Traders Focus on Jackson Hole, Fed Outlook | The Asia Trade 8/28/2026

SHERY: THIS IS "THE ASIA TRADE." TOP STORIES THIS HOUR -- ASIAN STOCKS THAT FOR A CAUTIOUS OPEN AFTER NVIDIA-LED GAINS IN U.S. TECH AS S&P 500 SHARES FELL. KIOXA, FOCUSING ON PLANS TO RAMP UP PRODUCTION AS SK HYNIX MULLS DEEPER TIES. KEVIN WARSH'S DEBUT SPEECH AT JACKSON HOLE, WITH TREASURY YIELDS ARE STILL ELEVATED AND CONCERNS OF STICKY INFLATION AND FISCAL DEFICITS. AND COMING UP, A LOOK INSIDE INDIA'S A.I. AMBITIONS. WE UNPACKED THE CHALLENGES AND OPPORTUNITIES AS BILLIONS POUR INTO THE COUNTRY WITH YODA SERVICES AND LIGHTSPEED INDIA. PAUL: LET'S TAKE A LOOK AT THE SET UP FOR TRADING ACROSS ASIA. PRETTY HANDY LEAD IN ENTECH. WE SAW A BIG POP IN NVIDIA. WE MIGHT SEE SOME PASS-THROUGH TODAY TO ASIA TECH AS WELL. NOT REFLECTED IN THE FUTURES MARKET AT THE MOMENT. SOME SOFTNESS FOR THE NIKKEI FUTURES AND KOSPI FUTURES AS WELL. KIOXIA, SK HAND NEXT -- SK HYNIX, WE BRING IN THE DETAILS IN A MOMENT. OIL PICKED UP A LITTLE BIT. PRESIDENT TRUMP HAS NO INTEREST IN GOING BACK TO THE JUNE MEMORANDUM OF UNDERSTANDING SIGNED WITH IRAN. ALSO IN TALKS WITH MEN AS WELL AS A TAKE A LARGE STAKE OF OIL FIELDS. VENEZUELA MIGHT BE PLANNING TO LEAVE OPEC. A LOT OF ACTION IN THE BOND SPACE -- IN FACT, NOT A LOT OF ACTION IN THE BOND SPACE. NOT A LOT OF EXCITEMENT OUT OF KEVIN WARSH'S SPEECH BUT A LOT OF POSITIONING AROUND THE WAY NANCY TRADE. LET'S -- THE WAIT AND SEE TRADE. LET'S LISTEN TO THE KANSAS CITY FED. >> LAST YEAR, WE CERTAINLY WERE NOT RESTRICTIVE. MAYBE A LITTLE ACCOMMODATIVE. WE'VE GOT WORK TO DO. SHERY: FOR MORE ON THIS ECONOMIC SYMPOSIUM, LET US BRING IN OUR BLOOMBERG INTERNATIONAL ECONOMICS AND POLICY CORRESPONDENT. MICHAEL MCKEE. ALSO MAKE RENFIELD -- MI -- MARK CRANFIELD IN SINGAPORE. WHAT ARE YOU EXPECTING TO SEE? >> WE ARE NOT REALLY SURE. YOU CAN CHARACTERIZE IT AS A CLEANUP SPEECH AND THE QUESTION IS, HOW BAD DOES HE THINK HE DID? HE DOESN'T LIKE TO COMMUNICATE. A LOT SAYS HE DOESN'T WANT TO DO THE FORWARD GUIDANCE THE FED HAS BEEN DOING IN THE AS -- THE PAST. HE MAY THINK HE IS DOING A FINE JOB AND WANT TO TALK ABOUT THE REFORMS HE IS MAKING. IT WILL BE INTERESTING TO SEE WHAT IT IS ACTUALLY -- WHAT MESSAGE HE WANTS TO DELIVER. SHERY: WHAT CAN WE EXPECT WHEN IT COMES TO MARKET REACTION GIVEN WHAT WE SAW LAST TIME WITH YIELDS SURGING IN TREASURIES AND THE GLOBAL REPERCUSSIONS AS WELL? >> WE HAVE QUITE AN INTERESTING SET UP IN THE TREASURY MARKET. TRADERS ARE NOT EXPECTING MUCH GUIDANCE AND VOLATILITY IS VERY LOW GOING INTO THE WEEKEND. SHORT TERM IMPLIED VOLATILITY IS PRETTY NEUTRAL. THAT SUGGESTS TRADERS ARE LOOKING AHEAD TO NEXT WEEK. THEN GOT A CLEAN SET UP WHERE THEY CAN PIVOT. THE BIG ACTION FOR BOND MARKETS, THERE'S ALWAYS IS FEEDBACK LOOP WITH WHAT HAPPENS WITH THE GDP IS BACK IN THE U.S. CURVE. WE HAVE 10 AND 30 YEAR OPTIONS COMING UP IN JAPAN. THAT'S A DIFFICULT SET UP WHEN YOU'VE GOT A BANK OF JAPAN COMING IN A COUPLE OF WEEKS' TIME. WHAT HAPPENS NEXT WEEK IS LIKELY TO BE NEGATIVE FOR THE TREASURY MARKET. LONG END YIELDS WILL BE UNDER PRESSURE AGAIN. REGARDLESS OF ANY SIGNALS WE GOT FROM U.S. SPEAKERS OVER THE WEEKEND. TREASURY TRADERS ARE POSITIONING THEMSELVES TO BE NIMBLE AND READY TO RESPOND WITH WHAT THEY SEE IN OFFSHORE MARKETS, PARTICULARLY JAPAN. FRANCE IS UNDER PRESSURE AS WELL. BOND MARKETS ARE COMING UNDER FOR THE SAME REASONS AS THE U.S., FISCAL DEFICITS ARE NOT BEING HELD DOWN. PAUL: WHAT DOES THE BOND MARKET NEEDS TO HEAR FROM KEVIN WARSH TO PREVENT YIELDS FROM RISING AGAIN? >> THEY WOULD REALLY NEED TO HAVE CLARITY ON THE INFLATION OUTLOOK. THAT'S WHERE PEOPLE ARE CRITICIZING HIM FOR -- IN JULY HE WAS NOT CRYSTAL CLEAR WHERE INFLATION IS GOING. IF HE BELIEVES INFLATION'S PEAKED, HE MAY LOWER INTEREST RATES SOME MONTHS AHEAD. HE NEEDS TO CLARIFY THE OUTLOOK. BOND INVESTORS ARE CONFUSED AT THE MOMENT AND THEY SEE A DISCONNECT BETWEEN THE CORE INFLATION NUMBERS THEY SEE AND WHAT THE FED IS LOOKING AT. IF HE REALLY WANTS TO SET A CAP FOR INFLATION AND GUIDE EXPECTATIONS LOWER, HE NEEDS TO TELL PEOPLE WHAT HE IS SEEING AND WHERE HE EXPECTS THIS TO GO. IF HE FAILS TO DO THAT, BOND MARKETS WILL MAKE UP THEIR OWN MIND AS THEY HAVE BEEN DOING FOR THE PAST SEVERAL MONTHS AND THEY TEND TO LEAN IN FAVOR OF THE FACT THAT WHEN YOU HAVE DEFICITS AS THEY ARE, CORE INFLATION STATED, THAT IS NOT GOOD FOR THE LONG END OF THE BOND MARKET. PAUL: MY CRANFIELD WAS -- MARK CRANFIELD WAS OUTLINING WHAT THE FED WOULD LIKE TO HEAR FROM KEVIN WARSH. ARE THEY GOING TO HEAR THAT? WHO'S GOT THE PROBLEM HERE? DOES HE NEED TO CHANGE HIS STYLE OR DOES THE AUDIENCE NEED TO CHANGE THEIR EXPECTATION? >> A BIT OF BOTH. KEVIN WARSH TOLD SOME HE THINKS IT IS NOT HIM. HE WANTS THE BOND MARKET TO SIGNAL TO THE FED WHAT SHOULD HAPPEN -- WHAT SHOULD HAPPEN IN THE ECONOMY AND WHAT THE FED SHOULD DO. THE MARKETS ARE USE OF THE FED GUIDING THEM. THAT WILL BE A FIGHT THAT PLAYS OUT FOR A WHILE. YOU'VE GOT THIS WILD CARD WHERE THE U.S. TREASURY SECRETARY SCOTT BESSENT IS DELIBERATELY MANIPULATING THE MARKET WHICH CONFUSES THE SIGNALS TO KEVIN WARSH. A A LOT OF THINGS AT PLAY HERE AND THAT IS THREADING THE NEEDLE SITUATION FOR WARSH TO TRY TO SATISFY THE MARKETS WITHOUT GIVING AWAY HIS POSITION THAT THE MARKET SHOULD TAKE THE LEAD. SHERY: AND THE FOMC IS STILL A COMMITTEE. RIGHT? WHAT ARE MEMBERS ARE SAYING ABOUT THE STATE OF THE U.S. ECONOMY AT THE MOMENT? THERE SEEMS TO BE TO ME GROWING THIS AGREEMENT ABOUT A KEY ISSUE, WHETHER POLICY IS RESTRICTIVE ENOUGH RIGHT NOW. >> WE HAVE NOT HEARD ANYBODY CHANGE THEIR VIEW SINCE THE LAST MEETING. THOSE WHO THINK THEY SHOULD RAISE RATES STILL BELIEVE THAT. AND THERE IS ABOUT HALF OF THEM ON THE COMMITTEE WHO THINK THAT IS THE CASE. ONLY THREE OF THEM WERE VOTERS THIS LAST TIME AND ONLY THREE OF THOSE -- -- THOSE SAME THREE WILL BE VOTERS NEXT TIME. IT MAY NOT BE ENOUGH TO TIP THE BALANCE. MANY WHO ARE NOT VOTERS THINK RATES SHOULD GO UP AND OTHERS THINK RATES ARE FINE WHERE THEY ARE AND THEY ARE MILDLY RESTRICTIVE AND THAT SHOULD BE GOOD ENOUGH