Transcripts For BLOOMBERG Bloomberg 20240703

Losses after strong u. S. Job openings ratchet up wall streets [indiscernible] hitting multiyear highs. The yen is surging from its weakest levels in a year amid speculation japanese officials intervened to slow the currency slide. Plus a republican revolt dumping Kevin Mccarthy as House Speaker, sending a fractious u. S. Congress and to further disarray. Media reports suggesting he will not run for office, for the post again. We are just getting some numbers when it comes to south korean Industrial Production crossing the bloomberg for the month of august. We are seeing a big beat when it comes to Industrial Production. Seasonally adjusted monthtomonth number, 5. 5 against expectations of. 2 and really bouncing back from the contraction of 2 we saw in the prior month. When it comes to Industrial Production, the year on your number, that is a bigger year number, that is a bigger fall than expected, about half a percent. Expectations were a fall of about 6 . A better outcome than expected versus that revised 8. 1 contraction in july. We saw the industrial output number rising 5. 5 against the contraction of 2 in july there. The cyclical leading index was unchanged month on month at 0. 4 Percentage Points in july. Shery take a look at how u. S. Futures are trading early in the Asian Session, not a lot of movement after we saw pressure in the new york session, we had almost every sector in the s p 500 in the red. A lot of volatility given that yields continue to surge to new multiyear highs. The vix, at one point surpassing the 20 level, the highest level in 16 months. It just settled a fraction below that. It was the resilient labor market data and more hawkish commentary coming from fed officials that really talked about that higher for longer narrative continuing, sending yields higher, the 10 year yield and 30 year yields now at the highest level since 2007. Lets take a look at the data. It was really the jobs openings in the u. S. Topping all forecasts for the month of august. Those positions available at 9. 61 million, which shows you the resilience of the labor market. Hiring was up. Layoffs were sort of low. Gains in the job market, coming in the professional and Business Services sector. All of this is making traders thank, where does the fed think, where does the fed goes from here . It seems to be the longer for the higher for longer narrative continues. Annabelle they are still playing out the key rates elevated for some time. That is playing out this morning as we take a look at the open. Bond underway. Yields ticking higher. Stocks today, you mentioned the bearish sentiment coming through. Aussie stocks, into their Third Straight day of losses. 3 . The ausie dollar, you can see the story of Dollar Strength coming through. We are below the . 63 level versus the greenback. Lets change on take a look at what else we are watching in the asian market landscape today. Kiwi assets, very much still a focus. We have the rbnz decision later this morning. The expectation is, yes, a hold, but what is called a hawkish old. The rbnz may flag the risk of further hikes ahead. Kiwi bond yields, moving higher. Chinas shut today for the golden week holiday but hong kong is watching the price session because it helped drive down the broader benchmark. We are actually trading at the lowest level this year for asiapacific stocks. Have erased all the gains we have erased all the gains we have made here since march. The 150 level, it is back off that, but here is haidi for more details on why. Haidi it is about the yen, it is about treasury yields. It feels a little bit like groundhog day. Garfield reynolds is here. Not much has changed in terms of watching levels, wondering if they are overdone. Lets start off with the young first. The 150 level. The question is i guess how much they are willing to pay for intervention if we are dealing with an exceedingly hawkish fed. The yen, it is hard to see it rallying sustainably from here unless you either get suddenly less hawkish fed, not quite sure where that would come from, or you get suddenly a less dovish boj. We have some signs of that in the more recent meeting, but there is still a long way away, especially in market terms, from making a shift. That makes the yen vulnerable. The only thing thats restraining it from going to if you had the ministry of finance of japan coming out saying, we believe the market should set the Exchange Rate, then the yen would be on its way to 160 or something. But right now, theres a lot of fear even amongst yen bears that japan could come in. They may have come in overnight either directly by their own currency or perhaps more likely by doing what is called a rate check, where the central bank sort of goes around and asks dealers what they are offering for the yen, which sort of gets them a little bit worried. You then get a lot of those people who have been betting on yen declines on the money on those bets saying, we dont want to risk losing those, if we do get a sudden turnaround. So lets take some money off the table. So weve had the latest warning shots whether they were real or virtual as it were in was going to be a long battle for the yen and how much of a role japans authority has played in helping restrain it from going much past the 150 level. Shery how many times can tsuzuki come out and talk about currency fluctuations . Whats it been, six days in a row now saying the exact same line about the swings . I wonder, aside from that, how much political heat will be on the boj to continue with the ultraloose policy, at what point does it become too painful for the domestic economy and for the japanese public, whose spending power keeps fading . That is a very difficult question to answer. It does seem to be that theres general consensus perhaps within the core doors of power and japan that 150 is a pretty significant level as part as long as the public is concerned. That is going to be too much for Japanese Society and the japanese economy in some ways to really cope with. You are then going to need to to defend that and it is how do you defend that . Will tightening that make the policy less loose . Bringing up the Foreign Exchange bazooka to stop the rot, probably what the japanese authorities are most hoping for is at least some signs of a little bit of weakness in u. S. Data that might rein the fed back in. Shery you know this is a problem when they have when i have japanese friends telling me they cant visit may because the yen is to cheap. Is too cheap. Garfield reynolds, with the latest on the japanese yen trajectory. Joining me now is the global strategist at wells fargo investment institute. Gary, great to have you with us. If you where the boj, policymakers in japan like the finance ministry, how do you best defend the yen while at the same time thinking the domestic economy is not Strong Enough, inflation, wages are not Strong Enough . You put your finger on it. You are looking at the latest purchasing numbers through september we have seen a loss of momentum in manufacturing and in services. Raising Interest Rates at this point creates a headwind for the economy at a time when the we getting the weakening yen destroys everything it supported, travel abroad becomes more expensive. I would look for jawboning for now. Unless the yen moves in a Sustainable Way in a somewhat disorderly market condition. It continues to move lower. I dont think the bank of japan has much choice. Until then the hope has to be with the u. S. That they see a less hawkish fed. Shery the japanese yen at 150 per dollar, how do japanese assets look to you . They look attractive, coming off the rally we saw through much of this year in the japanese stock market. That was reinforcing the view japan was an optimal place to invest. Some of that luster has been removed, as the economy has lost momentum. But certainly asset values in japan have to look attractive in a snapshot based on the Exchange Rate at the moment. Haidi haidi if you take a look at treasuries, haidi if you take a look at treasuries, these things take on a life of its own, but looking at the momentum gauge, oversold, longer data treasuries, are we sort of out of peak when it comes to yields yet for you . That is difficult to say, from a fundamental standpoint, and i focus on the fundamentals more than market terms. There is still additional upside there. We expect to see the decline in inflation we have seen so far this year level out at least for a time. Until the recession that we expect to materialize by early next year begins to bite into Economic Activity and with that inflation itself. With inflation leveling out at a rate above the 2 target rate and a possibility the fed will be coming in with at least one more rate hike, you have to be on guard in the bond market. We think we are close to a peak if not at a peak. There are risks that yield will move a been higher despite the momentum we have seen of late. Haidi when you talk about value and the kind of mismatch opportunities we could see, how do you feel about china at the moment . How do you view the risk premium scenario if you will . We are guarded on china. We expect to see china recover. We are seeing signs of that already. But even more aggressive economic and monetary stimulus from the peoples bank of china, we think that recovery will be a very sluggish one. Clearly china has gone through a difficult period. Valuations in many instances are not attractive. We are guarded on china and for that matter other emergingmarkets