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Slew A FED speak today Collins Bouman, Harker Jefferson on Tap Cleveland FED, President of Rundamessa, speaking to the ft and saying, quote, I don't really see a compelling reason to pause. I would see more of a compelling case for bringing rates up and then holding for a while until you get less uncertain about where the economy is going. There's some good news. Bob Michael takes the other side of that of JP Morgan Asset Management, saying that we
are going to get a pause. We expect the FED to pause hiking rates at the June f MC meeting and believe we have seen the last rate hike for this cycle. And the good news for Bob Michael is it sounds like his boss agrees with him to listen.
You know, my simple view is that you know, the the right to pause at this point has been a big increase, you know, five hundred basis points, so take a pause. But I do think it's possible they're going to raise a little bit more.
Take a pull.
It sounds like a fish ready to go out.
He looks secretary right. Okay, he looks melon like ready to sell the country.
Andrew Mellon, Yeah, did you see Bob Michael is under secretary?
I can see see.
That joining us now, Robert Michael.
Bob Michael had a fixed income JP Morgan Asset Management. And I want to go back to nineteen eighty four. You're a youngling at bankers Trust. Ian Rush is with Liverpool. They're doing better than good. This is way way back. And the basic idea is we used to clip coupons. Would you be sitting with mister Diamond now saying that we can make coupon and total return?
Now?
Are we going to see price up yeeld down in a basic bond portfolio.
I can't tell you how relieved I am not to hear him tell me that I should be preparing for seven percent. So I'll take what I can from him that we're due for a pause and that should relax the markets. No, one hundred percent. This is the time where you clip coupons because yields have reset materially higher from where they were at the end of twenty twenty one. Actually, when you look at real yields in the bond market,
they're the highest level going back fifteen seventeen years. We're going to get some capital appreciation on top of the coupon clipping. I'm looking for close to double digit returns on the Bloomberg aggregate over the next year.
This is the key statement.
And what's important about this is mister Diamond back to bank when actually knows what an.
SMP blue book is. I mean, you have a blue book and you have bonds in it.
You go through and you try to buy bonds for price up, yield down.
Which kind of bonds will give you.
The best pop there to get your double digit return.
Well, we're currently intermediate government bonds look good to us, So we're thinking the five year treasury. We feel we've been given a gift in here with the backup in yields. Sure, we swung a little bit low and yields the market got all excited. Now it's going the other way. We do think that we're going to see three percent across the coupon curve by the end of the summer, and the five year seems to be the sweet spot, so we like that, and then we like high quality credit,
so for sure we're going into investment grade corporates. We're actually starting to see a lot of overseas investors returning to the US investment grade corporate bond market. They're attracted by the yields there.
The yields you jentlemor folds right into the disinflation deflationary Chinese impulse.
Some of this you would state just on the yield curve for people who aren't familiar with what drives different parts of the yield curve. What is special about a five year maturity? Why is that the sweet spot for you?
Because it gives you a couple of things. One, it gives you a reasonably high level of yield. Sure it's not cash. Cash is sitting out there at over five percent, but that's the cash trap. At this part of the cycle. You put money there and then a year from now it's gone. Your cash run rate is probably below four percent a year from now, so you've lost all of that, and then the yell curve starts to adjust to a
central bank that's cutting rates again. We still think we're going to be in recession by the end of the year. Everything that's happened so far this year continues to tell us end of the year recession and first FED rate cut in September, and I know the recent data throw some of that into speculation. Not in our book. Things are playing out the way they should exactly.
So five year in the treasury market one got it, okay, ig ton of amount coming from abroad, got that, okay. High yield you've got within your call a rate cut coal in September. Does it make sense to be buying high yield and taking more more credit risk at a time whether Fed's going to be cutting rights because you anticipate the economy is going to weaken.
So I'm listening to the conversation at the start about the equity market and how we're isolating. Nvidia and a couple things have driven this rally, but there are other things that are lagging.
Now.
