WEBVTT - DNC Gets Under Way in Chicago, Markets Prep For Powell

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

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<v Speaker 2>This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis

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<v Speaker 2>along with Doug Krisner, join us each day for the

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<v Speaker 2>stories making news and moving markets in the Asia Pacific.

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<v Speaker 2>You can subscribe to the show anywhere you get your

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<v Speaker 2>podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and

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<v Speaker 2>the Bloomberg Business app. Well, with that DNC underway, Vonnie

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<v Speaker 2>Quinn joins us Bloomberg US TV correspondent who has been

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<v Speaker 2>taking a closer look. So it's fair to say I

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<v Speaker 2>think that the Democrats appear pretty rejuvenated here and pretty

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<v Speaker 2>excited about the prospects of Kamala Harris. But you also

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<v Speaker 2>hear a lot of mention of Donald Trump. It seems

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<v Speaker 2>that they're definitely looking at using that as a lever

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<v Speaker 2>to get people to vote for Kamala Harris. What have

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<v Speaker 2>you noticed today that stands.

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<v Speaker 3>Out, I'm sure, Brian. Well, we actually had a surprise

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<v Speaker 3>appearance from Kamala Harris tonight. We weren't expecting her to

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<v Speaker 3>take to the DNC stage until Thursday when she formally

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<v Speaker 3>accepts the nomination, but she did speak for about two minutes,

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<v Speaker 3>really just pressing ahead to President Joe Biden. Speaking later,

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<v Speaker 3>she made some remarks and obviously gave her campaign cry,

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<v Speaker 3>When we fight, we win. But it was interesting to

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<v Speaker 3>see who has been taking to the stage because we

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<v Speaker 3>had union representatives, politicians including right now, progressive Alexandria Ocasio

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<v Speaker 3>Cortes is on the stage, and we also expect to

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<v Speaker 3>hear from Secretary of State formerly Hillary Clinton. Alexandra Ocasio

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<v Speaker 3>Cortes made mention of Gaza, which was interesting because this

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<v Speaker 3>is one of the areas where Kamala Harris is really

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<v Speaker 3>hoping to bring back voters to the Democratic Party. AOC

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<v Speaker 3>said that she was working tirelessly for a ceasefire and

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<v Speaker 3>to bring back the hostages. Now she didn't go beyond that.

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<v Speaker 3>And we know that there are thousands of demonstrators in

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<v Speaker 3>Chicago right now, some of them trying to disrupt the

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<v Speaker 3>convention because they want to know what exactly Kamala Harris

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<v Speaker 3>would do differently from President Joe Biden, given that so

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<v Speaker 3>far all she has done is offer a sympathetic ear

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<v Speaker 3>to pro Palestinian protesters and that vote. So that's one

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<v Speaker 3>of the things that stood out to me for sure.

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<v Speaker 4>Well as you mentioned we are waiting to hear from

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<v Speaker 4>President Biden. Interesting that we're hearing from a sitting president

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<v Speaker 4>on day one of the convention, and also that as

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<v Speaker 4>advisors a pushing back pretty strongly that this speech is

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<v Speaker 4>not a Swan song.

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<v Speaker 3>What is it? Yes, it's definitely going to push forward

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<v Speaker 3>as well. Right, Biden wants to keep the emphasis on

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<v Speaker 3>what comes next. He also doesn't want to write himself

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<v Speaker 3>off THEUS five more months in which he wants to

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<v Speaker 3>do some important work, including hopefully getting a ceasefire in Gaza,

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<v Speaker 3>and also continuing to campaign. So the theme for Monday

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<v Speaker 3>Night is for the people, and that will jive very

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<v Speaker 3>nicely with what he intends to speak about, which is

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<v Speaker 3>likely how he and his administration, including Kamala Harris, brought

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<v Speaker 3>the US economy back from the pandemic. Also past legislation

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<v Speaker 3>on infrastructure and climate and protected democracy. Now, this last

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<v Speaker 3>has been so important to Biden during his own campaigning

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<v Speaker 3>for several months and even post him dropping off the tickets,

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<v Speaker 3>So we expect to hear a lot of comments about democracy.

