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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the

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Speaker 2: top stories in the coming week from our Daybreak anchors

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Speaker 2: all around the world, and straight ahead on the program,

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Speaker 2: a look ahead to this week's FED meeting, what it

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Speaker 2: means for monetary policy. I'm Tom Busby in New York.

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Speaker 1: I'm Caroline Head in London, where we're looking ahead to

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Speaker 1: the Eurozones Big economic data job.

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Speaker 3: I'm Brian Curtis in Hong Kong. We look ahead to

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Speaker 3: the machinations of one key central bank, and then what's

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Speaker 3: next for a key industry that would hope to curb

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Speaker 3: the power of central banks.

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Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg

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Speaker 4: Eyleod on Free Own, New York, Bloombergen ninety nine to one, Washington,

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Speaker 4: d C, Bloomberg ninety two to nine, Boston, Bloomberg nine sixty,

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Speaker 4: San Francisco, DAB Digital Radio, London, Sirius XM one twenty one,

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Speaker 4: and around the world on Bloomberg Radio dot Com and

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Speaker 4: via the Bloomberg Business APPA.

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Speaker 2: Good day to you. I'm Tom Busby. We begin the

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Speaker 2: program with a look ahead to this week's Federal Preserve

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Speaker 2: Policy Meeting, a decision on rates expected on Wednesday. Twenty

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Speaker 2: meetings in a row with either a rate increase or

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Speaker 2: no change at all, will the Fed finally vote to

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Speaker 2: cut rates for more. We're joined by Michael McKee, Bloomberg

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Speaker 2: International Economics and Policy correspondent. Michael, I think the handwriting

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Speaker 2: is on the wall. What are you expecting to see

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Speaker 2: though this week from the Fed?

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Speaker 5: The handwritings on the wall? And for the first time,

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Speaker 5: as you mentioned, in a very long time, we're actually

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Speaker 5: going into this saying it matters what they do for

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Speaker 5: so long. We've been saying they're stuck higher for longer,

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Speaker 5: and it doesn't matter what they do at their meeting.

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Speaker 6: It's going to be what they.

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Speaker 5: Say about the future. Well, that one's going to be

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Speaker 5: both because there is a slight chance of a fifty

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Speaker 5: basis point move because they didn't fit rule it out

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Speaker 5: before the quiet period began. Nobody really thinks that's going

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Speaker 5: to happen, but it's out there, so it'll be the

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Speaker 5: first thing people will look at is how much did

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Speaker 5: they cut? And so that will be important. Then we

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Speaker 5: get the summary of economic projections new forecasts for the

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Speaker 5: economy and the dot plot, and that'll capture some attention

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Speaker 5: as well.

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Speaker 2: Now, the Fed has always said we are data dependent.

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Speaker 2: Any move we make is all depends on the data.

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Speaker 2: Let's talk about the data we saw this past week

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Speaker 2: consumer and producer price inflation. How will that factor into

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Speaker 2: this decision?

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Speaker 6: Kind of a downside surprise.

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Speaker 5: Yeah, well that's what cemented. I think the view that

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Speaker 5: we do twenty five instead of fifty and really took

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Speaker 5: away the hope of the fifties folks, because while we

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Speaker 5: got a very small increase in core CPI over what

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Speaker 5: was anticipated and the same in PPI, it doesn't suggest

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Speaker 5: that the inflation is going to be going the other

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Speaker 5: way or there's a huge danger of inflation accelerating. It

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Speaker 5: just shows that the battle is not won yet and

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Speaker 5: the FED can't rest on its laurels. And so that's

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Speaker 5: why people are saying they shouldn't go fifty because that

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Speaker 5: might send the wrong message. They want to send the

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Speaker 5: message that we are still vigilant against inflation.

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Speaker 6: And we're going to keep an eye on it.

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Speaker 5: And as last week, Christopher Waller from the Federal Reserve said,

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Speaker 5: if data from this point on show that fifty is

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Speaker 5: worth doing They can easily do that, but right now

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Speaker 5: they're not ready to.

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Speaker 2: Now some of the people who are calling for a

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Speaker 2: fifty basis point cut, I think the Fed waited too

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Speaker 2: long to initiate this cut, that they kind of missed

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Speaker 2: the boat at the end of July and we saw

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Speaker 2: some very troubling data about jobs. We saw a little

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Speaker 2: uptick in inflation growth. Do you think they missed the boat,

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Speaker 2: do you think? Or is it steady as she goes

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Speaker 2: and they're on the right path.

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Speaker 5: Well, it's impossible to say, except in hindsight that they

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Speaker 5: were behind the curve. The argument is that, as you noted,

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Speaker 5: the labor market has slowed a lot. We haven't seen

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Speaker 5: consumers spending really slow yet, except that the people's savings

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Speaker 5: are kind of dwindling, and so there's a feeling that's

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Speaker 5: going to happen at some point. The thing about in

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Speaker 5: recessions is they're based on confidence, and all of a sudden,

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Speaker 5: people lose confidence, both consumers and businesses lose confidence in

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Speaker 5: their ability to pay for new what economics would call investments,

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Speaker 5: all the stuff you buy, and so they pull back

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Speaker 5: on their spending. And right now it doesn't seem to

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Speaker 5: be the case, businesses have slowed down. We don't really

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Speaker 5: know whether that's because they are waiting, and it does

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Speaker 5: seem logical they are waiting to see the results of

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Speaker 5: the presidential election and what the tax and regulatory regime

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Speaker 5: will be like going into the new year. Consumers through

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Speaker 5: the back to school have been spending. We'll see if

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Speaker 5: that continues, but the latest indications from the high frequency

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Speaker 5: indications from retailers are that people are still spending. So

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Speaker 5: it doesn't look like there has been a seizure of

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Speaker 5: lack of confidence seizure among people yet. So it's hard

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Speaker 5: to say with any certainty that they may or may

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Speaker 5: not have missed the boat. The only thing that you

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Speaker 5: do know is that it takes a long time for

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Speaker 5: monetary policy to hit the economy. You're going to hear

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Speaker 5: after Wednesday, especially Donald Trump, who's already said this, the

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Speaker 5: Fed shouldn't be cutting rates and it's going to be unfair,

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Speaker 5: and it's going to be a boost to Biden and Harris.

