WEBVTT - Baltimore Bridge Collapse Disaster & Yen Hits 34 Year Low

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>This is the Bloomberg Daybakut podcast, available every morning on Apple,

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<v Speaker 2>Spotify or wherever you listen. It's Wednesday, the twenty seventh

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<v Speaker 2>of March. Here in London. I'm Caroline Hepka and.

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<v Speaker 3>I'm Lizzie Burden. Coming up today the latest on the

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<v Speaker 3>Baltimore Bridge collapse disaster. As emergency services moved from rescue

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<v Speaker 3>to recovery.

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<v Speaker 2>The Japanese yen hits its lowest level against the dollars

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<v Speaker 2>since the nineties, as Japan moves a step closer to

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<v Speaker 2>currency intervention.

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<v Speaker 3>Plus, you can't buy happiness, but you can buy chocolate.

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<v Speaker 3>But as the price of coco hits a record high,

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<v Speaker 3>it's likely to cost you a whole lot more.

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<v Speaker 2>Let's start with a roundup of our top stories.

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<v Speaker 3>Six people are presumed dead following the collapse of Baltimore's

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<v Speaker 3>Francis Scott Key Bridge after it was struck by a

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<v Speaker 3>container ship. More from Boomberg's Dan Schwartzman.

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<v Speaker 4>Now, the search for survivors at the Francis Scott Key

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<v Speaker 4>Bridge collapse site in Baltimore, Maryland was suspended overnight, with

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<v Speaker 4>the six people missing deemed to be deceased. The six

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<v Speaker 4>were construction workers from a business called Browner Builders, and

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<v Speaker 4>we're doing repair work on the bridge. Coastguard Rear Admiral

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<v Speaker 4>Shannon Gilreath explains why the operation was transitioning to a

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<v Speaker 4>new phase.

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<v Speaker 5>Based on the length of time that we've gone in

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<v Speaker 5>the search, the extensive search efforts that we've put into it,

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<v Speaker 5>the water temperature that at this point we do not

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<v Speaker 5>believe that we're going to find any of these individuals

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<v Speaker 5>still alive.

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<v Speaker 4>That's Coastguard Rear Admiral Shannon Gilreath. The search for the

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<v Speaker 4>missing is resuming this morning. Dan Schwartzman, Bloomberg Radio.

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<v Speaker 3>The incident also adds pressure to already strained global supply chains,

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<v Speaker 3>Baltimore being one of the busiest ports on the US

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<v Speaker 3>East Coast.

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<v Speaker 6>Now.

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<v Speaker 2>The Japanese y end slid to its lowest against the

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<v Speaker 2>US dollars is nineteen ninety, with Japan's Finance minister warning

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<v Speaker 2>of bold action. The Cauncy's pair slid to one hundred

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<v Speaker 2>and fifty one ninety seven in trading this morning, before

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<v Speaker 2>pulling back when Minister Shinichi Zuki hinted at potential intervention

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<v Speaker 2>that is past the level that prompted Japan to weighed

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<v Speaker 2>into markets. In October twenty twenty two, hedge funds and

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<v Speaker 2>asset managers combined held a near record level of bearish

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<v Speaker 2>positions against Japan's currency last week.

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<v Speaker 3>As many as eight million UK workers are at risk

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<v Speaker 3>of losing their jobs to AI. This according to a

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<v Speaker 3>think tank, The Institute for Public Policy Research, is forecasting

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<v Speaker 3>that the new technology could add three hundred and six

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<v Speaker 3>billion pounds a year to the UK economy or wype

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<v Speaker 3>out nearly a quarter of its jobs. James Wilcock has.

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<v Speaker 7>More a job's apocalypse. That's what the IPPR is calling it.

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<v Speaker 7>They analyzed twenty thousand tasks in the UK across all

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<v Speaker 7>job types to see how easy they could be to automate.

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<v Speaker 7>What emerged is a sesaw model. In the worst case scenario,

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<v Speaker 7>seven point nine million jobs are lost to no economic gain.

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<v Speaker 7>In the best case scenario, zero jobs are lost to

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<v Speaker 7>the tune of thirteen percent and your GDP growth. LinkedIn's

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<v Speaker 7>UK boss Jean Chamberlain is on the optimistic side.

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<v Speaker 3>This is really important to kind of consider what does

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<v Speaker 3>AI actually provide.

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<v Speaker 8>It doesn't replace someone's job.

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<v Speaker 3>This is just about giving people a helping hend a

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<v Speaker 3>starting point.

