Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brown Witz Jay Ley. We
Speaker 1: bring you insight from the best and economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple podcast, Suncloud,
Speaker 1: Bloomberg dot com, and of course on the Bloomberg terminal.
Speaker 1: Long ago, there was Planned Chronics and it was a
Speaker 1: glory of a small cap stock from three dollars up
Speaker 1: to seventies seven dollars and down. John just a complete
Speaker 1: debaccle to twenty six dollars to take out this morning
Speaker 1: all cash HP forty dollars per share. Dave shul looks
Speaker 1: like a genius. What they do headphones, they do stuff
Speaker 1: like that. They I don't know. No, they're not like
Speaker 1: those kind of headphones. I mean, you know you're not listening. Yeah,
Speaker 1: they're not like you'll you'll us into Tyler the Creator.
Speaker 1: They're not like that. They're like when you're like hello,
Speaker 1: line to John Farrell's online too. Yeah, that kind of thing. Okay,
Speaker 1: we'll move on from that, but that's an interesting story.
Speaker 1: They're the only one that understands what I'm talking about
Speaker 1: is Terry Wiseman who remembers this and Bear Sterns years ago,
Speaker 1: not on plantronics, but on interest rates and currencies. Terry,
Speaker 1: I am honored you were on today, and I want
Speaker 1: to link it right into Macquarie, which is ausi yen.
Speaker 1: When we move like we move, things happen. What should
Speaker 1: we be paying attention to with weekend three standard deviation
Speaker 1: long rendmnby three standard deviation long ausee, etcetera. What do
Speaker 1: we gotta focus on? We still have to focus on
Speaker 1: what the central banks are going to do it, especially
Speaker 1: with the b o J is going to do over
Speaker 1: the next few weeks. They have a meeting coming up
Speaker 1: in a few weeks, and we think that they're going
Speaker 1: to um potentially raise that app on ten year d yield. Yes,
Speaker 1: you're willing to call that that They're gonna go from
Speaker 1: a point to five out to something new. Yeah, probably
Speaker 1: about above zero point three, maybe zero point three to
Speaker 1: zero point four, somewhere in that range. I think at
Speaker 1: some point there's gonna be a loss or or lack
Speaker 1: of tolerance for for a week or agen. As you said,
Speaker 1: imports are going to start getting more expensive in Japan. Uh,
Speaker 1: It's true that they need more inflation, But it seems
Speaker 1: that they also don't need the kind of uncertainty that's
Speaker 1: brought to the market by a lot of dollar yet
Speaker 1: in volatile. Okay, but Terry, with all your with all
Speaker 1: your I gotta interrupt because this is so so important.
Speaker 1: You and I are xconsed at the Imperial Hotel, at
Speaker 1: the old Frank Lloyd Wright Bar. You're Evan Saki. I
Speaker 1: can't afford I'm having a triple Scotch and we're talking
Speaker 1: about a cultural change in Japan? Are we gonna see
Speaker 1: that at this time? No. I wouldn't describe it as such.
Speaker 1: That the states of cultural change would be to say
Speaker 1: that somehow zero point to five percent is some sort
Speaker 1: of line in the sand that is immutable. We never
Speaker 1: thought that it was always intended to adjust with conditions.
Speaker 1: Inflation is returning to Japan to some extent, but more importantly,
Speaker 1: that's the b o J risks having a situation where
Speaker 1: it's forced to absorb and buy every j g BE
Speaker 1: on the planet. Uh If if yields outside of Japan
Speaker 1: continued to go up and people continue to dump their jgbs,
Speaker 1: I don't think the b O J would want to
Speaker 1: be in a position where it completely loses control of
Speaker 1: its balance sheet, and the adjustment they have to make
Speaker 1: here is to raise the cap. It's not a cultural change.
