1 00:00:00,280 --> 00:00:07,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:10,600 --> 00:00:13,040 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:13,080 --> 00:00:15,080 Speaker 2: the top stories in the coming week from our Daybreak 4 00:00:15,080 --> 00:00:17,599 Speaker 2: actors all around the world. Straight Ahead on the program, 5 00:00:17,600 --> 00:00:20,560 Speaker 2: we'll look at upcoming housing data, along with earnings from 6 00:00:20,560 --> 00:00:24,440 Speaker 2: eb Giant Tesla and the latest on its CEO Elon Musk. 7 00:00:24,880 --> 00:00:26,439 Speaker 2: I'm Tom Busby in New York. 8 00:00:26,720 --> 00:00:29,240 Speaker 3: I'm Karen Hecke here in London, where we're asking what 9 00:00:29,360 --> 00:00:31,640 Speaker 3: the European Central Bank we'll do next. 10 00:00:32,080 --> 00:00:34,879 Speaker 4: I'm dek Krisner taking a look at the upcoming national 11 00:00:34,920 --> 00:00:36,159 Speaker 4: election in Japan. 12 00:00:38,479 --> 00:00:42,520 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:42,560 --> 00:00:46,240 Speaker 1: eleven three zero, New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:46,760 --> 00:00:51,879 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius 15 00:00:52,040 --> 00:00:55,560 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 16 00:00:55,640 --> 00:00:57,840 Speaker 1: dot Com and the Bloomberg Business App. 17 00:01:02,560 --> 00:01:03,320 Speaker 5: Well, good day to you. 18 00:01:03,480 --> 00:01:05,960 Speaker 2: I'm Tom Busby, and we begin today's program with some 19 00:01:06,080 --> 00:01:09,400 Speaker 2: key US housing data as we wrap up the critical 20 00:01:09,520 --> 00:01:12,760 Speaker 2: spring home buying season. Existing home sales for June out 21 00:01:12,760 --> 00:01:16,039 Speaker 2: on Wednesday. New home sales for that same month on Thursday, 22 00:01:16,160 --> 00:01:19,360 Speaker 2: for more on what to expect the impact of sky 23 00:01:19,440 --> 00:01:24,080 Speaker 2: high home prices, elevated mortgage rates arise in existing home inventories, 24 00:01:24,120 --> 00:01:26,520 Speaker 2: and the Trump tariffs and all that. We're joined by 25 00:01:26,560 --> 00:01:30,720 Speaker 2: Drew Redding, Bloomberg Intelligence US home building Analysts. Well, Drew, 26 00:01:31,000 --> 00:01:33,120 Speaker 2: thanks so much for being here. I want to start 27 00:01:33,120 --> 00:01:35,720 Speaker 2: with what you're expecting to see in these reports, and 28 00:01:35,760 --> 00:01:38,400 Speaker 2: then we'll break down what's behind those numbers. 29 00:01:38,959 --> 00:01:41,760 Speaker 6: Sure, so let's start on the existing home side. Obviously, 30 00:01:42,400 --> 00:01:45,039 Speaker 6: the resale market has been stuck in the mud. You know, 31 00:01:45,040 --> 00:01:48,400 Speaker 6: we're expecting sales will be down modestly on a sequential basis, 32 00:01:48,440 --> 00:01:50,400 Speaker 6: but you know, should be up a little bit from 33 00:01:50,480 --> 00:01:53,880 Speaker 6: last year's three point nine million annualized rate. Keep in 34 00:01:53,880 --> 00:01:56,240 Speaker 6: mind that was the lowest pace in about fifteen years, 35 00:01:56,320 --> 00:01:59,440 Speaker 6: so some modest improvement, but the market's still down over 36 00:01:59,560 --> 00:02:03,480 Speaker 6: twenty sent from more normalized levels. We've kind of been 37 00:02:03,480 --> 00:02:06,440 Speaker 6: hovering around this four million annualized rate of sales for 38 00:02:06,480 --> 00:02:09,079 Speaker 6: a while now. But it does appear to us that, 39 00:02:09,440 --> 00:02:12,080 Speaker 6: at least from a volume perspective, the market as troth. 40 00:02:12,240 --> 00:02:15,440 Speaker 6: You have to realize there's some level of underlying demand 41 00:02:15,440 --> 00:02:17,440 Speaker 6: out there. In the market given people have to move 42 00:02:17,480 --> 00:02:19,480 Speaker 6: for one reason or another, and you do you think 43 00:02:19,520 --> 00:02:21,640 Speaker 6: you'll see a little bit of growth this year and 44 00:02:21,680 --> 00:02:24,400 Speaker 6: perhaps stronger growth next year off that low base. Now 45 00:02:24,440 --> 00:02:26,080 Speaker 6: it's a little bit of a different story in the 46 00:02:26,120 --> 00:02:29,520 Speaker 6: new home market. Sales are expected to be down from 47 00:02:29,639 --> 00:02:32,480 Speaker 6: last year. Some of the higher frequency data we've seen 48 00:02:32,639 --> 00:02:35,720 Speaker 6: on purchase application showed a little bit of improvement, so 49 00:02:35,720 --> 00:02:39,079 Speaker 6: there are some conflicting signals. We've also been hovering in 50 00:02:39,440 --> 00:02:41,800 Speaker 6: a range for a part of two years now. But 51 00:02:41,880 --> 00:02:44,280 Speaker 6: what we do know is that builders are having to 52 00:02:44,280 --> 00:02:46,840 Speaker 6: fight harder for every sale, and they continue to discount 53 00:02:46,880 --> 00:02:51,160 Speaker 6: heavily to maintain their sales space. There's some evidence that 54 00:02:51,400 --> 00:02:54,560 Speaker 6: these incentives that they've been using or having diminishing returns, 55 00:02:55,120 --> 00:02:57,760 Speaker 6: they're just not as effective at a certain point. So 56 00:02:58,160 --> 00:03:00,600 Speaker 6: you know, builders are turning the base price. We've heard 57 00:03:00,600 --> 00:03:02,480 Speaker 6: that from Lennar and KB Home, so I think that's 58 00:03:02,520 --> 00:03:03,639 Speaker 6: probably the path forward. 59 00:03:03,919 --> 00:03:06,799 Speaker 2: Well, I think that's the biggest sticking point is the price. 60 00:03:06,880 --> 00:03:09,040 Speaker 2: The price not only on new homes of course, but 61 00:03:09,080 --> 00:03:12,280 Speaker 2: on existing homes. They are still rising. The growth is 62 00:03:12,320 --> 00:03:13,800 Speaker 2: starting to slow though, correct. 63 00:03:13,960 --> 00:03:16,000 Speaker 6: Yeah, that's a great point, and the resale market, prices 64 00:03:16,000 --> 00:03:18,920 Speaker 6: are definitely still climbing. The latest data we've seen from 65 00:03:19,000 --> 00:03:21,960 Speaker 6: Redfin showed about a two percent increase in mid July, 66 00:03:22,480 --> 00:03:25,560 Speaker 6: but as you mentioned, prices are rising at a slower pace. 67 00:03:26,080 --> 00:03:28,400 Speaker 6: Part of that reflects, you know, the obvious shift to 68 00:03:28,440 --> 00:03:30,639 Speaker 6: more of a buyer's market where sellers are getting a 69 00:03:30,680 --> 00:03:33,960 Speaker 6: little bit more realistic in terms of listing prices. So 70 00:03:34,040 --> 00:03:36,680 Speaker 6: it has started to help the monthly payment on the margins, 71 00:03:37,160 --> 00:03:40,160 Speaker 6: you know, like we've seen with inventories, the stories really 72 00:03:40,400 --> 00:03:42,880 Speaker 6: at the local level where we have a lot of 73 00:03:42,880 --> 00:03:46,080 Speaker 6: markets across the country that are actually already seeing price decline. 74 00:03:46,120 --> 00:03:50,000 Speaker 6: So you know, you talk about markets in Florida, like Tampa, 75 00:03:50,120 --> 00:03:53,840 Speaker 6: also Atlanta, al So it really varies by market, and 76 00:03:53,880 --> 00:03:56,200 Speaker 6: it's going to be dependent on supply. You know. In 77 00:03:56,520 --> 00:03:59,160 Speaker 6: the new home market, we've already seen prices come down 78 00:03:59,160 --> 00:04:03,200 Speaker 6: more significantly and one of the reasons obviously builders have 79 00:04:03,200 --> 00:04:05,520 Speaker 6: been aggressive in the use of incentives, but they're turning 80 00:04:05,560 --> 00:04:08,040 Speaker 6: more to base price cuts as well. And if you 81 00:04:08,080 --> 00:04:12,000 Speaker 6: think about, you know, how builders account for incentives, it's 82 00:04:12,040 --> 00:04:14,360 Speaker 6: reflected as a reduction in the average selling price, so 83 00:04:14,880 --> 00:04:17,200 Speaker 6: to the extent that inventory continues to puddle up, they 84 00:04:17,320 --> 00:04:19,800 Speaker 6: keep their foot on the gas in terms of incentives. 85 00:04:20,120 --> 00:04:22,720 Speaker 6: We think you see further net pricing pressure in the 86 00:04:22,760 --> 00:04:23,640 Speaker 6: new home market as well. 87 00:04:23,839 --> 00:04:26,479 Speaker 2: And those inventories of new homes the highest in almost 88 00:04:26,520 --> 00:04:27,760 Speaker 2: two decades, right. 