I'm a bond guy, which makes me an equity market expert, but I see a lot of I see a lot of Yeah, exactly, I see a lot of what's going on the equity market, in the high yield market, and we've parsed through all of this, and what you're looking at is the triple C universe is a thousand basis points over, so it's already coming under pressure, and the double B universe is in the three hundreds over, so that differentiation is already occurring. This is very different than
where we were back in August September. Whenever we hit six hundred basis points. Oh, for pretty much most of the market was about six hundred basis points over. That was probably the time to take a shot over the near term. Now is not. Now the market is telling you there is differentiation beneath the surface. Investors are seeing cracks forming and they're trying to get out of the way.
You said that things are playing out as they should to get to a recession by the end of the year and to get a fed to cut rates by September. Does that mean that we're in this sort of inflection point that we're going to see a rapid deceleration in some of the economic data in a way that we just haven't yet with all the upside surprises.
Absolutely, and we've talked about this before, from the last FED rate hike until recession, it's historically averaged about a thirteen month period, so that long and variable takes time. We're now getting into a year and a quarter. We're going to start hitting the window when the four to
seventy five basis point rate hikes start to hit. And you're already hearing about the funding pressure to businesses and households at a higher rate level, it's causing them to rethink things, and then the higher cost of everything that's causing them to rededicate where their spending goes to. So that catch up is coming. And some of the inflation data we're looking at Europe overnight or this morning came
in so often. I know Italy surprised a little bit to the upside, but everything seems to be slowing down. The one thing that seems to have gone under the radar. Forget about what's going on in China. Look at the Bloomberg Commodities Index. It was one hundred and forty ish about a year ago. It's below one hundred now, and the trend is diving south at a rate that you only see headed into recession. So the weakness is there, the cumulative and lagged or catching up.
This is important. A lot of people push back against commodities being a real signal this time around. This time is different with a lot of different things than I could see.
Right, you don't use them for anything.
But hold on a second.
But here's the issue.
People saying that because of China and the inability to get that right, because of Russia and their willingness to pump much more than their allotted amount to try to get money to fund the war. Because of all of these issues, you're seeing distortions in the commodity market that do not comply with what they're seeing on the ground. How much are you using this as a key signal saying or where we should be?
Well, you still have very low unemployment in the US. Everyone's talking about three and a half percent unemployment. Everyone's talking about wages have gone up and that there's a stickiness to core inflation. Everyone's talking about consumers want to spend on travel and leisure so that the demand is there. But if the demand is at a high enough level, you are going to see commodities prices pushed higher. People
are spending on things. In buying things, it's just not a rate that sustains itself with the amount of supply. We're now seeing the bottlenecks have cleared.
Well, this is awesome by Michael jpmorganism management.
We're going to go to the congressman from in between the Cubs and the Brewers, Jamesville, Wisconsin. Brian Style joins us now Republican from Wisconsin with all that heritage of former Speaker Paul Ryan. Congressman, I'm going to go back to the election of twenty eighteen. You won with fifty one, maybe fifty two percent of the vote. You've done better in recent elections, doing better like sixty percent or whatever.
I want you to comment on the vociferous conservative Republicans and what they're doing to Republicans who are more middle of the road. What is the damage being done by the strident Republicans to the oh more in the middle of the road.
This vote is going to be a little bit of a vote of strange bedfellows. I think what you're going to see is, at the end of the day, there's some members that are going to allow perfection to be the enemy of the good all of us, I think would like to see us get our true fiscal house in order in the United States. This bill is only a step in the right direction, but it's a step in the right direction. It's the largest spending cuts that we're going to ever see in the United States of America.
It has work requirements, it helps workers get back to work, and it does all this without raising taxes. And so at the end of the day, there's some people that would like to see a perfect bill, but I think if we have a good bill, you got to vote for it.
Congressman Jim Garretty in the Washington Post had a brilliant half paragraph yesterday which said, Look, the Republicans have a narrow majority in the House. Can you expand that power in Washington with President Trump? After this budget debate? Can you get there with Donald Trump November of twenty twenty four to move beyond a narrow majority in the House.
We're going to see now to the election in twenty twenty four is a lot of voices coming to the table, and I think the one that's going to be successful is the candidate that's going to talk about the future of the United States of America, about how we're going to grow the economy and address the fiscal situation that we're in. We're going to have a number of voices
at the table. I don't think that's a bad thing, because I think we need to dramatically change course in Washington, in particular, following two years of dramatic increases of spending.
