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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg

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Speaker 1: Daybreak Asia podcast. I'm Doug Krisner. You can join Brian

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Speaker 1: Curtis and myself for the stories, making news and moving

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Speaker 1: markets in the APAC region. You can subscribe to the

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Speaker 1: show anywhere you get your podcast and always on Bloomberg Radio,

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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App.

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Speaker 2: Joining us now for further discussion of the FED and

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Speaker 2: markets is Vincent Signerella, Bloomberg macro strategist Vince. Great to

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Speaker 2: have you with us here on the program. So the

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Speaker 2: FED took a pretty dramatic step here in cutting by

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Speaker 2: fifty basis points, but then it signaled that it's not

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Speaker 2: in a hurry to do more. So that's a kind

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Speaker 2: of balancing. It seems like their messages we're fine tuning here,

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Speaker 2: we're not panicking, we're not doing anything too dramatic. Is

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Speaker 2: that the message that the market is reading.

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Speaker 3: Yeah, I would say that's the best of the equity

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Speaker 3: market is reading. I'm not so sure that market is

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Speaker 3: taking it the same way the equity guys. It was

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Speaker 3: a really volatile session. I have to say, I'm not

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Speaker 3: sure if your listeners saw what happened after the or

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Speaker 3: got a feel for what happened after two o'clock. But

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Speaker 3: the volatility was extraordinary. We surged, we went read, we

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Speaker 3: went back to the levels after the announcement, then went

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Speaker 3: read again. It was absolutely all over the place. But

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Speaker 3: the one thing that stayed tried and true with that,

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Speaker 3: Yale stayed higher. So I kind of always leaned towards

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Speaker 3: the fixed income guys as a former FX trader, being

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Speaker 3: smarter than we are, and I look to them for guidance.

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Speaker 3: And the guidance I get from the fixed income market

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Speaker 3: is We're going to wait and see what the data says,

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Speaker 3: the same way Powell says, we'll wait to see what

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Speaker 3: the data says.

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Speaker 1: Evin's One of the things that I was hearing during

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Speaker 1: the day is that Poulll was essentially making up in

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Speaker 1: going fifty today, making up for the fact that they

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Speaker 1: decided to do nothing in July. Is that plausible, do

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Speaker 1: you think?

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Speaker 4: Yeah?

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Speaker 3: I mean he mentioned that, he mentioned that they could

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Speaker 3: have gone in July, but he passed over that very

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Speaker 3: quickly and just said we could have gone, but we didn't,

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Speaker 3: And he didn't really give a lot of color in that.

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Speaker 3: I think you know, it would have been maybe a

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Speaker 3: little bit better received from the fixed income market if

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Speaker 3: they did twenty five basis points. In July did twenty

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Speaker 3: five basis points. Now, the good news is that the

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Speaker 3: warry going into this about the last two weeks was

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Speaker 3: that if he went fifty it would be perceived as

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Speaker 3: a bit of a panic. But clearly that wasn't the case.

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Speaker 3: It looked more like a catching up, which is fine.

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Speaker 3: But then you go back to what you guys had

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Speaker 3: mentioned earlier, just a few moments ago, and that he's

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Speaker 3: not in a rush. This isn't a predetermined course. We're

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Speaker 3: still always saying the data dependent story. And the latest

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Speaker 3: data we've seen is the Atlanta GDP FED printing three percent.

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Speaker 1: Wow.

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Speaker 3: Goldman updated their third quarter GDP at three percent, and

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Speaker 3: we've seen an inflation is a little hotter than forecasts.

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Speaker 2: So I think the equity market, e Vince, I think

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Speaker 2: the equity market, you know, the usually the first trades,

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Speaker 2: not really the one that gets sustained. I'm seeing a

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Speaker 2: lot of positivity here at the moment. Smpe me and

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Speaker 2: E's are up now two thirds of a percent, some

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Speaker 2: thirty seven points. The Nicks rallied seven hundred and ninety

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Speaker 2: odd points. You're going to get a pretty solid rally

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Speaker 2: in Hong Kong today. I would think it seems like

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Speaker 2: the market is reading this, the bond end stock markets

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Speaker 2: as yeah, things are okay, They've got some room to

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Speaker 2: cut here. It's not determined what the what the path

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Speaker 2: will be going forward, but it's certainly not panic at

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Speaker 2: this time.