until we get to the other side of the Economic Cycle and emerge from a Global Economic slowdown by early next year. Shery we are getting breaking news out of japan. We are talking about the potential intervention from the finance minister. We are hearing from the currency chief, declining to confirm if japan in fact did conduct intervention. That they will respond as always to excessive fx moves. Declining to confirm they conducted an intervention. Going back on the japanyen story, what do you think . We have been debating whether or not it was an actual intervention because the moves happened in the new york trading session and they could actually just have been stop orders and unwinding of positioning once the yen hit 150 per dollar. I would liken it to something of a shot across the barrel. The real substantive action by the bank of japan and japanese authorities will be a change in yield curve management, but thats really down the road. For now at least i think you will hear more talk about intervention. You will see periods of intervention certainly to counter periods of unsettled conditions in the Foreign Exchange market. I think they are in a very difficult situation at the moment. I dont foresee the boj moving away fundamentally from that Monetary Policy. The ball is in the feds court. They are giving every indication of holding lineup rates. We see something break on inflation, hopefully not the economy itself. Haidi always great to chat with you, gary schlossberg. Of course we are just hearing from japan currency minister decline into confirm if intervention was conducted. Commenting they will always respond to excessive fx moves that have a negative impact on japanese firms. It will take into account whether these moves are deemed to be excessive but they are not confirming it. Various factors are being taken into account to judge the fx moves, saying the yen moves are not desirable, the considerations include various factors regarding how they impact firms as well as japanese households. They are not ruling out any options regarding the 4x situation there. Staying mum when it comes to whether an interventiontook place. We have seen the yen surging from that weakest level in a year amid the speculations that intervention did in fact occur. We are seeing the yen dropping now at this point as he has declined to really make a comment on whether or not that intervention took place. Still ahead, new zealands central bank, expected to keep cash rates on hold later today as a nation prepares ahead prepares to head to the polls in about 10 days time. There are reports that Kevin Mccarthy will not run again for House Speaker after losing the job in a revolt within his own party. We are also hearing now that the house is expected to hold that speaker vote october 11, according to gop members speaking. We will get that update, next. This is bloomberg. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Shery reports from washington say ousted House Speaker Kevin Mccarthy will not be recontesting the position. We are hearing from gop members of saying the house of representatives is expected to hold a vote for the speakership on october 11th. Mccarthy became the first ever to be removed from the job. Bloombergs vonnie quinns following the development. We are expected to hear from him shortly. He is expected to speak. He did not speak to cameras right after the vote. You can imagine, a very shocked former speaker now. It only took 118 sessions of congress. Its never happened before in the history of the u. S. That the speaker has been voted out. The speaker of the house is responsible for the house passing legislation, legislation supported by the majority party, the speakers party. For eight members to vote against him is quite a phenomenal thing. That said, if you remember, back in january, it took 15 rounds to vote him in in the first place. It was matt gaetz who brought the motion to vacate today who really was a sort of a summoning block in that particular episode. So while its not unexpected, at the same time it is pretty shocking that this happened. He got 10 months. According to matt gaetz, the final straw was the continuing resolution this weekend. We work a little bit surprised we were a little bit surprised suddenly the government was not going to be shutting down. Apparently that was the speakers work and something the right flank of the party or what some call the ultraconservatives, the dissidents in this case, were not having. It looks like now there is going to be a vote tomorrow in a week. Goldman sachs came out with a note after the vote and said it could take a few days before the votes actually start and finish. Back in january, that particular vote took five days. Between now and then, legislative activity really sort of grinds to a hope even though we have an interim speaker halt even though we have an interim speaker. Haidi is there a plan when it comes to his successor . There were definitely meetings tonight. We know that for sure. We might hear something from Kevin Mccarthy. He himself although technically he can run again straight, he has told his republican conference he is not going to do that again, he is not going to put them through it. Frankly, he doesnt have anything left to deal with, he gave it all away. Including happenings today. The fact that he was able to to be ousted because one person brought a motion to vacate. That was part of the deal that got him into the job in the first place back in january. He has nothing left to deal with. There are other names being floated around. Patrick mchenry is the interim speaker, hes also the chair of the Financial Services committee, he has said he is not interested but is also a true ally of mccarthy,s are now with mccarthy out of the way, would he be interested . We will have to see. The markets might at least like Patrick Mchenry to continue on because he is a known quantity but there are other names. Steve scalise is one of them. He is also battling cancer so it might be a little bit difficult. Tom emery from minnesota. The whip of the conference, number three in charge. Tom cole, mark green. Who have any of these people can get 218 votes . That is what started this in the first place. The party is so divided and fractured. The democratic minority leader, Hakeem Jeffries of new york, sent out a message saying it is now the responsibility of the gop members to end the House Republican civil war. Shery it is going to be incredibly disruptive. We saw those votes back in january. We are still contending with a potential Government Shutdown come november 17. Markets will be watching this very closely. Very closely. At the very least, it unleashes more chaos. We have 44 days until the government technically shuts down again so we will have to see what happens between now and then. Will there be any speaker, how long will it take to get the new speaker elected . A leadership vacuum is not good for markets or ratings agencies who are already watching the u. S. And its behavior as we know moodys is the only one who has not actually issued a formal downgrade but has issued a warning to the u. S. And Goldman Sachs among others, terry haynes from pangea as well saying that this really raises the odds of a shut down. Terry haynes says the odds are now at 80 . Goldman sachs says there is a higher odds to this happening. At least goldman has an optimistic view in the sense that it thinks more than two to three weeks of a shut down is unlikely because of things like failure to pay Service Members which would be included in the shut down. That just would not be palatable to republicans so they would have to find a way. Haidi bloombergs vonnie quinn with the latest in this turmoil within congress, being thrown into even further disarray with the ousting of Kevin Mccarthy, the first u. S. House speaker to be ousted. We are looking forward to to potentially getting some comments from him shortly. We will continue to watch that developing story and bring you the latest. More to come here on daybreak asia. This is bloomberg. Haidi take a look at currencies at the moment. We are firmly trained on the prospect on whether or not yen intervention occurred over the night session. We are hearing denial from officials ening to confirm if tervention had taken place. Again reiterating these comments about excessive fx moves having a negative impact on japanese firms and households and they are closely monitoring the situation, not ruling out any options whe comes to how they manage the situation. We di see the yen surging f the weakest level in a year amid thes talks of intervention. Eally are not getting much, when it comes to the fed if you are a japanese currency official, given we had u. S. Job openings toppingorecasts. Really potentially giving longevity to what we have seen, as the young rally. Kevin mccarthy ousted as House Speaker speaking now in washington. Kevin mccarthy my journey to this office with something people would not understand. I grew up in the town bakersfield, california the son of a firefighter and the grandson of immigrants, parents worked hard, youngest in my family. Did not have great wealth, got out of high school, community college, college. Flipped cars, went into business with buddies, away at college for the weekend, stopped in the Grocery Store and won the lottery. It was only 5,000 but it was much further than. I took my folks to dinner, put the majority into the stock market ended pretty well. The next, i took a break from school. I went to buy franchise but nobody would