WEBVTT - A Weak IMF Outlook and Apple's Computer Problems

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<v Speaker 1>This is Bloomberg Daybreak Asia for this Tuesday, April eleventh

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<v Speaker 1>in Hong Kong, Monday April tenth in New York and

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<v Speaker 1>coming up today. US equities edge higher as the market

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<v Speaker 1>contemplates another rate hike by the Fed. The IMF says

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<v Speaker 1>it expects interest rates to revert to ultra low levels,

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<v Speaker 1>and Apple's Mac shipments suffer their worst drop since the

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<v Speaker 1>year two thousand days demand falls. PLA says it has

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<v Speaker 1>concluded drills and stands ready to fight Taiwan separatists. Pentagon

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<v Speaker 1>and DJ investigate the leak of highly classified intelligence. White

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<v Speaker 1>House elevates the effort to gain release of Wall Street

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<v Speaker 1>Journal reporter from Russia. I'med Baxter with Global News. That's

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<v Speaker 1>all straight Ahead on Bloomberg Daybreak Asia, the business news

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<v Speaker 1>you need to start your day in just one fifteen

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<v Speaker 1>minute podcast available on Apples, Spotify, the Bloomberg Business app

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<v Speaker 1>and everywhere you get your podcasts. Good morning, I'm de

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<v Speaker 1>Prisoner and I'm Brian Curtis. Here are the stories we're

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<v Speaker 1>following today. In the latest World Economic Outlook, the IMF

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<v Speaker 1>argued that rates in the United States and other industrial

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<v Speaker 1>countries will revert will go back to those ultra low

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<v Speaker 1>levels that prevailed prior to the pandemic. It sees the

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<v Speaker 1>so called natural or neutral rate comfortably below one percent

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<v Speaker 1>in the United States in the coming decades. The IMF

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<v Speaker 1>said that this will make it easier for some countries

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<v Speaker 1>to handle elevated government debt levels that came out of

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<v Speaker 1>the pandemic. Debt interest rates in geopolitical risks will be

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<v Speaker 1>in focus as both the IMF and the World Bank

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<v Speaker 1>kick off their Spring meetings this week now in Washington.

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<v Speaker 1>Managing Director Krystallina Gorgieva one that the IMS five year

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<v Speaker 1>outlook for global economic growth is the weakest in more

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<v Speaker 1>than three decades, despite the remarkable resilience of consumer spending

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<v Speaker 1>in the United States in Europe, despite the uplift from

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<v Speaker 1>China's reopening, global growth would remain below three percent as

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<v Speaker 1>we projected it earlier this year, and what is more concerning,

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<v Speaker 1>it would remain around three percent for the next five years.

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<v Speaker 1>Gorgieva cited Russia's invasion of Ukraine and also economic fragmentation

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<v Speaker 1>caused by geopolitical tensions as major factors limiting growth. The

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<v Speaker 1>IMF plans to release a more detailed World Economic Outlook

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<v Speaker 1>report tomorrow and a new sign that the banking crisis

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<v Speaker 1>may be easing. That story from Bloomberg's Denise Pellegrini, we're

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<v Speaker 1>hearing the amount of emergency debt the Federal Homelan Bank

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<v Speaker 1>System issued the last week of March was thirty seven

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<v Speaker 1>billion dollars. All that might seem like a lot, but

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<v Speaker 1>it is way down from the more than three hundred

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<v Speaker 1>billion dollars two weeks earlier. The fhlbs are essentially a

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<v Speaker 1>backstop for the banks. They were created during the depression

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<v Speaker 1>to boost mortgage lending and community investment, and at thirty

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<v Speaker 1>seven billion dollars in FHLB for the week, that's still elevated,

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<v Speaker 1>but the declines in advances and debt issuance are seen

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<v Speaker 1>as assigned banks need for cash has either met or dropping,

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<v Speaker 1>as many depositors apparently stopped pulling their money out. Denise Peloguni,

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<v Speaker 1>Bloomberg Day Break Asia. New Bank of Japan Governor Kazuo

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<v Speaker 1>Ueida said that the current yield curve control program and

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<v Speaker 1>also negative interest rates are appropriate policies because of the

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<v Speaker 1>current economy. It signals that any significant changes to the

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<v Speaker 1>boj's monetary policy of Framework may be unlikely for the

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<v Speaker 1>time being. Here's Uida speaking at his inaugural news conference

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<v Speaker 1>as the governor of the BOJ. If we suddenly normalize

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<v Speaker 1>policy when we realize that the economy will reach two

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<v Speaker 1>percent in a sustainable and stable manner, the market and

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<v Speaker 1>the economy will have to make a very large adjustment.