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<v Speaker 7>But for the IPPR it's a bleaker outlook. They say.

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<v Speaker 7>The key factor in where on the seesaw we end

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<v Speaker 7>up is how government plans the labor forces transition to AI,

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<v Speaker 7>and currently they say there isn't one in London, James Walcock,

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<v Speaker 7>Bloomberg Radio.

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<v Speaker 2>Meanwhile, more than a quarter of UK tech businesses want

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<v Speaker 2>to sell their firm abroad. A Berkeley survey of tech

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<v Speaker 2>founders exit strategies found that sixteen percent want to sell

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<v Speaker 2>their firms to a foreign buyer and ten percent would

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<v Speaker 2>sell shares abroad. More than half said that the lack

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<v Speaker 2>of funding, talent and infrastructure is holding back their company's growth.

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<v Speaker 2>The data suggests that Prime Minister is she Sunac still

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<v Speaker 2>has work to do to persuade British companies to stay

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<v Speaker 2>in the UK as they try to scale up.

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<v Speaker 3>Coco futures reached a record ten thousand dollars per metric

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<v Speaker 3>ton this week. The commodity has since raised those gains,

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<v Speaker 3>taking a break from a historic rally which has seen

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<v Speaker 3>prices double in twenty twenty four. Poor harvests from West

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<v Speaker 3>African growers ravaged by bad weather have spurred a third

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<v Speaker 3>straight annual Coco supply deficit, which has sent prices soaring.

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<v Speaker 3>Bloomberg's on duro a Ganga says there are a number

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<v Speaker 3>of factors behind the production slow down.

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<v Speaker 9>Ghana has also been having challenges with regards to financing

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<v Speaker 9>and so the government was not able to adequately subsidize fertilizer. Internationally,

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<v Speaker 9>we are also seeing their new rules incoming in Europe

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<v Speaker 9>which will block Coco that destroys for US and has

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<v Speaker 9>child libor in the Coco production Valichin from heating.

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<v Speaker 3>The market, Bloomberg's on duero Oganga speaking there. Pressures are

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<v Speaker 3>also building in the financial market, where some traders have

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<v Speaker 3>sold futures to hedge against the physical holdings.

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<v Speaker 2>Now, former President Donald Trump's social media startup sort in

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<v Speaker 2>its first trading day as a public company. Here's the

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<v Speaker 2>moment that Bluemok's cowl Massa called Trump Media and Technology

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<v Speaker 2>Group at the.

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<v Speaker 8>Close uppermost sixty percent. It ties today it's first official

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<v Speaker 8>day of trading. We know it was a spac and

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<v Speaker 8>so of course a merger with Digital World acquisition. It's

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<v Speaker 8>an unprofitable company. This is something that we've been trying

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<v Speaker 8>to dig into a little bit more today finishing the

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<v Speaker 8>day with a sixteen percent gain, but soaring. It did

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<v Speaker 8>also trigger a brief volatively related trading hot but nonetheless,

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<v Speaker 8>as I said, some outperformance in that one day two

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<v Speaker 8>will be an interesting trade, no doubt.

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<v Speaker 2>So Blombog's Carol Massa there She says that the now

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<v Speaker 2>seven point nine billion dollar valued company has a meme

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<v Speaker 2>like appeal. It's become the most expensive US dot T

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<v Speaker 2>bet against. Short Sellers are having to pay up to

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<v Speaker 2>three hundred times the average cost to borrow its shares.

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<v Speaker 2>There are a very tiny amount of shares actually available

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<v Speaker 2>to borrow this according to the financial analytics firm S

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<v Speaker 2>three Partners. So that on the presence former presidents social

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<v Speaker 2>media start up behind Truth Social now a search and

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<v Speaker 2>rescue operation for survivors of the collapse Francis Scott Key

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<v Speaker 2>Bridge in the US city of Baltimore has been suspended.

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<v Speaker 2>Officials say that they are now transitioning their efforts to

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<v Speaker 2>recovery missions. With six people presumed dead, the aftermath of

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<v Speaker 2>the bridge is collapse throws another spotlight on the fragile

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<v Speaker 2>nature of global supply chains that have already been strained

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<v Speaker 2>by the drought in the Panama and missile attacks in

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<v Speaker 2>the Red Sea. Our trades are Brendan Murray joins US.

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<v Speaker 2>Now we understand the bridge collapse will cause weeks, if

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<v Speaker 2>not months of trade disruptions.

