WEBVTT - Yen Rises with Warning From Takaichi, Metals Rally

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Daybreak

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<v Speaker 1>Asia podcast. I'm Doug Chrisner. The Japanese yen is trading

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<v Speaker 1>at a five month high today against the US dollar.

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<v Speaker 1>It was earlier on Sunday that we heard from Prime

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<v Speaker 1>Minister taka Ichi sending a fresh warning to markets with

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<v Speaker 1>the assertion that the government is ready to take action

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<v Speaker 1>in the face of a weaker yen and surging Japanese

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<v Speaker 1>bond yields. Now. Last Friday in the States, traders reported

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<v Speaker 1>that the New York Fed had contact at financial institutions

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<v Speaker 1>to ask about the yen's exchange rate. Now, the reason

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<v Speaker 1>behind that rate check was unclear, However, the possibilities do

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<v Speaker 1>include that Japan's Ministry of Finance did ask the US

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<v Speaker 1>Department of Treasury to request a rad check to stabilize

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<v Speaker 1>the end without any direct intervention. Let's take a closer

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<v Speaker 1>look at what this means for market action. I'm joined

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<v Speaker 1>by k Mura. Kay is, portfolio manager and managing director

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<v Speaker 1>for Japanese equities at Newburger Berman. K joins from Tokyo.

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<v Speaker 1>Thank you so much for being here. We heard over

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<v Speaker 1>the weekend from Prime Minister Takei ICHI's sending a fresh

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<v Speaker 1>warning to markets, perhaps signaling the potential for some sort

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<v Speaker 1>of intervention. I'm curious, K, when you listen to some

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<v Speaker 1>of the chatter on trading floors in Tokyo, what are

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<v Speaker 1>you hearing right now?

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<v Speaker 2>Me personally sitting here, we haven't heard anything directly, just

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<v Speaker 2>because our trading has actually done in Hong Kong. But

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<v Speaker 2>what I can say, though, is based on our internal communication,

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<v Speaker 2>is that we have been hearing over the last several

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<v Speaker 2>weeks that the government has been more keen to put

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<v Speaker 2>some kind of a floor for the Japanese yend. That

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<v Speaker 2>rhetoric has sharply increased since Friday, and that was following

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<v Speaker 2>the boj governor's press conference started off with rate checks

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<v Speaker 2>from the central Bank, and I think what caught people

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<v Speaker 2>off guard was what happened on the state side, with

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<v Speaker 2>speculation about the FED New York Office also intervening, which

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<v Speaker 2>I think would be quite a rare event if it

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<v Speaker 2>actually did happen. I think at the moment there is

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<v Speaker 2>also some speculation that the government in Japan has intervened

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<v Speaker 2>in the markets, just given the way the yen has moved.

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<v Speaker 2>And so we are currently watching at the moment, if

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<v Speaker 2>the yen would appreciate any further. On the other hand,

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<v Speaker 2>if the moves that we've been seeing on the end

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<v Speaker 2>is driven partly on speculation that the US government has

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<v Speaker 2>also intervened in the market, which we haven't yet heard of,

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<v Speaker 2>that is something that I think we need to pay

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<v Speaker 2>attention to more carefully because that's sort of coordinated action

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<v Speaker 2>by the two central banks. It's something that we haven't

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<v Speaker 2>seen since what March of twenty eleven, and that would

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<v Speaker 2>be quite a very very rare move.

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<v Speaker 1>So we're seeing big moves in the for X today

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<v Speaker 1>dollar weakness, with the Bloomberg Dollars spot index down about

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<v Speaker 1>a third of one percent right now, the end much stronger.

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<v Speaker 1>Some of this may be tied to a bit of

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<v Speaker 1>short covering. Do you have a sense of how much

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<v Speaker 1>time will need to elapse before we can kind of

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<v Speaker 1>conclude that this is perhaps a durable move that we're

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<v Speaker 1>not going to see a resumption of en weakness.

