Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Speaker 1: Daybreak Aisia podcast. I'm Doug Prisner. You can join Brian
Speaker 1: Curtis and myself for the stories, making news and moving
Speaker 1: markets in the Apec region. You can subscribe to the
Speaker 1: show anywhere you get your podcast and always on Bloomberg Radio,
Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. Vice President
Speaker 1: Kamala Harris kicked off a critical stretch of her campaign
Speaker 1: earlier tonight in Philadelphia. That's where she took the stage
Speaker 1: for the first time with her new running mate, Minnesota
Speaker 1: Governor Tim Walls, joining us now for a closer look
Speaker 1: at the political story behind this. Amy Dacy, executive director
Speaker 1: at American University sign Institute of a Politics and a Policy.
Speaker 1: Good of you to drop by, Ms Dacy, Thanks so much. First,
Speaker 1: let me get your reaction. I'm sure you watched it
Speaker 1: on the television. What did you think?
Speaker 2: Yeah, this is definitely general election phase that we're in,
Speaker 2: and the enthusiasm you saw, you know in Philadelphia, I
Speaker 2: think is going to carry out. You know, in the campaign.
Speaker 2: It definitely was between you know, the speakers that were
Speaker 2: before them, but it was the first time you saw
Speaker 2: these two candidates together, and I think it was incredibly
Speaker 2: well received. You can feel the energy in the room,
Speaker 2: and I think they're ready to go on the road
Speaker 2: and really start talking about their ticket and what they
Speaker 2: planned to do.
Speaker 1: It was earlier in the rally that Pennsylvania Governor Josh
Speaker 1: Shapiro delivered what seemed to be a full throated endorsement
Speaker 1: of Governor Walls. Shapiro, as you know, had been in
Speaker 1: the running to join Vice President Harris on the ticket.
Speaker 1: In the end, she bypassed Shapiro for whatever reason. Although
Speaker 1: I think it's fair to say that Pennsylvania is a
Speaker 1: politically valuable state in this election. Do you have a
Speaker 1: sense of the strategy behind the scenes, why Walls and
Speaker 1: not Shapiro.
Speaker 2: Well, I think the Vice President had a very difficult
Speaker 2: choice in front of her simply because there were so
Speaker 2: many good Democrats to pick from, and I think that's
Speaker 2: one of the things that you see that is very
Speaker 2: different than the Republican bench out there. She had, you know,
Speaker 2: a dozen people to look at, but I think at
Speaker 2: the end of the day, some of the last names
Speaker 2: that you saw, whether it was Mark Kelly or Josh
Speaker 2: Shapiro or Tim Walls are all candidates that certainly get
Speaker 2: she you know, felt comfortable with that brought something to
Speaker 2: the ticket. I think, you know, in this situation, Tim Walls,
Speaker 2: Governor Walls, he brings a beautiful contrast to some of
Speaker 2: her profile. He also plays well into some of the
Speaker 2: the you know, communities that the Democrats need to reach
Speaker 2: out to. This is somebody from humble beginnings, was an
Speaker 2: Army National Guard, you know, really ran and won in
Speaker 2: a very rural conservative district in Minnesota. And you know
Speaker 2: he's a former NRA member, a teacher or high school
Speaker 2: football coach. You know, these are all things that played
Speaker 2: really well. And I think all the candidates brought something,
Speaker 2: you know, to the table. But you also saw them
Speaker 2: immediately co arrests around this take of Harris Well. So
Speaker 2: even Jos Shapiro sent out a very strong statement. He
Speaker 2: certainly gave an incredible speech at the rally. I think
Speaker 2: it's all hands on deck for the Democrats here and
Speaker 2: every single Saraga is going to be out there supporting
Speaker 2: this ticket.
Speaker 1: You are a former advisor not only to President Barack Obama,
Speaker 1: but Senator John Kerry as well now Vice President Harris
Speaker 1: and Governor Walls are on their way to a number
Speaker 1: of key cities in states like Wisconsin, Michigan, Arizona, Nevada.
