HAIDI: LOOKING TO “DAYBREAKAUSTRALIA.” I'M HAIDI STROUD-WATTS INSYDNEY. WE ARE COUNTING DOWN TO ASIA'SMAJOR MARKET OPENS. ANNABELLE: TECH DRIVES THE U.S.STOCK REBOUND WITH THE EARNINGS SEASON ABOUT TO KICK INTO FULLSWING. BLOOMBERG INTELLIGENCE SEESPROFITS FOR THE MAGNIFICENT SEVEN RISING 38% IN THE FIRSTQUARTER. HAIDI: REPORTS THAT U.S.REGULATORS ARE SCRUTINIZING EFFORTS TO PREVENT POTENTIALMONEY LAUNDERING. ANNABELLE:.
PRESIDENT BIDEN COMMITS TODEEPER SECURITY TIES WITH JAPAN AND THE PHILIPPINES AS THEPRIME MINISTER OF JAPAN SAYS CHINA POSES A THREAT TO GLOBALPEACE. HAIDI: WE DO HAVE EMPLOYMENT DATACOMING OUT OF SOUTH KOREA. 2.8%, BEEN IN LINE WITHEXPECTATIONS, PICKING UP FROM THAT 2.6% WE SAW IN FEBRUARY.WE ARE ALSO, OF COURSE, COUNTING DOWN TO BE OK DECISIONDATE AS WELL. THE LABOR MARKET IS LIKELYSEEING LOOSENING IN RECENT MONTHS.BLOOMBERG HAD ESTIMATED 2.8%.
FOR THE JOBLESS RATE TO RISE.2.8% STILL BELOW THE POST-PANDEMIC AVERAGE OF 3.3%, WHICH IS SEEN AS THE RATE OFEMPLOYMENT, SO NEITHER INFLATIONARY NORDISINFLATIONARY. TAKING A LOOK AT HOW WE AREFARING, JUST AN HOUR AWAY FROM THE START OF MAJOR MARKETSTRADING. AROUND THE REGION, WE ARESEEING DAMPENING RISK APPETITE ACROSS THE BOARD.SIDNEY FUTURES DOWN BY ABOUT .4%, A PRETTY MIXED PICTUREBECAUSE WE DO SEE TECH LIFTING.
U.S. STOCKS.WE WILL BE WATCHING FOR A CHIP-RELATED NAMES.FUTURES LOOKING A LITTLE MORE OPTIMISTIC AND CHINAFUTURES LAGGING AS WELL. ANNABELLE:A LITTLE BIT OF BREAKING NEWS CROSSING THE TERMINAL, WE HAVEPERU OUT WITH A CENTRAL-BANK DECISION. VERY UNEXPECTED BECAUSE OUT OF30 ECONOMISTS EXPECTED — OUT OF 30 ECONOMISTS SURVEYED, ONLYONE EXPECTED THIS RATE TO COME THROUGH.
THIS IS LOOKING AT LATINAMERICAN CENTRAL RATES, BUT PERU IS THE LINE YOU SEE INPURPLE, SO IT IS A LOT LOWER THAN COUNTERPARTS IN THE REGION.A SURPRISE COMING THROUGH BECAUSE LAST MONTH, INFLATIONSLOWED A LOT LESS THAN HAD BEEN EXPECTED, SO STILL REMAININGABOVE THE PERU CENTRAL-BANK TARGET.RATES REALLY PLAYING INTO THE SESSION INTRADAY TODAY.WE HAD U.S. PPI INFLATION. YOU LOOK AT WHAT WE ARE SEEINGFOR FUTURES COMING IN LINE, BUT A U.S.PPI PRINT THAT CAME IN LOWER.
THAN WHAT ECONOMIST HAD BEENEXPECTING, SO THAT WAS A RELIEF. OTHERWISE, THE FOCUS IN THESESSION CAME DOWN TO BIG TECH. WITH THE EARNINGS SEASON ABOUTTO KICK INTO FULL GEAR LATER TODAY, U.S.TECH STOCKS VERY MUCH THE FOCUS, AS WE SAW ALPHABET, FORINSTANCE, INCHING CLOSER TO THE $2 TRILLION MARK.AMAZON HITTING A RECORD HIGH. APPLE JUMPING ON PLANS TOREVAMP ITS MAC LINE AS WELL. MORGAN STANLEY YOU CAN SEEUNDER PRESSURE. BANK NAMES — JP MORGAN, WELLSFARGO, CITI, ALL REPORTING.
EARNINGS LATER TODAY.LET'S TAKE A LOOK. HOW THIS IS PLAYING INTOFUTURES AS WE COME ONLINE. NASDAQ, S&P 500A LITTLE BIT IN GREEN TERRITORY. WE SAW TREASURY YIELDS MOVING ALITTLE BIT HIGHER TO 4.58% FOR THE 10-YEAR, WATCHING CRUDE ASWELL, GIVEN THAT WE DO SEE QUESTIONS AROUND SUPPLYPRESSURES COMING THROUGH AND HOW THAT WILL REALLY AFFECT THEDYNAMICS THROUGH THE END OF LAST YEAR, BUT CERTAINLY AS WESAID, THE FOCUS COMING DOWN TO THE FED.WE HEARD FROM THE FEDERAL.
RESERVE BANK OF BOSTONPRESIDENT, AND SHE IS URGING A LITTLE MORE PATIENCE WHEN ITCOMES TO EXPECTATIONS FOR CUTS. TAKE A LISTEN. >> RECENT DATA HAVE NOTMATERIALLY CHANGE MY OUTLOOK, BUT THEY DO HIGHLIGHTUNCERTAINTIES RELATED TO TIMING AND THE NEED FOR PATIENTS,RECOGNIZING THAT DISINFLATION MAY CONTINUE TO BE UNEVEN.THIS ALSO IMPLIES THAT LESS EASING OF POLICY THIS YEAR THANPREVIOUSLY THOUGHT MAY BE WARRANTED. HAIDI:WE BRING IN A CLIENT PORTFOLIO.
MANAGER AT DRUMMOND CAPITAL.GREAT TO SEE YOU, AS ALWAYS. THE BALANCE OF RISK SEEMS SOFINE AT THIS POINT THAT CAUTION SEEMS TO BE THE NAME OF THEGAME. WHAT DO YOU EXPECT TO SEE FROMTHE FED? >> I THINK THE FED NEEDS TO BEREALLY CAREFUL. THERE'S A LOT OF PARALLELS TONOVEMBER 2021. I THINK THEIR CREDIBILITY ISQUITE AT STAKE. I THINK THEY DID MOVE TO EARLYWITH THEIR PIVOT IN DECEMBER. WE FELT INFLATION WAS GOING TOBE STICKY EVER SINCE THEN, AND.
