WEBVTT - Ed Rogers on BOJ (Radio)

0:00:00.160 --> 0:00:03.080
<v Speaker 1>We have ed Rodgers with US chief executive officer and

0:00:03.200 --> 0:00:07.480
<v Speaker 1>c i O at Rogers investment advisors. So the Bank

0:00:07.520 --> 0:00:10.520
<v Speaker 1>of Japan won't raise rates a long time down the road,

0:00:10.560 --> 0:00:14.160
<v Speaker 1>probably a tweak in policy. I suppose it's possible. It

0:00:14.200 --> 0:00:17.920
<v Speaker 1>seems the consensus today is that they'll stand pat in

0:00:18.000 --> 0:00:21.240
<v Speaker 1>most areas. What might we learn though from the commentary

0:00:21.320 --> 0:00:26.360
<v Speaker 1>at good morning or I guess good evening for you guys.

0:00:26.360 --> 0:00:29.040
<v Speaker 1>Thanks very much for having me back on the show. Um. Yeah,

0:00:29.400 --> 0:00:32.240
<v Speaker 1>no one expects any fireworks on the actual BOJ decision.

0:00:32.320 --> 0:00:36.519
<v Speaker 1>Of course, we expect the markets. Sorry, the rates today unchanged.

0:00:36.920 --> 0:00:40.800
<v Speaker 1>That's really as as expected. I think the interesting thing

0:00:40.840 --> 0:00:43.320
<v Speaker 1>to think about here, though, is the environment around what

0:00:43.720 --> 0:00:46.400
<v Speaker 1>else is going on in Asia related to rates? What

0:00:46.560 --> 0:00:48.960
<v Speaker 1>is China going to do once uh, you know, the

0:00:49.479 --> 0:00:53.640
<v Speaker 1>full impact the medical impact of the COVID unwind becomes

0:00:53.640 --> 0:00:56.640
<v Speaker 1>clear that sorry, the zero COVID UH policy unwined becomes clear.

0:00:57.000 --> 0:00:59.600
<v Speaker 1>That could drive significant action the Fed. Are they going

0:00:59.680 --> 0:01:02.920
<v Speaker 1>to tinue to back pedal a little bit and ease off?

0:01:03.360 --> 0:01:05.240
<v Speaker 1>Yes or no? Um, there's are the kind of a

0:01:05.280 --> 0:01:09.840
<v Speaker 1>bigger picture questions about rates. I think, okay, well, there

0:01:09.840 --> 0:01:12.440
<v Speaker 1>are a lot of variables there, and particularly when it

0:01:12.440 --> 0:01:16.000
<v Speaker 1>comes to China, how do you see this UH path

0:01:16.080 --> 0:01:18.720
<v Speaker 1>out of COVID unfolding over the next couple of quarters.

0:01:21.040 --> 0:01:23.880
<v Speaker 1>I are look, my my view is that it's going

0:01:23.920 --> 0:01:26.600
<v Speaker 1>to be very difficult for China UH and and the

0:01:26.880 --> 0:01:30.120
<v Speaker 1>for China, the tradeoff in you know, public policy and

0:01:30.160 --> 0:01:34.200
<v Speaker 1>financial support versus you know, medical UH safety is going

0:01:34.240 --> 0:01:37.479
<v Speaker 1>to be a real big issue here. So the worst

0:01:37.480 --> 0:01:41.160
<v Speaker 1>that China suffers medically, if you will, in terms of

0:01:41.360 --> 0:01:44.840
<v Speaker 1>fatalities and illnesses and significant illnessis the more pressure there

0:01:44.880 --> 0:01:47.800
<v Speaker 1>will be to be accommodative and provide easy money and

0:01:48.080 --> 0:01:50.680
<v Speaker 1>stimulus and make life look better on the economic front.

0:01:50.880 --> 0:01:53.800
<v Speaker 1>And I think that could become quite severe frankly over

0:01:53.800 --> 0:01:57.520
<v Speaker 1>the next two months. We had this Kyoto news report

0:01:57.760 --> 0:01:59.840
<v Speaker 1>earlier this week, and I guess is so the weekends

0:02:00.000 --> 0:02:04.160
<v Speaker 1>matter day about possible revisions to the arrangement the accord

0:02:04.240 --> 0:02:07.520
<v Speaker 1>between the government and the Bank of Japan. UM. It

0:02:07.640 --> 0:02:11.000
<v Speaker 1>got denied by by the government, UM, but it did

0:02:11.040 --> 0:02:13.840
<v Speaker 1>it did actually draw a lot of attention in the market,

0:02:13.840 --> 0:02:16.120
<v Speaker 1>and it did spark quite a lot of buying of

0:02:16.160 --> 0:02:19.320
<v Speaker 1>the of the yen. Since this reversed, do you put

0:02:19.360 --> 0:02:25.240
<v Speaker 1>much stock in that. I think the things that will

0:02:25.320 --> 0:02:28.800
<v Speaker 1>move the markets first of all yen, and it's moved

0:02:28.800 --> 0:02:31.160
<v Speaker 1>a bit, but it's not been a dramatic move. Frankly,

0:02:31.200 --> 0:02:36.160
<v Speaker 1>we're still hovering around one is arranged. It's it's not

0:02:36.200 --> 0:02:39.240
<v Speaker 1>been a dramatic move. I think the bigger thing to

0:02:39.360 --> 0:02:41.680
<v Speaker 1>watch in Japan is what sort of money will be

0:02:41.720 --> 0:02:46.200
<v Speaker 1>spent by the government on this rearmament policy. And that

0:02:46.360 --> 0:02:50.000
<v Speaker 1>is a multi year project and it's a frankly of

