# AI Capital Shifts and Global Market Realignment

**Podcast:** Bloomberg Daybreak: Asia Edition
**Published:** 2026-02-10

## Transcript

Today's show is brought to you by Vanguard.
To all the financial advisors listening, let's talk bonds for a minute.
Capturing value in fixed income is not easy.
Bond markets are massive, murky, and let's be real.
Lots of firms throw a couple flashy funds your way and call it a day.
But not Vanguard.
At Vanguard, institutional quality isn't a tagline.
It's a commitment to your clients.
We're talking top grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders.
These folks live and breathe fixed income.
So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at Vanguard.com slash audio.
That's Vanguard.com slash audio.
All investing is subject to risk, Vanguard Marketing Corporation distributor.
Donald Trump is rewriting the Washington rule book and reshaping the global economy.
If you're trying to connect the dots behind the headlines, Bloomberg's Trumponomics podcast is here to help.
I'm Stephanie Flanders, head of government and economics at Bloomberg.
Every week I'll bring you a smart, focused conversation with reporters and experts from Washington, Wall Street, and beyond.
Listen to new episodes every Wednesday and follow Trumpenomics wherever you listen.
Bloomberg Audio Studios, podcasts, radio news.
Welcome to the Daybreak Asia Podcast.
I'm Doug Chrisner.
In Japan, the equity market is breaking to fresh record highs, and these gains reflect expectations for more fiscal spending, as well as a cut in the sales tax on food items.
All of that comes after Prime Minister Takeichi's snap election victory over the weekend seemed to give her a mandate to make economic change.
Meantime here in the States, equities recovered, especially those software stocks following last week's sharp losses.
Now, at the time, the spotlight was on how AI could undermine various software businesses.
And not surprisingly, many of those shares were punished.
Although last Friday, the mood began to shift and it continued today.
The IGV software, ETF, picked up 6.8% over the last two sessions.
For a closer look, I'm joined by Ross Mayfield.
He is investment strategist at Baird.
Ross is on the line from Milwaukee, Wisconsin.
Thank you for being here.
What did you make of the bounce in software shares today?
Well, I think generally I'm of the view that there might be some disruption, and there probably will be, but I I don't think that, you know, most large companies are gonna rip their their tech stack out in favor of um, you know, AI tools overnight.
I think I think the selling is overdone, and and this is when I would I would be kind of legging into some of these names, even if the recovery could take some time.
I mean, these these charts are are pretty beat up right now.
It was interesting today, Goldman Sachs noted that hedge funds had piled into short positions on the notion that we were going to see AI disrupt various business models.
And I'm wondering whether or not some of the positivity that we had today may have been tied to some short covering.
What do you think about that?
Yeah, I think so.
I mean, this is um, you know, the software names were by a lot of metrics at their most oversold um at as they'd been in decades, um, probably since the dot com bubble.
Um, and so anytime you get that kind of you know, violent shift in the markets, you're gonna get some some technical selling and some short covering.
Um, and I I think that, you know, this could be an an oversold bounce here.
I think you could see a resume or a resumption downward or at least kind of some sideways trading as as these names carve out a new base.
But again, if you're investing with a year plus timeline, I just think these that the selling is overdone.
And you've got a lot of babies thrown out with the bathwater.
There are a lot of companies, you know, that are software adjacent that have been sold but uh have really diversified businesses with big entrenched user bases.
We had a very interesting development today from Alphabet.
The company is going global now is insofar as financing ambitions for AI.
Alphabet is set to raise about 20 billion from a US dollar bond offering.
And this offering was more than five times oversubscribed.
At the same time today, Alphabet began pitching what would be the company's first ever offerings.
This is a debt offering, one in Switzerland, the other in the UK.
What does this speak to when you have one of the hyperscalers going into the credit markets to try to raise capital to build out AI infrastructure?
Well, it changes the narrative on these companies entirely.
I mean, for for decades, the story around, you know, the big tech companies, you know, Fang to Mag 7 to all the different acronyms in between was huge free cash flow, low debt, um, you know, businesses that just print money and then you can, if you're Alphabet, you can plunge all that extra cash into moonshots like Waymo.
Um, the these businesses are fundamentally changed.
They are now um asset heavy.
They are tapping debt markets.