sell me one. I was only 20 years old. I learned then to never give up, so i open my in business, selling sandwiches. Three things i learned, first to work, last to leave, last to be paid. I wanted to finish my College Degree at that time. Nobody in my family had finished a fouryear degree, did well, and had money to pay my way through school so sold my business to go to school and open the local paper and it said summer intern in washington, d. C. With my local congressman. I did not know this meant, but i applied. He turned me down. You want to know the end of the story . I got elected to his seat i could not get an internship for and ended up being the 55th speaker of the house, one of the greatest honors. I loved every minute. One thing i would tell you is doing the right thing is not always easy, but it is necessary. I dont regret standing up for choosing governing over grievance. It is my responsibility. It is my job. I do not regret negotiating. Our government is designed to find compromise. I dont regret my efforts to build coalitions and find solutions. I was raised to solve problems, not create them. So i may have lost that vote today but as i walk out of this chamber, i feel fortunate to have served the american people. I leave the speakership with a sense of pride, accomplishment and yes, optimism. From the day i entered politics my mission has always been to make tomorrow better than today and i thought for what i believed in and i believe in this country of america. My goals have not changed. My ability to fight is just in a different form. You need to 118. Unfortunately 4 of our conference conjuring the democrats and dictate who can be the speaker. Kevin mccarthy after he was ousted as u. S. House speaker talking about how he got to the job after an arduous lifetime of work and of course, he has just been voted out of the speakership position after passing that lastminute temporary spending bill with democrats. Lets turn to another story in the u. S. , as we continue to see more labor action across the board. We are hearing that ford has made a new offer to 57,000 employees as the uaw strike heads towards its fourth week. Lets get more from su keenan. What do we know about this proposal . Su it is the seventh and in the view afforded the strongest and it offers record pay and benefits. The ceo says it is an offer costly for the company but ford believes itonit believes will allow for the future and a future it can invest in and grow. It bogincreases for permanent workers 20 and increases benefits lunches contributions to 401 k , vacation, and Income Insurance or what is called layoff protection, meaning no job losses dueectrc battery plans. The whole ev issue is a serious one for the union and includes a reference to new product commitments. Now the devil may be in the details. The Ceo Jim Farley criticized the uaw as the one to determine the way it runs battery plants not even built yet, but in the latest proposal forward appears to be making concessions or easing concerns in this regard and says it remains open to the possibility of working with the union on future ev battery plants but these are multibilliondollar investments that must operate at competitive and sustainable levels. You may recall that last week forward stop work on the michigan ev battery plant, which is a 3. 5 billion investment in forward said it made the offer late monday night and while it did not put a number on the wage offer, it says that this increase would actually put the uawrepresented jobs among the top 25 of all u. S. Jobs hourly and salaried in terms the amount of pay. Where do we go from here . Su well, obviously, the uaw will look at this and come back to them. We do know that uaw initially asked for a 40 pay increase. According to reporting by bloomberg, sources close to the negotiation say that union actually wants to emerge from the strike with at least a 30 pay raise, so there is a big gap between 20 and 30 . We also know that all three automakers have essentially said from the beginning that a 40 increase would effectively bankrupt their business, so raising that pay level is a series block for them in terms of the other issues. It is ca that ford, as said, from earlier proposals. You have 25,000 workers on strike 19 days in, a number of layoffs and furloughs by all three automakers and ford announced they are laying off an additional 300 workers and that brings it to well over 900 the amount they have laid off so far in their Party Concerns that even though the latest Sales Numbers for the Third Quarter show an increase in cars sold that there are concerns that the strike as it has continued for three weeks now could impact and will likely impact the supply chain issues for the automobile industry. Su keenan with the latest on the uaw negotiations and strikes. The blockbuster trial of the u. S. Versus Sam Bankmanfried is underway almost a year after the collapse of the creek exchange he cofounded, ftx. We have this report from new york. Sams trial began in court in manhattan on tuesday where he is facing seven charges related to fraud and Money Laundering. The trial proceedings began with jury selection in multiple pools of jurors were evaluated for any bias that they can decide his fate ultimately. San bankmanfried was present in the courtroom on tuesday and he had a shorter haircut. The signature mop of curly hair was gone and he was wearing a suit that appeared too big for him and he may have lost weight while in detention in the metropolitan detention center. The case centers around implosion of ftx, Alameda Research, the exchange and hedge fund founded and prosecutors say he orchestrated one of the greatest financial frauds in u. S. History and misused funds for risky investments come at, and political donations. Prosecutors will be aided by three key witnesses, all of whom were some of the closest associates of san when those went down, berry wong, and two others. It includes his exgirlfriend and the former ceo of Alameda Research you have plead not guilty to charges and are cooperating with prosecutors. As for the defense, they will likely argue Sam Bankmanfried did not intentionally commit fraud. This is something that Sam Bankmanfried himself has said repeatedly in the lead up to the trial and has pleaded not guilty to all seven charges and this trout will take some time to play out and it could last up to six weeks and if he is convicted up the seven charges at the end of it, some carrying large maximum sentences of 20 years for five counts, so it is very possible if he found guilty that some bankmanfried could spend the rest of his life in prison orbits instance or be sentenced to is at least. Crypto assets under pressure and broad off risk sentiment. Lets see what else is moving. What are we seeing in terms of risk assets today . Yeah, its all about the yen and it comes down to the focus this hour because we are tracking those moves and we hit that threshold of 150 overnight in the session and saw that sharp pullback in the japanese yen. What drove that . There are different theories being discussed whether it was japanese government intervention. 150 has been the line we have been tracking for the past couple of weeks, that we would see government officials stepping and once again to defend the local currency but then there is also as well options positioning, whether it was just simply the yen being sold with a strike price of 150, but what we are seeing this morning is more intrigued because we have heard from a source saying essentially a decline to comment on whether intervention was done would be unusual to have been happening during wall street hours are but essentially again saying excessive fx moods are undesirable and linking those moves to the impact of this is and household so that is what we are hearing so far from japans top currency strategist. The japanese yen trading flat as we get underway in the early hours of trading this morning. Again it tells us perhaps that the 150 run again could be possible given that traders are taking comments in stride and it is still that story of the bond moves we are seeing. The less change on and take a look at what rethink this morning. Yields continue to move higher across those. Watch what happens with the nikkei futures are th nkkei when it comes online the next hour, gunning for a big drop of one point 5 but continuing to track that weakness when it comes through uring the wall street session. Rbn said decision due today and the expectations is that we will see a hawkish hold. Shery coming up next, economist expecting the rbnz to reach a terminal rate. We are joint for a preview of this decision. This is bloomberg. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanngaes. All right. As we get into the rbnz decision day, expectations ae or a hawkish hold as we wat elevated inflation pressure coming through the Energy Sector largely, but this ithe picture across tding in new zealand assets on decision day. Kiwi stocks down 1 . We are seeing the kiwi dollars seeing a little upside trading aga the u. S. Dollar and trading 10 days out from election as we, adding to expectations we will continue to see reallyrates stay on hold from the rbnz. Watching with bond yields across the region after another big session when it comes to treasury yields spiking as we surgingll as the bond routelds reaching year highs particular across the longer end of bond traders targeting 10y gilts above 5 within a matter of wee lets bring out a guessing upside risk for the rbnz and joining us out of auckland is the senior economist at kiwi bank. Its not just the rbnz contending with these emerging inflation rate pressures are right . How big of a component would they be looking at, oil, as well as other uncertainties emerging across the cost spectrum . Yeah. That, acceleration and Global Oil Prices is a concern given how high that inflation is and it comes at a bad time but they typically look through these transitory supply chain supply issue kind of cause pressures. It is when they start to influence broader pricing and influencing expectation that they take it into concern but this, acceleration and Global Oil Prices will see that banks say on high alert in case it feeds through and becomes more entrenched in expectations. Shery shery the resilience of the broader economy was pretty surprising with that revision of the gdp number. Take a look at this chart. Haidi haidi its not just that one reading but we have two consecutive contractions for gdp starting to bounce back and home sales seeing a Pretty Healthy rebound of over 9 as well, so which parts of the economy are you seeing concern or are you seeing broadbased resumes that could potentially mean the rbnz has more room. May jo i think that picture of gdp coming out on the higher side of expectations is a factor that strong population growth we have seen over the past couple of months. We had this massive surge with the highest levels we have seen so over length population growth over gdp Growth Numbers shows a sluggish underlying economy. Yes, we have seen upside surprises to gdp in the Housing Market is bouncing back earlier when we were expecting, and migration continues to prove strong, but the reserve bank has two way that against other indicators that shig the economy is slowing down and we have business and onsumer confidence soft and retail spending is taking a hit with squeezed hoehold incomes and there are clear signs of labor market is already loosening as we speak, and that should really pool, ease those cause pressures emanating from the labor market and if we look overseas, the Global Economy is uncertain, the outlook, especially given the fragility of the chinese economy, so on balance i dont think the reserve bank has any reason to come out more hawkish than they did in in august or come out and change their tune with a more dovish tone today so we will get we will get a similar reserve bank to what we saw in august and reaffirming to keep rates restricted to keep inflation under control. Shery given the challenges and despite the headline economic numbers that look rosy, when are we expecting the rbnz to change its tune . Mary jo yeah, we think the reserve bank will be in a position early next year to begin easing Monetary Policy and return it to more neutral levels and think this sort of rly next year we will be in a position where the economy is much softer than it is to date and the labor market will be looser with unemployment rising and inflation i think well be headed towards a 2 target. It may not be at that target specifically but within the target band, and that gives reserve bank the petition potentially the first mover and across the globe to begin easing Monetary Policy and get it down from the levels it is is today and we think the reserve bank is at the end of their hiking cycle but it is about keeping rates restricted now to get inflation under control and to rein in those expectations. Shery how important is consumption for the new zealand economy given the weaknesses you are seeing among consumer confidence, not to mention the labor market starting to ease . Mary jo yeah, it is a very big factor in consumption is a key driver of the new zealand economy and one reason we had a strong recovery coming out of the lock them in 2020, so we are already seeing signs Consumer Spending is slowing down, particular when we talk about nondiscretionary items and households pulling back on spending that is flowing through businesses and their concerns. Labor was the primary constraint but now it is sales and the question of whether there is demand out there, and increasingly so it looks like demand is weakening, which is off by design. The reserve bank needs to get the men softer than it is today date to get inflation under control. That is their target. That is their goal. Haidi with just 10 days from the election, what do you see as policy priorities and your expectations . Mary jo i think we always see this period of uncertainty right before an election, businesses tend to sit on their hands and households tend to go back and you have this period of uncertainty and just sitting on their hands, but hesitant to do no expand business and that is what we are seeing in todays surveys of business confidence. [keyboard typing] it is recovering but soft and shows how uncertain the environment is today and i think in that environment further rate hikes will not help anyone right now and this time of uncertainty. [keyboard typing] haidi good to have you with us. A preview of that rbnz decision. Still ahead, japans famous bullet train, riding it will get more expensive for tourists. We are looking behind price hikes of up to 77 . This is bloomberg. Haidi the rally and treasury yields to fresh multiyear highs taking the dollar to the highest evel in 10 months. On the other cited the trade, weakness for other currencies, even the japanese yen despite that it strengthen so much on intervention chatter. It is down against the u. S. Dollarowards the 149 level. Lets talk about more what is happening in japan, because prices are being raised for the japanese train for the first time in four decades. Our reporter has the details. So how much does this have to do with what i mention how cheap the japanese yen and tourists are coming in and we been talking about this inflationary pressures in the country as well. Good morning. They have just hiked the price of the great passes used by tourist and not residents, the first right hey kai rate hike and 40 years. It is not believed that it will prevent people from using the buses given how cheap it has been so although on the surface it seems like a price hike but in fact it is only for tourists coming to japan. If you think about how much prices are. It has increased in the last 40 years but they remain from increasing these prices and it is believed that the bullet trains will continue to have loyal fans because of the sheer convenience i have an they can be ported from anywhere in japan. Haidi uh, how long do expect it to last . Is this an indication that the demand we are seeing from postpandemic impact or is a bit more structural and is expected to be longsting . Supriya uh, sorry, could you please repeat your question . Haidi i am wondering how much longevity pay expect to see from this level of demand . Supriya yes. So, i mean, japan has come at the group has not increased the price for 40 years but the Railway Company and some experts believe that demand will state robust, because although some airlines might be trying to hike some tours who would not board the trades in would look at that in japan but it seems that forward this year fact that the bullet trains are so convenient for short to midterm journeys that tourists keep using them and demand will remain robust, because the price hike is not really going to affect the prices. [indiscernible] [keyboard typing] haidi that is our aviation reporter. Coming up in the next hour, the head of economic and strategy for a bank talking about the e yen and the boj problem with the fed solution. This is bloomberg. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. The power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Haidi this is daybreak asia were counting down to a counting down to asias market open. After a day of multiday high yields has pressured equities and sent shock waves through the currency space. Haidi did they or didnt they . Will they or wont they . That is a question when it comes to the yen and certainly japanese currency officials are saying saying mum when it comes to whether intervention did actually happen in the overnight session but the yen at 150 is front on center with the rising yields. Shery thats right. The japans top currency official declining to comment on whether there have been any sort of formal intervention but thats been mooted as well as possibly the chance that it was down to options positioning that shot move back from the 150 level overnight. But the open here for japan and also south kre pack back arun from an extended period and whats happening with that yen at the open here. Because you can see were holding fairly steady. We did as well as we heard from candor in about the last hour saying ta excessive f. X. Moves a having a negative impact on firms and households. Thats all eye say abou that. We have the details more. But also watching in the session really is still that move higher that were seeing in treasury yields. Theres also flowing out you can see that the 10year yield for japans bonds pushing above again or higher again. Japanese stocks one to watch. Weve got the nikkei 225 opening below the 31,000 mark. That does tell us perhaps that we could be on the verge of correction territory because as david points out on the live bloc were now around 9 prx below the recent tops that puts a technical correction on the cards for us. Thats the open there for japan as we come online. Lets switch now and take a loo at the open for koeas we get trading under way. And weve been on an extended break over the last couple of days and the start we are seeing a bit of a catch down in trm of trading here. Because weve got the kospi off 1. 