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Speaker 3: No, no, not at all. And the good news for

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Speaker 3: equity markets is, and it depends again on the data

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Speaker 3: going forward, is that the quantitative titan cycle is clear over.

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Speaker 3: We've moved at least temporarily into an easing cycle. We

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Speaker 3: don't know the extent of that cycle or how far

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Speaker 3: it's going to go. One of the things I would

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Speaker 3: always go harken to is Bostic's comments, which is the

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Speaker 3: credibility issue, which is the worst thing we could possibly

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Speaker 3: do is cut interest rates and then the data doesn't

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Speaker 3: support it going forward, and then we have to turn

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Speaker 3: around and raise. So I think we're going to see

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Speaker 3: a little bit more of a prudent, careful fed going forward,

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Speaker 3: which showed in the dot plot where they just forecast

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Speaker 3: twenty five basis points for November and December, which I

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Speaker 3: think is reasonable, but also very cautious because it gives

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Speaker 3: them the opportunity to go either way. They could easily

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Speaker 3: go fifty basis points in November if the economy rolled over,

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Speaker 3: or they could easily pull back to do absolutely nothing

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Speaker 3: in November if the economy sort.

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Speaker 1: So, Powell talked about recalibrating policy to a more neutral

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Speaker 1: level in your work. I mean, I know it's theoretical

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Speaker 1: and debated. Where the neutral rate seems to be. Is

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Speaker 1: three percent fair? Do you think?

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Speaker 3: I personally think so. I think the idea that we're

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Speaker 3: going to get back to two percent is incredibly unreasonable.

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Speaker 3: We have a thirty five trillion dollar national debt, and

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Speaker 3: that you know, if you look at both parties and

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Speaker 3: where they're going in the election in a couple of months,

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Speaker 3: both are talking about increasing spending, so that is not

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Speaker 3: likely to go lower. It's going to go higher. The

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Speaker 3: idea that interest rates have a substantial downside is I

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Speaker 3: think a little bit unrealistic. Three percent is not unrealistic,

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Speaker 3: but again it depends on inflation and how much either

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Speaker 3: of these candidates, for instance, and their parties want to

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Speaker 3: spend to get someplace, and what they will do when

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Speaker 3: they get there.

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Speaker 2: So one of the things that we've seen in the

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Speaker 2: past several weeks is some of these cyclicals and small

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Speaker 2: caps outperform. They've they've they've been seen as a beneficiary

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Speaker 2: in a in a rate cutting cycle like this.

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Speaker 5: Uh.

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Speaker 2: Would you put commodities and commodity currencies in there? And

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Speaker 2: is this something that investors can can play here continue

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Speaker 2: to play?

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Speaker 4: Yeah?

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Speaker 3: Well, I mean, uh, you know, look at gold, you know,

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Speaker 3: record highs, looking at copper futures and doing very well.

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Speaker 3: You know, across the board, commodities are trading well. I

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Speaker 3: mean in a lower interest rate environment, commodities tend to

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Speaker 3: do well. Uh, they're easier to finance. But you know, again,

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Speaker 3: it's when the one thing that that is positive for

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Speaker 3: that space is the lower that you get us interest rates,

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Speaker 3: the cheaper it is for emerging market currencies to finance

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Speaker 3: their debt, which makes commodities a little bit cheaper across

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Speaker 3: the board. So that gives them the opportunity to, if

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Speaker 3: you will, finance exports, uh, and make those commodities cheaper,

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Speaker 3: which makes them more affordable.

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Speaker 1: And well wanted you were talking about volatility earlier, or

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Speaker 1: I saw the dollar bouncing around. I was looking at

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Speaker 1: the pound. I was looking at the euro earlier, put

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Speaker 1: on your old four x hat. Where's the dollar headed

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Speaker 1: from here?

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Speaker 3: My personal feeling, I'm just going to look at dollar

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Speaker 3: yen and I think that dollar yen has a lot

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Speaker 3: of room to go lower. And this has more to

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Speaker 3: do with boj policy going forward maybe than the Fed.

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Speaker 3: The idea, obviously is the bojil stampad. This time around,

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Speaker 3: we've got sort of LDP politics playing in, but there's

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Speaker 3: a reasonable possibility they go fifty basis points at the

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Speaker 3: meeting that follows, if not the meeting that follows that,

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Speaker 3: and you're going to see this divergence in monetary policy.