89 00:04:28,080 --> 00:04:31,200 Speaker 6: Yeah, it's certainly an interesting dynamic right now. Remember over 90 00:04:31,240 --> 00:04:34,240 Speaker 6: the last couple of years, the lack of for sale 91 00:04:34,320 --> 00:04:36,960 Speaker 6: inventory in the existing home market had been a key 92 00:04:37,000 --> 00:04:40,760 Speaker 6: part of the investment thesis for home building investors. You know, 93 00:04:40,880 --> 00:04:42,360 Speaker 6: you had a lack of options, so it helped the 94 00:04:42,360 --> 00:04:44,960 Speaker 6: funnel buyers over to the new home market, who were 95 00:04:45,000 --> 00:04:47,359 Speaker 6: also able to help with the monthly payment. But you know, 96 00:04:47,400 --> 00:04:49,640 Speaker 6: as you mentioned, that's that tailwind has turned into a 97 00:04:49,680 --> 00:04:52,200 Speaker 6: headwind as more listings come onto the market and homes 98 00:04:52,200 --> 00:04:55,159 Speaker 6: are sitting for longer. On the resale side of things, 99 00:04:55,240 --> 00:04:59,159 Speaker 6: inventories are about thirty percent from last year, and you know, 100 00:04:59,160 --> 00:05:02,280 Speaker 6: we're still ten percent below twenty nineteen. But looking at 101 00:05:02,279 --> 00:05:06,000 Speaker 6: the national data, I think really blurs the picture. At 102 00:05:06,000 --> 00:05:09,760 Speaker 6: this point. We now have ten states where resale supply 103 00:05:09,880 --> 00:05:12,719 Speaker 6: is higher than it was in twenty nineteen, and a 104 00:05:12,760 --> 00:05:14,960 Speaker 6: lot of that's in some important markets for the builders, 105 00:05:15,000 --> 00:05:19,480 Speaker 6: think of Florida, Texas, markets out west like Colorado and 106 00:05:19,520 --> 00:05:22,520 Speaker 6: Arizona certainly a big risk out there, And as you mentioned, 107 00:05:22,560 --> 00:05:25,000 Speaker 6: it's not just resale market, but it's also in the 108 00:05:25,040 --> 00:05:29,320 Speaker 6: new home market where completed inventories have really risen. And 109 00:05:29,360 --> 00:05:31,520 Speaker 6: the reason for that is over the last couple of years, 110 00:05:31,520 --> 00:05:34,080 Speaker 6: when there wasn't supply in the resale market, builders stepped 111 00:05:34,080 --> 00:05:36,600 Speaker 6: in to fill that void, so they got more aggressive 112 00:05:36,600 --> 00:05:40,280 Speaker 6: in their use of specs. Now that build an inventory 113 00:05:40,560 --> 00:05:42,600 Speaker 6: was met with a rise in rates and a drop 114 00:05:42,600 --> 00:05:44,920 Speaker 6: in demand. So now they're left sitting with all that 115 00:05:44,960 --> 00:05:48,120 Speaker 6: inventory on their books. I think we ultimately that leads 116 00:05:48,200 --> 00:05:52,520 Speaker 6: to is a pullback in production, so fewer housing starts. 117 00:05:52,560 --> 00:05:55,000 Speaker 6: We're starting to see it on the building from its side, 118 00:05:55,080 --> 00:05:57,120 Speaker 6: so it's something that they're going to have to work 119 00:05:57,160 --> 00:05:59,600 Speaker 6: through before they start to put more more units in 120 00:05:59,640 --> 00:06:00,760 Speaker 6: the got. 121 00:06:00,640 --> 00:06:01,880 Speaker 5: To clear out that inventory. 122 00:06:02,760 --> 00:06:05,679 Speaker 2: Let's talk about interest rates, So you just mentioned still 123 00:06:06,000 --> 00:06:10,000 Speaker 2: stubbornly near seven percent. You know, that's probably why mortgage 124 00:06:10,000 --> 00:06:12,880 Speaker 2: applications just last week took a tumble down ten percent. 125 00:06:13,440 --> 00:06:16,000 Speaker 2: Now the Fed meets again about ten days from now, 126 00:06:16,360 --> 00:06:18,840 Speaker 2: no indication the Central Bank is ready to lower those 127 00:06:18,839 --> 00:06:22,440 Speaker 2: benchmark lending rates. So how big a concern are rates 128 00:06:22,520 --> 00:06:23,400 Speaker 2: to the housing market. 129 00:06:23,480 --> 00:06:26,400 Speaker 6: Right now, We've talked about one piece, which is home prices, 130 00:06:26,400 --> 00:06:29,800 Speaker 6: and the other important piece is obviously where the thirty 131 00:06:29,880 --> 00:06:33,160 Speaker 6: year rate is. Right now, we're about six point eight percent. 132 00:06:33,200 --> 00:06:36,520 Speaker 6: We had seen a little bit of improvement, but now 133 00:06:36,520 --> 00:06:40,719 Speaker 6: maybe some concerns reigniting with inflation pushing things back up. 134 00:06:41,040 --> 00:06:43,920 Speaker 6: I think one of the main issues with rates is 135 00:06:44,760 --> 00:06:48,120 Speaker 6: not only the absolute level, but just the volatility. You know. 136 00:06:48,160 --> 00:06:49,800 Speaker 6: I think if we could get rates into the low 137 00:06:49,880 --> 00:06:53,240 Speaker 6: six high five percent range for more of an extended 138 00:06:53,240 --> 00:06:56,360 Speaker 6: period of time, it gives you know, home shoppers a 139 00:06:56,360 --> 00:06:58,440 Speaker 6: little bit more comfort of what their payment might be 140 00:06:58,480 --> 00:07:02,000 Speaker 6: as they're going through the application process. So rates are 141 00:07:02,040 --> 00:07:04,640 Speaker 6: certainly a very important piece of the puzzle. And you know, 142 00:07:04,760 --> 00:07:07,520 Speaker 6: there's not a whole lot of indication that things are 143 00:07:07,520 --> 00:07:09,800 Speaker 6: going to get significantly lower anytime soon. 144 00:07:10,000 --> 00:07:11,440 Speaker 5: Oh boy, it's a lot to take. 145 00:07:11,480 --> 00:07:14,480 Speaker 2: In June, existing home sales out on Wednesday, new home 146 00:07:14,560 --> 00:07:17,240 Speaker 2: sales for that same month on Thursday. Our thanks to 147 00:07:17,360 --> 00:07:21,520 Speaker 2: Drew Redding, Bloomberg Intelligence US home building analyst. We move 148 00:07:21,640 --> 00:07:24,760 Speaker 2: now to earnings at Tesla. It's out with second quarter 149 00:07:24,800 --> 00:07:28,280 Speaker 2: results this coming Wednesday. Has the ev maker bounced back 150 00:07:28,280 --> 00:07:32,000 Speaker 2: from a troubling first quarter. What has CEO Elon Musk's 151 00:07:32,000 --> 00:07:34,440 Speaker 2: renewed focus on the company meant after he left his 152 00:07:34,680 --> 00:07:38,760 Speaker 2: Trump Administration cost cutting duties, and what will the pending 153 00:07:38,840 --> 00:07:41,760 Speaker 2: rollback of clean energy tax credits mean for the company. 154 00:07:41,800 --> 00:07:44,640 Speaker 2: For more on what to expect, we're joined by Steve Mann, 155 00:07:44,680 --> 00:07:50,080 Speaker 2: Bloomberg Intelligence Global Autos and Industrials Research Manager. Well, Steve, 156 00:07:50,160 --> 00:07:53,080 Speaker 2: thank you so much for joining us. After a disappointing 157 00:07:53,120 --> 00:07:56,280 Speaker 2: first quarter results. Will there be good news in Tesla's 158 00:07:56,360 --> 00:07:58,280 Speaker 2: upcoming second quarter report? 159 00:07:58,680 --> 00:08:02,040 Speaker 7: Yeah, I think the vestor will be more focused on 160 00:08:02,200 --> 00:08:05,240 Speaker 7: what Elon must is going to talk about in the 161 00:08:05,280 --> 00:08:08,600 Speaker 7: remainder of the year and beyond. In terms of earnings, 162 00:08:08,640 --> 00:08:12,960 Speaker 7: we actually expected to report in line with consensus, but 163 00:08:13,680 --> 00:08:16,560 Speaker 7: a few things that are on investor's mind, like you know, 164 00:08:16,640 --> 00:08:20,080 Speaker 7: the Robotaxi, like the new models that they're rolling out 165 00:08:20,120 --> 00:08:23,480 Speaker 7: they're planning to roll out, and even Elon himself, you 166 00:08:23,480 --> 00:08:26,320 Speaker 7: know he's tweeted a few things around politics. You know 167 00:08:26,520 --> 00:08:29,280 Speaker 7: what does he thinking around that and how it's going 168 00:08:29,360 --> 00:08:30,280 Speaker 7: to impact the company. 169 00:08:30,600 --> 00:08:32,920 Speaker 2: Let's start with those models. Well, the Model three is 170 00:08:33,000 --> 00:08:35,720 Speaker 2: still the bread and butter for revenue, right, But how 171 00:08:35,760 --> 00:08:40,040 Speaker 2: about the revamped model Why Juniper Suv. What does that mean? 172 00:08:40,559 --> 00:08:44,320 Speaker 7: The ramp up has been going fairly well. It probably 173 00:08:44,360 --> 00:08:47,959 Speaker 7: disappointed some investors that they didn't ramp up as fast 174 00:08:47,960 --> 00:08:50,880 Speaker 7: as they thought, but it seems like the second quarter 175 00:08:51,320 --> 00:08:55,480 Speaker 7: it came in nicely. Is some initial data on China sales, 176 00:08:55,520 --> 00:08:58,840 Speaker 7: which is right now is probably like close to forty 177 00:08:58,880 --> 00:09:02,360 Speaker 7: to fifty percent of their sales now. They're also planning 178 00:09:02,400 --> 00:09:05,720 Speaker 7: to launch an extended version, a longer version of the 179 00:09:05,760 --> 00:09:08,480 Speaker 7: Model Y in China, and I think that's going to 180 00:09:08,559 --> 00:09:11,960 Speaker 7: resonate with the clients over there fairly well. 181 00:09:12,400 --> 00:09:15,560 Speaker 2: How does it compete against the byds and the Cherries 182 00:09:15,640 --> 00:09:19,400 Speaker 2: and the other very very low cost Chinese rivals. 