TO BRING DOWN INFLATION. THE QUESTION IS DOES INFLATION START TO COME DOWN? THE SEPTEMBER 12 CPI IN THE U.S. WILL BE IMPORTANT TO SHOW THE DIRECTION OF INFLATION AND THAT MAY PULL SOME PEOPLE OVER TO THE HAWKISH SIDE OF IT COMES IN HIGHER -- IF IT COMES IN HIGHER. SHERY: WE HAVE PRICING IN WHAT THE FED DOES, THAT VOLATILITY IN THE GLOBAL YIELD SPACE. WE HAVE UPCOMING VERY BIG JGB AUCTIONS THAT COULD ADD TO THE DURATION VOLATILITY. EXPLAIN RIGHT NOW THE LINK BETWEEN WAS HAPPENING IN THE U.S. AND THE IMPORTANCE OF JGB'S AT THIS POINT. >> IT'S PARTICULARLY IN THE LONG END OF THE CURVE. WE HAVE A 30 YEAR AUCTION COMING UP NEXT WEEK. THERE'S A CORRELATION BETWEEN THE MAJOR G10 CURVES. THEY ARE ALL LINKED TO SOME EXTENT. THE ONE THAT IS BEEN DRIVING THE MARKETS OVER THE PAST 18 MONTHS OR SO IS THE JAPANESE CURVE -- MORE QUICKLY THAN OTHER G10 COMPARISONS. THEY ARE SLIGHTLY BELOW THE PEAK WE SAW BACK IN MAY FOR THIS YEAR. U.S. YIELDS ALREADY ONE ABOVE THAT. WE ARE IN A SITUATION WHERE IT WOULD NOT TAKE MUCH FOR INVESTORS TO SAY, WE ARE NOT GETTING ENOUGH COMPENSATION IN JAPAN, THE BANK IS NOT SERIOUS ABOUT GETTING OUT OF THE INFLATION CURVE, WE ARE GETTING CLOSE TO PRICING IN A SEPTEMBER RATE HIKE BUT THE IDEA THEY COULD GO BACK TO BACK SEPTEMBER AND OCTOBER IS LOW, THEY REALLY DO THAT. THAT WOULD BE DISAPPOINTING TO THE MARKET. THEY WANT MORE COMPETITION FOR LONG-TERM YIELDS AND THAT FOCUSES ON THE THIRD YEAR AUCTION NEXT WEEK. IF IT DOES NOT GO WELL, WE SEE YIELDS GO TO NEW HIGHS FOR 2026, THAT WILL FEED BACK INTO THE U.S. AND OTHER G10 MARKETS AS WELL AND YOU GET THIS SPIRAL WHERE ALL THE YIELDS ARE PUSHING UP TOGETHER. WE HAVE SEEN IT A FEW TIMES TOGETHER IN THIS CYCLE AND IT IS A HIGHER RISK FOR NEXT WEEK. PAUL: ALL RIGHT, MICHAEL MCKEE AND JACKSON HALL AND MARK CRANFIELD, THANK YOU. STILL TO COME, NVIDIA NOTCH IS THE SECOND-LARGEST LARGEST ONE-DAY GAIN IN U.S. MARKET HISTORY. ADDING MORE THAN $440 BILLION AFTER ITS BLOCKBUSTER FORECAST. WE WILL CHECK THE FLOW ON ASIA'S TRADING DAY NEXT. THIS IS BLOOMBERG. SHERY: YOU ARE WATCHING "THE ASIA TRADE." WE ARE TRACKING DEVELOPMENTS IN THE MEMORY CHIP SECTOR. KEEP AN EYE ON SK HYNIX, EXPLORING DEEPER COOPERATION WITH KIOXIA. IT HOLDS AN INDIRECT STAKE. THE CEO IS LOOKING AT WAYS TO GROW THE MARKET AND SAYS SK HYNIX'S SKIN TO CONTRIBUTE TO THE DEVELOPMENT OF JAPAN'S SEMICONDUCTOR INDUSTRY, SPEAKING AFTER A GROUNDBREAKING CEREMONY FOR SK HYNIX'S FOR BILLION DOLLAR INDIANA FACILITY -- 4 BILLION DOLLAR INDIANA FACILITY. KIOXIA AND SANDISK PLAN TO INVEST ONE -- INVEST INTO PRODUCTION JAPAN. A NEW PLANT WILL PRODUCE ADVANCED CHIPS FOR AI DATA CENTERS. THE COMPANY IS HOPING THE JAPANESE GOVERNMENT WILL SUBSIDIZE ABOUT A THIRD OF THE EXPANSION COSTS. THESE ARE SOME OF THE OTHER STORIES YOU HAVE TO WATCH. MICRON FOR EXAMPLE -- NOW PRESIDENT TRUMP PRAISING THE CEO, SAYING THE COMPANY IS KEEPING THE U.S. AT THE FOREFRONT OF A.I. AND ADVANCED COMPUTER. THEY HAVE PLANNED $10 BILLION RESEARCH LAB INVESTMENT IN FOCUS. WATCH FOR ALPHABET. IT TOOK A PLUNGE IN THE REGULAR SESSION. IT IS ERASING MORE THAN $700 BILLION OF MARKET VALUE SINCE THEIR PEAK. THERE ARE CONCERNS ABOUT BRAIN DRAIN AT THE COMPANY. SALESFORCE DID WELL IN THE OVERNIGHT SESSION. WE SAW IT RAISE. REMEMBER THAT TIME WE WERE ZEROING IN ON HOW SOFTWARE'S TECHNOLOGY COULD BE UPDATED GIVEN LLM'S AND NEW GEN A.I. A LOT OF THAT HAS BOUNCED BACK. AND NVIDIA, A GAIN OF MORE THAN 8% ADDING $442 BILLION IN MARKET VALUE, AFTER THE CFO TALKED ABOUT A 70% SURGE IN FISCAL 2020 REVENUE. WE HAVE BEEN WATCHING ASIAN TECH TRADERS TO SEE IF THEY WILL BE PRICING IN NVIDIA'S BIG MOVE. DID NOT NECESSARILY TRANSLATE TO THE REST OF THE STOCK SPACE IN THE U.S. OVERNIGHT THE S&P 500 WAS FLAT AND WE CONTINUED TO WATCH THE SOFTWARE SECTOR AS WELL. SALESFORCE IS NOT REALLY BAD. THE RESULTS RECENTLY LIFTING THOSE STOCKS. LET'S DISCUSS WHAT IS GOING ON AND IMPLICATIONS FOR ASIA WITH ANTHONY STEPHENS. LET'S START WITH NVIDIA. WE ARE WAITING FOR THAT POP IN THE ASIAN SESSION. HOW DO NVIDIA'S RESULTS TRANSLATE AND TRANSFER INTO THE REGION? ANTHONY: IT WAS MAYBE A BIT TOO MUCH OF A GOOD THING FOR NVIDIA. THE RESULT OUTPERFORMED THE IMPLIED MOVE TO THE UPSIDE. AROUND $400 BILLION IN MARKET CAP ADDED. NVIDIA HAS ACTUALLY BEEN A HUGE LAGGARD VERSUS THE REST OF THE TECH SPACE. THAT'S QUITE A SIGNIFICANT GAP IN THE U.S. AND EVEN BIGGER VERSUS KOREA AND TAIWAN. AS A RESULT THERE'S A LITTLE BIT OF REBALANCING FOR PEOPLE TO DO. THIS IS A CONSENSUS POSITION, YES, BUT HEDGE FUNDS ARE VERY LONG MEMORY. THERE VERY LONG COMPONENTS AND LONG OPTICALS. ALL THE COMPLICATED STUFF THAT GOES INTO NVIDIA CHIPS. WHAT NVIDIA'S SAYING IS WE ARE MAKING SO MUCH CASH THAT YOU SHOULD BE LOOKING AT OUR VALUATIONS. AND HAD THE DIVERSITY OF BANK OF AMERICA ALL THE WAY TO MICHAEL BURRY SAY THAT NVIDI MAY BE THE NEW WAY TO PLAY IN A SAFE MANNER AND THAT SUCKED OUT THE WIND OUT OF THE REST OF THE TECH SPACE. THAT MIGHT SET THE TONE FOR ASIA. A LITTLE MORE MONEY HAS TO COME OUT OF THE NAMES IN KOREA AND TAIWAN AND INTO NVIDIA AT THE MARGIN. SHERY: WHICH OF THESE LONG SHORT FUNDS DO NEXT? HOW DO THEY REPOSITION AFTER ALL OF THIS? ANTHONY: THE SOFTWARE SHORTAGE IS A VERY UNCOMFORTABLE POSITION BUT THERE IS OPPORTUNITY WITHIN THE SPHERE. CROWDSTRIKE, THE CYBERSECURITY SPACE'S VERY HEART, THE SOFTER SPACE HAS BEEN A LAGGARD FOR A VERY LONG TIME IN INDIA AND THERE COULD BE OPPORTUNITY THERE AS WELL BE A VIA CHINA FOR EXAMPLE IS AN EASIER PLACE TO MAKE MONEY ON SHIPS BECAUSE -- CHIPS BECAUSE IT IS DOMINANT IN THE SAME WAY . IT MIGHT BE ANOTHER WAY OF PLAYING NVIDIA'S GROWTH, EXPANDING THE ENTIRE MARKET. AND LASTLY INVESTORS NEED TO CONTINUE TO MAKE SPACE FOR THESE BIG IPOS COMING ON THE LLM SPACE LIKE ANTHROPIC AND OPENING OUR LEADER AS WELL. THERE'S A LOT OF REBALANCING TO DO INTACT, SHORT BOOK CONTINUES TO SUFFER, SO YOU CANNOT BE LAZY AND TECHNOLOGY INVESTING ANYMORE. SHERY: ANTHONY STEPHENS, ALWAYS GOOD TO GET YOUR VIEWS. OUR BLOOMBERG MARKETS REPORTER HERE WITH US WITH THE DETAILS ON THE MARKET. THIS IS BLOOMBERG. ♪ PAUL: THE KANSAS CITY FED PRESIDENT SAYS U.S. MONETARY POLICY MAY BE ACCOMMODATIVE RATHER THAN RESTRICTIVE. HE CITED UNDERLYING DEMAND PLEASURES HE BELIEVES COULD JUSTIFY A RATE HIKE. >> AS A VOTING MEMBER LAST YEAR, I DECIDED A COUPLE TIMES, THE Q3, Q4 DATA FROM A LESS THEY ARE WE CERTAINLY WERE NOT RESTRICTIVE. MAYBE EVEN A LITTLE ACCOMMODATIVE. WE GOT WORK TO DO. THERE IS A DEMAND ELEMENT UNDERNEATH ALL THE SUPPLY CONVERSATION THAT GETS TALKED ABOUT. I JUST NEED TO TRY TO FIGURE OUT, FOR ME, WE DO A LOT OF INFORMAL SURVEYING AROUND THE DISTRICT AND I WOULD SAY IT IS KIND OF A LITTLE BIT LIKE THE FOMC MEETING. YOU HAVE HALF THE PEOPLE THAT SAY CERTAINLY IT IS NOT RESTRICTIVE. IT SEEMS LIKE IT MIGHT BE CLOSE TO ABOUT RIGHT. BUT FOR ME I THINK IT MAY BE ACCOMMODATIVE ON THE SHORT END. >> HOW DO YOU MEASURE THAT? >> IT IS A REALLY GOOD QUESTION. LOOK, THE DATASETS ARE MASSIVE. RIGHT? WHAT YOU'VE GOT TO DO I THINK, I EVEN HAVE A TENDENCY TO DO THIS, YOU'VE GOT TO BE CAREFUL ABOUT LOOKING AT ONE OR TWO PRINTS AND THINKING ABOUT THE MACRO OVER THE MICRO. EVEN IN THE DISTRICT, SOME COMMUNITIES ARE BOOMING, SOME ARE JUST DOING OK. EVEN ABOUT INDUSTRIES, THE CATTLE INDUSTRY IS BOOMING BUT THE POULTRY INDUSTRY IS A SOFT. YOU HAVE TO BE THOUGHTFUL ABOUT THAT. HAT -- WHAT HAPPENS TO ME, MY PERSONAL EXPERIENCE AS WE GOT INTO THEREE -- THREE SUB 3. AND YOU DON'T WANT TO OVERSHOOT WITH THE POLICY RATE DECISION. YOU WANT INFLATION DOWN TO 2%. YOU WANT DEFLATION BUT NOT DISINFLATION. THE DECISION GETS HARDER. THERE IS A LOT OF DEMAND ELEMENTS UNDERNEATH THIS ECONOMY THAT I THINK A BIT HIGHER RATE MAY MAKE SENSE. >> AS SOON A SEPTEMBER 16TH? >> -- AS SEPTEMBER 16TH? >> GIVING THE CHAIRMAN SOME ROOM IS IMPORTANT. THE TASK FORCES WILL BE INSTRUCTIVE. THE FOMC IS LOOKING FORWARD IN MY OPINION TO THOSE. SOME OF MY COLLEAGUES DISSENTED AT THE LAST MEETING. I WOULD PUT MYSELF IN THAT CAMP, BUT HERE AGAIN THERE IS REALLY GOOD ARGUMENTS ON BOTH ENDS OF THIS POLICY DECISION. SO LET'S GET A LITTLE BIT MORE DATA AND LET'S SEE WHAT THE TASK FORCES WILL SEE OVER THE NEXT SUCCESSIVE MEETINGS. MAYBE THERE'S A BIT OF A RECENT WE HAVE TO MAKE. FOR ME, WE ARE A LITTLE ON THE ACCOMMODATIVE SIDE. >> YOU PROBABLY CANNOT MAKE THIS ANNOUNCEMENT BUT WOULD YOU ASSUME AS MOST PEOPLE DO THAT OCTOBER 28TH IS OFF THE TABLE BECAUSE IT IS TOO CLOSE TO THE ELECTION? >> I DON'T THINK SO, MIKE, WE HAD THIS DISCUSSION ABOUT INDEPENDENCE. WE GET IN THAT ROOM. WE SPEAK OUR TRUTH ABOUT WHAT WE THINK THE ECONOMY IS DOING. AND, YOU KNOW, I JUST DON'T THINK IT ENTERS INTO THE EQUATION, IT CERTAINLY DOES NOT ENTER INTO MY EQUATION. WE HAVE A MANDATE -- IT IS KEEP PRICES AT 2% INFLATION AND KEEP EMPLOYMENT, LABOR FULL. THAT IS A PRETTY SIMPLE MANDATE. SO, I CAN AT LEAST OFFER MY OPINION AROUND THAT AND BE HOPEFUL THAT MAYBE OTHER FOLKS ON THE FOMC THINK THE SAME. >> DOES THE FED HAVE A CREDIBILITY ISSUE? THERE'S TALK ON WALL STREET THAT IT MIGHT. >> WELL, FOR ME, I JUST DON'T SEE IT. I THINK IF YOU LOOK AT THE TWO GREAT CYCLES THAT CHALLENGE THE FED, THE POST '08 AND POST-COVID CYCLE, WE MIGHT HAVE MISSED A FEW THINGS EARLY IN THE '21, '22 CYCLE BUT WE USE POLICY RATES TO PUSH INFLATION DOWN, WE WERE TRENDING PRETTY WELL. WE WERE DOING OUR JOB. WE WERE THOUGHTFUL IN MOMENTS WHERE THE LABOR FORCE WAS STRUCTURALLY CHANGING WHICH IT STILL IS. FOR ME, I THINK WE ARE DOING OUR JOB, WE JUST HAVE NOT GOTTEN TO THE POINT WHERE WE CAN SAY, HEY, WE ARE AT A GOOD PLACE. MAYBE REMINISCENT OF THE CYCLE OF THE 1990'S WHERE YOU GET INFLATION DOWN TO 2%, YOU HAVE FULL EMPLOYMENT AND USER POLICY RATE IN A WAY TO KEEP THE ECONOMY MOVING ALONG WELL. PAUL: KANSAS CITY FED PRESIDENT JEFFREY SCHMIDT SPEAKING WITH BLOOMBERG'S MICHAEL MCKEE AT JACKSON HOLE. THE FORMER U.S. APARTMENT CHIEF ECONOMIST WILL JOIN US SHORTLY TO DISCUSS HER OUTLOOK FOR THE U.S. ECONOMY AS INVESTORS AWAIT KEVIN WARSH'S REMARKS. LET'S GET A CHECK OF THE TOP GLOBAL HEADLINES WE ARE FOLLOWING. U.S. TRADE REPRESENTATIVE JAMIESON GREER SAYS WASHINGTON SHOULD CONSIDER BANNING SOME CANADIAN GOODS AS THE TRADE WAR HEATS UP. WASHINGTON SLAPPED TARIFFS OF 50% ON $20 BILLION OF CANADIAN IMPORTS WHILE OTTAWA'S RETALIATORY DUTIES KICK IN NEXT MONTH. THE CLASHES SET TO ESCALATE WITH PRESIDENT TRUMP SENDING IN ORDER RENAMING LAKE ONTARIO AS LAKE AMERICA SAYING THAT WILL TAKE EFFECT IMMEDIATELY. >> CANADA TREATS US VERY BADLY AND PEOPLE OFTEN TIMES -- WHO WAS THE WORST A DEAL WITH ON TRADE? THAT'S EASY. CANADA. THEY ARE THE WORST. THEY FEEL ENTITLED. WE CAN'T HAVE THAT. PAUL: VENEZUELA IS SAID TO BE CLOSELY EXAMINING PLANS TO LEAVE OPEC. SOURCES SAY THE IDEA HAS BEEN A TOPIC OF CONVERSATION WITH THE U.S. OFFICIALS BUT NO FINAL DECISION HAS BEEN MADE. AN EXIT WOODSTOVE DOUBTS OVER WHETHER OPEC CAN CONTINUE TO HOLD TOGETHER. IT WILL STRESS THE REALIGNMENT IN CARACAS SINCE PRESIDENT TRUMP OUSTED LONGTIME LEADER NICOLAS MADURO. WE HAVE MORE HEAD ON "THE ASIA TRADE." STAY WITH US. THIS IS BLOOMBERG. ♪ >> AND WE START YOU OFF WITH BREAKING NEWS OUT OF JAPAN. WE ARE GETTING THE AUGUST C.P.I. NUMBERS. THE CORE INFLATION FOR TOKYO NOW RISING 1.8%%, COMING IN IN LINE WITH ESTIMATES ACCELERATING SLIGHTLY FROM THE PREVIOUS MONTH. FOR THE HEADLINE NUMBERS, C.P.I. GROWTH YEAR-ON-YEAR OF 1.9% ONLINE. CORE C.P.I. AS WELL EXCLUDING FRESH FOOD AND ACCELERATION OF 2%. WE’RE FOLLOWING THE TOKYO INFLATION PICTURE BECAUSE IT GIVES YOU AN IDEA OF WHERE NATIONAL PRICES ARE HEADED. THEY’RE AROUND THAT 2% LEVEL AS WE CONTINUE TO GAUGE WHAT THE BANK OF JAPAN WILL DO NEXT. RIGHT NOW PRICING IN AN 2% SEPTEMBER HIKE. THE MARKETS COMING IN FOR JAPAN 2.4%, SLIGHTLY TIGHTER THAN MARKETS HAD EXPECTED. FOR JULY THE JOB TO APPLICANT RATIO 118 JOBS PER 100 APPLICANT. PAUL. PAUL: LET’S LOOK AT SOME KEY ASSETS AHEAD OF KEVIN WARSH’S JACKSON HOLE SPEECH. WE HAVE A LOT OF SIDEWAYS DRIFT ALMOST AS IF THE MARKETS ARE WAITING FOR SOMETHING AND THEY’RE WAITING FOR THAT SPEECH. NOT A LOT OF ACTIVITY IN THE BOND MARKET. THE FED CONTINUING TO JUST TAKE THIS WAIT AND SEE START. JOINING US NOW IS