WEBVTT - Surveillance: Yen Weakness with Wizman 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:12.760 with Jonathan Ferrell and Lisa Brown Witz Jay Ley. We 0:00:12.880 --> 0:00:16.800 bring you insight from the best and economics, finance, investment, 0:00:17.079 --> 0:00:22.440 and international relations. Find Bloomberg Surveillance on Apple podcast, Suncloud, 0:00:22.840 --> 0:00:26.320 Bloomberg dot com, and of course on the Bloomberg terminal. 0:00:29.440 --> 0:00:32.280 Long ago, there was Planned Chronics and it was a 0:00:32.440 --> 0:00:36.320 glory of a small cap stock from three dollars up 0:00:36.320 --> 0:00:40.239 to seventies seven dollars and down. John just a complete 0:00:40.240 --> 0:00:43.600 debaccle to twenty six dollars to take out this morning 0:00:43.600 --> 0:00:47.880 all cash HP forty dollars per share. Dave shul looks 0:00:47.880 --> 0:00:51.400 like a genius. What they do headphones, they do stuff 0:00:51.440 --> 0:00:54.320 like that. They I don't know. No, they're not like 0:00:54.360 --> 0:00:58.160 those kind of headphones. I mean, you know you're not listening. Yeah, 0:00:58.360 --> 0:01:01.200 they're not like you'll you'll us into Tyler the Creator. 0:01:01.240 --> 0:01:03.880 They're not like that. They're like when you're like hello, 0:01:04.120 --> 0:01:08.800 line to John Farrell's online too. Yeah, that kind of thing. Okay, 0:01:08.840 --> 0:01:11.319 we'll move on from that, but that's an interesting story. 0:01:11.360 --> 0:01:13.319 They're the only one that understands what I'm talking about 0:01:13.360 --> 0:01:16.440 is Terry Wiseman who remembers this and Bear Sterns years ago, 0:01:16.840 --> 0:01:21.080 not on plantronics, but on interest rates and currencies. Terry, 0:01:21.160 --> 0:01:24.399 I am honored you were on today, and I want 0:01:24.440 --> 0:01:28.360 to link it right into Macquarie, which is ausi yen. 0:01:29.120 --> 0:01:34.160 When we move like we move, things happen. What should 0:01:34.160 --> 0:01:39.679 we be paying attention to with weekend three standard deviation 0:01:39.760 --> 0:01:43.880 long rendmnby three standard deviation long ausee, etcetera. What do 0:01:44.000 --> 0:01:47.480 we gotta focus on? We still have to focus on 0:01:48.240 --> 0:01:49.960 what the central banks are going to do it, especially 0:01:49.960 --> 0:01:51.240 with the b o J is going to do over 0:01:51.280 --> 0:01:53.200 the next few weeks. They have a meeting coming up 0:01:53.200 --> 0:01:56.280 in a few weeks, and we think that they're going 0:01:56.360 --> 0:02:02.600 to um potentially raise that app on ten year d yield. Yes, 0:02:02.680 --> 0:02:04.520 you're willing to call that that They're gonna go from 0:02:04.520 --> 0:02:07.560 a point to five out to something new. Yeah, probably 0:02:07.600 --> 0:02:10.079 about above zero point three, maybe zero point three to 0:02:10.160 --> 0:02:13.240 zero point four, somewhere in that range. I think at 0:02:13.280 --> 0:02:16.959 some point there's gonna be a loss or or lack 0:02:17.000 --> 0:02:19.920 of tolerance for for a week or agen. As you said, 0:02:20.040 --> 0:02:24.000 imports are going to start getting more expensive in Japan. Uh, 0:02:24.160 --> 0:02:27.400 It's true that they need more inflation, But it seems 0:02:27.400 --> 0:02:29.919 that they also don't need the kind of uncertainty that's 0:02:29.919 --> 0:02:32.680 brought to the market by a lot of dollar yet 0:02:32.680 --> 0:02:34.840 in volatile. Okay, but Terry, with all your with all 0:02:34.880 --> 0:02:37.120 your I gotta interrupt because this is so so important. 0:02:37.320 --> 0:02:39.680 You and I are xconsed at the Imperial Hotel, at 0:02:39.680 --> 0:02:42.520 the old Frank Lloyd Wright Bar. You're Evan Saki. I 0:02:42.560 --> 0:02:45.840 can't afford I'm having a triple Scotch and we're talking 0:02:45.880 --> 0:02:50.520 about a cultural change in Japan? Are we gonna see 0:02:50.560 --> 0:02:53.560 that at this time? No. I wouldn't describe it as such. 0:02:53.600 --> 0:02:55.640 That the states of cultural change would be to say 0:02:55.680 --> 0:02:59.960 that somehow zero point to five percent is some sort 0:03:00.040 --> 0:03:02.920 of line in the sand that is immutable. We never 0:03:02.960 --> 0:03:06.280 thought that it was always intended to adjust with conditions. 