Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Doug Prisner.
Speaker 2: You can join Brian Curtis and myself for the stories,
Speaker 2: making news and moving markets in the Apec region. You
Speaker 2: can subscribe to the show anywhere you get your podcast
Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the
Speaker 2: Bloomberg Business app. We had more than a half dozen
Speaker 2: FED officials addressing the issue of rate cuts today, one
Speaker 2: of them the head of the Minneapolis Fed, Neil Kashkari. Curiously,
Speaker 2: he was saying rate cuts may not be needed this year,
Speaker 2: especially if the economy remains robust.
Speaker 3: If we continue to see strong job growth, if we
Speaker 3: continue to see strong consumer spending and strong GDP growth,
Speaker 3: then that raises a question in my mind, well, why would.
Speaker 1: We cut rates.
Speaker 4: Maybe the dynamics that we have right now are actually sustainable,
Speaker 4: but there's a lot there's only a lot of gifts
Speaker 4: underlying that question and that hypothesis.
Speaker 2: He is Neil Kashkara, the head of the Minneapolis FED,
Speaker 2: at a virtual event on LinkedIn earlier today. We also
Speaker 2: heard from the head of the Cleveland Fed, lorettam Mesters,
Speaker 2: She suggested the FED could be getting close to the
Speaker 2: level of confidence it needs to begin cutting and Austin Goolsby,
Speaker 2: the head of the Chicago FED, was saying today those
Speaker 2: higher than expected inflation readings in the months of January
Speaker 2: and February likely don't change the broader picture of cooling
Speaker 2: price growth. Let's get to our guest, George, but Boris
Speaker 2: is with us. George's managing director of research and Investments,
Speaker 2: also advisory at K two Asset Management. He joins us
Speaker 2: from the line in Melbourne. George, thanks for being with us.
Speaker 2: Where are we right now in the inflation story.
Speaker 1: That's a good question to laid with.
Speaker 5: But in the Western world inflation is falling in a
Speaker 5: non linear manner.
Speaker 1: Others are calling it bumpy.
Speaker 5: That is much as expected for most participants in the market,
Speaker 5: but some do. You act surprise, but that stubborn core
Speaker 5: services inflation is an issue, and then it splits very quickly,
Speaker 5: depending on what narrative you are. You can look at
Speaker 5: core CPI it is upper end to that three handle.
Speaker 5: We can look at core PCE and it's upper end
Speaker 5: of the two handle. The directions in the right way.
Speaker 5: It is non many. It is messy. There is stubbornness
Speaker 5: to it, which is predicated on the resilience of aggregate
Speaker 5: data in North America.
Speaker 2: Do we are we underestimating the effect that the crude
Speaker 2: oil market could be having on inflation? I mean we're
Speaker 2: above we were trading above eighty seven dollars a barrel
Speaker 2: in a WTI and Brent right now is above ninety
Speaker 2: one bucks. If this is lasting, if this is durable
Speaker 2: in terms of the price moves in oil, could we
Speaker 2: be underestimating where we are in the inflation story?
Speaker 5: Just like a high interest rates are less sensitive the
Speaker 5: stage of the cycle. In broader terms of the US economy,
Speaker 5: you'd have to say higher energy prices are as well,
Speaker 5: to a degree at the stage of the cycle versus
Speaker 5: previous cycles decades. Part But the thing to reinforce is
Speaker 5: that the demand destruction kicks in rule of thumb. Econometricians
Speaker 5: like telling us ninety days of these sort of prices.
Speaker 5: Demand destruction kicks in one to eighty days. Demand destruction
Speaker 5: amplifies itself if there were to be sustainably higher and
Speaker 5: you need GDP.
Speaker 1: And aggregate data to justify it.
Speaker 5: Just like high nomenal bond yards, you can tolerate it
Speaker 5: if economic growth in nominal terms is expanding, So comes
Speaker 5: back to it is ahead.
Speaker 1: When it is demand destruction, it is a tax on
Speaker 1: the consumer. But taking a.