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Speaker 3: And the interesting thing is does that play into a

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Speaker 3: substantially stronger yen which unwinds the carry trade, which then

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Speaker 3: unwinds the equity trade. So that's going to be something

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Speaker 3: equity traders need to keep in focus. That something that

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Speaker 3: the fixed income market doesn't necessarily have to worry about.

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Speaker 2: Yeah, that's something something that we've been musing over here,

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Speaker 2: but it's not happening currently. I mean, the Nike has

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Speaker 2: been pretty choppy, but today up up. Yeah. Yeah, it's

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Speaker 2: been a very interesting time for Japan. The Bank of

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Speaker 2: Japan meeting will be interesting and then the election next week. Well,

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Speaker 2: just finally, I mean, do you feel good about I mean,

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Speaker 2: how are the kids doing? The kids?

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Speaker 1: Okay, Yeah, everything's good.

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Speaker 3: Everything's good. I'm you know, a little a little chubbier,

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Speaker 3: but otherwise do it fine.

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Speaker 2: It's you're talking, You're you're eating and drinking well and

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Speaker 2: we love to see that.

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Speaker 3: Wow.

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Speaker 2: Anything else, Doug A.

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Speaker 1: Quick no, no, just don't be a stranger.

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Speaker 2: Vinny, Yeah, call on this program. Yeah. I was going

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Speaker 2: to get you in here. We can't pay you, but yeah,

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Speaker 2: it's not a nice to have your time. Vince Signorella.

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Speaker 2: There Bloomberg macro strategist with some keen insights on the FED.

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Speaker 2: Helen ju joins us here in our studios in Hong Kong,

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Speaker 2: Managing Directorates and CIO at NF Trinity. Helen, thank you

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Speaker 2: very much for coming in. So it seems like this

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Speaker 2: is just a little insurance policy taken out by the

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Speaker 2: FED on the soft landing thesis. They're urging caution, they're

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Speaker 2: saying there's no there's no panic here. They have room

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Speaker 2: to cut and they're doing so. Do you think that

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Speaker 2: this is a message that investors in Asia will embrace.

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Speaker 4: Look, I think the message is quite clear. The message is,

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Speaker 4: first of all, we don't want to look like we're

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Speaker 4: falling behind the curve, as many people have been accusing

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Speaker 4: them of recently, but that you know, it's too early

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Speaker 4: to say that they're going to go all out dubvish,

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Speaker 4: mainly because they said twelve times during the meeting that

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Speaker 4: things are still pretty solid.

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Speaker 5: So I think it's good. It's a good message.

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Speaker 4: Right, So things are still good, but we're also fairly supportive.

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Speaker 5: And you know, we're mindful of the risks, et cetera.

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Speaker 4: So I think in combination, you've seen you know, Japan's

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Speaker 4: opening up, and I think in the short term there's

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Speaker 4: going to be a little bit more of a risk

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Speaker 4: on attitude, not just because of the FED, but also

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Speaker 4: because the data earlier this week was quite strong.

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Speaker 1: So we talk a lot about long and variable legs

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Speaker 1: when it comes to monetary policy. Maybe things, as a

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Speaker 1: result of what have been very high rates start to

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Speaker 1: slow down even more from here. Do you think the

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Speaker 1: US manages a soft landing and we avoid recession? Is

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Speaker 1: that the way you see it.

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Speaker 4: We do think that the soft landing is the base

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Speaker 4: case assumption. At the moment, I mean, we see.

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Speaker 5: The bigger risk.

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Speaker 4: However, is really a meaningful slenoun in terms of the

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Speaker 4: jobs market. As you know, the US is a very

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Speaker 4: consumption oriented market, and people the way that they spend

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Speaker 4: is but depending on whether they feel secure in their

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Speaker 4: employment and whether they have that wealth effect, and both

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Speaker 4: of these factors have been full on positive after COVID,

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Speaker 4: whereas in most other markets they've reversed. So the jobs

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Speaker 4: market is really critical. If jobs market starts the weekend

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Speaker 4: in the stock market will come down and everything's kind of interlinked, right.

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Speaker 5: If that were to happen.

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Speaker 4: Then we go into vicious feedback loop, in which case

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Speaker 4: I do think that growth will slow down much more

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Speaker 4: than expected, So we have to watch very carefully.

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Speaker 5: I think we're not completely out of the woods.

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Speaker 2: So what's the smart way to play this in markets

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Speaker 2: at the moment?