Speaker 1: I think it's with central banks do all the time,
Speaker 1: move at the times, move with the data. Terry. There
Speaker 1: is a time when actually people would not have found
Speaker 1: that as shocking, considering how much of some of the
Speaker 1: markets the Bank of Japan ended up owning. I do
Speaker 1: wonder though, going back to your question about the idea
Speaker 1: of a weak currency being a bad thing, after so
Speaker 1: many years, when I'm sure that the Bank of Japan
Speaker 1: would have welcomed a weaker currency, we've seen this race
Speaker 1: to strengthening in the FX market. Are you saying that
Speaker 1: the Bank of Japan hand will be in the same
Speaker 1: camp and that really it's a fight to preserve the
Speaker 1: worth in order to avoid that kind of bad inflationary input. Yeah,
Speaker 1: I think so. I think the kind of inflation that
Speaker 1: the rest of the world is seeing is certainly going
Speaker 1: to be to be visited on Japan. After all, Uh,
Speaker 1: they are not a commodity economy there there in terms
Speaker 1: of trade or not improving here, there's no reason to
Speaker 1: believe outside of central bank policy that the end would
Speaker 1: stabilize at these levels, and I think they recognize that
Speaker 1: and will be forced to make an adjustment. It may
Speaker 1: be small, it may not be enough to you know,
Speaker 1: take dollar end back down to one one ten or
Speaker 1: one oh five, but I think it will be enough
Speaker 1: to start stabilizing UH dollar. Yet. The other thing I
Speaker 1: would keep in mind is that dollar yen typically does
Speaker 1: not go up in those periods after the US yield
Speaker 1: curve inverts, and we are very close to inversion now,
Speaker 1: the same way we were in two thousand seven and
Speaker 1: the same way we we were in two thousand nineteen.
Speaker 1: If you look back with both those episodes, dollar yen
Speaker 1: was not rising anymore. It may have been rising before,
Speaker 1: but it started to fall after the inversion. So that's
Speaker 1: another reason why we think that dollary and may stabilize
Speaker 1: around these levels. This raises a question about what the
Speaker 1: haven is and whether the dollar really becomes the last
Speaker 1: standing haven that will continue to get inflows and continue
Speaker 1: to get stronger versus all of its developed market peers
Speaker 1: amid the turmoil of both with respect to inflation but
Speaker 1: also with respect to a potential growth scares. But not necessarily.
Speaker 1: You have seen the commodity currencies do very well in
Speaker 1: this context at the expense of the dollar. The Canadian
Speaker 1: dollars been stable, the Ausy dollar has been stable. Many
Speaker 1: of the emerging market currency they're associated with commodity economies
Speaker 1: as in Latin America and very stable. So I would
Speaker 1: not necessarily say that the dollar is the last is
Speaker 1: the redoubt here of of the inflation mistas. There are
Speaker 1: other currencies that one can buy here if one wants
Speaker 1: better protection, especially against the commodity driven supply shock driven
Speaker 1: inflation terry just quickly. The boj today hat to come
Speaker 1: in multiple times. I'm just thinking a few steps, a
Speaker 1: few miles down the rotarian getting to the end the story.
Speaker 1: Are they going to win the whold of this j
Speaker 1: g B market once they're done, because they already No,
Speaker 1: I don't think so, because I think that's not something
Speaker 1: they want to do, that eliminate liquidity from the market.
Speaker 1: I don't think that's the central Bank's responsibility. But already
Speaker 1: have a night what liquidity is there in the j
Speaker 1: g P market. We go some days where it's not
Speaker 1: even traded agreed and but I don't think they're going
Speaker 1: to force things to an extreme here there needs to
Speaker 1: be a liquid j g B market for the for
Speaker 1: the for the federal government to issue into I don't
Speaker 1: think a central bank's role is to eliminate liquidity. And
Speaker 1: remember we were looking at very tough times in Japan
Speaker 1: in the past deflation. We're not looking at that anymore
Speaker 1: in Japan. The need to to to reef to to
Speaker 1: reflate is diminishing in importance, and the need to potentially
Speaker 1: bring back liquidity to the j B j GB market
Speaker 1: is increasing in importance. It's a relative switch. I think
Speaker 1: they're going to raise the limit, the upper limit on
Speaker 1: on j g B. That's what I wanted to get saved.