Speaker 5: Step back is that there's the resilience for the US
Speaker 5: economy and the employments there. So in the US you'll
Speaker 5: be going up at a higher price. You'd be upset
Speaker 5: with hurb feelings, but in the main, generally it's that
Speaker 5: economic activity is more robust to tolerate it.
Speaker 2: Yeah, hurt feelings great in an election year. I mean,
Speaker 2: we'll see where that gets us, right, So let's talk
Speaker 2: a little bit of higher for longer in the states.
Speaker 2: Are you in the camp that we're going to get
Speaker 2: as many as three rate cuts this year in the US?
Speaker 5: Not too much three believe I'll start one late in
Speaker 5: the year, But that's irrelevant.
Speaker 1: It's more what does the data do.
Speaker 5: So having government obviously fed governors speaking about no rate
Speaker 5: cuts this year really gets the attention on the headline,
Speaker 5: so people can sit down and go, oh, what am
Speaker 5: I dealing with here? Because it can't be as binary
Speaker 5: as rate cut good, rate staying the same bad for
Speaker 5: risk assets, It's going to be more nuanced to that
Speaker 5: and that's what something's happening, and people need to focus
Speaker 5: on it. So the economic data and the wealth effects
Speaker 5: for households in North America and their residential homes are
Speaker 5: much higher than what it was before. There's a double
Speaker 5: wealth effect in there. Yes, there's the fixed loans and
Speaker 5: it's an accid in itself that have to be reset sometime.
Speaker 5: But why would someone's looking for price stability across an economy?
Speaker 1: Why would you be cutting into that?
Speaker 5: So data has to deteriorate in a faster momentum and pace,
Speaker 5: not just one month.
Speaker 1: It can't be just pay rolls tonight.
Speaker 5: It needs to be weakness over three months, rolling three
Speaker 5: months to be able to build that narrative of three
Speaker 5: rate cuts this year.
Speaker 1: But as it stands at the moment, earnings are growing.
Speaker 5: They're probably pricing to be too high, high single digits,
Speaker 5: but they are growing. It's quite healthy relative to expectations.
Speaker 5: And cutting interest rates in the face of these risks
Speaker 5: and average out of the earnings is what would be
Speaker 5: all looking for.
Speaker 1: It doesn't seem to make much sense to me.
Speaker 2: So let's change gears talk a little bit about China,
Speaker 2: and I'm curious as to whether or not first, you
Speaker 2: think the economy has bottomed, and if we are in
Speaker 2: that process right now, could we begin to inflate a
Speaker 2: little bit and kind of emerge from this deflationary trap
Speaker 2: in China.
Speaker 5: Possible, many moving parts, and your show discusses it all
Speaker 5: the time. It's very clear that household and business sentiment
Speaker 5: in China is at real depressed levels, unlike North America,
Speaker 5: and they got deflation unelike North America. So there are
Speaker 5: many moving parts as they've got to deal with the
Speaker 5: consequences of the biggest construction housing collapse we've ever seen.
Speaker 5: But it's very clear Beijing is very targeted. So the
Speaker 5: middle class is going to maintain this painful period for
Speaker 5: considerable time as they deviate their policies accordingly as pragmatic
Speaker 5: as Beijing always chose to be. So there is an
Speaker 5: aggregate turnaround of data. Sentiment is very very low in there,
Speaker 5: and they are controlling and the rest. This is why
Speaker 5: everybody's underweight auto's in the West. They are controlling the
Speaker 5: next phase of EVS and the protest grummery. So Janet
Speaker 5: Yellen needs to do her best work, and even that
Speaker 5: won't be enough on the current tour because they are
Speaker 5: ready to unload lower cost products right across the board
Speaker 5: to the whole world. And that is good for China
Speaker 5: in itself, But from the investment point of view, this
Speaker 5: is the crux of it all. We are not putting
Speaker 5: finite capital in China for the last three years, we
Speaker 5: are buying earning some of those exporters to China, hence
Speaker 5: their energy overweight.
