WEBVTT - Asia Stocks Rise Before Jobs Data, China CPI Cools

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>Welcome to the Daybreak Asia podcast. I'm Krisner. There's no

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<v Speaker 2>trading today in Japan. Markets are closed for National Foundation

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<v Speaker 2>Day and as a result, there will be no trading

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<v Speaker 2>in US treasuries until the London session. In the Japanese

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<v Speaker 2>equity market on Tuesday, we had the Nike closing at

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<v Speaker 2>a record high. Shares in Soft Bank led the way

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<v Speaker 2>with a gain of ten percent ahead of its earnings. Stateside,

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<v Speaker 2>we did have the report on retail sales and the

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<v Speaker 2>reading was unexpectedly flat for the month of December. Economists

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<v Speaker 2>had expected an increase by four tenths of one percent,

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<v Speaker 2>so the shortfall means the estimate on fourth quarter GDP

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<v Speaker 2>will be reduced. It also reinforces the case that perhaps

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<v Speaker 2>the Fed can be a little more aggressive in cutting

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<v Speaker 2>interest rates this year. For a closer look at markets,

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<v Speaker 2>I'm joined by Bloomberg Strategy just David Finnerty. David joins

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<v Speaker 2>from our studios in Singapore. Thank you for being here

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<v Speaker 2>and I want to play to one of your strengths

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<v Speaker 2>and talk about the currency market. The Bloomberg Dollar Spot

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<v Speaker 2>Index has been down now for three straight sessions, during

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<v Speaker 2>New York trading, and in that time it's lost around

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<v Speaker 2>one percent. Is the story on the weaker dollar really

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<v Speaker 2>driving the narrative when you look at overall price action.

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<v Speaker 3>In FX markets, Yes, I think it's basically dollar versus yeah,

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<v Speaker 3>the rest of the world basically in terms of currencies.

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<v Speaker 3>The general sentiment talking to a little traders and contacts

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<v Speaker 3>that I have is that people generally would like to

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<v Speaker 3>sell the dollar. They need the excuse to do that.

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<v Speaker 3>They're getting some but you get these pullbacks because the

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<v Speaker 3>US data comes out a bit mixed. You saw US

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<v Speaker 3>retail sales over night was weak, but you go back

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<v Speaker 3>to the IM data at the beginning of the month

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<v Speaker 3>that was strong. So obviously everyone's looking at what the

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<v Speaker 3>payroll data is today, particularly unemployment rate is that is

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<v Speaker 3>tends to be what the Fed focuses on. If you

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<v Speaker 3>did see an uptick in that, then I think the

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<v Speaker 3>market go yes, finally we got another green knight to

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<v Speaker 3>sell the dollar and buy other currencies, and they're tending

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<v Speaker 3>to buy. If they're shorting the dollar, they're tending to

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<v Speaker 3>go for the Euro or the Aussie dollar tend to

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<v Speaker 3>be the two popular ones at the moment. But everything

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<v Speaker 3>generally does well, but those tend to be the too

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<v Speaker 3>popular trade.

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<v Speaker 2>So, as I mentioned, we did have that record high

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<v Speaker 2>for the Japanese equity market on Tuesday. A lot of

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<v Speaker 2>this bullishness seems to be directly correlated to the so

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<v Speaker 2>called taki ichi trade expectations here that we're going to

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<v Speaker 2>see a lot more in a way of fiscal spending,

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<v Speaker 2>perhaps a cut in the sales tax on certain food items.

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<v Speaker 2>You would think with talk around fiscal stimulus that the

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<v Speaker 2>Japanese currency would weaken, but that doesn't seem to have

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<v Speaker 2>been the case. So if you look at the yen strength, David,

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<v Speaker 2>does that really revolve around the dollar weakness story?

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<v Speaker 3>Yeah, well, I would still remember dolly in still trading

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<v Speaker 3>one fifty four, so historically still at the weaker end

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<v Speaker 3>of its range, shall we say, with like one sixty

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<v Speaker 3>basically being the bottom of it. Some of it really

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<v Speaker 3>have won, it's just this end of intervention fears that

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<v Speaker 3>you have. Some of it is a weeker dollar. But

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<v Speaker 3>you know when it was up around one fifty seven

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<v Speaker 3>just the start of the week, you know the market

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<v Speaker 3>was the Finance Miniso in Japan came out and did say,

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<v Speaker 3>look you now we are watching currency markets. Was again

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<v Speaker 3>was we don't want that one sided spectation against the end.