0:03:06.840 --> 0:03:10.800 Inflation is returning to Japan to some extent, but more importantly, 0:03:10.880 --> 0:03:13.160 that's the b o J risks having a situation where 0:03:13.160 --> 0:03:15.639 it's forced to absorb and buy every j g BE 0:03:15.760 --> 0:03:19.440 on the planet. Uh If if yields outside of Japan 0:03:19.480 --> 0:03:22.600 continued to go up and people continue to dump their jgbs, 0:03:22.600 --> 0:03:24.480 I don't think the b O J would want to 0:03:24.480 --> 0:03:26.880 be in a position where it completely loses control of 0:03:26.880 --> 0:03:29.639 its balance sheet, and the adjustment they have to make 0:03:29.680 --> 0:03:32.120 here is to raise the cap. It's not a cultural change. 0:03:32.160 --> 0:03:33.800 I think it's with central banks do all the time, 0:03:34.400 --> 0:03:36.440 move at the times, move with the data. Terry. There 0:03:36.520 --> 0:03:38.400 is a time when actually people would not have found 0:03:38.400 --> 0:03:40.840 that as shocking, considering how much of some of the 0:03:40.880 --> 0:03:43.480 markets the Bank of Japan ended up owning. I do 0:03:43.560 --> 0:03:46.080 wonder though, going back to your question about the idea 0:03:46.080 --> 0:03:49.480 of a weak currency being a bad thing, after so 0:03:49.520 --> 0:03:51.960 many years, when I'm sure that the Bank of Japan 0:03:52.120 --> 0:03:55.520 would have welcomed a weaker currency, we've seen this race 0:03:55.600 --> 0:03:59.280 to strengthening in the FX market. Are you saying that 0:03:59.320 --> 0:04:01.280 the Bank of Japan hand will be in the same 0:04:01.360 --> 0:04:04.120 camp and that really it's a fight to preserve the 0:04:04.200 --> 0:04:08.400 worth in order to avoid that kind of bad inflationary input. Yeah, 0:04:08.440 --> 0:04:10.600 I think so. I think the kind of inflation that 0:04:10.960 --> 0:04:12.640 the rest of the world is seeing is certainly going 0:04:12.680 --> 0:04:15.280 to be to be visited on Japan. After all, Uh, 0:04:15.320 --> 0:04:17.839 they are not a commodity economy there there in terms 0:04:17.880 --> 0:04:20.039 of trade or not improving here, there's no reason to 0:04:20.120 --> 0:04:23.159 believe outside of central bank policy that the end would 0:04:23.160 --> 0:04:27.240 stabilize at these levels, and I think they recognize that 0:04:27.400 --> 0:04:29.560 and will be forced to make an adjustment. It may 0:04:29.560 --> 0:04:32.440 be small, it may not be enough to you know, 0:04:32.520 --> 0:04:34.839 take dollar end back down to one one ten or 0:04:34.880 --> 0:04:36.800 one oh five, but I think it will be enough 0:04:36.839 --> 0:04:39.840 to start stabilizing UH dollar. Yet. The other thing I 0:04:39.839 --> 0:04:42.640 would keep in mind is that dollar yen typically does 0:04:42.720 --> 0:04:45.800 not go up in those periods after the US yield 0:04:45.839 --> 0:04:48.040 curve inverts, and we are very close to inversion now, 0:04:48.360 --> 0:04:50.279 the same way we were in two thousand seven and 0:04:50.320 --> 0:04:52.400 the same way we we were in two thousand nineteen. 0:04:52.400 --> 0:04:54.960 If you look back with both those episodes, dollar yen 0:04:55.120 --> 0:04:57.440 was not rising anymore. It may have been rising before, 0:04:57.480 --> 0:05:00.200 but it started to fall after the inversion. So that's 0:05:00.200 --> 0:05:02.839 another reason why we think that dollary and may stabilize 0:05:02.839 --> 0:05:05.599 around these levels. This raises a question about what the 0:05:05.640 --> 0:05:08.679 haven is and whether the dollar really becomes the last 0:05:08.680 --> 0:05:11.400 standing haven that will continue to get inflows and continue 0:05:11.400 --> 0:05:14.680 to get stronger versus all of its developed market peers 0:05:14.720 --> 0:05:17.560 amid the turmoil of both with respect to inflation but 0:05:17.600 --> 0:05:22.280 also with respect to a potential growth scares. But not necessarily. 