YOU HAVE THREE MONTHLY PRINTSSHOWING YOU HAVE A TREND, NOT TO MENTION THAT COMMODITY PRICEIS PULLING UP, AND IF WE GET CRUDE ENERGY HAVING ANOTHERVOLLEY FROM HERE, I THINK WE COULD FIND OURSELVES IN QUITE APRECARIOUS SITUATION. IT'S LOOKING LIKE NOVEMBERINCREASINGLY COULD BE THE FIRST CUT. PEOPLE LIKE LARRY SUMMERSSAYING THERE'S A 25% PROBABILITY WE COULD HAVE AHIKE THIS YEAR. HAIDI:ARE YOU TAKING SHORT POSITIONS IN TREASURY?.
>> WE ARE NOT TAKING OUTRIGHTSHORT POSITIONS, BUT WE HAVE NOT HAD ANY GLOBAL BONDS SINCELAST YEAR. HAIDI: TALK US THROUGH HOW YOU ARENAVIGATING. >> WE HAVE BEEN ADDING TO RISKREALLY FROM THE FIRST QUARTER OF LAST YEAR JUST AS THEECONOMIC DATA WAS GETTING BETTER AND BETTER. U.S.DATA HAS CONTINUED TO BE RESILIENT AND SURPRISING ON THEUPSIDE THIS YEAR. GIVEN THE NARROW MARKETLEADERSHIP WITH TECH, EARNINGS FOR THE LAST QUARTER, LASTYEAR, WERE ABOUT 55%.
WE DO HAVE STRONG PRICE ANDMOMENTUM TRENDS, BUT THE MARKET KEPT JUST A LITTLE BIT CAUTIOUS.WE DID ADD GLOBAL SMALL CAPS ABOUT FIVE WEEKS AGO.IF YOU LOOK AT THE S&P 500, YOU HAVE HAD INDUSTRIAL SMALL ANDMID-CAPS OUTPERFORM THE S&P 500, SO THERE'S A LOT OFBENEFICIARIES IN SMALL MONEY CAP STOCKS THAT WOULD BENEFITFROM RESHORE IN IN GEOPOLITICS, BUT ANY KIND OF CHINA EXPOSED NAMES YOU PROBABLY WANT TOBE CAUTIOUS. HAIDI: IS IS INTERESTING IS THE RUN-UPWE HAVE SEEN IN GOLD PRICES.
PERHAPS WITHOUT ANY SORT OFCATALYST, BUT YOU HAVE ADDED GOLD MINERS TO YOUR STRATEGY ASWELL. >> THE GOLD PRICE STARTED TOTAKE OFF IN EARLY MARCH. THERE'S A FEW THINGS BEHINDTHAT. THERE'S THE CENTRAL BANK, THEMASSIVE BUY-IN BY CHINA, CHINESE HOUSEHOLDS AS WELL.I THINK VERSUS THE EXPECTATION THAT REAL YIELDS WOULD COMEDOWN, BUT EVEN LAST WEEK WHEN WE SAW BOND YIELDS SELLOFF,GOLD CONTINUE TO RALLY, SO I THINK THERE IS A GEOPOLITICALBID BECOMING MORE RELEVANT.
I THINK THE FACT THAT YOU HAVE SEEN ENERGY AND GOLD RALLYTOGETHER SHOWS THAT IS BEING EMBEDDED INTO MARKETS FROM THEFLAREUP IN THE MIDDLE EAST. >> THINKING ABOUT THAT WORD FROMYOUR MAKES ME THINK OF HAVEN DEMAND AND I THINK ABOUT THEJAPANESE YEN, BUT OF COURSE, IT HAS BEEN THAT DOLLAR STORY,THAT YIELD STORY. DO YOU THINK YEN AT THESELEVELS, COULD WE SEE IT GETTING EVEN WEAKER? >> WE COULD SEE IT GET EVENWEAKER.
AN INTERESTING THING IS TOWATCH AND BE WHERE THE BANK OF JAPAN HAS TO START INTERVENING.I THINK THEY INTERVENED ABOUT FOUR TIMES IN WENDY 22.IF YOU SEE DOLLAR-YEN CROSS ABOUT 155, I THINK JUST OVERTHE LAST FEW WEEKS, WE SAW THE BOJ REMOVE INTEREST-RATE POLICYAND YIELD CURVE CONTROL. I DON'T THINK THE — I DON'TTHINK THEY WERE THINKING THE YEN WOULD DROP.AGAIN, THE BANK OF JAPAN AFTER COMING OUT OF ONE OF THE MOSTUNORTHODOX TIMES, THE CHALLENGE, BUT ONE KEY THING TOWATCH, THAT 10-YEAR GTB YIELD,.
I THINK IT'S CLOSE TO 1.5.YOU CAN START TO SEE THAT REPATRIATION OF CAPITAL ANDTHAT GLOBAL CARRY TRADE BEING A SOURCE OF VOLATILITY, WHICHCOULD ALSO PUT UP PRESSURE ON YIELDS IN THE U.S.AND AUSTRALIA TO A LESSER EXTENT. >> DO YOU WANT ANY EXPOSUREDIRECTLY OR INDIRECTLY AT THE MOMENT? >> IT'S AN INTERESTING ONEBECAUSE IT'S PROBABLY ONE OF THE MOST SHORTED MARKETS.
MANUFACTURING DATA STARTED TOIMPROVE, SO YOU HAVE SEEN MORE EVIDENCE THAT YOU COULD GET Q1GROWTH HITTING TARGETS WITHOUT PROPERTY MARKET RECOVERY.FOR US TO INVEST, WE WOULD — WE WOULD NEED TO SEE A LOT MOREIN TERMS OF RECOVERY, SO WE ARE STILL QUITE CAUTIOUS GIVEN THEEXPERIENCE OVER RECENT YEARS. HAIDI:ALWAYS GREAT TO HAVE YOU WITH US. COMING UP, APPLE PREPARING TOOVERHAUL ITS ENTIRE MATT LINE WITH A NEW FAMILY OF PROCESSES– PROCESSORS DESIGNED TO.
HIGHLIGHT AI.AND WE GET HIGHLIGHTS FROM THE >> CHINA'S CURRENT STANCE ANDACTIONS PRESENT UNPRECEDENTED AND THE GREATEST STRATEGICCHALLENGE, NOT ONLY TO THE PEACE AND SECURITY OF JAPAN,BUT TO THE PEACE AND STABILITY OF THE INTERNATIONAL COMMUNITYAT LARGE. >> THE UNITED STATES DEFENSECOMMITMENTS TO JAPAN AND THE PHILIPPINES ARE IRONCLAD.THEY ARE IRONCLAD. AS I SAID BEFORE, ANY ATTACK ONAIRCRAFT VESSELS OR ARMED FORCES IN THE SOUTH CHINA SEAWOULD INVOKE OR — OUR MUTUAL.