Speaker 1: If you were advising this campaign, what would you say
Speaker 1: to them?
Speaker 2: Well, I think, you know, they've started out in an
Speaker 2: incredible way as this authentic individuals who are listening to Americans,
Speaker 2: who are saying that they won't turn back. They're putting
Speaker 2: a strong contrast, you know, with their opposition in the
Speaker 2: Trump you know, Vance ticket. I think in a good way.
Speaker 2: They're talking about their vision for America. They're not just
Speaker 2: against something therefore something I do think they're spending, you know,
Speaker 2: and looking for. You look at the swing through the
Speaker 2: next week, all the states that they'll be you know,
Speaker 2: going to, these are ones that really matter in that
Speaker 2: electoral map. But I think the bottom line is they're
Speaker 2: setting forth their vision for America. What this looks like,
Speaker 2: you know, especially talking to people whether they are in
Speaker 2: Wisconsin or New York, or California or Arizona or Nevada.
Speaker 2: But I think their clear vision that they're putting out
Speaker 2: is really important. And a sense of optimism. I think
Speaker 2: you saw, you know, a sense of energy and optimism
Speaker 2: that you haven't seen, you know, for a while with
Speaker 2: the Democratic ticket, So I think, you know, and if
Speaker 2: you're going to advise them, it's that keep the authenticity.
Speaker 2: Listen as well as you know, speak, make sure that
Speaker 2: you're out there and understanding people's pain. You know, not
Speaker 2: everybody feels like they've moved forward, Like what where are
Speaker 2: people at? What are the things they could do to
Speaker 2: make their lives better? And I think they're off to
Speaker 2: a good start with that.
Speaker 1: So we're less than two weeks away from the Democratic
Speaker 1: now national convention in Chicago. Did we pretty much hear
Speaker 1: the party platform tonight at this rally in Pennsylvania?
Speaker 3: You know?
Speaker 2: I mean I think that you know, everything is thought
Speaker 2: through in tactical I think starting this out in Pennsylvania
Speaker 2: is really important. I think that this move, you know,
Speaker 2: whether you knew it was going to be Shapiro or
Speaker 2: Walls or Kelly, I think Pennsylvania is going to be
Speaker 2: a battleground state no matter what. And so I think
Speaker 2: the time they're spending there, the fact they're starting the
Speaker 2: swing there, the fact that you have the governor of
Speaker 2: an important state like Pennsylvania doubling down, I think this
Speaker 2: is all coming together as they launch. And remember this
Speaker 2: week is in lead up to a convention. They haven't
Speaker 2: even done their Democratic Convention yet, and so Democrats have
Speaker 2: an opportunity to show who the Democratic Party is, share
Speaker 2: all those faces and voices of potential, you know, vice
Speaker 2: presidential nominees set forth their platform and their vision. So
Speaker 2: everything's tactical, and I think this is all moving into
Speaker 2: the direction to head into Chicago in a very strong position.
Speaker 1: It's hard to believe that it's been less roughly a
Speaker 1: month since President Biden stepped down, and I'm looking at
Speaker 1: some of the latest polling coming from NPR, PBS News
Speaker 1: marist Kamala Harris leading Trump fifty one forty eight. Are
Speaker 1: you surprised at the momentum? Has this been kind of
Speaker 1: a stunning development that no one could have predicted?
Speaker 2: Well, again, as you said, you know, you look back
Speaker 2: a month ago, and it's hard to believe that we're
Speaker 2: in this situation now. So much has changed in a month.