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<v Speaker 1>I think we have to make an appropriate judgment in

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<v Speaker 1>advance so that such a thing does not happen. Uida

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<v Speaker 1>also said that he's open to the idea of a

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<v Speaker 1>policy review from a longer term standpoint, but he said

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<v Speaker 1>that he'd like to discuss it with other board members

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<v Speaker 1>before any decision. And Doug, it's one of the reasons

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<v Speaker 1>we saw that broad weakness in the end again, dali

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<v Speaker 1>En one thirty three sixty. We go to Apple next.

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<v Speaker 1>The company's MAC shipments were down in the first quarter

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<v Speaker 1>by forty and a half percent. You know, this is

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<v Speaker 1>the worst decline since the fourth quarter of two thousand.

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<v Speaker 1>The figures, by the way, come from the International Data Corporation.

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<v Speaker 1>Apple was hit by sluggish demand along with an industry

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<v Speaker 1>wide glut. All PC makers were affected. Now, if you're

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<v Speaker 1>looking for a silver lining it, maybe this cooling demand

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<v Speaker 1>may give some of these companies the opportunity to overhaul

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<v Speaker 1>production and diversify their supply chains. Bloomberg's Anoragrana said that

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<v Speaker 1>Apple may have more time to explore options outside China.

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<v Speaker 1>They don't mind being exposed to China, but they don't

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<v Speaker 1>want to be hundred percent exposed to China. I see.

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<v Speaker 1>You know, let's say over the next decade, you know,

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<v Speaker 1>you could see perhaps half of their production coming from

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<v Speaker 1>China and half from somebody where else. That would be

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<v Speaker 1>a combination a bunch of countries. It's impossible for them

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<v Speaker 1>to truly diversify away from China, but they have to

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<v Speaker 1>do it. Bloomberg's on a rock Grana there By the way,

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<v Speaker 1>we are hearing that Apple is reading some new models

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<v Speaker 1>that could help spur demand. This would include the next

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<v Speaker 1>slate of laptops and desktops, including a new iMac. Those

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<v Speaker 1>products are expected to be launched later this year. Meantime,

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<v Speaker 1>Taiwan Semiconductor missed sales estimates for the second consecutive quarter.

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<v Speaker 1>It's a sign of continued weakness in global electronics demand.

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<v Speaker 1>We heard from Joan Poene at Advisors Capital Management. For

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<v Speaker 1>those exposed to the consumer PCs and smartphones. It's certainly

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<v Speaker 1>a demand decline right after the surge and purchases during

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<v Speaker 1>the works of the pandemic. Right we're seeing them digest

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<v Speaker 1>that and wait till they need to upgrade their PCs

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<v Speaker 1>and their smartphones. So I think demand is largely driving

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<v Speaker 1>what's going on both at Apple on TSMC and had

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<v Speaker 1>already gone on at the other PC manufacturers. Joan Poeni

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<v Speaker 1>Advisors Cap Management. TSMC also slashed its capital spending plans

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<v Speaker 1>for the year to a range of thirty two to

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<v Speaker 1>thirty six billion. That's down from the thirty six point

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<v Speaker 1>three billion that we saw last year. Separately, rival Samsung

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<v Speaker 1>announced last week it would cut memory chip production to

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<v Speaker 1>a meaningful level. It's a move that competitors had been

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<v Speaker 1>waiting for after a pile up of inventory hurt pricing

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<v Speaker 1>and profits. And we did see Samsung up more than

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<v Speaker 1>one percent as mentioned yesterday, and in the socks in

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<v Speaker 1>the session today, DOUG was up one point eight percent.