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<v Speaker 3>And then it's interesting to note that Biden will then leave,

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<v Speaker 3>He'll have passed the baton to Kamala Harris, and he

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<v Speaker 3>leave to go on vacation just for a short period,

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<v Speaker 3>going to the West coast, California where you are, I

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<v Speaker 3>believe Brian right now, and he will leave the stage

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<v Speaker 3>to Kamala Harris. Of course, he will be getting back

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<v Speaker 3>to his own important work as president of the United

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<v Speaker 3>States following that vacation.

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<v Speaker 2>We should talk a little bit about some of the

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<v Speaker 2>key policy points that will eventually come from Kamala Harris.

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<v Speaker 2>She wants to expand child tax credits, and she wants

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<v Speaker 2>to offer more incentives for home buyers, trying to reduce

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<v Speaker 2>the cost of food and prescription drugs, and she's made

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<v Speaker 2>a really big point about cracking down on price gouging.

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<v Speaker 2>And what some investors in some critics are saying is

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<v Speaker 2>that that really what she's talking about is fixing prices,

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<v Speaker 2>and that doesn't ring too well with people who are

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<v Speaker 2>perhaps independence or in the middle. And then she also,

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<v Speaker 2>quite closely with the Donald Trump, wants to exempt tips

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<v Speaker 2>from federal taxes. So far today, have we heard a

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<v Speaker 2>lot about issues or is it more about the difference

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<v Speaker 2>between a Kamala Harris presidency and a Donald Trump.

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<v Speaker 3>Want Actually, so far today we've just heard a lot

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<v Speaker 3>of rallying cries, right, and the idea that you know,

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<v Speaker 3>we all love our country, we need to fight for

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<v Speaker 3>our values and you know, if we know what to

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<v Speaker 3>fight for, we can fight. So there's been a lot

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<v Speaker 3>of you know, tonal rhetoric, let's say, but not a

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<v Speaker 3>lot on policy. Now, outside the convention, in various ways,

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<v Speaker 3>we have been hearing a little bit more about policy.

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<v Speaker 3>For example, Reuters did an interview with Donald Trump, who's

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<v Speaker 3>been on the campaign fail in the Swing States, and

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<v Speaker 3>managed to get from him that he would consider doing

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<v Speaker 3>something on housing as well. It was seemingly a response

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<v Speaker 3>to what Kamala Harris has said you will do on housing,

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<v Speaker 3>and NBC also reporting the Kamala Harris will propose a

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<v Speaker 3>corporate tax of twenty eight percent, So that would be

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<v Speaker 3>the first revenue raising policy that we've heard from the

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<v Speaker 3>Harris campaign. But yes, certainly on the stage, I would

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<v Speaker 3>expect less policy and more celebratory rhetoric and rallying cries,

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<v Speaker 3>and we should hear a little bit more about policy

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<v Speaker 3>perhaps off the stage.

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<v Speaker 4>Yeah, at that point, Funny, the convention does suck up

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<v Speaker 4>a lot of oxygen around the user gender. What is

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<v Speaker 4>the Trump campaign doing While this is going on, the.

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<v Speaker 3>Drump campaign has been trying to suck some of that

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<v Speaker 3>oxygen away actually from the Harris DNC. President Trump has

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<v Speaker 3>been touring a factory in Pennsylvania, has been offering interviews

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<v Speaker 3>writers reporting that he's been talking about Elon Musk, for example,

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<v Speaker 3>that he would be happy to offer him the cabinet

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<v Speaker 3>post if he were to be elected, or indeed an

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<v Speaker 3>advisory role in the White House, and that he's also

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<v Speaker 3>considering ending seven and a half thousand dollars tax credits

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<v Speaker 3>for EV purchases. Not sure how the two fit together,

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<v Speaker 3>but that he hasn't made a decision on it. So

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<v Speaker 3>Donald Trump is definitely trying to keep him, at least

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<v Speaker 3>in the headlines. He goes to Michigan tomorrow, and of

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<v Speaker 3>course on Thursday, the day that is really Kamala Harris

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<v Speaker 3>is to accept the nomination, he will be at the

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<v Speaker 3>border in Arizona, and you know he's going to be

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<v Speaker 3>hammering home the fact that that's one of her frailties.

