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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis,

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Speaker 2: along with Doug Krisner, join us each day for the

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Speaker 2: stories making news and moving markets in the Asia Pacific.

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Speaker 2: You can subscribe to the show anywhere you get your

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Speaker 2: podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and

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Speaker 2: the Bloomberg Business App.

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Speaker 1: Let's get to our guest. Lucy Baldwin is with us.

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Speaker 1: Lucy is co head of research and equity advisory at City.

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Speaker 1: She joins us via Zoom from Hong Kong. Thanks for

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Speaker 1: being with us, Lucy. Can we start with the FED?

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Speaker 1: I'm curious about the extent to which you waked the

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Speaker 1: FED in a lot of your thinking about where to

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Speaker 1: put money to work? Is the FED still in the

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Speaker 1: driving seat for global markets these days?

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Speaker 3: Good morning? Thanks for having me. Yes, absolutely, as you say,

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Speaker 3: it's all eyes on the FED. As ever, all bit,

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Speaker 3: I don't think this meeting is necessarily as critical for

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Speaker 3: markets as the ones that will come as we head

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Speaker 3: towards June July. You know, our view here is that

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Speaker 3: the FED is still very important because obviously the market

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Speaker 3: has been incredibly focused on two things, AI and on

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Speaker 3: these rate cuts, And of course the data that we've

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Speaker 3: had at the start of this year has suggested that

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Speaker 3: this last mile of inflation to bring down to the

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Speaker 3: two percent level is incredibly sticky, and so everyone is

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Speaker 3: wondering whether the data we've seen is a red herring

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Speaker 3: or indeed a red flag, you know, And our view

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Speaker 3: here is that it is still pretty pretty hot the

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Speaker 3: US market and that actually, you know, it's going to

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Speaker 3: be too early to see a cut. We expect to

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Speaker 3: see cuts coming through in June. As you point out,

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Speaker 3: that's very much the consensus now. But we actually have

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Speaker 3: one hundred and twenty five basis points of cut this year,

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Speaker 3: which is which is clearly not what the marketing pricing

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Speaker 3: because we still believe that the US will go into

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Speaker 3: a recession or being a relatively short nallow one.

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Speaker 2: Wow, that's surprising. I've been surprised myself that almost nobody

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Speaker 2: talks about recession anymore.

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Speaker 4: But you're still holding on to that.

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Speaker 2: What do you think is the main what will be

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Speaker 2: the cause of that, what will be the trigger?

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Speaker 4: Yeah?

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Speaker 3: Absolutely, And as you say, we went from it being

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Speaker 3: absolutely consensus last year. Everyone thought there was going to

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Speaker 3: be a recession. There wasn't. Everything was much better, much stronger,

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Speaker 3: And our of you is really that the tightening impact

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Speaker 3: has just been extended that lagged impact because people obviously

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Speaker 3: and corporate's turned out their debt. We still expect to

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Speaker 3: see that impact coming through. We expect to see services

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Speaker 3: demand weakening. We think the fiscal impulse is a lot

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Speaker 3: less now despite going into the election, and essentially we

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Speaker 3: feel that the loosening of the labor market is required

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Speaker 3: to bring inflation back to the two percent level. And

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Speaker 3: we think it plays out one of two ways, either

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Speaker 3: the conventional reduced demand for lay leading to rising unemployment

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Speaker 3: and a recession, or the more optimistic view and the

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Speaker 3: soft landing folks believe that supply of the label market

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Speaker 3: is going to help us out and you're going to

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Speaker 3: see better participation, more migration, wages coming down, and that's

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Speaker 3: enabling then this soft landing rhetoric. But our view, as

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Speaker 3: you are starting to see some cracks emerge in the

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Speaker 3: US and households and SMEs in particular as seeing balance

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Speaker 3: sheets coming under pressure eroding a little now, higher rates

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Speaker 3: coming down, quick rates coming down, we think that suggests

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Speaker 3: that payrolls are going to get a little bit softer

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Speaker 3: as we head through spring and towards summer.

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Speaker 1: So if that's your view on the macro, I'm curious

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Speaker 1: is to how that would translate into equity market strategy.

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Speaker 1: Can you help me kind of square that circle?