BETSY STEPHENSON PROFESSOR AT THE UNIVERSITY OF -- THANK YOU FOR JOINING US. WHAT ARE YOU EXPECTING TO HEAR FROM KEVIN WARSH IN HIS JACKSON HOLE SPEECH? >> THERE IS A LOT OF PRESSURE ON A FIRST DEBUT SPEECH AT JACKSON HOLE. WHAT IS HE GOING TO SAY BUT HONESTLY, I DON’T THINK WE’RE GOING TO HEAR A LOT. THAT’S MY GUESS. WE’LL SEE IF I’M WRONG BUT HE’S TAKEN THE APPROACH THAT, YOU KNOW, IF HE TELLS TOO MUCH, HE JUST ENDS UP POTENTIALLY BRINGING MORE POLITICAL HEAT ON HIM AND ON THE FED. SOCK HE’S TAKING THIS SORT OF WONKY APPROACH BUT HE REALLY DOESN’T TALK ON FED POLICY IN QUITE THE SAME WAY WE HAVE HEARD OTHER CENTRAL BANK PRESIDENTS TALK ABOUT SO I THINK PEOPLE ARE WAITING TO SEE IF THEY GET MORE ABOUT WHAT IS HIS APPROACH. OR MAYBE A FORECAST. BUT HE IS ALSO NOT REALLY TELLING US HOW DOES HE THINK THE ECONOMY WORKS AND HOW ARE THINGS GOING AND WHAT WOULD HE DO AND HOW DOES HE BALANCE THESE COMPETING RISKS? I THINK PEOPLE ARE GOING TO BE PASTING IT TO SEE IF THEY GET A BETTER UNDERSTANDING OF THOSE KINDS OF ATTITUDES FROM HIM. PAUL: DO YOU FEEL LIKE THERE’S ANY RISK WITH THIS GUID GUIDANCE-LIGHT APPROACH OR IS SIT BETTER TO STEP BACK AND LET THE MARKETS FUNCTION, DO THEIR JOB? >> THEIR JOB IS TO REACT TO INFORMATION AND THE FED HAS SOME INFORMATION AND THEY SHOULD BE SHARING THAT INFORMATION WITH THE MARKETS SO THAT THEY CAN ABSORB THAT INFORMATION QUICKLY SO I DON’T KNOW THAT THIS IDEA OF THE FED KNOWS THINGS BUT THEY’RE NOT GOING TO TELL YOU BECAUSE THEY WANT YOU TO DISCOVER IT FOR YOURSELF IS NECESSARILY THE BEST THING. THERE ARE TWO WAYS TO THINK ABOUT FORWARD GUIDANCE. ONE IS LIKE I’M GOING TO TELL YOU WHAT I’M GOING TO DO. THAT DOESN’T MAKE SENSE FROM ANYBODY’S PERSPECTIVE RIGHT NOW. THE DECISIONS ARE SO DATE-DEPENDENT NOBODY KNOWS WHAT THEY’RE GOING TO DO. THEY TONIGHT WANT TO MAKE PROMISES AND I THINK CHAIR POWELL HAD MOVED AWAY FROM FORWARD PROMISES BUT THERE’S A DIFFERENCE BETWEEN SAYING THIS IS WHAT MY EXPECTATION IS OR SOMETHING MORE NARROW WHICH IS THIS IS WHAT WE’RE HEARING FROM PEOPLE IN THE COMMUNITY. HE’S BEEN REALLY, I’M GOING TO KEEP ALL THE CARDS CLOSE TO MY CHEST AND PEOPLE WANT TO SEE HIM MOVE THOSE CARDS AWAY JUST A TINY BIT. WHICH ISN’T NECESSARILY THE SAME THING AS GIVING FORWARD GUIDANCE. G.D.P. IN THE THIRD QUARTER LOOKS LIKE IT’S GOING TO COME IN REALLY STRONG BUT IT SEEMS TO BE DOING IT WITHOUT A LOT OF WORKERS. WE DON’T SEE STRONG EMPLOYMENT YET WE ALSO SEE INFLATION THAT IS PERSISTENTLY STICKING ABOVE THEIR TARGET. HOW ARE THEY PUTTING ALL THOSE THINGS TOGETHER? PAUL: I’D LIKE YOUR VIEW AS A FORMER ECONOMIST FOR THE U.S. LABOR DEPARTMENT. WE HAVE JOBLESS CLAIMS NEAR AN HISTORIC LOW. PRICING CLAIMS REMAIN ELEVATED. HOW DURABLE WOULD THE JOBS MARKET BE IF THE FED DID DECIDE TO TIGHTEN? >> I THINK THE JOB MARKET, I WILL SAY, IS VERY DIFFICULT FOR ANYBODY TO ANALYZE WELL RIGHT NOW BECAUSE WE HAVE HAPPENED BIG CHANGES IN OUR IMMIGRANT POPULATION. IMMIGRANTS HERE AND HOW WE ATTRACT IMMIGRANTS TO THE UNITED STATES AND THAT’S CHANGED THE LABOR MARKET THIS WAY THAT IS MAKE IT HARDER TO PARSE THE DATA. THAT SAID, AS YOU POINTED OUT, EVERYTHING LOOKS PRETTY GOOD IN THE LABOR MARKET. UNEMPLOYMENT REMAINS REASONABLY LOW, EVEN IF IT’S SORT OF POINTED UPWARDS OVER THE LAST SIX MONTHS. STILL HISTORIC LOWS. INSURANCE CLAIMS ARE HISTORIC LOWS ALTHOUGH THE PEOPLE WHO ARE UNPLOYED ARE STAYING UNEMPLOYED FOR A REALLY LONG TIME SO THEY’RE NOT ELIGIBLE FOR UNEMPLOYMENT INSURANCE. SO WE COULD HAVE UNEMPLOYMENT RISING ONE EMPLOYMENT CLAIMS STAYING LOW. YOU HAVE TO PARSE THIS COMPLICATED DATA BUT WHEN WE LOOK AT ESTIMATES FOR THIRD QUARTER G.D.P. CONSUMER SPENDING IS STRONG ENOUGH I THINK THAT THE ECONOMY CAN TOLERATE COMING IN A LITTLE BIT HARDER AFTER INFLATION SO I KNOW THEY’RE A LITTLE ANXIOUS TO DO THAT AND I DON’T THINK ANYONE WANTS TO RAISE RATES RIGHT BEFORE AN ELECTION AND I DON’T THINK THAT WAS TRUE BEFORE THIS PRESIDENT CAME INTO OFFICE. PAUL: I’D LIKE TO GET YOUR VIEW ON THE PER CENTER DEALT AND DEFICIT ISSUE IN THE UNITED STATES. THE FOREIGN MARKET SENDING CLEAR SIGNALS THAT IT WOULD LIKE TO SEE SOMETHING GET DONE. IF NOTHING GETS DONE, HOW DO YOU SEE THE FED REACTING? >> AS YOU SAID, THE CHALLENGE IS EVERYBODY WANTS TO BORROW. WHEN EVERYBODY WANTS TO BOWO THE MONEY IS GOING TO GO TO WHO’S WILLING TO PAY THE MOST. THE UNITED STATES HAS BEEN IN THIS SITUATION WHERE GOVERNMENT SPENDING HAS STAYED PERSISTENTLY TWO, THREE, FOUR, SOMETIMES FIVE PERCENTAGE POINTS ABOVE GOVERNMENT REVENUE IN GOOD TIMES AND BAD TIMES NOW FOR QUITE SOME TIME AND THAT HAS GOT TO BE FIXED. THAT CAN’T BE ONGOING BECAUSE IT’S TOO BIG OF A GAP. AND THAT IS -- I THINK THE BOND MARKET IS SAYING YOU NEED TO GET YOUR HOUSE IN ORDER AND I THINK THE CHALLENGE IS THERE’S NOT A LOT OF SPENDING PEOPLE WANT CUT. WE DON’T WANT TO SEE THINGS LIKE SOCIAL SECURITY OR MEDICARE, WHICH ARE BIG-TICKET ITEMS GETTING CUT AND REALLY THE ONLY SOLUTION IS GOING TO BE TO DO MORE TO RAISE REVENUE. NOBODY LIKES THOSE SOLUTIONS EITHER. YOUR GUESS IS AS GOOD AS MINE AS WHAT’S GOING TO FINALLY CAUSE PUSH COMING TO SHOVE AND SOME DECISION BEING MADE ABOUT HOW TO ADDRESS THIS PROBLEM AND THE BOND MARKET IS CERTAINLY TRYING TO BE ONE OF THOSE PUSHES. PAUL: BETSEY STEVENSON, PROFESSOR OF PUBLIC POLICY AND ECONOMICS AT THE UNIVERSITY OF MICHIGAN. SHERY? SHERY: WE’D LIKE TO CLARIFY AN EARLIER STORY. SK HYNIX SAYS HE’S IT’S TRYING TO FIND WAYS TO DEEPING TIES. MORE HALED ON "THE ASIA TRADE." THIS IS BLOOMBERG. PAUL: MORE EARNINGS OUT OF CHINA ON THE WAY INCLUDING MEITUAN AND THE CHIP MAKER CSMT EXPECTED TO REPORT EXPLOSIVE GROWTH AS A LISTED COMPANY. MINMIN LOW JOINS US. CAN CSMT LIVE UP TO THE VERY HIGH EXPECTATIONS TODAY? MINMIN: INDEED, I THINK INVESTORS WILL BE CLOSELY WATCHING THIS GIVEN IT SKY-HIGH VALUATION NOW AS THE MOST EXPENSIVE COMPANY IN CHINA RIGHT NOW. ITS PROSPECTUS WAS LISTED IN SHANGHAI IN JULY, PROJECTED REVENUE WOULD GROW BY OVER 600% SO AN EXPLOSIVE GROWTH ON THE BACK OF THE HUGE DEMAND FOR THOSE CHIPS. THAT IS COMING LIKE OTHERS HAVE SHIFTED PRODUCTION AWAY