Speaker 1: That's gonna be the biggest shape Terry Wasteman and Macquarie,
Speaker 1: thank you said right now maybe your most important conversation
Speaker 1: of the day. We're fixated on yield. We're fixated on
Speaker 1: bond price. Sarah Hunt looks at equities portfolio manager Alpine
Speaker 1: Woods Capital Investors. One measure I have, Sarah of bond
Speaker 1: price is back to a price of two thousand nine.
Speaker 1: That you can be the idea of an e t
Speaker 1: F A given bond market e t F. That's I
Speaker 1: don't know if it's a bear market, but it's a
Speaker 1: pretty ugly number negative eleven on price, and yet equities
Speaker 1: are resilient. Is it just money choosing? Is it flow
Speaker 1: from fixed income to equity? I think it's the same
Speaker 1: problem that we've been seeing since you've had since two
Speaker 1: dozen and one, when you've had interest rates at historic lows.
Speaker 1: And I think that this fast, fast move in the
Speaker 1: bond marketing yield has caught people a little bit off guard.
Speaker 1: And I think that there is some belief that equities
Speaker 1: have more safety in them because you've got more growth
Speaker 1: inequities than you have potentially in the economy. And I
Speaker 1: just don't I think that it's very difficult when bonds
Speaker 1: have more volatility than some of the things that are
Speaker 1: supposed to be volatile, like bitcoin, which you were discussing earlier,
Speaker 1: and I and this move is just taking people, I
Speaker 1: think very much by surprise. Do you have a gauge
Speaker 1: of the revenue line of the corporations you follow, the
Speaker 1: ones you like, the ones you hold, the ones you sell?
Speaker 1: And is the misestimation here? Nominal GDP will give us
Speaker 1: better revenue growth than anybody cares to admit. I think
Speaker 1: that part of the upside to inflation in people's minds
Speaker 1: is that, yes, you will have an inflation in revenues.
Speaker 1: I think what is not being thought about is as
Speaker 1: deeply is what that does to margins and what that
Speaker 1: does to the costs on the other side. In the beginning,
Speaker 1: you have higher prices, but you don't have those costs
Speaker 1: catching up. As those costs start to catch up, then
Speaker 1: it becomes a much more difficult balance between can I
Speaker 1: keep on margins and still be raising my revenue lines
Speaker 1: or not. And I think that's where in the in
Speaker 1: the near term that equities have the advantage. But I
Speaker 1: think that there is some question as to how all
Speaker 1: these infut costs, which are not going to be as
Speaker 1: easy to fix as people are hoping, come down. And
Speaker 1: that includes the energy price, which is a big part
Speaker 1: of what's going on here. That's going to flow through
Speaker 1: to a lot of other things besides just energy prices themselves.
Speaker 1: So it just drilling down into the granularity of markets
Speaker 1: and frankly equities more broadly, how much can you bet
Speaker 1: on consumer discretionaries at a time like this. I have
Speaker 1: to say, I'm sorry, gentlemen, but I'm in camp Lisa
Speaker 1: on this one. I am very concerned that all these
Speaker 1: higher prices are going to lead to different spending choices
Speaker 1: and for people to pull back a little bit and
Speaker 1: to worry that they are going to not have enough
Speaker 1: money to deal with things like higher energy price bills,
Speaker 1: higher heating bills, higher cooling bills in the summer, and
Speaker 1: higher food prices. So I do think that it makes
Speaker 1: people more cautious about what they spend. You've got the
Speaker 1: conflicting aspect of coming out of the pandemic, which we're
Speaker 1: still trying to do, so there's also a little bit
Speaker 1: of excitement to both spend and travel. So those are
Speaker 1: competing forces at the moment. But if you don't have
Speaker 1: some changes longer term and energy prices, I think that
Speaker 1: really does confect affects consumer psychology and John. What's important
Speaker 1: here is we all know Camp Lesa is a lot
Speaker 1: like Total Drama Island. The swim test alone is enough
Speaker 1: to kill you. Let the black flies. Camp Laser is
Speaker 1: not a place you might not want to go to.
