ByteDance Gets $30B Loan to Fuel AI Ambitions | The China Show | 9/3/2026

9:00 A.M. IN SHANGHAI, SHENZHEN AND HERE IN HONG KONG. YOU'RE WATCHING THE CHINA SHOW. I’M YVONNE MAN WITH DAVID INGLES WE ARE COUNTING DOWN TO THE OPEN MARKETS. A SURGE IN THE JAPANESE YEN. TRADERS ON HIGH ALERT FOR OFFICIAL INTERVENTION. ASIAN STOCKS GAINING. YVONNE: SHIPS AND FOCUS WITH THE U.S. SAID TO BE WEIGHING A FRESH ROUND OF TARIFFS ON IMPORTS. BROADCOM REPORTING SURGING AI CHIP SALES. DAVID: CHINA GOVERNMENT BOND SALES PUTTING THE FOCUS ON LIQUIDITY IN THE PBOC. YVONNE: DID THEY OR DID THEY NOT INTERVENED? THAT IS THE BIG QUESTION. A MYSTERIOUS SURGE AROUND THE YEN OVERNIGHT. I THINK THAT REALLY WE WILL SEE IF THAT BODES WELL FOR THE 30 YEAR AUCTION LATER. DAVID: THE FOOTPRINTS WERE THERE WHEN WE WOKE UP. IT WAS WHO WAS ACTUALLY THERE WHEN THE YEN CROSSES WHERE IT IS CURRENTLY. WE DID SEE A SHARP MOVE, NOT AS SHARP AS THE ONE WE'VE SEEN ON THE ACTUAL INTERVENTION ITSELF. CERTAINLY ENOUGH TO TAKE NOTICE WHERE WE ARE. 158.67 IS WHERE WE ARE CURRENTLY. WE'VE ALSO TAKEN A STEP DOWN ACROSS MOST OF THE KEY JAPANESE CURRENCY IS, WHICH I GUESS GOES INTO THE BOND STORY WE TALKED ABOUT. THERE IS A 30 YEAR BOND OPTION TODAY -- BOND AUCTION TODAY. THE APPETITE FOR THE LONG END, APPETITE FOR YEN EXPOSURE IS A KEY CROSS. THE JAPANESE 30 YEAR YIELD CURRENTLY AT 407. YVONNE: I THINK THIS JUST PUTS NOT JUST THIS BROUGHT AUCTION AND FOCUSED, THE SEPTEMBER BOJ MEETING IN FOCUS, IT IS ALMOST LIKE IT IS FULLY PRICED IN THE BOJ WILL HAVE TO HIKE AND SOON. THAT WILL BE THE KEY FOCUS FOR IT HAS ALSO LIFTED THE LIKES OF THE KOREAN WON. THE OIL MARKETS, WE TRACK THAT GIVEN WHAT WE HAVE SEEN. IT SEEMS LIKE THERE IS NO END TO THE WAR. AND NO TALKS, OR AT LEAST LACK OF PROGRESS IN TALKS. WE ARE SEEING A 95 HANDLE WHEN IT COMES TO BRENT PRICES, SLIGHTLY COMING OFF SOME OF THE INITIAL HIGHS. SHANGHAI CRUDE REMAINS ELEVATED. GOLD FUTURES ALSO CATCHING AMID SOME OF THESE MOVES WITH THE YEN AND DOLLAR, COPPER FLAT. DAVID: THIS ONE JUST CROSSING, CAN WE GET THE BOND BOARD BACK UP? LOOKING AT THE 407 LEVEL, AND SOMETHING WE HAVEN'T REALLY SEEN. WE ARE DOWN 10 ON THE JAPANESE 10 YEAR YIELDS. THAT HAS GONE RED ON THE BLOOMBERG TERMINAL. THIS RALLY ON THE LONG END OF THE JAPANESE CURVE AHEAD OF THAT , THE 30 YEAR BOND AUCTION LATER TODAY. THE PLOT THICKENS. ALL THAT TO SAY WHEN YOU LOOK AT THE MARKETS CURRENTLY, THE EQUITY MARKETS ARE RELATIVELY STEADY, RALLIED INTO THE CLOSE OF THE HANG SENG INDEX. I THINK WHAT IS ALSO QUITE TELLING AS TO WHAT EXTENT CHINA ACTS AS AN ANCHOR. WE SEE IN THE BOND SPREAD BETWEEN THE CHINESE 10 YEAR YIELDS AND THE U.S. 10 YEAR YIELD ALMOST AT A RECORD. THE CORRELATION