A lot of people talk about the real discussion being entitlements and whether Social Security checks are going to have to be reduced, whether Medicare and Medicaid are going to have to receive less funding. Are you putting those things on the table in your discussion about further fiscal restraint.
In this bill, we're only really dealing with eleven percent of the federal budget, and dealing with eleven percent, we got one point five trillion dollars of savings for the American people. But you're right, at the end of the day, it's the entitlement programs that are driving costs higher. This is going to be an opportunity here to bring Democrats and Republicans to the table to address those programs and really protect in particular social Security and Medicare for generations
to come. But that's going to require a bipartisan approach of folks coming to the table, encourage of candidates who are running for president in twenty twenty four to talk about the reforms that are ultimately going to be needed.
There's a large question around whether that will actually happen, and we've been having it with a lot of cynicism. I'm sure you have your own with insight from inside the Beltway. Wendy Schiller of Brown University was on the show earlier and she said Kevin McCarthy will remain Speaker of the House simply because the Democrats will back him if the Republicans won't, because at least it will be some sort of cohesive voice that is better than the alternative.
Does that concern you that Kevin McCarthy will remain speaker, but perhaps only at the behest of Democrats who are concerned about the alternative.
I actually disagree with the analysis. I think Kevin McCarthy will remain Speaker with Republican votes. I actually don't even think you'll see a motion to vacate. We had a robust family conversation last night intil the late hours of the evening talking about this legislation. And while it's true there are some Republicans that would like to see a better bill. They think that they could get a perfect bill.
At the end of the day, I think everybody in the room recognizes that this bill is a step in the right direction, and they're appreciative of the Republican negotiating team that moved the ball forward. You got to remember we started with the president saying that he was going to refuse to negotiate. He put his head in the sand, he went to Delaware, went off to Japan rather than negotiating, and at the end of the day, we came back with one comp five trillion dollars in savings.
Car you sound like Paul Ryan on an off day. Come on, congressman, let's be come on. What I'm hearing in the zeitgeist right now from Anne Marie Horden is Democrats are taking a victory lap because they pretty much.
Got what they wanted.
Modern Republicans like you are saying, Okay, let's get this done and move on, and you got a bunch of people trying to block this and shut down the government. I got to go back to the fact you lived Paul Ryan's decline as Speaker.
Of the House.
I want to go from Bayer to Ryan to McCarthy. What does a speaker have to do now? Not to be Paul Ryan, not to be John Bahner.
I think, actually the Republicans are quite unified in the House right now, and I think that shows when we passed the Limit Save Grow Act, many people across the United States underestimated the ability of Republicans to come together and unify and pass a bill. In fact, President Biden didn't think we could do it either. That was part of his negotiating tactics, and at the end of the day,
we came together. I think the Republican conference in the House is quite unified to address the spending challenges that we face.
But you know the speaker, Okay, I'll go with that, But the answer is John, the speaker, the speakership here.
Is under real threat and it comes up suddenly?
Did it come up suddenly? Congressman for Paul Ryan, was everything fine? And then boom, you're his aid in office, and all of a sudden, boom, he's under threat by these Republicans.
I was working in the private sector for quite some time, so I wasn't on Capitol Hill for about twenty years before I ran for office. But I think what you see is at the end of the day that these things can rise on. Okay, but if you talk to Republican members, we're unified in the House Representatives. I think everyone recognizes that this is a good bill. There's just some conservative and Republican members that would like to have a better bill. That's not the bill that's on the table.
Congressman, I'm just a spectator and watching this play out for a long time, both within the United States and abroad as well, and every single time we get into this tobacco, we just raised the debt seating again and again and again and again. Whether that's a Republican president or a Democratic president, it's the same outcome. We raise the debt ceiling. Bron You heard JP Morgan's Jamie Diamond come in from the break there saying, I wish one day they'd get rid of the whole debt ceiling thing.
Why do we still have it? And isn't it somewhat embarrassing for the president, whether Republican or Democrat, to go abroad to places like Japan for the G seven to try and lead the global effort on a whole bunch of issues to then be looking back and have this em type tobacco playing out at home.