183 00:09:19,880 --> 00:09:24,360 Speaker 7: Yeah, it's tough. Launching FSD full self driving in China 184 00:09:24,520 --> 00:09:29,360 Speaker 7: earlier this year will help, But BYD did cut prices 185 00:09:29,480 --> 00:09:32,520 Speaker 7: quite a bit early in the year by a magnitude 186 00:09:32,559 --> 00:09:36,360 Speaker 7: of thirty percent, and Tesla it doesn't want to play 187 00:09:36,440 --> 00:09:40,080 Speaker 7: in that low cost, low price market. I think they're 188 00:09:40,120 --> 00:09:43,360 Speaker 7: going to be medium price to high price market, and 189 00:09:43,720 --> 00:09:47,920 Speaker 7: I think launching the extended version will actually help drive 190 00:09:48,000 --> 00:09:51,280 Speaker 7: sales for the company over there into next year. 191 00:09:51,600 --> 00:09:53,920 Speaker 2: Now, last month you mentioned this elon Musk rolled out 192 00:09:53,920 --> 00:09:57,839 Speaker 2: as long delayed robotaxi unit in Austin, Texas. How far 193 00:09:57,880 --> 00:09:59,760 Speaker 2: away is that service really for making any kind of 194 00:10:00,280 --> 00:10:00,840 Speaker 2: on the company. 195 00:10:01,280 --> 00:10:04,200 Speaker 7: It's a pretty exciting development. He's been talking about it 196 00:10:04,240 --> 00:10:08,120 Speaker 7: for a while. It's it's finally here. It's it's still 197 00:10:08,120 --> 00:10:11,840 Speaker 7: a slow go. I think he's very focused on safety, 198 00:10:12,320 --> 00:10:15,600 Speaker 7: not a surprise, and and that's where he should be 199 00:10:15,600 --> 00:10:20,080 Speaker 7: focused on to make sure the long term reputation of 200 00:10:20,120 --> 00:10:24,520 Speaker 7: that business stays positive. And we think, you know, no 201 00:10:24,640 --> 00:10:27,640 Speaker 7: meaningful revenue or profit in the next couple of years 202 00:10:28,280 --> 00:10:30,400 Speaker 7: is probably going to come through in twenty twenty seven, 203 00:10:30,720 --> 00:10:34,320 Speaker 7: so we haven't baked in that that business as a 204 00:10:34,320 --> 00:10:37,960 Speaker 7: meaningful contributor to to the bottom line. But it's a 205 00:10:38,160 --> 00:10:41,200 Speaker 7: it's a big market, so there's a number of players, 206 00:10:41,720 --> 00:10:45,480 Speaker 7: Waymo being probably the largest at the moment. But I 207 00:10:45,520 --> 00:10:47,960 Speaker 7: think the market's going to grow to a point where 208 00:10:47,960 --> 00:10:51,520 Speaker 7: he's gonna be able to absorb a new competition like 209 00:10:51,640 --> 00:10:55,520 Speaker 7: Tesla and even even Uber like. Uber announced that they're 210 00:10:55,559 --> 00:11:00,599 Speaker 7: partnering with Lucid to develop automous vehicles for their robotaxi business. 211 00:11:01,080 --> 00:11:04,360 Speaker 2: You mentioned something earlier, and that is safety concerns, especially 212 00:11:04,360 --> 00:11:07,360 Speaker 2: with the full self driving. I mean they've had quite 213 00:11:07,400 --> 00:11:10,360 Speaker 2: a few problems, a lot of litigation. 214 00:11:11,080 --> 00:11:13,800 Speaker 7: I would say that's kind of normal mode of operation. 215 00:11:14,240 --> 00:11:18,320 Speaker 7: I think there will be some safety concerns, there will 216 00:11:18,360 --> 00:11:23,360 Speaker 7: be accidents. I think the investors should be aware. No 217 00:11:23,880 --> 00:11:28,400 Speaker 7: engineering feat like this goes smoothly, so it's going to 218 00:11:28,640 --> 00:11:32,079 Speaker 7: have some hiccups. So that's why it's very important for 219 00:11:32,640 --> 00:11:35,920 Speaker 7: not just Tesla, but weimol to really hone in on 220 00:11:36,000 --> 00:11:41,280 Speaker 7: safety and making sure the consumer, the users of ROBOTAXI, 221 00:11:41,720 --> 00:11:44,120 Speaker 7: feels confident with this service. 222 00:11:44,520 --> 00:11:46,880 Speaker 2: Now I want to talk about something I think that 223 00:11:46,920 --> 00:11:49,679 Speaker 2: the shareholders are going to be very interested in what 224 00:11:49,760 --> 00:11:52,040 Speaker 2: Elon Musk has to say, and that's the expiration of 225 00:11:52,080 --> 00:11:55,840 Speaker 2: the seventy five hundred dollars EV tax credits. That deadline 226 00:11:55,880 --> 00:11:59,240 Speaker 2: is coming soon September thirtieth. Now we know how Elon 227 00:11:59,360 --> 00:12:02,439 Speaker 2: must react to that Trump bill that removes those clean energies, 228 00:12:02,480 --> 00:12:05,679 Speaker 2: and it was not pretty. How will Tesla respond, How 229 00:12:05,679 --> 00:12:06,840 Speaker 2: will the company respond? 230 00:12:07,760 --> 00:12:11,080 Speaker 7: It's a double edgh sword. I think on the surface 231 00:12:11,400 --> 00:12:15,760 Speaker 7: it is negative. It is negative because obviously they have 232 00:12:16,360 --> 00:12:19,160 Speaker 7: generated quite a bit of revenue and profit from the 233 00:12:19,280 --> 00:12:23,240 Speaker 7: selling these credits. If you look on the bottom line, 234 00:12:23,320 --> 00:12:26,120 Speaker 7: it's minimal. It's probably like five percent, maybe less than 235 00:12:26,160 --> 00:12:30,280 Speaker 7: five percent of profits. So it's going to have an 236 00:12:30,280 --> 00:12:35,240 Speaker 7: impact on earnings definitely in the fourth quarter and well 237 00:12:35,280 --> 00:12:36,280 Speaker 7: into the next year. 238 00:12:36,480 --> 00:12:37,720 Speaker 5: Well, a lot to look forward to. 239 00:12:37,880 --> 00:12:40,920 Speaker 2: Tesla Q two earnings out this Wednesday after Wall Street's 240 00:12:40,960 --> 00:12:44,960 Speaker 2: closing bell Our thanks to Steve Man, Bloomberg Intelligence Global 241 00:12:45,040 --> 00:12:48,520 Speaker 2: Autos and Industrials Research Manager, and coming up on Bloomberg 242 00:12:48,600 --> 00:12:51,280 Speaker 2: day Break weekend, we'll look ahead to the next monetary 243 00:12:51,280 --> 00:12:55,160 Speaker 2: policy decision from the European Central Bank. I'm Tom Busby 244 00:12:55,280 --> 00:13:08,920 Speaker 2: and this is Bloomberg. This is Bloomberg day Break weekend, 245 00:13:08,920 --> 00:13:11,199 Speaker 2: our global look ahead at the top stories for investors 246 00:13:11,200 --> 00:13:11,920 Speaker 2: in the coming week. 247 00:13:12,120 --> 00:13:13,640 Speaker 5: I'm Tom Buzzby in New York. 248 00:13:14,080 --> 00:13:16,520 Speaker 2: Up later in our program, we look ahead as Japanese 249 00:13:16,520 --> 00:13:19,280 Speaker 2: citizens head to the polls for an Upper House election. 250 00:13:19,480 --> 00:13:22,960 Speaker 2: But first europe Central bankers will vote on their next 251 00:13:22,960 --> 00:13:25,640 Speaker 2: move when it comes to interest rates. The Governing Council 252 00:13:25,720 --> 00:13:28,480 Speaker 2: decision comes at a time of heightened trade tensions fueled 253 00:13:28,480 --> 00:13:31,400 Speaker 2: by the back and forth with the US. How will 254 00:13:31,440 --> 00:13:34,640 Speaker 2: policymakers respond For more Let's go to London and bring 255 00:13:34,679 --> 00:13:37,920 Speaker 2: in Bloomberg daybreak. Euro banker Caroline hepger. 