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Speaker 5: But it's not because you won't really see any impact

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Speaker 5: on the economy until next year from even a twenty

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Speaker 5: five basis point cut. So if things deteriorate between now

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Speaker 5: and the end of next year, you could say they

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Speaker 5: got behind the curve, but we don't know yet.

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Speaker 2: Well, we have a big decision this Wednesday from the

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Speaker 2: Federal Reserve. Our thanks to Michael McKee, Bloomberg International Economics

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Speaker 2: and Policy correspondent for full FED coverage, be sure to

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Speaker 2: tune in Wednesday one thirty pm Wall Street Time for

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Speaker 2: a Bloomberg surveillance special, The Fed Decides, joined Tom Kaine,

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Speaker 2: John Ferrell, and Lisa Abramowitz as they break down the

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Speaker 2: decision with the biggest names in finance, economics, and business.

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Speaker 2: That's one thirty Wednesday on Bloomberg Radio and Television. We

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Speaker 2: move now to the logistics and services delivery giant FedEx,

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Speaker 2: and with its busiest time of year nearly here, FedEx

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Speaker 2: reports first quarter earnings this Thursday. So how will an

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Speaker 2: organizational restructuring impact its earnings ahead of the holiday season. Well,

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Speaker 2: for more, we're joined by Lee Clascow. He's Bloomberg Intelligence

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Speaker 2: Senior Transport, Logistics and Shipping analyst.

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Speaker 6: Will Lee.

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Speaker 2: Let's start with what you expect to see in FedEx's

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Speaker 2: earnings report this week, coming off a very strong Q

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Speaker 2: four in June.

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Speaker 7: Yeah, Well, thanks for having me. You know, I think

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Speaker 7: that FedEx's should report another solid earnings report. You know,

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Speaker 7: they were show me story for so many quarters, and

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Speaker 7: they've really shown the market, if you will, that they

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Speaker 7: can't execute on their strategy. They have a bunch of

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Speaker 7: restructuring plans that are underway that are expected to save

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Speaker 7: a significant money, over two billion dollars in physical twenty

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Speaker 7: twenty five on top of the one point eight billion

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Speaker 7: that they saved in twenty twenty four. So you know,

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Speaker 7: they're really doing all the right things. They're restructuring their

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Speaker 7: businesses into one main reporting business. They are changing the

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Speaker 7: way they operate their air fleet, and they're really taking

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Speaker 7: costs out, something that that company didn't do for a

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Speaker 7: long time. It really became an old fat company, and

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Speaker 7: they're really taking a good look inside and making it

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Speaker 7: a much more productive organization.

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Speaker 2: Well, they also laid off tens of thousands of workers

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Speaker 2: in the last year or so.

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Speaker 7: Yeah, I mean they you know, that's always an unfortunate event,

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Speaker 7: but you know, they, like I said, there was a

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Speaker 7: lot of fat, if you will, that needed to be them.

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Speaker 7: And with the you know, advent of technology advancements and

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Speaker 7: productivity tools that they're able to use you just simply

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Speaker 7: don't need as many people as you once did, whether

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Speaker 7: you know that's on the dock or you know in accounting.

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Speaker 6: Does robotics play a lot into that?

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Speaker 7: Not so much robotics for FedEx. I mean, you know,

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Speaker 7: they have really state of the art sorting facilities across

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Speaker 7: the country and the world. You know that does a

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Speaker 7: lot of that automation, and that's able to save not

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Speaker 7: only time but money for the company. So that is

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Speaker 7: definitely in net positive, but that's not really what's driving

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Speaker 7: I would say the head cuts a lot of that.

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Speaker 7: The head count reduction is really on the corporate side.

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Speaker 2: Now, in addition to those job cuts, there's also capital expenditure.

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Speaker 6: They've really pulled back or are they just you know, really.

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Speaker 7: FedEx was famous for buying a lot of planes, maybe

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Speaker 7: even if they didn't need them. What they have done

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Speaker 7: is they've refreshed their fleet into a much more fuel

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Speaker 7: efficient fleet, getting rid of some of the older, less

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Speaker 7: efficient planes, and they're also parking a lot more equipment.

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Speaker 7: So you know the reality is they don't need as

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Speaker 7: many planes as they once did. And not only does

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Speaker 7: it need as many, but you know, not just because

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Speaker 7: from a restructuring of their air freight network. They also

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Speaker 7: don't need as many because a lot of the planes

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Speaker 7: either can can do more with less, if you will.

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Speaker 2: Now, speaking of freight, you have reported that there's a

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Speaker 2: possibility of them spinning off that freight unit.

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Speaker 6: Is that still in play?

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Speaker 7: Yeah, so they're freight unit is or less than truckload business.

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Speaker 7: That's it's a very good business, but it's currently under

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Speaker 7: a strategic review. You know, we expect that could generate

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Speaker 7: an enterprise value of between thirty and thirty three billion

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Speaker 7: dollars for the company. You know, right now, the less

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Speaker 7: than truckload market is having a little issues with demand.

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Speaker 6: Demand is down for a.

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Speaker 7: Lot of the carriers that are in the market, and

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Speaker 7: the reason for that is we're really coming up against

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Speaker 7: tough comparisons. One of their large competitors went out of

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Speaker 7: business last year and we're kind of past that anniversary. Also,

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Speaker 7: you know, the ism has been in contraction territory for

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Speaker 7: something like twenty one over the last twenty two months.

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Speaker 7: So that's not great for LTL demand because it tends

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Speaker 7: to be a leading indicator.

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Speaker 2: Now a lot of businesses and consumers pulling back on

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Speaker 2: spending times are tight, especially as we're coming into the holidays.

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Speaker 2: Do you think there's going to be a lot fewer

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Speaker 2: packages people choosing ground instead of air. I mean is

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Speaker 2: how will this affect FedEx in the coming months.

