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Speaker 1: This is Bloomberg Surveillance. I think if there was ever

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Speaker 1: a year to say in an outlook that you have

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Speaker 1: no idea what's going to happen, two thousand sixteen has

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Speaker 1: been the year is the safe haven currency. The yen

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Speaker 1: is likely to see most weakness when risk appetite is

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Speaker 1: when people are using the end as a funding currency

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Speaker 1: to move into higher risk assets. I'll starting to see

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Speaker 1: a lot of different regions, including the year old Zone,

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Speaker 1: including the emerging market economies in the United States turn

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Speaker 1: upward with the economic reports. Bloomberg Surveillance your link to

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Speaker 1: the world of economics, finance, and investment on Bloomberg Radio.

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Speaker 1: Good morning everyone, Michael McKeon Time Keener Friday, coming up

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Speaker 1: an intelligent conversation on the massive confusion over strong yen.

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Speaker 1: I can't think of a story in years that it

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Speaker 1: had so much bewilderment story to story within the business media.

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Speaker 1: We're gonna bring continued clarity on that with John Vale

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Speaker 1: right now off for X Report will lead with Yen.

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Speaker 1: The FOREX brief matched by Interactive Broker's winner of f

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Speaker 1: X Weeks two thousand fifteen award for the best Retail

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Speaker 1: for X Trading platform visit ib at I b k

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Speaker 1: R dot com slash four x so one O eight

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Speaker 1: sixty six on yen. That's a full big figure above

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Speaker 1: the strongest point yesterday one oh seven and change. And

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Speaker 1: we've come back a little bit, but nowhere near where

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Speaker 1: Mr Abe would like yen. We'll get to that. The

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Speaker 1: euro has not advanced with the yen one thirteen sixty

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Speaker 1: five on euro, and that gives you a euro yen

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Speaker 1: take out the dollar. The number of yen compared to

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Speaker 1: euro one three point five zero. That's down from a

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Speaker 1: one six level eight cups of coffee ago. So there's

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Speaker 1: stronger yen, weaker euro sterling. That means David Wilson can

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Speaker 1: afford the junk at the London this weekend. We need

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Speaker 1: we need like a one thirty eight David to really

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Speaker 1: make the math work. What is this? We we we you.

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Speaker 1: It's like when they asked, when they asked Ben Bernanky

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Speaker 1: last night, how are you going to shrink the fense

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Speaker 1: balance sheet? And he said, I'm not going to. Right

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Speaker 1: there you go. It's all about you know, personal responsibilities

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Speaker 1: and plans. Who is the responsibility at Yahoo right now?

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Speaker 1: I mean, that's what a game this is into the weekend,

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Speaker 1: well sure is and Verizon plans to make a first

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Speaker 1: round offer for the company's web business next week. That's

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Speaker 1: according to people familiar with the matter. They said Verizon

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Speaker 1: is willing to buy yah Who's thirty five percent stake,

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Speaker 1: and Yeah who Japan is part of a deal, and

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Speaker 1: shares of the Japanese company climbed six point four percent today.

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Speaker 1: That helps explain why Yahoo itself is up one and

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Speaker 1: a half percent in early trading. Speaking of deals, n

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Speaker 1: XP Semiconductor up two and a half percent. The chipmakers

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Speaker 1: considering a sale of its standard products business. Going to

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Speaker 1: people familiar with the matter, they said the unit has

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Speaker 1: attracted interest from Chinese suitors. CME Group, on the other hand,

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Speaker 1: down about two and a half percent. The Brazilian exchange

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Speaker 1: owner be M and F bow Vespa sold its entire

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Speaker 1: four percent stake in the U S company and gave

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Speaker 1: up its seat on CMESE board. The sale amounted to

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Speaker 1: one point two billion dollars. B M and F bo

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Speaker 1: Vespa will put the proceeds toward the purchase of a

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Speaker 1: Brazilian over the counter market and a dark on patroleum

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Speaker 1: up two and a half percent. The energy company offered

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Speaker 1: to buy back as much as a billion dollars of

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Speaker 1: notes maturing next year. The repurchase may cost and a

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Speaker 1: dark goes six and a half percent more than the

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Speaker 1: notes based value. Nonetheless, the possibility going over well gaps

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Speaker 1: down six and a half percent. The power retailers March

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Speaker 1: sales dropped six percent of stories upen more than a year,

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Speaker 1: and Alice only expected the same story sales to fall

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Speaker 1: five percent of Coining to a retail metrics survey, sales

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Speaker 1: were disappointing at Old Navy and Banana Republic, as well

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Speaker 1: as the GAP's namesake chain, under Armor. Now this gets

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Speaker 1: a little tricky. The athletic wearmaker effectively split its shares

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Speaker 1: two for one by handing out a new class of

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Speaker 1: non voting stock. Now, this distribution is similar to one

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Speaker 1: May two years ago by Google, which is now alphabet.