Speaker 2: But I do think one of the things that was
Speaker 2: a huge indicator, definitely, you know, to be full disclosure,
Speaker 2: was surprising to me right out of the gate just
Speaker 2: how strong it was, you know, in the first thirty
Speaker 2: six hours. Vice President Harris was able to coalesce the
Speaker 2: party you know, leadership around her, whether it was party chairs,
Speaker 2: whether it was leaders in the House and Senate and
Speaker 2: other governors. She also was able you know, to within
Speaker 2: mer you know, twenty four hours, have fifty six new
Speaker 2: thousand new volunteers sign up, you know, unbelievable amount of money,
Speaker 2: even as early as you know today, raising ten million
Speaker 2: dollars in the first hour after you've you know, picked
Speaker 2: a vice presidential nominee. I think everything that came out
Speaker 2: of the gate was really strong. So I do think
Speaker 2: that will start reflecting in the polling and not as
Speaker 2: surprised to see that they've been you know, flawless and
Speaker 2: executing this they brought forward in a very strong way,
Speaker 2: you know, a process that was respectful and still kept
Speaker 2: everybody together in the party as she picked her vice
Speaker 2: presidential nominee. So you know, polls are a snapshot in time.
Speaker 2: This is going to also if you look back a month,
Speaker 2: like look forward a month, there can be a lot
Speaker 2: of changes and a lot going on. But I do
Speaker 2: think she's her running mad a in well positioned going
Speaker 2: into the convention, and we'll even see if their opponents
Speaker 2: decide to debate them or not. There's still a lot
Speaker 2: of pieces moving forward. But I also caution and remind
Speaker 2: people that in less than sixty days people are voting
Speaker 2: in America. You know, we've got people voting in as
Speaker 2: early as September, So we keep saying in ninety some
Speaker 2: days till the election. The election is closer than we think,
Speaker 2: so they have a small amount of time to really
Speaker 2: reach those undecided voters.
Speaker 1: Most definitely, Amy, good of you to join us. Thanks
Speaker 1: so much. Enjoyed the conversation with Amy Dacy. She is
Speaker 1: executive director at American University sign Institute of Policy and Politics.
Speaker 1: Carlos Casanova is with us. Carlos is Senior Asia Economist
Speaker 1: at UBP. He joins us from our studios in Hong Kong.
Speaker 1: Good of you to drop by. I hope you're doing well.
Speaker 1: So I think we can agree maybe a semblance of
Speaker 1: calm in the market today, But the combination of events
Speaker 1: seems as though it's almost like a perfect storm. We
Speaker 1: had the weak US data on jobs last week, some
Speaker 1: under performing tech results, a crowded yen carry trade that
Speaker 1: may be tied to last week's decision from the Bank
Speaker 1: of Japan. How are you making sense of this and
Speaker 1: when clients come to you, how are you describing the
Speaker 1: unfolding of these events?
Speaker 4: Good morning, and certainly very tumultuous period for markets. I
Speaker 4: think you've missed the one factor, which is valuations in Japan.
Speaker 4: Those were averaging cyclical highs last week, although of course,
Speaker 4: following that massive correction, we are now looking at a
Speaker 4: twelve times on a four p basis, which is more
Speaker 4: in line with average levels for Japan. But we are
Speaker 4: explaining it to clients exactly in this context. We think
Speaker 4: the main trigger was this unwinding of the yen carried trade.
Speaker 4: If you look at the commodity trade in Future Commission,
Speaker 4: about fifty percent of that has been unwound over the
Speaker 4: past few weeks. And the reason for that it was
Speaker 4: a crowded trade. And now you have a very hawkish
Speaker 4: Bank of Japan potentially eroding the profitability of that trade
Speaker 4: in the months ahead. That coincided with fears around a
Speaker 4: potential slow than in the US economy, and of course
Speaker 4: you had a perfect storm for a correction. The selling
Speaker 4: pressure was quite in discriminate, even in Japan. You saw
Speaker 4: selling across all sectors, even one of some of the
Speaker 4: sectors that benefit from a more hawkish Bank of Japan,
Speaker 4: and so we have been telling clients that, you know,
Speaker 4: for those that were not able to, you know, lock
Speaker 4: in some profits, you know, ahead of the Bank of
Speaker 4: Japan meeting, there will be another opportunity. Because the market
Speaker 4: has been so volatile, it doesn't it looks overdone and oversold.
Speaker 4: But you know, if you do see that rebound, you
Speaker 4: have to start looking at fundamentals and try to reposition accordingly.