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Speaker 7: Yeah, So the consumer is obviously an important constituent for

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Speaker 7: not only FedEx ups, Deutsche Posts, but really all modes

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Speaker 7: of transportation that I cover. We're relatively bullish on the consumer.

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Speaker 7: You know, we think that a couple of things are

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Speaker 7: going to happen a you know, we are transitioning back

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Speaker 7: from buying services to now going back to buying stuff.

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Speaker 7: We all so believe that we are going to have

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Speaker 7: a real peak season this year pecause of that, and

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Speaker 7: seasonality is continuing is coming back into the market because

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Speaker 7: we've gone so many years from the pandemic of these

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Speaker 7: crazy dislocations that made comparisons next to them possible. So

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Speaker 7: you know, we're getting back to seasonality. We think there's

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Speaker 7: going to be a peak, which I think could surprise

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Speaker 7: demand on the upside. And we're really gonna be paying

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Speaker 7: close attention during the earnings call on Thursday on when

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Speaker 7: management talks about you know, what they are expecting from

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Speaker 7: peak from their conversations with their shippers.

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Speaker 2: Well FedEx fiscal first quarter earnings out after Wall Street's

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Speaker 2: closing bell this Thursday, and our thanks to Lee Classical

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Speaker 2: Bloomberg Intelligence senior transport, logistics and shipping analysts. Coming up

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Speaker 2: on Bloomberg day Break weekend to look ahead to the

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Speaker 2: eurozones big economic data drop. I'm Tom Busby and this

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Speaker 2: is Bloomberg. This is Bloomberg day Break weekend, our global

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Speaker 2: look ahead at the top stories for investors in the

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Speaker 2: coming week. I'm Tom Busby in New York. Up later

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Speaker 2: in our program, we look ahead to a meeting from

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Speaker 2: one of the key central banks in Asia, the Bank

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Speaker 2: of Japan. But first, as expected, the European Central Bank

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Speaker 2: cut rates again at its most recent policy meeting, three

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Speaker 2: months after its first cut in five years. Will lower

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Speaker 2: borrowing costs lead to economic prosperity for the block for more,

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Speaker 2: Let's go to London and bring in Bloomberg day Break

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Speaker 2: europbanker Caroline hepgar.

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Speaker 1: Tom in Europe, it seems that rake huts are like buses.

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Speaker 1: You wait five years for one, and then two arrive

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Speaker 1: in quick succession. When the EU became one of the

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Speaker 1: first major central banks to cut its lending rate, this summer,

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Speaker 1: it hearted progress made on tackling inflation. This time around,

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Speaker 1: the bank delivered another twenty five basis point cut, citing

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Speaker 1: further progress against their economic goals. But European Central Bank

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Speaker 1: President Christine Lagarde says that you per area growth risks

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Speaker 1: are now tilted to the downside. Speaking at a news

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Speaker 1: conference in Frankfurt following the committee's decision to once again

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Speaker 1: lower boring costs, she emphasized the importance of economic data

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Speaker 1: going forwards.

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Speaker 8: So the President, the Vice President and I welcome you

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Speaker 8: today to our press conference. The Governing Council today decided

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Speaker 8: to lower the deposit facility rate, the rate through which

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Speaker 8: we steer the monetary policy stance, by twenty five basis points.

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Speaker 8: Based on our updated assessment of the inflation outlook, the

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Speaker 8: dynamics of underlying inflation, and the strength of monetary policy transmission,

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Speaker 8: it is now appropriate to take another step in moderating

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Speaker 8: the degree of monetary policy restriction. Recent inflation data have

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Speaker 8: come in broadly as expected, and the latest ECB staff

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Speaker 8: projections confirm the previous inflation outlook. Fiscal and structural policies

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Speaker 8: should be aimed at making the economy more productive and

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Speaker 8: competitive which would help to raise the potential growth and

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Speaker 8: reduce price pressures in the medium term. Mario Draggy's report

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Speaker 8: on the Future of European Competitiveness and then recall it

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Speaker 8: as report on empowering the Single Market stress the urgent

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Speaker 8: need for reform and provide concrete proposals to make this happen.

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Speaker 8: The risks to economic growth remain tilted to the downside.

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Speaker 8: Lower demand for your area exports, owing for instance, to

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Speaker 8: a weaker world economy or an escalation in trade tensions

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Speaker 8: between major economies, would weigh on your area growth. We

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Speaker 8: have consistently said, and we repeat again that we shall

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Speaker 8: remain data dependent, and that is particularly justified in view

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Speaker 8: of the uncertainty that abounds.

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Speaker 1: That was the European Central Bank President Christine Lagarde speaking there.

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Speaker 1: Despite the upbeat sentiment of Eurozone policy makers, growth is

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Speaker 1: faltering across the region's largest economies and consumer confidence remains

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Speaker 1: below pre pandemic levels. The ECB's latest projections downgraded output

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Speaker 1: over the next three years, whilst the outlook for underlying

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Speaker 1: inflation nudged higher for this year and twenty twenty five.

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Speaker 1: In the coming days, markets will receive more European inflation

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Speaker 1: data alongside the Bloomberg September Eurozone Economic Survey, which may

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Speaker 1: help to guide the two remaining ECB policy meetings that

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Speaker 1: are left this year. All of this is something I've

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Speaker 1: been discussing with Bloomberg's senior Euro Area economist David Powell.

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Speaker 9: The most important data point will beginning this upcoming week

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Speaker 9: to you.

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Speaker 10: Is that the finallying on CPI for the month of August,

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Speaker 10: and that will allow us and others to look at

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Speaker 10: as a more grammar look at underlying measures of inflation.

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Speaker 10: But basically, broadly speaking, those measures are coming down. The

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Speaker 10: headline number isn't very far from the ECB's target right

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Speaker 10: now and all moving in the right direction. A real

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Speaker 10: number that's is concerned to the ECB's services inflation that

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Speaker 10: has remained uncomfortably high at over four percent, and that's

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Speaker 10: what the ECB is focused on. This is the second reading,

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Speaker 10: so it's unlike it moved that much from the from

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Speaker 10: the first reading, so it'll be more important for the

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Speaker 10: ECV on terms of inflation. We get the reading for

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Speaker 10: September and that's out on the first in October.