Um it doesn't mean that they're bad investments, but it it requires basically a whole new way of thinking about the the big tech companies at the top of the market um from asset light um to asset heavy and what that requires and and what that means.
Um, but it it it it changes how investors who have leaned on these companies for decades, uh change in how you have to think about them.
So does it create anxiety for you to the extent that if you were long, let's say a name like Alphabet that you would try to reduce your position slightly?
You know, I I don't think I would take it that far.
Um, you know, I I do think it it raises the stakes a little bit.
So, you know, we keep a really close eye on on broader credit spreads and um, you know, make sure the bond market is is well behaved.
But, you know, I I think there's an interesting dichotomy in the market right now, which is that if you look at the software sell-off and you believe that even some of it is justified by the incredible potential of AI tools, whether it's, you know, um anthropic or or Gemini or or, you know, all of the above, then perhaps the level of spending that Amazon and Alphabet laid out last week is justified.
Um and I I would be, you know, buyers of the names that again are are are kind of selling the the picks and shovels and and building out the infrastructure to um, you know, keep this trend going.
So it it requires extra due diligence.
Um, but I would not be, you know, selling a a company like Alphabet at this point in time with what I think is an AI um, you know, trend that's still in the early innings, quite frankly.
So we've seen enormous volatility recently in a number of asset classes.
And that would include Bitcoin.
Uh we saw a bit of a rebound from the recent sell-off today and we kind of fluctuated on either side of 70,000.
How how are you feeling about the crypto space?
Well, you know, crypto is is very narrative driven.
I mean like any asset that doesn't uh you know produce cash flow or or have like a real industrial use, um I mean it's it doesn't act as a currency particularly in developed markets.
Um it trades on narrative and you know over the last three, four years, some of the predominant narratives have been really beat up.
It was not a good inflation hedge in 2022.
And it has not really acted like a store of value to hedge, you know, geopolitical or debasement risk.
It's not a good sign if if, you know, as the digital gold for a modern era, um, it's going down while real gold and silver are going up and to the right.
And so the the complete um split of those two assets, I think really hurts the narrative that crypto and Bitcoin in particular is this store of value that can be counted on.
Um now anyone who's who's watched the space for a while knows that this sort of volatility is not uncommon, but every crypto bull and bear cycle we go through as institutional adoption picks up, um, and as these narratives get beat up, I think there's gonna be more and more um behind the the demand for use case and for, you know, what what is this?
And so I I'm somewhat of a skeptic.
I you know, I'm uh it's it's um just kind of entrenched in me to be a little skeptical of this sort of stuff, but I do think that that narrative being so beat up over the last couple of months is is concerning as we go forward.
We also had news today that the privately held firm jump trading is set to take some small stakes in both Cal Shi and Polymarket.
This would be done in exchange for providing liquidity on these prediction market platforms.
How do you view the prediction markets overall?
You know, for financial markets for investors, I mean, I I it could add some level of uh volatility to markets, you know, if if these platforms really get up to scale.
Um, you know, I I think it it's probably not too big of an issue um for broad investors at this point.
You know, it it it probably says more about um, you know, society than it than it is uh an indicator for financial markets.
But um, you know, anytime you have uh a lot of interest in leverage, in you know, the kind of meme stocks, or and I think that these kind of prediction markets and event contracts start to fall under that umbrella of you know, retail getting really creative with ways to try and hit it big, you know, maybe even crypto falls under that umbrella.
Um, you know, it it it adds a level of volatility and a level of systemic risk that um is it's hard to price because they're so new.
But I I it's not a concern, you know.
I think if you're just uh an investor in a 6040 or someone who has kind of a diversified portfolio, um now what it says about the state of the world is is maybe a different conversation.
Change gears very quickly here.
Talk a little bit about Japan because uh yesterday we had a pretty powerful rally in the equity market in Tokyo.
That was after Prime Minister Takeichi managed that historic landslide win in the snap election on Sunday.
And we've got, as I speak to you, uh the Nikkei trading at a record high.
If you had to look at a market offshore, would you would you take notice of what's happening in Japan and maybe put a little cash to work?
Absolutely.
Um, Japan, Korea, there are a lot of uh stock markets around the world um that are acting like leadership and and leading this global bull market.
I think of all the asset classes, US uh investors are probably the most underweight international after you know 15 years of underperformance.