256 00:13:38,000 --> 00:13:43,480 Speaker 3: Tom the Bundesbank president and DCB policymaker Joakim Nagel has 257 00:13:43,600 --> 00:13:47,000 Speaker 3: urged caution over the European Central Bank's next move on 258 00:13:47,080 --> 00:13:50,840 Speaker 3: interest rates, telling a newspaper that it requires a steady hand. 259 00:13:51,240 --> 00:13:55,560 Speaker 3: His comments come as policymakers have cut rates eight times 260 00:13:55,800 --> 00:13:59,040 Speaker 3: between June twenty twenty four and June twenty twenty five, 261 00:13:59,120 --> 00:14:01,920 Speaker 3: down to two percent. Economies and markets are now betting 262 00:14:01,960 --> 00:14:05,319 Speaker 3: on a pause in July. The final release of EU 263 00:14:05,480 --> 00:14:08,880 Speaker 3: Area inflation for June also confirmed that the headline measure 264 00:14:09,240 --> 00:14:12,200 Speaker 3: accelerated to two percent year on year from one point 265 00:14:12,320 --> 00:14:15,480 Speaker 3: nine percent in the previous month, but still fairly well 266 00:14:15,480 --> 00:14:18,640 Speaker 3: anchored in terms of inflation in Europe. So the focus 267 00:14:18,720 --> 00:14:22,040 Speaker 3: is also going to be on the ECB September meeting 268 00:14:22,120 --> 00:14:26,160 Speaker 3: when we get new ECB economic projections, and that may 269 00:14:26,200 --> 00:14:30,400 Speaker 3: give officials more clarity on the economic backdrop. But with 270 00:14:30,560 --> 00:14:34,160 Speaker 3: US President Donald Trump's on again, off again tariff policy 271 00:14:34,200 --> 00:14:38,240 Speaker 3: clouding the outlook, Nagel says that the impact on inflation 272 00:14:38,480 --> 00:14:42,920 Speaker 3: is extremely uncertain and in Europe, member states are urging 273 00:14:43,240 --> 00:14:46,920 Speaker 3: the Council to do more to support the economy. French 274 00:14:46,920 --> 00:14:50,680 Speaker 3: Premier frostwy Beiru said his country's facing the same challenges 275 00:14:50,720 --> 00:14:53,640 Speaker 3: as the US, but without the strong dollar that he 276 00:14:53,800 --> 00:14:57,120 Speaker 3: says gives the Federal Reserve the option to create money 277 00:14:57,160 --> 00:15:01,360 Speaker 3: to fuel quote optimism in the economy. It's an issue, 278 00:15:01,400 --> 00:15:05,960 Speaker 3: France's finance Minister Eric Lombard outlined, speaking to Primpaks and 279 00:15:06,160 --> 00:15:08,920 Speaker 3: Edward's critique Cup and Mark Cardmore. 280 00:15:08,720 --> 00:15:12,280 Speaker 8: France as an issue of a large public debt and 281 00:15:12,760 --> 00:15:17,840 Speaker 8: two large public deficit, and we are tackling the issue, 282 00:15:17,960 --> 00:15:21,000 Speaker 8: I believe very seriously. The plan is a plan of 283 00:15:21,480 --> 00:15:27,840 Speaker 8: forty four billion euro of savings and revenue increases. Forty 284 00:15:27,840 --> 00:15:31,720 Speaker 8: four billion euro that will bring our deficit below the 285 00:15:31,760 --> 00:15:36,080 Speaker 8: five percent threshold next year to four point six percent, 286 00:15:36,440 --> 00:15:39,760 Speaker 8: and we are aiming at a deficit below three percent 287 00:15:40,160 --> 00:15:43,600 Speaker 8: in twenty twenty nine. The bulk of the plan is 288 00:15:43,640 --> 00:15:49,880 Speaker 8: to cut public spending. There are thirty billion of savings 289 00:15:49,920 --> 00:15:54,040 Speaker 8: of cuts in public spending, whether for the state of 290 00:15:54,040 --> 00:16:00,200 Speaker 8: a social security, which is absolutely important but manageable. There 291 00:16:00,240 --> 00:16:03,960 Speaker 8: will be ten percent of revenue increases and four billion 292 00:16:04,040 --> 00:16:07,400 Speaker 8: more because French people will have to work more, two 293 00:16:07,560 --> 00:16:12,600 Speaker 8: days more, because we will cut to making holiday next 294 00:16:12,680 --> 00:16:15,920 Speaker 8: year and the years after. So it's a very easerious plan. 295 00:16:16,080 --> 00:16:18,320 Speaker 8: Forty four billion euro okay. 296 00:16:18,040 --> 00:16:20,760 Speaker 9: And you think that this is enough to reassure investors, 297 00:16:20,960 --> 00:16:24,240 Speaker 9: What about getting the support of all of the lawmakers 298 00:16:24,240 --> 00:16:27,360 Speaker 9: in France, because that seems to be very difficult. You'll 299 00:16:27,400 --> 00:16:31,360 Speaker 9: need the support of a number of parties. Which parties 300 00:16:31,400 --> 00:16:34,200 Speaker 9: are you going to talk to to try and get support? 301 00:16:34,200 --> 00:16:37,600 Speaker 9: Here are the socialists at the top of your list, 302 00:16:37,640 --> 00:16:39,800 Speaker 9: because I think the far right and the far left 303 00:16:39,840 --> 00:16:43,040 Speaker 9: have already found serious problems with this budget plan. 304 00:16:43,640 --> 00:16:43,920 Speaker 7: Well. 305 00:16:43,960 --> 00:16:46,840 Speaker 8: For first, let me remind you that with the same 306 00:16:46,920 --> 00:16:50,280 Speaker 8: parliament we had an approval for the twenty twenty five 307 00:16:50,320 --> 00:16:54,200 Speaker 8: budget which is currently being implemented, which is already a 308 00:16:54,240 --> 00:16:58,160 Speaker 8: budget which is a very serious budget bringing down the deficit. 309 00:16:58,640 --> 00:17:01,240 Speaker 8: We will talk to all parties because it is an 310 00:17:01,240 --> 00:17:04,160 Speaker 8: issue of national interest. We believe it is the best 311 00:17:04,240 --> 00:17:07,800 Speaker 8: interest of France to put its public finance right before 312 00:17:07,840 --> 00:17:11,399 Speaker 8: the next presidential election of twenty twenty seven, and we 313 00:17:11,440 --> 00:17:15,200 Speaker 8: will talk to all parties. Having said that, the first 314 00:17:15,200 --> 00:17:18,560 Speaker 8: reaction of opposition parties is quite normal because it's a 315 00:17:18,640 --> 00:17:22,120 Speaker 8: huge plan. So the first reaction is negative. We will explain, 316 00:17:22,280 --> 00:17:26,639 Speaker 8: we will discuss we will improve the plan and obviously 317 00:17:26,760 --> 00:17:32,000 Speaker 8: there are probably more possibilities to reach an approval with 318 00:17:32,400 --> 00:17:36,360 Speaker 8: the Socialist Party. They are still a party in the opposition, 319 00:17:36,960 --> 00:17:39,879 Speaker 8: but they allowed the budget to pass for twenty twenty 320 00:17:39,920 --> 00:17:44,400 Speaker 8: five and if we have a fair discussion with them, 321 00:17:44,440 --> 00:17:47,240 Speaker 8: and we will have a fair discussion with the Socialist Party, 322 00:17:47,560 --> 00:17:51,800 Speaker 8: hopefully they can support the government for the budget. But 323 00:17:52,040 --> 00:17:54,919 Speaker 8: again we will talk to all parties and we hope 324 00:17:54,960 --> 00:17:58,720 Speaker 8: to have wider support because again it's an issue of 325 00:17:58,840 --> 00:17:59,639 Speaker 8: national interest. 326 00:18:01,520 --> 00:18:03,960 Speaker 10: Eric, good Morning. Part of the plan is to raise 327 00:18:04,000 --> 00:18:09,040 Speaker 10: revenues through selling selling down stakes in companies without losing influence. Apparently, 328 00:18:09,880 --> 00:18:12,040 Speaker 10: what kind of sectors do you expect to see those 329 00:18:12,119 --> 00:18:14,399 Speaker 10: kind of revenue gains? Are there any sectors off limits 330 00:18:14,440 --> 00:18:17,160 Speaker 10: for selling down stakes and how much do you expect 331 00:18:17,200 --> 00:18:17,800 Speaker 10: to raise through that? 332 00:18:19,840 --> 00:18:23,680 Speaker 8: Well, obviously, you know the French state owns many companies, 333 00:18:23,880 --> 00:18:27,240 Speaker 8: some of which are listed, so I won't be very 334 00:18:27,240 --> 00:18:32,879 Speaker 8: talkative on that point. So we are working on it. Obviously, 335 00:18:33,200 --> 00:18:37,600 Speaker 8: the large public sector companies like La post or like 336 00:18:37,760 --> 00:18:41,120 Speaker 8: EEDF are not on the plane, but there are many 337 00:18:41,160 --> 00:18:44,040 Speaker 8: options and we will work on it ultimately. 338 00:18:44,640 --> 00:18:48,639 Speaker 10: The investor community, I think the initial reaction is not 339 00:18:49,040 --> 00:18:52,520 Speaker 10: a lot of faith that the trajectory of this budget 340 00:18:52,520 --> 00:18:56,359 Speaker 10: plan and the governments is much better than it was, 341 00:18:56,760 --> 00:18:58,440 Speaker 10: you know, six months or a year ago. And I 342 00:18:58,480 --> 00:19:00,800 Speaker 10: think there's a lot of worry about the government again 343 00:19:01,400 --> 00:19:03,879 Speaker 10: Will will kind of struggle to get the budget passed 344 00:19:03,880 --> 00:19:06,120 Speaker 10: and will kind of suffer on that. But we saw 345 00:19:06,200 --> 00:19:08,919 Speaker 10: last year the investors move on. Are you more worried 346 00:19:09,200 --> 00:19:11,159 Speaker 10: about how the investor reaction this time or do you 347 00:19:11,280 --> 00:19:13,199 Speaker 10: not think that we're yet at a critical period for 348 00:19:13,280 --> 00:19:15,680 Speaker 10: investor pressure to cand of really force something to get done. 349 00:19:16,440 --> 00:19:18,520 Speaker 8: I'm not worried, but thank you to give me not 350 00:19:18,560 --> 00:19:21,479 Speaker 8: part need to talk to them. I want first to 351 00:19:21,520 --> 00:19:25,359 Speaker 8: reassure them on the twenty twenty five budget execution, because 352 00:19:25,359 --> 00:19:29,040 Speaker 8: you know, public finance is something which is very operasional. 