Speaker 4: And in the US we're also not expecting a recession,
Speaker 4: so we think the cell of is a little bit overdone,
Speaker 4: but we are monitoring this soft landing very closely and
Speaker 4: also repositioning accordingly.
Speaker 1: I'm well aware of the deflationary history in Japan, more
Speaker 1: than three decades worth, and I understand how that history
Speaker 1: is going to create a bit of a conservative bias
Speaker 1: within the policy making body of the Bank of Japan.
Speaker 1: Having said that, I think we have seen over the
Speaker 1: last well almost two years inflationary pressures building. The boj
Speaker 1: resisted the temptation to tighten. Is the Bank of Japan
Speaker 1: in any way complicit in maintaining a weaker currency and
Speaker 1: allowing for excessive leverage in global markets.
Speaker 4: To some extent, you can argue that there is no
Speaker 4: way that Bank of Japan wasn't aware of these risks
Speaker 4: in the global financial system. They are the only ones
Speaker 4: that may be able to answer the question how big
Speaker 4: was this carry trade? I think no one else has
Speaker 4: the data. We all look at proxies to try to
Speaker 4: estimate the size of the carried trade. And it's also,
Speaker 4: I would say reasonable to assume that the FED and
Speaker 4: the Bank of Japan to communicate to some extent. So
Speaker 4: in a sense, yes, I think Bank of Japan may
Speaker 4: have had pressures to deliver the hawkish pivot, perhaps before
Speaker 4: they had full visibility in terms of the data. We
Speaker 4: can go into that later. As a result of this
Speaker 4: imbalance that was building in the global financial sector and
Speaker 4: following many many months of them essentially sort of providing
Speaker 4: the conditions for one way expectations on the Japanese end
Speaker 4: so very crowded trade and at some point they had
Speaker 4: to pull the trigger.
Speaker 1: The other part of the story is obviously the story
Speaker 1: of dollar strength. Now we know that the inflation story
Speaker 1: in the US is very different from what it is
Speaker 1: in Japan, and the end or rather the FED has
Speaker 1: had a bias to keep things tight for some time now,
Speaker 1: So I guess if you are on the side of
Speaker 1: the boj pointing to the persistent weakness, some of the
Speaker 1: problem may stem from persistent dollar strength.
Speaker 4: Right, correct. So going back to the point on inflation
Speaker 4: in Japan, it has been significantly higher than the two
Speaker 4: percent target, but most of that has been driven by
Speaker 4: strong dollar yen, so a lot of that is imported inflation.
Speaker 4: Where there's whole case for tightening rates has been this
Speaker 4: virtuous cycle. So you first have weak yen triggering imported inflation.
Speaker 4: As a result of that, you instigate changes in corporate behavior,
Speaker 4: including increasing wages. For the first for the highest amount
Speaker 4: that increase was the highest than thirty years, So definitely
Speaker 4: that part of the cycles has materialized, and then down
Speaker 4: the line that should translate into stronger domestic consumption and
Speaker 4: endogenous inflation. The third part of that puzzle is what
Speaker 4: we haven't quite seen yet. Although data overnight did show
Speaker 4: real wages increasing by one point one percent for the
Speaker 4: first time since twenty twenty one, but in none of itself,
Speaker 4: that is not sufficient to justify the hawkish pivot. So
Speaker 4: I think inflation has been high, but it's predominantly driven
Speaker 4: by US dollars strength, to your point, and so Bank
Speaker 4: of Japan really really has taken a gamble here because
Speaker 4: the preliminary data does point towards this virtual cycle sort
Speaker 4: of taking hold in the second half of the year,
Speaker 4: but they moved ahead of having visibility on that front.
Speaker 1: So, Carlos, next week, as you know, we're going to
Speaker 1: get the quarterly GDP number for Japan, how are you
Speaker 1: assessing the overall economy.