Speaker 2: It seems as though authorities in China are really caught
Speaker 2: between a rock and a hard place. I mean, I
Speaker 2: understand the weakness and the property market and how industrial
Speaker 2: policy as a driver of growth may be able to
Speaker 2: make up for some of that, but if you're dealing
Speaker 2: with over capacity in so many industries, it's not clear
Speaker 2: to me how you can continue to use industrial policy
Speaker 2: as a driver.
Speaker 1: No spot on.
Speaker 5: Sometimes some people would say there's some cognitive dissonance with
Speaker 5: some of the policy cutting out of Beijing, but in
Speaker 5: reality they're taking a step back from the grand to
Speaker 5: play the long term. They will unload cheaper products to
Speaker 5: the rest of the world that will allow it, and
Speaker 5: North America will maintain them. They've obviously died up those
Speaker 5: tariffs and the current administration from the previous one. They
Speaker 5: can allow these cheap goods to come through, which they
Speaker 5: won't and that would be very CPI will fall very quick.
Speaker 5: But in the main, China's just got a different playbook
Speaker 5: at the moment to where we're worth three years ago
Speaker 5: and the middle class of China going to pay that price.
Speaker 1: Look it is.
Speaker 5: It is a property construction collapse like we've never seen.
Speaker 5: It will take a decade to get out of that.
Speaker 5: But again in the main, China is just coordinating that
Speaker 5: middle class go through the pain, hold onto that pain.
Speaker 5: Aggregate data will get us over the edge. And they
Speaker 5: are producing some some key goods, particularly in the technology sector,
Speaker 5: in the energy transition sector, that the rest of the
Speaker 5: world needs at a lower price. And that's a nuance
Speaker 5: of it. Or how do they do? And we believe
Speaker 5: the risks are which you can't price see with geopolitical
Speaker 5: is that there's tariff's go even of off the current
Speaker 5: template which is really high, Tariff's just accelerate in twenty
Speaker 5: twenty five to another level. They're the risks for the
Speaker 5: global economy.
Speaker 2: George, Before I let you go, I have to get
Speaker 2: your take on Japan. We heard from Governor Uwaita speaking
Speaker 2: with Saji Shimboon, saying that really greater certainty is necessary
Speaker 2: before on the inflation story, before there is any more
Speaker 2: policy action in terms of raising infrastrates. Where are you
Speaker 2: on Japan right now?
Speaker 5: Firstly, Yuela has played it perfectly, engineered that he's nominal
Speaker 5: rates to zero very well, and it's obviously communicated in
Speaker 5: hindsight by a local press in Japan, and that's been
Speaker 5: a good nuance, and he's targeted that March April period.
Speaker 1: It's plant panned out.
Speaker 5: I think they're right to reinforce that they've got a
Speaker 5: pastoring more inflation obviously, the weakness of the yen, the
Speaker 5: issues for their corporate sector on that and passing those through. Yes,
Speaker 5: the way drives is already built in. I do think
Speaker 5: they've got this is at this stage. The current policy
Speaker 5: mix is good. The overweight to Japan as a consequence
Speaker 5: is reasonable. You can overgeneralize a calendar twenty three was
Speaker 5: a value play, Calendar twenty four is a growth play
Speaker 5: and guard play for earnings in Japan. And I do
Speaker 5: think sitting back in that lange which is giving us
Speaker 5: quite good so very happy with Japan, more predictive that
Speaker 5: it's bad for some.
Speaker 2: Time George, Thank you so much. George bar boris of
Speaker 2: K two Asset Management, joining us here on a daybreak
Speaker 2: Asia from Melbourne. Meredith Whitney is with us. She is
Speaker 2: the founder also the CEO of the Meredith with Me
Speaker 2: Advisory Group. Nice of you to stop by, good to
Speaker 2: see you. Thank you so much. I hope you're doing well.