DEFENSE TREATY. HAIDI:OF COURSE, WE ARE CONTINUING TO MONITOR THIS MEETING BETWEENTHE JAPANESE PRIME MINISTER AFTER HE SPOKE WITH THE U.S.CONGRESS PRESIDENT BIDEN, AHEAD OF A TRILATERAL MEETING WITHTHE PHILIPPINES AT THE WHITE HOUSE.TENSIONS WITH CHINA DOMINATING THE CONVERSATION.LET'S BRING IN OUR EAST ASIA GOVERNMENT EDITOR. THE U.S. STRATEGY IN TERMS OF HOLDINGTHIS THREE-WAY SUMMIT, WHAT ARE THEY TRYING TO ACHIEVE?.
>> THE U.S.IS LOOKING FOR JAPAN TO INCREASE ITS INFLUENCE IN THEREGION TO FORM PARTNERSHIPS WITH THE LIKES OF THEPHILIPPINES AND OTHER COUNTRIES IN SOUTH AND ALSO TO BRING THISINTO AN INTEGRATED NETWORK. BEFORE THE SUMMIT BEGAN, THEWORK BEING TALKED ABOUT WAS A LETTUCE ARRANGEMENT IN VARIOUSNETWORKS WHERE THE U.S. WOULD HAVE ITS MAIN PARTNERSAND THOSE PARTNERS WOULD WORK WITH OTHERS IN THE REGION.FOR THE PHILIPPINES, IT'S THINGS LIKE HELPING WITH COASTGUARD PATROLS, BOOSTING ITS.
NAVY, AND FOR THE SUMMITITSELF, THE TALK ALSO EXTENDED BETWEEN JAPAN AND THEPHILIPPINES, BRINGING IN AUSTRALIA AS PART OF THENETWORK FOR DATA SHARING, LOOKING AT DRILLS WITH THEU.K., SO IT WAS USING JAPAN AS A KEY FOCAL POINT IN ASIA,LOOKING AT THE SOUTH CHINA SEA AND TALKING ABOUT THEIRCONCERNS FOR WHAT THEY SEE AS THE ASSERTIVENESS FOR CHINA INTHE REGION. HAIDI: WE JUST HEARD SOME OF THESOUNDBITES. IT SEEMS THAT WAS REALLY THEMESSAGE, THEY ARE QUITE TOUGH.
ON CHINA. >> EXACTLY.THIS WAS AN UNUSUAL SPEECH. THE PRIME MINISTER HARDLY EVERSPEAKS — MAKES SPEECHES IN ENGLISH.THE MESSAGE WAS THAT JAPAN IS A PARTNER THAT THE U.S.CAN RELY ON. IT'S CONCERNS OR JAPAN — IT'SCONCERNS ARE JAPAN'S CONCERNS, AND KUSHIDA TALKED ABOUT U.S.SELF-DOUBT WHEN IT COMES TO THINGS LIKE UKRAINE AND ALSOPROVIDING REASSURANCES WITH CHINA AND SECURITY MATTERS.
>> WE MAY GET THIS TRILATERALMEETING BETWEEN SOUTH KOREA, CHINA, AND JAPAN.I WONDER HOW THE U.S. FEELS ABOUT THAT. >> THE U.S.HAS BEEN SUPPORTIVE ABOUT THE PROCESS. THIS THREE-WAY WITH JAPAN,SOUTH KOREA, AND CHINA HAS BEEN ON HOLD SINCE COVID. THE U.S.SUPPORTS ITS TWO ALLIES, JAPAN AND SOUTH KOREA, WITH GOINGAHEAD WITH THE PROCESS. IT SEEMS THE TALKS AS APOSITIVE FOR THE REGION.
BIDEN HIMSELF HAS SPOKEN WITHXI JINPING RECENTLY OVER A NUMBER OF MATTERS.IF HE GOES AHEAD, IT WILL BE GOOD FOR THE THREE KEY PLAYERSIN THE REGION TO SIT DOWN AND SPEAK WITH EACH OTHER. HAIDI: THAT WAS OUR EAST ASIAGOVERNMENT EDITOR. OTHER DEVELOPMENTS WE ARETRACKING THIS MORNING INCLUDE THE LARGEST U.S.AIRLINES WHICH ARE ASKING THE BIDEN ADMINISTRATION TO BLOCKNEW FLIGHTS FOR CHINESE CARRIERS, CITING WHAT THEYCALLED BEIJING'S.
ANTICOMPETITIVE POLICIES.THE ALLIANCE FOR AMERICA TRADE BAND OTHER GROUPS MAY PLEAD INA LETTER. FIGHTS BETWEEN THE U.S.AND CHINA ARE GROWING, BUT THEY DO REMAIN WELL BELOW THE AVERAGE 340 PER WEEK BUILD FOR– BEFORE THE PANDEMIC. A DIRECTIVE WAS ISSUED EARLIERTHIS MONTH BY THE U.S. CYBER SECURITY AGENCY AND MADEPUBLIC ON THURSDAY. THE AGENCY ACCUSES A RUSSIANSTATE-SPONSORED GROUP CALLED MIDNIGHT BLIZZARD TRYING TOCOMPROMISE MICROSOFT CUSTOMERS.
PRESIDENT BIDEN IS MOVING TOBLOCK OIL AND GAS DEVELOPMENT IN MILLIONS OF ACRES OFALASKA'S SLOPE THAT COULD BE FINALIZED IN DAYS.THE ADMINISTRATION SAYS IT NEEDS TO BALANCE OILDEVELOPMENT WITH PROTECTING THE ENVIRONMENT.COMPANIES WITH LEADS IN THE REGION HAVE OBJECTED TO THEPLAN. WE WILL HAVE MORE AHEAD ONDAYBREAK AUSTRALIA. THIS IS BLOOMBERG. HAIDI:APPLE SHARES, YOU CAN SEE THAT.
POP WE HAD IN THE OVERNIGHTSESSION AFTER A BLOOMBERG REPORT THAT THE TECH GIANT ISPREPARING TO OVERHAUL ITS ENTIRE MATT LINE UP WITHAI-FOCUSED IN-HOUSE CHIPS — ENTIRE MAC LINE-UP.TAKE A LOOK AT THE SALES WE HAVE COMING THROUGH.THIS EMPHASIZES WHY IT'S COMING AT SUCH A CRITICAL TIME FOR THELINEUP. >> ABSOLUTELY. THIS IS A SET OF PRODUCTS THATAPPLE PRODUCES THAT REALLY PEAKED IN 2022.YOU WILL REMEMBER THAT DURING.