In a period of time of dividing government, there's actually a few opportunities to negotiate the spending reforms that are needed, in particular a period of time when executive authority has grown so dramatically. In this bill, we actually address the fact that the President tried to dramatically alter student loan
payments that never went through Congress in the first place. Unfortunately, based on executive overreach, what we have is so few opportunities to get spending under control where the executives both parties are absolutely right continue to spend money through executive action. And this negotiation allows us to actually bring the president to the table and have a conversation about how we're
going to get spending under control. And I think again, at the end of the day, this is overall a good bill moving us in the right direction.
Yeah, the one bill assigned Congressman, don't you see where this is coming though? That ultimately, and we're out of time, So if you want to continue this conversation, by all means, come back another time. It just feels like we're in the process now of deliberately manufacturing crises to do exactly what you just explained it. At some point that's going to write the confidence in this country and potentially the
ust market too. So we've got to leave it that, Congressman, if you want to continue, happy to do that another time, Congressman Brian style of that of Wisconsin.
Right now, we're going to talk the talk of the moment in video with Angelo Zeno, senior equity analyst at CFIRA, who, in a brilliant note, has a courage to write what everybody's thinking. Which is the only way you can justify this is to extend your timeline.
Angelo, you go right out to twenty.
Twenty four, and you say, look, with a twenty five percent growth pop, you're buying a forty multiple stock, why don't you extrapolate out to twenty twenty five?
Yeah, I mean, listen, I think you can. I think there's always danger with kind of trappling the numbers out right, But I will say this, we are believers in kind of the entire video story, in kind of the AI story, the fact that kind of GPU's going to increasingly represent a bigger percentage of CAPEX dollars for these cloud companies.
We do think over time over the next three to five years, the comhid and annual growth rate for GPUs and specifically that of Nvidia on the accelerator side of things in the cloud can grow at an annualized piece of north of kind of twenty to twenty five percent, and that can kind of get you to an EPs.
Growth rate over time for in Vidia.
Again north of twenty percent. If you're a believer that you know the top line for this company can continue to grow at a mid to high teams percentage pace.
Are there other invidias out there?
So we actually wrote a piece back in late March about kind of the biggest winners of kind of the generative AI boom within the semiconductor industry, and we kind of pointed to four names at that point in late March. And those four names were one, of course, in Nvidia, AMD is another name clearly a beneficiary and the GPU
side of things over time as well. And then the other two names are more kind of network connectivity type names, and they were there were Marvel as well as Broadcom, a name that we think is highly underappreciated, a number a name that's going to report tomorrow.
Night at the close, I'm wondering what a tech company is right now and which companies can actually take advantage of artificial intelligence. Some of this technology very clear cut AMD or in Nvidia, but what about Meta what about just in a broader sense, other companies that could potentially gain from the productivity of investments and artificial intelligence? How do you value which companies will gain and which actually won't at all and potentially could even lose.
Yeah, listen, I think that's probably the most important question we get from investors right now. It's from a monetization perspective, who are going to be the biggest winners kind of
from this AI boom? And that's really ant you know, it's a tough question to answer and say, you know, to your point, kind of the easy answer right now is on the semiconductor side of things, That is on the infrastructure side of the and kind of playing that and that's clearly where the kind of the the action has been.
Here in recent weeks.
Now when you kind of look kind of more forward looking in nature, when we think about some of the larger capaning stocks, I'd say Microsoft clearly at the top of the list in our view. I mean with with copilot out there with the potential to kind of see significant pricing power on that side of things. We think the light of line of sight is highly visible in when where over the next decade should be a clear
winner in our view. Now, other names like an alphabet as well as menta, we think they're going to be a little bit tougher calls. And that's why you don't see kind of the multiple to the extent where you see that of the Microsoft's of the world. And the big reason for that is, you know, are they going to get really get the ROI potential or are they going to give advertisers out there the ROI from this AI.
But we think there is some kind of positives out there, but I don't think it's as clear as potentially a name like Microsoft out there.
So you can be a believer in this story, and I think that anyone who sees the way that people are using chat GPT like artificial intelligence has to be something of a believer, if not at least a very open recipient of this information. But you do have some naysayers out there about the valuation, basically saying that the rally that you have seen so far thirty one percent in big tech stocks so far this year is at
risk of petering out. This according to City Analysts, basically saying that positioning is just such that it's rife for profit taking. I mean, do you sort of play into that?
