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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis

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Speaker 2: along with Doug Krisner. Join us each day for the

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Speaker 2: stories making news and moving markets in the Asia Pacific.

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Speaker 2: You can subscribe to the show anywhere you get your

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Speaker 2: podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and

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Speaker 2: the Bloomberg Business App. Joining us now in our studios

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Speaker 2: in Hong Kong is Jill Disis, Bloomberg's China Eco Gov editor.

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Speaker 2: So a little bit of a mixed bag there on data.

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Speaker 2: I mean, the manufacturing number is that that's good. People

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Speaker 2: will definitely take some heart from that. We had some

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Speaker 2: pretty good export numbers earlier earlier last month, But the

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Speaker 2: property data still kind of hangs there looming large at

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Speaker 2: the moment, doesn't it.

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Speaker 3: Yes, Brian, So I think what you're ultimately looking at

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Speaker 3: here is kind of a two track economy. You've got,

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Speaker 3: on the one hand, the industrial sector, which is doing,

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Speaker 3: you know, better than expected. We saw that really positive

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Speaker 3: industrial output data for the first two months of the year.

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Speaker 3: That followed some really encouraging signs on export, indicating that

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Speaker 3: foreign demand has really picked up. Obviously, this latest PMI

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Speaker 3: survey on manufacturing snapping that five month streak of declines,

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Speaker 3: adding to that idea that the industrial sector is actually

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Speaker 3: probably at this point seems to be one of those

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Speaker 3: major drivers for the Chinese economy this year. On the

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Speaker 3: other hand, though, you know those really worrying property sector numbers,

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Speaker 3: This idea that home sales aren't picking up, it really

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Speaker 3: points to ongoing challenges with domestic demand. I know that

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Speaker 3: we saw that CPI gauge tick positive in February, but

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Speaker 3: overall the trend is still deflation area, and so that

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Speaker 3: does indicate that there are concerns on that side of

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Speaker 3: the equation.

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Speaker 2: I want to get your take on an interesting development

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Speaker 2: last week and with Shijinping's comments about monetary policy tools

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Speaker 2: at the PBOC, and it sounded like he was talking

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Speaker 2: about getting behind a kind of quantitative easing, because he

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Speaker 2: talked about how, you know, the PBOC had these tools

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Speaker 2: and that they should be increasing buying and selling of

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Speaker 2: government bonds.

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Speaker 4: I'm not sure it went anywhere, but what did you

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Speaker 4: make of that?

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Speaker 3: Yeah, I think this is actually something that we've kind

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Speaker 3: of seen the government hint at, at least in fairly

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Speaker 3: recent months. So ultimately, obviously, you know, China does not

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Speaker 3: favor quantity of easing historically whatsoever. But we have seen

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Speaker 3: at least some efforts to diversify the ways in which

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Speaker 3: the central bank has actually tried to help the economy.

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Speaker 3: I mean, as we saw last year, broader rate cuts

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Speaker 3: really didn't move the needle whatsoever. You know, it didn't

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Speaker 3: really do a ton to support the economy. But what

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Speaker 3: the central bank has been doing is using more targeted

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Speaker 3: forms of stimulus. So there's one in particular. It's a

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Speaker 3: program that involves sort of special lendings being low cost

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Speaker 3: central bank funding and phases into different programs to help

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Speaker 3: with partable housing and things like that. I think that

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Speaker 3: that's the kind of thing that you might see the

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Speaker 3: government do more of. We've seen a couple of those

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Speaker 3: types of sales take place in December and January at

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Speaker 3: the very least. So I think she's comments points to maybe,

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Speaker 3: you know, further encouragement for the uh, you know, for

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Speaker 3: the central bank to take a look at alternative forms

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Speaker 3: of easing to kind of attempt to get things going again.

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Speaker 2: So yeah, that's one of the key areas is try

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Speaker 2: to get consumers spending and housing is such a big

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Speaker 2: part of everyone's total wealth. Uh And in their consideration

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Speaker 2: of how to spend what to spend on, I'm curious

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Speaker 2: whether or not there are other tools that they have

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Speaker 2: that might help lift domestic spending uh and and whether

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Speaker 2: or not, you know, more can be coming well.