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<v Speaker 2>It's hard to say, because at the moment, what is

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<v Speaker 2>driving the dollar yen is speculation about intervention, which historically

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<v Speaker 2>has helped for very near term movements. By that said,

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<v Speaker 2>the weakness that we're seeing for the end where we

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<v Speaker 2>have been seeing has been driven by more economic fundamentals

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<v Speaker 2>structural issues with the Japanese economy. We are of the

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<v Speaker 2>view though, that the moves have been somewhat excessive, especially

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<v Speaker 2>given the fact that government finances in Japan have been

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<v Speaker 2>improving over the last several years, and so we're of

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<v Speaker 2>the view that once there's some normalcy coming back to

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<v Speaker 2>the markets, yet would appreciate gradually against the US dollar,

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<v Speaker 2>albeit this would also be dependent on what the FED

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<v Speaker 2>does over the next or six to twelve months.

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<v Speaker 1>We recently saw in the Japanese bond market a little

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<v Speaker 1>bit of anxiety tied to the Prime Minister's plan for

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<v Speaker 1>a tax cut on food, and that put the spotlight

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<v Speaker 1>clearly on the fiscal situation that Japan has been struggling

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<v Speaker 1>with for quite some time. Now. Do you think that

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<v Speaker 1>that is also something that is pretty much a short

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<v Speaker 1>term blip that we shouldn't be too overly concerned about,

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<v Speaker 1>or is there a potential for some type of return

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<v Speaker 1>to that type of volatility in the Japanese bond market.

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<v Speaker 2>It's hard to say at the moment, but what I

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<v Speaker 2>can say is that most investors have already priced in

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<v Speaker 2>the prospect of some kind of tax cut involving food

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<v Speaker 2>stuffs in Japan, and this has to do with the

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<v Speaker 2>fact that most of the political parties in this potential

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<v Speaker 2>upcoming election have also looked to make similar policy statements. However,

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<v Speaker 2>I think what investors are keenly focused on is how

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<v Speaker 2>the election would help Prime Miaster tak push through other

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<v Speaker 2>economic fiscal stimulus measures, potentially increase defense spending down the line.

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<v Speaker 2>We're of the view that if the Liberal Democratic Party

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<v Speaker 2>wins more seats in the parliament, if Miss Takaichi Solidus

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<v Speaker 2>bias her power even further, then she will likely push

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<v Speaker 2>through more measures that will further support to domestic economy,

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<v Speaker 2>especially on private spending, and then of course on defense

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<v Speaker 2>spending as well. And our portfolios are well positioned to

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<v Speaker 2>try to capture some of those gains down the line.

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<v Speaker 2>And of course, I think we're of the view that

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<v Speaker 2>if this helps the prop up the economy further, that

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<v Speaker 2>could be especially helpful for regional banks as well as

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<v Speaker 2>also some of the big lenders as well that could

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<v Speaker 2>benefit from a healthier economy.

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<v Speaker 1>So we're seeing a pullback in Japanese equities that seems

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<v Speaker 1>to be directly correlated to the end strengthening today. Longer term,

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<v Speaker 1>what is your outlook for stocks in Japan.

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<v Speaker 2>Yeah, no, that's a that's a very good point. You know,

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<v Speaker 2>this sort of temporary pullback is something that you know,

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<v Speaker 2>we think is actually quite healthy. It gives us an

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<v Speaker 2>opportunity to dive into some really good names. Our view

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<v Speaker 2>of the mid to long term is that there are

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<v Speaker 2>companies out there in Japan that are very much discounted

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<v Speaker 2>versus global peers, but have really good economic fundamentals and

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<v Speaker 2>macro fundamentals underneath it, but also good growth stories over

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<v Speaker 2>the mental long term. So we own a company like

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<v Speaker 2>say Nitara, which used to be a company called JC Spark,

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<v Speaker 2>Plug and Doug. You know, if you're a driver, you'll

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<v Speaker 2>probably know what that is. It's it's a key device

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<v Speaker 2>that goes into an internal internal combustion engine vehicle. This

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<v Speaker 2>company owns seventy percent of the global market share, and

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<v Speaker 2>as we've all been seeing internal combustion engines, hybrid vehicles,

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<v Speaker 2>plug and hirrins are all coming back. And our view

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<v Speaker 2>is that as this market continues to do quite well,

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<v Speaker 2>this company with this type of global market share will

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<v Speaker 2>be able to not only maintain good margins but also

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<v Speaker 2>be able to pass on increasing costs and further improve

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<v Speaker 2>profitability down the line. These are the types of companies

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<v Speaker 2>that we think have really good potential over the mental

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<v Speaker 2>interm and they're still you know, training at low teams,

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<v Speaker 2>which is a really nice discount compared to some of

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<v Speaker 2>the really high cyclic goal high valuation names out there today.