FROM D-RAM TO HBF. ANALYSTS HAVE NOT PROVIDED QUARTERLY EARNINGS ESTIMATES BUT YOU CAN SEE HERE THE REVENUE EXPECTED TO GROW MULTIFOLD YEAR ON YEAR. NET INCOME AS WELL. FROM 300 TO 159 BILLION FOR THE FULL YEAR. SO REALLY STRONG EXPECTATIONS BUT WE’LL BE WATCHING OUT FOR ANY GUIDANCE FROM THE COMPANY, ESPECIALLY REGARDING IT TECHNOLOGY. IT’S SAID TO GIVE A SMALL SUPPLY OF CHIPS TO HUAWEI. ITS CURRENT D-RAM CHIPS IS PERHAPS ONE TO TWO GENERATIONS BEHIND THE GLOBAL AMERICAN MARKS NOW. IT IS ALSO BEING OCCUR TAILED A LITTLE BIT ON THE EQUIPMENT FRONT AS WELL. PAUL: YOU MENTIONED GUIDANCE. THAT’S GOING TO BE A CRITICAL QUESTION FOR MEITUAN AS WELL. IN THIS CASE, EXPECTING A FOURTH CONSECUTIVE QUARTER OF LOSSES. WHAT DOES THE MARKET NEED TO HEAR ABOUT WHAT’S COMING NEXT? MINMIN: FOR MEITUAN, I THINK INVESTORS WILL DEFINITELY WANT TO HEAR ABOUT THE GUIDANCE AGAIN ON ITS TIMELINE TO PROFITABILITY BECAUSE IT’S ALREADY HAD THREE CONSECUTIVE QUARTERS OF LOSSES. IT’S EXPECTED TO SEE ANOTHER QUARTER OF LOSS BUT THAT LOSS IS EXPECTED TO DECLINE SIGNIFICANTLY SO THAT IS A GOOD THING. THE PRICE COMPETITION BETWEEN J.D..COM AND ALIBABA HAS EASED A LITTLE BIT. GROWTH RETAIL, THAT IS A LOWER MARGIN, HEAVY-ASSET BUSINESS THAT IS EXPECTED TO DRAG ON IT CASH FLOW BUT HERE YOU CAN SEE A REALLY RAPID DECLINE IN LOSSES SO THAT IS SOMETHING THAT IS POSITIVE. WE’LL BE WATCHING WHETHER OR NOT THE COMPANY THE ABLE TO BEAT EXPECTATIONS AND TURN POSITIVE IN ITS NET INCOME THIS QUARTER. SHERY: MINMIN LOW THERE. THE BIGGEST LENDERS ALSO SET TO REPORT ON FRIDAY. THE LARGEST BANK, ICBC IS EXPECTED TO REPORT HIGHER VOLUME. ALSO VOLUME LEAD OVER OTHER BANKING SEGMENTS THROUGH THE REST OF THIS YEAR. WE’LL HAVE LATER MORE WITH UBS INVESTMENT BANK. THE AUTOMAKER COULD SEE QUARTERLY LEVEL RETURN TO GROWTH AFTER THREE QUARTERLY DECLINES. CHARLOTTE, WE’VE SEEN THAT STOCK RALLY MORE THAN 20% THIS QUARTER. WHAT WILL YOU BE WATCHING IN THESE RESULTS TO JUSTIFY THAT? CHARLOTTE: YES, IT’S ALL ABOUT I WOULD SAY BUSINESS MOMENT FOR BYD AND IF IT’S TURNING THOSE VOLUME GROWTHS INTO PROFIT GROWTH. THE OVERSEAS BUSINESS IS INCREASINGLY IMPORTANT FOR BYD. NOT ONLY BECAUSE IT’S SELLING OVER 40% TO CHINA BUT MORE IMPORTANTLY IN THOSE MARKETS IT’S ABLE TO SELL HIGHER PRICED PRODUCTS THAN THEY DO AT HOME. THAT’S EXPECTED TO CUSHION SOME OF THE COST OF PRESSURE FROM THE RAW MATERIALS AS WELL AS THE DOMESTIC COMPETITION. THAT’S WHY THIS STOCK HAS GONE UP THIS QUARTER. WHEN RESULTS ARE OUT, INVESTORS WILL PAY CLOSE ATTENTION TO THE NET INCOME, WHICH IS EXPECTED TO CLIMB BACK 25% FROM LAST YEAR AND THEN EXACTLY HOW MUCH THEY’RE PAYING FOR VEHICLE. ON THE DOMESTIC MARKET, BYD HAS BEEN ABLE TO WIN BACK SOME OF THE MARKET SHARE IT HAD LOST EARLIER TO COMPETITION BECAUSE OF A STRONGER PRODUCT CYCLE BUT THE DOMESTIC MARKET -- INVESTORS HAVE BEEN PRICING OVERALL WITH DEMAND ALSO CONTINUING COMPETITION. SO THE PROFIT CENTER HAS TO BE AN OVERSEAS BUSINESS. THAT’S GOING TO BE THE MOST IMPORTANT CATALYST FOR THE STOCK. SHERY: IT WAS INTERESTING HEARING FROM JAPANESE AUTOMAKERS’ EARNINGS SEASON. HOW THEY ALL HAD CHANNELS IN THE CHINA MARKET, WHETHER BECAUSE OF COMPETITION OR JUST AS YOU MENTIONED, WEAK DEMAND. WHAT WERE THE KEY TAKEAWAYS FOR CHINESE AUTOMAKERS AS WE’RE WRAPPING UP THOSE RESULTS NOW? CHARLOTTE: THE BIGGEST TAKEAWAY IS THAT DOMESTIC COMPETITION REMAINS INCREDIBLY TOUCH AND DIVERGENCE FOR AUTOMAKERS THAT MEANINGFUL EXPOSURE COMPARED TO THOSE WHO ARE FOCUSED ON CHINA. THE LIKES OF XPENG AND LI AUTO ARE STRUGGLING IN CHINA. AND ALSO, SEPTEMBER AND OCTOBER ARE TRADITIONALLY WHAT THEY CALL A HOT AUTO SALES SEASON BUT YOU DON’T REALLY HAVE THAT -- YOU’RE NOT HEARING THAT OPTIMISM ON EARNINGS COST FROM THE AUTOMAKERS WHEN THEY TALK ABOUT CHINA. PASSENGER VEHICLE SALES WERE DOWN 30% IN THE FIRST HALF BUT YOU HAVE NEW HOLDS TO INTRODUCE. SO THAT SHOWS YOU DOMESTIC COMPETITION IS A STEREO SUM GA GAME. AUTOMAKERS, IF THEY HAVE THE CAPABILITY, THEY’RE TURNING TO THE OVERSEAS MARKET. INVESTORS ARE GOING TO BE VERY SELECTIVE. FOCUSING ON THOSE EXPORT GAINERS. SHERY: CHARLOTTE, ALWAYS GOOD TO GET YOUR PERSPECTIVE. MORE ON HOW TECH ALSO IS RESHAPING THE REGION ON TODAY’S EPISODE OF BLOOMBERG TECH ASIA. WE’LL UNPACK WHETHER INDIA’S AI VISION CAN OVERCOME THE REALITIES ON THE GROUND. WE’RE LIVE AT THE TIMES ON YOUR SCREEN. PAUL? PAUL: ALL RIGHT, THE LATEST FROM THE CORPORATE FRONT. TOYOTA WILL PRODUCE IT NEXT GENERATION E.V. IN CHINA. IT WILL BE SOLD AS AN S.U.V. UNDER ITS LUXURY BRAND, LEXUS. BLOOMBERG INTELLIGENCE SAYS TOYOTA IS STILL THE WORLD’S MOST DESIRED AUTO BRAND. CITADEL POSTED A RECORD $7.3 BILLION OF TRADING REVENUE FOR THE SECOND QUARTER. THAT WAS MORE THAN TRIPLE THE LEVEL FROM YEAR AGO WHILE NET INCOME ALSO CLIMBED TO $3.3 BILLION. CITADEL IS A GROUP OF FIRMS TO HELP MATCH BUYERS AND SELLERS. QANTAS WILL RETIRE ITS AIRBUS AND ALSO ANOTHER PLANE. WE SPOKE ABOUT THE FLEET REVAMP. >> THE NEW PLANES COMING. PROJECT SUNRISE, A3-50. MORE A3-501,000’S, MORE 787’S. THESE ARE THE NEXT-GENERATION AIRCRAFT. >> A 40TH 4% IN YES, YOUR HONOR LYING PROFIT. PART OF THE PROBLEM HAS BEEN SURGING FUEL PRICES AS A RESULT OF THE IRAN WAR. FUEL PRICES JUMPED BY $610 MILLION AUSSIE DOLLARS. HAS THE CONFLICT IN THE MIDDLE EAST FUNDAMENTALLY CHANGED THE WAY YOU’RE THINKING ABOUT FUEL HEDGING? >> GANTAS HAS THAT STRONG RECORD OF FUEL HEDGING AND IT’S A POLICY THAT’S BEEN IN PLACE FOR OVER A DECADE. THAT’S NOT GOING TO CHANGE. FUEL HEDGING ONLY ACTUALLY BUYS YOU A CERTAIN AMOUNT OF TIME BECAUSE OUR PHILOSOPHY IS THAT WHEN FUEL PRICES ARE HIGH, WE’LL ADJUST CAPACITY AND FARES TO ENABLE US TO RECOVER WHAT IS SUCH A SIGNIFICANT COST LINE FOR US BUT ALSO FOR ALL AIRLINES WHANDI’VE BEEN WE’VE SEEN A SIMILAR RESPONSE ACROSS THE GLOBE. WE’RE BICYCLE TO BE VERY -- CONTINUE TO BE VERY DISCIPLINED WITH YOUR FUEL HEDGING APPROACH AND MAKE SURE WE HAVE AN ABILITY TO PARTICIPATE AS WELL. IF AND WHEN FUEL PRIZES NORMALIZE. >> WHAT IF FUEL PRICES STAY HIGH? WHO’S GOING TO ULTIMATELY BEAR THE COST? SHAREHOLDERS THROUGH PRESSURE ON MARGINS