Do you just sort of look past that?
Do you think that anything like that will just be a buying opportunity? How are you playing sort of the tactical ride up that we've seen in prices that can't really continue at this pace.
Yeah, I mean, listen, I mean, in terms of the performance here that there is we think going to be some sort of AI fatigue here potentially in the coming weeks, some sort of digestion that's probably going to be needed.
Now that said, I mean, we remain very big believers that the valuation actually is not as extended I think as many people out there think, especially as you kind of look out to a calendar twenty twenty four bases for names like in Nvidia and others where kind of there are within their five to ten year historic historical ranges, Especially when you start thinking about kind of the growth
tied to a number of these names. I'd also point to, you know, names like a Microsoft and others where Listen, at this point in time, I'd say, kind of, the risk of the downside on EPs estimates are probably very low, and there's probably upside potential to those estimates, So we kind of continue to we want to be one on a lot of these names that are AI related, and I would say, kind of, you kind of want to have a basket of names. You don't want to grow your eggs in one basket, and you want to be
buying kind of on any any pullbacks. But listen, it's definitely gotten a bit hot to an extent, especially on the semi side of things. But the four names that we highlighted, we think continue to be the biggest winners and the names you want to buy on those pullbacks.
So you want to belong. Some people feel like they have to be longer. It's just going through the ambust recommendations. I love this forty nine buys, eight holds and one guy who cann't care less about career risk with the South. Now, Angelo, that's what wanted to finish on. Do you sense the so called career risk associated with this given how quickly it's moving, is there pressure that you have to be long?
I think that's a great point. I mean, listen, I think listen. I think there's always risk of kind of you know, there's always risk on that side of things, but you know, we are fundamental by nature and to us the fundamentals that are screaming by right now, and for that reason, I think you continue to need to
pound the table on these type of names. And I think especially on a name like Nvidio, when you kind of look at the multiples at about forty low forties on a calendar twenty four basis, and then you look at the growth tied to it three to five years from now, and you kind of look at how early
we are. If you're a believer of kind of let's say, autonomous vehicles and what have you, there is risk to potentially having a cell to be tactical the nature rather than kind of a beating kind of the you know, the table on the longer term outlook on these areas. And I think that's what you need to do for investors out there right now.
Interesting, Angela, always great to hear from you. Thank you, Angela Zena, the of cf RA. We've got to catch up with Emily Rowland Co. Chief Investment strategistic John Hancock Investments, Emily credit where it's due. I've been speaking to you all year. You push back against that europe euphoria. You remained committed to the growth equity story the United States over the rest of the world, not the rest of the world over the United States. Emily. Are you're sticking with it?
Yeah, John, we are, absolutely, And it does feel like markets are sort of getting the memo right now.
In terms of the macroeconomic environment.
You know, we're looking at decelerating growth, as you all have mentioned, disappointing data in China. This morning we saw japan industrial production and retail sales both disappointing.
And you've seen this big rotation into US markets.
And that's been exhibited by a lot of the cross asset action, seeing a bid for treasuries. Finally, over the last couple of days here you're seeing the dollar get a bid. And of course this massive rotation into US quality growth stops, which we've talked about for some time. So that's got some key implications for portfolios, especially if you think about, you know, some of these trend following strategies that have bought you know, the Japan they've bought
Europe based on positive price momentum. You might see that reverse and actually exacerbate some of the flows out of those areas of the market.
You're going to get me in trouble.
Mentioned the trend following strategies, Emily, I'm glad you mentioned Japan. We haven't mentioned that this morning, and those are shocking numbers. Within this is sticky inflation. Everybody's doing real analysis, but we live in a nominal world. Are we going to be surprised by okay, revenue growth that supports US blue chips?
Well, I think it's a great point because inflation has definitely helped these companies that have a lot of pricing power, especially companies that have high operating leverage, and we've seen that be absolutely critical in terms of supporting margins. We think it's going to be hard to sustain that going forward. Of course, bottom line costs are elevated, whether it's the
cost of capital. Wage growth still fairly elevated, though there are signs that that's coming down, and then clearly demand is starting to slow.