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<v Speaker 2>All Right, Bonnie, as usual, quite professional and nice to

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<v Speaker 2>have you with us here on the program. We always

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<v Speaker 2>love to have you with us. Monty Quinn Bloomberg USTv

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<v Speaker 2>correspondent Jay Hatfield, CIO at Infrastructure Capital Management for a

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<v Speaker 2>closer look at markets. So, Jay, is this a grind

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<v Speaker 2>higher in risk assets or a breakout?

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<v Speaker 5>Thanks Brian for having me on. Well, we actually so

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<v Speaker 5>we've been hyper bullish really all year. We start with

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<v Speaker 5>a fifty five hundred target on the S and P.

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<v Speaker 5>Now we have a six thousand target. And we actually

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<v Speaker 5>became incrementally bullish when there was the growth scare combined

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<v Speaker 5>with the blow up in Japan, because what was bullish

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<v Speaker 5>is that rates drop significantly. There's still below three ninety

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<v Speaker 5>and that was the part of our call that was

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<v Speaker 5>at risk because there's a lot of bond bears who focus,

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<v Speaker 5>we think too much on the US budget deficit and

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<v Speaker 5>not enough on monetary policy. So it became clear that

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<v Speaker 5>if the Fed cuts, rates are going lower, and that's

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<v Speaker 5>really required to help us justify six thousand target, you

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<v Speaker 5>really need rates at three point fifty or below. So

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<v Speaker 5>that's a twenty one multiple that implies really three point

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<v Speaker 5>fifty to three and a quarter on the tenure. So

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<v Speaker 5>we're not surprised we're grinding higher. We have a lot

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<v Speaker 5>of positive catalysts. We don't normally have during the fall.

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<v Speaker 5>You know, whether there's another freak out, we can't really predict,

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<v Speaker 5>but we're sticking to our six thousand target.

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<v Speaker 2>Clearly, investors see a lot of positivity, but so many

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<v Speaker 2>things could go wrong. You know, Pal could surprise us.

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<v Speaker 2>He may not feel comfortable with the rally in risk assets,

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<v Speaker 2>and Vidia could stumble, you know, that's coming up on

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<v Speaker 2>August twenty eighth. Hamas might not accept a cease fire deal,

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<v Speaker 2>and Iran could launch a major strike on Israel. I mean,

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<v Speaker 2>I know you know this, everybody knows it, but doesn't

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<v Speaker 2>it paid a hedge here?

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<v Speaker 5>Well, certainly. I mean, we're getting close to all time hunts,

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<v Speaker 5>so it's a good time of year to be a

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<v Speaker 5>little bit cautious where our call is for a fourth

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<v Speaker 5>quarter rally, So we're not saying we're going to get

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<v Speaker 5>to six thousand, you know, by the end of the week,

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<v Speaker 5>and we normally you pull back. We already did it once.

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<v Speaker 5>We could easily go down to five thousand. We think

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<v Speaker 5>there's good support there and we concur that. You know,

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<v Speaker 5>with your skepticism about the FED, they operate as if

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<v Speaker 5>their third mandate is to be behind the curve, and

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<v Speaker 5>so it would not be totally shocking if they pause

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<v Speaker 5>yet again, but they certainly shouldn't. There's evidence of a slowdown.

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<v Speaker 5>Our forecast is if they don't cut, we'll have a

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<v Speaker 5>recession in twenty five.

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<v Speaker 2>Yeah, and I suppose if you don't overthink it, you

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<v Speaker 2>just look at this kind of situation where you have

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<v Speaker 2>a FED cutting interest rates into an economy that does

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<v Speaker 2>not seem to be stumbling. That's kind of a winning formula.

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<v Speaker 5>Absolutely, And we also think that there'll be a rally

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<v Speaker 5>when the election is resolved. Our call is for divided government.

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<v Speaker 5>It seems that the Senate is going to go to

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<v Speaker 5>the Republicans just because the math is overwhelming for them,

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<v Speaker 5>probably the House the Democrats virtually impossible to call the

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<v Speaker 5>presidential but divided government is really good for the market

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<v Speaker 5>as well. So we see all the inflection points, even

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<v Speaker 5>the ones you mentioned, as ultimately ending up positive, and

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<v Speaker 5>that's why we're comfortable with our six thousand target.