OR PASSENGERS THROUGH HIGHER FARES? >> IF FUEL PRICES STAY HIGH FOR LONGER WE ARE GOING TO HAVE TO ADJUST FARES. SOMETHING WE’VE BEEN DOING AND ALL AIRLINES HAVE BEEN DOING. ALSO MANAGE CAPACITY. MAX MALCAPACITY IN PERIODS OF HIGH FUEL PRICES. OVER TIME I THINK YOU’LL SEE THAT ALL AIRLINES ARE ADAPTING TO AN ENVIRONMENT IF THAT WERE TO HAPPEN, THROUGH FARES BUT ALSO THROUGH COST REDUCTIONS. TRANSFORMATION AND COST TRANSFORMATION HAS BEEN A DISCIPLINE WE’VE HAD AT QANTAS FOR MANY YEARS. WE SEE THAT THAT IS A HUGE OPPORTUNITY BUT NEW AIRCRAFT AS WELL. IF YOU THINK ABOUT AIRFARES MAY BE ONE PART. COST REDUCTIONED A BUT THE NEW AIRCRAFT THEMSELVES WILL BE TRANSFORMATIVE IN TERMS OF BETTER FUEL EFFICIENCY, LOWER CONSUMPTION OF FUEL BUT UNLOCKING NEW DESK NEIGHINGS AND NEW ROUTES IS A FUNDAMENTAL PART OF TRANSFORMATION. PAUL: VANESSA HUDSON FROM Q ANTAS. HERE’S WHAT WE’LL LOOK AT WHEN MARKET OPEN SHORTLY. RISING COSTS ACROSS THE AVIATION SUPPLY CHAIN REMAIN A CONCERN. WESTGOLD’S FULL YEAR REVENUE SAYING IT EXPECTS TO PROVIDE FURTHER UPDATES ON ITS GROWTH STRATEGY AND OUTLOOK IN THE COMING WEEKS. MORE AHEAD ON "THE ASIA TRADE." THIS IS BLOOMBERG. >> [SPEAKING ANOTHER LANGUAGE] >> IF WE CONSIDER THAT UNDERLYING INFLATION IS APPROACHING%, WE NEED TO CONSIDER THE UPSIDE RISK OF INFLATION AND CHECK THE OUTLOOK AT EVERY POLICY MEETING. SHERY: THAT WAS THE DEPUTY FINANCIAL GOVERNOR SPEAKING AT AN EVENT HERE. STILL, HE DIDN’T GIVE ANY SIGNAL WHEN IT COMES TO THE SEPTEMBER RATE DECISION. LEFT THE 82% SEPTEMBER HIKE ODDS INTACT. NIKKEI FUTURES POINTING TO A DOWNSIDE OF .3% AFTER ALREADY A SESSION OF LOSSES BUT THE YEN HAS BEEN TRADING SIDEWAY FOR THE SOME DAYS. THE MARKET OPENS ARE NEXT. THIS IS BLOOMBERG. ♪ SHERY: THIS IS "THE ASIA TRADE." WE’RE COUNTING DOWN TO ASIA’S MAJOR MARKET OPENS AFTER GAINS ON ON THE WALL STREET SESSION BUT THE BIG POP IN NVIDIA REALLY STOOD OUT. WE’LL BE WATCHING THE TECH SECTOR ACROSS ASIA NOT TO MENTION ANY CENTRAL BANK SPEAK COMING FROM JACKSON HOLE. PAUL: AN INTERESTING PART OF THAT WAS SOFTWARE SALES ARE BACK. RUMORS OF THE DEATH OF THE SOFTWARE SECTOR AT THE HANDS OF AI ARE PERHAPS GREATLY EXAGGERATED PUT YOU’RE RIGHT, SHERY, THE EVENTS OF THE WEEK. EVERYBODY IS SORT OF SITTING BACK WAITING TO SEE WHAT KEVIN WARSH SAYS IN THE SPEECH TO JACKSON HOLE. SHERY: ESPECIALLY GIVEN THE MARKET IMPACT WE HAD AFTER HIS SPEECH IN JULY. SEE IF HE GIVES ANY MORE GUIDANCE ON THE PATH OF MONETARY POLICY FOR THE FEDERAL RESERVE. HERE IN JAPAN WE’RE ALSO GETTING PERHAPS A LITTLE BIT MORE CLARITY ABOUT THE BANK OF JAPAN. THE DEPUTY GOVERNOR TALKING ABOUT THE UPSIDE INFLATION RISKS. STILL HE DIDN’T GIVE ANY CLUES ON WHAT HAPPENS IN THE DECEMBER SESSION. THE NIKKEI IS OPENING AT THE MOMENT, NOT DOING MUCH AFTER LOSSES IN THE PREVIOUS SESSION AND EVEN THE JAPANESE YEN HAS BEEN TRADE SIDEWAYS. WE’LL BE WATCHING THE TECH SECTOR CLOSELY GIVEN THAT WE’VE HEARD FROM C KIOXIA AND SAN DISK. J.J.B. IS HOLDING AT THAT 290 FOR THE 10-YEAR BENCHMARK. WATCH OUT FOR THE AUCTIONS COMING UP. IF WE SEE MORE WEAK DEMAND AND VOLATILITY THAT WILL HAVE CONSEQUENCES FOR GLOBAL YIELDS. SK HYNIX SAYING THAT IT WANTS TO CORPORATE MORE WITH JAPANESE BUYERS AND SUPPLIERS. STOCK DOWN ABOUT 1.5%. THE KOSPI ALSO LOSING .1%. THE KOREAN WON HAS STRENGTHENED BUT IT’S ALL ABOUT THE TECH STORY IN SOUTH CONTEMPORARY AS WELL. PAUL: WE JUST OPENED HERE IN AUSTRALIA AS WELL. MODEST GAINS. MATERIALS, WHICH IS ONE OF THE HEAVYWEIGHTS IS IN POSITIVE TERRITORY AS WELL. FINANCIALS FLAT AT THE MOMENT. A LOT OF ACTION IN THE BOND SPACE. LET ME START WITH OIL. $89.0 FOR A BARREL OF BRENT. NOT A GREAT DEAL BUT THE U.S. IS IN TALKS WITH VENEZUELA TO TAKE A LARGE STAKE IN ITS OIL FIELDS BUT THE ACTION OR LACK THEREOF ON THE TREASURY FRONT, EVERYTHING IS GOING SIDEWAYS, ALMOST AS IF IT’S WAITING FOR SOMETHING. WELL, PERHAPS IT IS THAT SPEECH FROM KEVIN WARSH COMING UP AT JACKSON HOLE. GOLD CATCHING A BID AS WELL. SHERY: QIOXIA AND SAN DISK PLANNING TO GROW IN JAPAN. ANTHONY STEPHENS JOINS US WITH THE LATEST. WOE EVEN SAW FROM NVIDIA ABOUT HOW THAT STORY MAY NO LONGER BE ABOUT AI COMMAND BUT THE CHIP SHORTAGE. WHAT ARE WE SEEING? ANTHONY: ABSOLUTELY RIGHT. WE TALK ABOUT NVIDIA. THEY SAID THEY WOULD ONLY GROW AT 70% BECAUSE OF THAT MEMORY SHORTAGE. THEY REFERENCED SOME HUGE COMMITMENTS FOR MEMORY AND THAT WAS A GOOD SETUP BUT NOW WE CONTINUE THIS TENSION IN THE MEMORY TRADE BETWEEN THE MONEY THEY’RE MAKING TODAY AND THE MONEY THEY’RE INVESTING TO MAKE MONEY TOMORROW. THAT IS WHERE INVESTORS’ CONCERN LIES. ARE PEOPLE INVESTING IN THE TOP OF THE CYCLE IN WHAT USED TO BE A CYCLICAL INDUSTRY OR HAS THIS MARKET BROKEN FREE OF THE CYCLICAL NATURE? THAT BELIEVE IS NOT WIDESPREAD AND THAT DROVE SOME OF THE DOWNTURN FROM JULY WHEN INVESTORS GOT OVEREXUBERANT AND THEY HAD TO PAY A BET. NOW WE HAVE TO ASSESS THIS BELT AS THE COMPANIES CONTINUE TO INVEST. LEANING INTO THE MEMORY TRAILED. KIOXIA IS ONE OF THE BIG SUCCESS STORIES OF THE JAPANESE TECH INDUSTRY AND THE GOVERNMENT IS BEHIND HIM. A BIG TIE-UP PERHAPS WITH S SANDISK AND ALSO THE EXPANSION THAT KIOXIA IS DOING ON ITS OWN. WE HAVE SEEN SOME DEEARNINGS TODAY TO GIVE YOU PULSE CHECK ON THAT PROGRESS. ALSO CMT IS DOING SOME NEW TECHNOLOGY TO TRY AND CATCH UP WITH SK HYNIX. THAT WILL BE INTERESTING TO SEE. ALSO IPC. SAYING THEY’RE GOING TO TRY TO USING THAT MONEY TO TRY AND CATCH UP F IN THE CAP SPACE. COMING ONLINE LATE IN THE CYCLE AND THAT IS WHAT IS CONCERNING INVESTORS AT THIS JUNCTURE. PAUL: WHAT ELSE SHOULD WE BE WATCHING IN ASIAN TECH TODAY? SOFTWARE MAKING A COMEBACK? ANTHONY: ABSOLUTELY. YOU SAW INDIA TECH MOST NOTABLY LAG VERY BADLY. EVEN VERSUS ITS OWN MARKETS WHEN ISN’T DOING VERY MUCH. IT’S STILL DOUBLING IN THE SPACE, HOW CAN PEOPLE MONEY SPACE SOFTWARE IN THE AI WORLD? CAN YOU GET BETTER MARGINS BY USING AI TO SERVE THOSE CLIENTS? THE U.S. COMPANIES HAVE DONE THAT REALLY WELL. CAN THAT BE REPLICATED BY SOME OF THE SMALLER MODELS? THEN USING LLM INNOVATION FOR LOW COST AND VERY LOW MARGIN. CAN THAT BE A SUSTAINABLE WAY FORWARD? THAT