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Speaker 3: Yeah, and it's complex, So our view on the equity

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Speaker 3: market we get asked a lot. Is there oxygen above

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Speaker 3: five thousand? Our base case is fifty one hundred for

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Speaker 3: the sv our ball case has been since December last year,

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Speaker 3: fifty seven hundred. But to get there, you do need

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Speaker 3: that Goldilocks scenario, right, You need soft landing, you need

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Speaker 3: the US tenure to come down, You need earnings to

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Speaker 3: be stronger than expected. You know, in fairness, the tech

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Speaker 3: driven rallies that we've seen with tech now being twenty

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Speaker 3: percent of earnings, thirty percent of the index and you

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Speaker 3: know more than half the performance and even more than

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Speaker 3: that last year. You know that is rooted in some

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Speaker 3: good fundamentals. So there is a scenario to get us

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Speaker 3: to fifty seven hundred. But nonetheless, you know, our base

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Speaker 3: case isn't that We're kind of at the base case now.

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Speaker 3: Valuation is clearly pretty extended. Ninety percent of history the

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Speaker 3: US market has been cheaper. Now, despite me saying all

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Speaker 3: of that, I don't think people should sell their exposure

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Speaker 3: to the US equity market. It's much more important more

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Speaker 3: time in the market than your time to the market,

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Speaker 3: particularly for most people. Of course, some of our hedge

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Speaker 3: fund clients that are much more focused on daily or

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Speaker 3: weekly performance. It's different, but for most people, but it's

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Speaker 3: really important to stay invested. So are you As you

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Speaker 3: diversify a little bit, you broaden out, go a bit

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Speaker 3: more global, you hedge a bit, and we do expect

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Speaker 3: to see mark.

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Speaker 4: Well, Lucy.

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Speaker 2: We have seen that, actually, I mean we've seen a

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Speaker 2: really nice rally in the All Country World Index, which

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Speaker 2: is all the stocks out there across the globes rallied

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Speaker 2: about twenty five percent since November. That's an example of

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Speaker 2: how we are seeing a little bit of a spreading

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Speaker 2: out a rotation. We've seen materials rally, industrials rally, and

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Speaker 2: energy has rallied. Is it possible that some of the

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Speaker 2: money just comes out of the you know, the big

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Speaker 2: big mega cap tech performers and flows into that and

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Speaker 2: that that's a sign that you're wrong, there's no recession coming.

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Speaker 2: That cyclically we're going to go into a steady period.

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Speaker 5: Yeah.

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Speaker 3: Look, I think it is very very finely balanced whether

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Speaker 3: you do or don't tip into that technical recession and

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Speaker 3: argue in in the second half of this year. In

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Speaker 3: the US, you know, we're shifting to a slightly new

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Speaker 3: global macro paradigm. Right post GFC, it was all about demand.

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Speaker 3: It's now been much more about supply side issues, and

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Speaker 3: everybody's shifting to the new model. Right the focuses on

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Speaker 3: tech and AI, on life sciences, and on the green

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Speaker 3: energy transition. But the tech aipiece, you know, is still

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Speaker 3: a big question mark. There's going to be a lot

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Speaker 3: of CAPEX spent and we're going to have to see

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Speaker 3: what that does to productivity. But I think in the

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Speaker 3: near term, you know, the people that are in the

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Speaker 3: bubble camp, you need a Barbell strategy to prepare yourself

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Speaker 3: for this, and you need to own some of that

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Speaker 3: tech that you need to position alongside the more value options.

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Speaker 1: We'll leave it with a Barbell strategy. Lucy, pleasure to

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Speaker 1: have you on the program today. Lucy Baldwin from City

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Speaker 1: here on Daybreak Asia.

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Speaker 2: A new legislation that was passed, the security legislation here

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Speaker 2: in Hong Kong. It's known as Article twenty three because

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Speaker 2: it was mandated by the Basic Law, which is the

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Speaker 2: mini constitution here in Article twenty three. The bill was

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Speaker 2: fast tracked through the Legislative Council in just eleven days,

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Speaker 2: and it was passed unanimously. Rebecca Sean Wilkins with this

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Speaker 2: s Bloomberg Asia Government and Politics correspondent. Does Robert Stampt

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Speaker 2: come to mind?