THE PANDEMIC, EVERYONE WASGOING OUT, BUYING LAPTOPS, NEW DEVICES, NEW TABLETS, AND THATWAS A REALLY PEAKED TIME FOR THEM.WE HAVE SEEN SALES OF THE MAC COME DOWN IN MORE RECENT YEARS.APPLE IS DOING EVERYTHING IT CAN TO REFRESH THE LINE, TOBREATHE NEW LIFE INTO IT, TO GET PEOPLE EXCITED ABOUT THATWHOLE LINE, FROM THE IMAC MANY TO THE MACBOOK PRO.THEY WILL BE EQUIPPING IT IN SHORT ORDER WITH THE HIGHESTPOWER CHIP THEY HAVE. HAIDI:TELL US ABOUT THE EQUIPMENT.
WITH AI TECHNOLOGY.WHAT DOES THAT MEAN FOR THE CONSUMER, AND WILL IT BE ENOUGHAS AN OFFER? >> RIGHT NOW, APPLE IS SEEN ASSOMETHING AS — SOMETHING OF A LAGGARD WHEN IT COMES TOINTEGRATING AI CAPABILITIES INTO ITS END PRODUCT.WE HEAR A LOT FROM MICROSOFT. WE HEAR A LOT FROM GOOGLE.WE HEAR A LOT FROM META WHEN IT COMES TO HOW AI WILL CHANGE THEUSER EXPERIENCE. IN JUNE, THEY WILL TALK ABOUTHOW GENERALIZED AI CAPABILITIES WILL CHANGE THE USER EXPERIENCEIN EVERYTHING FROM THE IPHONE.
TO THE MAC AND OTHER APPLEPRODUCTS. THIS IS THE FIRST HINT AT THAT.IN ORDER TO MAKE THAT WORK, IN ORDER TO MAKE THOSE PRODUCTSAND SHOW OFF THE AI CAPABILITIES AND DEVICES, THEYWILL BE TALKING ABOUT THE IDEA OF HAVING A FASTER CHIP, ANDTHAT'S WHERE THE M4 COMES IN. HAIDI: A CRUCIAL TIME FOR APPLE.THE U.S. EARNINGS SEASON BEGINNING WITHJ.P. MORGAN AND CITI REPORTING EARNINGS ON FRIDAY.THEY ARE FEELING OPTIMISTIC ABOUT A BUMP.SALLY BAKEWELL LEADS OUR U.S.
FINANCE TEAM.EXPECTATIONS ARE PRETTY RICHLY PRICED GOING INTO THIS. >> THAT'S RIGHT.I THINK A BIG DRIVER WILL BE THE TRAJECTORY OF INTEREST RATEHIKES, WHICH COMPARED TO THREE MONTHS AGO WHEN A LOT OF THEBANKS WERE WARNING THE RECORD WHOLE OF INCOME COULD CURRENTLYBE OVER AS WE WERE STARING AS FAR AS THE PACE OF INTERESTCUTS, BUT NOW THAT FEWER ARE EXPECTED, AND A LOT OF THE BIGBANKS ARE PROBABLY GOING TO INCREASE THEIR OUTLOOK FORINTEREST INCOME BASED ON THAT.
THAT'S SOMETHING A LOT OFINVESTORS AND ANALYSTS WILL REALLY BE LOOKING FOR. GENERALLY, LOWER RATES MEANPEOPLE CAN EARN MORE AND BANKS PAY OUT LESS ON DEPOSITS.IT'S A DIFFICULT DYNAMIC FOR THE BIG U.S.BANKS TO NAVIGATE, BUT ON THE WHOLE, IT'S PROBABLY BETTER FORBIG U.S. ASSETS AND STATE BANKS. HAIDI:WHAT SORT OF OUTLOOK SO WE ARE EXPECTING TO HEAR GIVEN THELEVEL OF UNCERTAINTY AROUND BANKS?.
>> A LOT OF PEOPLE ARE TALKINGABOUT JP MORGAN AND WELLS FARGO. THEY ARE EXPECTED TOPOTENTIALLY REVISE THEIR OUTLOOKS. OF COURSE, WHAT THEIR CHIEFEXECUTIVE OFFICERS, IN PARTICULAR JAMIE DIMON, SAYABOUT THE MARKET WILL BE WATCHED.JAMIE DIMON TALKED ABOUT HOW THE MARKETS ARE PRICING IN A POTENTIALLY 80% TO 70%CHANCE OF RATES LOWERING. HE ALSO SAID GIVEN THEINFLATIONARY PRESSURES THE.
MARKET IS FACING, WE COULD SEEANYWHERE FROM 2% TO 8% OR MORE AND THAT THE BANK WAS PREPAREDFOR THAT. HAIDI: THERE ARE CONCERNS OVER MONEYLAUNDERING CONTROLS WITH REGULATORS. >> THAT'S RIGHT.IN A WAY, NOT ALL OF THIS WAS NEW.WE KNOW THE FEDERAL RESERVE WAS LOOKING TO SEE IF MORGANSTANLEY'S BUSINESS WAS TAKING ADEQUATE MEASURES TO PREVENTPOTENTIAL MONEY LAUNDERING. AT THE TIME, IT WAS REPORTEDTHE REGULATOR WAS PREPARED TO.
IMPROVE CONTROLS AND PROCESSES. TODAY WE LEARNED IT'S ACTUALLYTHE SEC, OCC, AND SOME OTHER U.S.TREASURY DEPARTMENT OFFICES, DIGGING INTO IT BANKS DIDENOUGH DUE DILIGENCE. WHAT WE DON'T REALLY KNOW ISWHY THE HUGE SHARE DROP GIVEN THE ASPECTS OF THE PROBEALREADY KNOWN AND THE BANK HAS MADE SOME REGULATORYDISCLOSURES AND FILINGS. WE ALSO DON'T REALLY KNOW THETIMING OR PERIOD OF THINGS THESE APPLY TO NOR THE GRAVITY.
OR THE HEFT OF THESE PROBES ANDHOW SERIOUS THEY ARE. HAIDI: THAT WAS THE LEADER OF OURFINANCE TEAM. THAT'S THE OUTLOOK YOU'VE GOTHERE FOR STOCKS. WE ARE 30 MINUTES OUT FROM THEOPEN FOR AUSTRALIA, KOREA, AND JAPAN, AND FUTURES FEELINGMUTED SO FAR. INTRADAY, WE SAW IT MOVE HIGHERFOR U.S. EQUITIES WITH FED OFFICIALS ASWELL REITERATING A PATIENT APPROACH, BUT CERTAINLY TODAY,AND A LOT OF DATA ON THE ECO-DOCKET IN THIS PART OF THEWORLD.