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<v Speaker 1>It's interesting because that runs a little counter to some

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<v Speaker 1>of the negativity that we've seen in the bond market,

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<v Speaker 1>and we can get to that in a moment, but

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<v Speaker 1>I wanted to mention this very interesting non consensus call

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<v Speaker 1>by the IMF to go back to very low interest rates.

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<v Speaker 1>There will be a lot of debate, and it's good

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<v Speaker 1>fodder for us on this show today to talk about

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<v Speaker 1>that because it really does mean a different outlook going

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<v Speaker 1>forward if the IMF is right, I would say dramatically,

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<v Speaker 1>so wouldn't you, Brian. I mean, in order for for

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<v Speaker 1>us to see rates kind of revert back to these

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<v Speaker 1>ultra low levels that we've known, there would have to

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<v Speaker 1>be a great deal of economic weakness. You know, it's

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<v Speaker 1>easy to argue that that's not going to be the

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<v Speaker 1>case because of deglobalization, so called friend shoring that raises

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<v Speaker 1>costs in the United States is a lot more expensive

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<v Speaker 1>to produce there than all around the rest of the world, geopolitics,

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<v Speaker 1>which we've seen a lot in the last year with US,

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<v Speaker 1>China and Russia Ukraine. It just seems like there's also

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<v Speaker 1>long wave trends that would suggest it when moving into

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<v Speaker 1>a higher interest rate environment. So yeah, that's up a

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<v Speaker 1>great debate, no doubt about it. And in terms of

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<v Speaker 1>the data, you're talking about interest rates directionally remaining at

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<v Speaker 1>elevated levels because inflation is still running hot. We've got

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<v Speaker 1>the CPI data later in the week here in the US,

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<v Speaker 1>and as you know later today in China both CPI

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<v Speaker 1>and PPI. But in the case of China, when it

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<v Speaker 1>comes to wholesale inflation, it's a story of deflation. Yeah, absolutely,

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<v Speaker 1>one of the things though that was interesting about on

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<v Speaker 1>that and also looking at why cyclicals did so well today.

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<v Speaker 1>I mean, we know the socks was higher because of

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<v Speaker 1>the Samsung call at least, and Micron moving up as much,

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<v Speaker 1>but Chinese provinces boosting spending on major construction projects this year.

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<v Speaker 1>There's a lot of money. This is one point eight

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<v Speaker 1>trillion dollars. It's a twenty percent gain, might be one

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<v Speaker 1>of the reasons, and it does kind of go against

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<v Speaker 1>the deflation and the low levels inflation that we've seen

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<v Speaker 1>so far. So sets up for a very interesting debate.

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<v Speaker 1>It is now time for Global news. Taiwan's foreign minister

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<v Speaker 1>says three days of China's military drills in the Straits

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<v Speaker 1>the Taiwan Straits are similar to how Beijing acted after

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<v Speaker 1>Nancy Pelosi's visit. Ed Baxter has Global News in the

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<v Speaker 1>nine sixty Newswoman San Francisco ed, Yeah, that's right. Brian

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<v Speaker 1>Minister Joseph Wu says the intensity is about the same.

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<v Speaker 1>PLA says US concluded the drill says its stands ready

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<v Speaker 1>to fight at any time and crush separatist activities and

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<v Speaker 1>foreign interference. Meanwhile, from French law makers are planning to

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<v Speaker 1>visit Taipei, WHO saying that they are showing support for

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<v Speaker 1>Taiwan and that the visit will be very soon. Ukraine

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<v Speaker 1>has been for USD to alter some of its counter

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<v Speaker 1>offensive plans. CNN reporting a leak of classified documents is

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<v Speaker 1>hitting too close to home. Meanwhile, in the US, A

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<v Speaker 1>Pentagon now says the Department of Justice and Pentagon are

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<v Speaker 1>looking into those leaks. We don't know who's responsible for this,

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<v Speaker 1>and we don't know if they have more they intend

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<v Speaker 1>to post, so we're watching this and monitoring it as best.