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Speaker 1: So if you look at under armo or on a

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Speaker 1: Bloomberg screen right now, it says the shares are down

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Speaker 1: forty six and a percent. Well, if you adjust for

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Speaker 1: the stock split, you are talking about a price that's

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Speaker 1: seven percent higher than it was late yesterday for the

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Speaker 1: existing voting shares of under Armour. So it's going to

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Speaker 1: be one to watch and pay attention to. You finished

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Speaker 1: Friday with that complexity. Well, I got a couple of

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Speaker 1: more fo if you want to bonus round one more. Alright,

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Speaker 1: deep amend up. Sixtent, the developer of oral drug delivery technology,

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Speaker 1: faces a possible proxy fight with Starboard Value. The activist

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Speaker 1: investor disclosed the own's equivalent of a ninetent stake and

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Speaker 1: has called for a special meeting of shareholders. When I

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Speaker 1: say bonus run, you're supposed to come back with Shanir

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Speaker 1: off the bottom twenty four up to thirty eight, rolling

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Speaker 1: over a little bit here as well. Well, let's see, Yeah,

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Speaker 1: tankers are heading out. I guess there's a fifth tanker

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Speaker 1: that has been loaded at the saban past the sports terminal.

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Speaker 1: So there you go. Right before we get to John Vale,

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Speaker 1: I want to say thank you to you for your

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Speaker 1: years of work at Bloomberg in writing deeply intelligent music articles.

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Speaker 1: People are raving about your Merle Haggard article of the

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Speaker 1: other day, raving about it. I mean it's really cool,

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Speaker 1: and Merle Haggard saved Bakersfield and some would say save

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Speaker 1: country music as well. Let's move on to Japan right now.

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Speaker 1: We spoke with Robert Feldmann this morning of Morgan Stanley

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Speaker 1: and now John Vale to give us wisdom on what

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Speaker 1: has occurred. John, I can honestly say I have never

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Speaker 1: seen bewilderment over the why of strong en, the wither

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Speaker 1: of strong end, and the response of the government of

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Speaker 1: Japan to a strong yen. Let's back up and say,

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Speaker 1: why the bewilderment, Why the cacophony of ideas and themes

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Speaker 1: around Japan right now? Good question. Yes, many people are bewildered,

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Speaker 1: and it's because it's not very logical what's happening to

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Speaker 1: the end. It's not fundamentally driven. It's more speculatively driven,

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Speaker 1: so it could easily unwind very quickly. The markets are

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Speaker 1: testing the Japanese government, well, i'd say the speculators are

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Speaker 1: if that means markets, um, but it's yeah, it's definitely

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Speaker 1: gotten very very uh uh strong recently, but it could

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Speaker 1: reverse very very quick. Where does NICO feel fair value is?

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Speaker 1: It's always a loaded question and I've done technical extrapolations

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Speaker 1: this answer, that answer, what's the NICO answer? We think

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Speaker 1: it's going to be more like one fifteen or one

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Speaker 1: sixteen six months from now, but it could be Uh,

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Speaker 1: it could be stronger than short term bike. I sort

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Speaker 1: of doubt and it seems to me like, uh, it's

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Speaker 1: it's it's very difficult to get the end a whole

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Speaker 1: lot stronger from here because the fundamental is just aren't

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Speaker 1: that strong. In Japan, Bloomberg, of course keeps track of

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Speaker 1: people's forecast. David Cole, who works for Julius Bayer, spoke

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Speaker 1: to Top Forecaster, says the end could go past one

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Speaker 1: oh five. Yeah, he was on this morning. He was brilliant.