0:05:23.000 --> 0:05:25.359 You have seen the commodity currencies do very well in 0:05:25.400 --> 0:05:28.760 this context at the expense of the dollar. The Canadian 0:05:28.800 --> 0:05:31.120 dollars been stable, the Ausy dollar has been stable. Many 0:05:31.120 --> 0:05:35.480 of the emerging market currency they're associated with commodity economies 0:05:35.600 --> 0:05:37.640 as in Latin America and very stable. So I would 0:05:37.640 --> 0:05:41.160 not necessarily say that the dollar is the last is 0:05:41.200 --> 0:05:43.960 the redoubt here of of the inflation mistas. There are 0:05:43.960 --> 0:05:47.080 other currencies that one can buy here if one wants 0:05:47.120 --> 0:05:50.600 better protection, especially against the commodity driven supply shock driven 0:05:50.680 --> 0:05:53.960 inflation terry just quickly. The boj today hat to come 0:05:54.000 --> 0:05:58.039 in multiple times. I'm just thinking a few steps, a 0:05:58.040 --> 0:06:00.880 few miles down the rotarian getting to the end the story. 0:06:01.240 --> 0:06:02.560 Are they going to win the whold of this j 0:06:02.640 --> 0:06:06.800 g B market once they're done, because they already No, 0:06:06.920 --> 0:06:08.840 I don't think so, because I think that's not something 0:06:08.839 --> 0:06:12.720 they want to do, that eliminate liquidity from the market. 0:06:12.760 --> 0:06:15.800 I don't think that's the central Bank's responsibility. But already 0:06:15.839 --> 0:06:17.680 have a night what liquidity is there in the j 0:06:17.760 --> 0:06:20.160 g P market. We go some days where it's not 0:06:20.200 --> 0:06:24.760 even traded agreed and but I don't think they're going 0:06:24.800 --> 0:06:27.240 to force things to an extreme here there needs to 0:06:27.279 --> 0:06:30.080 be a liquid j g B market for the for 0:06:30.120 --> 0:06:32.279 the for the federal government to issue into I don't 0:06:32.279 --> 0:06:35.719 think a central bank's role is to eliminate liquidity. And 0:06:35.760 --> 0:06:38.200 remember we were looking at very tough times in Japan 0:06:38.360 --> 0:06:41.880 in the past deflation. We're not looking at that anymore 0:06:41.880 --> 0:06:45.400 in Japan. The need to to to reef to to 0:06:45.560 --> 0:06:49.680 reflate is diminishing in importance, and the need to potentially 0:06:49.720 --> 0:06:52.520 bring back liquidity to the j B j GB market 0:06:52.600 --> 0:06:56.160 is increasing in importance. It's a relative switch. I think 0:06:56.200 --> 0:06:58.960 they're going to raise the limit, the upper limit on 0:06:58.960 --> 0:07:01.000 on j g B. That's what I wanted to get saved. 0:07:01.320 --> 0:07:03.799 That's gonna be the biggest shape Terry Wasteman and Macquarie, 0:07:04.000 --> 0:07:12.400 thank you said right now maybe your most important conversation 0:07:12.480 --> 0:07:15.400 of the day. We're fixated on yield. We're fixated on 0:07:15.440 --> 0:07:19.360 bond price. Sarah Hunt looks at equities portfolio manager Alpine 0:07:19.360 --> 0:07:23.640 Woods Capital Investors. One measure I have, Sarah of bond 0:07:23.680 --> 0:07:26.520 price is back to a price of two thousand nine. 0:07:27.240 --> 0:07:29.200 That you can be the idea of an e t 0:07:29.480 --> 0:07:33.080 F A given bond market e t F. That's I 0:07:33.080 --> 0:07:34.680 don't know if it's a bear market, but it's a 0:07:34.720 --> 0:07:39.920 pretty ugly number negative eleven on price, and yet equities 0:07:40.000 --> 0:07:43.720 are resilient. Is it just money choosing? Is it flow 0:07:44.240 --> 0:07:48.880 from fixed income to equity? I think it's the same 0:07:48.920 --> 0:07:51.320 problem that we've been seeing since you've had since two 0:07:51.320 --> 0:07:55.119 dozen and one, when you've had interest rates at historic lows. 0:07:55.200 --> 0:07:57.000 And I think that this fast, fast move in the 0:07:57.040 --> 0:07:59.960 bond marketing yield has caught people a little bit off guard. 