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<v Speaker 3>So that's a strength and the end pushed dolly and lower.

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<v Speaker 3>But even as you said, some of it Nan has

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<v Speaker 3>been the dollar side. What's interesting is talking to some

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<v Speaker 3>traders yesterday when dolly en was around one fifty five

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<v Speaker 3>ahead of the US retail sales data, I was like,

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<v Speaker 3>you know what sort of the positioning on this? Where

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<v Speaker 3>are we? And they go, look, realistically, the long dollar

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<v Speaker 3>en longs have been sort of been squaring up. It

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<v Speaker 3>hasn't shifted to a dollar in short position yet. They said,

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<v Speaker 3>this is some of that, but not a lot. I

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<v Speaker 3>think everyone really is looking this payroll but to get

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<v Speaker 3>out the way to give Glay the greater clarity in

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<v Speaker 3>terms of whether dollar headed and therefore sy Dollien will

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<v Speaker 3>go with that.

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<v Speaker 2>The other story here that's kind of remarkable to me

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<v Speaker 2>is the strength that we've been seeing in the Chinese currency,

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<v Speaker 2>both offshore and onshore. Is that again really about dollar weakness.

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<v Speaker 3>I think that's a bit of two things. I mean, obviously,

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<v Speaker 3>the PBOC with the fixed scenes has continually sort of

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<v Speaker 3>indicated that it's quite happy for it to slowly appreciate,

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<v Speaker 3>and I emphasize the slowly appreciate. The Federal Reserve came

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<v Speaker 3>out recently. Also, the Treasury did in its semi annual

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<v Speaker 3>country report and did say, okay, they think the EU

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<v Speaker 3>one was well undervalued. So obviously they're giving signs to China,

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<v Speaker 3>let your currency appreciate. China seems to be willing to

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<v Speaker 3>let it appreciate to some degree. I mean, we have

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<v Speaker 3>six nineties, you know, a lot of people saying that

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<v Speaker 3>maybe six eighty six seventy versus dollar per year end.

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<v Speaker 3>That certainly the path at the moment of least resistance. Again,

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<v Speaker 3>things can always change with geopolitics, which could disrupt the carts.

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<v Speaker 3>But the moment, the trend higher PBOC doesn't seem to

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<v Speaker 3>be fighting that. So the market, which is long yan

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<v Speaker 3>so short dotty one, is quite happy with this, quite

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<v Speaker 3>high at the moment.

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<v Speaker 2>So you mentioned that week reading on retail sales. It

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<v Speaker 2>caused money markets to price slightly higher odds for three

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<v Speaker 2>Fed rate cuts this year. Two have already fully been

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<v Speaker 2>priced in, And I'm wondering whether or not you're comfortable

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<v Speaker 2>with the idea that we could see as many as

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<v Speaker 2>three or is that maybe a little bit too much enthusiasm.

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<v Speaker 3>I think, look at the moment, the market loves rate cuts,

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<v Speaker 3>so you give it a chance to price inerrate cut

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<v Speaker 3>will happily do it. So I think realistically, you're not

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<v Speaker 3>going to get the rate cut before Kevin Wah, the

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<v Speaker 3>new governor, takes over, So then you're looking for basically

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<v Speaker 3>second half of the year. I think, you know, so

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<v Speaker 3>there's a lot of data that can still come out

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<v Speaker 3>ahead of that, So is too feasible? You go, definitely,

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<v Speaker 3>you're not going to write off three, but I wouldn

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<v Speaker 3>at the moment say more than three. But you know,

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<v Speaker 3>the market's going two to three. Giving the amount of

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<v Speaker 3>data it could still come out which could move that probability,

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<v Speaker 3>You go, well, you know, it's sort of fair. You know,

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<v Speaker 3>I don't think we're going extreme yet, but we're in

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<v Speaker 3>that two to three camp and I think we'll stay there.

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<v Speaker 3>I think the market's be very reluctant to go under two.

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<v Speaker 3>We need some really really strong day to do that.