Speaker 2: It was kind of interesting. And I don't know whether
Speaker 2: you've had a chance to listen to some of our
Speaker 2: FED coverage today. I know we had about a half
Speaker 2: dozen or so FED speakers today. Neil Kashkari caught my attention.
Speaker 2: He was saying that, hey, maybe we don't get any
Speaker 2: rate cuts this year. If inflation proves to be as
Speaker 2: stubborn as it may be, and the American economy holds
Speaker 2: up as well as it seems to be, maybe Cashkari
Speaker 2: is not going to be one of those that would
Speaker 2: advocate for a cut. What do you think about that.
Speaker 6: I think it's hard to argue with the fact that
Speaker 6: we all signals in the US economy continue to be
Speaker 6: very strong, so it's hard to imagine. And I came
Speaker 6: into this year not thinking there would be six rate cuts.
Speaker 6: Three even seemed aggressive. I think one would be at
Speaker 6: best maybe after the election, but the economy still strong.
Speaker 6: Wages are going to I think, remain strong. I think
Speaker 6: jobs are going to remain strong because we have a
Speaker 6: real labor shortage in the US. So that'll call. You know,
Speaker 6: people don't want to hear that. People don't want to
Speaker 6: believe that. Everyone thought that that the FED didn't was
Speaker 6: signaling things that they didn't really mean. And I think
Speaker 6: as the year progresses, they'll appreciate the fact that the
Speaker 6: FED has been saying they're data dependent and the data
Speaker 6: is stronger than would allow them to eat to cut.
Speaker 2: That's an interesting point. Do you have a sense of
Speaker 2: why the Fed, why Powell and company back in let's
Speaker 2: say November December period of last year, were so optimistic
Speaker 2: that they could be maybe as aggressive as to cut
Speaker 2: seventy five basis points. What did they see then? What
Speaker 2: what did they understand about the trajectory that allowed them
Speaker 2: to say that.
Speaker 6: It's hard to see because I look at things in
Speaker 6: a very bottoms up basis, and I think that the
Speaker 6: FED is looking at a lot of twenty year thirty year
Speaker 6: old measures to value the economy and what you know
Speaker 6: statistically as well as anecdotally is that we have real
Speaker 6: shortage of labor and healthcare and home healthcare AIDS. We
Speaker 6: have a chronic and I think a systemically dangerous shortage
Speaker 6: in basic trade. So these are steel workers, these are electricians,
Speaker 6: these are plumbers from the steel workers at welders rather
Speaker 6: from the welder's perspective. That's where I say it's an
Speaker 6: issue of national security, and so it's very hard to
Speaker 6: imagine that that abates anytime soon. So you've seen layoffs,
Speaker 6: the most prolific in the tech sector that had over hired,
Speaker 6: and you see really basic no impact in the unemployment
Speaker 6: and in the jobs data with over five hundred thousand
Speaker 6: lost jobs in the tech industry. I would argue, and this,
Speaker 6: by the way, is you know federal FED data and
Speaker 6: Census data and BLS data. Is the fact that you know,
Speaker 6: since COVID more college educated workers are working multiple jobs.
Speaker 6: Prior to COVID, thirty percent of folks working multiple jobs
Speaker 6: were college educated. Post COVID, it's over over fifty. And
Speaker 6: I think that's probably understated because people working full time,
Speaker 6: high paid jobs are probably not going to admit in
Speaker 6: a survey that they're working multiple jobs. But this is why,
Speaker 6: you know. I just think you've got to go below
Speaker 6: the surface. And there are a lot of very smart
Speaker 6: people at the FED, but they're looking at traditional metrics,
Speaker 6: which I don't think apply today.
Speaker 2: Can I ask why you were in Hong Kong? But
Speaker 2: are you speaking with clients? Are you kicking the tires
Speaker 2: on some opportunities there? Why are you in hk.