Speaker 1: I mean, Lisa, what happens at Camp Lisa? What comes
Speaker 1: on that if you just you know, walk around and
Speaker 1: feeling kind of gluemy. No, in all honesty, what you
Speaker 1: do is you look at the data. Getting back to
Speaker 1: this point Sara, that you're raising, and I want to
Speaker 1: get a little bit closer to it. This this idea
Speaker 1: of not wanting to go into consumer discretionaries at a
Speaker 1: time of pressure on some of these households. What counts
Speaker 1: as discretionary? Is it an Apple phone? Is it an iPhone?
Speaker 1: Is it an Apple watch? Is it? You know, some
Speaker 1: of the basic mainstays of households that cost a lot
Speaker 1: and used to be discretionary, but for apps no longer are.
Speaker 1: So I would argue that something like Apple went from
Speaker 1: being I agree as discretionary to something Can you imagine
Speaker 1: when you leave your house without your phone by accident?
Speaker 1: It feels like you you know, it's like something terrible
Speaker 1: has happened. So I'm not sure that that counts as
Speaker 1: much as discretionary as on the margin people doing more
Speaker 1: on the both travel and entertainment side, Maybe you put
Speaker 1: something off for a little while longer, even though you're
Speaker 1: excited to travel. Maybe you only take one trip instead
Speaker 1: of too depending on what's going on with COVID, And
Speaker 1: that's another thing that's still problematic. Look at China, you're
Speaker 1: seeing oil back and down today, partially on the back
Speaker 1: of the fact that China is once again having issues
Speaker 1: and is trying to curtail COVID by shutting things down.
Speaker 1: I think that there is so much going on right
Speaker 1: now it is very difficult to pass each and every piece.
Speaker 1: But ultimately we still have the problem of all the
Speaker 1: factors have moved towards a higher energy price and higher
Speaker 1: food prices. That is going to be tough for consumers.
Speaker 1: However you define discretionary is still going to be a problem.
Speaker 1: I cannot keep up with this market at the moment. Sarah,
Speaker 1: thank you, Sarah Hunt Valpine. What's off of investas that
Speaker 1: she ducks out the way it heads towards. It's a
Speaker 1: really this is a joy and with the uproar over
Speaker 1: the last forty eight hours. I'm President Biden. In the trip,
Speaker 1: we thought we'd talked to the adult in the room
Speaker 1: who actually can give perspective. Professor Schiller. Wendy Schiller's Tobbin
Speaker 1: Center for American Politics at Brown University is definitive in
Speaker 1: the span of American history. Wendy Schiller Obama two thousand eight.
Speaker 1: I know that I don't look like the Americans who
Speaker 1: have previously spoken in This Great City, Obama clearly talking
Speaker 1: about JFK. Reagan with Garbaschev June twelve, nine seven. That
Speaker 1: was the weight on this president to find the right tone.
Speaker 1: Did he come near it or was it too much pressure? Well,
Speaker 1: I think that he is concerned about looking too weak.
Speaker 1: I think that's you know, one of the things that
Speaker 1: is sort of hangover the Obama administration, especially when it
Speaker 1: comes to Russia, obviously with Syria in particular. You know,
Speaker 1: how do you stop people from doing terrible things? How
Speaker 1: do you stop people from doing military exercises, invasions, you know,
Speaker 1: killing people, blowing up buildings. That's what Americans are seeing NonStop.
Speaker 1: And they're wondering, with this massive apparatus and military approus
Speaker 1: we have, why we can't do more. So he's trying
Speaker 1: to urge everybody to say this guy should not be there.