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<v Speaker 3>But I think if we're going above three, then you

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<v Speaker 3>really need some really weak data, particularly the employment unemployment rate,

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<v Speaker 3>to optic.

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<v Speaker 2>Yeah, we'll get that US jobs data on Wednesday, today's

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<v Speaker 2>FED speaks seemed to me to be a little hawkish.

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<v Speaker 2>We heard from the head of the Cleveland FED, Beth Hammock,

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<v Speaker 2>and she was saying that interest rates could be on

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<v Speaker 2>hold for an extended period while the FED evaluates incoming data.

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<v Speaker 2>And the head of the Dallas FED, Laurie Logan, was

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<v Speaker 2>saying it would take material weakness in the labor market

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<v Speaker 2>for her to support more RAID cuts. I'm curious to

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<v Speaker 2>get your take on this messaging. Obviously, we're going to

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<v Speaker 2>get a new FED chairman soon, and perhaps a tilt

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<v Speaker 2>in the FED bias will change to becoming a little

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<v Speaker 2>more dubbish when Kevin Warsh is seated, if in fact

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<v Speaker 2>that does happen and he is confirmed by the Senate.

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<v Speaker 3>Yeah, if I'm honest, I don't. I think what all

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<v Speaker 3>that rhetoric illustrates how split the Federal Reserve is, and

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<v Speaker 3>I don't think that will change unless the hawks we saved,

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<v Speaker 3>unless they only become dubbish, and if they got data to

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<v Speaker 3>back that up. So at the moment, I mean that

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<v Speaker 3>UFED chair Powe's dealing with the split, and I think Kevin,

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<v Speaker 3>what should be no different. I mean, all you're doing

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<v Speaker 3>is you're changing one person. Yes, that person has a

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<v Speaker 3>strong influence over the policymakers, but at the end of

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<v Speaker 3>the they make their own decisions. You look at a

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<v Speaker 3>dot plot, it's always been very split, so there are

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<v Speaker 3>sort of two camps, and I think that will remain

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<v Speaker 3>cleinly for foreseeable future. I said, for those hawks become doves,

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<v Speaker 3>I think they'll go, not that they won't, but they go.

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<v Speaker 3>I needed more evidence than they're presently seeing, is what

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<v Speaker 3>they're saying, and I think it's fair at the moment.

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<v Speaker 2>Okay, David, we'll leave it their good stuff as always,

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<v Speaker 2>Thank you so much. David finnerity Bloomberg's strategist, joining from

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<v Speaker 2>Singapore here on the Daybreak Asia podcast. Welcome back to

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<v Speaker 2>the Daybreak Asia Podcast. I'm Doug Krisner. We moved to

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<v Speaker 2>China next and the latest readings on inflation. Consumer prices

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<v Speaker 2>were up last month less than expected. We had CPI

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<v Speaker 2>rising at an annual rate of two tenths of one percent. However,

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<v Speaker 2>producer prices dropped at an annual rate of one point

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<v Speaker 2>four percent. We got reaction from Robin Sching. Robin is

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<v Speaker 2>the chief Chine economist at Morgan Stanley he spoke with

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<v Speaker 2>Bloomberg TV host David Engliss and minman Low.

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<v Speaker 4>There is no signs of decisive reflation. If you look

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<v Speaker 4>at the CPI over the last three four months, they

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<v Speaker 4>edged up largely due to go the price and the vegetables.

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<v Speaker 4>If you stripe that out, Yeah, anything in the course

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<v Speaker 4>of its remained the very week due to y in

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<v Speaker 4>sufficient domestic demand. PPI improved a little bit, but I

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<v Speaker 4>think it's just mechanical. If you look at the PPI

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<v Speaker 4>is due to commodity price. It's all contributed by global factors.

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<v Speaker 4>It's not a demand let turn in China because we

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<v Speaker 4>see no path through from this upstream commodity price to

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<v Speaker 4>downstream or consumer goods. So there is no decisive reflation

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<v Speaker 4>yet in China.

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<v Speaker 5>I'm wondering when you talk about PPI. Actually, if you

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<v Speaker 5>pull out and look at the longer term, it's steadily

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<v Speaker 5>been improving since maybe middle of last year, and some

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<v Speaker 5>economist think we could see positive PPI somewhere maybe middle

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<v Speaker 5>of this year. Do you think that's possible.

