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Speaker 1: Global business news twenty four hours a day. If Bloomberg

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Speaker 1: dot Com, the Radio plus Mobile Act and on your radio.

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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Speaker 1: I'm Charlie Pelota. A mixed picture for stocks the narrow

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Speaker 1: range right now, with the SMP up just one point,

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Speaker 1: the DALLO is down thirteen. We are brought to you

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Speaker 1: by Pershing's Inside twenty sixteen, the must attend event for

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Speaker 1: advisors less than two weeks away June seventh through the ninth.

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Speaker 1: If you haven't registered, you still can visit Inside dot com.

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Speaker 1: That's I N S I T E twenty sixteen dot Com.

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Speaker 1: Now over to the First Word Breaking news desk for

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Speaker 1: today's afternoon call. Here he is Bill Maloney. Good afternoon, Charlie.

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Speaker 1: It's been a quiet day from the man U Savages.

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Speaker 1: DALLA is currently lowered by thirteen points. SUPs are higher

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Speaker 1: by a point, and as that gains eleven, the small

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Speaker 1: cap six hundred is little changed, while the U S

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Speaker 1: tenure yield fell to one point eight two percent. Six

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Speaker 1: out of ten s B sectors are higher, led by

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Speaker 1: games and Utilities, Telecom and consumers. Staples leaders to the downside.

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Speaker 1: Included the materials, financials, and energy sectors down. Transports fall

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Speaker 1: twelve points and as a by text, the client ten

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Speaker 1: and the vix is down by one point seven percent down.

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Speaker 1: Leaders to the upside included Coca Cola, Fiser and Apple.

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Speaker 1: Apple traded back above a hundred dollars per share. DuPont,

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Speaker 1: Woman Sacks, and JP Morgan led to the downside after earnings.

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Speaker 1: Dollar Tree search thirteen percent to an all time high.

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Speaker 1: HP gained as much as seven and a half percent.

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Speaker 1: Abercroberty fell seventeen percent, while It's hide Water dropped as

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Speaker 1: much as thirty eight percent to its lowest level since

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Speaker 1: nineteen eighties six after the belt. Tonight, look for earnings

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Speaker 1: from Decker's outdoor game stop and Alta Salon, Live from

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Speaker 1: the first Breaking news desk on Bill Maloney. Charlie all right,

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Speaker 1: thank you very much, Bill Maloney, and the here live

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Speaker 1: breaking news over your Bloomberg type squawk squ a w

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Speaker 1: K on your terminal. I'm Charlie Pellock and that's a

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Speaker 1: Bloomberg business flash, Thank you very much. Charlie palis taking

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Speaker 1: a look at President Obama's visit to Japan. The Japanese

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Speaker 1: Prime Minister talking about the potential for a global crisis,

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Speaker 1: warning of a risk on the scale of Lehman Brothers

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Speaker 1: if appropriate policies are not taken. What are those policies?

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Speaker 1: What exactly is the Prime Minister referring to. That's why

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Speaker 1: we have Mark Chandler. He is the global head of

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Speaker 1: currency strategy for Brown Brothers Harriman and he can be

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Speaker 1: followed on Twitter at Mark m a r C. Making

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Speaker 1: sense alright, Mark makes some sense for us. What is

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Speaker 1: Prime Minister Shinzo Abe talking about? Thanks him, I don't

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Speaker 1: think he's really talking about what he's talking about. I

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Speaker 1: think what he's talking about is his own domestic issues

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Speaker 1: and what it's happening. Is it next to April? Japan

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Speaker 1: is scheduled to raising sales tax on consumption from eight

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Speaker 1: percent to ten percent. The big movie to push against it,

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Speaker 1: and the only way Abiter Japan say he will avoid it,

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Speaker 1: he will he will push it out is if there's

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Speaker 1: a Lehman like crisis, and so of course he's got

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Speaker 1: a warrant of the list of a Lehman like crisis

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Speaker 1: for domestic purposes, not that he's really saying we're on

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Speaker 1: the verge of such a crisis. Well, you know when

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Speaker 1: is there's a certain things stand out in your mind. Mark,

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Speaker 1: I will never forget in when the consumption tax have

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Speaker 1: been passed by Japanese lawmakers, it was clear the economy

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Speaker 1: was slowing down. And used to sit there as a

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Speaker 1: journalist or as a you know a trade or whatever,

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Speaker 1: say don't do it, don't do it, and they did,

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Speaker 1: and they helped push their economy over the edge. Is

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Speaker 1: this another situation? And how I runic? What how many

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Speaker 1: years thirty years later? Is it possible they're about to

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Speaker 1: make them the same mistake if they do raise that

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Speaker 1: consumption tax exactly kept and they raised it a couple

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Speaker 1: of years ago, they raised it from five to eight percent,

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Speaker 1: partly because the I M. S at the time was

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Speaker 1: pushing them too, because Japan has the debt that makes

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Speaker 1: it it makes Greece almost look solvent. Japan is debt

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Speaker 1: to GDP is something close to about two. And so

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Speaker 1: the idea is and how is Japan going to consolidate

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Speaker 1: its fiscal situation? And the idea was raised the value

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Speaker 1: added tacks, which is low in Japan compared to other countries.