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Speaker 6: Well, since the Hong Kong government and Beijing effectively forced

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Speaker 6: out much of the opposition in response to the pro

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Speaker 6: democracy protests in twenty nineteen. Actually, it's not just this

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Speaker 6: specific legislation, but other forms of bills that have moved

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Speaker 6: through LEDGCO much faster too, Although it is worth saying

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Speaker 6: that experts and certain analysts have expressed concern over the

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Speaker 6: pace at which we have seen this legislation ushered through.

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Speaker 6: It even appeared that after Chinese authorities expressed a desire

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Speaker 6: to get this done, a certain Hong Kong law makers

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Speaker 6: returned to Hong Kong early from the NPC that's China's

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Speaker 6: annual Parliament, in order to get this through and rush

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Speaker 6: it through through these snap meetings.

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Speaker 1: The voice of Stephen roach I mean. He is well

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Speaker 1: known in the financial community, the economist and former chairman

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Speaker 1: of Morgan Stanley Asia. He has long been known for

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Speaker 1: his optimism around Hong Kong, but recently in the ft

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Speaker 1: he said, it pains me to say that Hong Kong

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Speaker 1: is over. When you look at the effect of a

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Speaker 1: move like this on the business community, Rebecca, does it

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Speaker 1: not foster deep pessimism.

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Speaker 6: I think there's sort of probably two prevailing thoughts, and

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Speaker 6: the first is that in some ways, because Beijing's imposed

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Speaker 6: national security law actually has already been in place in

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Speaker 6: Hong Kong for some years, to some extent, the businesses

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Speaker 6: that are still in Hong Kong, both domestic and multinational,

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Speaker 6: have already become accustomed and perhaps have already adapted to

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Speaker 6: the new realities of a different national security landscape. This

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Speaker 6: also comes amid concern For example, investors were spooked by

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Speaker 6: a wider espionage anti espionage law in mainland China as well,

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Speaker 6: and we have seen firms here, for example, moving to

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Speaker 6: ring fence data and so on. So there has already

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Speaker 6: been to some extent this sort of protests sort of

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Speaker 6: this process of adaptation. But I do think in other

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Speaker 6: corners of the business community. There is this desire and

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Speaker 6: somewhat perhaps even frustration with the government for continuing to

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Speaker 6: talk about national security. Of course they had to pass

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Speaker 6: Article twenty three in terms of how it was mandated

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Speaker 6: under the basic law, but it had This sort of

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Speaker 6: continual discussion around national security has drawn a lot of criticism,

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Speaker 6: as we've seen from the UK, the US and so on. Today,

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Speaker 6: the American Chambers in Hong Kong, for example, the top

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Speaker 6: answer from its respondents on what would improve relations and

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Speaker 6: the environment here between is if the US and the

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Speaker 6: Hong Kong government would just stop talking about national security.

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Speaker 2: To what degree have we seen in veesters get spooked over, like,

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Speaker 2: for instance, the collusion with foreign powers? I mean, that

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Speaker 2: is so vague the way that it's defined. Are are

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Speaker 2: we actually hearing from foreign investors that they will go well?

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Speaker 6: Quite frankly, I think a lot of foreign investors are

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Speaker 6: as understandably quite cautious about talking about this topic in

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Speaker 6: the first place. But we have heard sort of this

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Speaker 6: anxiety expressed through certain analysts and experts around precisely what

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Speaker 6: this means. And it's perhaps actually the sort of diplomatic

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Speaker 6: figures that have been somewhat more explicit about the risks here.

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Speaker 4: Now.

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Speaker 6: Lawmakers during some of the debates that we saw and

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Speaker 6: the discussions that we saw around Article twenty three in

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Speaker 6: recent days, have stress that if you're just sort of

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Speaker 6: conducting your normal business, you know, not quite sure what

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Speaker 6: that means. But if you're conducting your normal business as

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Speaker 6: a foreign firm and interacting with foreign entities, you don't

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Speaker 6: have anything to worry about. But of course it is

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Speaker 6: the vagueness that is concerning people. And as the EU

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Speaker 6: has pointed out as well, they're also seeing these sort

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Speaker 6: of significantly increased penalties in the bill as well as

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Speaker 6: an element of extra territorial reach that is also perhaps worrying.