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<v Speaker 1>So kay and the week ahead here in the States,

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<v Speaker 1>we're going to be getting earnings from four of the

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<v Speaker 1>mag seven companies, and a portion of what we will

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<v Speaker 1>be hearing will be reflective of the environment around artificial intelligence.

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<v Speaker 1>Give me a sense of what's happening in Japan right

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<v Speaker 1>now in AI and how this is being played out

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<v Speaker 1>in the equity market.

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<v Speaker 2>We also have exposure to this play, but more from

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<v Speaker 2>a cautious valuation standpoint. So what I mean by that is,

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<v Speaker 2>you know the likes of say Advan Tests or took Electron.

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<v Speaker 2>These are hardware semiconductor production equipment type plays. They've seen

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<v Speaker 2>a huge run up in their share price in evaluations

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<v Speaker 2>with a little stretch. But actually if you go down

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<v Speaker 2>the value chain, you'll find that there are companies like

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<v Speaker 2>Kinden which are very focused in terms of the building

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<v Speaker 2>in construction of the semiconductor plants and the data centers.

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<v Speaker 2>And actually these are the companies that have actually done

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<v Speaker 2>very very well, and we continue to see them doing

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<v Speaker 2>very well because up until now they haven't been able

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<v Speaker 2>to make much money in construction projects. But with the

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<v Speaker 2>last sort of three to four years Japan coming back

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<v Speaker 2>with inflation sticking real interest rates higher, these companies can

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<v Speaker 2>now pick and choose really profitable projects and voila. They

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<v Speaker 2>tend to be the AI related investment place. And so

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<v Speaker 2>that has done tremendously well for us. More, from a

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<v Speaker 2>macroeconomic standpoint, AI is going to have a really big

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<v Speaker 2>boost to productivity and you know, Doug, as you know,

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<v Speaker 2>in Japan we have a shrinking population, so any incremental

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<v Speaker 2>improvements that we could see in productivity for the labor

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<v Speaker 2>market would bode well, very well for Japanese companies. And

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<v Speaker 2>these are types of companies that you'll find exposure to

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<v Speaker 2>in our portfolios.

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<v Speaker 1>Okay, before I let you go, I have to ask

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<v Speaker 1>about inflation, because at the end of the week we're

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<v Speaker 1>going to get the data on Tokyo CPI. We're speaking,

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<v Speaker 1>you're in the Japanese capital. Give me a sense of

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<v Speaker 1>what's happening on the inflation story, particularly at the retail level.

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<v Speaker 2>Yeah, Doug, I think we are seeing the inflation and

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<v Speaker 2>take a bite out of people's wallets. And you know,

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<v Speaker 2>when we're looking at some of the numbers from retail

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<v Speaker 2>sales figures, we did notice some weakness, especially among SI

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<v Speaker 2>apparel and some of the you know, basic items. I

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<v Speaker 2>think you know you can you can get a sense

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<v Speaker 2>that some people are starting to trade down towards some

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<v Speaker 2>of the cheaper goods. However, it is important to note

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<v Speaker 2>that in the upcomings next several months, we're going to

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<v Speaker 2>see wage negotiations from laboring unions. They're going to be

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<v Speaker 2>very keen on seeing higher wages continue for the foreseeable future.

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<v Speaker 2>But that's why it is very important that as equity investors,

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<v Speaker 2>you're invested in these companies that have good, solid fundamentals,

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<v Speaker 2>that have high market share, that can pass on rising

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<v Speaker 2>costs such as labor. Those are the ones that will

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<v Speaker 2>continue to survive. And I think you know, our view

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<v Speaker 2>is is as economy gets better and better, we will

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<v Speaker 2>see the consumption pick up. It might take a little

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<v Speaker 2>bit of time, but it will pick up. And that's

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<v Speaker 2>I think what makes us market burber interesting.

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<v Speaker 1>Okay, we'll leave it on that optimistic note. Kay, thank

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<v Speaker 1>you so much. Kaya Kimura is portfolio manager also managing

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<v Speaker 1>director for Japanese equities at Newberger Berman. Joining from Tokyo

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<v Speaker 1>here on the Daybreak Asia podcast. Welcome back to the

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<v Speaker 1>Daybreak Asia Podcast. I'm Doug Krisner. We are seeing a

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<v Speaker 1>rally in the precious metals market. Earlier today, spot gold

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<v Speaker 1>rose above five thousand dollars in ounce for the very

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<v Speaker 1>first time, and silver also hit a record high on Monday.