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<v Speaker 4>Well, if you think about the big picture, China need

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<v Speaker 4>to refleate. They need to do three steps. Step one,

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<v Speaker 4>don't add a new capacity in these oversupplied sectors. They

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<v Speaker 4>started to do that anti evolution step two cutting access capacity,

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<v Speaker 4>they haven't done much. There is very limited progress on

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<v Speaker 4>that front due to job concerns or debt concerns. Finally,

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<v Speaker 4>post consumption, particularly boosting it in a sustainable way, not

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<v Speaker 4>just to catch for clong subsidy, but try to provide

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<v Speaker 4>a better upgraded social safety net to unlock consumption. That

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<v Speaker 4>part is also quite weak, right. So that's why I

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<v Speaker 4>don't see sustained reflation here. And the PPI improvement you

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<v Speaker 4>mentioned that I mentioned it is mechanical because global factors

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<v Speaker 4>like dollar debate or global AI data center demand, that's

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<v Speaker 4>helping the upstream price going up, but we don't see

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<v Speaker 4>it's passing through to any of the downstream or consumer

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<v Speaker 4>price in China that showed is largely important due to

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<v Speaker 4>external factors. It's not a China net reflation.

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<v Speaker 6>So the lack of okay, let's just call it the

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<v Speaker 6>demand pull inflationary pressures, that's really what matters, right, and

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<v Speaker 6>that's really what keeps things sustainable. That's the backdrop I'll

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<v Speaker 6>bring into other stories. Recently, there's the conversations from VAT

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<v Speaker 6>and the stronger currency. Both of those things are counter

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<v Speaker 6>inflation if well the other one actually, if you add inflation,

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<v Speaker 6>it's not perhaps the best time.

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<v Speaker 2>To do that.

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<v Speaker 6>Where do you think those two stories fit into the

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<v Speaker 6>inflation picture.

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<v Speaker 4>Well, the VAT debate is an interesting story. Your colleagues

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<v Speaker 4>did a great coverage on that that day when they

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<v Speaker 4>moved on the telecom VIAT, you know, from six per

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<v Speaker 4>century to nine percent. A lot of investors were concerned

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<v Speaker 4>this could become a broad based at hikes, not just

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<v Speaker 4>the left pocket the right pocket in a sooe dominated

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<v Speaker 4>the telecom business, but also maybe reaching out going after

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<v Speaker 4>private firms in Internet platforms, e commerce, gaming on at hikes.

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<v Speaker 4>We don't think they will do that because it's counterproductive,

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<v Speaker 4>it's bad for reflation, is hurting confidence, and it's inconsistent

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<v Speaker 4>with the macro consistency review work. But investors are concerned

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<v Speaker 4>due to legitimate reasons. We think in the upcoming National

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<v Speaker 4>People of Congress in March, they may set the physical

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<v Speaker 4>deficit ratio at the same level of last year. So

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<v Speaker 4>if the economy is in definition, you actually need more

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<v Speaker 4>proactive fiscal powers expanding fiscal deficit. B it the headline

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<v Speaker 4>deficit or the broad augmented deficit if you keep it

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<v Speaker 4>stable because government revenue is going to underperform during deflation.

0:12:32.960 --> 0:12:36.679
<v Speaker 4>Revenue as a percentage of GDP may decline and the

0:12:36.800 --> 0:12:41.000
<v Speaker 4>deficit keep stable. That means suspending power to support the economy,

0:12:41.000 --> 0:12:45.120
<v Speaker 4>support consumption or being limited. Right, So investors have a point.

0:12:45.480 --> 0:12:48.600
<v Speaker 4>Maybe the government need to collect more revenue by hiking

0:12:48.679 --> 0:12:52.839
<v Speaker 4>some tax rates, but that's counterproductive during deflation. So that's

0:12:52.840 --> 0:12:56.520
<v Speaker 4>why I think if they keep a modest stable deficity

0:12:56.640 --> 0:13:01.360
<v Speaker 4>ratio is probably not decisive reflation efforts. But I do

0:13:01.559 --> 0:13:05.240
<v Speaker 4>think if first half growth on the delivered, they may

0:13:05.400 --> 0:13:08.800
<v Speaker 4>you a top up in this physical package by second

0:13:08.880 --> 0:13:12.040
<v Speaker 4>half of this year in the order of maybe zero

0:13:12.080 --> 0:13:15.400
<v Speaker 4>point five percentage of GDP, you know, less than one

0:13:15.440 --> 0:13:19.200
<v Speaker 4>trallmain be targeting consumption or housing support.