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Speaker 1: So when you look at the local economy, I understand

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Speaker 1: that because its reputation as a financial center has really

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Speaker 1: been maybe cast a little bit in doubt as a

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Speaker 1: result of some of the moves that we have seen

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Speaker 1: since twenty nineteen, what can the local economy withstand if

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Speaker 1: there is a move away on the part of the

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Speaker 1: let's talk about the financial industry, maybe to reconsider its

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Speaker 1: presence at the same level at which it's been operating,

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Speaker 1: maybe to relocate. And I know we've been talking about

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Speaker 1: this over the years to a place like Singapore, for example,

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Speaker 1: what would happen or what is happening to the local economy.

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Speaker 6: Well, I think this is precisely the sort of pressure

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Speaker 6: and perhaps the opportunity that Chief Executive John Lee is

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Speaker 6: now looking at now that he's cleared the path. Article

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Speaker 6: twenty three is the last major bit of national security

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Speaker 6: legislation that really he had to sort of get done.

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Speaker 6: But I think there is this pressure to think about

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Speaker 6: what is Hong Kong's status as an international financial center,

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Speaker 6: what does that actually mean? Bloomberg Intelligence producer report that

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Speaker 6: showed that we see more multinationals, including Chinese firms, wanting

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Speaker 6: and moving to set up their headquarters in Singapore. So

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Speaker 6: in that regard, Hong Kong is already on the back foot.

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Speaker 4: You talk about a chilling effect.

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Speaker 2: You know, in the past, when we had elections here

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Speaker 2: in Hong Kong, normally the breakdown was usually sixty percent

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Speaker 2: would go to pro democracy candidates in forty percent. And

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Speaker 2: the way that the elections were set up, the Democrats

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Speaker 2: they could not actually gain a majority in the legislature

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Speaker 2: because of the way that it was. It was set

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Speaker 2: up with functional constituencies and only a portion or geographical votes,

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Speaker 2: but you got the flavor of how people felt. Now,

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Speaker 2: Hong Kong's Purity Secretary Chris Tang tells us that this

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Speaker 2: law had wide support locally, with ninety eight point six

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Speaker 2: percent of public feedback supporting this legislation.

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Speaker 4: What does that tell you?

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Speaker 6: Yes, that has been the government's line. They produce this

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Speaker 6: public consultation that showed these very high levels of support.

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Speaker 6: I will say in that document they did include some

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Speaker 6: quotes and some elements that expressed more concern that did

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Speaker 6: express this worry about the vagueness of the law, the

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Speaker 6: harshness of the penalties, this issue around state securities and

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Speaker 6: foreign interference. So we have heard those concerns expressed from

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Speaker 6: some corners. But yes, if you think about the sort

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Speaker 6: of chilling effect, you can see that perhaps that we

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Speaker 6: are already seeing signs of that that has been.

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Speaker 4: Expressed already there.

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Speaker 2: Rebecca, thank you so much for joining us here in

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Speaker 2: our studios. Rebecca Chong Wilkins, Bloomberg Asia Government and Politics responded,

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Speaker 2: joining us now is hand the current Bloomberg News Global

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Speaker 2: Economy Reporter SO and the Atlanta Fed GDP now has

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Speaker 2: growth tracking at about two percent or so. And we

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Speaker 2: know that disinflation has stalled a little bit here, so

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Speaker 2: it does kind of frame the question. Sticky inflation, fairly

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Speaker 2: solid growth, the markets at the moment seem okay with

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Speaker 2: that is the Fed, and don't.

