate is going to be Republican. What happens in that universe exactly what happened in twenty ten, you get a two year extension of all the existing tax breaks
for every income bracket. You raise salt to maybe forty sixty K, you provide a child tax credit which is in about another trillion dollars, and you maintain all the IRA tax credits. That's going to be your bill of Kamala Harris wins. The idea where Democrats have a sweep control is only a ten percent prospect in my opinion. So effectively, what I'm saying is, no matter what happens at the top, you're going to get a two year extension at a minimum of all the existing tax breaks.
That's a blueprint that we've had all year long. It's not that confusing. It seems really clear to me. So that's what I'm expecting next year. We'll deal with the debt ceiling first, and we'll send the second half of the year on taxes. Pass it in late December, and everything will be extended for two years out of minimum.
No equivocating their pall.
I mean, that's why Henrietta is the best. I mean, I mean, it makes it pretty clear here Henrietta. I mean, from a political perspective, does anybody care about the debt and the deficits and things like that, or from a political perspectives, that just the third rail and there's no upside.
They sure don't, you know, you look at the policies that have been enacted, not just since COVID, but going back as I went back to twenty ten. There's just not a concern about the deficit and federal spending right now. I have this conversation a lot with foreign clients where they're saying, you know, surely America is going to get learned about this, and then you come over to the States, and American investors do not follow this nearly as much
as overseas investors. And I can promise you that in a campaign, an electioneer, Democrats and Republicans are not thinking about on Capitol Hill, the scenario where Harris wins and we get a two year extension of everything means that in that interim two years twenty six and twenty seven, we have another round of fiscal negotiations around as Simpson Bulls asked, bipartisan deficit reduction compromise, And unfortunately, I'm going to default to the base case, which is that even
after those commissions are organized, nothing changes.
We see Donald Trump heading back to Wisconsin. He was there last week. He's going to go there again on Tuesday after a stop in Georgia. Kamala Harris out in California then in Las Vegas. She's going to go visit FEMA headquarters today. After what happened over the weekend with the storm in the southeast. What would you if you were running these two campaigns. We know what the swing states are, the five six swing states. What would you
be prioritizing at this point? It's interesting, just kind of divine based on their travel where these campaigns think they need to be spending the most time. You talked about Pennsylvania a little while back. It seems like that is the magnet that is drawing them back to Pittsburgh over and over and over again. Where should they be focusing on this point? And how resonant do you think their message is when you look at that kind of granular level, you.
Know, instead of repeating something that is very fair but often stated by people watching the polls, Pennsylvania's critical. The money that Harris has raised allows her to, you know, juice up a tour bus and go to the different suburbs and rural areas of Pittsburgh and the outlying areas and really turn out her margins where possible there but to tie into the hurricane those the hurricane went straight through a Republican voter war path and it is decimated
huge swasps of the country in that exact area. I think that the Trump campaign should spend a lot of energy talking about mail and balloting to those voters who don't have the infrastructure and will you know, will be busy rebuilding their homes and maybe not available to give a vote on the first Tuesday in November because of
the destruction that the hurricane is. I would spend all my resources on shoring up those boats that are already locked in for the Trump campaign but now are very much at risk of just not showing up because of the destruction that just occurred.
Wow, all right, Henriette, I think I appreciate your tying all that in for us. Henrietta Treds managing partner Veta Partner's Boy. From my perspective, usually is nobody better and kind of bringing it all to the front. Here. Looks like we're going to have some labor strife on the eastern docks here in ports along the East Coast and Gulf here. It just doesn't seem like these two sides are making any leeway or any headway in terms of these discussions.
Get the latest reporting from Danny Berger. She's a host of Bloomberg Television. Danny, I see you stand and there are folks on YouTube can see you standing at a dock somewhere that is ground zero for these discussions. What's the latest reporting.
I'm at one of the busiest docks. I'm in Newark, and docks like this have been preparing for a strike at the strike of midnight tonight. They've been extending hours because by all accounts, this will go ahead. There are no current talks scheduled between the Longshoreman Association, that is the union that represents the Eastern and Gulf ports and the employers. There are two main disagreements that this is over. One is about pay. They want a significant pay rise
from eighty percent over the next six years. The current offer on offer, they say, is stingy. The second thing they want is they do not want automation. They want things written into the contract that says that there will not be more automation on the docks, akin to what we have in Asia. In Amsterdam, now, the workers here, they do have significant leverage at this moment. For one, they have an administration that is friendly to labor, and
they also have a supply demand issue. There are not enough people who want to do these jobs, so they have the kind of leverage that, ironically, in the first place, is why so many of these docs want to automate a lot of these jobs.