353 00:19:29,400 --> 00:19:33,040 Speaker 8: We put a budget for this year cutting the deficit 354 00:19:33,200 --> 00:19:37,520 Speaker 8: to five point four percent, and we follow the budget 355 00:19:37,600 --> 00:19:42,000 Speaker 8: execution on a monthly basis. I gather all minister's General 356 00:19:42,040 --> 00:19:45,879 Speaker 8: secretary every month, and I can tell you beginning of July, 357 00:19:46,119 --> 00:19:48,480 Speaker 8: a middle of July, while we are today that we 358 00:19:48,520 --> 00:19:52,800 Speaker 8: are totally online in the review of spending. We are 359 00:19:52,800 --> 00:19:56,040 Speaker 8: on plan on spending after I must say ten billion 360 00:19:56,119 --> 00:19:58,760 Speaker 8: cuts that we did in the first quarter in the 361 00:19:58,800 --> 00:20:02,320 Speaker 8: second quarter, but after ooskuts we are totally on NINER 362 00:20:02,960 --> 00:20:07,360 Speaker 8: and on the revenue where the vty income tax, corporate 363 00:20:07,400 --> 00:20:10,040 Speaker 8: tax we are also online. So we are monitoring the 364 00:20:10,080 --> 00:20:13,119 Speaker 8: execution of twenty twenty five very closely. We have a 365 00:20:13,240 --> 00:20:17,119 Speaker 8: very ambitious target for twenty twenty six. I'm confident it 366 00:20:17,160 --> 00:20:20,280 Speaker 8: will be approved, it will be executed, and that France 367 00:20:20,520 --> 00:20:23,800 Speaker 8: will put itself back on track, which is absolutely key 368 00:20:24,080 --> 00:20:26,320 Speaker 8: in order to play our role in Europe and. 369 00:20:26,400 --> 00:20:27,000 Speaker 5: In the world. 370 00:20:27,760 --> 00:20:30,800 Speaker 3: That was the French Finance Minister Eric Lombard there speaking 371 00:20:30,800 --> 00:20:33,960 Speaker 3: to Blombergs and Edward's critique cup To and Mark Cudmore. 372 00:20:34,480 --> 00:20:37,400 Speaker 3: The plight of France and other European countries in similar 373 00:20:37,400 --> 00:20:40,639 Speaker 3: positions will be on the minds of policymakers as they 374 00:20:40,680 --> 00:20:43,879 Speaker 3: make a decision about the ECB's immediate rate path in 375 00:20:43,920 --> 00:20:47,160 Speaker 3: the days ahead. It's something I've been discussing with Bloomberg's 376 00:20:47,160 --> 00:20:53,320 Speaker 3: ECB reporter Jana Randall. Yana, France's situation is one all 377 00:20:53,400 --> 00:20:57,960 Speaker 3: too familiar to EU member states. High debt and stalling growth. 378 00:20:58,359 --> 00:21:00,879 Speaker 3: How can the EU mitigate. 379 00:21:01,000 --> 00:21:05,840 Speaker 11: Well, Mostly it's France's responsibility right, passing a budget that 380 00:21:06,000 --> 00:21:10,240 Speaker 11: puts the government on a path towards sustainable public finances, 381 00:21:10,640 --> 00:21:13,320 Speaker 11: and of course it has presented plans on how to 382 00:21:13,440 --> 00:21:17,560 Speaker 11: narrow the deficit next year, which mainly look at austerity 383 00:21:17,600 --> 00:21:21,920 Speaker 11: measures including freezing welfare pensions as well and acting to 384 00:21:22,080 --> 00:21:25,440 Speaker 11: public holidays. As a matter of fact, whether that will 385 00:21:25,480 --> 00:21:29,000 Speaker 11: do the trick, whether that'll fly we of course I'll 386 00:21:29,119 --> 00:21:31,440 Speaker 11: remember what happened in France at the start of the year. 387 00:21:31,920 --> 00:21:35,240 Speaker 11: We won't know until September because that's when lawmakers come 388 00:21:35,320 --> 00:21:39,760 Speaker 11: back and will properly engage and vote on This debate 389 00:21:39,880 --> 00:21:42,960 Speaker 11: surely will also be colored by the outcome or the 390 00:21:42,960 --> 00:21:48,080 Speaker 11: state of trade negotiations, because that affects growth in France 391 00:21:48,080 --> 00:21:50,680 Speaker 11: but also across the region. And that's of course where 392 00:21:50,720 --> 00:21:53,080 Speaker 11: the EU then comes in, because it's up to the 393 00:21:53,119 --> 00:21:56,280 Speaker 11: EU to engage with the US on trade. Good deal 394 00:21:56,320 --> 00:22:00,560 Speaker 11: has the potential to live confidence, thus demand investment and spending, 395 00:22:00,640 --> 00:22:04,760 Speaker 11: consumer spending across Frants but also across the region. And yeah, 396 00:22:04,800 --> 00:22:06,240 Speaker 11: I don't need to tell you what a bad deal 397 00:22:06,640 --> 00:22:07,080 Speaker 11: will do. 398 00:22:07,600 --> 00:22:10,239 Speaker 3: But it's the French Prime minister writer to ask for 399 00:22:10,359 --> 00:22:12,320 Speaker 3: interest rate cuts in the near future. 400 00:22:12,400 --> 00:22:16,840 Speaker 11: Then I find it always difficult when politicians tell central 401 00:22:16,880 --> 00:22:21,639 Speaker 11: bankers what to do, especially because central bankers are independent 402 00:22:21,680 --> 00:22:24,199 Speaker 11: for a reason, because they need to be, you know, 403 00:22:24,320 --> 00:22:28,680 Speaker 11: keeping their cool when when maybe tensions and a sentiment 404 00:22:28,720 --> 00:22:32,200 Speaker 11: heats up and passions heat up in political decision making. 405 00:22:32,560 --> 00:22:35,600 Speaker 11: And of course we can see what is happening in 406 00:22:35,640 --> 00:22:40,160 Speaker 11: the US currently with the federal reserves. The Prime Minister's 407 00:22:40,200 --> 00:22:44,600 Speaker 11: motivation is easily explained, and if you're naughty, you can 408 00:22:44,760 --> 00:22:47,199 Speaker 11: you can say it's very much in the same spirit 409 00:22:47,280 --> 00:22:50,480 Speaker 11: as the arguments that the president in the US makes 410 00:22:50,880 --> 00:22:53,600 Speaker 11: low barring costs for the government at a time when 411 00:22:53,800 --> 00:22:55,800 Speaker 11: dead levels are high and a lot of money is 412 00:22:55,840 --> 00:22:59,560 Speaker 11: needed to service that debt. Right, so low boring costs 413 00:22:59,600 --> 00:23:02,639 Speaker 11: help the government deal with its fiscal mess. If you 414 00:23:02,680 --> 00:23:05,520 Speaker 11: look a little bit back in the past, we've seen 415 00:23:05,600 --> 00:23:10,520 Speaker 11: similar voices, similar initiatives in Italy increase when those countries 416 00:23:10,560 --> 00:23:13,560 Speaker 11: were in the spotlight of markets. Well as for France, 417 00:23:14,080 --> 00:23:15,959 Speaker 11: you know, I wouldn't make too much out of it 418 00:23:16,000 --> 00:23:17,840 Speaker 11: in terms of whether the youc be swayed by those 419 00:23:17,880 --> 00:23:21,840 Speaker 11: calls or not. I really would would see it more 420 00:23:21,880 --> 00:23:24,640 Speaker 11: as a sense of a sign of desperation from from 421 00:23:24,680 --> 00:23:28,480 Speaker 11: the French you know, realizing that something is going really 422 00:23:28,480 --> 00:23:29,720 Speaker 11: really wrong with their budget. 423 00:23:30,359 --> 00:23:33,160 Speaker 3: Yeah, absolutely, and perhaps can't be compared to the sort 424 00:23:33,200 --> 00:23:36,879 Speaker 3: of relentless pressure that President Trump has put onto your 425 00:23:36,880 --> 00:23:40,240 Speaker 3: own power that we've seen repeatedly. But look, we might 426 00:23:40,280 --> 00:23:42,919 Speaker 3: not get an interest rate cut from the ECB this 427 00:23:43,040 --> 00:23:46,920 Speaker 3: time round. Over all, though, how fast our interest rates 428 00:23:47,000 --> 00:23:52,520 Speaker 3: expected to continue coming down in the months ahead, given 429 00:23:52,560 --> 00:23:56,400 Speaker 3: EU inflation that does look at the moment reasonably tamed. 430 00:23:56,680 --> 00:23:59,840 Speaker 3: What is your view now on the path of interest rates. 