Speaker 6: Well forst starters, I love being in Hong Kong. I
Speaker 6: love my clients in Hong Kong. And I'm on a
Speaker 6: board and Hong Kong and it's just, you know, it's
Speaker 6: it's hyper speed in terms of learning and a very
Speaker 6: very smart investor base. So I come here at least
Speaker 6: once a year. Obviously during COVID I missed a few years,
Speaker 6: but I've been a regular Hong Kong visitor.
Speaker 2: What is the view on putting money to work in
Speaker 2: China right now? I mean, the consensus opinion is you
Speaker 2: want to avoid it at all costs right now. In
Speaker 2: one of our surveys, we spoke I think to seven
Speaker 2: different financial firms in Shanghai. All but one said that
Speaker 2: the economy is yet to bottom. We're looking for further weakness.
Speaker 2: Is that the sense that you're getting that it will
Speaker 2: remain a week outlook for for the Chinese economy in
Speaker 2: twenty four It.
Speaker 6: Depends on who you ask. So they're perma China bowls
Speaker 6: in Hong Kong and the US. You know, China is
Speaker 6: a four letter word, so so it's it's very difficult.
Speaker 6: You know, you see a real disparity in valuations. Right,
Speaker 6: Chinese stocks are incredibly cheap stocks. A lot of US
Speaker 6: stocks are arguably very expensive. So there is a point
Speaker 6: where you know, global managers are going to be underweight China,
Speaker 6: and when is that point that they'll have to reallocate
Speaker 6: their portfolios. It's hard to argue the demographics are on
Speaker 6: anybody's side in China. So it's hard to argue that
Speaker 6: the real estate market is truly bottomed. It's hard hard
Speaker 6: to argue that unemployment is not a problem. So there,
Speaker 6: I don't you know, you're always going to make the
Speaker 6: most money when nobody wants to go into a market.
Speaker 6: You know, I'm not an expert on China, but it
Speaker 6: still seems a little a little you know, evaluation. If
Speaker 6: you're a if you're a classic Chinese investor, you're you're
Speaker 6: not going to be swayed by so much aversion to
Speaker 6: the Chinese market, but it's all question of timing, and
Speaker 6: I'm not sure it's right.
Speaker 1: Meredith.
Speaker 2: Before I let you go twenty seconds, the biggest surprise
Speaker 2: that you have had during your time in Hong Kong
Speaker 2: is what.
Speaker 6: The fact that so many people think Trump's going to
Speaker 6: win the election here?
Speaker 2: Hmm. Interesting? Interesting, And that certainly is going to factor
Speaker 2: into the equation, particularly during Janet Yellen's visit to Beijing,
Speaker 2: which is underway now, and whether or not leaders in
Speaker 2: China are going to be betting more and more that
Speaker 2: they're not going to have to deal with a Biden
Speaker 2: administration a year from now. Meredith, thank you so much.
Speaker 2: Always a pleasure, Meredith Whitney of the Meredith Whitney Advisor
Speaker 2: Group joining us from our studios in Hong Kong, Garfield Reynolds,
Speaker 2: Bloomberg's chief rates correspondent for Asia. He joins us from
Speaker 2: our studios in Sydney Garfield. It's always a pleasure. Maybe
Speaker 2: we don't get a rate cut at all this year.
Speaker 2: What do you think of that?
Speaker 7: Well, it certainly has to be a possibility, you're given
Speaker 7: the extremely strong start of the year we've had from
Speaker 7: the US economy, and as he said, if that continues, well,
Speaker 7: then why would you cut rights. I mean, that's kind
Speaker 7: of one of the underlying questions around the globe is
Speaker 7: that most economies looking pretty strong, especially your job markets
Speaker 7: are just fine. Unemployment levels are the kind of place
Speaker 7: where five ten years ago you would have been ecstatic
Speaker 7: about those and you would certainly not be thinking you
Speaker 7: need to ease policy as a result. Inflation also remains elevated,
Speaker 7: even though it's come down from those extreme highs. So
Speaker 7: all of those reasons say you have to consider it
Speaker 7: as an option that rates don't come down. But you know,
Speaker 7: the caveat is that with inflation having come down as
Speaker 7: much as it has, what we now have are restrictive rates.