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<v Speaker 2>If there were to be a sweep, many think that

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<v Speaker 2>it might be more likely to be a Republican sweep,

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<v Speaker 2>but in any case, in either direction, if there was

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<v Speaker 2>a sweep, does that bring that deficit blowout that you

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<v Speaker 2>talked about as somewhat fictitious into more of a reality.

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<v Speaker 5>No question, that divided government means that the opposing party

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<v Speaker 5>opposes all spending proposed by the dominant party, and we've

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<v Speaker 5>seen that over the last although for two years technically

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<v Speaker 5>the republic I mean sorry, Democrats are in charge, but

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<v Speaker 5>mansion and cinema blocked excessive spending. So that's a concern.

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<v Speaker 5>There's also another concern that's unique to this year or

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<v Speaker 5>next year, really, and that is if there's a Democratic sweep,

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<v Speaker 5>there almost certainly will be a significant corporate tax increase,

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<v Speaker 5>and regardless of your political outlook, that is unambiguously bad

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<v Speaker 5>for the stock market. So we would drop our target

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<v Speaker 5>by about twenty percent if that occurred, if we really

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<v Speaker 5>got a twenty eight percent tox rate, which seemed likely.

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<v Speaker 5>So we see that as a risk, and we also,

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<v Speaker 5>as you're implying, it's not really that great if we

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<v Speaker 5>have a Republican sweep and we spend too much money

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<v Speaker 5>on defense and just cut taxes and run huge deficits.

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<v Speaker 2>Yeah, Democrats, shapiir pretty rejuvenated here and seem to be

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<v Speaker 2>rather excited about the prospects of Kamala Harris, but it'll

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<v Speaker 2>be today. I think that President Biden looks back and

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<v Speaker 2>looks to his own legacy, and we'll talk a lot

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<v Speaker 2>about that, and it might suggest there's a little bit

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<v Speaker 2>of discord over the way the president was sidelined by

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<v Speaker 2>some of the heavyweights like Barack Obama, Nancy Pelosians. I

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<v Speaker 2>got to ask you a little bit about politics, given

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<v Speaker 2>the day and the fact that President Biden will be speaking,

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<v Speaker 2>and by the way, we'll be carrying that and wrapping

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<v Speaker 2>up the speech a little bit later on here on

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<v Speaker 2>the network. But I want to get your take on

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<v Speaker 2>whether or not you think that Democrats are united or divided.

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<v Speaker 5>Well, they have one element that really kind of argues

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<v Speaker 5>against all the divided arguments. And I don't know if

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<v Speaker 5>you've heard of him. His name is Donald Trump. So

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<v Speaker 5>that absolutely is going to and already has really unified

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<v Speaker 5>the Democratic Party. They did what they had to do

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<v Speaker 5>to get a more credible candidate. Seems like so far

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<v Speaker 5>it's working. And the Trump administration so far, or Trump

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<v Speaker 5>really himself, seems to be situation normal, completely disorganized campaign,

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<v Speaker 5>off message, picta a vice presidential candidate that does not

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<v Speaker 5>broaden the base if anything, and narrows it. So you know,

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<v Speaker 5>we're we just look at the gambling odds, favors come

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<v Speaker 5>all up. That's kind of our base case. Yeah, but

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<v Speaker 5>it's a turnout elections. We won't know till we now.

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<v Speaker 2>Yeah, absolutely, well, I should stay in my lane here

0:13:24.400 --> 0:13:27.000
<v Speaker 2>and get you back to markets. You know, give me

0:13:27.120 --> 0:13:30.160
<v Speaker 2>your number one theme to play at the moment.

0:13:31.600 --> 0:13:34.880
<v Speaker 5>Well, we do think the rates are going lower, which

0:13:34.920 --> 0:13:38.160
<v Speaker 5>is less of a non consensus call than it was

0:13:38.160 --> 0:13:41.120
<v Speaker 5>at the beginning of the year. And if that occurs,

0:13:41.600 --> 0:13:46.960
<v Speaker 5>that favors the intersensitive sectors, and these are sectors that

0:13:47.000 --> 0:13:50.280
<v Speaker 5>have been beaten down during the FED tidening cycle. So

0:13:50.360 --> 0:13:54.800
<v Speaker 5>we're strongly recommending financials and reads, and that also includes

0:13:54.800 --> 0:13:57.240
<v Speaker 5>small caps because they're dominated by financial routs.