Speaker 1: He's legitimate. Now it's borderline. You know, the United States
Speaker 1: is legally prohibited obviously from trying regime change short of
Speaker 1: declaring war. Um So I think that's the problem for him.
Speaker 1: I mean, that's to me, that's the problem form. But
Speaker 1: that's what he's trying to do. It's the shadow of
Speaker 1: Obama and Syria that I think is really governing a
Speaker 1: lot of what they're doing here, the professor Shoulder, this
Speaker 1: goes to your classic textbook. It goes to Obama. Oh a,
Speaker 1: it goes to Reagan. They didn't have the speed of
Speaker 1: modern media. The President Biden faces, how is he doing
Speaker 1: adapting to the new realities of news flow? Well, I mean,
Speaker 1: he's not of the generation, and he's been making gaffs
Speaker 1: ever since he you know, went to the United States Senate,
Speaker 1: so it's not as if he's going to change his
Speaker 1: style per se. What surprising to me is the team
Speaker 1: around him has been his team for a long time.
Speaker 1: They're almost like fused as one person. But they should
Speaker 1: know better, or he should make sure to hire people
Speaker 1: who know better, who know how to manage these communications,
Speaker 1: or at least to try better than he's been doing.
Speaker 1: You know, the wisdom that comes with age is great,
Speaker 1: but if you're not willing to listen to people who
Speaker 1: are more in tune what's going on now and how
Speaker 1: to communicate the message, then you can make missteps. But
Speaker 1: but Wendy, based on your comment there, that it should
Speaker 1: be who should definit his team to to call him
Speaker 1: out are you saying that this was perhaps a little
Speaker 1: bit predetermined cutting into this speech and not an ad
Speaker 1: lib as people said afterwards. Yeah, no, I mean I
Speaker 1: think he's trying to establish that there are certain people
Speaker 1: who should not be in power, that there's a legitimacy
Speaker 1: that comes with power, and that when you misuse military power,
Speaker 1: particularly and you invade another country. Justice George W. Bush
Speaker 1: said about Saddam the sane, you know, going back all
Speaker 1: over the First Gulf War and his father's war. You know,
Speaker 1: this person should not be in power. They are not legitimate,
Speaker 1: and the world can do something about it. That was
Speaker 1: the message, and I think it was on purpose. One day.
Speaker 1: Is there a difference between the opinion of the President
Speaker 1: of the United States and the official policy of the
Speaker 1: administration across the range of issues. I think we used
Speaker 1: to the President speaking and that being the policy. But
Speaker 1: is there a difference between his opinion and the policy. Well, yeah,
Speaker 1: there's certainly a you know, Royal ready used to say,
Speaker 1: you know, I'd issue an order or take a week
Speaker 1: for it to be implemented in the White House, because
Speaker 1: you know, the policy is a huge bureaucratic apparatus. So
Speaker 1: the things that we do, and the people we have
Speaker 1: on the ground diplomatically, militarily, all those things are set
Speaker 1: in motion, you know, almost separate from the president. Even
Speaker 1: though it's the commander in chief. It should be the same,
Speaker 1: but in fact and how it plays out, I think
Speaker 1: it can be quite different. Right now, Wendy, we're heading
Speaker 1: into a mid term period with consumer sentiment at the
Speaker 1: lowess is two thousand and eleven. President Biden is going
Speaker 1: to try to shift the message back to the United
Speaker 1: States in this speech at two pm today about the
Speaker 1: fiscal year budget. How much is this focus on taxing
Speaker 1: the wealthiest individuals an effort to try to channel some
Speaker 1: of the anger that people feel into this versus actually
Speaker 1: plugging a deficit gap and actually planning forward for a
Speaker 1: policy measure. Well, I think the Democrats are counting on
Speaker 1: this message to be something they can carry through the
Speaker 1: summer and that will be popular over the long run.
