# SpaceX-XAI Merger, US-India Trade Deal, and APAC Market Shifts

**Podcast:** Bloomberg Daybreak: Asia Edition
**Published:** 2026-02-03

## Transcript

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Welcome to the Daybreak Asia Podcast.
I'm Doug Chrisner.
We begin with Elon Musk.
He's planning to merge SpaceX with his artificial intelligence firm XAI.
And we're being told the combined company is expected to have a valuation of one and a quarter trillion dollars.
Here is Bloomberg's Ryan Gould.
Elon's view is that we're going to have data centers in space, and part of this is about, you know, putting compute and the idea of space exploration and sort of expression of the universe together.
Um, this is clearly part of his vision.
Um, there is a very good quote that kind of encapsulates a lot of this, which is what you know he wrote, I think, late last year, which is that in some ways his companies, his three companies, Tesla, SpaceX, and XAI, are going to come together, they're going to converge.
And maybe this is kind of the first leg of the stool that we're now seeing.
That is Bloomberg's Ryan Gould.
We're seeing a calmer mood in equity markets across the Asia Pacific after some heavy selling in the Monday session.
As one example, South Korean shares jumped by more than 3% at the open.
That's after the cost speed tumbled 5.3% in the Monday session.
Joining me now is Bloomberg's Paul Dobson.
Paul is executive editor for Asia Markets, and he joins from our studios in Singapore.
Thanks for being here.
So the Monday session, as we both know, was eye-opening, particularly when you look at precious metals.
We did have that cratering in both gold and silver prices in New York on Friday, and some analysts were tracing that sell-off to the news on Kevin Walsh being selected as President Trump's nominee to lead the Fed.
Do you consider this to be the primary driver of the recent volatility?
I think that markets had just gotten extremely stretched and over leveraged in the metal space, but not just there, in a lot of the momentum trades as well.
And the CTAs were involved, the retail traders were involved, and so uh it got very, very top heavy.
Um, and so when the correction came with the Walsh announcement, um, the move was pretty violent and you know, right for that.
So although the correction uh the sell-off was really huge, it still you know didn't even wipe out pretty much the gains for this year, let alone the massive run-up for last year.
So you'd only have been underwater if you were very late to the party.
So I guess that that you know help helped whip it up.
Um always, always leverage and uh people thinking that there's uh easy trade and no no end.
The other side of that story is the rally that we had in the dollar during New York trading on Friday.
It seems like that may have provided the spark.
Yeah, so I think that you know, dollar negativity for one thing had gotten extremely overdone, perhaps in January.
Uh that idea of sell um America, that idea of de-dollarization, the quiet quitting, all of those sort of themes had sort of fed into this very negative dollar spiral.
Um, and above all else, the idea that um the president uh was trying to influence the Fed and its monetary policy.
And I think the appointment of uh Kevin Walsh really short-circuited a lot of that uh for a couple of reasons.
One, maybe because he's seen a slightly more of a hawk relative to the other candidates, and so all things being equal may not cut our interest rates quite as much as others.
But actually, when people dug into what he stands for a little bit more, I think there's two other things.
One is this idea that he would like a much lower uh Fed balance sheet, and so that would shrink the amount of uh liquidity sloshing around in the system, which may firm up the dollar to a certain extent, but even more than that, that just that he's seen as a credible candidate with a bit of a plan and with a bit of a you know kind of backbone.
And I think the idea that he would actually stand for Fed independence and yes, maybe working in concert a little bit with the finance ministry, uh with the Treasury Secretary, but at the same time sticking with a kind of Fed and government relationship that that stands the test of time was enough to firm people's convictions up a little bit on the on the dollar, and so it took away some of the motivations and the reasons for um the de-dollarization trade, and be that against other currencies or against the precious metals.
So I have to ask you about the US trade deal with India.
This is after Prime Minister Modi agreed to stop buying Russian crude oil.
What do you think this means, Paul, for the Indian market going forward?
Osensibly, this is uh a really big moment of relief for India, which had been underperforming Asia and emerging markets for quite some time.
It had its worst January since 2016 in the stock market, the rupee was at a record low.
So things were really starting to uh look rather crestfallen for India because of the weight of the US tariffs.
So finding a way out of that at long last is definitely seen first and foremost as a relief.
We saw that in the overnight trading of ETFs, which were up around four percent, I think, and the rupee in the NDF market up over one percent, but it's not as simple as that.
Uh so some of the uh agreements, the idea that India can very easily replace Russian oil with Venezuelan oil has problems, problems to do with the quality of the crude and also to do with the price that would need to be paid.
So that's not perfect for India, and there are other agreements as well, including how much it has to spend in theory on buying US goods that are also going to be a little bit of a long-term headache.
So, top line, people are very happy that a deal's done.