0:13:20.679 --> 0:13:23.400
<v Speaker 5>To your point about fiscal policies, right, I think so

0:13:23.640 --> 0:13:26.240
<v Speaker 5>far all the signs this year showed that the government

0:13:26.400 --> 0:13:29.880
<v Speaker 5>is pulling back significantly in terms of consumption subsidies. Last

0:13:29.960 --> 0:13:32.160
<v Speaker 5>year is three hundred billion uion this year is sixty

0:13:32.200 --> 0:13:34.360
<v Speaker 5>over a billion UI in and you mentioned the social

0:13:34.440 --> 0:13:37.000
<v Speaker 5>safety net as well. What do you think is holding

0:13:37.080 --> 0:13:40.480
<v Speaker 5>the government back from decisively pumping in more.

0:13:40.440 --> 0:13:44.160
<v Speaker 4>Fiscal policies here, I think old habits die hard.

0:13:44.400 --> 0:13:44.559
<v Speaker 5>Right.

0:13:45.120 --> 0:13:48.280
<v Speaker 4>They try to be restrained on how much debt they

0:13:48.320 --> 0:13:51.480
<v Speaker 4>want to raise, how much deficit they want to expand,

0:13:52.040 --> 0:13:54.719
<v Speaker 4>partially due to the concerns if you do too much

0:13:54.840 --> 0:13:57.600
<v Speaker 4>debt expansion it's bad for the future, but also how

0:13:57.679 --> 0:14:00.880
<v Speaker 4>you spend the debt. China was used to the supply

0:14:01.000 --> 0:14:06.720
<v Speaker 4>centric business model, spending it on instructor capects or manufacturing upgrade.

0:14:07.400 --> 0:14:11.359
<v Speaker 4>But we know in some areas it's already oversupplied instructure

0:14:11.640 --> 0:14:14.800
<v Speaker 4>or industrial capacity. So they have to shift the pattern

0:14:15.400 --> 0:14:19.480
<v Speaker 4>of the spending mix from investing in physical goods to

0:14:20.120 --> 0:14:23.760
<v Speaker 4>investing in human capital like social welfare. But these are

0:14:23.880 --> 0:14:27.200
<v Speaker 4>all multi year journey of reform. I don't expect it.

0:14:27.320 --> 0:14:29.920
<v Speaker 4>They can do a big band reform this year. It

0:14:30.040 --> 0:14:32.600
<v Speaker 4>may be the start of the next five year plan

0:14:32.840 --> 0:14:36.480
<v Speaker 4>emphasizing the upgrading of a social safety net, but it

0:14:36.600 --> 0:14:39.560
<v Speaker 4>will take some time. So to your question, physical policy

0:14:39.680 --> 0:14:42.400
<v Speaker 4>is still restraint because they are still a lot of

0:14:42.560 --> 0:14:44.800
<v Speaker 4>old habits, and old habits die hard.

0:14:45.400 --> 0:14:47.560
<v Speaker 6>Some of the old let's call it old habits. To

0:14:47.680 --> 0:14:50.960
<v Speaker 6>barrier the concept you just raised, there is an exercise

0:14:51.040 --> 0:14:54.240
<v Speaker 6>in setting GDP and growth targets right, and we've heard

0:14:54.280 --> 0:14:57.440
<v Speaker 6>from many provinces recently over their individual targets for twenty

0:14:57.520 --> 0:15:01.640
<v Speaker 6>twenty six. How do those targets form you over what

0:15:01.760 --> 0:15:04.960
<v Speaker 6>the aggregate economic growth target is going to be at

0:15:04.960 --> 0:15:06.360
<v Speaker 6>the NPC and what they'll tell us.