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Speaker 1: Rachel Worstban, our executive producer, demanded Mr Cole come on

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Speaker 1: from Julius Bear And I mean there's a media inflammatory

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Speaker 1: idea of sub one hundred, you know, these benchmarks, but

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Speaker 1: the inertial mass to drive the yen, the force of

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Speaker 1: money to drive the yen one oh eight, one oh

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Speaker 1: six two Cole's one oh five or lower. Where does

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Speaker 1: that money come from to bid up yen? And in

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Speaker 1: processing its speculation, there's a small chance that it could

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Speaker 1: be Japanese corporations repatriating a great deal of money because

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Speaker 1: they're afraid of the global situation. I don't really see

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Speaker 1: that in any of the data, but for the most part,

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Speaker 1: it does seem like it's speculator driven. You think in

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Speaker 1: six months we start going the other way. What happens

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Speaker 1: if you're wrong? Um? A lot of people saying, you

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Speaker 1: look at the end right now and it's the death

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Speaker 1: of abonomics. Yeah, I think the death of abanomics is

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Speaker 1: greatly overstated. Uh. It's still the same guys in charge

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Speaker 1: and with the same motivation to get themselves out of

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Speaker 1: this situation they've been in the four of us of

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Speaker 1: a very strong end and and deflation. Krona is not

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Speaker 1: going anywhere. He probably they're probably gonna ease further, um,

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Speaker 1: and may be surprisingly further. He's always surprised us in

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Speaker 1: the past, so I guess we shouldn't be be surprised

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Speaker 1: if he surprises us again, um at the next bo

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Speaker 1: J meeting. And in the meantime, the Federal Reserve is

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Speaker 1: going to be hiking rates faster than at least the

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Speaker 1: drivatives markets expect in our view, and so that should

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Speaker 1: any sort of signal of either one of those things

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Speaker 1: happening could send the yen into a very much more

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Speaker 1: weakening mode quickly. Well, what does Corona do? Well? Um,

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Speaker 1: you know, we don't think he can cut rates further,

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Speaker 1: although he might, but uh, I think most everyone is

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Speaker 1: talking more about e t f s and buying more

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Speaker 1: e t f They've been buying three point five trillion

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Speaker 1: in the year on. You know, they had this policy

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Speaker 1: called q q E qualitative and quantitative easing, and buying

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Speaker 1: e t s was part of the qualitative aspect um.

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Speaker 1: But they might move it more towards the quantitative aspect

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Speaker 1: I mean, he didn't really do it before for monetary

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Speaker 1: policy reasons. They were buying e t f s in

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Speaker 1: order to show the country and investors that risks are

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Speaker 1: worth taking and to try to boost optimistic sentiment in

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Speaker 1: the country. But now they might move it towards the

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Speaker 1: other queue. And you know, talk about some real money.

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Speaker 1: Some people are talking about ten trillion uh yen per year,

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Speaker 1: which is of what buy ETFs, So that would be

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Speaker 1: those e t f s gold. Are they equities exactly?

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Speaker 1: They've always been buying equities. Yeah, they're buying stocks. Yes,

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Speaker 1: they've been buying stocks for many years now. Bank for

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Speaker 1: US for a cymical for for a symbolic. So the

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Speaker 1: symbolism here would be Janet Yelling buying shares and Colgate

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Speaker 1: plov They buy E T F S, which is which

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Speaker 1: would have Colgate pame olof in them General Electric Except

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Speaker 1: I don't get it, Michael Barr, was this in your

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Speaker 1: economic textbooks? I want to make Clearinet. We're gonna come

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Speaker 1: back with John Vale on Japan Fusion up fifteen. This is, folks,

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Speaker 1: This just gets stranger from August of oh seven. This

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Speaker 1: gets stranger every single day. Alright, time now for Michael

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Speaker 1: bar and the latest news heading my time. Thank you

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Speaker 1: very much. Senator Bernie Sanders, as Hillary Clinton's presidential campaign

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Speaker 1: has decided to go negative against him after his recent

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Speaker 1: string of primary season victories. Sanders tells MSNBC that he's

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Speaker 1: encouraging Clinton to get back to the issues. Sanders is

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Speaker 1: depending speaking out harshly against Clinton, saying we've got to

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Speaker 1: fight back against statements that she's made. Pope Francis has

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Speaker 1: released a two hundred fifty six page document today telling

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Speaker 1: Catholics an individual conscience should be the guiding principle for

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Speaker 1: them concerning issues such as sex, marriage, and family life.

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Speaker 1: Authorities are still looking for an accused killer who escaped

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Speaker 1: Wednesday night from a psychiatric hospital south of Tacoma, Washington.