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Speaker 3: So I think outside of just the central Bank, because

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Speaker 3: I mean there's you know, certain tools that they have.

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Speaker 3: Obviously we've been discussing. The government has indicated that they're

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Speaker 3: interested in, you know, other types of support. So there's

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Speaker 3: obviously on the fiscal side, they want to sell more

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Speaker 3: sovereign debt this year. This is it sort of comes

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Speaker 3: from this idea of the local governments obviously being incredibly indebted,

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Speaker 3: maybe that they you know, can lean on the central

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Speaker 3: government a little bit more to sell debt to fund

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Speaker 3: infrastructure spending, which again one of those really you know,

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Speaker 3: prominent historical measures to try to boost activity. But there's

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Speaker 3: also I think some policies being discussed about how to

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Speaker 3: help the consumer more. There's like trade in like buyback

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Speaker 3: programs that the government has been discussing. So this idea

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Speaker 3: of like, you know, trade in your old goods for

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Speaker 3: better ones, maybe try to stimulate you know, some more

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Speaker 3: demand of that way. So there are sort of these

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Speaker 3: piecemeal things that the government has been discussing, both from

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Speaker 3: that fiscal side and then also from the monetary policy side.

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Speaker 3: I think it's just a matter of whether that's actually

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Speaker 3: going to you know, sort of evolve into anything substantial

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Speaker 3: this year to help, you know, put the floor under

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Speaker 3: this property sector side and really get themestic expending going again.

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Speaker 2: We did see consumer prices actually rise for the first

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Speaker 2: time in quite a while, almost half a year, and

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Speaker 2: that might seem to indicate that with you know, if

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Speaker 2: consumer prices are going up, that there's a little bit

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Speaker 2: more appetite. Are there very many examples of spending consumer

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Speaker 2: spending that might be encouraging.

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Speaker 3: Yeah, Brian, I'm pretty skeptical of that February CPI up tick.

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Speaker 3: I think that the thing that you have to remember

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Speaker 3: is that that was also the month in which the

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Speaker 3: Lunar New Year holiday took place this year as much

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Speaker 3: later than usual. So I think that at least some

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Speaker 3: of that uptick and CPI data is capturing spending over

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Speaker 3: the holiday. We saw some more nitty gritty numbers that

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Speaker 3: actually looked at how even though the broader. You know,

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Speaker 3: tourism spending numbers were up for the period per capita spending,

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Speaker 3: so spending per person per tourists was actually lower than

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Speaker 3: it was before the pandemic. So I think I would

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Speaker 3: need to see you know, better data for March April

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Speaker 3: may you know, showing a more sustained confident turnout of

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Speaker 3: deflation than we're seeing right now to actually think, okay,

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Speaker 3: that's you know, we've snapped that deflationary tree.

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Speaker 2: And something else that might be more long term oriented

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Speaker 2: than short term. Is the government trying to attract foreign

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Speaker 2: investment back into the country. Are we seeing much progress there?

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Speaker 5: Yeah?

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Speaker 3: I mean, look, twenty twenty three was an absolutely terrible

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Speaker 3: year for foreign investment. As we all know. We know

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Speaker 3: that the government is trying to you know, boost things

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Speaker 3: again this year. I think that, you know, just last week,

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Speaker 3: you know, with a couple of prominent forums, we saw

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Speaker 3: our higher profile leaders actually talking to foreign business executives

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Speaker 3: trying to convince them to invest in China. Right now,

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Speaker 3: I think that, you know, it's sort of a this

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Speaker 3: is another thing where there's a kind of a two

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Speaker 3: track issue here. Now, obviously China wants to encourage more

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Speaker 3: foreign investment. I do think that they're taking stronger steps

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Speaker 3: this year to make that actually happen. But at the

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Speaker 3: same time, China is also facing a lot of major

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Speaker 3: geopolitical pressures that might make that very difficult. You've got

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Speaker 3: all of these US led sanctions that are really kind

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Speaker 3: of crimping the ability for China to actually attract, you know,

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Speaker 3: other foreign businesses, or at least limit the fields in

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Speaker 3: which they can actually operate.