Speaker 1: I don't think it does anything for anybody who's paying
Speaker 1: too much money at the gas pump today, or finds
Speaker 1: that there aren't enough products on the shelves, there's paying
Speaker 1: too much for rent, for food, for everything else. So
Speaker 1: it's not a short term boost. But he's trying to
Speaker 1: lay out a message for the party. They can go
Speaker 1: into the summer with that sort of positions the Republicans
Speaker 1: on the wrong side of struggling people, people who are
Speaker 1: struggling economically. So it makes sense in the long game.
Speaker 1: I don't think it does anything for him in the
Speaker 1: short game, and it just quickly. Typically a president might
Speaker 1: wait until after the midterms to have a shake up
Speaker 1: of his camp. And do you think nice ju Now,
Speaker 1: do you think they need to get ahead of some
Speaker 1: of this? Yeah, I mean, even though Clinton had to
Speaker 1: shake up before his first mid term, and certainly had
Speaker 1: to shake up after his first mid term, which was
Speaker 1: pretty disastrous for his presidency. Although let him get reelected
Speaker 1: in have the foil of the Republicans, that's the Achilles
Speaker 1: seal for the Republicans that they take to Congress in
Speaker 1: two then Biden can play off them. They Democrats some
Speaker 1: play off them going into twenty four. So um, yeah,
Speaker 1: I mean I think it's really a problem. But you know,
Speaker 1: the political cycle has gotten so quick, but we just
Speaker 1: don't know how much is baked in for the outcome
Speaker 1: of the mid term and how much how much can change.
Speaker 1: Who do you think is letting him down. Who do
Speaker 1: you think is letting him down? I think I think
Speaker 1: his messaging staff. I mean, I think Jeff Zaki does
Speaker 1: a good job, but I think that his communications staff
Speaker 1: has not figured out how to shift him, how to
Speaker 1: simplify things and the party itself. It has to be
Speaker 1: the same message on message as a party as the
Speaker 1: Republicans have been in a locked step. And you know
Speaker 1: that's simple to absorb in a world that is more
Speaker 1: confusing than ever, that is more scary really than it's
Speaker 1: been in a while. Coming out of pandemic. Is supposed
Speaker 1: to be happy. There's war in Ukraine. These are confusing times.
Speaker 1: Be simple, if you're a politician, have one message and
Speaker 1: stick to it. Brand University, Wendy, thank you as a
Speaker 1: wis one person today I wanted to talk to I said,
Speaker 1: I don't know Paul one. Two am s get nord
Speaker 1: VICKI nord Vicks with us legendary with a phenomenal book
Speaker 1: on Europe, hugely Prussian a decade ago, and he joins
Speaker 1: us today on Japan, Yen, thank you so much with
Speaker 1: Accenity data for joining us this morning. What are the
Speaker 1: ramifications for the people of Japan and their government? If
Speaker 1: yen weakens out further one twenty dare I say to
Speaker 1: one thirty and new trade weighted weakness. Yeah, Well, the
Speaker 1: yen has already weakened about to decent really over the
Speaker 1: last month, so it's a pretty significant move already. And
Speaker 1: clearly if you're importing oil or importing anything, uh, those
Speaker 1: goods will go up dramatically in price. Right, So those
Speaker 1: are the facts that people will see. That said, Japan
Speaker 1: is a different country from almost any other country in
Speaker 1: the world in that they have not had any broad
Speaker 1: based inflation pressure yet. Japan is a country that's been
Speaker 1: stuck in mostly deflationary involved because just at the time,
Speaker 1: and Paul Sweeney wants to jump in here, I agree
Speaker 1: with that that they've been stuck in a disinflationary deflationary trend.