0:02:50.120 --> 0:02:56.440
<v Speaker 1>vital national security issue ever since Russia invaded Ukraine. Uh,

0:02:56.480 --> 0:02:58.400
<v Speaker 1>you know, my view, our our firm view is that

0:02:58.760 --> 0:03:02.320
<v Speaker 1>this is a moment of singular importance to Japan. It's

0:03:02.440 --> 0:03:05.160
<v Speaker 1>it's similar to commodore perry sailing into Tokyo Bay in

0:03:05.560 --> 0:03:09.240
<v Speaker 1>eighteen fifty three. Everything now changes from Japan for Japan

0:03:09.320 --> 0:03:12.880
<v Speaker 1>going forward, and that clearly the immediate response on the

0:03:13.040 --> 0:03:16.760
<v Speaker 1>on the military rearmament is just a first step, but

0:03:16.960 --> 0:03:19.639
<v Speaker 1>that will have a significant impact, dramatic impact, far more

0:03:19.680 --> 0:03:23.040
<v Speaker 1>than just global inflationary concerns. I hate to ask a

0:03:23.160 --> 0:03:27.040
<v Speaker 1>mundane follow up because you're talking about you know, monumental

0:03:27.080 --> 0:03:32.799
<v Speaker 1>implications from it, but is it good for the economy. Well,

0:03:32.840 --> 0:03:35.760
<v Speaker 1>in the short answer would be yes, there's going to

0:03:35.840 --> 0:03:40.320
<v Speaker 1>be significant economic activity around the actual rearmament process itself.

0:03:40.760 --> 0:03:45.480
<v Speaker 1>There's also more and more pressure to take unused or

0:03:45.600 --> 0:03:48.560
<v Speaker 1>or what are you gonna call it in the neglected

0:03:48.600 --> 0:03:52.200
<v Speaker 1>capital retained earnings that sits in Japanese banks and make

0:03:52.280 --> 0:03:55.480
<v Speaker 1>them more productive, make it more productive capital. And all

0:03:55.520 --> 0:03:59.320
<v Speaker 1>of that will be partially sponsored or prompted by natural

0:03:59.320 --> 0:04:01.720
<v Speaker 1>security concern and those aren't going away for the next

0:04:01.760 --> 0:04:05.080
<v Speaker 1>ten to fifteen years. So overall, yes, it's kind of

0:04:05.080 --> 0:04:08.240
<v Speaker 1>good for the economy. Some big spanding coming. We've got

0:04:08.240 --> 0:04:12.240
<v Speaker 1>a very week end and we've got CPI UM expected

0:04:12.280 --> 0:04:14.240
<v Speaker 1>to come in just a shade on the four percent

0:04:14.320 --> 0:04:16.760
<v Speaker 1>when we get the next reading in three days time.

0:04:16.920 --> 0:04:20.640
<v Speaker 1>So are we seeing inflation in Japan? And how sustained

0:04:20.720 --> 0:04:25.440
<v Speaker 1>is it going to be? We we've definitely seen inflation Japan.

0:04:25.480 --> 0:04:28.640
<v Speaker 1>It's it's undeniable um. Now sector by sector, you you

0:04:28.960 --> 0:04:31.200
<v Speaker 1>can make an argument something that will received again. You know,

0:04:31.320 --> 0:04:34.839
<v Speaker 1>oil prices, who knows where they go, Kathleen, sorry, kathylene,

0:04:34.880 --> 0:04:37.040
<v Speaker 1>nominal prices, who knows where they go? But the impact

0:04:37.080 --> 0:04:38.680
<v Speaker 1>on food, you know, the man on the street when

0:04:38.680 --> 0:04:41.120
<v Speaker 1>he goes and buys cardener, milk or a cup of coffee.

0:04:41.240 --> 0:04:43.760
<v Speaker 1>It's real, it's it's it's it's much of it's been

0:04:43.800 --> 0:04:47.680
<v Speaker 1>done already. Um, how much can they use this inflation?

0:04:48.000 --> 0:04:51.000
<v Speaker 1>How much can the government use this obvious inflation as

0:04:51.040 --> 0:04:54.560
<v Speaker 1>a tool to force more capital into the system, more

0:04:54.600 --> 0:04:57.880
<v Speaker 1>money in the system through increased wages for workers for example.

0:04:58.160 --> 0:05:00.600
<v Speaker 1>That's what you want to watch, the inflation itself is

0:05:00.839 --> 0:05:03.400
<v Speaker 1>we want to watch the by products of the quote

0:05:03.440 --> 0:05:07.920
<v Speaker 1>unquote inflation response and that that will be very telling

0:05:07.960 --> 0:05:12.279
<v Speaker 1>as far as impact on the economy. In just fifteen seconds.

0:05:12.279 --> 0:05:14.440
<v Speaker 1>Do you feel more confident now about next year than

0:05:14.480 --> 0:05:19.800
<v Speaker 1>you did, say, two months ago. Absolutely. I think this

0:05:19.920 --> 0:05:21.760
<v Speaker 1>is gonna be a This is a great time to

0:05:21.760 --> 0:05:23.360
<v Speaker 1>be looking at Japan. I think of it as a

0:05:23.480 --> 0:05:26.560
<v Speaker 1>zero some game. If Chinese going down, Stan's going up

0:05:26.560 --> 0:05:30.839
<v Speaker 1>for investments going up. Good tease for our next our

0:05:30.920 --> 0:05:33.640
<v Speaker 1>next interview with you, Ed, Thanks very much, We'll bring

0:05:33.640 --> 0:05:36.280
<v Speaker 1>you back soon. Ed Rochers, CEO c i O at

0:05:36.680 --> 0:05:38.560
<v Speaker 1>Rogers Investment Advices,