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Speaker 1: Is there a danger that the ECB has been overconfident

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Speaker 1: on tackling inflation. They haven't ruled out a further cut

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Speaker 1: in October.

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Speaker 10: Well, these policy rates, deposit rate is in very restrictive territory.

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Speaker 10: We think that kind of a neutral level would be

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Speaker 10: about two percent. So monetary policy has been very tight.

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Speaker 10: We have seen that in the economy, with the economy

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Speaker 10: having flatlines for a long time in your area, and

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Speaker 10: they have made significant progress on inflation. Like I said,

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Speaker 10: the headline number now is now very close to the target.

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Speaker 10: And when we look at measures of cost pressure, so

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Speaker 10: wage growth and negotiated wages, things like that, they're all

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Speaker 10: moving in the right direction. And an ECV can't wait

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Speaker 10: until they're actually there to cut because voluntary policy operates

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Speaker 10: with the long leag They've got to be more forward

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Speaker 10: looking and they see everything going in the direction they

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Speaker 10: want it to be going, and I think monetary policy

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Speaker 10: can be less restrictive.

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Speaker 9: Now.

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Speaker 1: Expect, though, is for the economy in Europe to remain

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Speaker 1: under significant pressure. You saw it in the ECB's forecasts

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Speaker 1: from this week's bank meeting. How will markets react if

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Speaker 1: the incoming economic data isn't positive? Will there be concerns

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Speaker 1: that the ECB has left it too late.

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Speaker 10: Yeah, I think generally speaking in the your area as

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Speaker 10: well as in the US, so around the world, there

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Speaker 10: are concerned that that tight monetary policy is really taking

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Speaker 10: it all on the economy, and of course the markets

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Speaker 10: are react negatively when.

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Speaker 9: We get the bad data.

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Speaker 10: We're seeing that not only in Europe, in the US

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Speaker 10: as well, and.

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Speaker 1: So in terms of what that means for others who

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Speaker 1: are affected by interest rates, particularly for the European banking space,

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Speaker 1: what do you expect from that.

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Speaker 9: Well, A lot of banks, of course are benefit from

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Speaker 9: the rise in interest rate because their interest rate income

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Speaker 9: has gone up, and then they will have a negative

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Speaker 9: impact as that comes down, although it won't be immediate

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Speaker 9: because for many of these institutions they have longer term

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Speaker 9: they have longer term assets and liabilities. They will be

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Speaker 9: benefitting for a while from higher interest rates, and we

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Speaker 9: have we've we've seen that in the government bond space

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Speaker 9: where Italy has.

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Speaker 10: Had a very high demand for its bond in recent

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Speaker 10: in recent options in order for investors to take advantage

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Speaker 10: of these higher interest rates before they come down.

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Speaker 1: Will be the effect on the European Central Bank If

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Speaker 1: the FED cuts by fifty basis points in the days ahead.

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Speaker 10: Well, the the the e c D has been moving

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Speaker 10: on its own at its own pace. The e c

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Speaker 10: B cut before the FED, and so it really at

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Speaker 10: a monetary policy based on what's happening in Europe. Having

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Speaker 10: said that, of course, not ignoring what the SAID does.

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Speaker 10: What the FED does is an impact on the exchange rate,

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Speaker 10: and they'll be watching it closely if the if the

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Speaker 10: FED were to have an aggressive move, it would probably

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Speaker 10: increase the probability of the ECB moving more aggressively as well,

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Speaker 10: meaning it would increase the probability of a move in October,

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Speaker 10: although at this stage we don't think that Planckly, what

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Speaker 10: do you make.

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Speaker 1: Of the idea of higher for longer? Is that really

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Speaker 1: true for Europe?

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Speaker 10: Well, we have we moved away from that now. The

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Speaker 10: CD had its first cut in June and then we

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Speaker 10: had to cut yet announced and we think the CB

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Speaker 10: will cut again in December, so they have the higher

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Speaker 10: the longer idea of this idea of kind of reaching

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Speaker 10: a plateau is the chief Aponos the Maank of England

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Speaker 10: referred to as a table mountain approach. You kind of

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Speaker 10: get up and it's very flat for a long time.

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Speaker 10: But this isn't looking like table mountain. It's certainly more

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Speaker 10: like a like a a peak that we've come down

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Speaker 10: and we think will continue to come down after December.

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Speaker 10: In the next year, you'll probably be having cut at

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Speaker 10: a quarterly pace.

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Speaker 1: How much concern is that within the ECB around the

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Speaker 1: growth prospects of Europe? I mean, the US also is

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Speaker 1: perhaps cooling, but only a little, and the underlying strength

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Speaker 1: of the economy has been evident for months. China has

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Speaker 1: seen kind of a lot of big disinflationary pressures. How

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Speaker 1: much concern and Europe is exposed to that, How much

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Speaker 1: concern is there within the ECB about the slowing pace

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Speaker 1: of the economy.

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Speaker 10: Well, the ECB has a single mandate just inflation reserved,

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Speaker 10: a dual mandate focusing on inflation and employment, so the

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Speaker 10: ACB doesn't have to pay as much attention to employment

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Speaker 10: as epent. But of course in order to meet this

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Speaker 10: sensation objective, it has to look at what's going on

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Speaker 10: the economy, because an economy it's too week will produce

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Speaker 10: inflation that's below target, and we saw that.

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Speaker 9: For many years preceding the pandemic.

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Speaker 10: But at this stage they really focused on the inflation

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Speaker 10: numbers as a whole, although there are voices that are

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Speaker 10: becoming increasingly concerned about the slowdown the economy and the

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Speaker 10: potential for that to lead to an undershooting inflation eventually,

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Speaker 10: and that's probably why we've seen some more of support

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Speaker 10: for a back to back cut at the ECB, needing

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Speaker 10: another move in October. As it's reported by Bloomberg.