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<v Speaker 1>For a closer look at market action, I'm joined by

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<v Speaker 1>Katie Kaminski. Katie is chief for Search strategist at Alpha Simplex.

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<v Speaker 1>She's on the line from Boston, a very cold and

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<v Speaker 1>snowy Boston. Katie, thank you so much for being here.

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<v Speaker 1>What do you make of what we're seeing right now

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<v Speaker 1>in the precious metal space.

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<v Speaker 3>Well, I mean, I think the precious metals market is

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<v Speaker 3>a little bit of a shock for us that we've

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<v Speaker 3>seen so much movement there.

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<v Speaker 4>It's almost like you have supply and.

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<v Speaker 3>Demand and balance and so much demand for precious metals

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<v Speaker 3>that prices have just really surged drastically. I mean, I

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<v Speaker 3>think gold spot prices broke five thousand today future is

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<v Speaker 3>even higher than that, of course, so you're really seeing

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<v Speaker 3>precious metals as the safety trade, and it continues.

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<v Speaker 1>To go safety against I think.

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<v Speaker 3>Against potential weakness for the US dollar, geopolitical uncertainty, just

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<v Speaker 3>so many variables looking for something that has clear value,

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<v Speaker 3>tangible value, and in some senses a hedge on the

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<v Speaker 3>potential for challenging environments for equities at some point.

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<v Speaker 1>So you mentioned the dollar weakness. Flip side of that

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<v Speaker 1>today is a great deal of strength that we're seeing

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<v Speaker 1>right now in the Japanese yen. Earlier on Sunday, Prime

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<v Speaker 1>Minister Takich she sent a fresh warning to the currency market.

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<v Speaker 1>She was saying that the government's going to be ready

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<v Speaker 1>to take action in the face of a lot of

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<v Speaker 1>the weakness that we have seen. In the end, now

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<v Speaker 1>we know that last week the boj did not adjust policy.

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<v Speaker 1>Whether or not that contributed to a lot of the

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<v Speaker 1>recent weakness that we're seeing in the end, I'll let

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<v Speaker 1>you answer that question, but first talk to me about

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<v Speaker 1>what you're seeing in the dollar and what accounts for

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<v Speaker 1>the dollar weakness.

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<v Speaker 3>Well, the dollar has a lot of things going against

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<v Speaker 3>it right now, obviously US rates are higher, and potentially

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<v Speaker 3>we're one of the few economies that might still cut

0:13:08.320 --> 0:13:09.559
<v Speaker 3>rates at some point.

0:13:09.320 --> 0:13:12.440
<v Speaker 4>So I think that's very negative for the dollar.

0:13:12.520 --> 0:13:16.360
<v Speaker 3>You've also seen strong growth rally that has also been

0:13:16.840 --> 0:13:19.640
<v Speaker 3>somewhat non dollar, and then there's been a lot of

0:13:19.920 --> 0:13:22.960
<v Speaker 3>concern about sort of the anti dollar trade as well,

0:13:23.120 --> 0:13:26.560
<v Speaker 3>so sort of you know, moving out of US assets.

0:13:26.559 --> 0:13:28.920
<v Speaker 3>So you've definitely seen that for the last year, and

0:13:29.000 --> 0:13:31.319
<v Speaker 3>you continue to see that this month. So that's been

0:13:31.600 --> 0:13:33.960
<v Speaker 3>really occurring for the last couple of days as well.

0:13:34.200 --> 0:13:36.640
<v Speaker 1>So we have a FED rate decision this week. In

0:13:36.720 --> 0:13:40.320
<v Speaker 1>our survey, policymakers are widely expected to keep rates steady.

0:13:40.360 --> 0:13:44.600
<v Speaker 1>But there's another idea here is that we'll probably have

0:13:44.640 --> 0:13:47.800
<v Speaker 1>to wait until June before we get another rate cut

0:13:47.840 --> 0:13:50.480
<v Speaker 1>from the Fed. Is that consistent with your thinking.

0:13:51.280 --> 0:13:54.319
<v Speaker 3>That's consistent with what most people are thinking right now.

0:13:54.440 --> 0:13:59.080
<v Speaker 3>I think bonds have been the hardest asset class to trade.