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<v Speaker 1>Yeah, exactly. I think that the initial and the next

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<v Speaker 1>steps are going to be a lot of finger pointing

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<v Speaker 1>at how this happened. You know, how did the ship

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<v Speaker 1>itself not have a backup system if it's power failed,

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<v Speaker 1>Why did the bridge pilings not have fenders around them,

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<v Speaker 1>some protective equipment around them, And how did a bridge

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<v Speaker 1>collapse so easy and so thoroughly in this situation. The

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<v Speaker 1>immediate effect on supply chains is going to be the

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<v Speaker 1>Port of Baltimore has closed indefinitely. They're going to have,

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<v Speaker 1>you know, weeks or months of salvage operations to clean

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<v Speaker 1>up the site. All that cargo is going to have

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<v Speaker 1>to go somewhere else, places like Norfolk, Virginia, Charleston, South Carolina, Savannah, Georgia.

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<v Speaker 1>The big ships will have to go to New York

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<v Speaker 1>and New Jersey. So there's going to be a period

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<v Speaker 1>where supply chains have these wrinkles that need to be

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<v Speaker 1>ironed out. It's going to be it's going to mean

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<v Speaker 1>delays for people and businesses for their parts and their products,

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<v Speaker 1>and it's going to possibly mean some higher costs in

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<v Speaker 1>the short term.

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<v Speaker 3>And BRENDA just give us a sense of the scale

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<v Speaker 3>of the trade that was going through this port. You

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<v Speaker 3>had lots of cars and light trucks going through it.

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<v Speaker 3>How does it compare to other sorts of blockages that

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<v Speaker 3>we've seen in Maine waterways.

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<v Speaker 1>So Baltimore has about three percent of the cargo volume

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<v Speaker 1>on the US East Coast and Gulf Coast, so it's

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<v Speaker 1>a small amount of containerized cargo that goes through there,

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<v Speaker 1>but as you mentioned, it's a big auto export and

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<v Speaker 1>import gateway. So a lot of the companies that ship

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<v Speaker 1>their cars in and out of their companies like BMW

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<v Speaker 1>and Volkswagen and Ford and GM, some of them have

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<v Speaker 1>docks that are not affected by this, they're on the

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<v Speaker 1>ocean side of the bridge. Some of them will have

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<v Speaker 1>operations that will be affected. So we'll have to sort

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<v Speaker 1>of pick through the situation on the ground there to

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<v Speaker 1>see which ones will be affected and which ones.

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<v Speaker 3>Won't, And if we zoom out, what's the kind of

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<v Speaker 3>big picture read through to global trade and the ability

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<v Speaker 3>of these isolated events to impact global flows.

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<v Speaker 1>So there isn't going to be a widespread impact, but

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<v Speaker 1>there will be isolated situations. Baltimore was also a big

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<v Speaker 1>coal export port, so it's and a lot of that

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<v Speaker 1>went to developing countries, say India, so you know that

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<v Speaker 1>still use a lot of coal for fuel. So there

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<v Speaker 1>will be isolated situations like that. There was a lot

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<v Speaker 1>of construction equipment that went through Baltimore. You know, it's

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<v Speaker 1>coming up on spring in the construction season, and a

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<v Speaker 1>lot of farm equipment went through there. It's you know,

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<v Speaker 1>a couple month or two from planting season for a

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<v Speaker 1>lot of farmers in the Midwest. So there will be

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<v Speaker 1>some isolated industries that are affected, but most of the

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<v Speaker 1>economs we talked to says it won't really mean much

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<v Speaker 1>of a blip on the US economy as a whole,

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<v Speaker 1>or really any more widespread effect on the global economy.

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<v Speaker 3>Okay, Brendan Murray our trade, So thank you so much

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<v Speaker 3>for bringing us the trade impact of that story. Of course,

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<v Speaker 3>it's also had a serious human toll, six people presumed dead,

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<v Speaker 3>and we will continue to bring you the latest on

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<v Speaker 3>that story throughout the program.