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Speaker 2: One of the big events last week was the Development

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Speaker 2: Forum in Shanghai, and President she did get a chance

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Speaker 2: to talk to a lot of top US business leaders,

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Speaker 2: and one of the core messages was that, look, China's

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Speaker 2: economy is okay. So my question to you is, what

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Speaker 2: does he know that we don't know okay? Or was

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Speaker 2: that just a pr PR exercise.

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Speaker 3: I mean, I think that to a certain extent, he's

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Speaker 3: you know, just even the fact that he's meeting with

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Speaker 3: these business executives is I think a really big you know,

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Speaker 3: it's a big deal, right, because I think that that

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Speaker 3: shows that he wants to personally sort of you know,

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Speaker 3: tell them, look, it's it's fine to invest in China.

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Speaker 3: I do think that he's right from the perspective of

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Speaker 3: you know, some of this really promising industrial data that

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Speaker 3: we've been discussing does seem to help, you know, indicate

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Speaker 3: that maybe they can hit that growth target of about

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Speaker 3: five percent that they've set for themselves this year. But

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Speaker 3: really the China story is much more about long term

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Speaker 3: economic growth drivers. How do you replace property as a

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Speaker 3: major driver of the economy with things like EV sales,

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Speaker 3: advanced tech, that kind of thing. And that's where I

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Speaker 3: think the picture is a lot murcuryer, because while China

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Speaker 3: has the capacity to you know, really boost those things.

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Speaker 3: I mean, we've seen how much they've really built electric vehicles.

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Speaker 3: This is really you know, big and big for global demand.

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Speaker 3: But when you've got a lot of those geopolitical pressures,

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Speaker 3: you know, this idea of sanctions and restrictions on their business,

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Speaker 3: are they able to actually keep that up and really

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Speaker 3: transform the economy and the way they need to.

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Speaker 2: All Right, Jill, out of time, but thank you very much,

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Speaker 2: so much more to talk about. For instance, wang E

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Speaker 2: talked about how the economy was facing bewildering levels of

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Speaker 2: trade curbs and it's not likely that that is going

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Speaker 2: to change anytime soon. Well, save that for another discussion.

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Speaker 2: Jill Jill Desis, Bloomberg China Eco Gov Governor Editor. Joining

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Speaker 2: us for some discussion about markets is Paul Dobson, Bloomberg

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Speaker 2: Executive Editor for Asia Markets with US Live. So, Paul,

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Speaker 2: it seems like the FED is intent here on preaching patients.

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Speaker 2: Even j Powell, the last time he spoke after the

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Speaker 2: latest FED meeting, he talked about getting inflation down to

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Speaker 2: target in time. So it seems like no rush to

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Speaker 2: cut rates and no real rush to get inflation to

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Speaker 2: the target.

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Speaker 1: Yeah, yeah, good morning. And I think that's right. But

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Speaker 1: I think that the flip side of that is that

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Speaker 1: the FED is still talking about cutting rates and being

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Speaker 1: minded to do that at some point in the future,

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Speaker 1: And in a way, the market seems a little bit

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Speaker 1: untroubled at the moment about the exact timing, so long

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Speaker 1: as it knows that the trajectory in the end is

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Speaker 1: going to be down with four interest rates, and so

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Speaker 1: I suspect that the market will be reasonably happy. The

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Speaker 1: PCEE figure didn't give us any negative surprises and will

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Speaker 1: take comfort more from the fact that while the FED

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Speaker 1: and power preaching patients, they're still looking to cut later

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Speaker 1: in the year and still potentially gonna be cutting three

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Speaker 1: times based on based on what the dot plot tells us.

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Speaker 4: Yeah.

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Speaker 2: In that clip that we heard from Jerome Powell, he

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Speaker 2: talked about how strong jobs are, and you might think

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Speaker 2: that with inflation high and the Fed still talking about

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Speaker 2: cutting three times this year, that it is thinking more

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Speaker 2: about employment and worrying that perhaps, you know, the lagged

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Speaker 2: effect of higher rates could impact the jobs market. So

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Speaker 2: it's a little interesting to hear him talk about jobs

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Speaker 2: being so strong, don't you think.