So what's the latest here, Danny? Where are these two sides? I mean, this sounds like they're not even close here. What are the next steps really?
So they are far apart. You're completely correct, they're so far apart that there are no talks that are scheduled for this moment. Some of the steps that we have seen that's kind of occurring in the background is the administration trying to mediate this. Again, the administration is in a catch twenty two. They want the union support, so they don't want to step in and prevent this strike from happening, but at the same time they don't want the economic damage. So the strike will happen twelve oh
one am on Tuesday, then talks will presumably happen. Now, most by most accounts, experts we speak to think that this will only last for a few days. There is significant pressure here considering the money, the economic impact that is at stake. But again the Longshoreman Association say that they are ready to quote the head of the long Shoreman's Association. He says that a sleeping giant will be awakened come tomorrow morning.
All right, Danni, thank you so much for joining us. Danny Berger hooset to Bloomberg Television Live reporting from the docks in lovely Newark, New Jersey. I was over in the Motherland, over in Ireland last week, seeing the people, seeing the family. Apparently the Bank of I mean Japan, the PBOC was pretty active last week, David, and I think that's good news. It's certainly good news for folks that own Chinese stocks like Ali Baba. But what does
it mean here? Amanda Rabella joins us. She's had of x tracker sales us on shore at DWS Group. She joins us here in studio. Amanda, thanks so much for joining us here. Again, what did you make from the PBOC last week and what they're trying to do to the Chinese economy here?
Yeah, absolutely, it's really interesting. China is something that we're always speaking about X trackers. So we launched the first A shares you know, direct holdings of the China shares with the West Nasset Manager almost years ago actually in Europe and also in the US as well, and so we've now become like the default for that exposure. So we were pretty busy to stay the least on Friday
and actually today as well. PBOC on Tuesday they announced a number of stimuli which were then effective as of Friday, so we saw a really big jump in the market. I think all of us know that China has been really out of favor for international investors for the past couple of years. In particular, was definitely a darling, but I would say post pandemic has never really kind of
got back to where it was. Obviously, we've seen the cut in projections regarding the target GDP growth that the government has been expecting historically was around six and a half percent came to about five percent. But there's been a lot of cynicism from Western asset managers western investors over the past couple of years about whether the five percent was actually achievable, and so what we saw on
Friday effective was some changes in rates policy more broadly. So, first of all, we saw decreases in the reserve requirement ratio, and then we also saw a cut in the seven day reserve rate as well. What these two together have done is that actually it's injected the Chinese economy with one trillion new one which is now available for investment,
and the market received that pretty well. So we actually saw on Friday the market the CSI three hundred increased by just shy of four point five percent, and then it's closed that over eight percent up on the day, which is incredible.
So being called the PBOC put by exactly people I know.
I don't think it's over as well, think there's more to come.
Yeah, I'm curious you talk about the sort of investor's skepticism that there's been the backdrop to all of this, and I wonder how curtive you think these efforts are going to be in allaying those concerns. So, given that skepticism or fear about the state of the Chinese economy, is this in a way alarming?
Is it?
Does it in gender more confidence? How do you see it sort of playing out? I guess attitudinly, I.
Think we've seen it as pretty positive. We and also are inventure partner Harvests, who are headquartered out of Beijing, and so you know, even though they are headquartered out of Beijing, they're actually quite measured in terms of their views. They're not always massively bullish on China. What's really interesting is that, you know, the biggest sector which is always under pressure is residential property more broadly, and so these two acts and more supportive for the property kind of
sector overall. What we see as well is that there will be more government issuance of treasuries locally, which will be kind of basically for funding infrastructure and property exercises as well. So we think then that's all positive. There was also a repercussion as well for you know, retail mortgage rates as well, So again that's supportive from a grassroots perspective, and you know, I think US and Harvest we expect that there's more to come from a fiscal policy perspective as well.