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<v Speaker 2>Now let's also turn our attention though to the main

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<v Speaker 2>market story. This morning, Japan is edging close it would

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<v Speaker 2>seem to currency intervention, with its strongest warning yet from

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<v Speaker 2>the Finance Minister, Janezi Suzuki say we will take bold

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<v Speaker 2>measures against successive moves without ruling out any options. That is,

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<v Speaker 2>the Japanese yen slid to the weakest level in about

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<v Speaker 2>thirty four years against the US dollar. So joining us

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<v Speaker 2>now for more on this developing story. Bloomberg's executive editor

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<v Speaker 2>for Asian Markets, Paul Dobson, Paul, good morning. Just explain

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<v Speaker 2>what is behind the slide in the Japanese currency. Firstly, yeah,

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<v Speaker 2>hi theren thanks for having me. It's quite contrarian kind

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<v Speaker 2>of a move by the in actual fact, because just

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<v Speaker 2>this month we saw the Bank of Japan raise interest rates,

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<v Speaker 2>taking it out of negative territory for the first time

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<v Speaker 2>in more than a decade. No normally that should lift

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<v Speaker 2>the currency, and yet we're still seeing more yen weakness.

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<v Speaker 2>So there's a few things that would explain parts of

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<v Speaker 2>the reason for that. First of all, while the boj

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<v Speaker 2>did hikit stressed that it was going to be cautious

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<v Speaker 2>in moves from here, talking about retaining a commensative stance

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<v Speaker 2>as well, and that sort of emphasized the still huge

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<v Speaker 2>gap in relative yields between Japan and the rest of

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<v Speaker 2>the world and the US in particular, so traders looking

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<v Speaker 2>at carried trades and where to deposit their money going

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<v Speaker 2>to earn much higher interest rates in dollars than they

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<v Speaker 2>are in yen. On top of that, you know, the

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<v Speaker 2>fact that it was just so well telegraphed by the

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<v Speaker 2>BJ that we knew that this was coming also in

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<v Speaker 2>the end help them, you know, move it through without

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<v Speaker 2>causing too much market volatility, but didn't give them any

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<v Speaker 2>any boost in terms of yen strength. And so that

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<v Speaker 2>in addition to some of the currency weakness, and then

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<v Speaker 2>over the other side of the trade, you've got a

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<v Speaker 2>stronger dollar as people continue to push back those bets

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<v Speaker 2>for when the FED will begin to cut interest rates

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<v Speaker 2>on the other side of things. So those things combined

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<v Speaker 2>have provided this backdrop for a week a yen.

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<v Speaker 1>Today.

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<v Speaker 6>In particular, we heard from one of the BJ's more

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<v Speaker 6>hawkish members, and he again stressed that kind of a

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<v Speaker 6>commotative position, and so that was taken as a bit

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<v Speaker 6>of a red rag to a bull as it were,

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<v Speaker 6>for the currency market, pushing it through those levels that

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<v Speaker 6>we've been watching for some time around the one point

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<v Speaker 6>fifty one ninety five level.

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<v Speaker 3>Paul can just spell out for us, when the finance

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<v Speaker 3>minister says that they'll take bold measures against excessive moves,

0:12:04.559 --> 0:12:05.320
<v Speaker 3>what does that mean.

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<v Speaker 6>Yeah, well, so there's almost like a traffic light signal

0:12:09.400 --> 0:12:13.240
<v Speaker 6>system from the finance ministry. Remember it's the government, not

0:12:13.360 --> 0:12:17.079
<v Speaker 6>the central bank that intervenes in currency markets in Japan,

0:12:17.360 --> 0:12:19.480
<v Speaker 6>so they have a sort of scale of warnings, and

0:12:19.520 --> 0:12:22.640
<v Speaker 6>the market is so used to detecting the changes in

0:12:22.679 --> 0:12:26.440
<v Speaker 6>tone depending on the rhetoric that's chosen by the officials.

0:12:26.480 --> 0:12:30.160
<v Speaker 6>So this latest comment bold action is another step up

0:12:30.200 --> 0:12:32.360
<v Speaker 6>in terms of sort of getting the market ready for

0:12:32.400 --> 0:12:36.520
<v Speaker 6>the possibility that the government would step into the market

0:12:36.559 --> 0:12:39.120
<v Speaker 6>and begin buying the yen in order to support it.

0:12:39.200 --> 0:12:41.120
<v Speaker 6>We're not there yet, and there are still perhaps a

0:12:41.480 --> 0:12:45.720
<v Speaker 6>couple of extra levels on the Richter scale of warnings

0:12:45.720 --> 0:12:47.960
<v Speaker 6>from the MOF, but we're getting pretty close. So they're

0:12:47.960 --> 0:12:50.040
<v Speaker 6>telling us that they're serious about this right now.

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<v Speaker 2>And it can get expensive. I mean, in twenty twenty two,

0:12:53.080 --> 0:12:56.040
<v Speaker 2>Tokyo spent you know, billions in terms of supporting the yen.