Speaker 7: In real terms, the cash rate is well above the
Speaker 7: inflation rate.
Speaker 2: You're right about that, but I think the Fed is
Speaker 2: looking at the labor market in particular as well as inflation. Yes,
Speaker 2: but the labor market may now be showing signs of
Speaker 2: a little bit of softening. Weekly jobless claims at our
Speaker 2: highest level since January, although our Michael McKee was saying
Speaker 2: it's not exceptionally high. And then I was struck by
Speaker 2: a survey from the National Federation of Independent Business. The
Speaker 2: firms they surveyed, only eleven percent of those firms intend
Speaker 2: to add workers in the next three months on a
Speaker 2: net basis. So it's possible that we're beginning to see
Speaker 2: maybe a peak in the level of employment now. A
Speaker 2: lot more is going to become clear tomorrow with the
Speaker 2: March jobs numbers in the US. We're expecting to see
Speaker 2: healthy gains and payrolls and maybe a little bit of
Speaker 2: moderation in wages. So would you think that it's fair
Speaker 2: that the Fed remains very much focused on what's happening,
Speaker 2: not only on the inflation story, but the labor market especially.
Speaker 7: Well, I mean, those are its two basic mandates. And
Speaker 7: the other thing the factor in is your Keshkari, who
Speaker 7: doesn't vote, is definitely hawkish. Powell has been far more
Speaker 7: consistent in saying that do expect the cut rights and
Speaker 7: that do expect to meet the three rate cuts that
Speaker 7: they're projected in the top plots. And that makes sense
Speaker 7: from the point of view of in March, they boosted
Speaker 7: their forecasts for economic growth and yet they stuck with
Speaker 7: their rate cuts. So to some extent, the way the
Speaker 7: economy is traveling now is not hugely at variance with
Speaker 7: how the FED was seeing things developing when they had
Speaker 7: their last meeting. So they're still thinking they're going to
Speaker 7: cut rates, given that if there's a downside surprise for
Speaker 7: jobs that will bring rate cuts roaring back into play.
Speaker 7: Market will probably overshoot, but certainly the current pricing for
Speaker 7: June as a likely rate cut venue will firm, ride up,
Speaker 7: and we'll get back to betting on three rate cuts
Speaker 7: this year. That's still the base case scene of the markets.
Speaker 7: But there's a small a small constituency looking for maybe
Speaker 7: only two two. But yeah, a week payrolls print would
Speaker 7: put us back to three. Yeah.
Speaker 2: We had a lot of FED speak today, I think
Speaker 2: a half dozen of FED speakers, and one of them
Speaker 2: was Tom Barkman of the Richmond Fed. He was saying,
Speaker 2: it's smart to take your time to get clarity about
Speaker 2: where inflation is before you cut rates. But if you
Speaker 2: look at the way the bond market behave today, yields
Speaker 2: were actually down. Obviously, the equity market got hammered, and
Speaker 2: the dollar I think softened just a bit. These perhaps
Speaker 2: suggested to your point that maybe things are on track
Speaker 2: for cuts, because there will be on the horizon and
Speaker 2: maybe in the near term of softening in the in
Speaker 2: the American economy, and markets are beginning to kind of
Speaker 2: anticipate that.
Speaker 7: Yeah, I think. I think also, you know, the overnight
Speaker 7: action very much is smelled like investors repositioning into jobs
Speaker 7: to looking, okay, where have we gone maybe a bit
Speaker 7: too far considering we think things are going to develop.
Speaker 7: Yields are up a lot still on the week, you know,
Speaker 7: in the ten year yield hit four point four percent
Speaker 7: earlier on, which was a level we haven't seen since
Speaker 7: ya back in November, So that that makes sense to
Speaker 7: pull back from that. And stocks as well, stocks had
Speaker 7: been marching on pretty much unconcerned. They got a little
Speaker 7: bit of course, for concern with what's been going on
Speaker 7: in the Middle East and what that is the oil price.