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Speaker 1: News David, there's always a concern amongst the different members

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Speaker 1: of the European Union and the Eurozone indeed about the

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Speaker 1: differing performance of certain countries and whether or not interest

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Speaker 1: rates happen to suit them at the particular business cycle

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Speaker 1: that they are in. Who is most worried now?

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Speaker 10: Well, when we look around Europe, there are the various

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Speaker 10: economies that performed differently. The President of ECV, Christiane Regard,

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Speaker 10: highlighted it for press conference with this month that Spain

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Speaker 10: and Netherlands.

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Speaker 9: Are doing very well, others are not.

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Speaker 10: If there's one country that had stopped doing well right now,

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Speaker 10: it's Germany. Germany's industrial sector who has had a number

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Speaker 10: of hits in recent years from high energy prices as

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Speaker 10: result of the war in Ukraine and softening demand in China,

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Speaker 10: which is one of its largest export markets, and it

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Speaker 10: really does continue to kind of be in thedulgence right now,

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Speaker 10: and it's looking like a sick man of Europe as

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Speaker 10: it was called for many years before before labor market

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Speaker 10: reforms were introduced.

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Speaker 1: My thanks, sir to Bloomberg's David Power for taking us

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Speaker 1: through the data to watch when it comes to the

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Speaker 1: European Central Bank. I'm Caroline Hetger here in London. You

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Speaker 1: can catch us every weekday morning for Bloomberg day Break Europe.

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Speaker 1: Began at six am in London. That's one am on

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Speaker 1: Wall Street.

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Speaker 6: Tom, Thank you, Caroline.

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Speaker 2: And coming up on Bloomberg day Break weekend, we look

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Speaker 2: ahead to a monetary policy decision from the Bank of Japan.

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Speaker 2: I'm Tom Busby and this is Bloomberg. This is Bloomberg

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Speaker 2: day Break Weekend, our global look ahead at the top

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Speaker 2: stories for investors in the coming week. I'm Tom Busby

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Speaker 2: in New York. We turn now to Asia and what

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Speaker 2: could be a big decision from the Bank of Japan,

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Speaker 2: which is weighing just how far to adjust its policy

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Speaker 2: easing settings. We get more from Bloomberg Daybreak Asia co

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Speaker 2: hosts Brian Curtis and Doug Krisner.

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Speaker 3: Tom the Bank of Japan meets in the coming week,

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Speaker 3: and this smart money is suggesting no major surprise is expected.

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Speaker 3: But what are BOJ officials thinking. Well, a Bank of

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Speaker 3: Japan board member says the BOJ will adjust policy provided

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Speaker 3: the economy performs in line with projections. We welcome Paul

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Speaker 3: Jackson to the air waves Bloomberg Economy Editor to take

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Speaker 3: a closer look at what we might expect. Paul bog

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Speaker 3: official seem a little nervous here about the volatility that

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Speaker 3: was caused by the rate hike in July. So let

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Speaker 3: me go out on a limb and say, not likely

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Speaker 3: they will make a move this month.

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Speaker 11: Yeah, I think you're right there. I think it's a

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Speaker 11: time to wait and watch given the extreme volatility we

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Speaker 11: saw after that July rate hike. Remember this is only

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Speaker 11: the second time the Bank of Japan has raised rates

440
00:25:38,880 --> 00:25:43,760
Speaker 11: in the last seventeen years, so we saw in very

441
00:25:44,160 --> 00:25:48,199
Speaker 11: sharp volatility afterwards the nick K stock index and its

442
00:25:48,280 --> 00:25:52,960
Speaker 11: biggest drop on record following the rate hike. Of course,

443
00:25:53,320 --> 00:25:56,439
Speaker 11: one of the key factors was also US data, which

444
00:25:56,720 --> 00:26:00,520
Speaker 11: fed into the narrative for the Federal Reserve rate cuts.

445
00:26:00,520 --> 00:26:03,639
Speaker 11: So it wasn't just the BOJ rate hike that caused

446
00:26:03,640 --> 00:26:07,840
Speaker 11: that volatility, But still I think there's enough reason there

447
00:26:08,640 --> 00:26:11,359
Speaker 11: for the central Bank in Japan to want to just

448
00:26:11,480 --> 00:26:15,760
Speaker 11: wait and see look at market stability and also to

449
00:26:16,720 --> 00:26:20,320
Speaker 11: look at the impact of that second rate hike in July.

450
00:26:20,520 --> 00:26:25,399
Speaker 11: So I think the widely held consensus for next week

451
00:26:25,920 --> 00:26:28,640
Speaker 11: is there's going to be no move from the Bank

452
00:26:28,680 --> 00:26:33,800
Speaker 11: of Japan, but that does not mean rate hikes aren't

453
00:26:33,840 --> 00:26:35,879
Speaker 11: in the pipeline coming ahead.

454
00:26:36,080 --> 00:26:39,440
Speaker 12: The enormous volatility with the unwinding of that yen carry

455
00:26:39,480 --> 00:26:42,480
Speaker 12: trade as well, which then brings to my mind the

456
00:26:42,560 --> 00:26:45,879
Speaker 12: concern that the BOJ may have when it watches the

457
00:26:45,920 --> 00:26:49,000
Speaker 12: currency perform in markets. Is there a kind of a

458
00:26:49,040 --> 00:26:51,919
Speaker 12: comfort zone that the BOJ has, do you think for

459
00:26:51,960 --> 00:26:53,200
Speaker 12: the en visa e. The dollar?