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Speaker 5: Forget the hot jobs market. Brian. You know several the

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Speaker 5: war forecasters not so long ago expecting that the FED

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Speaker 5: would be cutting rates tomorrow. Well, those those forecasts are

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Speaker 5: well and truly dashed by now. To your point, we

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Speaker 5: seem to be in this narrative around whether or not

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Speaker 5: the disinflation story has stalled. Inflation since the beginning of

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Speaker 5: the year, the first couple of months of the year

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Speaker 5: in core parts of the services sector like car insurance,

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Speaker 5: for example, have proven to be much higher than anticipated,

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Speaker 5: at least the expected. All of that is raising question

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Speaker 5: marks around the FED story. Now tomorrow, they're not expected

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Speaker 5: to cut rates or change policy, but it's going to

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Speaker 5: be all about what will they signal in terms of

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Speaker 5: whether they think the window will come, What will they

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Speaker 5: signal in terms of how they're looking at the lady's

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Speaker 5: sensation numbers? Are they looking through it or are they

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Speaker 5: more concerned? And of course we'll get their new forecast

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Speaker 5: the first time they have had forecast since December. We'll

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Speaker 5: get a so called dot clots and that will give

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Speaker 5: us an inkling in terms of how many cuts those

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Speaker 5: people on the FMC board are expecting by the end

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Speaker 5: of the year.

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Speaker 1: Yeah, and I'm wondering whether there's a bit of danger

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Speaker 1: here that the FED may switch the outlook from what

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Speaker 1: had been previously anticipation of three cuts at twenty five

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Speaker 1: basis points a pop down to two cuts. Do you

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Speaker 1: think that's a possibility.

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Speaker 5: Can't be ruled out, Doug. I mean, you know, the

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Speaker 5: FED narrative has already evolved quite a bit since the

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Speaker 5: beginning of the year. As I said a few months ago,

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Speaker 5: I mean some people were expecting tomorrow Good and Sachs

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Speaker 5: for example, of originally forecasting tomorrow with the e rate cut.

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Speaker 5: We've already come a long way since then, So most

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Speaker 5: of columns are probably still settled on seventy five basis

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Speaker 5: points of cuts by the year end. That would probably

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Speaker 5: be three incremental moves. It probably would be a surprise

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Speaker 5: if the FED gives up on that, because it would

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Speaker 5: indicate that perhaps the more worried about inflation story than

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Speaker 5: broadly thought. But I think everybody watching this tomorrow will

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Speaker 5: be saying the same point that ultimately inflation has proven

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Speaker 5: more durable than thought. The job's market remains very strong,

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Speaker 5: and the overall growth picture is okay. So it's not

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Speaker 5: like the ingredients for the Fed to cut in their

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Speaker 5: term are necessarily there right now.

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Speaker 2: On the disinflation story, we do hear claims that shelter

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Speaker 2: is actually coming down, but it takes a while to

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Speaker 2: get reflected in the data, and that it's only a

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Speaker 2: matter of time.

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Speaker 4: I know you study this, what can you add on

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Speaker 4: that front?

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Speaker 5: The gauging or the measuring of shelter custs here has

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Speaker 5: become a very thorny topic among economists, So with the

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Speaker 5: subjects have a lot of confusion, as you know earlier

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Speaker 5: this month and last month with a Bureau of Labor

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Speaker 5: Statistics giving a briefing on how they do gauge it,

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Speaker 5: I think to your point. To your point, Brian, the

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Speaker 5: broad narrative among economists is that shelter or rent has

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Speaker 5: stabilized and is expected to come down and take this

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Speaker 5: thing out of inflation in the months ahead. But again

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Speaker 5: that's proven to be more more resilient than expected. And

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Speaker 5: that goes for other parts of the core gages over

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Speaker 5: the economy as well. You see things that airfare is

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Speaker 5: going back up, you see used car prices, you see,

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Speaker 5: as I mentioned earlier Anturan, there are plenty of subsectors

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Speaker 5: of aspects of everyday living that continue to push in

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Speaker 5: their own directions. So regardless how you slice and dice

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Speaker 5: the data, I don't think anyone here could companiently say

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Speaker 5: that the broad inflation story as well and truly over

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Speaker 5: and remember said keeps saying they need to be confident

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Speaker 5: that inflation is coming back to two percent targeted, repeated

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Speaker 5: that word confident several times. I don't think I can

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Speaker 5: say that can be truly confident given the genuine in

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Speaker 5: fever inflation data.

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Speaker 1: There's been so much anticipation of this pivot toward easing

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Speaker 1: that I think financial conditions, I think we may be

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Speaker 1: able to agree on this that are They're much looser now,

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Speaker 1: perhaps a little more than the Fed would like to see.