PART OF THE ECOSYSTEM HASN’T GOTTEN A LOT OF CAPITAL IN COMPARISON WITH THE U.S. BUT THAT COULD CHANGE WITH THEM COMING ON BOARD AND CHINA AND DOING WELL FROM DAY ONE. SO MAYBE JUMPING ON THE SOFTWARE TRAIN IS ANOTHER WAY TO PLAY SECOND HALF. SHERY: ANTHONY STEPHENS THERE WITH THE LATEST ON THE MARKETS. BREAKING NEWS. WE ARE UNDERSTANDING THAT -- HAS RECEIVED A APPROACH FOR 2,280 YEN PER SHARE. DENTSU SAID IT WILL CONSIDER THIS. DENTSU IS A BUSINESS SOLUTIONS COMPANY. IT DOES HAVE ONE BUY, THREE HOLDS AND ZERO SELLS FROM ANALYSTS SO DO WATCH OUT FOR THIS STOCK WHICH IS HALTED AT THE MOMENT BUT IT’S BEEN LOSING GROUND THIS WEEK. COMING UP, THE ASX IS MARKING 25 YEARS SINCE IT BECAME HOME TO AUSTRALIA’S RATE OF FUNDS. STATE STREET JOINS US NEXT TO DISCUSS THAT MARKET AND THE PIPELINE. THIS IS BLOOMBERG. ♪ PAUL: LET’S LOOK AT HOW THE KEY STOCK BENCHMARKS IN ASIA ARE TRACKING THIS FRIDAY. MODEST GAINS IN JAPAN, HERE IN AUSTRALIA AS WELL. THE KOSPI SOFTER BY A BIT MORE THAN 1%. BOTH HEAVYWEIGHTS SK HYNIX AND SAMSUNG LOSING A LITTLE BIT OF GROUND. NOT CATCHING THE TAILWINDS FROM NVIDIA THAT WE SAW IN THE U.S. SESSION. OUR NEXT GUEST YOU’RE SEAS ASIA PACIFIC AND EUROPE INVESTMENT FOR STATESTREET INVESTMENTS WITH MORE THAN $2 TRILLION IN ASSETS. LET’S TALK WITH ANN. THANKS FOR JOINING US. ANNE: NICE TO BE HERE. THANK YOU. PAUL: LAST MONTH YOU LAUNCHED TWO ACTIVELY MANAGED E.T.F.’S IN AUSTRALIA. IS THIS JUST THE START? IS THERE MORE COMING? >> SO THIS IS A THEME THAT WE’RE PURSUING GLOBALLY. WE’RE EXPANDING OUR PRODUCTS IN LINE WITH INVESTOR PREFERENCES BUT ALSO EXPANDING OUR INVESTMENT CAPABILITIES SO WE’RE DOING THAT THROUGH PARTNERSHIPS AND THE ONE THAT YOU REFERRED TO IN AUSTRALIA ARE T TWO ACTIVE E.T.F.’S WE LAUNCHED IN COMBINATION WITH BLACKSTONE AND LEADING PROVIDER IN THE CREDIT SPACE SO IT’S AN OPPORTUNITY FOR US TO BRING THAT EXPOSURE TO AUSTRALIAN INVESTORS AND YES, IT’S BEEN A WONDERFUL LAUNCH AND WE DO INTEND TO DO MORE ALONG THOSE LINES. EACH LAUNCHING OUR OWN E.T.F.’S OR IN LINE WITH OTHERS. PAUL: DO YOU GET INTEREST FROM RETAIL INVESTORS AS WELL? ANN: E.T.F.’S ARE INCREASINGLY BECOMING THE PRODUCT STRUCTURE OF CHOICE FOR ALL INVESTORS AND ALL PRODUCTIVE CAPITAL. FROM INSTITUTIONAL INVESTORS AND INCREASINGLY RETAIL INVESTORS SEE THE BENEFIT OF E.T.F. INVESTING, WHICH IS THAT YOU HAVE TRANSPARENCY, LIQUIDITY AND ACCESS TO A WILDER AND WILDER VARIETY VARIETY OF INVESTMENT ASSOCIATION. PAUL: 25 YEARS I BELIEVE SINCE E.T.F.’S FIRST LAUNCHED IN AUSTRALIA. HOW HAVE YOU SEEN THE MARKETS EVOLVE SINCE THEN? ANN: THE LAUNCH WE SALE BERATED YESTERDAY MORNING. BECAUSE WE WERE THE FIRST MANAGER TO LAUNCH E.T.F.’S INTO THIS MARKET. AND WE LAUNCHED THE FIRST ONE OVER 30 YEARS AGO IN THE YOU SAID SO WE HAVE VERY STRONG INTEREST IN THIS SPACE BUT AS YOU SAY, IT’S INCREASINGLY WE’RE SEEING MORE PREVALENCE OF E.T.F.’S, MORE USES OF E.T.F.’S AND OUR EXPECTATION IS THAT HERE E.T.F. GROWTH IS GOING TO BE EIGHT-FOLD IN THE NEXT 15 YEARS. EQUIVALENT TO WHAT’S GOING TO HAPPEN IN AUSTRALIA AS WELL. INCREASINGLY PEOPLE ARE SEEING E.T.F.’S AS THE WAY TO GAIN EXPOSURE TO LEVERAGE IN DIVERSIFIED MARKETS. PAUL: MORE BROADLY, WHAT ARE THE EXPANSION PLANS FOR STATE STREET AND ASIA? ANN: ASIA IS INTERESTING BECAUSE IT’S A DIVERSE REGION AND YOU HAVE DIFFERENT REQUIREMENTS FROM INVESTORS FROM REGULATORS AND INVESTOR PREFERENCES AND THERE ARE SOME SIMILARITIES AS WELL. SO OUTSIDE OF OUR OWN INTENTION, THE GROWTH EXPECTATIONS FOR APAC ARE VERY STRONG AND EXPECTED TO BE GREATER THAN ANYWHERE ELSE IN THE WORLD. WE’VE BEEN HERE IN ONE AREA OR ANOTHER OF ASIA FOR OVER 40 YEARS SO WE KNOW THE INDIVIDUAL ID CINESIS OF THE REGIONS IN APAC AND WE WANT TO LEVERAGE OFF THAT AND AUSTRALIAN ARE LARGE INSTITUTIONAL INVESTORS FOR A LONG TIME. WE’RE THE LARGEST IN AUSTRALIA. THE LARGEST PENSION INVESTOR IN JAPAN BUT WHAT WE’RE SEEING, INCREASED KNOCKTYIZATION OF INVESTING SO THAT MOVE, MORE RETAIL IT’SING THAN WE’VE SEEN IN THE PAST. HERE IN AUSTRALIA THERE’S A STRONG INVESTMENT CULTURE BUT IN JAPAN LESS SO WHEN WE SEE GOVERNMENT-BACKED POLICIES TO TRY AND ENHANCE THAT. PAUL: YOU MENTIONED REGULATORS THERE. HOW DO YOU HAVE TO TAILOR YOUR APPROACH FROM COUNTRY TO COUNTRY? KOREA HAD WELL THIS HAVE PUBLICIZED ISSUES WITH VOLATILITY EARLIER IN THE YEAR. HOW DO YOU TAILOR YOUR APPROACH FOR DIFFERENT JURISDICTIONS? ANN: WE ARE A GLOBAL COMPANY SO WE’RE SET UP FOR GLOBAL GROWTH BUT LOCAL RELEVANCE IS WHAT’S IMPORTANT TO US AND ONE ASPECT IS DIFFERENT REGULATIONS IN DIFFERENT PARTS OF THE WORLD. YOU DO AGAIN SEE SIMILAR THEMES EMERGING FROM REGULAR LATORS BUT ALSO THERE ARE DIFFERENCES AND WE’RE SET UP TO ACCOMMODATE THAT WE’VE BEEN DOING THIS FOR A VERY, VERY LONG TIME. TO UNDERSTAND WHAT THE -- ARE TRYING TO ACHIEVE AND THEN WE’LL BUILD OUR PRODUCTS AROUND THAT. PAUL: YOU ALSO OVERSEA THE MIDDLE EAST AS PART OF YOUR ROLE. HOW WOULD YOU DESCRIBE SENTIMENT AT THE MOMENT AND IN LIGHT OF THE ONGOING CONFLICT BETWEEN THE U.S. AND IRAN? ANN: WE’VE BEEN IN THE MIDDLE EAST FOR OVER 25, 30 YEARS SO WE KNOW OUR CLIENTS THERE VERY WELL. BUT IT’S STILL A REGION THAT’S VERY IMPORTANT TO US AND OUR GROWTH AND I WILL BE SPENDING TIME THERE IN THE NEXT COUPLE OF MONTHS. PAUL: WE NEED TO TALK ABOUT AI AS WELL. IT’S DISRUPTING EVERYTHING A TOUCH. IS IT DISRUPTING YOUR BUSINESS AS WELL AND HOW ARE YOU FINDING WAYS TO WORK IT? ANN: THERE IS BOTH A DISRUPTIVE AND A PRODUCTIVITY ASPECT FOR AI AND FOR US WHEN WE THINK ABOUT AI, OUR BUSINESS IS MANAGING MONEY SO HOW CAN WE USE AI TO HELP US MANAGE MONEY BETTER AND THEN HOW DO WE INTERACT WITH OUR CLIENTS MORE EFFECTIVELY AND HOW DO WE RUN OUR BUSINESS? THOSE THREE STRANDS WE THINK ABOUT AND THERE’S DEFINITELY GOING TO BE A LOT TO SEE IN THIS SPACE OVER THE NEXT FEW YEARS. WE’RE A HIGHLY REGULATED INDUSTRY, ORGANIZATION, OUR CLIENTS PLACE OUR TRUST IN US SO WE HAVE TO MAKE SURE THAT WHATEVER WE DO IN AI IS WITHIN A VERY WELL-MANAGED RISK FRAMEWORK SYSTEM FOR LONGEVITY. PAUL: THANK YOU VERY MUCH FOR JOINING US. ANN PENDERGAST. TOP STORIES TODAY. TOYOTA