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Speaker 1: Yeah, yeah, yeah, I think I think that's right. But

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Speaker 1: I think again turning on his head and the fact

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Speaker 1: that he's starting to talk about jobs gives you gives

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Speaker 1: you one the idea that the Fed is looking around

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Speaker 1: for other reasons why it might need to cut interest

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Speaker 1: rates later in the year, again giving us that sort

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Speaker 1: of insight into the mindset there. And also, you know,

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Speaker 1: the fact is that they are are slightly worried about

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Speaker 1: it and pointing that spotlight on it. So, yes, things

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Speaker 1: all all the good at the moment, but uh, you know,

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Speaker 1: it's kind of that six month out view again of

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Speaker 1: where we could be headed from here.

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Speaker 2: Well, you have an inverted yield curve and a lot

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Speaker 2: of other signs that you know, something, something could bring

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Speaker 2: us to the downside. At the moment, the markets are

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Speaker 2: pretty focused on, you know, this idea that that jobs

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Speaker 2: are healthy, it's keep keeping people spending. They're they're reasonably content,

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Speaker 2: and inflation is receding, and so you know, it's good

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Speaker 2: to stay long these markets, even if to some people

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Speaker 2: there's a little bit of frothiness there. So I raised

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Speaker 2: this question with an earlier guest about what might the

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Speaker 2: catalyst be for some disruption in this because high valuations,

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Speaker 2: you know, often are not that sort of catalyst.

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Speaker 4: Do you see anything out there that's particularly worrying.

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Speaker 1: Well, there's there's all the ways, the unknown unknowns, but

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Speaker 1: the no non knowns. You know, the coal tension that

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Speaker 1: we have in the Middle East, for example, we know

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Speaker 1: about those kinds of things.

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Speaker 4: Already feels like.

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Speaker 1: The economy is starting to shift a little bit more

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Speaker 1: upward globally as well right now. If you look at

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Speaker 1: the trade figures coming out of our region, for example,

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Speaker 1: you look at the Chinese pmis that we just had.

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Speaker 1: You know, there's little out there immediately that would disrupt things.

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Speaker 1: And I think that it's mainly that kind of confidence

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Speaker 1: that the sort of breeds that complacency, and that in

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Speaker 1: a way starts to sow the seeds for a potential

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Speaker 1: correction at some point in the future. Now, you know,

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Speaker 1: kind of the people are looking at the tech sector

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Speaker 1: of talking in very excited terms. The earning season seems

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Speaker 1: to have been reasonably good, but it doesn't take too

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Speaker 1: many bad reports coming out of that. You know, how

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Speaker 1: can people really monetize AI, for example, to give the

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Speaker 1: market a little bit of a worry or a concern there?

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Speaker 1: I think likewise, if you're looking for risks out there

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Speaker 1: are the possibility that there may be more from the

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Speaker 1: commercial real estate aside coming through in the next six months.

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Speaker 1: Hurting bank balance sheets still hasn't gone away really as

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Speaker 1: a risk either. I think the third thing is, although

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Speaker 1: we you know, corporate bond spreads are incredibly tight at

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Speaker 1: the moment and looking very comfortable for issuers who are

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Speaker 1: sort of eroding that kind of wall of refinancing that

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Speaker 1: they needed to do this year, will the market continue

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Speaker 1: to take that down or will they start to get

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Speaker 1: indigestion at some point in the year and start to

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Speaker 1: raise those corporate borrowing costs again. Because if that's the case,

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Speaker 1: then that could become a little bit more awkward for

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Speaker 1: those companies that haven't gone out there already into the market.

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Speaker 2: We've seen investors be pretty discerning in some ways because

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Speaker 2: some of the money has come out of AMD and

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Speaker 2: even Envidioff, the highs and Broadcom and others and flowed

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Speaker 2: into industrials and materials and financials, all of which in

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Speaker 2: the past four to six weeks have outperformed tech, outperformed

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Speaker 2: the cues. And so you see that happening, and then

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Speaker 2: I think for investors wanting to get out in front

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Speaker 2: of that, they might be thinking about emerging markets and

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Speaker 2: places that have had a little bit less attention. So

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Speaker 2: I'm curious what you're seeing, any type of action in

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Speaker 2: markets that might suggest money is flowing into em and

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Speaker 2: if so.

