Market Analysis, US Trade Representative Jamieson Greer on US Trade Policy

**SPEAKER_2** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Doug Krizner** (0:10)
Welcome to the Daybreak Asia Podcast. I'm Doug Krizner. Semiconductor stocks are being hard hit right now in South Korea. At the moment, the entire group is down about 10%, leading the cost to be lower by roughly 6%.
Now, these losses come ahead of second quarter earnings from Taiwan Semiconductor Manufacturing. TSMC is set to report its results before the US market opens on Thursday. Yes, guidance will be crucial, and so will the numbers on capex spending, as we hear from Bloomberg's Stephen Engel.

**Stephen Engel** (0:42)
Yeah, well, that previous guidance was for a near record outlays this year of $56 billion.
But UBS, for one, is saying, you know, given the demand out there right now, there could be a number released upwards of $60 billion. So that is something that we're going to be looking quite closely at. Also, of course, we got those storm-delayed sales figures for the second quarter on Monday, which saw 36% rise in sales at TSMC, including a 68% jump in June alone. So that's a good harbinger for the revenue side. We'll have to see, though, if margins are being squeezed, though, as they increase ramp up of production of two nanometer technology, and two, as well as their expansions overseas, and most specifically in the United States, in Arizona.

**Doug Krizner** (1:32)
That is Bloomberg's Stephen Engel. For a closer look at market action, I'm joined by Ross Mayfield. He's investment strategist at Baird, and Ross joins from Louisville, Kentucky. Thank you for being here. Give me your sense of what you're seeing in the market today.
We had the PPI reading that came in. I don't want to say it was cool, but it certainly allowed the market to breathe a sigh of relief when the conversation lately has been around the Fed hiking interest rates maybe as soon as this month. That doesn't seem to be in the cards right now, but what are we seeing overall in the market? There certainly has been a lot of volatility.

**Ross Mayfield** (2:08)
Yeah, absolutely. A lot of volatility as this momentum trade kind of takes a pause and unwinds a bit. I mean, it seems like you wake up every morning and see that overnight the Korean cost was up or down 10 plus percent, which is crazy for a market of its prominence at this point.
Today, I think you're right, PPI was far from cool, but it was cool enough that it let investors focus on the combination of CPI and PPI and say, well, this is heading in the right direction. As long as tensions in Iran don't flare up and send crude back over $100 a barrel, it gives the Fed room to breathe. And I think that's all the market wants at this point, is a little bit of time, core inflation, particularly that core CPI number being down month over month for the first time since the pandemic, I think really underscores a lot of disinflation in the system that the Fed can glob onto if they're not wanting to hike rates later this year.

**Doug Krizner** (3:07)
I want to get your take on the AI trade because in the last week, we had some pretty upbeat guidance from ASML, the Dutch Semiconductor Equipment Maker, and now we're being told that Anthropic is going to be meeting with investors maybe in the coming weeks about its potential mega IPO. How are you feeling about this AI enthusiasm right now? Is it waning a little bit? Are there questions about whether or not it is too extended? Or does this still have legs?

**Ross Mayfield** (3:39)
I think it still has legs. I think a healthy consolidation of some names and industries that have gone parabolic this year is a pretty healthy thing. I think the thing to watch is when you get weakness in leadership, where does the money go? And typically, over the last six, eight weeks, we've seen a rotation into maybe it's financials or industrials. Maybe some money goes back to the Mag-7, which has had a nice couple of days, cyber security, software-adjacent stocks. So money is not leaving and it's not even really chasing defensive assets. So I think there's, yes, a recontextualization of what you do with these memory stocks up four, five, 600 percent year to date, which I think is a totally fair question to ask of them, even though their earnings have been outstanding.
But it's where the money is headed that lets me think the AI trade and the bull market still have plenty of legs because it's not fleeing the asset. It's not a defensive move, more of just seeking value elsewhere.