Speaker 4: It's a backward looking indicator, so I think it's going
Speaker 4: to disappoint Remember that the economy was in a recession
Speaker 4: in the first quarter. Consumption and capital expenditure was contractionary
Speaker 4: as a result of high inflation, squeezing purchasing power of
Speaker 4: households in Japan because all of their imports net importer,
Speaker 4: and all of the imports are more expensive. But also
Speaker 4: companies have been adjusting to higher nominal wages by reducing
Speaker 4: the amounts that they spend on capital expenditures. So I
Speaker 4: think that trend is going to continue into the second quarter,
Speaker 4: and of course, if we see a disappointing GDP reading,
Speaker 4: that is going to be quite negative for markets. Against
Speaker 4: the backdrop of this of this, you know, concerns about
Speaker 4: global growth and BOJ being too hawkish even as the
Speaker 4: economy struggles a little bit. So I think that it
Speaker 4: will disappoint, But as I mentioned, it's a backward looking indicator,
Speaker 4: so you have to take it.
Speaker 3: With a pinch of salt.
Speaker 4: And the more important thing to monitor going forward is
Speaker 4: whether or not this one point one percent increase in
Speaker 4: real wages is sustainable, and then whether that is going
Speaker 4: to lead to a pickup in domestic consumption.
Speaker 1: To what extent is Japan being held back The economy
Speaker 1: in Japan being held back by a weak China.
Speaker 4: China is one of the largest export markets for Japan,
Speaker 4: so I think US demand picking up in the first
Speaker 4: half of this year was a factor that contributed to
Speaker 4: that outperformance for Japanese equities, especially some of the exporters.
Speaker 4: Heading into the second half, we now have a weaker
Speaker 4: consumer demand in the US, but also China very sluggish
Speaker 4: and it's proving very difficult to boost demand there. So
Speaker 4: the initial idea that as demand from the US would
Speaker 4: weekend demand from from China would pick up may not
Speaker 4: be sustainable. So we do think that exports will be
Speaker 4: a drag in the second half, even if they are
Speaker 4: helping in the first half for Japan. And yeah, not
Speaker 4: only there's the direct export channel, but also in terms
Speaker 4: of global investor sentiment, there is a concern around a
Speaker 4: slowing global economy and China is just not going to
Speaker 4: come to the rescue this time around very quickly.
Speaker 1: Fifteen seconds. Do we have to revise the growth target
Speaker 1: for China this year? Will they make.
Speaker 4: It five point zero? Very unlikely? So my target is
Speaker 4: four point eight. I think they will miss target the forecast.
Speaker 1: Carlos, It's always a pleasure. Thank you so much for
Speaker 1: joining us. Carlos Casanova, a senior Asia economist at UBP.
Speaker 1: Stephanie Jung joins us. Stephanie is the chief investment officer
Speaker 1: at Stashaway, and she joins us from our studios in
Speaker 1: Hong Kong. Good of you to drop by. I'm so
Speaker 1: interested in your market person inspective, particularly what we have
Speaker 1: seen over the last let's say, forty eight hours. How
Speaker 1: are you understanding the volatility and some of the moves
Speaker 1: that we have seen lately.
Speaker 3: Yeah, indeed, there was a pretty crazy forty eight hours.