YOU HAVE CHINA'S MARCH TRADEDATA DO, EXPECTING EXPORTS TO SHOW RESILIENCE.SINGAPORE'S QUARTER GIGI — GDP. THE BE OK COMING UP AS WELL,AND AS WE SAID, THE BANK OF KOREA EXPECTED TO KEEP RATESUNCHANGED AFTER PARLIAMENTARY HAIDI: LET'S TAKE A LOOK.FX AS WE GO INTO THIS LAST TRADING SESSION OF THE WEEK.WE SEE ASIAN CURRENCIES LOOKING TO GLOBAL CENTRAL BANKS FORGUIDANCE, IN PARTICULAR WHEN IT COMES TO THE FED. THE U.S. DOLLAR IS LITTLE CHANGED, EVENAS PRETTY AS HER PRICES ROSE AT.
A SLOWER THAN EXPECTED PACE.THAT HAD A STEADY EFFECT ON MARKETS. SEPARATE FIGURES REALLY DRIVINGTRADERS TO CUT RATE CUT BETS. WE ALSO SAW THE EURO ENTERING ALITTLE LOWER AFTER THE ECB HELD RATES STEADY AFTER SIGNALING APIVOT OR PATH TO A PIVOT TO EASING. TO THAT END, WE ARE SEEING REDTOLD PRETTY STEADY. WE HAVE THE EXPECTATION OFIMPROVING TIES WITH CHINA OFFERING A BIT OF POSITIVESUPPORT IN THIS CURRENCY AS.
THAT CHINA PROXY.WE ALSO CONTINUE TO SEE IMPROVEMENT ON THE ECONOMICSITUATION, AND OF COURSE, WATCHING THE YEN AT 1.5322.QUESTIONS OVER HOW MUCH HE AN INTERVENTION WOULD NEED HELP ATTHIS POINT. — WATCHING THE YEN AT 153.22. WE LEARNED EXCLUSIVELY THAT THECURRENT FOCUS ON ASIA INCLUDES THE REVIVAL IN JAPAN. >> ASIA FOR US IS REALLY ANAREA WE HAVE BEEN BUILDING FOR TWO DECADES SINCE 2005 IN ANAREA WHERE WE AS A FIRM HAVE A.
REALLY DOMINANT POSITION. WE HAVE GROWN FROM 18 BILLIONOF A UM INTO 65 BILLION A YOU AND, TO GIVE YOU A SENSE OF THETYPE OF GROWTH. IT'S THE FASTEST PART OF THEWORLD TODAY. 65% OF GLOBAL GDP GROWTH ISCOMING OUT OF ASIA. IT'S A NATURAL PLACE FOR US TOBE FOCUSED AS PRIVATE EQUITY, AS INFRASTRUCTURE INVESTORS,REAL ESTATE INVESTORS, IN JAPAN IN PARTICULAR, IT'S EXCITING.AROUND 40% OF OUR BUSINESS IN ASIA IS JAPAN.IT'S COMING OUT OF THIS LONG.
ECONOMIC MORASS, AND THEIMPLICATIONS FOR JAPAN ARE PROFOUND, IN TERMS OF WHERESAVINGS ARE GOING, IN TERMS OF GOVERNANCE REFORM, THEOPPORTUNITY FOR US TO COMBINE GREAT CORE BUSINESSES WITHAGGLOMERATES. >> IF YOU LOOK AT THE LIFEINSURANCE AND ANNUITY MARKET, IN THE U.S., IT'S A $4 TRILLIONMARKET. IN JAPAN, IT'S $3 TRILLION.IT'S A MASSIVE MARKET ACROSS A LOT OF WHAT WE DO, SO WE SEEOPPORTUNITIES TO EXPAND. >> AND A LOT OF PEOPLE AREFOCUSED ON JAPAN RIGHT NOW.
KKR HAS A DOMINANT POSITION.THERE'S ALSO A LOT OF FOCUS ON CHINA AND WHAT TO DO WITH THAT.YOU DO HAVE A SIGNIFICANT PRESENCE IN CHINA.HOW DO YOU THINK ABOUT HOW THAT LIVES GIVEN THE GEOPOLITICS ATTHE MOMENT WHICH ARE HIGHLY UNCERTAIN? >> OUR APPROACH TO CHINA HASBEEN CONSISTENT SINCE WE STARTED OUR BUSINESS.WE HAVE THREE OFFICES IN ASIA, CHINA, AND HONG KONG.OUR FOCUS OVER THE LAST TWO DECADES HAS BEEN FOCUSED ON THECONSUMER SEGMENT OF CHINA, THE.
GROWING MIDDLE-CLASS, THEORGANIZATION TRENDS IN THAT MARKETPLACE, AND THAT'S THESWEET SPOT OF THE OPPORTUNITY FOR US. WE HAVE INVESTED IN RETAILCOMPANIES, BRAND AND CONSUMER GOODS, HEALTH CARE.WE ARE NOT LEANING INTO THESE HIGH GROWTH AREAS THAT AREGEOPOLITICALLY SENSITIVE LIKE SEMICONDUCTORS, LIKE AI, SO WEHAVE APPOINTED A LOT OF THE AREAS THAT CURRENTLY CREATE ALOT OF TURMOIL IN THE MARKET. >> THERE WERE THE KKR CO-CEO'SSPEAKING EXCLUSIVELY WITH OUR.
COLLEAGUE IN NEW YORK.30 MINUTES AFTER THE SESSION OPENING HERE IN SYDNEY, SEOUL,AND TOKYO, AT THE START OF THE DAY, WE ARE WATCHING THOSEJAPAN FUTURES IN PARTICULAR. YOU CAN SEE THAT FUTURESCONTRACT LISTED IN SINGAPORE THAT HAS JUST COME ONLINE.THAT SORT OF FOLLOWS WHAT CAME THROUGH OVERNIGHT IN THE U.S.SESSION WHEN WE SAW THAT RALLY IN EQUITIES ON WALL STREETDRIVEN BY THIS EXPECTATION AROUND EARNINGS SEASON.WE ARE EXPECTING SOME WITTY SOLID NUMBERS COMING OUT,PARTICULARLY FROM TECH NAMES.
WHAT ELSE WE ARE TRACKING INTHE SESSION REALLY IS JUST THE SHEER AMOUNT OF DATA WE AREEXPECTING TODAY. YOU HAVE EXPORT NUMBERS DUEFROM CHINA. YOU HAVE EXPORTS EXPECTED TOSHOW RESILIENCE FOR CHINA'S ECONOMY.OTHER DECISIONS OR THINGS COMING UP AS WELL, SINGAPORE DOWITH ITS GDP FIGURES. ALSO IN MAS DECISION AND ALSOTRACKING, OF COURSE, THE BANK OF KOREA.THAT IS DUE JUST IN THE NEXT HOUR PERHAPS.TIGHT JOB MARKET PERHAPS WILL.