0:15:06.320 --> 0:15:10.240
<v Speaker 4>Then, Yeah, we closely monitor how the local MPC from

0:15:10.400 --> 0:15:15.080
<v Speaker 4>each province or cities are tracking on gp target. Most

0:15:15.160 --> 0:15:18.800
<v Speaker 4>of them trimmed the target, so on average they lowered

0:15:19.000 --> 0:15:22.000
<v Speaker 4>the target of last years five point five percent to

0:15:22.360 --> 0:15:26.280
<v Speaker 4>twenty six five percent around five percent, so that probably

0:15:26.360 --> 0:15:30.640
<v Speaker 4>should national target will also be around five percent. I

0:15:30.720 --> 0:15:33.880
<v Speaker 4>don't think it's a downgrade, it's more like becoming more

0:15:34.320 --> 0:15:39.640
<v Speaker 4>practical if they can tolerate slightly slower growth instead of

0:15:39.920 --> 0:15:43.360
<v Speaker 4>doing all in for CAPAX to reach that five percent

0:15:43.480 --> 0:15:47.880
<v Speaker 4>or above growth target. These tolerance of slightly slower growth

0:15:48.360 --> 0:15:52.880
<v Speaker 4>is actually good for quality rebalancing efforts because if they

0:15:52.960 --> 0:15:58.040
<v Speaker 4>need to shift the spending from supply side to consumer welfare,

0:15:58.320 --> 0:16:01.320
<v Speaker 4>that will take time and the new term that may

0:16:01.400 --> 0:16:04.480
<v Speaker 4>mean you have to tolerate a lower GDP target because

0:16:04.520 --> 0:16:09.040
<v Speaker 4>it's always easier to anchor growth with instructure capacks, while

0:16:09.120 --> 0:16:13.760
<v Speaker 4>it may take longer harder to change people's behavior on consumption,

0:16:14.160 --> 0:16:16.800
<v Speaker 4>So I do take it. You know, ten out of

0:16:16.960 --> 0:16:20.480
<v Speaker 4>these top fifteen provinces lower the GDP target. That's probably

0:16:20.560 --> 0:16:22.880
<v Speaker 4>a good sign they are becoming more practical.

0:16:24.320 --> 0:16:27.120
<v Speaker 5>We have seen with the dollar slide, right, the UN

0:16:27.240 --> 0:16:29.760
<v Speaker 5>has been pushing towards six point nine, and there has

0:16:29.840 --> 0:16:32.920
<v Speaker 5>been expectation that this momentum would continue throughout the year.

0:16:33.000 --> 0:16:36.680
<v Speaker 5>But at the same time this would worsen't deflation, right,

0:16:36.800 --> 0:16:39.600
<v Speaker 5>So how much do you think the PBOC would allow

0:16:39.600 --> 0:16:40.840
<v Speaker 5>the UN to continue strengthening.

0:16:41.680 --> 0:16:45.120
<v Speaker 4>If you ask ten economists on the forecast of mean

0:16:45.160 --> 0:16:47.800
<v Speaker 4>ME today, I think ten out of ten will be bullished.

0:16:48.360 --> 0:16:52.560
<v Speaker 4>I am not one of them. The reason is Chinese

0:16:52.640 --> 0:16:56.520
<v Speaker 4>in deflation and a stronger currency in a sustainable session

0:16:57.000 --> 0:17:01.200
<v Speaker 4>is counterproductive for reflation. It could make the PPI deflation

0:17:01.360 --> 0:17:06.080
<v Speaker 4>even worse, squeezing profit margins for firms, so it's against

0:17:06.200 --> 0:17:09.679
<v Speaker 4>the reflation goal. Of course. Now people are looking at

0:17:09.880 --> 0:17:13.119
<v Speaker 4>your term the mean B has been strengthening. That's not

0:17:13.359 --> 0:17:16.760
<v Speaker 4>a German B story. That's largely a dollar story. Just

0:17:16.840 --> 0:17:19.800
<v Speaker 4>to look at your screen, dollar index is continue to

0:17:19.880 --> 0:17:23.720
<v Speaker 4>weakening and that's a dollar beta story. It's not a

0:17:23.800 --> 0:17:27.320
<v Speaker 4>German B alpha story. In fact, the PBOC probably prefer

0:17:28.040 --> 0:17:31.760
<v Speaker 4>by you know, maintaining the German b against its basket