Underneath that, the details may be a little bit less beautiful for India's market in the long term.
Is there a sense of how Beijing feels about this?
Do we know the Chinese side of the story?
It feels like as far as the US and China relationship is concerned at the moment, there's this idea of just trying to not rock the boat too much.
So, you know, it feels like the pressure from the Trump administration on China has somewhat abated.
Happy to see the trade just continue to kind of flow through.
So I'm not sure that China will react one way or the other to the Indian trade deal in a great um manner.
What it might take some exception to is the announcement uh that we had in the US Day today, that uh President Trump also wants to build this stockpile for rare earth minerals and associated products, which may, you know, weigh on the sector or indeed stoke demand for the sector, particularly outside of China.
But I think again, the idea that the US and other economies uh that don't have great relationships with China will look to source those materials from elsewhere is nothing particularly new.
We had the official Chinese PMI data over the weekend.
Factory activity unexpectedly deteriorated.
And then when you look at the non-manufacturing side, that PMI also contracted a bit.
I'm wondering about the level of concern here about what's going on with the Chinese economy.
That was a negative surprise, no doubt about it.
People don't really know how those numbers looked quite so bad.
It's funny though, because just at the same time as that, I think that there are glimmers of hope for the other side of the Chinese economy, namely the the sort of consumer side of things.
And what I'm looking at there is uh sales of liquor actually up in China and recovering, which is usually a sign that people are in a good mood preparing for the lunar new year celebrations.
We've also seen uh a pickup in some other areas of consumption, and anecdotally it sounds like over the Christmas period things were a little bit busier as well.
That said, you car sales have down quite a long way.
BYD reported um that so it's still a mixed picture on the consumption side.
I think for the industrial production side, we'll have to see whether this is part of a a longer term trend or just a blip.
So the BYD that you mentioned, sales down in the month of January by 30%.
To what extent is that a reflection of just overall demand weakness, or the government, I understand is kind of scaling back on some of these subsidies that were designed to support the EV industry in China.
And as they go away, it's only logical that maybe you see sales struggle a bit.
That's right.
So the the removal of subsidies is is a big deal that the EV makers are gonna have to come to terms with but the size of the drop is is large either way.
And so the impact on those companies is going to be negative and on the economy too.
China does have these other support measures in place where there's sort of trade in goods a little bit like or trade in reason motivation for doing trade-ins a little bit like uh the cash for conquer scheme that the US used to have um and it's continuing with that into this year as well.
So there are um other other incentives for various purchases across the consumer complex but yes and I I think that probably you know if those businesses the electric vehicle makers are able to stand on their own feet without the subsidies then that's probably a good strong sign for the longer term.
And I think the other thing is they'll probably continue to emphasize exports particularly selling into Europe of course.
You mentioned the lunar new year holiday which is fast approaching are analysts reasonably optimistic that Chinese consumers will be spending a fair amount as we look to that long holiday period.
I think relative to what we've seen in the last few years since COVID, there are are signs of green shoots and a little bit more optimism with certain caution and caveats.
It's certainly not all guns blazing.
People are still very worried about the employment situation.
But it does seem that there is a little bit more momentum just starting to uh kindle at the moment.
So as we get there, we'll be watching uh holiday travel, holiday spending, where people are going.
Are they going to the movie theaters?
What are they spending on at restaurants as well?
And are they shopping?
And if we come through the outside of uh Lunar New Year with a a more complete picture on that, we'll be able to determine a little bit more what that sentiment looks like going into the rest of the year.
Is Beijing still urging Chinese travelers to avoid Japan?
I know we had the comments from Japanese Prime Minister Takeichi concerning Taiwan and how leadership in Beijing took offense.
That's pretty much why we're in this situation, right?
The dispute with Japan has not gone away as yet.
And so Chinese spending in Japanese duty-free uh stores, for example, is still down considerably year on year.
So that that's an interesting friction that hasn't gone away yet and seems to be just left to fester at the moment.
We haven't heard any more uh recently from Takaichi in Japan or from the Chinese administration on it.
Maybe the plan will be to stop talking about it and hope it goes away over time so that there's a bit of an off-ram, which I think has been the trend in the past, but it can take quite a long time for those things to blow over and uh and reset.
In the US, we had a pretty strong reading on manufacturing for the month of January, the PMI data from the ISM.
And I know, Paul, that we've had a lot of PMI figures published for the APAC region recently.
Is there a way that you can make some generalizations?
Are you seeing slight expansion?
Are things in contraction?
How would you describe the overall picture?
Coping, coping with the tariff situation and kind of muddling through a little bit mixed.
Um, but the markets seem optimistic about it.
Uh, in any case, I think if you take away those last few days, so Thursday, Friday, Monday, January was an exceptionally good month for APAC for emerging markets, um uh in terms of performance.