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Speaker 1: The equity market very near record highs. We've got yields

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Speaker 1: coming in just a bit. Do you think this is

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Speaker 1: going to be troubling that the condition of that financial

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Speaker 1: conditions are in right now.

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Speaker 5: It's a fair point, but you know, I think you

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Speaker 5: know there is pain at the margins of the economy.

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Speaker 5: We know that there is some softening in the job's

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Speaker 5: market for example. Undoubtedly we know that their stress almost

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Speaker 5: say people with car loans, people with credit cards. We

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Speaker 5: know that there's pressure on small business loans. So you know,

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Speaker 5: I don't think the Fed will be totally averse to

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Speaker 5: an easier financial conditions. And that's why a lot of

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Speaker 5: people think that ultimately they will be easing this year.

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Speaker 5: It's question of why how much. The thing to keep

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Speaker 5: an eye have for tomorrow and financial conditions is what

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Speaker 5: they signal on the balance sheet. Remember they have been

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Speaker 5: shrinking their balance sheet. Possibly they don't want to do

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Speaker 5: that to the point where it starts to create market

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Speaker 5: stress and typing conditions to your point, so listen out

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Speaker 5: for any new commentary on the balance sheet tomorrow.

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Speaker 2: I think the easing of financial conditions. One thing that

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Speaker 2: has changed that is probably good news to the Fed

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Speaker 2: is that the market has come around to its own

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Speaker 2: point of view basically on around three cuts this year,

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Speaker 2: and the Fed doesn't want to get involved in telling

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Speaker 2: markets you know how you value stocks, but it doesn't

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Speaker 2: feel comfortable when the market is thinking there's going to

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Speaker 2: be six or more rate cuts when they're only thinking

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Speaker 2: about three. So I think your point is quite good

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Speaker 2: that the FED may not be too concerned about financial

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Speaker 2: conditions at the time. But you know, and the difference

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Speaker 2: between three rate cuts and two, I'm interested in you

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Speaker 2: explaining and what the you know, what's the mechanism for

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Speaker 2: that to be felt in the economy.

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Speaker 4: Who does that hurt?

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Speaker 2: What does the math say about the you know, how

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Speaker 2: it hurts earnings or business itself.

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Speaker 5: So if you consider that the FED is currently well

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Speaker 5: into restrictive territory, that's the jargon for saying in gust

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Speaker 5: rates are really high and you know, causing pain in

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Speaker 5: the economy, one rate cut won't change that. Two rate

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Speaker 5: cuts won't change that, and maybe even three rounded. And

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Speaker 5: that's where the big academic debate going on in the

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Speaker 5: background in terms of how many or by how much

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Speaker 5: would the FED need to lower rates to get it

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Speaker 5: back to where it's in this so called neutral zone

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Speaker 5: whereby it's neither hurting the economy are necessarily stimulating things.

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Speaker 5: So for sure, some rate cuts would obviously take pressure

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Speaker 5: off the margins those people on floating rate loans, credit

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Speaker 5: cards or maybe if it's if it's a cow loan

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Speaker 5: or whatever. Of course, of course it would take pressure

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Speaker 5: off the margins, but I don't think people would necessarily

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Speaker 5: say it would be gain change. And that's because and

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Speaker 5: that's where this whole neutral debate comes into it, in

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Speaker 5: terms of just how far does the FED have to

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Speaker 5: cut before they're really taking their their you know, take

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Speaker 5: the pressure of the economy. I should say, though, let's

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Speaker 5: not forget this is where you want to bring up

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Speaker 5: the other side of the debate, which is that the

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Speaker 5: cardinal error of central banking is cutting rates too soon

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Speaker 5: only if you see inflation research. So it's gonna be

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Speaker 5: a tricky one for the FED to try and ease

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Speaker 5: when they can, to take pressure off those pockets of

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Speaker 5: the economy that are hurting, but of course without letting

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Speaker 5: inflacement run wild again, as central banks have made that

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Speaker 5: mistake in the path. But it's a very difficult act

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Speaker 5: for the FED.