431 00:24:00,480 --> 00:24:05,280 Speaker 11: We're not expecting anything for the upcoming meeting, and as 432 00:24:05,359 --> 00:24:07,919 Speaker 11: as far as September is concerned, that is still very 433 00:24:08,000 --> 00:24:13,520 Speaker 11: much in play. Economists expect another rate cut in September. Others, 434 00:24:14,440 --> 00:24:17,400 Speaker 11: you know, the majority, I should say, expect another cut. 435 00:24:17,480 --> 00:24:21,480 Speaker 11: Others say the ECB is done or you know, might 436 00:24:22,000 --> 00:24:25,480 Speaker 11: wait a little bit longer to deliver it. It essentially 437 00:24:25,600 --> 00:24:31,480 Speaker 11: all hinges on some signals on how how trade negotiations 438 00:24:31,520 --> 00:24:35,800 Speaker 11: are going, uh, the implications they will have, or the 439 00:24:36,119 --> 00:24:39,840 Speaker 11: implications any result will have. And September in that sense 440 00:24:39,880 --> 00:24:42,840 Speaker 11: is a good month because the ECB will get another 441 00:24:43,440 --> 00:24:46,879 Speaker 11: fresh round of economic forecasts, so another look at growth 442 00:24:46,880 --> 00:24:51,879 Speaker 11: and inflation prospects for the Eurozone in September, so it 443 00:24:51,960 --> 00:24:55,120 Speaker 11: would be a good month to make up their minds. Equally, 444 00:24:55,240 --> 00:24:59,680 Speaker 11: if they still can't be sure and things are kind 445 00:24:59,680 --> 00:25:02,320 Speaker 11: of cod sting along, they might write it a little longer. 446 00:25:02,520 --> 00:25:05,920 Speaker 11: So overall, one more rate cut is more or less 447 00:25:05,960 --> 00:25:09,400 Speaker 11: expected September if you need to put your money on it. 448 00:25:09,920 --> 00:25:14,520 Speaker 11: But uncertainty is just exceptionally high. And listening to policymakers, 449 00:25:14,600 --> 00:25:16,639 Speaker 11: some say, you know, the bar is very high for 450 00:25:16,680 --> 00:25:20,480 Speaker 11: another cut. Others are concerned about inflation maybe following a 451 00:25:20,480 --> 00:25:25,080 Speaker 11: bit too low below target. It's you know, highly answertain. 452 00:25:25,640 --> 00:25:27,840 Speaker 3: Okay, Diana, thank you so much for being with me 453 00:25:27,920 --> 00:25:31,240 Speaker 3: this morning. That is Blomberg CCB with Porta, Yana vandall. 454 00:25:31,359 --> 00:25:33,600 Speaker 3: Thank you. I'm Caroline Hepke here in London. You can 455 00:25:33,680 --> 00:25:36,439 Speaker 3: catch us every weekday morning for Bloomberg Daybreak. You're at 456 00:25:36,440 --> 00:25:38,640 Speaker 3: the beginning at six am in London. That's one am 457 00:25:38,680 --> 00:25:39,359 Speaker 3: on Wall Street. 458 00:25:39,400 --> 00:25:41,280 Speaker 5: Tom, thank you, Caroline. 459 00:25:41,320 --> 00:25:43,360 Speaker 2: And coming up on Bloomberg day Break weekend, we look 460 00:25:43,359 --> 00:25:45,600 Speaker 2: ahead to an Upper House election in Japan. 461 00:25:46,200 --> 00:25:48,520 Speaker 5: I'm Tom Busby and this is Bloomberg. 462 00:25:59,000 --> 00:26:01,400 Speaker 2: This is Bloomberg day Break weekend, our global look ahead 463 00:26:01,400 --> 00:26:03,520 Speaker 2: at the top stories. For investors in the coming week. 464 00:26:03,800 --> 00:26:07,040 Speaker 2: I'm Tom Busby in New York. Japanese citizens head to 465 00:26:07,040 --> 00:26:09,800 Speaker 2: the polls in the coming days for an Upper House election. 466 00:26:10,440 --> 00:26:12,560 Speaker 2: This comes at a time when the country's Prime Minister 467 00:26:12,640 --> 00:26:17,000 Speaker 2: finds himself in a precarious political position. For more, let's 468 00:26:17,000 --> 00:26:20,400 Speaker 2: get to the host of the Daybreak Asia podcast, Doug Krisner. 469 00:26:20,920 --> 00:26:24,520 Speaker 4: Tom, this election will serve as the latest referendum on 470 00:26:24,560 --> 00:26:28,560 Speaker 4: the leadership of Prime Minister Shiguru Ishiba. He's already running 471 00:26:28,600 --> 00:26:32,840 Speaker 4: a minority government after last autumn's dismal election results in 472 00:26:32,920 --> 00:26:35,920 Speaker 4: the lower House. For a closer look now at what's 473 00:26:35,920 --> 00:26:38,439 Speaker 4: at stake in the Upper House, I'm joined by Bloomberg's 474 00:26:38,480 --> 00:26:42,000 Speaker 4: Isabelle Reynolds. She is our Tokyo bureau chief, joining us 475 00:26:42,000 --> 00:26:45,600 Speaker 4: from our radio studio in Tokyo. Isabelle, thank you. I 476 00:26:45,640 --> 00:26:48,280 Speaker 4: know the stakes are high, as I understand where the 477 00:26:48,359 --> 00:26:52,439 Speaker 4: ruling coalition could lose its majority. This would be a first, 478 00:26:52,520 --> 00:26:53,240 Speaker 4: is that correct? 479 00:26:54,240 --> 00:26:57,760 Speaker 12: Not exactly a first, but we did see a similar 480 00:26:57,800 --> 00:27:01,200 Speaker 12: case back in nineteen ninety four where the ruling LDP 481 00:27:01,320 --> 00:27:04,360 Speaker 12: lost its majority in both houses. But the party has 482 00:27:04,440 --> 00:27:06,880 Speaker 12: been in government for almost all of the time since 483 00:27:06,960 --> 00:27:10,200 Speaker 12: nineteen fifty five. Just so to be out of power 484 00:27:10,440 --> 00:27:12,960 Speaker 12: in both houses is pretty unusual. They did also lose 485 00:27:13,000 --> 00:27:16,640 Speaker 12: power to an opposition party in two thousand and nine, 486 00:27:16,680 --> 00:27:20,240 Speaker 12: of course, but yes, this would be a historic occasion. 487 00:27:20,680 --> 00:27:23,080 Speaker 4: So give me a sense of where things are in 488 00:27:23,160 --> 00:27:27,000 Speaker 4: terms of political stability. How would you describe that at 489 00:27:27,040 --> 00:27:30,199 Speaker 4: a time when Japan is really struggling with so many issues, 490 00:27:30,240 --> 00:27:31,879 Speaker 4: not the least of which is a trade deal with 491 00:27:31,920 --> 00:27:32,439 Speaker 4: the US. 492 00:27:32,960 --> 00:27:37,040 Speaker 12: Absolutely, yes, I would say the situation is extremely unstable 493 00:27:37,080 --> 00:27:39,960 Speaker 12: at the moment. What we're seeing is the support for 494 00:27:40,000 --> 00:27:42,720 Speaker 12: the ruling coalition is falling again as we're going into 495 00:27:42,760 --> 00:27:45,960 Speaker 12: the election. What we see is several of the big 496 00:27:46,040 --> 00:27:49,480 Speaker 12: media outlets here, the newspapers which were still widely read 497 00:27:49,480 --> 00:27:52,119 Speaker 12: in Japan and like other places in the world perhaps, 498 00:27:52,160 --> 00:27:55,880 Speaker 12: but they do massive polls and analysis of what's going 499 00:27:55,960 --> 00:27:57,520 Speaker 12: on in the run up to the election, and it's 500 00:27:57,560 --> 00:28:00,680 Speaker 12: looking pretty likely that the ruling courlition and will lose 501 00:28:00,720 --> 00:28:02,320 Speaker 12: its majority in the upper house. 502 00:28:02,920 --> 00:28:06,359 Speaker 4: So with that then Prime Minister Ishuba would probably lose 503 00:28:06,400 --> 00:28:07,840 Speaker 4: his position as prime minister. 504 00:28:07,960 --> 00:28:08,440 Speaker 5: Is that right? 505 00:28:08,920 --> 00:28:11,280 Speaker 12: Well, we don't know that for sure. It sort of 506 00:28:11,320 --> 00:28:14,600 Speaker 12: depends how bad the result is. You know, obviously they 507 00:28:14,640 --> 00:28:17,119 Speaker 12: could lose their majority by a very small margin, in 508 00:28:17,160 --> 00:28:19,720 Speaker 12: which case they could hope to sort of cobble together 509 00:28:20,240 --> 00:28:22,720 Speaker 12: not a formal coalition, but a loose coalition with some 510 00:28:22,840 --> 00:28:25,919 Speaker 12: other party to get to legislation through. And that's what 511 00:28:25,960 --> 00:28:27,959 Speaker 12: they're already doing in the lower house, so it's not 512 00:28:28,040 --> 00:28:29,720 Speaker 12: out of the question that they could do that in 513 00:28:29,720 --> 00:28:33,320 Speaker 12: the upper house. But if the results are extremely bad, 514 00:28:33,400 --> 00:28:36,480 Speaker 12: I think Ishuba would eventually have to take responsibility for 515 00:28:36,520 --> 00:28:40,000 Speaker 12: that situation and step down, and then we could see 516 00:28:40,280 --> 00:28:42,680 Speaker 12: a whole different level of chaos in Japan. 517 00:28:42,880 --> 00:28:45,440 Speaker 4: So he's considered a physical hawk. So if the outcome 518 00:28:46,280 --> 00:28:50,480 Speaker 4: is such where Ishiba has to withdraw from the prime ministership, 519 00:28:50,600 --> 00:28:53,360 Speaker 4: and that wouldn't necessarily I think put Japan on a 520 00:28:53,400 --> 00:28:58,240 Speaker 4: path where maybe the country's finances are somewhat in question. 