So you mentioned last week we did get a lot of fiscal policy measures very positively received by the marketplace. Again, Mike Proxy is just Ali Bobbings. I know that company very well, up another three percent today, hitting a fifty two week, HI up about fifty percent year to date. But still my big issue, and I think for a lot of investors issues why China still may be uninvestable. I just don't know what the government's going to do. Any given day. They can come along and say Tech,
we don't like you. Yeah, and we're going to enact a bunch of policies that are going to impact your business, and there's nothing an investor can do. How do you view that risk when you talk to clients. I guess the geopolitical risk just within China.
Yeah, so we do think that China. I mean there's no right or wrong answer. I mean that's what's making
markets interesting as well, these diversions in thought. So, you know, while we have been speaking about our ASHER and our ASHS tickers with investors, for those that are more cynical and maybe have a similar view to you, Paul, in terms of what other the surprises that can happen, we've actually been speaking to investors for coming up to a year about a fund that we launched in collaboration with Selective and JH. Whitney, which is CRTC. Think of it
as DMX China. So we always talk about EMX China, but it's important to think about DMX China. So for example, tech a great example you can think about. Then the party is going to say, okay, all government officials, you can't have an iPhone, and then you see market cap of Apple drop right, and so CRTC. The US National Critical Technologies ETFs tracking an index which is ultimately looking at economic exposure to China, Russia, Iran which is becoming
more important as well, and North Korea. So these adversary nations from a US and actually more broadly NATO perspective, and so you're also then focusing as well on critical technologies. So at the same time, it's also tapping into the categories which have been identified by the Department of Defense, which are going to maintain and even enhance the US economy globally. You know, it's really about preservation of the US economic standing in the world.
I'ld be spinning away from China just to international equities broadly. How are you feeling about prospects there in light if yes, what we've been talking about, certainly what the FED is doing as well, how much an APPLA you have for them.
Yeah, So you know, I think when a lot of clients are thinking about the MSCI world. For example, so ten years ago, the US used to make up about forty percent, then that became forty eight percent, and then now it's it's pretty much sixty percent. So everyone has got this inherent bias to the US. A lot of people thinking is that too much. We've been speaking, you know, for pretty much a year now about the mag seven and so thinking about diversifying it back into international equities
is really interesting. We in particular really like Japan right now, and we still think that there's a carry component, even if the FED has cut rates recently and looks to do so further. You know, Japan is always pretty much a zero rates environment. But the Japanese economy what's interesting is that it's moved away from having, you know, just an export focus, and actually the demographics are starting to change a little bit. There has been an increase in
domestic consumption, for example. So this is kind of long standing we expect, and we think that gives a broader, nice story for all the hedged exposure to MSCI Japan.
Well, we want to first start on Wall Street. In the mid eighties, Japan was the bomb. You had to be in Toke. You had to do a tour duty there and then we went a generation with nobody you couldn't, you know, give it away. I just don't know what's changed there. As the economy materially changed, has the government policy change? Why are Warren Buffett and people like you talking about Japan.
Yeah, it's a value trade basically, so I think you have to have the discipline to stay in it for the long haul. You know, we did see some retrenchment in the past couple of months, but we think that's the long term projection, is that it really makes sense on a five year, ten yar perspective.
I would love to get your perspective on sort of where the FED goes from here and how much the ground changed after the beginning of this rate cut cycle for you and clients as well. Has the perspective shifted such that you don't have to play the parlor game as much? This is kind of begun and going to continue with some momentum, or how much how much focus is the FED still taking up in your psychic space?
Yeah, sure so.
George Catchrembone, who is the head of our fixed income business for the US. You know how some great views on this, definitely. I think he's a common, very popular guest on your side. What we think is that actually gives them an opportunity for credit again, so I think that there had been a rotation out of that where there had been allocations, it had been more on the
IG side. But we think that high yield. We've actually liked high yield long term, but we just haven't seen much in terms of flows into it, and so we're definitely thinking it makes sense.
Now.
What's really interesting short duration high yield. So shyl is Ourtica that's yielding about eight point five percent and the duration I think is like one point eight years something like that. We've seen default rates come down massively, even you know, at the triple C level, so I think they've more than halved actually over the last four years, so much more robust than we have sorught of it previously.
Hi Amana, thank you so much for joining us. Always appreciate it having a particularly when you come in studio. Mana Rebella, she's head of x Tracker Sales US on shore for DWS Group, joining us here in studio. This is the Bloomberks of podcast, bringing you the best in economics, geopolitics, finance, and investment. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten Eastern from our
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