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Speaker 4: Well, I think it's quite interesting because the market's basically

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Speaker 4: saying two totally different things to you, right, So the

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Speaker 4: credit spread, the share price performance of FAG US equities

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Speaker 4: in general, US financials, US industrials, they're basically telling you

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Speaker 4: there is barely any landing. Things are completely fine. On

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Speaker 4: the other hand, if you look at some other sectors

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Speaker 4: like consumer discretionary, tech, hardware, you know, a lot of

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Speaker 4: areas outside the US and maybe commodities recently, these areas

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Speaker 4: are telling you that things are not so fine, and

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Speaker 4: actually treasury yields as well. Right, So I would say,

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Speaker 4: you know, if we do have a decent soft landing scenario,

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Speaker 4: I would be more interested in looking at a gradual

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Speaker 4: recovery of those areas that have priced in more of

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Speaker 4: a landing scenario and being underweight some of the areas

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Speaker 4: that really hasn't priced in any kind of landing at all.

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Speaker 1: So we've arrived, the easing cycle has has begun. Maybe

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Speaker 1: we get another fifty basis points between now and the

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Speaker 1: end of the year. What does that mean for central

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Speaker 1: bankers and your neck of the woods. I'm thinking primarily

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Speaker 1: of the BOJ at the moment.

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Speaker 4: Well, I think the BOJ is a slightly different case

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Speaker 4: from elsewhere just because of their starting point being so

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Speaker 4: incredibly low versus all the other major central banks. But

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Speaker 4: I would say elsewhere in Asia and in emerging markets anywhere,

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Speaker 4: even in DM for for sure, other than the Japan

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Speaker 4: special case, it definitely opens up the window right for

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Speaker 4: people to do a bit more if they need to,

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Speaker 4: because what people had been suffering throughout most of last

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Speaker 4: year and end of the year before was basically that

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Speaker 4: you don't have too much flexibility because you don't want

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Speaker 4: your currency to endlessly depreciate against the dollar, which has

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Speaker 4: been so strong for so long. So I think this

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Speaker 4: is definitely a positive for non US markets and non

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Speaker 4: US central banks.

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Speaker 2: Can we connect the dots from the cut by the

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Speaker 2: FED to the housing market in China and to the

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Speaker 2: mood among the average the average mister and missus Wong

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Speaker 2: in China, I mean, how are they feeling these days?

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Speaker 4: There's not much of a direct linkage between the FED

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Speaker 4: and the property owners in China. I would say the

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Speaker 4: indirect linkage is that if there's less pressure on the

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Speaker 4: R and B from the dollar strengthening, then the PBOC

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Speaker 4: has more room to cut. But the PBOC has already

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Speaker 4: been very proactive in terms of dropping mortgage rates as

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Speaker 4: well as overall interest rates. So I think that's not

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Speaker 4: the most important thing. The thing is about price expectation

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Speaker 4: and confidence in the market.

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Speaker 5: Even if rates are zero.

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Speaker 4: You know, if you think prices are going to go

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Speaker 4: down continuously year after year, you're not going to go

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Speaker 4: out and buy a property. So I think that's the

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Speaker 4: thing that they have to wrestle with at the moment.

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Speaker 4: The expectation within the market has really weakened substantially, and

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Speaker 4: you have to stabilize the expectation, if not reverse it

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Speaker 4: before the market could possibly potentially pick up. So right now,

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Speaker 4: all you've seen is secondary market is more active because

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Speaker 4: there's more supply available as people who were previously hoarding

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Speaker 4: or putting their properties on the market. The primary market

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Speaker 4: has really suffered because of you know, developers not taking

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Speaker 4: a lot of land the past few years and just

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Speaker 4: you know, lack of a less of a price advantage

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Speaker 4: for the primary market.

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Speaker 5: So I think it's going to be challenging.

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Speaker 1: Are your clients asking you about what the stakes are

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Speaker 1: in the US presidential election.

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Speaker 4: I think everybody's watching the election very very closely. Right

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Speaker 4: a couple of months ago that the default assumption was

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Speaker 4: that Trump was going to win for sure. You saw

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Speaker 4: that in everything from you know, financials and tech, you know,

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Speaker 4: which are the more regulated risk sectors, as well as

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Speaker 4: the market overall, as well as you know, people basically

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Speaker 4: thinking that muals should go up and corporate tax rates,

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Speaker 4: tax cuts will get extended. Now.