521 00:28:58,440 --> 00:28:59,040 Speaker 5: Is that fair? 522 00:28:59,320 --> 00:29:02,440 Speaker 12: Yes, you're absolutely right there. I mean, the big issue 523 00:29:02,440 --> 00:29:04,440 Speaker 12: in the election, as it was in the last election, 524 00:29:04,680 --> 00:29:06,840 Speaker 12: is the issue of inflation in Japan. It's the cost 525 00:29:06,880 --> 00:29:10,360 Speaker 12: of living. The level of frustration is growing among the public. 526 00:29:10,360 --> 00:29:12,720 Speaker 12: They've been putting up with this situation where prices are 527 00:29:12,760 --> 00:29:16,720 Speaker 12: growing much faster than their own wages, and the question 528 00:29:16,800 --> 00:29:18,959 Speaker 12: is how to deal with that situation. So the LDP, 529 00:29:19,440 --> 00:29:22,320 Speaker 12: she get a issue buzzed party, is sticking to these 530 00:29:22,360 --> 00:29:24,560 Speaker 12: kind of temporary, one off solutions. It wants to do 531 00:29:24,600 --> 00:29:28,320 Speaker 12: a cash handout things like that. But those opposite, smaller 532 00:29:28,360 --> 00:29:32,400 Speaker 12: opposition parties that are growing in popularity proposing these much 533 00:29:32,480 --> 00:29:35,960 Speaker 12: more drastic ideas, such as cutting consumption tax, which is 534 00:29:36,000 --> 00:29:39,000 Speaker 12: a key source of income for the government, And that's 535 00:29:39,000 --> 00:29:41,760 Speaker 12: why we're seeing these kind of ructions in the bond market. 536 00:29:42,160 --> 00:29:45,400 Speaker 12: Fears that these kind of policies could gain traction after 537 00:29:45,440 --> 00:29:48,240 Speaker 12: the election are raising concerns about Japan's finance. 538 00:29:48,480 --> 00:29:51,120 Speaker 4: So you mentioned the fact that households in Japan are 539 00:29:51,120 --> 00:29:54,280 Speaker 4: dealing with higher inflation, much higher inflation. Is that why 540 00:29:54,320 --> 00:29:57,480 Speaker 4: this election is being referred to as the rice election? 541 00:29:58,040 --> 00:30:00,480 Speaker 12: Yes, I mean that the symbolic issue it comes to 542 00:30:00,520 --> 00:30:02,800 Speaker 12: inflation is the price of rice, which at one point 543 00:30:02,840 --> 00:30:06,000 Speaker 12: was double what it had been a year earlier. There 544 00:30:06,000 --> 00:30:08,400 Speaker 12: are a lot of structural reasons why that's the case, 545 00:30:09,120 --> 00:30:14,600 Speaker 12: and the LDP has put in place this young politician, Koizumi, 546 00:30:14,760 --> 00:30:18,440 Speaker 12: who has dealt with this by immediately sort of releasing 547 00:30:18,800 --> 00:30:21,960 Speaker 12: rice stores at a much cheaper price to the public. 548 00:30:22,440 --> 00:30:25,360 Speaker 12: So that did gain them some time, but that is 549 00:30:25,400 --> 00:30:28,400 Speaker 12: not a long term solution to what's going on. So 550 00:30:28,640 --> 00:30:32,240 Speaker 12: people who want a more drastic solution, for example, ramping 551 00:30:32,360 --> 00:30:36,520 Speaker 12: up production of food in Japan might opt to vote 552 00:30:36,560 --> 00:30:37,440 Speaker 12: for a different party. 553 00:30:37,800 --> 00:30:39,960 Speaker 4: So how does what is happening in the diet the 554 00:30:40,040 --> 00:30:44,400 Speaker 4: Japanese parliament impact what the Bank of Japan is trying 555 00:30:44,440 --> 00:30:48,400 Speaker 4: to do in weaning the economy of massive stimulus that, 556 00:30:48,520 --> 00:30:51,920 Speaker 4: as you well know, has been going on for decades now, right. 557 00:30:51,840 --> 00:30:55,880 Speaker 12: Yes, I mean we're seeing obviously the government tries officially 558 00:30:55,920 --> 00:30:58,600 Speaker 12: at least to keep its handle off the Bank of 559 00:30:58,640 --> 00:31:01,920 Speaker 12: Japan is choosing to do. But if we are going 560 00:31:01,960 --> 00:31:04,800 Speaker 12: to see a massive ramp up in spending, obviously that 561 00:31:04,880 --> 00:31:07,080 Speaker 12: will have to play into the thinking at the Bank 562 00:31:07,120 --> 00:31:10,560 Speaker 12: of Japan. So this path that we've been seeing towards 563 00:31:10,600 --> 00:31:14,600 Speaker 12: normalization could potentially be affected if we're going to see 564 00:31:15,160 --> 00:31:18,720 Speaker 12: a massive cut in, for example, revenue from consumption tax 565 00:31:18,800 --> 00:31:20,160 Speaker 12: and so on over the coming years. 566 00:31:20,360 --> 00:31:24,240 Speaker 4: So put this election in the context of Tokyo and 567 00:31:24,400 --> 00:31:26,840 Speaker 4: Washington trying to work out a new trade deal. I 568 00:31:26,840 --> 00:31:29,720 Speaker 4: think the deadline is now August first, to avoid being 569 00:31:29,760 --> 00:31:33,000 Speaker 4: slapped with twenty five percent tariffs. And we know that 570 00:31:33,040 --> 00:31:37,600 Speaker 4: for Japan when you're talking about automobiles and steel manufacturing, 571 00:31:37,640 --> 00:31:40,960 Speaker 4: this is critical. Put the election in context of trying 572 00:31:40,960 --> 00:31:42,560 Speaker 4: to work out a trade deal with the US. 573 00:31:43,200 --> 00:31:46,280 Speaker 12: Yes, well, I think that that's an interesting question because 574 00:31:46,560 --> 00:31:50,080 Speaker 12: I think there's a growing doubt in Japan about whether anything, 575 00:31:50,360 --> 00:31:53,600 Speaker 12: any action or words on their part can affect what 576 00:31:53,720 --> 00:31:58,360 Speaker 12: decision Donald Trump makes on these tariffs. So although it's 577 00:31:58,400 --> 00:32:01,920 Speaker 12: been somewhat of an issue in the campaign, I think 578 00:32:01,920 --> 00:32:05,840 Speaker 12: there's very little sort of faith that either Ishiba or 579 00:32:05,880 --> 00:32:10,160 Speaker 12: any of these smaller opposition parties could do any better 580 00:32:10,240 --> 00:32:12,840 Speaker 12: job than they have done so far in trying to 581 00:32:12,880 --> 00:32:15,480 Speaker 12: negotiate a deal. So I'm not really sure how it 582 00:32:15,480 --> 00:32:19,520 Speaker 12: affects that. Obviously, Ishiba could opt to reshuffle his cabinet 583 00:32:19,800 --> 00:32:23,200 Speaker 12: after the election if there is a poor performance. But 584 00:32:23,880 --> 00:32:25,520 Speaker 12: if you ask the public who's going to do a 585 00:32:25,520 --> 00:32:28,480 Speaker 12: better job in organizing this trade deal, I doubt they 586 00:32:28,480 --> 00:32:31,080 Speaker 12: would come up with a very swift answer for you. 587 00:32:31,200 --> 00:32:33,400 Speaker 4: Before I let you go, Isabelle, can you break down 588 00:32:33,520 --> 00:32:37,880 Speaker 4: from me how this might look if we segment different 589 00:32:37,960 --> 00:32:42,880 Speaker 4: generations of Japanese society, let's say younger voters versus the 590 00:32:42,920 --> 00:32:43,720 Speaker 4: older generation. 591 00:32:44,400 --> 00:32:48,040 Speaker 12: Yes, I think we are seeing increased interest in voting 592 00:32:48,320 --> 00:32:52,400 Speaker 12: among the younger voters. They traditionally have not had a 593 00:32:52,480 --> 00:32:54,880 Speaker 12: very high turnout. It's been the older voters who have 594 00:32:54,960 --> 00:32:58,440 Speaker 12: always voted for the LDP or its coalition partner, the 595 00:32:58,520 --> 00:33:02,920 Speaker 12: Core metor one particular. Their support is falling away rapidly, 596 00:33:03,920 --> 00:33:07,000 Speaker 12: and for the LDP, it's always a bad sign. If 597 00:33:07,080 --> 00:33:09,000 Speaker 12: young people are coming out to vote, that means that 598 00:33:09,120 --> 00:33:12,920 Speaker 12: somebody is going to be voting for opposition parties. So 599 00:33:13,400 --> 00:33:16,040 Speaker 12: for the LDP, I mean they'll be hoping that the 600 00:33:16,080 --> 00:33:17,040 Speaker 12: young people stay at home. 601 00:33:17,480 --> 00:33:20,160 Speaker 4: Isabelle, thank you so very much for helping us look 602 00:33:20,160 --> 00:33:23,000 Speaker 4: ahead to Japan's upper House election in the week ahead. 603 00:33:23,280 --> 00:33:26,920 Speaker 4: She is Isabelle Reynolds, Tokyo bureau chief for Bloomberg News. 604 00:33:27,240 --> 00:33:29,840 Speaker 4: Let's stay in Japan because we heard earlier in the 605 00:33:29,880 --> 00:33:34,640 Speaker 4: week from Masahiro Kihara, CEO of Misohu Financial Group. He 606 00:33:34,800 --> 00:33:38,480 Speaker 4: sees an end to uncertainty and reason to be optimistic 607 00:33:38,560 --> 00:33:41,600 Speaker 4: on the future. Here's part of the conversation with mister 608 00:33:41,680 --> 00:33:44,440 Speaker 4: Kihara with Bloomberg's friend Sine Laqua. 