0:13:59.120 --> 0:14:02.520
<v Speaker 3>We have seen YU fields up quite a bit, and

0:14:02.559 --> 0:14:06.120
<v Speaker 3>you're seeing sort of this short views on fixed income.

0:14:06.640 --> 0:14:09.640
<v Speaker 3>That being said, these are not really strong signals.

0:14:09.640 --> 0:14:11.560
<v Speaker 4>You're still sort of it feels like.

0:14:11.600 --> 0:14:14.600
<v Speaker 3>Fixed income is in limbo, and that's consistent with the

0:14:14.679 --> 0:14:16.720
<v Speaker 3>idea that we're not probably going to have some big

0:14:16.760 --> 0:14:18.360
<v Speaker 3>moves or changes in the short term.

0:14:18.440 --> 0:14:20.440
<v Speaker 1>We get PPI at the end of the week. Are

0:14:20.480 --> 0:14:24.680
<v Speaker 1>you satisfied with the level of inflation right now? I mean,

0:14:24.720 --> 0:14:26.680
<v Speaker 1>if you had to put money to work in the

0:14:26.720 --> 0:14:29.960
<v Speaker 1>bond market, that inflation is not a pain point for you.

0:14:31.200 --> 0:14:33.640
<v Speaker 3>So I think the challenge here is the short term

0:14:33.720 --> 0:14:36.440
<v Speaker 3>versus the long term view. The short term view seems

0:14:36.480 --> 0:14:41.240
<v Speaker 3>to be relatively mild on inflation, and bonds have been

0:14:41.280 --> 0:14:45.120
<v Speaker 3>trading sort of not too concerned about inflation. But I

0:14:45.160 --> 0:14:47.920
<v Speaker 3>think if we really did have a shift in policy

0:14:48.040 --> 0:14:51.320
<v Speaker 3>where in some sense you have rates go lower because

0:14:51.320 --> 0:14:53.000
<v Speaker 3>there's a lot of pressure for that, and you have

0:14:53.040 --> 0:14:58.560
<v Speaker 3>a lot of growth accelerated and overstimulation, that's where longer

0:14:58.680 --> 0:15:01.080
<v Speaker 3>term you might see some potential for inflation.

0:15:01.240 --> 0:15:02.000
<v Speaker 4>We don't see that.

0:15:02.080 --> 0:15:05.280
<v Speaker 3>Now, but I think over longer horizons it's definitely a concern.

0:15:05.640 --> 0:15:08.440
<v Speaker 1>We have a lot of key earnings reports in the week.

0:15:08.440 --> 0:15:10.680
<v Speaker 1>I had four of the mag seven are reporting, and

0:15:10.760 --> 0:15:13.320
<v Speaker 1>this is very much part of the AI story and

0:15:13.360 --> 0:15:17.080
<v Speaker 1>the build out of the infrastructure that has helped to

0:15:17.200 --> 0:15:20.120
<v Speaker 1>drive a lot of economic growth in the US. What

0:15:20.160 --> 0:15:23.600
<v Speaker 1>will you be listening for as we hear from four

0:15:23.640 --> 0:15:24.920
<v Speaker 1>of the mag seven this week.

0:15:25.320 --> 0:15:27.520
<v Speaker 3>Well, this is an important point because if you look

0:15:27.560 --> 0:15:30.120
<v Speaker 3>at the market will be very focused on the strength

0:15:30.120 --> 0:15:32.840
<v Speaker 3>of these earnings. But if you look at market moves

0:15:32.880 --> 0:15:35.920
<v Speaker 3>this month, actually the Russell and some other sectors have

0:15:35.960 --> 0:15:39.840
<v Speaker 3>been outperforming, so we've seen somewhat of a rotation, and

0:15:39.880 --> 0:15:42.240
<v Speaker 3>I think it could be a trigger point if you

0:15:42.320 --> 0:15:45.720
<v Speaker 3>did see some concerning news in something that has been

0:15:45.720 --> 0:15:48.400
<v Speaker 3>the main support of the market recently.

0:15:49.120 --> 0:15:51.440
<v Speaker 4>But it has been interesting that the market.

0:15:51.200 --> 0:15:54.480
<v Speaker 3>Has been kind of pivoting and rotating a little bit

0:15:54.600 --> 0:15:57.720
<v Speaker 3>out of sort of tech and more in favor of

0:15:57.760 --> 0:16:01.080
<v Speaker 3>small cap this month. Maybe that's something that could continue

0:16:01.120 --> 0:16:03.800
<v Speaker 3>depending on how this news and how earnings come out.