5 . Very sensitive to what goes o with u. S. Stocks. And we have seen the s p 500 likewise trending lower in this time. Tech stocks also taking a of a hit. The korean won it is fairly eady as we get under way. But we will be of course monitoring for any sort of reaction. And helping this is the industrial output numbers a came through in the last hour. Bcause these were actually a lot better than had been expected. We did see a decline on the year. Year on year basis of half a percent. But still it was much better than the expected 6. 2 contraction and on a monthly basis, we actually saw te fastest month on month growth since020. So global bellwether a more positive signal on the outlook there. Finally a. Quick check on whats happening in australia and the energy space in particular because we got brent crude jus opening up and we are continuing to track it around that 90, 91 level. W. T. I. Holding fairly tedy but below the 90 mark. Energy stocks one of the big movers in the price session and we are seeing the a. S. X. 200 one hour into the days off for a Third Straight day, shery. Shery lets delve into whats happening with the japanese yen because we heard from top currency official declining to confirm if the government intervened after yens stunning gain. Afteriefly touching that 150 level. Lets discuss with our senior japan economist did they or didnt they . Its really hard to digest what happened to the yen. Probably while 50 is such an easy threshold probably, some investors after watching it touch 150 and to my eye, probably the bank of japan as operator for the ministry checked the rates of the yen and didnt actually intervene. This is what they what they often do before the intervention. Its it recognizes a higher warning or a precursor of actually intervention. Anyway, im not sure what happened. But the thing is 150 is such a threshold that probably the authority or traders are watching it. Haidi so how long lasting will it be . Where do we go from here . So i think as i mentioned like 150 is such a nicely rounded number. So probably its to have it there. And obviously the bank of japan is disseminating bond purchases since last is disseminating bond purchases since last week. So there will be a challenge that tries further at 150. But obviously i think the move will act probably with the intervention to restrain the level of the yendollar rate. Somewhere in between 150 to 155. Because its getting political. The weaker yen is pushing the living costs and voters are frustrated and recent polls show that the prime ministers are not doing well in terms of the price policies. So, therefore, i think the re restraining the weaker yen is what the government and the ministry of finance is very, very willing to do right now. Although ostensibly, they say the volatility matters. But clearly the level matters for them. Haidi political not just in japan but when it comes to the trading partner situation as well, right . Were hearing from the bank of korea saying theyre closely monitoring markets and capital flows and will take market stabilization steps if needed with volatility that could increase when it comes to f. X. And financial markets. Taro kimura, great to have you with us. Bloombergs senior japan economist. Lets get some more on the yen. Our next gift says the weak yen is a b. O. J. Problem with a fed solution. Joining us is Vishnu Varathan who is head of economics and strategy at mizuho bank. Great to have you always. So if the antidote is a less hawkish fed or a more hawkish b. O. J. Which is more likely at this point . Vishnu well, i think we can be very typical about this and say lets reach a compromise. Lets get much less dovish b. O. J. Because i dont think the b. O. J. Can turn outright hawkish here. But at the same time, the b. O. J. Also perhaps correctly suspects that the fed is on the cusp of relinquishing quite a bit of its hawkish positioning. And a lot of the hawkish hold has been far more effective than the fretting that the Central Banks do after pulling the trigger. So if if they are right, and this is our suspicion as well, where the fed loses some of its hawkish tone, then that in itself could lend some support to the yen without causing too much fiscal pain which is what will happen if b. O. J. Turns hawkish a bit too quickly. Haidi where is the peak . Were looking at where the peak is when it comes to the Dollar Strength and when it comes to yen weakness but also when it comes to the relentless surging yields, right . Do you have expectations that the fed could get more hawkish from here given the latest data seems to potentially give them a bit more runway to . Vishnu i mean, thats a really good point. Im getting slightly more nervous sitting a little closer to the edge of my seat every day given that our view was that the last hike is already done. And that from here on, its going to be a hawkish hold. But clearly the jobs data have, you know, jolted a little bit. As has some of the employment subcomponents of i. S. M. Manufacturing. Some of this hawkish could be reattend but our session suspicion is by the time we get to the second half of q4 and after the november fomc, fed speak may start to allude less to higher to go and really focus on how long to stay here. And i think that will be the start of the turn. We are of course expecting more cuts in 2024 than is currently guided by the dot plot which would be 50 basis points if they were to hike once more and otherwise 25 point cut next year. But we think it could be in the ballpark of 100 to 150 basis point cuts by the second hatch of next year. If thats correct, thats a good reason for the b. O. J. Not to flinch too much yet. Primarily because that will be consistent with dollaryen, the 130, 135 levels which is quite a bit of appreciation. We may under Current Conditions forget. But the b. O. J. Doesnt want volatility either way. So too much appreciation especially if the fed makes a sharp turn around the corner, its also not good for the yen. Shery what about the rest of asia . Especially when it comes to emerging market asia. Were talking about a peak fed in the second half of the Fourth Quarter as youre talking about. How much pain would that imply for e. M. Asia . Vishnu yeah. I think this this time around, it looks like the could come through with a little bit more leg on two counts. One, i think we get a more prolonged Dollar Strength that starts to play out in terms of higher indebtedness. And those as much asking costs will perhaps come home to a lot of a little later. So we probably get, you know, more pain in the nea term. And the pain resuing gain as we get to the middle of next year where we could see more global downturn and head wins impacting exporters and the region especially if some of its services pick up postponed starts to fade and china plays a huge part here. And i think we can think of it in two ways. One is we probably havent seen peak or the we havent seen the peak of Downside Risks for asian currencies yet. I think its premature to call that a peak fed. The other point around it is where e. M. Asia normalizes may have a lot to do with the reversion or the notions of reversions we have for the rhythmi. And where it will settle after the weakness in coming months. So those two factors such as we cannot write off Downside Risks and any dollar pullback is just going to be technical positioning. Its not going to be a durable one way upset side upside bet for e. M. Asia currencies. Shery when do you expect chinas economy to rebound next year given all the stimulus measures that weve seen so far and how indicative will this golden week holiday be for that trajectory . Vishnu lets start with the golden week. The golden week seems to be ending with a bit of a tarnish given high yields and the strong dollar and another shake to confidence. I think the global narrative remains one of u. S. Exceptionalism. Whereas conditions elsewhere at best are starting to bottom for manufacturing. And its less clear on a more economywide basis. So the way we see china playing out is fairly interesting. Because to some extent what you alluded to with respect to korea. That could be the early signs of a bottoming in the prolonged downside cycle that we saw in manufacturing. So that should aid chinas recovery. But how the Services Sector plays out is a far bigger wild card here. We think that some of the resumption of onshore con sums is going to be at best modest. As for the Housing Market, we are not convinced the recovery comes true just due to the drips and drabs of stimulus push that weve seen. But we havent seen confidence being restored. So our suspicion a fragmented Services Sector and some recovery in the Housing Market but confidence not restored to prepandemic levels and probably see chinas growth continuing to struggle, to get traction to whats 5 , 4. 