0:13:57.600 --> 0:13:59.760
<v Speaker 2>Yeah all right, Jay, very good, Thank you very much

0:13:59.800 --> 0:14:03.600
<v Speaker 2>for owning us here. Jay Hatfield there, CIO at Infrastructure

0:14:03.679 --> 0:14:13.440
<v Speaker 2>Capital Management, Mary Nicola and live strategists with us live

0:14:13.520 --> 0:14:17.040
<v Speaker 2>here on the program. So a lot of deals here

0:14:17.080 --> 0:14:21.440
<v Speaker 2>of late Mary, a softer tone at the FED. You've

0:14:21.440 --> 0:14:24.480
<v Speaker 2>got a rebound of some of the megacap tech stocks

0:14:24.520 --> 0:14:28.200
<v Speaker 2>and also a broadening out of the marketplace and a

0:14:28.240 --> 0:14:30.920
<v Speaker 2>weaker dollar. So there's a lot to like. But does

0:14:30.960 --> 0:14:31.680
<v Speaker 2>it continue?

0:14:33.520 --> 0:14:35.720
<v Speaker 1>Yeah? I think for now it does, and largely has

0:14:35.760 --> 0:14:38.120
<v Speaker 1>to do with the fact that you've got a soft

0:14:38.200 --> 0:14:41.800
<v Speaker 1>landing narrative that's really come through. So the data has

0:14:41.920 --> 0:14:44.760
<v Speaker 1>shown that the US economy is actually holding up. It's

0:14:44.800 --> 0:14:48.280
<v Speaker 1>not doing as bad as what was initially thought of

0:14:48.320 --> 0:14:52.720
<v Speaker 1>when we saw the jobs report in early August, So

0:14:52.800 --> 0:14:55.600
<v Speaker 1>the narrative has changed. It has shown that the US

0:14:55.600 --> 0:15:00.800
<v Speaker 1>economy is resilient, inflation is softening, so playing feeding into

0:15:00.840 --> 0:15:05.760
<v Speaker 1>that soft landing narrative, So giving the likes of the

0:15:05.800 --> 0:15:08.200
<v Speaker 1>equity rally a little bit more of a boost and

0:15:08.240 --> 0:15:13.440
<v Speaker 1>giving you know, things like Asian currencies another strong rebound

0:15:13.520 --> 0:15:18.120
<v Speaker 1>and another lift higher as a result. So for now,

0:15:18.160 --> 0:15:21.280
<v Speaker 1>and then obviously once the FED reconfirms that the easing

0:15:21.360 --> 0:15:24.080
<v Speaker 1>is on its way, that should really continue.

0:15:24.680 --> 0:15:24.880
<v Speaker 3>Yeah.

0:15:24.840 --> 0:15:28.520
<v Speaker 4>Does soft landing necessarily mean easing though, because how is

0:15:28.560 --> 0:15:31.760
<v Speaker 4>growth looking? And is there this disconnect again between what

0:15:31.800 --> 0:15:35.040
<v Speaker 4>the markets are expecting and what JPAL might end up delivering.

0:15:36.440 --> 0:15:38.360
<v Speaker 1>I mean, the fact is the market is pricing in

0:15:38.440 --> 0:15:42.480
<v Speaker 1>something very aggressive in my view, in terms of highlighting

0:15:42.520 --> 0:15:44.200
<v Speaker 1>the fact that there is going to be a cut

0:15:44.240 --> 0:15:48.120
<v Speaker 1>almost every meeting from then on, I think what the

0:15:48.920 --> 0:15:51.280
<v Speaker 1>FED is likely to take where the approach that they're

0:15:51.360 --> 0:15:53.440
<v Speaker 1>likely to take is more of what we've been hearing

0:15:53.480 --> 0:15:57.320
<v Speaker 1>from global central pangs, which they start cutting or they

0:15:58.120 --> 0:16:00.880
<v Speaker 1>do their first cut and they become more data dependent.