We're seeing that way back in the supply chain.
If you look at things like the ISM index of new orders, which is our favorite leading indicator, no offense. I know everybody has a favorite leading indicator, but that's our the John Hancock and that's going to put up pressure on margins. It's going to cause companies to need to defend their margins going forward, and that's ultimately going to result.
And the unemployment rate rising.
We haven't seen that happen yet, but we think that that's something that comes in the next couple of quarters here.
There's been growing theme in a lot of the notes that I've been reading about this inflection point that we seem to be coming up upon, not that just that we've been halfway through the year, but also that some of the main factors driving the first half are shifting. Do you see that as well, and we're going to be the features of this inflection point.
Yeah.
Well, some of the main drivers that have been supporting the market we've talked about it was really China reopening back in the fourth quarter of last year and better weather in Europe, which causes massive rotation into European equities. It caused a dollar to weaken, which really supported risk assets. There's been almost a perfect correlation with the dollar weakening and risk assets rallying and vice versa, and you're seeing some of those things shift now again as this rotation
comes back to the US. The economic data not great across the globe, but it's actually better in the US right now, which is a big shift over the last couple of quarters. So stronger dollar bid for treasuries. We think that's where some of the opportunities are from here. And I think that again, the market action of the past couple of days to us makes a ton of sense given the fact that we are in a decelerating growth environment and that recession is likely to unfold.
Emily great, cool so far here today on the equity market, together with the same Thank you, Emily Rowland of John Hancock Investment Management.
William Lee joins US now chief economist and Milken Institute. Billy, let's start with green Spanny in one oh one is China and they're slow down, going to export, disinflation and deflation.
Well, China cannets for much of anything right now, but I hope what they do with is disinflation for the rest of the world. Right now, China's recovery has really faltered. We can see that the piet not only is manufacturing down, but it looks like the consumption is on its way going to go down as well, with unemployment rates at twenty percent for youth unemployment, So China is not in
good shape right now. And I think we are looking around and seeing what is going to pull China out of the douldrums.
What is the degrees of freedom and autocracy has Sunday afternoon New York time when they're supposed to provide stimulus.
It's pretty limited, right because not only is the federal debt out of control, the municipal level debt is out of control. So the general channels for fiscal policy have been through the municipal governments to try to hire more people, build more projects and stuff like that. Well, right now they can't do that. So the amount of fiscal policy
that we have is really limited. And monetary policy, I mean, you can lower rates, but people are just going to stay there and not borrow because they're going to ask themselves where am I going to spend the money in order to make money in the future if the demand is so slow. So China right now is snowballing into a fairly bad static plateau.
Static plateau that's been priced in or not Bill.
You know, I think one of the things that we have to look at is where is it being priced. One of the things we talked about at the Milking conference that just end a month ago was that a lot of the investors going into China going into the private markets, and we really can't see a lot of that. But in order to get into the private markets, one thing that everyone made clear was they need a good surpose. They needed someone to guide them through to find good
investment opportunities. And a lot of the investors claim they've got some good sharpers there and they're getting good bargains because the slowdown is affecting valuations both in the public and private markets. But the real question to ask is will you get the kind of returns you're hoping for? And there I have my doubts because the democratics are
working against them. And on top of that, the possibility of technological change, which would be the one thing that boosts the Johnny's economy, is also not going to be there because policy has been really anti innovation, anti technology, and it's hard to see that changing.
Which is John what you were pointing to when you were taking a look at the tech indexes over in China versus the tech indexes in the US and that huge bifurcation between the two. Bill that's maybe on a domestic level, What about internationally has this been priced in in terms of the impulse that China had on Europe? We were talking about the euro and how much has come off some of its earlier highs.
Well, the RIM and be right now is weaker that it's been for godd knows how long, and so in that sense it's being priced it. But for me, the EFS market is very short term. The real question is are investors pricing in growth opportunities over the next five years. Are they putting the marginal dollar into China or a they're putting it somewhere else? And I think more often than not they're looking somewhere else.
Bill, You've got a great ability to move away from the Pacific RIM in the three cities we focus on all the time. What's the rest of China look like? With the unemployment rates that are.