5 seems to be a fairly reasonable case for next year in terms of chinas growth and the recovery is going to be a patchy one. Manufacturing probably has got some pickup. Services might remain subdued instead. Haidi how problematic energy reflation thanks to opec plus b for global policymakers . Vishnu i think, you know, this is going to come full circle. Global policymakers, its always been fashionable to write off energy and food as being volatile. However, i think under the Current Conditions where we have come from, where Inflation Expectations are at risk of being unmoored, the problem wity cannot write off energy inflation, especially given its got a very long region knockon effects. So global policymakers at the very least even as they see pain from current rates might have a higher bar to start the easing cycle. And thats going to get very inconvenient if you see further signs of a slowdown and a downturn. Some of the you know, the effects that weve seen coming through the global p. M. I. s and a widening of slowdown in activity and if credit cycle tightens further this is going to pose a real dilemma. And nevertheless, i think what you will cause it will cause policymakers to hold back on cuts until its too late. At which point, you know, it will come a full circle. Oil prices are also probably collapse. But by then, all reacting to demand and not actually restoring it. Shery Vishnu Varathan, head of economics and strategy at mizuho bank. And were just a few minutes into the trading session in japan, australia and south korea is also back. Lets turn to belle for whats moving. Belle . Annabelle thanks, shery. Were just 15 minutes into the session for tokyo and also seoul back from its extended break. But so far, at the outset here, we are seeing consumer stocks among the big laggards at least in the korean session. It is really a bit of a catch down trade that were continuing to monitor here given as i said rea has been shot for a couple of holidays and that is real just catching up to what happened in the wall street session in particular. But japan likewiseas been under pressure during this period. Green consumer stocks perhaps doing a little bit better. But we are continuing to monitor any sort of tourism flows into the country given it has been one of the most popular destinations for inbound tourism. Lets change on and take a look at what else were watching in the session. Because we are likewise continuing to monitor how korea is trading in particular. If you take a look at what were seeing in terms of the Energy Industrial names, those are the ones that are leading so far in the session, haidi. Haidi coming up, we have an exclusive conversation with malaysian economic minister on how the anwar government is planning to narrow the fiscal deficit whn it hands down the annual budget next week. But first, Kevin Mccarthy confirming he will not run again for House Speaker after losing the job in an historic revolt from within his own party. We get an update next. This is bloomberg. The first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. I believe i can continue to fight maybe in a different manner. I will not run for speaker again. Ill have the conference pick somebody else. Haidi Kevin Mccarthy after becoming first u. S. House speaker to be removed from the office. Republicans now say they expect the vote next week for new House Speaker. Bloombergs vonnie quinn is following the development. Vonnie, a vote but who are the candidates at this point . Vonnie thats just it, shery. This whole thing is unprecedented literally. Weve had 118 sessions of cock in of congress in the united states. And it is unexpected. There are people that could potentially be voted speaker next. We will get into that in a second. But just on what the former speaker now said, he also said that he believes he can contribute but maybe in other ways and that he hasnt thought about resigning from congress. Hes going to look at remaining in congress. So clearly, if you remember back to when he got elected as speaker in january, it took 15 rounds of voting, it took five days. And it took an awful lot of wheeling and dealing between all the various members of the right flank of his own party and more moderate flank of his own party and democrats in order to get him that job in the first place. And now hes lost that job because of some of that wheeling and dealing. Specifically matt gaetz who brought the motion to vacate today and thats only possible. It was only possible today because mccarthy gave away that power in order to become speaker. So we were expecting at some point that his speakership would be challenged. And indeed it happened just extremely fast. So you asked about who might replace him. Theres a lot of people that potentially could. Theres steve scalise, for example, who people have said would be a phenomenal speaker, including matt gaetz who some would call ultra conservative. Hes battling cancer that might be a little bit difficult. There is the number three of the party, the whip tom emmer of minnesota. He could get voted speaker. Tom cole, mark green, theres also trump ally jim jordan. There are plenty of people. But can they get 218 votes . Thats the question that is going to be the question tossed around for the next few days. Democrats right now are in absolutely no mood to help republicans. And there are several things on the table that would be sticking points. For example, the billions of dollars in aid to ukraine that was not agreed upon in this weekends continuing resolution. Thats up for grabs. The far right flank of the Republican Congress doesnt want billions to go to ukraine without more of a debate. And other issues are sort of red flags for democrats. For example, immigration, help for the poor, and so on. So theres very little that can be done. This is really all sort of infighting at the moment. And what each person will have to offer. Just as a side note, the person who is interim speaker a trump or rather who is a mccarthy ally, he has said that he is not interested in running for the speaker post. Thats patrick mckenry. Hes chair of the Financial Services committee. The markets know him. If matt if mccarthy is out of the way now, would he be interested . Its an open question. He is also very you know, very small possibility that he would also be a possible candidate. Shery and you mentioned lack of certainty for markets, this comes as we look at that november 17 new deadline for the Government Shutdown. And they need to get it done pretty quickly. Vonnie interesting, haidi, because what the weekend is wheeling and dealing brought mccarthy was his own ouster and very short as you say continuing resolution. Were going to have the whole question come up again and with a little bit less sort of goodwill on the parts of markets and ratings agencies. We already had a note from Goldman Sachs saying the next speaker is going to have a worse time of it because they will be very worried about the same things that mccarthy was worried about, for example. That there wont be any ability for them to actually go further than mccarthy did. Theyll have to do it in a very open manner. And thats what markets are going to be worried about and watching the ratings agencies, too. Haidi vonnie quinn with the latest on that ouster of Kevin Mccarthy as u. S. House speaker and you can actually get more on that story in todays edition of day break. Bloomberg subscribers go to this is bloomberg. sfx stone wheel crafting the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . Haidi new Zealand Central Bank is expected to keep Interest Rates on hold just 10 days out before a general election. For more bloombergs Tracy Withers joins us from washington. So a hawkish hold is expected later today. Its less than an hour until the decision is announced. The central bank most likely to signal that it wont be raising rates anytime soon. But it could hint that put pressure on inflation and therefore it wont rule out the chance of a rate rise. Haidi so does that mean given that were seeing, you know, these escalating pressures coming from energy inflation, that another hike is possible before the end of the yar . Theres a 5050 chance being priced in by investors in the swaps market. Theres a small minority of economists who say it is possible a quarter point hike in the november decision. On the other hand, quite extensive rate increases in the last period of a lot of households and Consumer Spending has started to be under pressure over the next 12 months. So it is the markets are pricing it by far its unclear exactly what the mizuho bank will do next. Shery what are we seeing in terms of the Housing Market and the labor market as well . House prices have started to lift depending on which gauge you follow. Certainly since the middle of the year, house prices have just slowly started to increase. But theyre not expected to accelerate away. Inflation is a big component. Immigration is iing up. Thats probbl going to add a little bit of pressure on the Housing Market. But on the other hand, the immigration inflows have eased a bit of tightness in the labor market. And Wage Inflation is probably past its peak. Well know more about that. And thats sort of toward the end of october into early november which will all come as i say before the Bank Decision later in november. Haidi bloombergs Tracy Withers there in wellington, of course, rather than washington. Taking a look at how futures in europe are opening up given that we have the return of volatility across the Asian Session and really trading in this part of the world. Firmly in the red. So not a great lead when it comes to what were seeing going into the start of trading. Futures, stoxx 50 futures really flat at the moment. German dax futures are looking a little bit softer. About. 1 . There is soe concern that europe parity bets become the next pain trade that we see across f. X. That steady retreat when it comes to the euro since july has seen some analysis really to evenlower forecasts through to the end o e year. This is bloomberg. Shery breaking news out of south korea we are getting the p. M. I. Manufacturing numbers coming in at 49. 