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Speaker 1: Police believe Anthony Garver bought a bus ticket from Seattle

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Speaker 1: to Spoken Global News twenty four hours a day, powered

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Speaker 1: by our two hundred journalists, Michael Barr and Michael Thanks

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Speaker 1: so much. Let's look at UH for an exchange right now,

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Speaker 1: d X y dollar slightly weaker this morning. Yen one

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Speaker 1: o eight seventy nine euro eighty. We're with John Vale,

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Speaker 1: Nico Asset Management on the stru of Japan. It's Bloomberg

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Speaker 1: Surveillance Market Drivers, brought you by Bank of America marri

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Speaker 1: invest your global cash wherever the road to growth leads.

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Speaker 1: That's the power of global connections. Bank of America. Go

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Speaker 1: at America number fd I C Global Business News twenty

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Speaker 1: four hours a day at Bloomberg dot com, the Radio

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Speaker 1: plus Mobile Lab and on your radio. This is a

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Speaker 1: Bloomberg Business Flash and I'm kar in Moscow. The Bloomberg

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Speaker 1: CME Group US stock index futures are higher, signaling the

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Speaker 1: SNP five D will rebound from its worst decline in

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Speaker 1: six weeks as a rally and crude prices boost energy

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Speaker 1: producers who checked the markets every fifteen minutes throughout the

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Speaker 1: trading a on bloomberg S and p E Many futures

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Speaker 1: of fifteen points and downy Many futures of a hundred

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Speaker 1: five Nasdaq EU Many futures of thirty two. The decks

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Speaker 1: in Germany is up one point three percent. Tenure Treasury

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Speaker 1: down ten thirty seconds, the yield one point seven two

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Speaker 1: percent yield on the two year point seven one percent

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Speaker 1: nim X Scrude oil is up five and a half percent,

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Speaker 1: or two dollars five cents at thirty nine thirty. A

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Speaker 1: barrel comics gold is down to ten percent or two

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Speaker 1: dollars eighty cents at twelve thirty four or fifty announced.

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Speaker 1: The euro A dollar thirteen eighties six, the N one

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Speaker 1: oh eight point eight five, and that's a Bloomberg business flash.

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Speaker 1: Tom and Mike Cara Mosco, thank you very much. John

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Speaker 1: val Is with Nico Asset Management, he's chief global strategist there,

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Speaker 1: and they're having to come up with some new strategies

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Speaker 1: in Japan with the en now at the moment at

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Speaker 1: one eighty five, it does seem to have weakened. Um.

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Speaker 1: I guess that's what we can call it, tom significantly

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Speaker 1: at this point from yesterday when we were down in

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Speaker 1: briefly one oh seven. Uh. But some would say this

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Speaker 1: is just you know, temporary blipping a long run decline

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Speaker 1: for Japan because the birth rate there has fallen below

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Speaker 1: the death rate and the country has no labor force

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Speaker 1: growth and with productivity falling as well. They can do

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Speaker 1: all they want in terms of trying to stimulate an economy,

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Speaker 1: but fundamentally it's just not going to be able to grow. Well. Uh,

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Speaker 1: there are a lot of things you can do, and

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Speaker 1: obviously the third era of Abenams is reform and economic reform,

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Speaker 1: and he's done some good things there. Some people say

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Speaker 1: it's a complete uh waste of time, and it's not true.

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Speaker 1: It's done very It's done very good things, especially on

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Speaker 1: the corporate tax rates and incentivizing companies to invest and

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Speaker 1: to return capitalist shareholders. And compared to what Japan was

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Speaker 1: like when I was there before Abe, uh, it's definitely

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Speaker 1: a much more dynamic country with much more optimism. But yes,

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Speaker 1: it's always gonna be a slow growing country. Um. If

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Speaker 1: it grows one percent, that's good news. Um. And uh

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Speaker 1: because their population is declining. In fact, their GDP per

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Speaker 1: capita I think has been growing faster than the USS

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Speaker 1: has been. Uh, so it's not all bad news. And

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Speaker 1: of course with the declining population, they're trying to offset

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Speaker 1: it with robots and increasing the female participation ratio, and

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Speaker 1: certainly there's some progress there. There's gonna be some cultural

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Speaker 1: changes then if you're going to get more women in

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Speaker 1: the workforce. Are they ever going to allow immigrants in? Well,

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Speaker 1: they are allowing immigrants and if they're skilled, they just

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Speaker 1: don't want unskilled immigrants to come in. All of that

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Speaker 1: might change with time given the labor shortage coming up,

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Speaker 1: but of course they'll be very selective about who they

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Speaker 1: want to come in. They want them to speak Japanese,

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Speaker 1: which is I guess logical, but it's hard to find

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Speaker 1: a lot of people. But there are tens of thousands

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Speaker 1: of Indonesian nurses and whatnot who are learning Japanese and

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Speaker 1: and and getting licensed in Japan. Help us with the

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Speaker 1: stereotype we have. We look at Mr Abe and others

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Speaker 1: through an international prism. I mean, we're a global show,

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Speaker 1: coast to coast. Um, there's states I've never been to.