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Speaker 5: I think a lot of that is kind of unclear.

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Speaker 4: And if Kamala actually wins, it's probably going to be

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Speaker 4: better for the rest of the world because of the

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Speaker 4: much lower Trump's specific Trump specific tariff risks. But for

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Speaker 4: the US, I think it's probably a little bit of

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Speaker 4: a challenge the exceptionalism thesis.

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Speaker 2: Can I just get thirty seconds from you? On consumption

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Speaker 2: in China, we touched on that briefly. The consumption picked

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Speaker 2: up a little bit here during the holiday, but it's

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Speaker 2: still away from better levels. How do you see things

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Speaker 2: over the next couple of months.

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Speaker 5: It's lukewarm at the moment.

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Speaker 4: I don't think it's getting substantially worse than before, but

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Speaker 4: we don't see much room for dramatic pickup either, precisely

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Speaker 4: because of the property price expectation issue we talked about earlier,

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Speaker 4: and the very significant impact is having unwealth effects in China,

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Speaker 4: and that's the total opposite of what's happening in the US,

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Speaker 4: where property crises are still boyant, stock market is still boyant,

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Speaker 4: and people are going on and spending a lot despite the.

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Speaker 1: Inflation we talked about Japan. I mentioned the fact that

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Speaker 1: with the FED doing what it is, maybe it takes

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Speaker 1: a little bit of pressure off the BOJ. But obviously

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Speaker 1: the Japanese situation is very different. Here, we're seeing quite

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Speaker 1: the rally going on in the Japanese equity market. It

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Speaker 1: seems to be a pretty robust debate on whether or

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Speaker 1: not we're going to get another rate hike between now

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Speaker 1: and the end of the year from the BOJ. Do

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Speaker 1: you want to weigh in on that? Is that likely.

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Speaker 5: Possible?

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Speaker 4: But I don't think that it's necessarily for sure. I

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Speaker 4: think that there was obviously a pretty significant reaction to

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Speaker 4: the last one and more volatility resulting versus what always expected.

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Speaker 4: So I think, and you know, I think it really

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Speaker 4: depends on the data, right and whether they really see

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Speaker 4: a meaningful evidence of continued, you know, robust growth and

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Speaker 4: more inflationary pressures in the economy.

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Speaker 1: Yeah.

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Speaker 2: So you and I live in Hong Kong, and Hong

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Speaker 2: Kong is an important place. Hong Kong will no doubt

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Speaker 2: benefit from rates moving down by the FED. Again, we

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Speaker 2: don't know how much, but fifty basis points here, can

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Speaker 2: you see a little bit of a pickup in activity

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Speaker 2: in Hong Kong or Is it wholly dependent on the

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Speaker 2: Chinese economy rebounding.

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Speaker 4: It's not wholly dependent on the Chinese economy rebounding, but

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Speaker 4: I think it's very important because the Chinese economy really

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Speaker 4: drives consumption here in Hong Kong, the financial markets here

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Speaker 4: in Hong Kong and the property market and the you know,

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Speaker 4: buying demand coming from North.

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Speaker 5: But that said, leaving China aside, I.

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Speaker 4: Do think that you're right, Hong Kong will benefit hugely

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Speaker 4: from the rate cut cycle in the US because of

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Speaker 4: the you know, pegged currency, et cetera, and the fact

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Speaker 4: that the property market's been under a significant amount of pressure.

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Speaker 4: So I think at least this alleviates some of the

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Speaker 4: pressures on the mortgages et cetera over time, and we'll

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Speaker 4: start to stabilize, if not start to potentially boost confidence

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Speaker 4: towards price expectation on Hong Kong's own property market in

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Speaker 4: the residential space.

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Speaker 1: Are we going to get more stimulus out of beychain,

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Speaker 1: either on the fiscal side or or the monetary side.

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Speaker 1: Do you think.

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Speaker 4: It's difficult. We've been trying to hope for more stimulus

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Speaker 4: for a while. We have gotten a great deal of

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Speaker 4: stimulus already.

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Speaker 5: Right, if you think about the rate.

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Speaker 4: Cuts, the mortgage reset, the mortgage cuts overall, the infrastructure spend,

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Speaker 4: the local government financing vehicle fixes, and the fiscal side.

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Speaker 4: A lot of these things have come together with consumption

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Speaker 4: policies like ev trade in and incentives, etc.