9 for the month of september. That is really just a fraction below that 50 threshold which would actually show expansion. So were very close to that level. Also, a number that has improved from the previous month after being in contraction territory since july f last year. Perhaps not surprising of the september number is coming in stronger. Tt49. 9. Because we did actually see that slump in south decree korean exports easing furthein september. After exports began to sink last year given the semiconductor slump as well. So haidi, a bit more positive on the p. M. I. Manufaturing number for korea at 49. 9. Haidi we are also seeing a bit more positivity when it comes to the japan p. M. I. Numbers that we just got. The composite number, the final at 52. 1. For septembe coming in a little bit higher than the 51. 8 n he previous reading. The Services Component also inching higher to 53. 8rom 53. 3. So boteing market improvement, really that the exton of that expansionary space, and potentially doesnt have a massive impact wh t comes to expectatioo th bank of japan. Thisming as we continue to h the yen. It jumped overnight after weakeni below 150 to the theres a lot of market speculation about intervention that may o may not have happened. We are seeing policymakers sort of refusing to confirm either way. Were also seeing these numbers out of singapore as well. Also seeing an improvement that s p global sing more p. M. I. For september jumping to 54. 2 from 53. 6. That is the highest reading since may 2023. And marks the seventh consecutive month of expansion, in paricular, output seeing a ninth consecutive month of expansion to 56. 4 from. 4 in august. Were also seeing new orders rising via versus the prio month. So when it comes to singapore, of course, really wached when it comes to regional and global trailed demand as something of a bellwether. That is a little bit of good news for these markts belle, that are pretty on edge at the moment. Annabelle yeah. Thats right. Its interesting, haidi, because we have seen some better data sets coming through. But the direction today is just really still being led by what weve seen in treasuries. And still this repricing going on and this changing expectations around where the fed and other Central Banks go from here. But elevated rates, that is certainly the centerpiece for us toay. So in terms of what were seeing, well, it is this ve higher across the asian debt space for yields and tracking the aussie 30 governmentyear the aussie 30year yield is very close to that 5 mark. The kiwi, positiveyear yield 30year yield up six points and ahead of the r. s decision and keep rates steady and a chance for further rate hikes in the months ahead. What were also seeing in the session it is still that session of Dollar Strength thats coming through. We got korean markets bark online after a fourday holiday. So we do see some bgger moves coming through for the korea won. It did openairly steady but in the time since its really started to weaken against the greenback here. Were around an 11month low at this point. The japanese yen is what you mentioned just holding away from that 150 level. At earlier we did hear from candor as you said, not to a declineo not declining to say whether the government intervenes to prop up the currency. In terms of direction for stocks in the session, we are really seeing the bigger moves coming through for the kp and that catch down to whats been happening, the bearish sentiment the last few days but off nearly 2 at this stage. So shery not a great outlok across the equities landscape today. Shery lets focus in on one company in japan, softbank world, begins shortly. And were just under 30 minutes away from the keynote address. The companys flagging a key topic this year, to discuss what to watch with kirk boodry, analyst and astris advisory japan. Kirk, good to have you with us. Walk us through the backdrop to this event in terms of the strength with which softbank, masashoy song after. Kirk and we dont expect to see too many sort of marketmoving announcements. I mean, a lot of this is geared toward corporate investor, corporate clients as opposed to the markets. Generative a. I. Will be a huge thing. Arm was successful for them. Not as successful as they might have liked. But that asset was certainly worth more than it was a year ago. And theyre going to push on about how it can be valued higher and the opportunities that they have to incorporate generative a. I. Investments going forward. Shery we heard reports that softbank could be potentially funding more than 1 billion in a venture with open a. I. What would you make of such a deal and what would that really reflect in terms of more investments to come from the company . Kirk i mean, this is such classic softbank in a way. I mean, because on the positive side, this is the kind of opportunity that you wouldnt expect any other private Equity Investor to have. To not just invest with open a. I. , which is sort of the and involving generative a. I. Excitement but to be working down in the weeds, i suppose, on building new devices for consumers based on that. And thats the policy. Thats the vision to brings him to that point. And the other way that its classic softbank is that theyre investing at a much higher valuation than might otherwise have been. So, i mean, you look at open a. I. Is worth 90 billion as is the rumored level that they want to raise money at. And there is investments being done at 29 billion back in february. So thats the thing with softbank. And you always have to take the good with the bad. Haidi kirk, how important is it for masa right now to seize the positive momentum both from arm, both from the positive input of a. I. Given what a tough time softbank and the vision fund has had in the last few years . Kirk yeah. I mean, thats a good point. Because we are in a transition. The vision fund has come down a lot. And we think that when you look at the public portfolio, thats pretty much stabilized. And that the private valuations theyre using are also firmed up at this level. You know, so going forward, you want to see that the vision fund starts to perform better. You also want to see softbank start to invest again. Thats their whole purpose now as an investment company, put money to work and they have that money. You know, the risk factor is that theyre too aggressive or that they are trying to play catchup in genre active a. I. Generative a. I. And investing over the odds. But in general what we do want to see is they start to step up their Investment Program supported in part by a vision fund ats starting to recover. Haidi we know that masa will continue to talk up a. I. And as you say, there is that risk that investors will be will become impatient and are investors becoming more sophisticated and therefore more demanding in terms of what companies and c. E. O. s and founders have to say about a. I. And how it can actually be in the near term something that can translate into actual value . Kirk yeah. I mean, its when we look at softbank, we can certainly certainly see that investors are risk off than they have been. We can measure it by looking at the discount of the share price to public value. And thats about 42 . You know, so investors are building a lot of risk into where theyre pricing softbank. And when you go out and you sort of look at a broader view, i mean, its a challenge if youre not even for arm is a challenge, and explaining how the sort of generative a. I. Is going to boost valuations quickly. Over the long term, i dont think anyone has any sort of doubts about the potential. And how that can both boost revenue and reduce costs. But it is sort of volatile environment to get to that point. Shery talking about a volatile environment, what are some of the implications of the feds higher for longer narrative if yields continue to rally . And we have a japanese yen thats at historic lows as well. Kirk i mean, the case of softbank, its you know, and of course theres an impact and theyre a highly leveraged company. And they have a lot of debt, a lot of that is impacted because a lot of that debt is in dollars as well. And so thats not as flattering to the Balance Sheet as it could be. You know, but fortunately, you know, much of that is fixed. So theyre able to sort of hold the line, i suppose, on that, while the payments that theyre making, they can also mash that debt with dollar assets match that debt with dollar assets. Ideally what we want to see is the Interest Rate environment stablizes. Like everyone else, i suppose, in the market. And we would like to see more deleveraging. Haidi kirk, great to have you with us. Kirk boodry, analyst at astris advisory japan. You can also turn to your bloomberg for more on this story. Tliv and get that from our team of expert editors. The investigation into singapores 2 billion Money Laundering scandal. And wvalley office and immigration rules in the spotlight. We have the details next. This is bloomberg. That first time you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Haidi asia stocks under pressure. The big move in the yen concerns or really speculation over currency intervention. Really not confirmed either way by japans topcurency official but we are watchinis very closely. The nikkei225 having one of the worst opens that weve seen in memory. Down by almost 2 straight off the bat. Wre seeing that weakness of about 1. 