WILL REPORTED BY START PRODUCING ITS NEXT-GENERATION EVE.V. IN CHINA FOR THE NEXT YEAR. TOYOTA IS STILL THE MOST DESIRED BRAND AS HYBRIDS REMAIN HIGHLY FAVORED. CITADEL POSTED A RECORD NUMBER IN TRADING VALUE FOR THE SECOND QUARTER. NEARLY TRIPLE LEVEL FROM A YEAR AGO. CITADEL SECURITIES IS AMONG A GROUP OF NON-BANK FIRMS THAT DEVELOPED THEIR OWN TECHNOLOGY IN QUANTUM ANALYSIS TO HELP MATCH BUYERS AND SELLERS. WE HAVE MORE AHEAD ON "THE ASIA TRADE." STAY WITH US. THIS IS BLOOMBERG. >> THE LAST Q3, Q4 DATA FOR ME LAST YEAR -- WE CERTAINLY AREN’T RESTRICTI AND MAYBE A LITTLE ACCOMMODATIVE SO WE’VE GOT WORK TO DO. PAUL: THAT WAS THE KANSAS CITY FED PRESIDENT JEFFREY SCHMID DISCUSSING U.S. FED POLICY AT JACKSON HOLE. OUR CORRESPONDENT TOLD US WHAT TO EXPECT AHEAD OF KEVIN WARSH’S OPENING REMARKS LATER. >> WALL STREET WANTS TO KNOW IF KEVIN WARSH IS READY FOR THE SPOTLIGHT. HE’S BEEN HERE BEFORE AS A FED GOVERNOR DURING THE FINANCIAL CRISIS BUT HE WASN’T THE PERSON INVESTORS LOOKED TO FOR GUIDANCE. NOW HE IS BUT SO FAR HE’S FAILED TO PROVIDE IT. WARSH ARGUES THE CENTRAL BANK SHOULDN’T STEER WALL STREET BY TELLING INVESTORS WHAT THEY HOPE THEY’LL DO. INVESTORS ORIGINAL WANT TO KNOW WHAT THE FED COULD DO, HOW HE THINKS ABOUT INFLATION AND PLANS TO KEEP HIS PROMISE TO BRING IT DOWN TO 2%. MICHAEL MCKEE, BLOOMBERG, JACKSON HOLE. PAUL: LET’S GET MORE ON HOW DOLLAR TRADE IS POSITIONING AHEAD OF WARSH’S FIRST ADDRESS AS FED CHAIRMAN AT JACKSON HOLE. PAUL, EVERYTHING SEEMS TO BE TRACKING SIDEWAYS AT THE MOMENT BUT WHAT’S THE PATH OF LEAST REFOR THE GREENBACK FROM HERE? PAUL: GOOD MORNING, PAUL. EVERYTHING WILL STAY SIDEWAYS UNTIL WE HEAR FROM WARSH AND THE REST OF THE JACKSON HOLE SYMPOSIUM. THERE IS A SENSE OF EXPECTATION AND APPREHENSION IN THE AIR AND YET CONCERN THAT HE WON’T SAY MUCH AT ALL THAT WILL BE MARKET MOVING AND SO THEREFORE THE MARKET IS ACTUALLY PRICING RELATIVELY LOW AMOUNTS OF VOLATILITY FOR BOTH THE DOLLAR AND FOR THE TREASURIES YIELD CURVE, SORRY, GOING INTO THIS MEETING SO IT MAY BE THAT WE COME OUT OF IT A LITTLE BIT MIFFED. WHAT WE CAN SEE BASED ON THE SPEW OF OPTIONS TRADING IN RECENT DAYS IS THAT THE MARKET IS LOOKING FOR A STRONGER DOLLAR AFTERWARDS, THEREFORE POSSIBLY A MORE HAWKER STEER FROM WARSH AND THAT’S WHAT THE MARKET WANTS. TO SHOW THAT THE FEDERAL RESERVE IS WILLING TO BE AGGRESSIVE IN ORDER TO GET INFLATION UNDER CONTROL AND THEREFORE TAKE OFF SOME OF THE PRESSURE THAT’S ON THE BACK END OF THE YIELD CURVE AT THE MOMENT. GIVEN WHAT WE JUST HEARD, HIS DESIRE NOT TO GIVE TOO MUCH IN TERMS OF THAT EDWARD GUIDANCE, IT MAY BE THE MARKET ENDS UP DISAPPOINTED AND ACTUALLY COMING OUT OF THE MEETING NONE THE WISER. PAUL: MIGHT BE A BIT OF A GULF BETWEEN WHAT THE MARKET WANTS TO HEAR AND WHAT WARSH IS WILLING TO SAY. THE YEN KEEPS GRADUALLY SOFTENING. IF WE GET NO GUIDANCE ON RATES FROM THE FED AND NOBODY SEEMS TO KNOW WHEN THE B.O.J. IS GOING TO TIGHTEN EITHER, WHAT DOES THIS MEAN FOR THE YEN? >> YOU’RE RIGHT THAT THE YEN HAS COME BACK UNDER PRESSURE AFTER THAT ALMOST UNPRECEDENTED INTERVENTION FROM BOTH THE U.S. AND THE JAPANESE ABOUT A MONTH AGO NOW. IT’S DRIBBLING BACK TOWARDS THAT 160 MARK AND UNDER WEAKENING PRESSURE STILL. THE B.O.J., AS YOU SAY, IS GOING TO BE REALLY KEEN. THE MARKET IS READY FOR A SEPTEMBER HIKE AND THAT SEEMS LIKELY. BUT WHAT THE MARKET REALLY NEEDS IS A MORE AGGRESSIVE FUTURE POLICY PATH FROM THE B.O.J. IN ORDER FOR THE YEN TO PICK UP MOMENTUM AND STRENGTHEN AND MOVE AWAY FROM THAT 160 LEVEL. OTHERWISE IT MAY BE THE CASE THAT IT REMAINS UNDER PRESSURE NOT WITHSTANDING WHETHER WE GET SOME MORE SIGNIFICANT MOVES IN THE DOLLAR POST AND THE FED AND GUIDANCE THERE. PAUL: IN TERMS OF A MORE AGGRESSIVE POLICY PATH AND STRONGER COMMUNICATION, I GIVE YOU EXHIBIT A, THE RESERVE BANK OF AUSTRALIA. GOLDMAN SACHS NOW SEES A RATE RISE IN AUSTRALIA IN SEPTEMBER. GIVEN THE LIKES OF AUSTRALIA BANK, A AND Z AS WELL SO WHAT’S THE DIRECTION OF TRAVEL FOR THE AUSSIE HERE? JUST HIGHER FOREVER AT THE MEET? >> WELL, I THINK THAT THE AUSTRALIAN DOLLAR HAS A LOT OF THINGS GOING FOR IT RIGHT NOW. IT’S GOT HIGH AND POTENTIALLY RISING INTEREST RATES LIKE YOU SAID. THE INFLATION PRINT WE HAD THIS WEEK IS MAKING VIEW THE RBA IS MORE LIKELY TO HIKE SOONER RATHER THAN LATER. IT HAS A STRONG BALANCE SHEET. SUPER A RATED. THE ENERGY COSTS ARE GOOD AND METALS PRICES ARE RISING SO THAT ALL BODES WELL FOR THE EXPORTS SIDE OF THE PICTURE. IN ITED BY CHINA’S ECONOMY IS GETTING A LITTLE BIT FLIP BUT THAT DOESN’T BEAM TO BE RATTLING AUSTRALIAN MARKETS TOO MUCH THESE DAYS SO THE AUSTRALIAN DOLLAR DOES SEEM TO BE ON THE PAR HIGHER. PEOPLE LIKE IT FOR ITS CARRY AND FOR ITS GROWTH AS WELL AND I THINK WHEN YOU’RE TALKING ABOUT THE RBA’S, NOT JUST THERE BUT RIGHT ACROSS ASIA A TREND TOWARDS TIGHTER MANAGEMENT POLICY. WE SAW THAT YESTERDAY IN THE PHILIPPINES. SOUTH KOREA AS WELL AND THE MARKET IS STILL PRICING IN MASH MORE OF THAT SO THE ASIAN PACIFIC CURRENCY COMPLEX AT THE MOMENT HAS A LITTLE BIT OF MOMENTUM BEHINDS IT AS A RESULT. PAUL: PAUL DOBSON THERE. LET’S TAKE A QUICK LOOK AT GOLD AND OIL. GOLD KEEPS TICKING UP. IT WAS ABOUT 4,600. JUST BACKED UP BUT IT’S ABOUT 14% HIGHER ON THE MONTH. IF WE HEAR TO HAVISH WORDS FROM JACKSON HOLE, THAT COULD PUSH HIGHER AS WELL. THE U.S. IS APPARENTLY IN TALKS WITH VENEZUELA TO TAKE A LARGE STAKE IN ITS OIL FIELDS. TO BE GLOBAL HEADLINES. VENEZUELA SAID TO BE CLOSELY EXAMINING ALSO PLANS TO LEAVE OPEC. IT HAS BEEN A TOPIC OF CONVERSATION WITH U.S. OFFICIALS. NO FINAL DECISION HAS BEEN MADE. THIS ALSO ILLUSTRATES THE REALIGNMENT IN CARACAS SINCE PRESIDENT TRUMP OUSTED NICHOLAS MADURO. GRIER SUGGESTS THE U.S. NEEDS TO CONSIDER BANNING SOME CANADIAN GOODS AS THEIR TRADE WAR HEATS UP. THE CLASH IS SET TO ESCALATE, PRESIDENT TRUMP SIGNING AN ORDER RENAMING LAKE ONTARIO AS LAKE AMERICA, SAYING THAT MOVE TAKES EFFECT IMMEDIATELY. OFFICIALS SAY THAT MORE THAN 100 PEOPLE -- 1200 PEOPLE ARE STILL MISSING AFTER LAST WEEK’S FLASH FLOODING ALONG THE NEPAL-CHINESE BORDER. MORE AHEAD, THIS IS BLOOMBERG. BLOOMBERG.