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Speaker 1: Where, Yeah, Yeah, Europe and emerging markets. I would say

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Speaker 1: it seems like, you know, that diversification trade, If you

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Speaker 1: really believe that things that are good and going to

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Speaker 1: continue strong, and you you know, notwithstanding the risk that

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Speaker 1: we just talked about, looking for value, then maybe you

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Speaker 1: look beyond the US these days. So Europe would be

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Speaker 1: the next obvious place to go.

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Speaker 2: But yes, well I mentioned Europe the reason I didn't

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Speaker 2: mention Europe isn't you know, you've got the dacks. Really

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Speaker 2: it basically all time highs, right, so it's already benefited.

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Speaker 1: Yeah, but the parts of Europe that aren't looking so

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Speaker 1: strong at the moment, Southern Europe in particular. Maybe also

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Speaker 1: the UK is suddenly suddenly back on investors map as well.

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Speaker 1: Not exactly an emerging market, although sometimes it's performed like

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Speaker 1: that over the last few years. But I think the

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Speaker 1: for em it seems like people are looking for more

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Speaker 1: active kind of asset allocations here, not just index following,

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Speaker 1: partly because they're still concerned about the drag that China

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Speaker 1: has on that and some of the other emerging markets.

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Speaker 1: But it's really about it's about kind of looking for

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Speaker 1: where those real pockets of exciting value are, and that

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Speaker 1: might be in some of the cheap sectors, the financials

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Speaker 1: for example. It might be some of the cyclical sectors

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Speaker 1: if we do believe that the pmis are strengthening, the

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Speaker 1: exports are strengthening, and we're seeing that uplift as well,

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Speaker 1: and it might be you know, kind of the old favorites,

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Speaker 1: like the AI stocks, particularly as in uppart of the

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Speaker 1: world at least they pay a much stronger dividend than

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Speaker 1: those in the US.

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Speaker 2: I wonder whether Australia might benefit here, and that it

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Speaker 2: seems kind of symbolic with the wine tariffs adjusted by China.

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Speaker 2: Whether or not that's a sign that, you know, relations

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Speaker 2: between Australia and China get back on a more solid footing.

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Speaker 1: Yeah, And that would put Australia in a better position,

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Speaker 1: particularly if we see an upswing in commodities demand as

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Speaker 1: well some more strength in the energy price complex. Two

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Speaker 1: natural gas prices haven't been performing so strongly this winter

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Speaker 1: in the northern Hemisphere as previously. But nonetheless, if that,

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Speaker 1: if that makes a little bit of a combat, that

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Speaker 1: would also bode well. So I feel that you're right

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Speaker 1: again Australia not too far from those record highs already,

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Speaker 1: but maybe maybe more of the strength comes through on

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Speaker 1: the currency side, if we finally, you know, kind of

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Speaker 1: feel feel a little bit more confident that the economies

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Speaker 1: on firm ground, even as inflations those in the RBA

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Speaker 1: starts to look at those interest rate cuts. Think from

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Speaker 1: the currency side, though, you know, it all comes back

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Speaker 1: to the FED and where we were talking at the

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Speaker 1: start about that timing from Powell and his colleagues.

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Speaker 2: And finally China. You mentioned that the pmis were better,

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Speaker 2: but we do have this drag from the property market.

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Speaker 2: People want to see China deal with its debt, but then,

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Speaker 2: you know, how do you fix the pretty market without

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Speaker 2: taking on more debt?

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Speaker 4: Yeah?

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Speaker 1: Yeah, and that's the drag, the loadstone around the neck.

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Speaker 1: At the moment, we had, you know, kind of looking

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Speaker 1: at the two columns where I put my news material

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Speaker 1: preparing for our morning calls like this one. And there's

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Speaker 1: lots in the good news column for China. But also

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Speaker 1: as you know that we have the banker news, we

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Speaker 1: have the country garden news, there's still plenty weighing down

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Speaker 1: on the currency sector, I mean, on the property sector.