0:16:04.000 --> 0:16:05.920
<v Speaker 1>So is the move into small cap that we've been

0:16:05.960 --> 0:16:09.960
<v Speaker 1>seeing recently, is that just based on the attractiveness of

0:16:10.320 --> 0:16:13.720
<v Speaker 1>valuation or is it a bet on the fact that

0:16:13.760 --> 0:16:16.600
<v Speaker 1>we're going to see a resurgence and economic growth.

0:16:18.000 --> 0:16:20.240
<v Speaker 3>That is a good question. I mean you have to

0:16:20.280 --> 0:16:22.920
<v Speaker 3>ask the question of is this a real rally or

0:16:23.000 --> 0:16:25.440
<v Speaker 3>is this a broadening rally where you're kind of seeing,

0:16:25.760 --> 0:16:28.560
<v Speaker 3>you know, equities have gone up so much growth is strong,

0:16:28.640 --> 0:16:31.640
<v Speaker 3>does that mean that sort of undervalued areas of the

0:16:31.680 --> 0:16:35.840
<v Speaker 3>market might actually have opportunity for expansion as well. It

0:16:35.840 --> 0:16:37.680
<v Speaker 3>could be one or it could be the other, and

0:16:37.760 --> 0:16:40.480
<v Speaker 3>it really depends on if this is a fundamentally based

0:16:40.520 --> 0:16:42.840
<v Speaker 3>and we're actually going to see that growth in those companies,

0:16:43.600 --> 0:16:45.760
<v Speaker 3>and maybe that people are just looking for other places

0:16:45.800 --> 0:16:48.240
<v Speaker 3>to diversify, and that means that it may not be

0:16:48.320 --> 0:16:50.760
<v Speaker 3>growth related but sort of diversification.

0:16:51.400 --> 0:16:54.720
<v Speaker 1>Take that a step further. If you're looking for diversification,

0:16:54.840 --> 0:16:57.080
<v Speaker 1>do you want to be exposed offshore right now? Is

0:16:57.360 --> 0:16:58.320
<v Speaker 1>that a safer bet?

0:16:59.360 --> 0:17:03.040
<v Speaker 3>Definitely, I would say, because if you've looked at things

0:17:03.080 --> 0:17:06.000
<v Speaker 3>that have really worked this month, it's things like em

0:17:06.520 --> 0:17:09.440
<v Speaker 3>Those markets are really benefiting from some of the big

0:17:09.480 --> 0:17:13.760
<v Speaker 3>moves in the metal space, et cetera. So you're seeing

0:17:13.800 --> 0:17:18.280
<v Speaker 3>opportunities outside of just US. Japan, despite today, has been

0:17:18.359 --> 0:17:18.760
<v Speaker 3>up quite a.

0:17:18.760 --> 0:17:19.800
<v Speaker 4>Bit as well.

0:17:19.840 --> 0:17:22.080
<v Speaker 3>And it has been interesting because you've seen China and

0:17:22.119 --> 0:17:25.960
<v Speaker 3>India have been down, but you've seen really positive returns

0:17:26.760 --> 0:17:30.800
<v Speaker 3>in other places like Hong Kong and Japan and et cetera.

0:17:31.359 --> 0:17:34.400
<v Speaker 1>Is it surprising to you that we haven't seen, let's

0:17:34.440 --> 0:17:37.160
<v Speaker 1>call it a meaningful pullback in the US equity market

0:17:37.200 --> 0:17:41.160
<v Speaker 1>something substantial to the tune of around ten percent or more.

0:17:41.240 --> 0:17:42.280
<v Speaker 1>Does that surprise you?

0:17:42.680 --> 0:17:46.879
<v Speaker 3>It's not that surprising to me, given the level of

0:17:47.400 --> 0:17:50.040
<v Speaker 3>growth that we've seen and sort of growth numbers. So

0:17:50.160 --> 0:17:53.639
<v Speaker 3>I think looking back at last year when we were

0:17:53.680 --> 0:17:56.359
<v Speaker 3>sort of in the height of this tariff discussion, I

0:17:56.359 --> 0:17:58.439
<v Speaker 3>think everybody thought, there's no way that we're going to

0:17:58.440 --> 0:18:00.520
<v Speaker 3>see what we've seen over the last year months. But

0:18:00.560 --> 0:18:04.240
<v Speaker 3>as long as we continue to see growth strong, then

0:18:04.359 --> 0:18:07.239
<v Speaker 3>sort of there's something for this market to lean on.