0:16:01.400 --> 0:16:03.920
<v Speaker 1>So right now, and one of the key things that

0:16:04.040 --> 0:16:07.560
<v Speaker 1>some of the FED officials have highlighted is that keeping

0:16:07.600 --> 0:16:11.080
<v Speaker 1>greats at the current level means that the economy is overheating. Obviously,

0:16:11.120 --> 0:16:13.680
<v Speaker 1>we know that the economy is not overheating. We're seeing

0:16:13.680 --> 0:16:18.360
<v Speaker 1>some softness coming through that takes them out of restrictive policy,

0:16:18.640 --> 0:16:22.280
<v Speaker 1>so you move more towards normalizing rather than easing. And

0:16:22.360 --> 0:16:27.000
<v Speaker 1>I think that message is likely to be emphasized at

0:16:27.080 --> 0:16:27.720
<v Speaker 1>Jackson Hall.

0:16:29.120 --> 0:16:32.280
<v Speaker 2>Interesting to see what he hints about in terms of

0:16:32.720 --> 0:16:35.320
<v Speaker 2>the pace of additional cuts. I think everybody kind of

0:16:35.360 --> 0:16:39.720
<v Speaker 2>feels now that September is likely on the way. That

0:16:39.760 --> 0:16:42.560
<v Speaker 2>would surprise the markets and you'd probably see a negative reaction,

0:16:42.920 --> 0:16:45.200
<v Speaker 2>but there's enough other good things happening that you know,

0:16:45.240 --> 0:16:49.080
<v Speaker 2>perhaps it would pass, but people will calibrate. You know

0:16:49.120 --> 0:16:51.440
<v Speaker 2>what's coming up next? What do you see as the

0:16:51.920 --> 0:16:53.920
<v Speaker 2>natural pace into twenty twenty five?

0:16:55.360 --> 0:16:59.960
<v Speaker 1>Yeah, I think what you do see is a gradual pace,

0:17:00.320 --> 0:17:02.720
<v Speaker 1>So you see a start of a cut in September,

0:17:03.120 --> 0:17:07.000
<v Speaker 1>then you sort of But I don't think a twenty

0:17:07.040 --> 0:17:11.960
<v Speaker 1>five basis point cut is guaranteed for every consecutive meeting thereafter,

0:17:12.680 --> 0:17:15.760
<v Speaker 1>and even to a jumbo rate cut unless you see

0:17:15.800 --> 0:17:18.760
<v Speaker 1>a deterioration in the market, and so that emphasis on

0:17:18.880 --> 0:17:21.960
<v Speaker 1>data dependency is likely to linger. It's something that we've

0:17:21.960 --> 0:17:25.160
<v Speaker 1>heard from the ECB, from the Bank of England and

0:17:25.480 --> 0:17:28.159
<v Speaker 1>that's unlikely to change with the FED as well. So

0:17:28.520 --> 0:17:31.159
<v Speaker 1>you're likely to see some of the what the swap

0:17:31.200 --> 0:17:34.119
<v Speaker 1>market is pricing in and some what traders are pricing

0:17:34.119 --> 0:17:36.879
<v Speaker 1>in to be repealed a little bit and paired back,

0:17:37.680 --> 0:17:40.959
<v Speaker 1>and that will set bring some upset into the market.

0:17:41.040 --> 0:17:43.959
<v Speaker 1>But at the same time, we've seen large sways in

0:17:44.040 --> 0:17:46.760
<v Speaker 1>FED pricing over the past year, where we've gone from

0:17:47.040 --> 0:17:49.760
<v Speaker 1>starting the year with almost seven basis points of cuts

0:17:50.320 --> 0:17:52.920
<v Speaker 1>heading into twenty twenty four, then we went down to

0:17:53.000 --> 0:17:56.639
<v Speaker 1>almost two and even closer to one at one point.