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Speaker 2: I should get my hands on that list of good

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Speaker 2: news and bad news because it's very important to us

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Speaker 2: here as well.

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Speaker 4: Paul, Thank you. Paul Dobson, Bloomberg Executive Editor for Asian Markets.

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Speaker 2: Our guest is Derek Iswell, who was a portfolio manager

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Speaker 2: and chief investment manager to Capital Management. I see in

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Speaker 2: the notes here some discussion of Japan, so we can

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Speaker 2: talk a little bit about that. But let's first start

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Speaker 2: with a couple of the big points of news that

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Speaker 2: might be moving markets this week, the PCE prices data

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Speaker 2: late last week in the US, and also the China PMIS,

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Speaker 2: and hopefully we'll get to Japan.

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Speaker 4: So I'm curious. It seems like the Fed.

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Speaker 2: Now is moving a little bit more to a balance

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Speaker 2: between it's addressing of inflation and employment, those two mandates

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Speaker 2: that they have, and it's more in balance. Do you

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Speaker 2: feel comfortable with that or do you think they should

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Speaker 2: be focusing more on slaying the inflation dragon?

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Speaker 1: First?

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Speaker 5: Well, I do believe that the Fed actually is still

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Speaker 5: focused on inflation. They are not going to diving a

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Speaker 5: hard time getting the inflation level down to their target

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Speaker 5: of two percent. It's seeming to settle long term around three,

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Speaker 5: and so in that kind of situation, they're going to

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Speaker 5: have to remain vigilant that at a three percent level

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Speaker 5: that it doesn't reseurge back to four or five or

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Speaker 5: six percent. So I believe here going forward, they're still

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Speaker 5: going to be primarily focused on inflation for the time being.

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Speaker 6: And does that bring the longe part of the high

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Speaker 6: for longer mantra into play? When do you anticipate the

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Speaker 6: faith might take its foot off the off the break.

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Speaker 5: Well, no, I think I think the Fed's going to

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Speaker 5: got about two to three rate cuts left this year.

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Speaker 5: But there you know, that's really about all we can

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Speaker 5: hope for them. You know that we were talking six

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Speaker 5: cuts earlier this year that wasn't really realistic. And in

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Speaker 5: a world where the inflation level stabilizes at three to

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Speaker 5: three or four percent, that's a very different investing environment

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Speaker 5: than we have experienced for the last twenty or twenty

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Speaker 5: five years. So it's going to make a big difference

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Speaker 5: for particular for US inventors, but also you know investors

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Speaker 5: around the world and how they build a portfolios.

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Speaker 2: See the reason I mentioned the balance is you know,

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Speaker 2: if inflation is too high, and you really want to

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Speaker 2: focus on inflation, why would you be cutting at all

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Speaker 2: here unless you are concerned about the lag defect and

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Speaker 2: the possibility that with these higher interest rates for this

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Speaker 2: long that you would do a certain amount of damage

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Speaker 2: to the economy and to jobs. And so that's why

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Speaker 2: I bring in that they would be trying to balance it.

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Speaker 2: In any case, if the interest rates start arriving before

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Speaker 2: we get anywhere close to the two percent target, is

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Speaker 2: that good for emerging markets? I mean, what would your

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Speaker 2: target be then in that environment.

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Speaker 5: Higher interest rates good for emerging markets? Yeah, in general,

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Speaker 5: I don't know.

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Speaker 2: Yes, if they start cutting, if they start cutting before

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Speaker 2: we get to the target, which seems to be you

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Speaker 2: know where we're heading, and you even reinforce that in

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Speaker 2: that environment, what's a good target?

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Speaker 4: Are emerging markets for instance? One?

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Speaker 5: Yeah, I mean if we do get more I would

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Speaker 5: say that when you're talking about emerging markets, that would

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Speaker 5: be a good target. The key here there is the dollar.

