Speaker 1: We have ed Rodgers with US chief executive officer and
Speaker 1: c i O at Rogers investment advisors. So the Bank
Speaker 1: of Japan won't raise rates a long time down the road,
Speaker 1: probably a tweak in policy. I suppose it's possible. It
Speaker 1: seems the consensus today is that they'll stand pat in
Speaker 1: most areas. What might we learn though from the commentary
Speaker 1: at good morning or I guess good evening for you guys.
Speaker 1: Thanks very much for having me back on the show. Um. Yeah,
Speaker 1: no one expects any fireworks on the actual BOJ decision.
Speaker 1: Of course, we expect the markets. Sorry, the rates today unchanged.
Speaker 1: That's really as as expected. I think the interesting thing
Speaker 1: to think about here, though, is the environment around what
Speaker 1: else is going on in Asia related to rates? What
Speaker 1: is China going to do once uh, you know, the
Speaker 1: full impact the medical impact of the COVID unwind becomes
Speaker 1: clear that sorry, the zero COVID UH policy unwined becomes clear.
Speaker 1: That could drive significant action the Fed. Are they going
Speaker 1: to tinue to back pedal a little bit and ease off?
Speaker 1: Yes or no? Um, there's are the kind of a
Speaker 1: bigger picture questions about rates. I think, okay, well, there
Speaker 1: are a lot of variables there, and particularly when it
Speaker 1: comes to China, how do you see this UH path
Speaker 1: out of COVID unfolding over the next couple of quarters.
Speaker 1: I are look, my my view is that it's going
Speaker 1: to be very difficult for China UH and and the
Speaker 1: for China, the tradeoff in you know, public policy and
Speaker 1: financial support versus you know, medical UH safety is going
Speaker 1: to be a real big issue here. So the worst
Speaker 1: that China suffers medically, if you will, in terms of
Speaker 1: fatalities and illnesses and significant illnessis the more pressure there
Speaker 1: will be to be accommodative and provide easy money and
Speaker 1: stimulus and make life look better on the economic front.
Speaker 1: And I think that could become quite severe frankly over
Speaker 1: the next two months. We had this Kyoto news report
Speaker 1: earlier this week, and I guess is so the weekends
Speaker 1: matter day about possible revisions to the arrangement the accord
Speaker 1: between the government and the Bank of Japan. UM. It
Speaker 1: got denied by by the government, UM, but it did
Speaker 1: it did actually draw a lot of attention in the market,
Speaker 1: and it did spark quite a lot of buying of
Speaker 1: the of the yen. Since this reversed, do you put
Speaker 1: much stock in that. I think the things that will
Speaker 1: move the markets first of all yen, and it's moved
Speaker 1: a bit, but it's not been a dramatic move. Frankly,
Speaker 1: we're still hovering around one is arranged. It's it's not
Speaker 1: been a dramatic move. I think the bigger thing to
Speaker 1: watch in Japan is what sort of money will be
Speaker 1: spent by the government on this rearmament policy. And that
Speaker 1: is a multi year project and it's a frankly of
Speaker 1: vital national security issue ever since Russia invaded Ukraine. Uh,
Speaker 1: you know, my view, our our firm view is that
Speaker 1: this is a moment of singular importance to Japan. It's
Speaker 1: it's similar to commodore perry sailing into Tokyo Bay in
Speaker 1: eighteen fifty three. Everything now changes from Japan for Japan
Speaker 1: going forward, and that clearly the immediate response on the
Speaker 1: on the military rearmament is just a first step, but
Speaker 1: that will have a significant impact, dramatic impact, far more
Speaker 1: than just global inflationary concerns. I hate to ask a
Speaker 1: mundane follow up because you're talking about you know, monumental
Speaker 1: implications from it, but is it good for the economy. Well,
Speaker 1: in the short answer would be yes, there's going to
Speaker 1: be significant economic activity around the actual rearmament process itself.
Speaker 1: There's also more and more pressure to take unused or
Speaker 1: or what are you gonna call it in the neglected
Speaker 1: capital retained earnings that sits in Japanese banks and make
Speaker 1: them more productive, make it more productive capital. And all
Speaker 1: of that will be partially sponsored or prompted by natural
Speaker 1: security concern and those aren't going away for the next
Speaker 1: ten to fifteen years. So overall, yes, it's kind of
Speaker 1: good for the economy. Some big spanding coming. We've got
Speaker 1: a very week end and we've got CPI UM expected
Speaker 1: to come in just a shade on the four percent
Speaker 1: when we get the next reading in three days time.
Speaker 1: So are we seeing inflation in Japan? And how sustained
Speaker 1: is it going to be? We we've definitely seen inflation Japan.
Speaker 1: It's it's undeniable um. Now sector by sector, you you
Speaker 1: can make an argument something that will received again. You know,
Speaker 1: oil prices, who knows where they go, Kathleen, sorry, kathylene,
Speaker 1: nominal prices, who knows where they go? But the impact
Speaker 1: on food, you know, the man on the street when
Speaker 1: he goes and buys cardener, milk or a cup of coffee.
Speaker 1: It's real, it's it's it's it's much of it's been
Speaker 1: done already. Um, how much can they use this inflation?
Speaker 1: How much can the government use this obvious inflation as
Speaker 1: a tool to force more capital into the system, more
Speaker 1: money in the system through increased wages for workers for example.
Speaker 1: That's what you want to watch, the inflation itself is
Speaker 1: we want to watch the by products of the quote
Speaker 1: unquote inflation response and that that will be very telling
Speaker 1: as far as impact on the economy. In just fifteen seconds.
Speaker 1: Do you feel more confident now about next year than
Speaker 1: you did, say, two months ago. Absolutely. I think this
Speaker 1: is gonna be a This is a great time to
Speaker 1: be looking at Japan. I think of it as a
Speaker 1: zero some game. If Chinese going down, Stan's going up
Speaker 1: for investments going up. Good tease for our next our
Speaker 1: next interview with you, Ed, Thanks very much, We'll bring
Speaker 1: you back soon. Ed Rochers, CEO c i O at
Speaker 1: Rogers Investment Advices,