0:17:56.720 --> 0:18:00.159
<v Speaker 1>So I think these sways will remain, especially if the

0:18:00.200 --> 0:18:04.119
<v Speaker 1>FED doesn't give some clear forward guidance of you know,

0:18:04.200 --> 0:18:07.600
<v Speaker 1>what is the pace likely to do, and that's that's

0:18:07.640 --> 0:18:10.240
<v Speaker 1>going to and that's going to resonate is the fact

0:18:10.240 --> 0:18:12.760
<v Speaker 1>that we don't get clear forward guidance and we still

0:18:12.800 --> 0:18:14.040
<v Speaker 1>rely on data dependence.

0:18:14.840 --> 0:18:17.280
<v Speaker 4>Well, dollar weakness in this environment seems to be emerging

0:18:17.280 --> 0:18:19.639
<v Speaker 4>as a theme. We've got the Bloomberg Dollar Spot index

0:18:19.680 --> 0:18:22.960
<v Speaker 4>off about two percent in the past month, and that's

0:18:22.960 --> 0:18:24.879
<v Speaker 4>causing some interesting moves in the yen. It went on

0:18:24.960 --> 0:18:27.200
<v Speaker 4>quite the journey yesterday, didn't it. We broke through one

0:18:27.280 --> 0:18:31.120
<v Speaker 4>forty eight now just above one forty six. Is yen

0:18:31.280 --> 0:18:34.440
<v Speaker 4>strength now an entrenched narrative or is that too early

0:18:34.480 --> 0:18:34.840
<v Speaker 4>to say?

0:18:36.160 --> 0:18:38.560
<v Speaker 1>Yeah? Absolutely. I think that's one of the things is

0:18:38.600 --> 0:18:41.000
<v Speaker 1>that every day it becomes all eyes on the end

0:18:41.880 --> 0:18:45.880
<v Speaker 1>and that's not likely to change. So obviously the FED

0:18:46.000 --> 0:18:51.080
<v Speaker 1>soft landing narrative helps assuage some of the concerns in

0:18:51.119 --> 0:18:53.560
<v Speaker 1>the market. So let's say you don't get as much

0:18:53.560 --> 0:18:58.600
<v Speaker 1>of a ruckus or disruption with a yen with a

0:18:58.720 --> 0:19:01.760
<v Speaker 1>yen strength as you did for as a result. But

0:19:01.880 --> 0:19:06.800
<v Speaker 1>I think the BOJ has let that normalizing genie out

0:19:06.840 --> 0:19:10.000
<v Speaker 1>of the bottle, and so we're looking for more further

0:19:10.080 --> 0:19:12.800
<v Speaker 1>normalization of rates. But I think one of the key

0:19:12.840 --> 0:19:15.399
<v Speaker 1>things that Yuwaita will say when he speaks to the

0:19:15.440 --> 0:19:18.840
<v Speaker 1>diet on Friday is the fact that when he continues

0:19:18.880 --> 0:19:23.480
<v Speaker 1>with his path towards normalization that obviously market conditions will matter,

0:19:23.760 --> 0:19:25.760
<v Speaker 1>and I think that's going to placate a lot of

0:19:25.760 --> 0:19:27.600
<v Speaker 1>the nerves that in the far in the market. So

0:19:27.880 --> 0:19:31.480
<v Speaker 1>you still see continued yen strength, but just not as

0:19:32.040 --> 0:19:35.760
<v Speaker 1>at the accelerated pace that we've seen over the last month.

0:19:36.640 --> 0:19:40.359
<v Speaker 2>So Doll again not unnerving markets. Now we have a

0:19:40.400 --> 0:19:44.679
<v Speaker 2>few other negative developments that could emerge. We mentioned that

0:19:44.760 --> 0:19:50.160
<v Speaker 2>Pal might surprise us in Nvidia could stumble, Hamas might

0:19:50.200 --> 0:19:54.440
<v Speaker 2>not even sniff at that ceasefire that at Israel has

0:19:54.480 --> 0:19:56.840
<v Speaker 2>agreed to, and Oran of course could could get pretty

0:19:56.840 --> 0:20:01.000
<v Speaker 2>aggressive against Israel. Any of those do you think potential

0:20:01.400 --> 0:20:03.000
<v Speaker 2>major stumbling points for the market.