0:18:07.320 --> 0:18:09.560
<v Speaker 4>And I think that's why you're seeing that.

0:18:09.760 --> 0:18:12.359
<v Speaker 1>So you're fully invested right now. You're not holding any

0:18:12.560 --> 0:18:13.920
<v Speaker 1>dry powder, so to speak.

0:18:14.359 --> 0:18:14.960
<v Speaker 4>Well, i'd see.

0:18:15.000 --> 0:18:17.520
<v Speaker 3>I mean, for us, we were really following the trends

0:18:17.520 --> 0:18:20.960
<v Speaker 3>and themes that you're seeing, and you're seeing not full

0:18:21.359 --> 0:18:24.399
<v Speaker 3>like signal strength in terms of equities, but you have

0:18:24.600 --> 0:18:28.880
<v Speaker 3>seen pretty consistent and strong views that equities are continuing

0:18:28.920 --> 0:18:33.440
<v Speaker 3>to rally and for now, there's really little that goes

0:18:33.480 --> 0:18:34.680
<v Speaker 3>against us at this point.

0:18:34.840 --> 0:18:37.639
<v Speaker 1>So what is the one thing then that potentially could

0:18:37.800 --> 0:18:41.679
<v Speaker 1>alter your thesis here that may prove to be a

0:18:41.720 --> 0:18:45.280
<v Speaker 1>good warning signal or something that may indicate that a

0:18:45.400 --> 0:18:46.879
<v Speaker 1>reversal is on the horizon.

0:18:48.000 --> 0:18:50.760
<v Speaker 3>I think the places a look right now are sort

0:18:50.800 --> 0:18:53.920
<v Speaker 3>of I am a little concerned about the massive moves

0:18:54.119 --> 0:18:56.720
<v Speaker 3>in the metals markets. So if you see that and

0:18:56.760 --> 0:19:00.000
<v Speaker 3>then you start to see energy join that particular theme,

0:19:00.680 --> 0:19:04.280
<v Speaker 3>then the sort of eventual inflation concern comes in. I

0:19:04.280 --> 0:19:06.719
<v Speaker 3>think the fact that you're seeing yields up and the

0:19:06.720 --> 0:19:10.920
<v Speaker 3>potential for sort of a weakening in the bond market

0:19:11.080 --> 0:19:16.400
<v Speaker 3>is also another precursor to potentially pullback in the equity market.

0:19:16.480 --> 0:19:18.679
<v Speaker 3>So I think we have to look outside of the

0:19:18.720 --> 0:19:21.600
<v Speaker 3>equity markets for areas where there might be some concern.

0:19:21.760 --> 0:19:23.840
<v Speaker 1>Okay, Katie, well leave it there. Thank you so much.

0:19:23.960 --> 0:19:26.440
<v Speaker 1>I hope the week ahead is a productive one for you.

0:19:26.760 --> 0:19:31.399
<v Speaker 1>Katie Kaminski is chief for search strategist at Alpha Simplex,

0:19:31.520 --> 0:19:35.000
<v Speaker 1>joining from Boston here on the Daybreak Asia Podcast. Thanks

0:19:35.080 --> 0:19:38.679
<v Speaker 1>for listening to today's episode of the Bloomberg Daybreak Asia

0:19:38.840 --> 0:19:43.280
<v Speaker 1>Edition podcast. Each weekday, we look at the story shaping markets, finance,

0:19:43.640 --> 0:19:46.520
<v Speaker 1>and geopolitics in the Asia Pacific. If you can find

0:19:46.600 --> 0:19:50.479
<v Speaker 1>us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or

0:19:50.520 --> 0:19:53.920
<v Speaker 1>anywhere else you listen, join us again tomorrow for insight

0:19:54.000 --> 0:19:58.280
<v Speaker 1>on the market moves from Hong Kong to Singapore and Australia.

0:19:58.680 --> 0:20:01.119
<v Speaker 1>I'm Doug Chrisner and this is Bloomberg.

0:20:08.480 --> 0:20:08.680
<v Speaker 3>Hmm