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<v Speaker 1>Spokesman Admiral John Kirby asked whether it was a concern,

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<v Speaker 1>said they darn well are. The US officials have been

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<v Speaker 1>in touch with the relevant allies and partners over the

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<v Speaker 1>last couple of days at very high levels. I'll leave

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<v Speaker 1>it at that. And Bloomberg's Larry Liebert says this league

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<v Speaker 1>has a Pentagon very very worried highly sensitive classified informations

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<v Speaker 1>is a very serious risk to national security made public

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<v Speaker 1>in this league of documents. He says. Allies may already

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<v Speaker 1>know much of it, but at the very least, it's

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<v Speaker 1>very embarrassing. The mind Administration has formally issued a statement

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<v Speaker 1>saying that it is determined that the Wall Street Journal

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<v Speaker 1>reporter Evan Gershkovitch has been wrongfully detained, and that elevates

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<v Speaker 1>it now to the state Department to leave the effort

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<v Speaker 1>to gain its release. United States leaders responding in some

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<v Speaker 1>force today over the Texas judges ruling to strip the

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<v Speaker 1>FDA of oversight of so called abortion pill Massachusetts Governor

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<v Speaker 1>Mora Healy it harms patience, undermines medical expertise, and takes

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<v Speaker 1>away freedom. It's an attempt to punish the shame, to

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<v Speaker 1>marginalize women. It's unnecessary, It's terrible, and Bloomberg's Rick Davis

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<v Speaker 1>says the implications are wide. You're going to have a

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<v Speaker 1>patchwork quilt of laws that nobody's really going to understand

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<v Speaker 1>how to abide by. We see reports that doctors are

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<v Speaker 1>leaving states that are banning abortion or fear that they're

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<v Speaker 1>going to have their practice attack by the courts. I

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<v Speaker 1>mean it's really a dislocation and of healthcare. And also

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<v Speaker 1>on sound on Bloomberg, Jeanie Schanzano says this can very

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<v Speaker 1>well go to the US Supreme Court. I do think

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<v Speaker 1>we'll see a stay of the Texas Judge's order in

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<v Speaker 1>the Fifth Circuit. But when you have competing rulings like this,

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<v Speaker 1>conflicting rulings, the Supreme Court verywell may have to step

0:11:20.559 --> 0:11:23.319
<v Speaker 1>in and politically both agree. It puts Republicans in a

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<v Speaker 1>very tough spot because this is a very issue that

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<v Speaker 1>can galvanize Democrats. Another mass shooting in the US today,

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<v Speaker 1>Five people, including the shooter, have lost their lives at

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<v Speaker 1>a bank in Louisville. Seven others are being treated at hospitals.

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<v Speaker 1>Kentucky Governor Andy Bascher has a personal connection to some

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<v Speaker 1>of the victims today. I have a very close friend

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<v Speaker 1>that didn't make it today, and I have another close

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<v Speaker 1>friend who didn't either, and one who's at the hospital

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<v Speaker 1>that I hope is going to make it through. So

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<v Speaker 1>when we talk about praying, I hope people will government. Reportedly,

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<v Speaker 1>as a former bank employee, Global News Power by more

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<v Speaker 1>than twenty seven hundred journalists and analysts and over one

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<v Speaker 1>hundred and twenty countries in San Francisco. I'm at Baxter

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<v Speaker 1>in This is Bloomberg. This is Bloomberg day Break Asia.

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<v Speaker 1>I'm Brian Curtis along with David Inglis. Our guest is

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<v Speaker 1>belie to own chairman of Dalton Investments. So blie to

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<v Speaker 1>where a daily news show. We have to rope in

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<v Speaker 1>some of the big stories so the day. What do

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<v Speaker 1>you make of this IMF call for going back to

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<v Speaker 1>very low interest rates? I find it quite surprising because

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<v Speaker 1>the fact is that inflation has increased and is still

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<v Speaker 1>with us despite the fence raising interest rates by five

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<v Speaker 1>percent or almost five percent in short order. And I

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<v Speaker 1>don't see how the federal lower interest rates very quickly

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<v Speaker 1>unless there's some sort of a dramatic economic accident. So

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<v Speaker 1>it's puzzling and it's something I have to think about more.