Speaker 3: If you look at the market's favorite gauge of fear,
Speaker 3: which is the VEX index measures the kind of nearrors
Speaker 3: our volatility for US markets. It spiked it as high
Speaker 3: as sixty five, and the last time we saw that
Speaker 3: kind of spike was back in COVID or even before
Speaker 3: that was the GFC. So a lot of like kind
Speaker 3: of dislocation is happening in our view. It all started
Speaker 3: with then winding up the carry trade when boj actually
Speaker 3: started to hike interest rates out of kind of out
Speaker 3: of consensus, and that sparked some unwind unwinding of the
Speaker 3: carry trade of course for the end, but that also
Speaker 3: kind of spiraled into other momentum traits. I mean, to
Speaker 3: start with, I think there has been some concerns in
Speaker 3: terms of how far, for example, the AI bubble has gone,
Speaker 3: and there's been some debates as to, okay, whether all
Speaker 3: these capecs spent on these AI names are justified by returns,
Speaker 3: and as we've seen in the second quarter results, these
Speaker 3: I mean, these returns are yet to show, right For example,
Speaker 3: I think the big tags are saying, oh, we're seeing
Speaker 3: increasing demand, but it's yet to show in numbers. So
Speaker 3: investors were already a bit jettuary. I think at the
Speaker 3: beginning of the summer beginning of July. So that's why
Speaker 3: we saw some rotation out of these spectac names into
Speaker 3: smaller caps into kind of other cyclical assets. And I
Speaker 3: think just in terms of unwinding, a lot of CTAs
Speaker 3: or control funds have done very very significant kind of
Speaker 3: de risking in the past few days. There could be
Speaker 3: still somewhat to sell over the next few days, but
Speaker 3: I think a lot of the volatility or the peak
Speaker 3: of autility has been has happened already in the past
Speaker 3: forty eight hours.
Speaker 5: It sounds almost like bad timing. This confluence of fact
Speaker 5: is all happening in a span of a few sessions.
Speaker 5: But what are your thoughts on the recession risk how
Speaker 5: over own do you think they are out of the US?
Speaker 3: Yeah, I think basically we've seen some weaker data coming
Speaker 3: out from the US in the past week. So for example,
Speaker 3: you look at the jobs data. Of course on Friday,
Speaker 3: it miss consensus by quite a wide margin, and it
Speaker 3: was kind of the lowest non found payroll numbers what
Speaker 3: we've seen in the past six months or so. However,
Speaker 3: if you kind of look underneath, there has been some
Speaker 3: temporary kind of I guess impact in terms of the
Speaker 3: hurricane in terms of that affecting temporary workers. So in
Speaker 3: terms of kind of how significant this data point is,
Speaker 3: I think as yet to be seen. You need to
Speaker 3: kind of see the August data. Given that there's a
Speaker 3: lot of temporary workers that were on leave in July,
Speaker 3: I mean that number could come back in August, and
Speaker 3: I wouldn't be surprised if the August number actually surprises
Speaker 3: on the upside. On the other hand, of course, if
Speaker 3: you look at the ISM numbers or kind of the
Speaker 3: survey numbers, there is some weakness right the I think
Speaker 3: the ISM was quite weak, and also the smp PMI
Speaker 3: was also quite weak, below fifty for the manufacturing sector. Now,
Speaker 3: in the past few months, we've seen a recovery in
Speaker 3: terms of the manufacturing sector in the US and also globally,
Speaker 3: but that seem to have stalled in July. I think
Speaker 3: part of that is election related. If you look at
Speaker 3: kind of the commentary that companies are giving, they're saying that, oh,
Speaker 3: because of the uncertainty of who's going to win or
Speaker 3: what policies are going to be in place posted the
Speaker 3: US election, a lot of companies are actually holding back
Speaker 3: on their investment plans. Now, of course, I mean this
Speaker 3: then get reflected into these survey data. So I think,
Speaker 3: again some of this is actually quite temporary. But also
Speaker 3: I think that given that we still have ninety days
Speaker 3: into election and right now the election outcome is actually
Speaker 3: quite uncertain, that is going to be an overhang on
Speaker 3: fundamentals and also on markets for the next two to
Speaker 3: three months.
Speaker 5: But now that we have the Harris Wells ticket, do
Speaker 5: you think that changes Commala's odds to the White House?
Speaker 5: And you know, what do you make of the Trump trades?
Speaker 3: Then yeah, I think I mean, Pamela made a very
Speaker 3: good choice in terms of her VP in kind of
Speaker 3: balancing the I guess the the the attacket voters that
Speaker 3: I mean, she's she's sort of not covering. So I
Speaker 3: think that in any case, I mean, the poor VP
Speaker 3: that he actually had in terms of the final candidates
Speaker 3: were all very very strong.
Speaker 4: Uh.