I think um US investors should really consider adding to international here.
I think the weaker dollar story has legs.
There are structural drivers in not just Japan, although they're that that's a great story and a great looking chart.
Um, but in other markets around the world, I think international is is a really interesting place to be right now.
It's a kind of a natural hedge to the tech centric US markets.
Um, and I think it's it's just frankly underowned in the U.S.
So Japan looks great, but I would be adding to international more broadly as well.
All right, Ross.
Thank you so much.
We'll leave it there.
Ross Mayfield is investment strategist at Baird, joining from Milwaukee, Wisconsin here on the Daybreak Asia podcast.
Today's show is brought to you by Vanguard.
To all the financial advisors listening, let's talk bonds for a minute.
Capturing value and fixed income is not easy.
Bond markets are massive, murky, and let's be real.
Lots of firms throw a couple flashy funds your way and call it a day.
But not Vanguard.
At Vanguard, institutional quality isn't a tagline, it's a commitment to your clients.
We're talking top grade products across the board of over 80 bond funds, actively managed by a 200 person global squad of sector specialists, analysts, and traders.
These folks live and breathe fixed income.
So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com/slash audio.
That's vanguard.com/slash audio.
All investing is subject to risk, Vanguard Marketing Corporation distributor.
Hello, I'm Stephen Carroll.
I'm in Brussels, where many of Europe's biggest decisions get made.
And I'm Caroline Hepke in London with the hosts of the Bloomberg Daybreak Europe podcast.
We're up early every weekday, keeping an eye on what's happening across Europe and around the world.
We do it early so the news is fresh, not recycled, and so you know what actually matters as the day gets going.
From Brussels, I'm following the politics, policy, and the people shaping the European Union right now.
And from London, I'm looking at what all that means for markets, money, and the wider economy.
We've got reporters across Europe and around the globe feeding in as stories break.
So whether it's geopolitics, energy, tech, or markets, you're hearing it while it happens.
It's smart, calm, and to the point.
And it fits into your morning.
You can find new episodes of the Bloomberg Daybreak Europe podcast by 7 a.m.
in Dublin or 8 a.m.
in Brussels, Berlin, and Paris.
On Apple, Spotify, YouTube, or wherever you get your podcasts.
Welcome back to the Daybreak Asia Podcast.
I'm Doug Chrisner.
The U.S.
employment report for the month of January is due on Wednesday.
And today, the director of the National Economic Council, Kevin Hassett, said, softer monthly jobs gains are likely in the coming months as labor force growth slows.
Today it was anxiety about the jobs data that helped to weaken the dollar.
We had the Bloomberg Dollar Spot Index falling six tenths of one percent in New York trading.
And that's where we begin our conversation with Carrie Lee.
She is the global market strategist at DBS.
Carrie spoke to Bloomberg TV host Sherry On and Avril Hong.
Where are we in these conversations and debate around the dollar debasement trade?
Yeah, um, well, um, I think over the past two sessions, the decline in the US data uh dollar actually was driven mainly by the resumption of this debasement trade.
But in the short term on the tactical horizon, actually we think the dollar index may still find some support around 95 to 96.
Because first of all, we've seen the latest data like ISM manufacturing and services index actually point to a still resilient U.S.
economy.
And then uh last night we've also seen the quite resilient U.S.
stock market.
And because of the still uh solid uh solid equity market and economy, it feels like the Federal Reserve itself may not be as dovish as expected.
If this is the case, then the U advantage itself may also help to um support the US dollar around the ninety-five to ninety-six level at this moment.
How closely are you watching who becomes the next chair of the Federal Reserve?
We just got the latest comments from Kevin Walsh talking about how he wanted to transform the institution.
Well, um, for the upcoming um fact share, actually, we think um he is going to still protect um the US, the Federal Reserve's um independence, which is actually not a negative factor for the US dollar.
But however, at the end of the day, we've seen in the longer term the US dollar itself may still have a structural moderate downtrend, which has already formed since 2022, the start of uh Russia-Ukraine war, because this is not uh about the next fact, but more about the US policy uncertainty actually uh shakes the US-led world order, and the market is also still concerned about the US fiscal sustainability in the long term, which probably the reason why we will see this on and off debasement trade still um weighing down the US dollar in the longer term.