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<v Speaker 1>But it's it's not something that makes a lot of

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<v Speaker 1>sense to me at this point. To David here, that's

0:13:01.000 --> 0:13:07.679
<v Speaker 1>a very diplomatic way of putting that doesn't make sense. Okay, well, okay,

0:13:07.840 --> 0:13:10.520
<v Speaker 1>let's look ahead then to this main meeting of the

0:13:10.559 --> 0:13:14.680
<v Speaker 1>FED coming up. This changes daily. Obviously, the probability is

0:13:14.720 --> 0:13:18.640
<v Speaker 1>like they probably will move um. I don't like those odds,

0:13:18.800 --> 0:13:20.839
<v Speaker 1>but perhaps the broader question to you is the market

0:13:20.840 --> 0:13:23.360
<v Speaker 1>correct as who may likely is the last hike of

0:13:23.400 --> 0:13:26.640
<v Speaker 1>the cycle. Yeah, obviously I don't know, but twenty five

0:13:26.640 --> 0:13:30.640
<v Speaker 1>basins points and may seems like a reasonable outcome if

0:13:30.679 --> 0:13:34.440
<v Speaker 1>there are no huge surprises in the CPI and PPI

0:13:34.559 --> 0:13:37.280
<v Speaker 1>numbers this week. And the reason I say that is

0:13:37.320 --> 0:13:40.080
<v Speaker 1>because of credibility. The Fed governors have already said that

0:13:40.120 --> 0:13:45.400
<v Speaker 1>they want to increase rates further and pause, so that

0:13:45.480 --> 0:13:50.080
<v Speaker 1>seems to be a reasonable outcome given what they've already said,

0:13:50.120 --> 0:13:52.840
<v Speaker 1>and they've basically done what they've said, so I would

0:13:52.880 --> 0:13:56.880
<v Speaker 1>believe they're comments. The bulls would would hope for a

0:13:57.040 --> 0:14:00.559
<v Speaker 1>pause in interest rates, but not necessarily cut. Often hear

0:14:00.880 --> 0:14:02.840
<v Speaker 1>analysts come on and say, well, you know, I don't

0:14:02.920 --> 0:14:04.920
<v Speaker 1>see a cut later this year, and the Feds certainly

0:14:05.040 --> 0:14:07.600
<v Speaker 1>not saying it. That's not what the what the real

0:14:07.640 --> 0:14:11.880
<v Speaker 1>bulls really want. What they probably want is the pause,

0:14:12.000 --> 0:14:14.959
<v Speaker 1>because when you get signs of a cut, it means

0:14:15.120 --> 0:14:19.080
<v Speaker 1>there's a reason for it. I agree, I'm not seeing

0:14:19.080 --> 0:14:23.240
<v Speaker 1>a cut, but I have heard many other people forecast

0:14:23.280 --> 0:14:25.640
<v Speaker 1>a cut by the end of this year. It's that's

0:14:25.640 --> 0:14:27.680
<v Speaker 1>surprising to me too, but it seems to be a

0:14:27.720 --> 0:14:30.120
<v Speaker 1>common view that we will answer a recession in the

0:14:30.160 --> 0:14:33.040
<v Speaker 1>second half of the federal cut interest rates. It's not

0:14:33.080 --> 0:14:36.360
<v Speaker 1>what I believe, but it's what I hear. Okay, Belieita,

0:14:36.440 --> 0:14:41.120
<v Speaker 1>let's talk strategy. How are your friends doing? Our friends

0:14:41.120 --> 0:14:44.840
<v Speaker 1>are doing fine. This year. It's been an exciting time

0:14:44.880 --> 0:14:49.840
<v Speaker 1>for us in Asia, especially in Japan because the government

0:14:50.080 --> 0:14:54.280
<v Speaker 1>is really ramping up its corporate government's reforms, and especially

0:14:54.320 --> 0:14:59.680
<v Speaker 1>because they just provide details of the listing requirements and

0:14:59.720 --> 0:15:03.680
<v Speaker 1>a headline for meeting those requirements or the companies will