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Speaker 5: But all of that has struggled.

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Speaker 4: Against the face of the declining property price. So I

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Speaker 4: think we will get more to answer your question, but

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Speaker 4: is it going to be super effective if property price

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Speaker 4: continues to slip.

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Speaker 5: I think it's going to be an uphill battle.

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Speaker 2: We've got about thirty seconds for this. I just want

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Speaker 2: to ask you what is your number one pick right now?

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Speaker 2: What's your big conviction trade at the moment.

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Speaker 4: I think the big convention trade is basically to be

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Speaker 4: more positive on Asia rather than just develop market. I

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Speaker 4: think that all of Asia has actually suffered pretty significantly

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Speaker 4: as a result of the very very strong dollar, and

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Speaker 4: I think that reversal is going to give a lot

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Speaker 4: more breathing room here in terms of the property market.

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Speaker 5: As you talked about in terms of consumption.

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Speaker 4: If Kamala Harri swins and we don't have as much tariffs,

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Speaker 4: that's going to be a positive as well. And I

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Speaker 4: think that some of the semi related stuff in Korea, Taiwan, etc.

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Speaker 4: Has been pressured and is better value and less crowded.

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Speaker 2: All right, we've seen money flow into Southeast Asia, the

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Speaker 2: Singapore stock market, for instance, of about six and a

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Speaker 2: half percent in the past month. Helen, Thank you. Helen

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Speaker 2: Ju from NF Trining.

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Speaker 1: Naomi Fink, Chief Global strategistic NICO Asset Management, joining us

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Speaker 1: live here on daybreak asient. Naomi, thanks for making time

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Speaker 1: to chat with us. Obviously it's about the FED today.

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Speaker 1: We can talk about what it may mean for the

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Speaker 1: Bank of Japan and going into the decision today, this

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Speaker 1: debate is it going to be twenty five? Is it

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Speaker 1: going to be fifty? We got fifty? What do you

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Speaker 1: make of that?

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Speaker 6: Well, I personally thought that twenty five would have been

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Speaker 6: more appropriate given the economic data out of the US.

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Speaker 6: Although the labor market picture is softening, it's not softening

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Speaker 6: to the extent that we should really be worried about

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Speaker 6: growth right now. I still expect growth to remain positive,

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Speaker 6: although potentially slower. I think it was more about the

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Speaker 6: fact that the FED had room to cut given wherever

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Speaker 6: neutral is, it's below where we are now. And also

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Speaker 6: market expectations had already priced it in, so there wasn't

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Speaker 6: the worry that delivering a fifty basis point cut would

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Speaker 6: send a message that there was some sort of undetected

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Speaker 6: weakness in the economy and then perhaps cause the opposite

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Speaker 6: effect to what happened, that markets would see it as

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Speaker 6: a surprise and react poorly to it.

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Speaker 2: So, with bond yields edging up a little bit, does

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Speaker 2: that send a message that the bond market is a

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Speaker 2: little concerned that inflation may tick back up again, or

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Speaker 2: is that just an indication of a slightly better reading

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Speaker 2: of the US economy.

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Speaker 6: Well, if the bond market yields are ticking up because

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Speaker 6: of expectations that inflation may come back, I think that's

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Speaker 6: a reasonable concern. Given we're not at the target yet

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Speaker 6: even per the Fed's own guidance, we don't expect to

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Speaker 6: reach target until sometime in twenty twenty six. Plus we've

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Speaker 6: got some potential inflationary events depending on what happens with

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Speaker 6: the election and beyond the election, things like the dead limit,

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Speaker 6: the US dead limit. If we do have, for example,

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Speaker 6: tariffs or some sort of protectionist measures put in place,

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Speaker 6: that could be inflationary. Similarly, if we have expectations for

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Speaker 6: fiscal easing, then that could also mean inflationary expectations by

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Speaker 6: households that the FED will have to react to. Plus

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Speaker 6: it may make those negotiations that aren't going well already

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Speaker 6: over the debt ceiling that much harder.

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Speaker 1: So maybe we have another fifty basis points sin FED

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Speaker 1: easing between now and the end of the year. What

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Speaker 1: does that mean for the Bank of Japan. Does this

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Speaker 1: take a lot of pressure off the BOJ or just

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Speaker 1: a little bit?