609 00:33:44,600 --> 00:33:47,720 Speaker 13: How confident are you about reaching the one trillion yen 610 00:33:47,800 --> 00:33:50,760 Speaker 13: profit within a few years, given all the global uncertainty, 611 00:33:50,760 --> 00:33:52,600 Speaker 13: and given what we heard on tariffs and trade. 612 00:33:53,000 --> 00:33:57,400 Speaker 14: In fact, I think from a current earning profile, I 613 00:33:57,400 --> 00:34:01,160 Speaker 14: think we have almost reached one trillion again. Actually we 614 00:34:01,200 --> 00:34:03,760 Speaker 14: had eight hundred last year. We had eight hundred and 615 00:34:03,760 --> 00:34:07,680 Speaker 14: eighty billion. We took one time losses around somewhere around 616 00:34:07,680 --> 00:34:10,920 Speaker 14: one hundred and twenty billion actually, so I think in 617 00:34:11,000 --> 00:34:16,400 Speaker 14: reality we reached one trillion. Thanks for all the you know, circumstances. 618 00:34:16,840 --> 00:34:19,560 Speaker 13: But what does the uncertainty do. The uncertainty is surrounding 619 00:34:19,560 --> 00:34:21,399 Speaker 13: some of the Trump policies and trade and tear. 620 00:34:21,440 --> 00:34:27,480 Speaker 14: Yes, yes, so before April second, we were aiming somewhere 621 00:34:27,480 --> 00:34:32,480 Speaker 14: around one point one trillion for this year. Actually, however, 622 00:34:32,520 --> 00:34:36,200 Speaker 14: because of all the uncertainties, we sort of shrink it 623 00:34:36,280 --> 00:34:40,360 Speaker 14: down from as a conservative base to nine hundred and 624 00:34:40,360 --> 00:34:42,879 Speaker 14: fifty trillion. I'm sorry, nine hundred and fifty billion yen. 625 00:34:43,360 --> 00:34:48,360 Speaker 14: But I think you know, when things get certain, the 626 00:34:49,360 --> 00:34:52,000 Speaker 14: corporate action will come back, which means that we can 627 00:34:52,120 --> 00:34:54,320 Speaker 14: wratchet up a little bit. Yeah, our guideance. 628 00:34:54,719 --> 00:34:57,399 Speaker 13: So where are you seeing that uncertainty play into us now? 629 00:34:57,480 --> 00:35:01,800 Speaker 13: Is it loans? Is it cheap executives spending not deploying cash. 630 00:35:01,920 --> 00:35:05,759 Speaker 14: Yes, right now, the CEOs are very very on the 631 00:35:05,840 --> 00:35:12,680 Speaker 14: sidelines actually, But for example, if it is a domestic deal, 632 00:35:13,880 --> 00:35:16,319 Speaker 14: even in each region, if it is a domestic deal, 633 00:35:16,400 --> 00:35:18,960 Speaker 14: things are happening, which means that we don't see a 634 00:35:18,960 --> 00:35:21,560 Speaker 14: lot of cross border happening right now. All of them 635 00:35:21,560 --> 00:35:24,719 Speaker 14: are we have a big chunk of pipeline, but they're 636 00:35:24,719 --> 00:35:27,920 Speaker 14: not executed. But from a domestically perspective, people are moving 637 00:35:27,960 --> 00:35:29,680 Speaker 14: a little bit. So I think, you know, there is 638 00:35:29,960 --> 00:35:33,080 Speaker 14: a good chance that people will get confident at some point. 639 00:35:33,840 --> 00:35:36,520 Speaker 13: How do you see them You know, Japanese landscape for 640 00:35:36,560 --> 00:35:40,240 Speaker 13: businesses changing, how much will they look? I mean, Japan 641 00:35:40,320 --> 00:35:43,399 Speaker 13: has been a great experiment right in terms of financials 642 00:35:43,400 --> 00:35:46,000 Speaker 13: for a long time. Yes, is it companies that will 643 00:35:46,000 --> 00:35:49,000 Speaker 13: then grow also abroad as economy stabilizes. 644 00:35:49,880 --> 00:35:55,040 Speaker 14: I would say that if right now there's many uncertainties, 645 00:35:55,040 --> 00:36:01,280 Speaker 14: but things get clearer, the coporate action will come back. 646 00:36:02,520 --> 00:36:05,360 Speaker 14: These couple of years, we have seen many corporate actions happening, 647 00:36:07,000 --> 00:36:12,680 Speaker 14: investing outside Japan, changing their business portfolio, miss selling parts 648 00:36:12,680 --> 00:36:14,759 Speaker 14: of the business that they are not doing well, so 649 00:36:14,920 --> 00:36:19,480 Speaker 14: concentrating the areas that has strengths. So I would say 650 00:36:19,520 --> 00:36:23,799 Speaker 14: that when things get clear corporate action will come back, 651 00:36:24,080 --> 00:36:28,080 Speaker 14: and many you know Japanese corporates will try to invest 652 00:36:28,120 --> 00:36:29,480 Speaker 14: in outside of Japan too. 653 00:36:29,760 --> 00:36:32,520 Speaker 13: Are you confident in the Japanese economy overall? 654 00:36:33,239 --> 00:36:42,319 Speaker 14: Over, I think we still have strengths in the economy 655 00:36:42,600 --> 00:36:46,400 Speaker 14: sectors that we have, so I think over we are 656 00:36:46,480 --> 00:36:49,440 Speaker 14: very I am very confident in that. The thing is 657 00:36:49,440 --> 00:36:53,480 Speaker 14: that we have to concentrate our resources in the area 658 00:36:53,600 --> 00:36:59,120 Speaker 14: that we have strengths. We have high quality manufacturing, high 659 00:36:59,239 --> 00:37:03,880 Speaker 14: quality you know products, So I think we need to 660 00:37:03,920 --> 00:37:07,000 Speaker 14: figure out where the strengths are and try to sell 661 00:37:07,040 --> 00:37:08,600 Speaker 14: it to the world. 662 00:37:09,040 --> 00:37:11,840 Speaker 13: Do you worry or are there dangers actually to Japan 663 00:37:12,280 --> 00:37:14,280 Speaker 13: given the spike in long term interest rates? 664 00:37:14,440 --> 00:37:20,160 Speaker 14: Yes, so twenty years so for the long end it's 665 00:37:20,200 --> 00:37:23,920 Speaker 14: been twenty years, thirty years. There has been spike and 666 00:37:24,000 --> 00:37:27,680 Speaker 14: there has been volatility. But I think the government said 667 00:37:27,719 --> 00:37:30,680 Speaker 14: that they will try to shift the issuance to a 668 00:37:30,960 --> 00:37:35,120 Speaker 14: ten years of below. I think that BOJ is a 669 00:37:35,160 --> 00:37:38,120 Speaker 14: little bit shrinking, is QT. I think that will help. 670 00:37:39,080 --> 00:37:41,439 Speaker 13: Is there a point where it actually starts treating your 671 00:37:41,480 --> 00:37:43,920 Speaker 13: business and starts shooting the real economy? 672 00:37:44,239 --> 00:37:49,520 Speaker 14: Well, I think BOJ is saying that the neutral rate 673 00:37:50,040 --> 00:37:52,680 Speaker 14: is somewhere around one point one percent to one point 674 00:37:52,680 --> 00:37:56,120 Speaker 14: five percent, and on top of that ten years will 675 00:37:56,120 --> 00:37:58,160 Speaker 14: be somewhere around two to two point two five percent. 676 00:37:58,200 --> 00:38:01,400 Speaker 14: Then I think that that's the level that is okay. 677 00:38:01,800 --> 00:38:05,120 Speaker 14: But if it goes beyond to three percent or so, 678 00:38:05,719 --> 00:38:06,960 Speaker 14: they will then hurt the budget. 679 00:38:07,000 --> 00:38:10,840 Speaker 13: I think, are you expecting more turmoil in the end, 680 00:38:11,000 --> 00:38:13,080 Speaker 13: but also not in the one market? 681 00:38:13,160 --> 00:38:16,520 Speaker 14: Not at this moment. Actually, I think the current level 682 00:38:17,040 --> 00:38:19,279 Speaker 14: of one point four one point five for ten years 683 00:38:19,320 --> 00:38:22,799 Speaker 14: is very it's okay. I think I haven't seen any 684 00:38:22,800 --> 00:38:25,160 Speaker 14: turmoil in the ten years old, so as long as 685 00:38:25,200 --> 00:38:27,520 Speaker 14: the ten year is fine, I think it's fine. 686 00:38:27,840 --> 00:38:31,720 Speaker 4: That is masahiro Kihara, CEO of Misahu Financial Group, speaking 687 00:38:31,760 --> 00:38:35,000 Speaker 4: with Bloomberg's friend Sine Laqua, and I'm Doug Prisner. You 688 00:38:35,000 --> 00:38:38,080 Speaker 4: can catch us weekdays here for the Daybreak Asia podcast. 689 00:38:38,400 --> 00:38:40,640 Speaker 4: It's available wherever you get your podcast. 690 00:38:41,000 --> 00:38:43,839 Speaker 2: Tom, Thank you, Doug. And that does it for this 691 00:38:43,960 --> 00:38:46,720 Speaker 2: edition of Bloomberg day Break Weekend. Join us again Monday 692 00:38:46,760 --> 00:38:48,840 Speaker 2: morning at five am Wall Street Time for the latest 693 00:38:48,840 --> 00:38:51,560 Speaker 2: on markets overseas and the news you need to start 694 00:38:51,600 --> 00:38:54,960 Speaker 2: your day. I'm Tom Buzby. Stay with us top stories 695 00:38:54,960 --> 00:38:57,520 Speaker 2: and global business headlines are coming up right now.