0:15:03.680 --> 0:15:06.800
<v Speaker 1>be booted down from the prime to the standard section

0:15:07.200 --> 0:15:10.360
<v Speaker 1>or even delisted all together. So finally something's happening there

0:15:10.400 --> 0:15:14.280
<v Speaker 1>that we think it's very positive for stocks. You know,

0:15:14.320 --> 0:15:17.560
<v Speaker 1>we mentioned at the top that Chinese provinces will boost

0:15:17.680 --> 0:15:20.080
<v Speaker 1>spending this year. It's one of the stories that we're

0:15:20.080 --> 0:15:24.080
<v Speaker 1>featuring on the terminal, and that might mean a lot

0:15:24.120 --> 0:15:27.000
<v Speaker 1>of business for foreign companies. And we did see a

0:15:27.120 --> 0:15:31.400
<v Speaker 1>spike in cyclicals today. Industrials, materials, and energy all seem

0:15:31.480 --> 0:15:33.600
<v Speaker 1>to do well, and it runs counter to what the

0:15:33.640 --> 0:15:36.480
<v Speaker 1>bond market seems to be saying. Can you figure out

0:15:36.520 --> 0:15:40.480
<v Speaker 1>a way to play China correctly this year. We don't

0:15:40.560 --> 0:15:44.040
<v Speaker 1>really invest in China currently. We have a specific way

0:15:44.040 --> 0:15:46.360
<v Speaker 1>of investing, which is that we're a value investor. We

0:15:46.440 --> 0:15:49.920
<v Speaker 1>look for good companies, good cash flows, and also importantly,

0:15:49.960 --> 0:15:52.880
<v Speaker 1>we look for companies that are run by managements whose

0:15:52.920 --> 0:15:55.960
<v Speaker 1>interests are a line with shareholders. And there's less and

0:15:56.040 --> 0:15:58.400
<v Speaker 1>less of that in China, one because there are a

0:15:58.400 --> 0:16:01.960
<v Speaker 1>lot of SOEs and two because truly successful entrepreneurs have

0:16:02.040 --> 0:16:08.320
<v Speaker 1>been punished, so the environment for entrepreneurs is becoming less welcoming.

0:16:08.600 --> 0:16:12.640
<v Speaker 1>On top of which, um, you know, we think there

0:16:12.680 --> 0:16:15.880
<v Speaker 1>a lot of headwinds facing China this year and even

0:16:15.920 --> 0:16:18.280
<v Speaker 1>going forward. So we're not that positive on China to

0:16:18.320 --> 0:16:25.600
<v Speaker 1>begin with, and the sort of anti capitalistic atmosphere there

0:16:27.040 --> 0:16:30.880
<v Speaker 1>hinders are enthusiasm. Okay, Well, talk to us in about

0:16:30.920 --> 0:16:35.160
<v Speaker 1>other opportunities you've you've talked about Japan, if you if

0:16:35.160 --> 0:16:37.520
<v Speaker 1>you would like to lay out some names there and why,

0:16:37.800 --> 0:16:39.960
<v Speaker 1>or perhaps other markets that career or time one. I believe,

0:16:40.000 --> 0:16:42.640
<v Speaker 1>of course you're looking at some companies there too, sure,

0:16:43.080 --> 0:16:46.360
<v Speaker 1>just to finish up one in Japan, you know, I

0:16:46.400 --> 0:16:49.320
<v Speaker 1>just want to mention that Warren Buffett is apparently talking

0:16:49.360 --> 0:16:52.280
<v Speaker 1>about raising another bond offering in Japan. Yes, and with

0:16:52.320 --> 0:16:56.240
<v Speaker 1>that he'll probably buy more stocks again. So clearly Warren

0:16:56.240 --> 0:16:58.080
<v Speaker 1>Buffett's thinking that this might be a good time to

0:16:58.120 --> 0:17:00.960
<v Speaker 1>add to his existing positions, because if we recall a

0:17:00.960 --> 0:17:03.840
<v Speaker 1>while back, he had bought a bunch of trading companies,

0:17:03.960 --> 0:17:06.840
<v Speaker 1>and he might do that again, you know. And we're

0:17:06.880 --> 0:17:12.280
<v Speaker 1>seeing from our visits with companies and other investors that

0:17:13.119 --> 0:17:15.520
<v Speaker 1>there are, actually, there's actually now for the first time

0:17:15.560 --> 0:17:19.239
<v Speaker 1>in over a decade, large investment management firms setting up

0:17:19.240 --> 0:17:22.600
<v Speaker 1>offices in Japan, and we're getting more visits from other

0:17:22.680 --> 0:17:27.080
<v Speaker 1>investors as well, from clients and other investors to Japan.