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<v Speaker 6>It can, but I think the view both the government

0:13:00.960 --> 0:13:02.760
<v Speaker 6>and the Central Bank for that matter, is that a

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<v Speaker 6>week en from here is not really helpful. Well, in

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<v Speaker 6>the past, a week een would help Japanese exporters, that

0:13:08.559 --> 0:13:10.840
<v Speaker 6>would help to counter balance, you know, some of the

0:13:10.880 --> 0:13:13.760
<v Speaker 6>stresses in the market. At these levels, those exporters don't

0:13:13.760 --> 0:13:16.319
<v Speaker 6>really stand to benefit that much more. On the flip

0:13:16.360 --> 0:13:19.480
<v Speaker 6>side of it, the weaker exchange trait makes inflation a

0:13:19.520 --> 0:13:22.960
<v Speaker 6>little bit more unruly and undesirable, so they're minded to

0:13:23.080 --> 0:13:26.080
<v Speaker 6>protect it even if it costs. What they say is

0:13:26.160 --> 0:13:29.040
<v Speaker 6>they don't mind if it's weakening so much. It's not

0:13:29.080 --> 0:13:31.560
<v Speaker 6>the outright level so much as the pace of depreciation.

0:13:31.679 --> 0:13:34.040
<v Speaker 6>But I think that probably in the aftermath of that

0:13:34.120 --> 0:13:35.760
<v Speaker 6>hike from the central bank, the last thing that they

0:13:35.840 --> 0:13:38.199
<v Speaker 6>want to see is too rapid depreciation of the currency.

0:13:38.240 --> 0:13:38.680
<v Speaker 6>From here.

0:13:39.240 --> 0:13:42.720
<v Speaker 3>And Paul, you've seen this powering the nick closing three

0:13:42.800 --> 0:13:46.000
<v Speaker 3>tenser percent off a record high. How much is that

0:13:46.040 --> 0:13:49.240
<v Speaker 3>down to the yen and this story about currency intervention

0:13:49.480 --> 0:13:53.440
<v Speaker 3>the BOJ how much is it about fundamentals in Japanese equities.

0:13:54.120 --> 0:13:56.400
<v Speaker 6>Yeah, well a little bit half and half, I would say,

0:13:56.480 --> 0:13:58.280
<v Speaker 6>you know, so, based on what I just said that

0:13:58.720 --> 0:14:02.559
<v Speaker 6>a week yen from here is that helpful for exporters. Nevertheless,

0:14:02.600 --> 0:14:05.800
<v Speaker 6>you know does have some supportive function for the equities market,

0:14:05.840 --> 0:14:07.600
<v Speaker 6>and so you would see a little bit of strength

0:14:07.600 --> 0:14:10.000
<v Speaker 6>off the back of that. But there's a pretty good

0:14:10.320 --> 0:14:14.600
<v Speaker 6>news story in the backdrop for Japanese companies in general anyway.

0:14:14.679 --> 0:14:17.240
<v Speaker 6>They're able to raise prices, which is something that was

0:14:17.320 --> 0:14:19.480
<v Speaker 6>quite surprising or even on thought of a few years ago.

0:14:19.560 --> 0:14:22.760
<v Speaker 6>But this inflationary environment is enabling them to widen their

0:14:22.800 --> 0:14:26.760
<v Speaker 6>profit margins and without fear of driving away customers. They

0:14:27.000 --> 0:14:30.120
<v Speaker 6>also are taking steps to improve their corporate governance right

0:14:30.160 --> 0:14:34.040
<v Speaker 6>across the board, unwinding kind of cross shareholdings, getting rid

0:14:34.080 --> 0:14:35.760
<v Speaker 6>of so much cash that they have pent up on

0:14:35.760 --> 0:14:38.240
<v Speaker 6>the balance sheet, and looking to expansion as well. So

0:14:38.280 --> 0:14:41.000
<v Speaker 6>there's quite a good feel good facts are behind the moves.

0:14:41.040 --> 0:14:43.160
<v Speaker 6>So even if you're looking at Japanese equities measured in

0:14:43.200 --> 0:14:45.360
<v Speaker 6>the dollar rather than the end, they've still been on

0:14:45.400 --> 0:14:47.040
<v Speaker 6>a pretty good upward path this year.

0:14:48.480 --> 0:14:51.400
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0:14:51.440 --> 0:14:54.560
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