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Speaker 5: And if we're looking at a situation where the FED

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Speaker 5: is starting to cut is cutting rates, then that will

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Speaker 5: that balance will then make the dollar less attractive then

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Speaker 5: overseas currencies, particularly perhaps maybe Japanese end but any of

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Speaker 5: these currencies, and when you get dollar weakness like that,

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Speaker 5: that's the really the key catalyst that emerging markets need

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Speaker 5: to waken out of their long, you know, ten fifteen

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Speaker 5: year slumber. That it was the week dollar that really

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Speaker 5: drove the last emerging market rally, you know, in addition

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Speaker 5: to China, but they were all related together back in

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Speaker 5: the early aughts, which has been the last time that

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Speaker 5: emerging markets had really delivered performance like we've seen in

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Speaker 5: develop markets.

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Speaker 6: It feels like a good moment to talk about the

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Speaker 6: China thing. We had some pretty good PMI numbers, which

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Speaker 6: is just maybe returning a corner. We had some commentary

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Speaker 6: also though from Ray Dalio saying, look, China's going to

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Speaker 6: fix its debt problems or face a lost decade or

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Speaker 6: what are your views on this?

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Speaker 5: I have to agree with Ray. We may see a

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Speaker 5: bounce in here just because China has been so weak,

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Speaker 5: at least in their investment markets, but certainly driven by

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Speaker 5: combination of economic news as well as the behavior of

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Speaker 5: the government. China's got three big problems. Debt is just

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Speaker 5: one of them. I like to call them three d's. Yes,

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Speaker 5: private debt is a big problem for China, and it

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Speaker 5: manifests itself in the real estate market. Also on top

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Speaker 5: of that, from a little slightly longer horizon, is their demographics.

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Speaker 5: They have the worst demographics of any large economy in

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Speaker 5: the world, and it's all a result of the one

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Speaker 5: child policy they've had for a couple of decades. And

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Speaker 5: as a results, that's not going to go away, and

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Speaker 5: this is going to be a constant drag on their economy.

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Speaker 5: Their population is actually even starting to roll over and

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Speaker 5: go down the third problem they have is when they

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Speaker 5: came out of COVID in November of twenty two, everyone

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Speaker 5: expected big things to happen. They expected a big surgeon

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Speaker 5: consumer spending. But all we really saw was a surgeon

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Speaker 5: production and Chinese consumers really didn't spend much more money.

439
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Speaker 5: And so they're now in a problem where they're in

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00:23:20,240 --> 00:23:24,760
Speaker 5: a deflationary situation and could get caught, you know, liquidity traps.

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00:23:24,800 --> 00:23:27,200
Speaker 5: So those three d's are really weighing on China, but

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00:23:27,320 --> 00:23:29,520
Speaker 5: we could see an investment bounce right now in the

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Speaker 5: short term.

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Speaker 2: Let's talk a little bit briefly here about the Bank

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00:23:32,720 --> 00:23:35,639
Speaker 2: of Japan and the yen. The Bank of Japan in

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Speaker 2: scrapping YCC but still buying bonds.

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Speaker 4: It hasn't been good news for the end.

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Speaker 2: How do you see the yen moving and can you

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Speaker 2: take advantage over the next few months.

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Speaker 5: Well, yeah, so obviously it has been very weak of

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Speaker 5: the last several months and it's and now they've released

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Speaker 5: the yield curve control, which should help support the end

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Speaker 5: if we see somewhat higher rates in Japan. That the

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Speaker 5: primary driver of the japan US exchange rate is the

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Speaker 5: difference between their ten year bonds. If you just look

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Speaker 5: at that. You can throw in a little sidekicker of

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Speaker 5: wel prices and things with a big driver.

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Speaker 2: All right, Derek, So unfortunately out of time, but love

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Speaker 2: to have you back. Thanks very much for joining us.

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Speaker 2: Derek Iswell from Shelton Capital Management. This is the Bloomberg

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00:24:26,960 --> 00:24:30,520
Speaker 2: Daybreak Asia podcast, bringing you the stories making news and

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00:24:30,720 --> 00:24:34,240
Speaker 2: moving markets in the Asia Pacific. Visit the Bloomberg Podcast

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00:24:34,400 --> 00:24:37,320
Speaker 2: channel on YouTube to get more episodes of this and

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Speaker 2: other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify,

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Speaker 2: or anywhere else you listen, and always on Bloomberg Radio,

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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app.