460
00:26:54,400 --> 00:26:57,960
Speaker 11: Ah, well, that's that's a very interesting question. Of course,

461
00:26:58,240 --> 00:27:02,000
Speaker 11: the BOJ would argue that it is not targeting any

462
00:27:02,400 --> 00:27:07,160
Speaker 11: currency levels. But let's face it. You know, the yen

463
00:27:07,480 --> 00:27:13,320
Speaker 11: has been extremely weak against the dollar, and while that

464
00:27:13,400 --> 00:27:17,159
Speaker 11: really helps its global companies, its companies with a lot

465
00:27:17,160 --> 00:27:20,879
Speaker 11: of exports, it inflates the earnings for those companies. For

466
00:27:21,040 --> 00:27:26,080
Speaker 11: domestic operations, it's the opposite. It raises all the costs

467
00:27:26,080 --> 00:27:31,159
Speaker 11: puts pressure on them, and it also makes the power

468
00:27:31,160 --> 00:27:34,760
Speaker 11: of the end for the average Japanese consumer, especially for

469
00:27:35,480 --> 00:27:40,240
Speaker 11: thinking of going abroad, much weaker. So in terms of levels,

470
00:27:40,560 --> 00:27:44,880
Speaker 11: i'd say one sixty is definitely two weak. We see

471
00:27:44,920 --> 00:27:47,440
Speaker 11: a lot of talk about the end getting too strong

472
00:27:47,480 --> 00:27:51,320
Speaker 11: when it's you know, between one hundred, one hundred and ten,

473
00:27:51,600 --> 00:27:54,480
Speaker 11: So we're a long way off that, but for sure

474
00:27:54,720 --> 00:27:57,159
Speaker 11: that the narrative is going to change towards. Is the

475
00:27:57,320 --> 00:27:59,639
Speaker 11: end strengthening too much we get past one twenty, I

476
00:27:59,680 --> 00:28:00,120
Speaker 11: would say.

477
00:28:00,440 --> 00:28:02,639
Speaker 3: It's hard to argue with the math. At the moment,

478
00:28:02,720 --> 00:28:06,520
Speaker 3: it looks like US rates are heading down, that Japanese

479
00:28:06,600 --> 00:28:09,960
Speaker 3: rates are heading up, and when you put that all together,

480
00:28:10,480 --> 00:28:13,760
Speaker 3: it would seem to argue for a stronger yen. The

481
00:28:13,800 --> 00:28:16,720
Speaker 3: pace is what matters, I suppose the most. The pace

482
00:28:16,880 --> 00:28:20,680
Speaker 3: was just too abrupt when we had the July rate hike,

483
00:28:21,440 --> 00:28:24,199
Speaker 3: so some modulation there. But the end will get stronger

484
00:28:24,240 --> 00:28:25,119
Speaker 3: from here, right.

485
00:28:25,240 --> 00:28:27,919
Speaker 11: I think the end is going to get stronger, But

486
00:28:28,080 --> 00:28:32,760
Speaker 11: I think we should be wary of thinking that the

487
00:28:32,800 --> 00:28:35,840
Speaker 11: Bank of Japan has seen that volatility and is now

488
00:28:35,880 --> 00:28:39,920
Speaker 11: scared off hiking again. I think they've been very consistent

489
00:28:39,960 --> 00:28:43,800
Speaker 11: in the messaging that no, no, If forecasts are met

490
00:28:43,840 --> 00:28:49,080
Speaker 11: as we hope, then we are going to continue hiking. Now,

491
00:28:49,160 --> 00:28:51,720
Speaker 11: is it going to be every quarter? No, I don't

492
00:28:51,720 --> 00:28:55,440
Speaker 11: think so, but I think the consensus is that December

493
00:28:55,960 --> 00:28:59,480
Speaker 11: or January is probably the timing for the next rate hike.

494
00:28:59,560 --> 00:29:03,680
Speaker 11: And don't forget we had a story with people familiar

495
00:29:04,080 --> 00:29:08,200
Speaker 11: and their views that BOG officials see this idea that

496
00:29:08,600 --> 00:29:12,440
Speaker 11: a nominal interest rate about one percent is probably around

497
00:29:12,960 --> 00:29:15,480
Speaker 11: the minimum level for the neutral rate. So if you

498
00:29:15,480 --> 00:29:19,000
Speaker 11: think of it in those terms, that's three quarter percentage

499
00:29:19,120 --> 00:29:22,200
Speaker 11: rate hikes that could be in the pipeline.

500
00:29:22,440 --> 00:29:25,160
Speaker 12: Paul, take a step back. Help us understand the macro

501
00:29:25,360 --> 00:29:30,280
Speaker 12: view of the Japanese economy right now, economic growth and inflation,

502
00:29:30,440 --> 00:29:32,040
Speaker 12: how are they performing well?

503
00:29:32,080 --> 00:29:36,400
Speaker 11: The economy has been sputtering. We've been lacking a consumption

504
00:29:36,480 --> 00:29:40,800
Speaker 11: in real terms, and that's really down to inflation. Don't forget,

505
00:29:40,840 --> 00:29:43,720
Speaker 11: Japan has not been used to inflation. It's had decades

506
00:29:43,720 --> 00:29:47,440
Speaker 11: of deflation. The goal in Japan has been to create inflation,

507
00:29:47,640 --> 00:29:52,160
Speaker 11: not crush it, so the optics are very different in Japan.

508
00:29:52,480 --> 00:29:55,320
Speaker 11: Inflation at the moment overall is at two point eight

509
00:29:55,360 --> 00:30:00,400
Speaker 11: percent and that's been really weighing on consumer spending. Really,

510
00:30:00,440 --> 00:30:03,640
Speaker 11: we're looking to see if the economy is kind of

511
00:30:03,720 --> 00:30:07,480
Speaker 11: engaging gears and is now moving towards growth of the

512
00:30:07,600 --> 00:30:11,240
Speaker 11: positive inflation cycle that allows more right hikes.

513
00:30:11,720 --> 00:30:16,800
Speaker 3: Paul, Thank you, Paul Jackson, Bloomberg Economy Editor. Next up,

514
00:30:16,880 --> 00:30:19,520
Speaker 3: we segue from the world of central banks to the

515
00:30:19,520 --> 00:30:23,560
Speaker 3: world of limiting the power of central banks. Cryptos. Coming

516
00:30:23,640 --> 00:30:26,959
Speaker 3: up later this month a very big conference Token twenty

517
00:30:27,040 --> 00:30:30,600
Speaker 3: forty nine. It's going to take place in Singapore. A

518
00:30:30,640 --> 00:30:36,680
Speaker 3: lot of very interesting topics coming up, such as the metaverse, DeFi, NFTs, Gold, Macro,

519
00:30:36,800 --> 00:30:40,320
Speaker 3: of course, Web three dios, and a whole lot more.