0:08:00.160 --> 0:08:02.920 And I think that there is some belief that equities 0:08:02.960 --> 0:08:05.120 have more safety in them because you've got more growth 0:08:05.160 --> 0:08:08.120 inequities than you have potentially in the economy. And I 0:08:08.680 --> 0:08:11.520 just don't I think that it's very difficult when bonds 0:08:11.560 --> 0:08:13.760 have more volatility than some of the things that are 0:08:13.800 --> 0:08:17.280 supposed to be volatile, like bitcoin, which you were discussing earlier, 0:08:17.560 --> 0:08:19.520 and I and this move is just taking people, I 0:08:19.520 --> 0:08:22.040 think very much by surprise. Do you have a gauge 0:08:22.360 --> 0:08:26.000 of the revenue line of the corporations you follow, the 0:08:26.040 --> 0:08:28.360 ones you like, the ones you hold, the ones you sell? 0:08:29.080 --> 0:08:33.560 And is the misestimation here? Nominal GDP will give us 0:08:33.600 --> 0:08:38.320 better revenue growth than anybody cares to admit. I think 0:08:38.360 --> 0:08:41.160 that part of the upside to inflation in people's minds 0:08:41.160 --> 0:08:43.679 is that, yes, you will have an inflation in revenues. 0:08:43.920 --> 0:08:46.120 I think what is not being thought about is as 0:08:46.160 --> 0:08:48.800 deeply is what that does to margins and what that 0:08:48.880 --> 0:08:51.600 does to the costs on the other side. In the beginning, 0:08:51.640 --> 0:08:54.320 you have higher prices, but you don't have those costs 0:08:54.320 --> 0:08:56.839 catching up. As those costs start to catch up, then 0:08:56.880 --> 0:08:59.640 it becomes a much more difficult balance between can I 0:08:59.720 --> 0:09:02.360 keep on margins and still be raising my revenue lines 0:09:02.679 --> 0:09:05.160 or not. And I think that's where in the in 0:09:05.200 --> 0:09:07.760 the near term that equities have the advantage. But I 0:09:07.760 --> 0:09:10.240 think that there is some question as to how all 0:09:10.320 --> 0:09:12.600 these infut costs, which are not going to be as 0:09:12.600 --> 0:09:15.800 easy to fix as people are hoping, come down. And 0:09:15.840 --> 0:09:18.120 that includes the energy price, which is a big part 0:09:18.200 --> 0:09:20.400 of what's going on here. That's going to flow through 0:09:20.440 --> 0:09:23.960 to a lot of other things besides just energy prices themselves. 0:09:24.160 --> 0:09:27.240 So it just drilling down into the granularity of markets 0:09:27.280 --> 0:09:29.960 and frankly equities more broadly, how much can you bet 0:09:29.960 --> 0:09:35.280 on consumer discretionaries at a time like this. I have 0:09:35.360 --> 0:09:37.800 to say, I'm sorry, gentlemen, but I'm in camp Lisa 0:09:37.840 --> 0:09:40.400 on this one. I am very concerned that all these 0:09:40.480 --> 0:09:43.320 higher prices are going to lead to different spending choices 0:09:43.360 --> 0:09:45.400 and for people to pull back a little bit and 0:09:45.480 --> 0:09:47.400 to worry that they are going to not have enough 0:09:47.440 --> 0:09:49.920 money to deal with things like higher energy price bills, 0:09:50.160 --> 0:09:53.200 higher heating bills, higher cooling bills in the summer, and 0:09:53.480 --> 0:09:55.800 higher food prices. So I do think that it makes 0:09:55.800 --> 0:09:58.440 people more cautious about what they spend. You've got the 0:09:58.440 --> 0:10:01.280 conflicting aspect of coming out of the pandemic, which we're 0:10:01.280 --> 0:10:03.560 still trying to do, so there's also a little bit 0:10:03.600 --> 0:10:06.240 of excitement to both spend and travel. So those are 0:10:06.360 --> 0:10:09.280 competing forces at the moment. But if you don't have 0:10:09.320 --> 0:10:11.640 some changes longer term and energy prices, I think that 0:10:11.720 --> 0:10:15.160 really does confect affects consumer psychology and John. What's important 0:10:15.200 --> 0:10:17.120 here is we all know Camp Lesa is a lot 0:10:17.200 --> 0:10:23.000 like Total Drama Island. The swim test alone is enough 0:10:23.040 --> 0:10:25.760 to kill you. Let the black flies. Camp Laser is 0:10:25.760 --> 0:10:28.160 not a place you might not want to go to. 0:10:28.440 --> 0:10:31.800 I mean, Lisa, what happens at Camp Lisa? What comes 0:10:31.880 --> 0:10:34.080 on that if you just you know, walk around and 0:10:34.080 --> 0:10:36.120 feeling kind of gluemy. No, in all honesty, what you 0:10:36.160 --> 0:10:37.680 do is you look at the data. Getting back to 0:10:37.720 --> 0:10:39.559 this point Sara, that you're raising, and I want to 0:10:39.600 --> 0:10:42.200 get a little bit closer to it. This this idea 0:10:42.400 --> 0:10:45.160 of not wanting to go into consumer discretionaries at a 0:10:45.160 --> 0:10:48.160 time of pressure on some of these households. What counts 0:10:48.200 --> 0:10:52.080 as discretionary? Is it an Apple phone? Is it an iPhone? 0:10:52.200 --> 0:10:54.320 Is it an Apple watch? Is it? You know, some 0:10:54.400 --> 0:10:57.920 of the basic mainstays of households that cost a lot 0:10:58.120 --> 0:11:00.800 and used to be discretionary, but for apps no longer are. 0:11:02.240 --> 0:11:04.400 So I would argue that something like Apple went from 0:11:04.400 --> 0:11:07.199 being I agree as discretionary to something Can you imagine 0:11:07.200 --> 0:11:09.280 when you leave your house without your phone by accident? 0:11:09.320 --> 0:11:11.360 It feels like you you know, it's like something terrible 0:11:11.400 --> 0:11:13.600 has happened. So I'm not sure that that counts as 0:11:13.679 --> 0:11:17.280 much as discretionary as on the margin people doing more 0:11:17.480 --> 0:11:20.440 on the both travel and entertainment side, Maybe you put 0:11:20.480 --> 0:11:22.200 something off for a little while longer, even though you're 0:11:22.200 --> 0:11:24.559 excited to travel. Maybe you only take one trip instead 0:11:24.600 --> 0:11:26.840 of too depending on what's going on with COVID, And 0:11:26.880 --> 0:11:29.679 that's another thing that's still problematic. Look at China, you're 0:11:29.679 --> 0:11:31.720 seeing oil back and down today, partially on the back 0:11:31.760 --> 0:11:35.040 of the fact that China is once again having issues 0:11:35.080 --> 0:11:38.160 and is trying to curtail COVID by shutting things down. 0:11:38.240 --> 0:11:40.360 I think that there is so much going on right 0:11:40.400 --> 0:11:42.760 now it is very difficult to pass each and every piece. 0:11:43.000 --> 0:11:45.960 But ultimately we still have the problem of all the 0:11:46.040 --> 0:11:49.040 factors have moved towards a higher energy price and higher 0:11:49.040 --> 0:11:51.640 food prices. That is going to be tough for consumers. 0:11:51.800 --> 0:11:55.360 However you define discretionary is still going to be a problem. 0:11:55.400 --> 0:11:57.760 I cannot keep up with this market at the moment. Sarah, 0:11:57.800 --> 0:12:00.839 thank you, Sarah Hunt Valpine. What's off of investas that 0:12:00.920 --> 0:12:04.280 she ducks out the way it heads towards. It's a 0:12:04.280 --> 0:12:11.960 really this is a joy and with the uproar over 0:12:11.960 --> 0:12:14.840 the last forty eight hours. I'm President Biden. In the trip, 0:12:14.920 --> 0:12:17.080 we thought we'd talked to the adult in the room 0:12:17.120 --> 0:12:21.160 who actually can give perspective. Professor Schiller. Wendy Schiller's Tobbin 0:12:21.280 --> 0:12:26.360 Center for American Politics at Brown University is definitive in 0:12:26.440 --> 0:12:31.679 the span of American history. Wendy Schiller Obama two thousand eight. 0:12:32.120 --> 0:12:34.520 I know that I don't look like the Americans who 0:12:34.559 --> 0:12:38.760 have previously spoken in This Great City, Obama clearly talking 0:12:39.120 --> 0:12:46.439 about JFK. Reagan with Garbaschev June twelve, nine seven. That 0:12:46.600 --> 0:12:50.280 was the weight on this president to find the right tone. 0:12:50.800 --> 0:12:55.079 Did he come near it or was it too much pressure? Well, 0:12:55.120 --> 0:12:58.040 I think that he is concerned about looking too weak. 0:12:58.160 --> 0:13:00.680 I think that's you know, one of the things that 0:13:01.440 --> 0:13:04.120 is sort of hangover the Obama administration, especially when it 0:13:04.160 --> 0:13:07.280 comes to Russia, obviously with Syria in particular. You know, 0:13:07.320 --> 0:13:10.240 how do you stop people from doing terrible things? How 0:13:10.240 --> 0:13:14.280 do you stop people from doing military exercises, invasions, you know, 0:13:14.440 --> 0:13:18.000 killing people, blowing up buildings. That's what Americans are seeing NonStop. 