Speaker 7: Also with your people like Kashkari laying out the potential
Speaker 7: that you know, an upside surprise on jobs could take
Speaker 7: some of those rate cuts off the table. So again,
Speaker 7: plenty of reason to get a little bit nervous that
Speaker 7: you're you've gone too far in the way that the
Speaker 7: market has been going and pull back a bit. So
Speaker 7: that's why you've got to pull back and yields, and
Speaker 7: you've got to pull back in equity prices.
Speaker 2: So before I let you go, let's talk a little
Speaker 2: bit about Japan, not only the Bank of Japan, but
Speaker 2: the yen. I mean, the yen had quite a bit
Speaker 2: of strength here in New York today. I think we
Speaker 2: were up about three tenths of one percent, the biggest
Speaker 2: gain in nearly a month. Some of that probably has
Speaker 2: to do with the anticipation that at some point, had
Speaker 2: the en remained weak, that the Ministry of Finance in
Speaker 2: Japan would have had no choice but to intervene. So
Speaker 2: maybe a little bit of haven buying as well as
Speaker 2: a result of the selloff that we had in risk assets.
Speaker 2: And here's Governor Uwaita saying that there's a lot more
Speaker 2: that's going to be required before there is another move
Speaker 2: up in the official policy Radio Japan makes sense of
Speaker 2: all of that. For me, how do you see the
Speaker 2: EN's performance right now visa VI BOJ policy.
Speaker 7: Well, the end's going to remain under pressure as long
Speaker 7: as the BOJ is pushing back against the idea that
Speaker 7: it's in any rush to titan policy. Now that it's
Speaker 7: gotten root of negative rights, I do think there's been
Speaker 7: a little bit of exhaustion when it comes to yen bears.
Speaker 7: The yen tried three times to go past one hundred
Speaker 7: and fifty two per dollar, couldn't make it so strong
Speaker 7: anticipation that if there was a move past one hundred
Speaker 7: and fifty two that would lead to intervention, then you'll
Speaker 7: certainly put intervention far more on the table than it
Speaker 7: has been. So the failure of the dottle that go
Speaker 7: past that meant a bit of exhaustion. There this kind
Speaker 7: of this difficulty that on the fundamentals, the en probably
Speaker 7: should be weaker. Certainly plenty of people think it should be. However,
Speaker 7: it's facing this this double danger of the FED still
Speaker 7: says it wants to cut rates, so forgets a reason
Speaker 7: to show that that's definitely on the table that's going
Speaker 7: to support the yen. And even as the BOJ says
Speaker 7: it's in no rush to titan, the Japanese government has
Speaker 7: made it pretty clear it's getting kind of antsy about
Speaker 7: seeing the yen this week, so that that's keeping the
Speaker 7: end and they're feeling narrow range. The moves of the
Speaker 7: night weren't that large, just unusual in the scope of
Speaker 7: where they went, but it becomes hard to see. You
Speaker 7: need a real shock to send the yen noticeably weaker
Speaker 7: from here. That means this is kind of an asymmetric risk,
Speaker 7: like if you get a shock that could send the
Speaker 7: yen stronger, it could go a lot stronger rapidly, there's
Speaker 7: nothing really to stop it. Whereas if you get a
Speaker 7: shock that should send it higher, you have the potential
Speaker 7: for the Ministry of Finance to step in with a
Speaker 7: range of tools all the way up to actual physical interventions.
Speaker 7: So the downside beckons for the dollar yen at the
Speaker 7: moment a little bit more strongly than the upside.
Speaker 2: Garfield, It's always a pleasure. I know it's a busy
Speaker 2: day for you there in Sydney, but I appreciate you
Speaker 2: making time to chat with us at Garfield Reynolds, Bloomberg's
Speaker 2: chief rates correspondent for Asia. This has been the Bloomberg
Speaker 2: Daybreak Asia podcast, bringing you the stories making news moving
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