BE ALLOWING THE CENTRAL BANK TOWAIT JUST A LITTLE BIT LONGER UNTIL THEY DECIDE TO PIVOT ABIT. WE WILL HAVE MORE ON THAT COMING UP.AS WELL, AN AUSTRALIAN ACTIVIST HAS LAUNCHED HEDGE FUND RETURNSTHAT ARE ALMOST DOUBLE THE COUNTRY'S MARKET.THIS IS BLOOMBERG. HAIDI: TAKING A LOOK AT HOW U.S.FUTURES ARE SHAPING UP AFTER A SESSION THAT WAS LARGELY– WE ARE SEEING S&P FUTURES LOOKING LARGELY FLAT AT THEMOMENT. WE HAVE HAD MIXED MESSAGINGWHEN IT COMES TO THE DATA.
THE TWO PIECES HAVE REALLYDRIVEN INVESTORS TO BE PRICE FED CUT EXPECTATIONS.WE HAD THE HOW TO EXPECTED CPI NUMBER WEDNESDAY, BUT THE CPINUMBER CAME IN A BIT SOFTER THAN EXPECTED, SO WE SEE THATMUTED REACTION ACROSS U.S. ASSETS, INCLUDING THE U.S.DOLLAR LOOKING REALLY FLAT AT THE MOMENT.NASDAQ FUTURES ARE LITTLE BIT TO THE UPSIDE.WE HAVE QUITE A BIT OF FED SPEAK AS WELL.INCLUDING THE BOSTON FED CHIEF SAY RATE CUTS — FEWER ANDLATER RATE CUTS MAY BE.
WARRANTED THIS YEAR. OUR BANKING REPORTER JOINS USNOW. >> WHEN I TALK TO INVESTMENTBANKERS ACROSS THE REGION AND FINANCIAL ADVISORS, THEY SAYIT'S ONE OF THE TOP CONVERSATIONS ON BOARDS' ANDCEO'S MINDS. IT HAS A LITTLE BIT OFPRESIDENT. I THINK GOLDMAN SACHS ADVISEDBHP WHEN ELLIOT CAME INTO THE STOCK IN 2018, AND IT PROMPTEDA LOT OF OTHER CONVERSATIONS AROUND THE REGION, LIKE — ISTHIS A NEW THING WE ARE GOING.
TO SEE? A FEW YEARS WENT BY.COVID HAPPENED, AND IT HAS NOT REALLY TAKEN OFF, BUT THERE AREEMERGING SIGNS AND PEOPLE ARE STARTING TO EVALUATE ANDREALIZE THERE IS A PLAYBOOK THAT IS STARTING TO CROP UP. LOCAL INVESTORS, MIGHT NOT BEU.S. FUNDS COMING IN, BUT IT DOESNOT MEAN PEOPLE CANNOT REVERSE ENGINEER THAT PLAYBOOK AND USEIT TO THEIR OWN ENDS AND ADOPT THAT STYLE OF ENGAGEMENT WHEREIT IS NEEDED TO GET THE OUTCOMES THAT THEY WANT.
>> WHY HAVE IT INVESTORS AND –WHY HAVEN'T INVESTORS AND SHAREHOLDERS BEEN INVESTING INAUSTRALIA? >> WE ARE A SMALL MARKET, 25MILLION PEOPLE HERE IN AUSTRALIA, SO IT'S A VERY SMALL COMMERCIAL REALM, AND ITS HARDSWATTING PEOPLE AROUND AND MAKING ENEMIES.THE OTHER ELEMENT THAT HAS STOPPED U.S.FUNDS COMING IN OR AT LEAST FOREIGN FUNDS FROM REALLYGETTING ATTRACTED TO AUSTRALIA IS THAT IT REALLY IS RELATED TOPEER TIME ZONE ISSUES AS WELL.
IT BREEDS ALL SORTS OFPROBLEMS, SO THAT'S CONVENTIONALLY WHAT HAS HELDBACK A LOT OF THAT ASSET CLASS FROM COMING DOWN, JUSTOPPORTUNITY SETS ELSEWHERE. HAIDI:AS YOU HAVE JUST WRITTEN ABOUT, IT CAN BE HUGELY REWARDING.ACTIVIST HEDGE FUNDS ARE NOT YOUR RETURNS NEARLY DOUBLE THATOF THE COUNTRY'S BENCHMARK STOCK INDEX.THE HEAD OF THE CATALYST FUND JOINS US NOW.GREAT TO HAVE YOU WITH US. WE HAVE BEEN TALKINGABOUT HOW STRONG THIS HOLD IS.
IN TERMS OF SEEING ACTIVISMWITHIN AUSTRALIA'S MARKETS. >> GOOD MORNING.THANK YOU FOR HAVING ME. ACTIVISM IN AUSTRALIA HASREALLY MIGRATED FROM HAVING A STIGMA ASSOCIATED WITH IT TOBEING ACCEPTED AND VALUED. ACTIVISTS LIKE OUR CATALYSTFUND HAVE ALIGNMENT, SO I THINK YOU ARE GOING TO SEE A LOT MOREOF IT THROUGH DEDICATED CATALYST FUND OR ACTIVIST FUNDTHROUGH A DEDICATED ACTIVIST STRATEGY WITHIN THE MINDSET OFTHE LARGE INDUSTRY FUNDS.
>> YOU HIT ON AN INTERESTINGPOINT. THERE HAVE BEEN THESE POCKETSOF CAPITAL THAT EMERGED IN AUSTRALIA THAT HAVE ADOPTED APLAYBOOK. RELATE ON THE RABBIT HOLE INTERMS OF USING TACTICS WE WOULD HAVE SEEN FROM TRADITIONALCORPORATE RAIDERS. THEY GOT UP TO 20% ENDED THEFULL WORKS FOR MEDIA PRESENTATION, A WEBSITE, PROXYADVISORS. IS THIS THE WAY IT IS? WILL WE SEE IT NOT FROM HEDGE FUNDS PER SE BUT FROMINDIVIDUALS?.
IN THE SUPER FUNDS AS WELL THATHAVE MONEY UNDER MANAGEMENT? WE CAN TALK ABOUT EXAMPLES INTHAT CASE AS WELL. DO YOU EXPECT THAT IS HOW WEWILL SEE THAT AS WELL? NOT JUST WEALTHY INDIVIDUALSTHROWING THEIR WEIGHT AROUND? >> WE HAVE SEEN INVESTORSPURSUE THIS ACTIVIST TYPE OF STRATEGY IN AUSTRALIA.YOU HAVE TOUCHED ON SOME. WITH THEM SAYING NO TO THE AIGPROPOSAL TO BE TAKEN OUT, THAT'S ANOTHER EXAMPLE OF THEINDUSTRY SUPERPOWERS FLEXING THEIR MUSCLES.