0:17:31.880 --> 0:17:35.439
<v Speaker 4>at a stable level. The safety's basket will largely parked

0:17:35.520 --> 0:17:40.159
<v Speaker 4>at that around one hundred nine. Uh, that's the stability

0:17:40.200 --> 0:17:42.920
<v Speaker 4>they are looking for. When dollar is strengthening, the mean

0:17:42.960 --> 0:17:45.280
<v Speaker 4>be will weakened against the dollar. When dollar is weakening,

0:17:45.520 --> 0:17:49.080
<v Speaker 4>just like now, Dollarman b will strengthen. But it's not

0:17:49.400 --> 0:17:52.600
<v Speaker 4>a Reman b alpha story because they know that when

0:17:52.840 --> 0:17:56.119
<v Speaker 4>they have domestic definition problem, if you have a sustainable

0:17:56.400 --> 0:18:00.280
<v Speaker 4>briefly an appreciation of the currency is actually making PPI

0:18:00.400 --> 0:18:04.119
<v Speaker 4>deflation worth making profit margins of corporate worth. So I

0:18:04.160 --> 0:18:08.000
<v Speaker 4>don't think they are looking for a stronger sustainable appreciation

0:18:08.280 --> 0:18:08.800
<v Speaker 4>of the rep.

0:18:09.640 --> 0:18:10.879
<v Speaker 6>Do you think that's going to be the story of

0:18:10.880 --> 0:18:14.200
<v Speaker 6>twenty twenty six? That the economy is not bad enough

0:18:14.280 --> 0:18:18.879
<v Speaker 6>to merit short term stimulus, stick to the structural story,

0:18:19.280 --> 0:18:21.679
<v Speaker 6>but not good enough that it's not going to fuel

0:18:21.800 --> 0:18:26.800
<v Speaker 6>this earnings rally, that most equity strategists are now trying

0:18:26.880 --> 0:18:31.840
<v Speaker 6>to sustain rebound in the equity market well aly lost economy.

0:18:32.200 --> 0:18:35.320
<v Speaker 4>I think the theme for twenty six will be similar

0:18:35.880 --> 0:18:41.200
<v Speaker 4>to twenty five. Oka micropositive macro challenging, so it's a

0:18:41.359 --> 0:18:46.480
<v Speaker 4>slow burn in China. Cigradio long term reflation process. Macro

0:18:46.680 --> 0:18:51.680
<v Speaker 4>is still challenging, particularly these macro sensitive effectors housing consumption.

0:18:52.440 --> 0:18:57.280
<v Speaker 4>But micro you can see a lot of positives on tech, AI,

0:18:57.440 --> 0:19:02.760
<v Speaker 4>supply chain, bow tech, advestor manufacturing. So this is definitely

0:19:02.960 --> 0:19:07.000
<v Speaker 4>the area investors I met have been re engaging with China.

0:19:07.080 --> 0:19:11.080
<v Speaker 4>It's more on these micro positives, but on macro people

0:19:11.080 --> 0:19:11.920
<v Speaker 4>are still Cassius.

0:19:12.040 --> 0:19:15.359
<v Speaker 2>That was Robin Shing. He is the chief China economist

0:19:15.400 --> 0:19:18.760
<v Speaker 2>at Morgan Stanley, speaking there to Bloomberg's David Igliss and

0:19:18.920 --> 0:19:22.360
<v Speaker 2>minman Low, bringing you their conversation here on the Daybreak

0:19:22.400 --> 0:19:27.560
<v Speaker 2>Asia Podcast. Thanks for listening to today's episode of the

0:19:27.600 --> 0:19:31.760
<v Speaker 2>Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at

0:19:31.800 --> 0:19:36.240
<v Speaker 2>the story shaping markets, finance, and geopolitics in the Asia Pacific.

0:19:36.520 --> 0:19:39.760
<v Speaker 2>You can find us on Apple, Spotify, the Bloomberg Podcast

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<v Speaker 2>YouTube channel, or anywhere else you listen. Join us again

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<v Speaker 2>tomorrow for insight on the market moves from Hong Kong

0:19:46.720 --> 0:19:51.080
<v Speaker 2>to Singapore and Australia. I'm Doug Prisoner and this is

0:19:51.119 --> 0:19:51.639
<v Speaker 2>Bloomberg