And I think that that reflects uh a certain degree of optimism uh and the idea that um that other regions are going to outperform the US um this year.
So I do think that it's interesting that actually we're seeing those signs of strength in the US economy, the ISM manufacturing gauge really strong as well.
I would say the other thing that we'll need to focus on, Doug will be the payrolls report.
But I understand that that's not going to come this Friday, so we'll have to be patient on that one.
But one less thing to worry about, I suppose, before the weekend.
Yeah, that partial government shutdown has delayed the release of the employment data, which was set for release on Friday.
Paul will leave it there.
Thank you so very much.
Bloomberg's Paul Dobson, he is executive editor for Asia Markets, joining from our studios in Singapore here on the Daybreak Asia podcast.
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Welcome back to the Daybreak Asia Podcast.
I'm Doug Krisner.
We mentioned a moment ago the U.S.
and India were able to reach a trade deal to reduce tariffs on Indian goods.
That was after Prime Minister Narendra Modi agreed to stop buying Russian crude oil.
Now, President Trump said he would lower his 25% tariff on Indian goods to 18%.
And at the same time, overall levies on many Indian goods will be reduced from 50% down to 18%.
And of course, that represents a significant reduction.
It'll affect things like textiles, machinery, and other goods.
And that's where we begin our conversation with Basant Sangera.
He is managing principal at the Asia Group.
Bassant spoke with Bloomberg TV host Paul Allen and Sherry On.
We don't have a full text of what was agreed to, but can you give us your initial reaction to this news?
Sure, thank you for having me, Paul.
Uh real milestone moment.
Nearly eight decades of U.S.
India diplomatic ties.
I think the bulk of what was negotiated in the bilateral trade agreement actually took place last year.
There was a moment in July when both sides are very close to announcement for a number of reasons geopolitical, India, Pakistan, Russian oil.
That agreement wasn't announced then.
But the both both sides have managed to revive a lot of that work.
That process to finalize that tax is still ongoing.
And of course, a huge relief for Indian exporters to the United States after facing that heavy 50% penalty tariff that which will now go down to 18%.
But how realistic is that?
Because agriculture's off limits.
Uh New Zealand and the European Union couldn't uh agree access for dairy products.
So uh why would the U.S.
expect any different treatment?
Well, I think it's important to remember that um of the the deals uh India has concluded with various partners, including a very monumental EU one.
From our understanding, is what it's offered from to the US has been un unprecedented and competitive compared to um what is offered other partners certain uh sectors as you mentioned particularly dairy GMOs those were non-starters and I don't think those will feature uh in in this agreement it's also important to to remember that this is the phase one portion of this agreement is just going to cover reciprocal tariffs and non-tariff barriers such as quality control orders.
There are going to be subsequent chapters total is 19 dealing with things like digital trade, intellectual property and most importantly economic security as you probably are tracking um the Indian foreign minister is going to be in Washington this week for an important meeting on critical minerals how both sides can cooperate more on uh economic security matters including critical minerals that's going to be an important part of the follow one agreement.
So again this is just the first phase an important one but the negotiations on those subsequent chapters they will continue throughout the remainder of the year.
And of course, in order to understand who got a better deal here between the two sides, we still need to see the details as you're alluding to.
But coming into these negotiations, who needed this deal more?
President Trump or Prime Minister Modi.
I think India was feeling, you know, uh confident uh, particularly given the monumental deal they secured with the European Union last week.
Um I think, as I mentioned, the substance was actually agreed some months uh ago.
But both sides I think needed an opportune political moment.
And as the previous analyst noted, the Russian oil picture also needed to get into a better place.
So the period of political stabilization allowed for um both sides to come together and do a leader-level call to make this deal possible.
At a time when trade conversations and geopolitical conversations, when the line seemed to be pretty blurred, you mentioned the critical minerals conversations ongoing right now.
How critical will this trade deal be in cementing a stronger relationship between the two sides at a time when we kind of thought perhaps America's Indo-Pacific strategy had wavered you you're absolutely right.
Geopoliticals are at the heart of this, you know, and in some ways, last year had the India-Pakistan clashes not taken place in April and May, you could have gotten a trade deal last summer.
But that was one of the chief obstacles.
So it's always important to sort of watch out for those geopolitical black swans that could create frictions down the road.
I think critical minerals is very much at the heart of this.
The unspoken factor here is China, both New Delhi and Washington have very real concerns about Chinese dominance in areas like critical minerals and rare earths.
And with other like-minded partners, the goal is now that this first phase is out of the way.
How can both sides sort of galvanize cooperation on supply chain resiliency?
That was Basant Songhera, managing principal at the Asia Group, speaking to Bloomberg TV host Paul Allen and Sherry On, bringing it to you here on the Daybreak Asia Podcast.
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