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Speaker 1: Talking about difficult exercises for central bankers, can we talk

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Speaker 1: about this shocking decision from the Bank of Japan. I

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Speaker 1: say that tongue in cheek, I mean the knee k

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Speaker 1: had really been out in front of this story in

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Speaker 1: a big way here, and pretty much the BOJ delivered

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Speaker 1: on what the knee k had reported. I'd like to

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Speaker 1: eat a weigh in on just not only what you

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Speaker 1: heard from the Bank of Japan, but the way in

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Speaker 1: which the market responded.

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Speaker 5: You would have to say, textbook delivery of how not

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Speaker 5: to surprise the markets with a politican move, I mean,

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Speaker 5: as politic moves go. That was as dramatic as they come.

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Speaker 5: The Bank of Japan hiking for hiking for the first

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Speaker 5: time in twenty oh seven, pulling out of negative territory,

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Speaker 5: scrapping the ETF purchases, dropping YCC, and the markets broadly

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Speaker 5: speaking took it in their stride. And the fact the

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Speaker 5: end stoften the touch, which is a great result for

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Speaker 5: the BOJA given they don't haven't picked any pain on

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Speaker 5: their export. So look, they got the message out there

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Speaker 5: that communicated it. In the end, it clearly wasn't a

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Speaker 5: surprise to investors or to markets in one of where

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Speaker 5: they go. Open here though, is a much more open question.

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Speaker 5: I think I've seen people call it a dubbish hike

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Speaker 5: by the BOJ governing Uada seem to be stressing that

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Speaker 5: policy conditions are still fairly accommodated in Japan. It's worth

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Speaker 5: remembering that. But they are still supporting the economy officially

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Speaker 5: very in a range of zero to zero point one

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Speaker 5: percent now. So yeah, it's a dramatic move, but question

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Speaker 5: is already go from here.

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Speaker 2: I was a little surprised that the boj didn't hint

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Speaker 2: a little bit at future rate hikes, and the market

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Speaker 2: seems to have interpreted this as one and done, hence

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Speaker 2: the drop in the end. And one of the things

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Speaker 2: that we hear is that average Japanese people are unhappy

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Speaker 2: with levels of inflation, and weaker currency will make some

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Speaker 2: things more expensive.

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Speaker 5: That's right. It will certainly make trailable inflation more expensive,

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Speaker 5: and not least the oil of which Japan is a

441
00:23:32,800 --> 00:23:36,159
Speaker 5: big importer. And Yuada did mention in the remarks I

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00:23:36,160 --> 00:23:38,119
Speaker 5: was reading this morning. He did give a nod to

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00:23:38,200 --> 00:23:42,400
Speaker 5: what's going on with wage gains and with inflation, so

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00:23:43,160 --> 00:23:45,800
Speaker 5: clearly he staid they're going to watch that closely. So

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00:23:45,840 --> 00:23:48,840
Speaker 5: he certainly did not signal another near term interest rate hike,

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00:23:48,960 --> 00:23:51,520
Speaker 5: but neither has he ruled it out. So I agree, Brian,

447
00:23:51,560 --> 00:23:53,720
Speaker 5: the takeaway seems to be more or less one. I'm

448
00:23:53,720 --> 00:23:56,040
Speaker 5: done for now. But that narrative could changes the months

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00:23:56,080 --> 00:23:57,480
Speaker 5: go by.

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00:23:57,600 --> 00:24:00,199
Speaker 2: Well, we give you the latest numbers here, Dolly Yen

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00:24:00,280 --> 00:24:02,480
Speaker 2: at the moment one fifty one twenty seven.

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00:24:02,600 --> 00:24:03,480
Speaker 4: We won't have any.

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00:24:03,320 --> 00:24:06,920
Speaker 2: Trading in inequities in Tokyo today because it's a holiday

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00:24:06,960 --> 00:24:10,240
Speaker 2: in Japan for the vernal equinox, but da thank you

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00:24:10,320 --> 00:24:12,359
Speaker 2: so much for joining us a great discussion and the

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00:24:12,480 --> 00:24:15,840
Speaker 2: current Bloomberg News Global Economy reporter.

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00:24:16,760 --> 00:24:19,639
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