9 at the moment. Really has been one of the worst startsto a session all year. We are seeing the kospi really down by just about 2 at th point. Lessvatility were seeing in the korean markets. But really across the board here n asia, we are seeing that surge in vol as well. In australia muted dosde comparatively to the rest of the regional to the extent of 1 lower. And over in new zealand, r. B. I. s decision rbzn expecting the hawkish hold and expecting communicn this recent bout of energy reflation that weve seen. 1. 1 lower for kiwi stocks and potenty given that the economy has bee hlding up relatively well. The markets will be lokig for any signaling that there is further room for the rbzn to put through more tightening in this cycle. Were also watching yields and how high is the peak going to be given that were seeing just high of that 5 threshold when it comes to the aussie 30year at the moment . Turning to singapore, where the investigation into one of the city states largest Money Laundering cases is widening further. With the value of assets seized, now topping 2 billion authorities are also investigating the role that some Family Officers might have played in the scandal. Bloombergs avril hong from singapore. So avril, whats happening now in terms. Latest on this now sounds like expanding investigation . It is expanding. And the value. Assets that have been seized or frozen in this scandal has now risen to more than 2. 8 billion singapore dollars. This is almost triple the original 1 billion that was first disdisclosed in mid august. 10 foreigners were arrested. All of them originating from china and theyve since been charged with laundering proceeds from scams, from online gambling, and given the size of this investigation as well as questions as to whether this is putting the International Standing of singapore in question, the topic has really gotten the attention in parliament this week. Its topping the agenda. Lawmakers are under pressure to tighten some of the scrutiny, the rules, and also to crack down on crossborder organized crime. Were also hearing how they are investigating the role that Single Family officers may have played in this scandal as one or more of the accused may have had links to some of these Family Offices that were awarded tax incentives. Shery so how are authorities planning to close those potential loopholes that criminals can exploit . Yes. So they are modeling potentially further rules on the Family Office space. They are also reviewing the processes in which sitch Family Offices are being awarded tax incentives. And were also hearing how they are modeling tighter immigration rules to curb illicit inflows. And this could involve tighter rules related to the immigration verification checks. Now, not just Family Offices that have been in the spotlight amid this scandal. It is also the major banks operating in singapore as well as rerty agents. And weve also seen how banks have already been taking some steps to clo the loopholes potentially. Theyve been increasing the scrutiny on some of their chinese bond clients with overseas passports. And as i say, all this amid the questions that are swirling as to how the Financial Sector was worth two trillion and driving the city state economy and as well as the property sector whether theyre doing enough to curb these dubious transactions in singapore. Shery avril hong joining us from the lion city. Malaysia, the economy minister says its counting on a plan to cut broader subsidies next year to help narrow the fiscal deficit. Rafizi ramli told us exclusively what to expect as the anwar government prepares to hand down its annual budget on october 13. Rafizi for this coming next week, i think the market will be excited because finally they will see a concrete move away from the blanket subdisthat has existed in malaysia for subsidies that has existed in malaysia for many decades. And subsidies system, that is key to the Fiscal Consolidation aspect of this administration. Now is the government looking to perhaps minimize the impact of inflation . And do you expect inflation to go up because of this . Rafizi there will be some form of catch transfers obviously to families. And thats why the centralized household base is very important for us to be able to design the cash transfers to go into the right families in the manner that will mitigate the effect of inflation. Because obviously the move will have some inflationary impact. The discussion so far is to make sure that at least 80 of the households will benefit when one way or another from different kinds of cash transfers. When we move to the subsidies. Im curious what new taxes are about to hit this economy . Can you give us a little bit more details . Or can you rule out new forms of taxes . Rafizi we are not going to introduce taxes just for the sake of higher income for the country and for the government without rationalizing and consolidating our expenditure. Should we be open minded about a vanity tax, targeted toward the rich . And im wondering whats on the table and what isnt on the table . Rafizi i feel that at least for 2024, i feel like the successful implementation of subsidy retargeting programs will put us in a much stronger position fiscally and it will allow us some breathing space so that we dont jump on the new taxes bandwagon too callously. Do we take it then your target 5 , the budget deficit, 5 to g. D. P. , does that come in . And how much rafizi yes. And how much does it come in . Rafizi yes. We should be able to meet the 5 budget deficit target that was sent for 2023. And the plan is to bring it down further to 4. 6 or lower and with subsidy rationalization going full swing in 2024, hopefully then we will be able to consolidate even further in 2025 to meet our 3. 5 target. Shery malaysian economy minister rafizi ramli with bloomberg. Next asian equities usually performing well the last three months of the year. That may not be e case this time around. Time around. Th blmberg. Fabulous surroundings. But everyones looking at their phones for Financial Insights from merrill. Is he hailing a ride to the concert hall . No. Hes making sure his portfolio and retirement plans work in harmony. They want to adopt a child and build a new home. So theyre talking numbers with their merrill adviser. Shes not researching her next role. Shes learning how to handle market ups and downs without the drama. Personalized advice so impressive your money never stops working for you with merrill. A bank of america company. Shery statistics suggest asian equities performed best the last three months of the year but a Bloomberg News survey has found that history may not repeat itself this time around. For more lets bring in bloomberg senior asia equities reporter. There are so many risks right now facing global traders. Whats particularly the case across asia . Thats right. A confluence of factors that are staring at the market which might bring markets down globally remains the same. The up to one being federal reserves resolve to keep Monetary Policy tighter for longer. Thats, you know, is going to impact equities across the board. And asia is no different. Second is the rise in oil prices. I think oil has rallied more than 20 from its june lows. You know, keeping inflation and Inflation Expectations higher. So again feeding into the case f igher dollar, higher for longer rates. An tats going to suppress multiples and possibly engs. But asia, china is the worlds second largest economy and china, the slowdown is going to impact the world. Asia will see an outsized impact. So if you look at the composition of msci world or global index, an equal weight of china. When you look at asia, and china has an outsized weight. So whatever happens in china is going to have have a big impact on asia. So china, slowdown is where asia differs from the rest of the world in terms orsks that is facing the impact that its going to have. And some of the data has started to have an effect in the market. And we are at the cusp of entering the socalled technical correction. And showing that there are possibly more declines. Haidi very quickly, any bright spots . Sorry . Annabelle any bright spots . Yeah. In terms of bright spots, you know, while our headline level, you know, theres a decline expected of about 5 in the quarter which usually give positive there are expectations that show next year is where possibly fed peak is and therefore a lot of strategists and Fund Managers are expecting the gauge to do better. In terms of markets, japan, where inflation is a bright spot. And there are themes like indias capex cycle and companies in china. Haidi bloomberg senior asia equities reporter. And we are heading into the rbzns decision and expect a hawkish hold and about 10 days out from an election. So that will be weighing in terms of unlikely to make any sudden moves. But a reflation st when it comes to Energy Prices could potentially be a reason that we could not quite down when it comes to this hiking cycle. Kiwi yields are surging along with the rest of the region. This is bloomberg. This is a clustomer. Hello its what happens when Marketers Group customers with very different behaviors. Into one tangled mess. This is a mess with mailchimp, marketers can use realtime behavior data, to personalize every email for every customer. Turning clustomers, into customers. Intuit mailchimp. The 1 email marketing and automation platform. Id like to thank stitch fix. For taking care of the shopping. For getting my fit just right. For finding me looks that work for me and my budget. Now getting dressed is so easy. You just get me. They get me. You just get me. 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