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Speaker 1: And when they did this, the Japanese the Japanese official said, oh,

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Speaker 1: we're gonna have a small downturn. But a couple of

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Speaker 1: years later they still haven't fully recovered from that tightening

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Speaker 1: of fiscal policy, because remember what opty was about ebonomics

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Speaker 1: was stimulating fiscal policy on a SX monetary policy and

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Speaker 1: which was working. The economy was growing, and then they

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Speaker 1: raised the sales tax pushed them into uh slower gear

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Speaker 1: or even a recession. So Marcus, this just really a

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Speaker 1: way of asking Janet Yelling and the other members of

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Speaker 1: the f O m C to please not raise interest

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Speaker 1: rates this year. Yeah, it's kind of interesting, Tim that

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Speaker 1: they would do that, but I suspect that at the

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Speaker 1: end of the day, this isn't really about U S policy.

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Speaker 1: In fact, just the other day, the I think it

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Speaker 1: was at Bloomberg News had the story of the vice

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Speaker 1: president of the e C e a federate hike. I

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Speaker 1: think the Japanese would like to federate's interest rates because

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Speaker 1: what would that do. They would make the interest rate

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Speaker 1: differential between the U S and Japan wide and out,

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Speaker 1: and would attract more money of the US and allow

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Speaker 1: the end to weaken after strengthening so much this year. Besides,

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Speaker 1: this issue of the domestic economy in Japan and what

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Speaker 1: is going on. The Japanese have another big issue, and

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Speaker 1: it's Japan's maritime proposals and the dispute with China over

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Speaker 1: some islands. This is something that never seems to really

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Speaker 1: boil over into a crisis, but never seems to go away.

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Speaker 1: What is it? What is what is on the table

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Speaker 1: at this G seven meeting of anything? Yeah, the good question.

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Speaker 1: I do think that it's the geopolitics is really first there.

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Speaker 1: I think in terms of what the Japanese ultimately interested

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Speaker 1: from rest of the world, and that is that they

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Speaker 1: need some support because what happened is that acceptal factors

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Speaker 1: at play here. But what happens a couple of years ago,

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Speaker 1: the governor of Tokyo nationally basically nationalized some islands, and

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Speaker 1: these lands were in dispute the Chinese going back to

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Speaker 1: sixties and early seventies. The Chinese basically say, we had

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Speaker 1: this dispute here, but let's not settle it. Let's let's

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Speaker 1: just like, let's let's not address this. Let's smarter people

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Speaker 1: than us. I think Jpe once said, let this next generation,

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Speaker 1: smarter people than us, resolved this very thorny topic. But

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Speaker 1: instead the Japanese sort of say that sort of woke

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Speaker 1: the sleeping dogs by nationalizing these islands, and the Chinese

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Speaker 1: cannot just let Japan resolved the issue by FIAT. And

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Speaker 1: so I know that the US and look at the

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Speaker 1: U S stress a lot of stories about how China

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Speaker 1: is building out these islands, basically doing some landfill, making

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Speaker 1: these shoals and tiny islands into larger places that can

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Speaker 1: be militarized. Would say, say, uh, landing for airplanes. What's

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Speaker 1: happening is many countries in East Asia are doing the

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Speaker 1: same thing, the Philippines, for example, also doing this, the Vietnamese,

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Speaker 1: the Taiwanese, and so I think this is a like

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Speaker 1: a tinder box, uh, that that could turn into something

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Speaker 1: more serious if the US and other countries do not

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Speaker 1: hold their allies into account. Mark Chandler, thank you so

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Speaker 1: very much, Mark Chandler. He's Global head of Currency Strategy

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Speaker 1: at Brown Brothers Harriman. As the G seven Heads of

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Speaker 1: State Summit is taking place in Japan, uh, the Japanese

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Speaker 1: Prime Minister Mr ab talks about the possibility of a

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Speaker 1: crisis like we saw with the Lehman Brothers collapse, back

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Speaker 1: in two thousand and eight, but his Mark points out

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Speaker 1: he's really just trying to get people fired up about

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Speaker 1: the threat of a consumption tax being passed in Japan.

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Speaker 1: I'm Kathleen Hayes along with Pim Fox, and this is

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Speaker 1: taking Stock on Bloomberg Radio Bloomberg. Taking Stock has brought

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