0:13:18.400 --> 0:13:22.080 And they're wondering, with this massive apparatus and military approus 0:13:22.160 --> 0:13:25.160 we have, why we can't do more. So he's trying 0:13:25.160 --> 0:13:28.000 to urge everybody to say this guy should not be there. 0:13:28.040 --> 0:13:31.040 He's legitimate. Now it's borderline. You know, the United States 0:13:31.080 --> 0:13:34.920 is legally prohibited obviously from trying regime change short of 0:13:34.960 --> 0:13:38.640 declaring war. Um So I think that's the problem for him. 0:13:38.720 --> 0:13:40.400 I mean, that's to me, that's the problem form. But 0:13:40.400 --> 0:13:42.160 that's what he's trying to do. It's the shadow of 0:13:42.200 --> 0:13:44.520 Obama and Syria that I think is really governing a 0:13:44.520 --> 0:13:46.600 lot of what they're doing here, the professor Shoulder, this 0:13:46.640 --> 0:13:49.360 goes to your classic textbook. It goes to Obama. Oh a, 0:13:49.480 --> 0:13:53.840 it goes to Reagan. They didn't have the speed of 0:13:53.960 --> 0:13:58.720 modern media. The President Biden faces, how is he doing 0:13:58.880 --> 0:14:03.880 adapting to the new realities of news flow? Well, I mean, 0:14:03.880 --> 0:14:06.800 he's not of the generation, and he's been making gaffs 0:14:06.800 --> 0:14:08.959 ever since he you know, went to the United States Senate, 0:14:09.040 --> 0:14:10.840 so it's not as if he's going to change his 0:14:10.920 --> 0:14:13.560 style per se. What surprising to me is the team 0:14:13.600 --> 0:14:15.520 around him has been his team for a long time. 0:14:15.559 --> 0:14:18.559 They're almost like fused as one person. But they should 0:14:18.559 --> 0:14:20.840 know better, or he should make sure to hire people 0:14:20.840 --> 0:14:23.280 who know better, who know how to manage these communications, 0:14:23.360 --> 0:14:25.800 or at least to try better than he's been doing. 0:14:26.040 --> 0:14:28.080 You know, the wisdom that comes with age is great, 0:14:28.320 --> 0:14:30.080 but if you're not willing to listen to people who 0:14:30.120 --> 0:14:31.880 are more in tune what's going on now and how 0:14:31.920 --> 0:14:34.160 to communicate the message, then you can make missteps. But 0:14:34.240 --> 0:14:36.960 but Wendy, based on your comment there, that it should 0:14:36.960 --> 0:14:39.000 be who should definit his team to to call him 0:14:39.000 --> 0:14:42.840 out are you saying that this was perhaps a little 0:14:42.840 --> 0:14:47.000 bit predetermined cutting into this speech and not an ad 0:14:47.040 --> 0:14:50.240 lib as people said afterwards. Yeah, no, I mean I 0:14:50.280 --> 0:14:52.680 think he's trying to establish that there are certain people 0:14:52.680 --> 0:14:54.880 who should not be in power, that there's a legitimacy 0:14:55.000 --> 0:14:58.240 that comes with power, and that when you misuse military power, 0:14:58.280 --> 0:15:01.760 particularly and you invade another country. Justice George W. Bush 0:15:01.800 --> 0:15:05.000 said about Saddam the sane, you know, going back all 0:15:05.040 --> 0:15:07.440 over the First Gulf War and his father's war. You know, 0:15:07.480 --> 0:15:10.920 this person should not be in power. They are not legitimate, 0:15:11.200 --> 0:15:13.360 and the world can do something about it. That was 0:15:13.400 --> 0:15:15.600 the message, and I think it was on purpose. One day. 0:15:15.600 --> 0:15:17.920 Is there a difference between the opinion of the President 0:15:17.960 --> 0:15:20.120 of the United States and the official policy of the 0:15:20.120 --> 0:15:23.360 administration across the range of issues. I think we used 0:15:23.400 --> 0:15:25.520 to the President speaking and that being the policy. But 0:15:25.600 --> 0:15:30.240 is there a difference between his opinion and the policy. Well, yeah, 0:15:30.240 --> 0:15:32.400 