Bloomberg Daybreak: Asia Edition Tariff Threats Offset Wall Street Gains; The State of China's AI Race
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Jul 1, 2025 
Burns McKinney, Managing Director at NFJ Investment Group, analyzes the impact of President Trump's tariff threats on Asian markets and Wall Street's recent rally. He highlights the need for earnings-focused investment strategies. Meanwhile, Catherine Thorbecke, a Bloomberg Opinion columnist specializing in Asia's tech scene, discusses the fierce competition in China's AI sector, where startups struggle to monetize amidst a flood of generative AI tools. She emphasizes the challenges faced by these 'Little Dragons' as they navigate a complex landscape filled with both rivals and state support.
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Market Rollercoaster Due To Tariffs
- The market's wild roller-coaster this quarter was driven by tariff fears and growing confidence they wouldn’t be as harmful.
- The risk-reward profile worsened due to tariff levels far beyond historical norms.
US Stocks Are Richly Valued
- US stocks look richly valued at about 23 times earnings, a third above historic averages.
- Investors must now rely on earnings growth instead of multiple expansion, facing a tougher market environment.
Earnings Margins Under Pressure
- Corporate profit margins are near all-time highs but are at risk due to tariffs.
- Costs haven't fully been passed to consumers, which may squeeze margins in upcoming earnings.