Being reported, that's a great question. Up until now, I would have said the prospects for any kind of innovation, any kind of employment growth are going to come out west. Because the Milkton study for the greatest performing cities in China landed on Chindu as a small innovation hub, and
we still stand by those numbers. But unfortunately these numbers are getting dated, and right now I'm not sure if even out west the innovation helps will be able to give the kind of employment that the way that they hope for.
We've been here before and the answer is Beijing always blinks and moves away from a totalitarian mindset, the autocracy of President g and they move to some form of liberality and capitalism.
You're saying, it's not going to happen this time. See he's points out on radio.
You can't see that, Professor Lee is I'm gonna I gotta duck because the chart's coming in.
Tom. President she's blinking, is gonna involve maybe a slightly different wrinkle. He's going to rely on nationalism, perhaps some militarism, some expansion of Huberts into the rest of Asia, because after all, he wants Asia to be the currency area
for the China for the rem and be so. So I think these are the kind of places we should look for any kind of resuscitation of you of Chinese nationalisms, which is they're going to try to instill pride in the Chinese people without giving them jobs, and that's going to be a cute trick.
Well, how do what does that mean in terms of international business? And I say this is JP Morgan has their conference and plays nice, albeit in a brilliantly diplomatic pro American but also pro China kind of speech by Jamie Diamond. How much can you really see a decoupling or a willingness to exacerbate that on the Chinese side in light of the economic challenges.
Well, Lisa, we have a love fest by US CEOs, going back to Tim Cook and now Elon Musk and Jamie Diamond is very slick and being able to say I'm a true American. I really am a patriot. So when you vote for me, remember that even though I'm asking you to come to China and support my people. And I think going forward we're going to see more of that, because the question is the people who are in China have to con their maintain their business and
really contain what they've gained. But the marginal dollar the investors. He's sitting here in the West thinking of going to China, what are they going to see? And I think They're going to see a lot of opportunities in osion in Korea and in the quad country surrounding Charla, because that's where a lot of the innovative industries are moving to.
I want to end the conversation where we began, where you're talking about sort of a stagnant plateau. What is that stagnant plateau in China? What is that rate of growth that's going to be the new normal and going to drive demand for the luxury goods that have gotten bid up for commodities that have surprised a lot of people to downside this year.
Well, Lisa, the official number is a five handle for growth going forward, and I think you're going to see more likely a three handle than five. So I think that's the kind of order magnitude you're thinking of, because with population stagnant, any kind of massive productivity growth can't get them above.
Three for obvious reasons. Bill market participants are going to be very interested in the next move on stimulus to get the PMI back above fifty. As you know, that's not what the leader of the Chinese Commuist Party is
going to be focused on. They're going to be taking a multi decade view, and Bill, I'm far more interested in the kind of FIS school moves that they make to stimulate more investment in certain parts of the economy that are going to be highly competitive with the United States and Europe, particularly as the US retrenches and refuses in some parts to do business with the Chinese government. Now, Bill, what are you focused on with regards to that?
Well?
Absolutely, In fact, if you look at where the Chinese are meeting and where they or not, they're not meeting with Defense Secretary of Austin, so they don't want to talk military because we know what they're going to do there is not very powerful for the US. But I think the place that they're meeting with is Genial Romando. It's the Commerce Secretary. They're hoping to leverage some action
on the tariffs. They're hoping to leverage some action on cutting the semiconductor restrictions, and their information blackout is going to leverage what our investors actually see. They're going to shape the story for global investors to be so wonderful that that investors carries is coming. But in order to do the due diligence require information to do the due diligence. It's something that's being restricted as we speak by the Chinese government and going forward, I don't see that lifting.
That last point is so important Bill, clarity transparency. How do I know what the unemployment rate actually is in China? Measuring it is hard enough. But when we hear youth unemployment something like twenty percent, just how bad is it?
Bill?
It is that bad or worse? And if it wasn't worse, we would hear more about informal data. But instead we see companies like Win being wound down by the government. We see due diligence, companies like Bane being queried by the officials. So I think the Chinese will making very clear We're going to feed you the information you need, but it's from us.
Bill lake Milkin, Hi. Bill got to catch up.
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