0:17:27.560 --> 0:17:30.719
<v Speaker 1>So clearly the interest in Japan is rising, and I

0:17:30.760 --> 0:17:33.240
<v Speaker 1>believe it's because it seemed to be a safe place

0:17:33.240 --> 0:17:35.200
<v Speaker 1>to be because there are good companies that are cheap,

0:17:35.680 --> 0:17:39.520
<v Speaker 1>and corporate governance is making an impact on the stock market.

0:17:39.880 --> 0:17:42.000
<v Speaker 1>But the problem with Japan always has been that for

0:17:42.040 --> 0:17:44.320
<v Speaker 1>the last thirty years, if you just overweighted Japan, you

0:17:44.359 --> 0:17:47.840
<v Speaker 1>lost money relative to the index. So it's a difficult

0:17:47.920 --> 0:17:51.359
<v Speaker 1>psychological hurdle to overcome. And there is one major trend

0:17:51.400 --> 0:17:54.720
<v Speaker 1>that may happen. It seems that Kazua is talking about

0:17:54.800 --> 0:17:57.639
<v Speaker 1>maintaining Corona's policies for a while, but a lot of

0:17:57.680 --> 0:18:00.159
<v Speaker 1>people in the market think that will change, and if so,

0:18:00.720 --> 0:18:03.879
<v Speaker 1>will that attract repatriation of yen back to Japan and

0:18:03.880 --> 0:18:08.280
<v Speaker 1>would that really benefit domestic companies. I think that's clearly

0:18:08.320 --> 0:18:13.120
<v Speaker 1>a upside possibility. That's very little downside because how much

0:18:13.280 --> 0:18:17.119
<v Speaker 1>further can you go than zero? And they've tried, and

0:18:17.119 --> 0:18:19.280
<v Speaker 1>they actually have gone below zero. But I don't think

0:18:19.280 --> 0:18:21.359
<v Speaker 1>that's sustainable because it costs a lot of money to

0:18:21.400 --> 0:18:24.240
<v Speaker 1>maintain the Yeo curve control that they have for so long.

0:18:24.560 --> 0:18:28.720
<v Speaker 1>And we are seeing some increase in wage in wages,

0:18:29.560 --> 0:18:31.560
<v Speaker 1>so there is the possibility that you might get an

0:18:31.640 --> 0:18:34.879
<v Speaker 1>appreciation in yen as well, on top of the stock

0:18:34.880 --> 0:18:36.720
<v Speaker 1>market doing better. Yeah, believe I was going to ask you,

0:18:36.760 --> 0:18:39.600
<v Speaker 1>how did dollar investors approach the hedging situation on the

0:18:39.680 --> 0:18:42.440
<v Speaker 1>end or is that something you're not worried about. We

0:18:42.920 --> 0:18:45.280
<v Speaker 1>hedge when we're given the opportunity to hedge. Often our

0:18:45.320 --> 0:18:48.440
<v Speaker 1>clients do the hedging themselves. But where we have the opportunity,

0:18:48.440 --> 0:18:51.160
<v Speaker 1>we hedge when we think that there might be weakness

0:18:51.240 --> 0:18:53.840
<v Speaker 1>in the yen. But at this point we're not hedged,

0:18:53.920 --> 0:18:58.840
<v Speaker 1>because we think that's upside. This is Bloomberg Daybreak Asia,

0:18:58.920 --> 0:19:01.480
<v Speaker 1>your morning brief on this story's making news from Hong

0:19:01.560 --> 0:19:04.199
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