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Speaker 6: So I don't expect that the Bank of Japan is

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Speaker 6: really going to change its trajectory, which is for hikes

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Speaker 6: in the future. However, the Bank of Japan also has

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Speaker 6: the luxury of delivering those hikes at a pretty slow pace,

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Speaker 6: given inflation is not really running away. In fact, it's

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Speaker 6: pretty well behaved. Bank of Japan is also far from neutral,

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Speaker 6: but on the downside, so it makes sense that it

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Speaker 6: will continue to deliver hikes, but I think that it's

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Speaker 6: going to do so at a very measured pace. So

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Speaker 6: I don't think that we should be pricing in a

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Speaker 6: rate hike every meeting, or even every other meeting, potentially

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Speaker 6: once a quarter for now until we really start seeing

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Speaker 6: signals that consumption domestically in Japan is speeding up.

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Speaker 2: The dot plot suggests a full one percentage point of

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Speaker 2: cuts next year, so call it one hundred bases points.

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Speaker 2: Is it too hard to look out into next year?

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Speaker 2: Is this really just kind of speculating or do you

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Speaker 2: see trouble next year?

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Speaker 6: I think the FED has to work with what it

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00:23:04,160 --> 00:23:07,000
Speaker 6: has so far, and for example, there are a lot

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Speaker 6: of unknowns. We don't know the outcome of the election.

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00:23:09,680 --> 00:23:11,880
Speaker 6: We don't know what's going to happen with the debt ceiling.

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00:23:12,520 --> 00:23:15,280
Speaker 6: We don't know what's going to happen with what appears

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Speaker 6: to be escalating tensions in the Middle East. There are

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Speaker 6: a lot of unknowns there, and the FED will have

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Speaker 6: to react to them as they happen, but they can't,

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Speaker 6: I guess, speculate too much about them before they do.

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Speaker 1: I'm going to throw you a curveball. I hope you

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Speaker 1: don't get upset with me. We've on September twenty seventh,

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Speaker 1: we have the leadership race for the LDP in Japan.

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Speaker 1: Can you weigh in on what's happening right now politically

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Speaker 1: in the country.

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00:23:41,640 --> 00:23:44,240
Speaker 6: Yes, I'm not too upset with that. I think that's

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00:23:44,280 --> 00:23:48,840
Speaker 6: a fair question. I think that the upcoming LDP election

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00:23:49,320 --> 00:23:54,320
Speaker 6: does bring emphasis on politics in a market where emphasis

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00:23:54,359 --> 00:23:57,440
Speaker 6: doesn't tend to be placed too much on politics because

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Speaker 6: a lot of times, for example, the UH the LDP

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00:24:00,960 --> 00:24:07,639
Speaker 6: premiership is is not as influential, for example, as US leadership,

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00:24:07,800 --> 00:24:13,400
Speaker 6: just because of the different structure of the political systems. However,

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Speaker 6: I think that there is some potential in the future

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00:24:16,960 --> 00:24:21,080
Speaker 6: to influence future elections. So we have I think three

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00:24:21,240 --> 00:24:27,080
Speaker 6: leading candidates, and of those I don't anticipate any big

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Speaker 6: changes in the near term, but the winning candidates' ability

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Speaker 6: to then win future elections will probably matter, and it

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Speaker 6: will matter for the longer term continuity of the policies

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Speaker 6: that have been put in place, and so far, apart

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Speaker 6: from the scandals of course that nobody liked, the policy

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00:24:45,680 --> 00:24:49,919
Speaker 6: hasn't really been too bad for Japan. It's been quite supportive.

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Speaker 6: We've seen some tax exemptions for investment, We've seen some

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Speaker 6: corporate governance strengthening. It's it's generally been quite good.

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Speaker 1: Naomi. Will we leave it there. Thank you so much

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00:25:01,119 --> 00:25:03,240
Speaker 1: for taking time to chat with us. Please come back again,

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Speaker 1: Naomi Think Chief Global strategist at Nico Asset Management, joining

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Speaker 1: us from the Japanese capital.

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Speaker 2: This is the Bloomberg Daybreak Asia podcast, bringing you the

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00:25:15,840 --> 00:25:19,280
Speaker 2: stories making news and moving markets in the Asia Pacific.

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Speaker 2: Visit the Bloomberg Podcast channel on YouTube to get more

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00:25:22,720 --> 00:25:26,520
Speaker 2: episodes of this and other shows from Bloomberg. Subscribe to

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Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen

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Speaker 2: Bloomberg Business App.