YOU WILL SEE DIFFERENT POOLS OFCAPITAL THAT ARE PROBABLY MOTIVATED AND ENCOURAGED BYDEDICATED ACTIVIST FUNDS SHOWING THE MARKET HOW ACTIVISMCAN BE ACTIVELY AND EFFECTIVELY DEPLOYED TO CREATE INVESTMENTRETURNS THAT WILL OUTPERFORM THE MARKET. >> WHAT DO YOU THINK THESPECIES OF ACTIVISM LOOKS LIKE HERE IN AUSTRALIA?CONVENTIONALLY, WE HAVE SEEN PROBABLY MORE WHAT'S CALLED ACONSTRUCTIVIST APPROACH. DO YOU EXPECT THAT TO CONTINUE?.
WE HAVE SEEN INVESTORS OFTENTAKE A SEAT AND ACCRUED MISTAKE AND WORK WITH THE COMPANYBEHIND CLOSED DOORS BEFORE IF THEY NEED TO, THEY WILL GOPUBLIC AND START THROWING THEIR WEIGHT AROUND.YOU HAVE A LOT OF LEVERS OUTSIDE OF JUST BUSTING UP ACOMPANY AND ASKING FOR BREAKUPS. FOR YOU, IT COULD BE CEO CHANGEOVER, DIVIDENDS. IS THIS WHAT IT LOOKS LIKE INAUSTRALIA VERSUS THE CORPORATE BREAKUP MODEL THAT PEOPLETRADITIONALLY THINK OF ACTIVISM AS HOLDING?.
>> I THINK THERE'S A FULLSPECTRUM OF ACTIVIST PLAYBOOKS HOWEVER THEY CAN BE UTILIZED INAUSTRALIA. ONE BOOK AND I WOULD CALL THECAPITAL A ACTIVIST APPROACH WHICH IS TO GO PUBLIC AND BEVERY EXCLUSIVE, AND THE OTHER END OF THE PLAYBOOK, WHICH ISMORE COMMON, MORE CONSTRUCTIVE, MORE BEHIND CLOSED DOORS. I LIKE THE TERM YOU USED, WEHAVE OUR OWN SPECIES OF ACTIVISM, WHICH IS WE ARE ASMALL MARKET. EVERYONE KNOWS EVERYONE AND WEHAVE OUR OWN WAY OF DOING.
BUSINESS, SO I THINK IN TIME,YOU WILL SEE A PARTICULAR FORM OF ACTIVISM PEOPLE IN STRIDE,AND ALSO THE SECTOR COMPOSITION OF THE AUSTRALIA MARKET, WHICHIS WE HAVE A VERY LARGE COMPONENT OF THE MARKET, WHICHIS RESOURCES UNIQUE TO AUSTRALIA . HAIDI: DO YOU SEE THIS AS BEING –THIS IS COINCIDING WITH A RISE OF M&A.DO YOU SEE THIS AS BEING A COINCIDENCE? >> I THINK ACTIVISM CAN EXISTAND EVOLVE THROUGHOUT ALL.
MARKET CONDITIONS. IT CAN BE A BENEFICIARY, BUT ITHINK WHAT IS IMPORTANT ABOUT ACTIVISM IS IT CAN TAKE MANYDIFFERENT FORMS. IT CAN BE STRATEGIC, FINANCIAL,OPERATIONAL, GOVERNANCE-RELATED, AND A LOTOF THOSE TYPES OF ACTIVISM EXIST SEPARATE AND DISTINCTFROM M&A ACTIVITY. >> THE RISE OF ACTIVISTINVESTMENT HERE IN AUSTRALIA. HAIDI:GLOBAL BANKS ARE RAMPING UP ROADSHOWS FOR CLIENTS EAGER TOBET ON JAPAN AS THE MARKET.
BECOMES A HOT DESTINATION FORFUN FLOWS. FOR MORE, LET'S BRING IN OURASIA INVESTIGATOR IN TOKYO. IT SEEMS EVERYONE OUT THERE ISLOOKING FOR MORE INFORMATION FROM JAPAN AND ALSO FROM PEOPLETHAT ARE REALLY ON THE GROUND THERE. >> ABSOLUTELY.THERE HAS OBVIOUSLY BEEN ENORMOUS INTEREST IN JAPANESESTOCKS. IN TOKYO, WHAT WE ARE SEEING ISWALL STREET BANKS THAT HAVE A LONG PRESENCE IN TOKYO RAMPINGUP RESEARCH SERVICES, GETTING.
ANALYSTS OUT IN FRONT OFCLIENTS, SO WE ARE SEEING CITIGROUP HOLDING JAPAN DAYS WORLDWIDE, GIVING RESEARCHANALYSTS OUT THERE TO SHARE INFORMATIONTHEY HAVE ON THE MARKET. WE ALSO HAVE MORGAN STANLEY'SJOINT VENTURE GOING ON THE ROAD AS WELL.THEY ARE REALLY WRAPPING UP THIS ACTIVITY, RAMPING UP THEIRMARKETING OF THEIR RESEARCH, JUST TO TIGHTEN UP CLIENTS WITHTHERE IS JUST THIS ENORMOUS EXCITEMENT.
>> ARE WE GETTING AN INDICATIONOF WHAT THE NEXT LEG WILL BE FOR INVESTORS?THERE ARE SOME CONCERNS AROUND THE EDGES AS TO WHAT WOULD BETHE DOWNSIDES. >> YEAH, CERTAINLY, THERE SEEMSTO BE A BIT OF AN INFLECTION POINT SINCE THE BOJ RAISEDINTEREST RATES. A LOT OF MARKETS AND EXTERNALFORCES WITH THE FED AS WELL. ONE OF THE KEY FACTORS IS THEUPCOMING EARNINGS SEASON. THERE SEEMS TO BE A LOT OFOPTIMISM AMONG INVESTORS THAT BECAUSE INFLATION IS BECOMINGMORE SUSTAINABLE THAT THAT WILL.
HELP COMPANIES IN TERMS OFPROFITS, BASICALLY. THERE'S ALSO OPTIMISM THATTHERE'S MOMENTUM FOR CORPORATE GOVERNANCE, PERFORMANCE, ANDCOMPANIES PAYING MORE ATTENTION TO SHAREHOLDER VALUE.IF WE WILL SEE THAT IN THE EARNINGS SEASON IN TERMS OFMORE BUYBACKS AND INCREASING DIVIDENDS AND THINGS LIKE THAT,SO A LOT HINGES ON THE COMING WEEKS, TO SEE WHERE THISEXCITEMENT REALLY HAS SOME MOMENTUM. >> THAT WAS OUR ASIA INVESTINGEDITOR IN TOKYO.