520
00:30:40,360 --> 00:30:43,200
Speaker 3: In Joining us now on the program to discuss what

521
00:30:43,320 --> 00:30:46,760
Speaker 3: might be said is Suver shri Ghosh, Bloomberg Crypto Currency

522
00:30:46,800 --> 00:30:50,600
Speaker 3: Reporter with us in our Singapore studio, Suva. I know

523
00:30:50,680 --> 00:30:54,560
Speaker 3: the US elections is a big issue with regard to crypto.

524
00:30:55,160 --> 00:30:59,000
Speaker 3: When we get to this Token twenty forty nine Singapore agenda,

525
00:30:59,120 --> 00:31:00,600
Speaker 3: what will the biggest issue p.

526
00:31:00,960 --> 00:31:02,959
Speaker 13: Firstly, I would like to kind of just give a

527
00:31:03,040 --> 00:31:06,160
Speaker 13: quick summary about this Token twenty forty nine because why

528
00:31:06,160 --> 00:31:10,040
Speaker 13: we care is important. You know, this is the most popular,

529
00:31:10,560 --> 00:31:17,200
Speaker 13: most well represented crypto conference globally that Singapore hosts every year,

530
00:31:17,760 --> 00:31:20,920
Speaker 13: and this time there will be twenty thousand people attending

531
00:31:21,040 --> 00:31:24,200
Speaker 13: globally from across the world, which is double that of

532
00:31:24,320 --> 00:31:27,520
Speaker 13: last year. Coming to your question over here, the main

533
00:31:27,800 --> 00:31:30,880
Speaker 13: themes as we go into the US elections is, of

534
00:31:30,920 --> 00:31:36,280
Speaker 13: course what will be the outcome of the US elections

535
00:31:36,320 --> 00:31:41,200
Speaker 13: results on crypto, especially given that there are two candidates,

536
00:31:41,480 --> 00:31:45,840
Speaker 13: one has very clearly talked about pro crypto, you know, stance,

537
00:31:46,400 --> 00:31:49,920
Speaker 13: and then there is Kamala Harris who hasn't yet given

538
00:31:49,960 --> 00:31:53,680
Speaker 13: a very clear indication of stance on crypto. So that

539
00:31:53,800 --> 00:31:57,000
Speaker 13: will be a very big theme that I expect to

540
00:31:57,040 --> 00:31:59,600
Speaker 13: play out in this conference in Token twenty forty nine

541
00:32:00,160 --> 00:32:04,520
Speaker 13: which starts next week. So we will clearly and very

542
00:32:04,640 --> 00:32:08,600
Speaker 13: openly speak to a lot of venture capital funds and

543
00:32:08,960 --> 00:32:12,160
Speaker 13: are there are big ones coming from US, from Europe,

544
00:32:12,320 --> 00:32:15,360
Speaker 13: from all across the world for four to twenty forty

545
00:32:15,440 --> 00:32:18,560
Speaker 13: nine in Singapore, and we are going to speak to

546
00:32:18,600 --> 00:32:21,920
Speaker 13: them to understand where will they put their money in.

547
00:32:22,000 --> 00:32:24,400
Speaker 13: Because in the back of the theme of US elections,

548
00:32:24,400 --> 00:32:26,920
Speaker 13: there are a lot of projects as well. We saw

549
00:32:27,280 --> 00:32:29,400
Speaker 13: in the last two years, there are projects which had

550
00:32:29,480 --> 00:32:32,040
Speaker 13: and companies which is moved, which were moving out of

551
00:32:32,280 --> 00:32:36,440
Speaker 13: US for a not so favorable climate towards crypto. Then

552
00:32:37,040 --> 00:32:39,720
Speaker 13: these are very crucial stuff that you're looking to cover

553
00:32:39,800 --> 00:32:40,480
Speaker 13: from the crypto.

554
00:32:40,800 --> 00:32:43,720
Speaker 12: Cryptocurrencies I think we can agree. I mean rose in

555
00:32:44,080 --> 00:32:47,720
Speaker 12: popularity pretty dramatically during the pandemic, and then twenty twenty

556
00:32:47,800 --> 00:32:50,960
Speaker 12: two happened in November, the cryptocurrency crash. There was a

557
00:32:51,000 --> 00:32:55,600
Speaker 12: lot of conversation before that about venture capitalist interested not

558
00:32:55,680 --> 00:33:00,280
Speaker 12: only in crypto but in blockchain technology more broadly. Is

559
00:33:00,360 --> 00:33:04,640
Speaker 12: now the notion of artificial intelligence really providing a lot

560
00:33:04,680 --> 00:33:07,880
Speaker 12: of very tough competition for new money that would have

561
00:33:07,960 --> 00:33:12,560
Speaker 12: otherwise maybe flown or flowed into the crypto space or

562
00:33:12,600 --> 00:33:13,640
Speaker 12: the blockchain space.

563
00:33:13,800 --> 00:33:15,880
Speaker 13: I mean, the thing is that you know, the money

564
00:33:15,960 --> 00:33:18,560
Speaker 13: is of course a part of money is limited, and

565
00:33:18,840 --> 00:33:22,360
Speaker 13: venture capital obviously would like to optimize the returns for

566
00:33:22,480 --> 00:33:26,360
Speaker 13: their LPs when it comes to choosing between AI and crypto.