0:20:04.400 --> 0:20:06.840
<v Speaker 1>I think the major one will probably be in Vidia,

0:20:07.800 --> 0:20:11.080
<v Speaker 1>especially because we've seen such a strong rally in equity

0:20:11.080 --> 0:20:15.679
<v Speaker 1>markets and that equity market comeback, and so Nvidia is

0:20:16.000 --> 0:20:20.679
<v Speaker 1>probably the key thing that's going to especially since the

0:20:20.680 --> 0:20:24.600
<v Speaker 1>Magnificent seven companies, we've seen that the results the earnings

0:20:24.680 --> 0:20:27.840
<v Speaker 1>so far for this quarter have been mixed. So it's

0:20:27.880 --> 0:20:31.480
<v Speaker 1>really up to Nvidia to carry through and justify those

0:20:31.560 --> 0:20:36.360
<v Speaker 1>high valuations. Even though we've seen a market improvement in

0:20:36.600 --> 0:20:40.359
<v Speaker 1>company earnings x magnificent seven. But it really will come

0:20:40.440 --> 0:20:43.880
<v Speaker 1>down to Nvidia showing us that, you know, the valuations

0:20:44.040 --> 0:20:48.399
<v Speaker 1>and the expensive valuations for equity markets makes sense. So

0:20:48.480 --> 0:20:50.879
<v Speaker 1>it's really going to be all about Nvidia.

0:20:52.359 --> 0:20:54.720
<v Speaker 4>In terms of magots. Let's take a look at thenk

0:20:54.920 --> 0:20:59.439
<v Speaker 4>rallying pretty hard despite the yen strengthening. What's going on

0:20:59.520 --> 0:21:00.320
<v Speaker 4>with the carry trade?

0:21:00.400 --> 0:21:00.480
<v Speaker 3>Now?

0:21:00.520 --> 0:21:01.480
<v Speaker 4>Can we even unpick that?

0:21:03.480 --> 0:21:06.280
<v Speaker 1>Yeah? I think that carry trade there's obviously a lot

0:21:06.320 --> 0:21:10.159
<v Speaker 1>of we've seen such an aggressive unwind in the carry

0:21:10.160 --> 0:21:13.359
<v Speaker 1>trade over the last few over the last month, and

0:21:13.560 --> 0:21:16.120
<v Speaker 1>I think a lot of it was really snowballed by

0:21:16.240 --> 0:21:19.119
<v Speaker 1>the fears of a recession. When you have a combination

0:21:19.440 --> 0:21:24.200
<v Speaker 1>of weak US growth, slow China economy, you wonder where

0:21:24.240 --> 0:21:26.960
<v Speaker 1>is emerging market growth going to come from? And that

0:21:27.119 --> 0:21:31.359
<v Speaker 1>really becomes the key sticking point for emerging markets and

0:21:31.359 --> 0:21:34.080
<v Speaker 1>why would you even hold a carry trade if that

0:21:34.280 --> 0:21:38.120
<v Speaker 1>environment continues. The key thing, you know, what we've seen

0:21:38.200 --> 0:21:40.960
<v Speaker 1>it for carry trades is the fact that equity markets

0:21:41.000 --> 0:21:41.760
<v Speaker 1>make a comeback.

0:21:42.080 --> 0:21:44.880
<v Speaker 2>Yeah, all right, Mary, thank you for joining us. Mary Nicola,

0:21:45.080 --> 0:21:51.639
<v Speaker 2>m Live Strategist. This is the Bloomberg Daybreak Asia podcast,

0:21:51.840 --> 0:21:54.919
<v Speaker 2>bringing you the stories making news and moving markets in

0:21:54.960 --> 0:21:58.760
<v Speaker 2>the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube

0:21:58.800 --> 0:22:02.200
<v Speaker 2>to get more episodes of this and other shows from Bloomberg.

0:22:02.480 --> 0:22:06.440
<v Speaker 2>Subscribe to the podcast on Apple, Spotify, or anywhere else

0:22:06.480 --> 0:22:10.159
<v Speaker 2>you listen and always on Bloomberg Radio, the Bloomberg Terminal,

0:22:10.240 --> 0:22:11.760
<v Speaker 2>and the Bloomberg Business opp