SHIFTING AS WELL TO THE BANK OFKOREA. IT IS EXPECTED TO KEEP POLICYSETTINGS UNCHANGED WHEN IT ANNOUNCES ITS RATE DECISION TOPOLICYMAKERS. OUR ASIA ECONOMY AND GOVERNOR– COVENANTS SENIOR EDITOR JOINS US.IT SEEMS LIKELY BE OK NOT QUITE READY TO SHIFT AWAY FROM ITSRESTRICTIVE STANCE JUST YET. >> THAT'S ABSOLUTELY THE CASE.EVERY ECONOMIST WE SPOKE WITH SAID HE OR SHE EXPECTS TO BE OKTO HOLD AT THAT 3.5% RATE, WHICH AS YOU SAID, WECHARACTERIZE AS RESTRICTIVE,.
WHICH MAKES SENSE FIRST OF ALLIN LIGHT OF RECENT INFLATION TRENDS.WE SAW INFLATION COME IN AT 3.1% LAST MONTH.THAT BEAT CONSENSUS, AND IT'S ABOUT THE BOJ'S 2% TARGET RANGE.AND AS YOU MENTIONED, POLITICS. IF YOU THINK ABOUT WHATHAPPENED WEDNESDAY, ONE OF THE BIG TOPICS ON THE MINDS OFVOTERS WAS RISING FRUSTRATION ABOUT THE COST OF LIVING, WHICHIS SHOOTING UP, AND WE SAW HOW THAT PLAYED OUT JUST FROM THESTANDPOINT OF OPTICS. IT WOULD NOT LOOK GOOD FOR THEBE OK TO COME OUT TWO DAYS.
LATER AND CUT INTEREST RATES. HAIDI: THERE ARE ALSO MULTIPLECHANNELS WHERE A FED MOVE WOULD AFFECT SOUTH KOREA.HOW DOES THAT PLAY INTO THIS? >> THAT IS A BIG PART OF THIS.IN THE U.S. AS WELL WE HAVE SEEN INFLATIONMUCH STICKIER THAN EXPECTED, AND THAT HAS PUSHED BACKEXPECTATION FOR FED RATE CUTS THIS YEAR.THAT, OF COURSE, ALL THINGS BEING EQUAL WILL SUPPORT THEDOLLAR, WHICH PUTS DOWNWARD PRESSURE ON ASIAN CURRENCIES.THE YEN IS A BIG PART OF THAT,.
BUT THE YUAN AS WELL AS THEYARE ONE OF THE WEAKEST CURRENCIES IN ASIA THIS YEAR,AND THAT'S A BIG PROBLEM FOR A COUNTRY LIKE SOUTH KOREA THATRELIES HEAVILY ON IMPORTS OF FUEL AND FOOD BECAUSE THATCOULD PUSH UP COSTS, PUSH INFLATION, WHICH WOULD MAKETHINGS WORSE FOR HOUSEHOLDS DEALING WITH TIGHTER BUDGETS. HAIDI: THE BROADER TREND FORINFLATION, THOUGH, IS STILL DOWN.DO YOU THINK THERE'S ANY SORT OF RISK ASSOCIATED WITH STAYINGHIGHER FOR LONGER?.
>> FIRST OF ALL, ONE THING WEWILL LOOK AT, LAST MONTH, THE BOARD CAME OUT AND SAID IT ISTOO SOON TO BE CONFIDENT THAT INFLATION WILL SLOW TO OUR 2%TARGET RANGE, SO WE WILL LOOK AND SEE HOW THEY CHARACTERIZEEXPECTATIONS TODAY. YES, OF COURSE THERE ARE RISKS.COMPANIES DEALING WITH DEATHS — WITH THE DEBT IN THEPROPERTY SECTOR, BUT ON THE OTHER HAND, EXPORTS HAVE HELDUP WELL. SEMICONDUCTORS, THE OUTPUT OFSEMICONDUCTORS IN FEBRUARY WAS THE HIGHEST IN 14 YEARS, SOTHERE ARE INDICATIONS THE.
ECONOMY IS HOLDING UP PRETTYWELL, EVEN WITH RATES AT THIS RESTRICTIVE LEVEL, SO IT'S TOOSOON TO THINK THE ECONOMY NEEDS ANY KIND OF HELP IN TERMS OFEASING. HAIDI:WE ARE FOLLOWING, AS WE DO EVERY MORNING, THE JOB OFTURNING FROM JAPANESE OFFICIALS ON CURRENCY.WE ARE HEARING FROM THE JAPANESE FINANCE MINISTER AGAINSPEAKING IN TOKYO, SAYING IT'S IMPORTANT THAT EFFORTS REFLECTFUNDAMENTALS AND CANNOT COMMENT ON RECENT MOVES, BUT EXCESSIVEMOVES ARE UNDESIRABLE AND THEY.
ARE NOT RULING OUT ANY OPTIONSAGAINST THESE EXCESSIVE MOVES. THAT SENSE OF URGENCY STILLBEING CONVEYED. WHEN IT COMES TO CURRENCYINTERVENTION, AS WE SEE BROAD-BASED WEAKNESS INRESPONSE TO THE DOLLAR, HOW USEFUL AND IMPACTFUL ANDSUSTAINABLE WOULD IT BE FOR JAPAN TO DO THAT AT THIS POINT? >> THAT IS SUCH A CRITICALQUESTION BECAUSE I THINK THERE'S A RISK.THE JAPANESE OFFICIALS HAVE BEEN VERY CAREFUL, FOR EXAMPLE,IN THEIR VERBAL INTERVENTION.
RECENTLY.THIS MONTH, THEY HAVE NOT USED THE PHRASE “WE ARE READY TOTAKE BOLD STEPS,” WHICH IS A DIRECT REFERENCEINTERVENTION. THEY HAVE NOT GONE THAT FAR,AND I THINK THERE'S A CONCERN AMONG OFFICIALS THAT IF THEYPLAY OUT THEIR INTERVENTION THREAT AND IT DOES NOT WORK,THEN THINGS WILL BE EVEN WORSE, EVEN MORE CHAOTIC, AND THERE'SA REAL SENSE THAT WHAT IS DRIVING THE DOLLAR-YEN HIGHERIS WHAT IS HAPPENING IN THE U.S. WITH THESE FED RATE CUTEXPECTATIONS BEING PUSHED BACK,.
AND THE OUTLOOK FOR RATEDIFFERENTIALS STAYING WIDE FOR MUCH LONGER THAN EXPECTED.I THINK THERE IS A RISK THAT INTERVENTION MIGHT NOT WORK ANDTHEY ARE AWARE OF IT. HAIDI:
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