567
00:33:26,840 --> 00:33:29,440
Speaker 13: Of course, in the last year or so, AI was

568
00:33:29,480 --> 00:33:32,160
Speaker 13: a fat but we have been seeing that that fat

569
00:33:32,280 --> 00:33:36,720
Speaker 13: is slightly fading and people are looking more for projects

570
00:33:36,720 --> 00:33:41,920
Speaker 13: which are detailed use case rather than just pure play infrastructure,

571
00:33:42,000 --> 00:33:45,880
Speaker 13: be it in AI or in crypto. So to answer

572
00:33:45,960 --> 00:33:50,280
Speaker 13: your question in a short wait, it's basically venture capital

573
00:33:50,320 --> 00:33:53,920
Speaker 13: funds are looking to invest where the use case is

574
00:33:53,960 --> 00:33:57,240
Speaker 13: more prominent than just going by the tag, which is

575
00:33:57,280 --> 00:34:00,520
Speaker 13: either AI and crypto. And I think personally speaking that

576
00:34:00,640 --> 00:34:03,760
Speaker 13: this will merge in this conference as well, where AI

577
00:34:03,880 --> 00:34:06,800
Speaker 13: and crypto will come together, they will intersect, and we

578
00:34:06,840 --> 00:34:10,600
Speaker 13: will see a lot of investors looking for those kinds

579
00:34:10,600 --> 00:34:11,160
Speaker 13: of projects.

580
00:34:11,440 --> 00:34:14,240
Speaker 3: There's a lot of technical aspects to this. For instance,

581
00:34:14,280 --> 00:34:19,319
Speaker 3: we've seen mining difficulty increase for bitcoin, and you'd have

582
00:34:19,400 --> 00:34:22,000
Speaker 3: thought that that would lead to higher prices, and perhaps

583
00:34:22,040 --> 00:34:25,520
Speaker 3: to a certain degree that happened, but bitcoin has actually

584
00:34:25,600 --> 00:34:29,520
Speaker 3: dropped about ten percent since you have this software code adjustment,

585
00:34:29,600 --> 00:34:33,319
Speaker 3: So you're seeing quite a lot of whipping around volatility

586
00:34:33,400 --> 00:34:35,240
Speaker 3: in cryptos. Will that continue?

587
00:34:35,640 --> 00:34:40,399
Speaker 13: Interesting question, and yes, crypto is a volatile asset and

588
00:34:40,520 --> 00:34:44,040
Speaker 13: it is likely to go ahead in that way, meaning

589
00:34:44,040 --> 00:34:47,040
Speaker 13: that the volatility is likely to continue. Of course, the

590
00:34:47,120 --> 00:34:51,200
Speaker 13: initial support was from the exchange traded funds that were

591
00:34:51,239 --> 00:34:53,560
Speaker 13: there in the US that piled up a lot of bitcoins.

592
00:34:53,800 --> 00:34:56,480
Speaker 13: But then after that the initial demand fizzled out and

593
00:34:56,920 --> 00:35:01,560
Speaker 13: we again saw macroeconomic conditions paramitter like inflation growth, all

594
00:35:01,600 --> 00:35:04,279
Speaker 13: this taking over, and Bitcoin was reflecting that as well.

595
00:35:04,320 --> 00:35:07,239
Speaker 13: In terms of volatility going ahead. You bring a very

596
00:35:07,239 --> 00:35:12,080
Speaker 13: interesting point about mining. Yes, the mining ban in China

597
00:35:12,280 --> 00:35:15,719
Speaker 13: had an impact, but we are seeing you know, spurts

598
00:35:15,719 --> 00:35:20,279
Speaker 13: of mining growth in different parts of the world, and

599
00:35:20,400 --> 00:35:23,239
Speaker 13: that is giving rise to some kind of support on

600
00:35:23,280 --> 00:35:27,320
Speaker 13: the bitcoin prices. At the back end of it, however, yes,

601
00:35:27,520 --> 00:35:31,040
Speaker 13: bitcoin is a volatile asset and no one can say

602
00:35:31,200 --> 00:35:34,120
Speaker 13: what would be the future of the price is going ahead,

603
00:35:34,600 --> 00:35:38,320
Speaker 13: whether the demand and supply will continue to match to

604
00:35:38,880 --> 00:35:42,600
Speaker 13: push prices higher or not. But this token twenty forty

605
00:35:42,680 --> 00:35:47,040
Speaker 13: nine will clearly show the trend of investor demand as

606
00:35:47,080 --> 00:35:50,160
Speaker 13: well as what miners are saying over here, because that's

607
00:35:50,200 --> 00:35:53,360
Speaker 13: going to be crucial for the you know, the aspect

608
00:35:53,400 --> 00:35:55,800
Speaker 13: of what will happen to bitcoin price is going ahead.

609
00:35:55,960 --> 00:35:58,799
Speaker 3: Suva, thanks so much for joining us, Suva. Shrik Ghosh there,

610
00:35:58,840 --> 00:36:02,719
Speaker 3: Bloomberg Crypto Current see reporter. We'll have Dan moorehead, the

611
00:36:02,719 --> 00:36:06,440
Speaker 3: founder and CEO at Pantera Capital speaking there. Mike Novograt's

612
00:36:06,440 --> 00:36:09,359
Speaker 3: a big name as well, CEO at Galaxy Digital. That's

613
00:36:09,400 --> 00:36:13,200
Speaker 3: all coming up in this conference. I'm Brian Curtis in

614
00:36:13,239 --> 00:36:16,040
Speaker 3: Hong Kong along with Doug Crisner. You can catch us

615
00:36:16,080 --> 00:36:19,480
Speaker 3: every weekday here for Bloomberg day Break Asia, beginning at

616
00:36:19,480 --> 00:36:22,800
Speaker 3: eight am in Hong Kong and eight pm on Wall Street.

617
00:36:23,120 --> 00:36:26,600
Speaker 2: Tom, Thank you Brian, and thank you Doug. And that

618
00:36:26,680 --> 00:36:29,000
Speaker 2: does it for this edition of Bloomberg day Break Weekend.

619
00:36:29,320 --> 00:36:31,520
Speaker 2: Join us again Monday morning at five am Wall Street

620
00:36:31,560 --> 00:36:34,000
Speaker 2: time for the latest on markets overseas and the news

621
00:36:34,040 --> 00:36:37,000
Speaker 2: you need to start your day. I'm Tom Buzzby. Stay

622
00:36:37,000 --> 00:36:39,959
Speaker 2: with us. Top stories and global business headlines are coming

623
00:36:40,000 --> 00:36:40,920
Speaker 2: up right now