Carrie, talk to us about the other side of the dollar trade in Asia, specifically for the Remin B.
We saw a bit of firmness following Bloomberg reports that China has told financial institutions or banks to reduce the exposure to treasuries, and this is not because of geopolitical maneuverings to be clear, but more because of parrying back some of the risk in markets.
As investors rethink what the US assets are going to look like this year, what are you seeing in China?
Well, uh in China, we've seen the PBOC always talk about Reming B internationalization, and they also try to transform the economy towards a growth, consumption-driven growth model.
And this probably needs the Reming B to strengthen a fair bit.
And in the meantime, we've also seen quite a fair bit of capital inflows as well as a record high current account surplus, all supporting the UN.
And more importantly, the PBOC has set the dollar CNY daily fixing rate lower and lower gradually.
Firstly below the seven mark and now towards the 6.95 level.
It feels like the PBOC does allow some further strength in the Reming B.
And if we look at the Reming B index, actually is still below its five-year average, which means that the catch-up play for the Reming B still has some room to run.
So we do expect the dollar C H to fall a fair bit towards the nine point six point nine level.
And then for the next step, whether it will go to 6.8 or even 6.7, it depends on the next move of the US dollar.
If the dollar index is trying lower towards 94, and if there are signs that the uh China's economy is improving further, then it's possible for the dollar CNH or dollar CNY to try lower towards uh 6.8 or even 6.7 in the rest of this year.
Carrie, what about dollar Japanese yen?
Is the verbal intervention we've been getting of late going to be enough to keep things down?
Well, um actually I think the yen strength over the past session is a bit surprising, but uh it's mainly driven by the retracement in the US dollar as well as uh the verbal intervention.
I think the market probably is still concerned about another round of coordinated rate check by the US and Japan.
But as long as there is only verbal intervention and there is no real intervention, then um probably the market's focus will uh shift back towards the concerns about the fiscal sustainability uh under Takai Chi government.
If that is the case, then um probably the Japanese yen is not yet out of the wood.
The dollar yen will still find some support around um 154.5 before 152, and then the risk is still tilted uh towards the upside, probably uh towards the previous high around 159.45.
Yeah, that was achieved around mid-January, right?
That 2024 low against the greenback.
What are we expecting in terms of the Bank of Japan?
Could we see accelerated rate hikes given the weakness in the yen?
Well, um, in terms of uh BOJ, actually our expectation is for them to hike once more this year towards one percent.
But there is also scope for them to hike further in the later part of this year or the early uh 2027.
If uh the Takai Chi government's upcoming fiscal expansion is going to support uh the economy and support the wage growth.
And if that is the case, then probably for uh Japanese yen, they may also find some scope for further interest rate hikes.
That is Carrie Lee, global market strategist at DBS speaking to Bloomberg TV host Sherry Ann and Avril Hong, giving you the conversation right here on the Daybreak Asia Podcast.
Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition Podcast.
Each weekday we look at the story shaping markets, finance, and geopolitics in the Asia Pacific.
You can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere else you listen.
Join us again tomorrow for insight on the market moves from Hong Kong to Singapore and Australia.
I'm Doug Chrisner, and this is Bloomberg.
I'm Carol Masser.
And I'm Tim Stenevak, inviting you to join us for the Bloomberg Business Week Daily Podcast.
Now, every day we are bringing you reporting from the magazine that helps global leaders stay ahead.
We've got insight on the people, the companies, and trends that are shaping today's complex economy.
That's right, Tim.
We're all over global business, finance, tech news, all as it is happening in real time, and we've got complete coverage of the U.S.
market close.
Gotta say, basically, if it impacts financial markets, if it impacts companies, if it's impacting trends and narratives that are out there, we are on it.
We also have a lot of fun doing it.
Bloomberg Business Week also brings you the analysis behind the headlines through conversations with our expert guests.
And we are doing this all live each weekday.
And then we bring you the best analysis in our daily podcast.
Search for Bloomberg Business Week on YouTube, Apple, Spotify, or anywhere else you listen.
Check it out on your way home from work to catch up on the conversations that you miss during the business day.
And on the weekend, check it out for a complete wrap up of your business week.
That's the Bloomberg Business Week Daily Podcast.
I'm Carol Masser.
And I'm Tim Stenovek.
Subscribe today wherever you get your podcasts.