Speaker 1: But on a nominal GDP basis, they define zombie. How
Speaker 1: zombie is the zombie this morning? Well, so what we're
Speaker 1: seeing in the end is just very very dramatic. We've
Speaker 1: not seen yen moves like this. I frankly can remember
Speaker 1: a weakening move like this in my entire career. So
Speaker 1: this is something we have not seen before. And what
Speaker 1: I would I would say is is so interesting now
Speaker 1: is that the Bank of Japan has been trying in
Speaker 1: different ways to maximize essentially the amount of easy monetary
Speaker 1: policy they deliver, right, And the last formerly they came
Speaker 1: up with was the yield curve control, fixing the ten
Speaker 1: year yield. And what is so kind of ironic about
Speaker 1: that policy is that when global yields under upward pressure,
Speaker 1: as we're seeing everywhere in the world right now, they
Speaker 1: actually get forced because of the yield curve control to
Speaker 1: buy more. And the Bank of Japan had to announce
Speaker 1: overnight that they were buying an unlimited amount of Japanese
Speaker 1: bonds at an option. So you have this ironic situation
Speaker 1: when when the need to ease is going away kind
Speaker 1: of they actually have to do more. It's a pro
Speaker 1: sickle called policy. And that's why the yen is getting
Speaker 1: really interesting now and having an explosive move. So yend
Speaker 1: And when I grew up, the yen was a safe haven.
Speaker 1: Is that still the case in any any regard? So?
Speaker 1: I think, uh, over the last month or so, we've
Speaker 1: seen just a dramatic reassessment of what the what the
Speaker 1: yen is and entails, right, So a lot of people
Speaker 1: have a type of yen hedge in the book, if
Speaker 1: something goes terribly wrong, we're going to make a bit
Speaker 1: of money on having yen calls in our portfolio. Those
Speaker 1: yen calls essentially didn't work at all when you had
Speaker 1: the Russian invasion of retrain they again was just stuck right,
Speaker 1: So those calls were worthless. So I think part of
Speaker 1: the reason why the yen has then turned to become
Speaker 1: so weak if that there's a structural reassessment of whether
Speaker 1: it's worth owning that insurance policy. So people are getting
Speaker 1: out of that ensure runs, and that in the process
Speaker 1: of adjustment entails actually selling the yen. Okay, we're gonna
Speaker 1: sell the yen. I get the dynamics, But I want
Speaker 1: to talk about the lessons we can learn in the
Speaker 1: West from the zombiefication and now this huge first derivative
Speaker 1: move of yen weakness. What does Europe learned from it?
Speaker 1: Where you wrote your authoritative book, Well, so, I think
Speaker 1: I think one thing we've seen in Japan right is
Speaker 1: the financial sector has really been suffering from just a
Speaker 1: yield curve with with no motion at all. That's been
Speaker 1: very little bond trading in Japan for a while since
Speaker 1: these policies introduced. There's a lot of different banks that
Speaker 1: have been to serious trouble than the regional banks. Right,
Speaker 1: so they so having a yield curve that is entirely stuck,
Speaker 1: entirely flat, has since serial costs financial stability issues in
Speaker 1: the in the regional bank and just we're going to
Speaker 1: run out of time? Is this our MMT experiment. It
Speaker 1: means Japan the has two for new fangled theories on
Speaker 1: monetary policy that pre perhaps suggest they don't work. I
Speaker 1: think what we're learning here is that pure inflation targeting,
Speaker 1: it's a policy that can really be causing significant trouble. Right,
Speaker 1: you need to look at financial stability to and in
Speaker 1: Japan now they are facing an issue around stability of
Speaker 1: their currency that they've been not faced for a really decades,
Speaker 1: and that's going to create a change in how the
Speaker 1: Bank of Japan is thinking, I think. And short notice,
Speaker 1: thank you so much for the clinic today ens an
Speaker 1: ordering with excited data. This is the Bloomberg Surveillance Podcast.
Speaker 1: Thanks for listening. Join us live weekdays from seven to
Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television
Speaker 1: each day from six to nine am for insight from
Speaker 1: the best in economics, finance, investment, and international relations. And
Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg
Speaker 1: dot com, and of course, on the terminal. I'm Tom
Speaker 1: keene In. This is Bloomberg.