Speaker 3: And if you look at kind of betting markets or
Speaker 3: kind of arts of who's gonna win, I mean, right
Speaker 3: now it's sort of a fifty to fifty split. And
Speaker 3: I think this is the worst outcome for markets because
Speaker 3: I mean, for a whole year, the market has been
Speaker 3: trading kind of Trump being in a White House. And
Speaker 3: actually I don't think it was co incidental that SMP
Speaker 3: actually peaked right after the attempt at assassination of Trump.
Speaker 3: That was when Trump, the Trump oughts actually searched his
Speaker 3: seventy five percent and the high since the sort of
Speaker 3: the election start, the election campaign started. And now fifty
Speaker 3: to fifty is not a good outcome because Marcus hate uncertainty,
Speaker 3: and right now there's a lot of uncertainty as to
Speaker 3: who's going to win on election day, but also kind
Speaker 3: of afterwards, right what happens. I think in any case,
Speaker 3: it's going to be a very very close election result
Speaker 3: and perhaps I mean that could be some sort of
Speaker 3: contest or kind of if I mean, it was kind
Speaker 3: of a long drag on results for a few more months,
Speaker 3: and I think that is going to be quite negative
Speaker 3: for markets.
Speaker 1: So let's get back to Japan, because obviously this carry
Speaker 1: trade was a very important deal for markets, and the
Speaker 1: unwind of that contributing to the selling and a lot
Speaker 1: of the volatility that we have been seeing. Next week
Speaker 1: we get economic growth for the Japanese economy. Give me
Speaker 1: your assessment of how well the Bank of Japan has
Speaker 1: been doing and at adjusting its policy right now. Did
Speaker 1: the BOJ wait too long to try to move toward normalization.
Speaker 3: Yeah, I think. I mean, given that Japan has gone
Speaker 3: through a deflation for the last thirty years, I think
Speaker 3: it's prudent for the BOJ to kind of be a
Speaker 3: bit more conservative in their move. I think the problem
Speaker 3: with the recent move is perhaps more in the timing
Speaker 3: of things. So they picked the summer, I think, when
Speaker 3: liquidity is actually quite thin and a lot of people
Speaker 3: are on leave, and I guess maybe they kind of
Speaker 3: wish that they could move the currency with this kind
Speaker 3: of thinner liquidity. Perhaps, I mean they got actually much
Speaker 3: more than what they wished for in a sense that
Speaker 3: it moved the currency in a very very valid way.
Speaker 3: And I think at the same time they stopped ETF
Speaker 3: purchases as well, and that I mean basically removed a
Speaker 3: very very strong support for the nik SO. I think
Speaker 3: a lot of these are actually quite technical in terms
Speaker 3: of the fundamentals and progress in terms of inflation for
Speaker 3: the Japanese economy. I mean, we still remain quite optimistic.
Speaker 3: I think the data actually is still moving in the
Speaker 3: right direction. And I mean, let's remember the reason why
Speaker 3: BOJ is hiking is because I mean they are actually
Speaker 3: quite confident of the way the economy is going. So
Speaker 3: I think in terms of fundamental story, there's kind of
Speaker 3: still a lot of progress, but I mean a lot
Speaker 3: of this is technical.
Speaker 5: How much further unwined do you think there is to
Speaker 5: go on the yen carry trade?
Speaker 3: Yeah, so, I mean it has. It has had a
Speaker 3: huge move ONUND sixty to one forty five. I think
Speaker 3: majority of that has been unwe If you talk to
Speaker 3: micro funds, a lot of directional funds have already unwounded.
Speaker 3: So I don't think there's much more to go, but
Speaker 3: of course I think they're probably gonna be quite choppy.
Speaker 1: Choppy indeed, Stephanie, it's always a pleasure. Thank you so
Speaker 1: much for being with us. Stephanie Leung, chief investment officer
Speaker 1: at Stashuway, joining us here on Daybreak Asia from our
Speaker 1: studios in Hong Kong. This has been the Bloomberg Daybreak
Speaker 1: Asia podcast, bringing you the stories making news and moving
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