there's certainly a you know, Royal ready used to say, 0:15:32.440 --> 0:15:34.000 you know, I'd issue an order or take a week 0:15:34.040 --> 0:15:36.200 for it to be implemented in the White House, because 0:15:36.400 --> 0:15:39.120 you know, the policy is a huge bureaucratic apparatus. So 0:15:39.240 --> 0:15:40.800 the things that we do, and the people we have 0:15:40.840 --> 0:15:44.040 on the ground diplomatically, militarily, all those things are set 0:15:44.040 --> 0:15:46.480 in motion, you know, almost separate from the president. Even 0:15:46.520 --> 0:15:49.160 though it's the commander in chief. It should be the same, 0:15:49.320 --> 0:15:51.960 but in fact and how it plays out, I think 0:15:51.960 --> 0:15:54.160 it can be quite different. Right now, Wendy, we're heading 0:15:54.160 --> 0:15:56.800 into a mid term period with consumer sentiment at the 0:15:56.840 --> 0:15:59.520 lowess is two thousand and eleven. President Biden is going 0:15:59.600 --> 0:16:02.160 to try to shift the message back to the United 0:16:02.240 --> 0:16:05.560 States in this speech at two pm today about the 0:16:05.600 --> 0:16:09.560 fiscal year budget. How much is this focus on taxing 0:16:09.560 --> 0:16:12.960 the wealthiest individuals an effort to try to channel some 0:16:13.040 --> 0:16:16.480 of the anger that people feel into this versus actually 0:16:16.520 --> 0:16:20.200 plugging a deficit gap and actually planning forward for a 0:16:20.240 --> 0:16:23.480 policy measure. Well, I think the Democrats are counting on 0:16:23.520 --> 0:16:25.320 this message to be something they can carry through the 0:16:25.400 --> 0:16:28.440 summer and that will be popular over the long run. 0:16:28.680 --> 0:16:30.960 I don't think it does anything for anybody who's paying 0:16:30.960 --> 0:16:33.760 too much money at the gas pump today, or finds 0:16:33.760 --> 0:16:35.800 that there aren't enough products on the shelves, there's paying 0:16:35.840 --> 0:16:39.000 too much for rent, for food, for everything else. So 0:16:39.200 --> 0:16:41.680 it's not a short term boost. But he's trying to 0:16:41.720 --> 0:16:43.760 lay out a message for the party. They can go 0:16:43.800 --> 0:16:46.640 into the summer with that sort of positions the Republicans 0:16:46.680 --> 0:16:50.080 on the wrong side of struggling people, people who are 0:16:50.080 --> 0:16:52.720 struggling economically. So it makes sense in the long game. 0:16:52.760 --> 0:16:54.000 I don't think it does anything for him in the 0:16:54.040 --> 0:16:56.560 short game, and it just quickly. Typically a president might 0:16:56.560 --> 0:16:59.080 wait until after the midterms to have a shake up 0:16:59.400 --> 0:17:01.080 of his camp. And do you think nice ju Now, 0:17:01.400 --> 0:17:02.440 do you think they need to get ahead of some 0:17:02.560 --> 0:17:04.960 of this? Yeah, I mean, even though Clinton had to 0:17:04.960 --> 0:17:07.120 shake up before his first mid term, and certainly had 0:17:07.119 --> 0:17:09.199 to shake up after his first mid term, which was 0:17:09.320 --> 0:17:12.120 pretty disastrous for his presidency. Although let him get reelected 0:17:12.119 --> 0:17:15.560 in have the foil of the Republicans, that's the Achilles 0:17:15.600 --> 0:17:17.800 seal for the Republicans that they take to Congress in 0:17:17.840 --> 0:17:21.440 two then Biden can play off them. They Democrats some 0:17:21.440 --> 0:17:24.560 play off them going into twenty four. So um, yeah, 0:17:24.640 --> 0:17:26.639 I mean I think it's really a problem. But you know, 0:17:26.680 --> 0:17:29.640 the political cycle has gotten so quick, but we just 0:17:29.680 --> 0:17:32.240 don't know how much is baked in for the outcome 0:17:32.240 --> 0:17:34.160 of the mid term and how much how much can change. 