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Speaker 1: But my prism of Tokyo is literally mike six blocks

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Speaker 1: of Tokyo plus the skyscraper where they film Lost in translation.

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Speaker 1: So like Osaka and Kyoto, the Kansai region, Abe has

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Speaker 1: a whole domestic calculus he has to deal with fold

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Speaker 1: his domestic mathematics now and do the international economics of

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Speaker 1: yen or abbynomics. Well, I think it's pretty straightforward in

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Speaker 1: that he wants so we could yet to boost the

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Speaker 1: whole national economy, not just Tokyo. Like you say, it's

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Speaker 1: a big country. It's one of the largest countries in

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Speaker 1: the world, and its regions have been suffering for ages

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Speaker 1: as there's been hollowing out of Japan. It's one reason

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Speaker 1: why they really do wanna weak again is to stop

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Speaker 1: the hollowing out. It's the regions that have been hurt

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Speaker 1: the most of that. Tokyo's population is still growing, surprisingly,

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Speaker 1: it's just the rest of the country is is Uh

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Speaker 1: is shrinking and so yes, and of course he's got

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Speaker 1: an election coming up um in Uh July and it's

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Speaker 1: still a question whether it will be for the um

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Speaker 1: Senate and the Congress or just for the Senate. But

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Speaker 1: he desperately wants a higher proportion of the votes in

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Speaker 1: the Senate, which is called the upper house in Japan,

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Speaker 1: so that he can have have more reforms passed. He's

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Speaker 1: also quite interested in and you know that the national

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Speaker 1: defense aspect too, and with North Korea UM looking at

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Speaker 1: a more dangerous situation now, um, he might get some

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Speaker 1: uh some support for being a little bit more defensive.

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Speaker 1: What will you right about? Study about think about through

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Speaker 1: the month of April after what we witnessed yesterday. What's

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Speaker 1: the thing you're focused on within the news flow out

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Speaker 1: of Japan. Is it just bulk economic data you just

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Speaker 1: need to see if if they slip further into recession

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Speaker 1: and slow down, or is it end dynamics or is

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Speaker 1: it debt dynamics. What's the thing you're focused on? Well,

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Speaker 1: I think the b J is always important, but we

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Speaker 1: are going to have some pretty big news items coming up.

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Speaker 1: Japan is hosting the G seven Commerce in May, and

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Speaker 1: one reason why the speculators are attacking the currency now

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Speaker 1: is that they think that Abe will delay announcing this

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Speaker 1: fiscal stimulus, which is going to be the gay G

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Speaker 1: seven communicates conclusion until after May, so that he's sort

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Speaker 1: of in a lull period before that and he can't

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Speaker 1: announce a big stimulus package now to counter the stronger

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Speaker 1: yen um. But along with that, he's probably going to

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Speaker 1: delay the v T hike which is scheduled to happen

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Speaker 1: next year as a form of fiscal stimulus. Instead of

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Speaker 1: being fiscally conservative, they're going by raising the v A T.

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Speaker 1: They're gonna stop that process. So there could be some

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Speaker 1: pretty big news on that front. Um corporate earnings are

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Speaker 1: obviously coming up pretty soon. We'll be watching those pretty carefully.

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Speaker 1: Uh So, it's there are a lot of things that

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Speaker 1: are would be very crucial to watch for Japan. John

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Speaker 1: thinks it's a great briefing, particularly domestic aspects of Japan.

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Speaker 1: Again the end one oh eight. Mike, I don't see

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Speaker 1: market fallout from Bill Dudley's comments. Some of the headlines

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Speaker 1: were surprising, but I mean, let's be blunt. He didn't

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Speaker 1: move the market relatively dubbish, but it didn't change the

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Speaker 1: perception of where the fan is. Hey, we want to

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Speaker 1: do a shout out to our buddy Chuck Todd from

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Speaker 1: NBC's Meet the Press. It is his birthday today. It's

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Speaker 1: a happy birthday. I wonder if we'll get birthday greetings,

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Speaker 1: so Mr Trump or Mr Sanders. That's a good question.

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Speaker 1: I don't know Bloomberg's surveillance stay with us. We are

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