0:17:34.200 --> 0:17:37.399 Who do you think is letting him down. Who do 0:17:37.440 --> 0:17:40.960 you think is letting him down? I think I think 0:17:41.359 --> 0:17:43.399 his messaging staff. I mean, I think Jeff Zaki does 0:17:43.440 --> 0:17:46.439 a good job, but I think that his communications staff 0:17:46.480 --> 0:17:49.040 has not figured out how to shift him, how to 0:17:49.080 --> 0:17:52.000 simplify things and the party itself. It has to be 0:17:52.040 --> 0:17:54.399 the same message on message as a party as the 0:17:54.480 --> 0:17:56.760 Republicans have been in a locked step. And you know 0:17:56.800 --> 0:17:58.800 that's simple to absorb in a world that is more 0:17:58.800 --> 0:18:01.680 confusing than ever, that is more scary really than it's 0:18:01.680 --> 0:18:03.879 been in a while. Coming out of pandemic. Is supposed 0:18:03.880 --> 0:18:06.560 to be happy. There's war in Ukraine. These are confusing times. 0:18:06.840 --> 0:18:09.560 Be simple, if you're a politician, have one message and 0:18:09.600 --> 0:18:13.119 stick to it. Brand University, Wendy, thank you as a 0:18:13.200 --> 0:18:22.760 wis one person today I wanted to talk to I said, 0:18:22.960 --> 0:18:25.560 I don't know Paul one. Two am s get nord 0:18:25.640 --> 0:18:31.160 VICKI nord Vicks with us legendary with a phenomenal book 0:18:31.200 --> 0:18:34.320 on Europe, hugely Prussian a decade ago, and he joins 0:18:34.400 --> 0:18:38.560 us today on Japan, Yen, thank you so much with 0:18:38.600 --> 0:18:41.679 Accenity data for joining us this morning. What are the 0:18:41.840 --> 0:18:47.240 ramifications for the people of Japan and their government? If 0:18:47.440 --> 0:18:52.560 yen weakens out further one twenty dare I say to 0:18:52.640 --> 0:18:57.639 one thirty and new trade weighted weakness. Yeah, Well, the 0:18:57.720 --> 0:19:02.159 yen has already weakened about to decent really over the 0:19:02.240 --> 0:19:05.800 last month, so it's a pretty significant move already. And 0:19:06.160 --> 0:19:09.840 clearly if you're importing oil or importing anything, uh, those 0:19:09.840 --> 0:19:12.520 goods will go up dramatically in price. Right, So those 0:19:12.560 --> 0:19:16.479 are the facts that people will see. That said, Japan 0:19:16.600 --> 0:19:20.240 is a different country from almost any other country in 0:19:20.280 --> 0:19:22.480 the world in that they have not had any broad 0:19:22.520 --> 0:19:28.440 based inflation pressure yet. Japan is a country that's been 0:19:28.480 --> 0:19:33.520 stuck in mostly deflationary involved because just at the time, 0:19:33.640 --> 0:19:36.840 and Paul Sweeney wants to jump in here, I agree 0:19:36.840 --> 0:19:40.719 with that that they've been stuck in a disinflationary deflationary trend. 0:19:41.240 --> 0:19:46.280 But on a nominal GDP basis, they define zombie. How 0:19:46.359 --> 0:19:51.640 zombie is the zombie this morning? Well, so what we're 0:19:51.680 --> 0:19:56.600 seeing in the end is just very very dramatic. We've 0:19:56.680 --> 0:20:01.360 not seen yen moves like this. I frankly can remember 0:20:01.440 --> 0:20:04.160 a weakening move like this in my entire career. So 0:20:05.000 --> 0:20:07.840 this is something we have not seen before. And what 0:20:07.920 --> 0:20:11.919 I would I would say is is so interesting now 0:20:12.160 --> 0:20:16.280 is that the Bank of Japan has been trying in 0:20:16.400 --> 0:20:20.560 different ways to maximize essentially the amount of easy monetary 0:20:20.640 --> 0:20:23.880 policy they deliver, right, And the last formerly they came 0:20:23.960 --> 0:20:27.200 up with was the yield curve control, fixing the ten 0:20:27.280 --> 0:20:31.080 year yield. And what is so kind of ironic about 0:20:31.200 --> 0:20:35.800 that policy is that when global yields under upward pressure, 0:20:35.880 --> 0:20:38.880 as we're seeing everywhere in the world right now, they 0:20:38.960 --> 0:20:42.520 actually get forced because of the yield curve control to 0:20:42.720 --> 0:20:45.400 buy more. And the Bank of Japan had to announce 0:20:45.480 --> 0:20:49.040 overnight that they were buying an unlimited amount of Japanese 0:20:49.080 --> 0:20:52.760 bonds at an option. So you have this ironic situation 0:20:52.880 --> 0:20:57.040 when when the need to ease is going away kind 0:20:57.040 --> 0:20:59.440 of they actually have to do more. It's a pro 0:20:59.600 --> 0:21:03.119