BETWEEN THE EQUITY MARKET, MSCI CHINA, MSCI WORLD. THE LOWEST. THAT HAS STARTED TO ACT AS AN ANCHOR. IN ANY CASE, THE DOLLAR-YEN, THIS IS WHAT WE WOKE UP TO THIS MORNING. TOKYO, THEN LONDON WAKES UP, AND THERE IS THIS OVERLAP BETWEEN LONDON AND NEW YORK. WHEN NEW YORK WOKE UP OVERNIGHT INTO THE U.S. SESSION, THE CHARTS ABOVE SHOW THIS, 158.22 IS THE LOW ON DOLLAR-YEN. WE HAVE RETRACED SLIGHTLY TO THE UPSIDE. YES, DID THEY OR DIDN'T THEY? WERE THEY OR WERE THEY NOT? MARKET CRANFIELD IS WITH US TO HELP SHED SOME LIGHT ON THE BIG QUESTION. WAS IT A RATE CHECK COME OFFICIAL INTERVENTION OR SOMETHING ELSE, MARK? MARK: TO BE OR NOT TO BE A YEN TRADER, THAT IS THE QUESTION. DIFFICULT FOR PEOPLE IN THE MARKET. I SUSPECT THEY DID NOT. TYPICALLY WHEN THERE IS INTERVENTION, YOU EXPECT THE DOLLAR-YEN TO MOVE AT LEAST 400, 500 PIPS. THAT MOVED ABOUT TWO HUNDRED. PROBABLY NOT INTERVENTION BUT THE MARKET WAS JITTERY. IT ALL STARTED WITH THE BANK COMMENTS EARLIER THE DAY. HE IS A KNOWN HAWK. PEOPLE EXPECT HIM TO BE ON THE AGGRESSIVE SIDE. HE HAS BEEN VOTING IN FAVOR OF INTEREST RATE HIKES, WHICH THE BOJ HAS NOT BEEN DELIVERING. HE STILL INSISTS THAT IS THE RIGHT DIRECTION TO GO. YESTERDAY WHEN HE WAS SPEAKING HE FLOATED TO IDEAS WHICH WERE NEW IN THE CONTEXT OF WHAT WE HAVE HEARD RECENTLY. ONE WAS THE BANK OF JAPAN MAY CONSIDER MORE THAN 25 BASIS POINTS. HE WAS EMPLOYING 50 BASIS POINTS OR SOMETHING WITH THAT IN TERMS OF A RATE HIKE. OR THEY WOULD DO BACK-TO-BACK INTEREST RATE HIKES, SEPTEMBER AND OCTOBER, WHICH NOT MANY PEOPLE HAVE BEEN TAKING SERIOUSLY. TWO THINGS FOR THE YEN TRADERS TO CONSIDER. THAT WAS CERTAINLY ENOUGH FOR THEM TO START BUYING THE CURRENCY YESTERDAY WHEN THERE WAS NOT TOO MUCH ELSE GOING ON ON THE FOREIGN-EXCHANGE WORLD. THAT GAVE THEM A GOOD EXCUSE TO DO IT. THIS IS ALSO A WEEK BEFORE LABOR DAY. TRADITIONALLY A LOT OF SENIOR TRADERS ARE OFF ON HOLIDAYS. IT WOULD BE A GOOD OPPORTUNITY FOR PEOPLE TO PUSH THE MARKET AROUND. MORE LIKELY SOME LARGE POSITIONS WERE UNWOUND RATHER THAN ACTUAL INTERVENTION. SO AT LEAST ENOUGH TO GET PEOPLE EXCITED. WHEN YOU CONSIDER THE CONTEXT WE ARE COMING TOWARDS THE BANK OF JAPAN MEETING, WE HAVE A CHANCE THE NEXT COUPLE OF WEEKS FOR TRADERS TO PROBABLY PUSH THE YEN STRONGER, PARTICULARLY AGAINST THE EURO, MAYBE AGAINST THE POUND. A BIT MORE DIFFICULT AGAINST THE U.S. DOLLAR BUT THERE IS ROOM FOR THE YEN TO APPRECIATE IF PEOPLE THINK THIS IS A MEETING WHERE IT WILL AT LEAST DISCUSS A BIGGER INTEREST RATE HIKE THAN JUST 25 BASIS POINTS. YVONNE: THE 30 YEAR BOND AUCTION IN JAPAN, WALK US THROUGH HOW IMPORTANT IT IS, WHAT ARE WE LOOKING AT THIS TIME AROUND? MARK: THIS IS A HUGE AUCTION IN GLOBAL TERMS. IT IS THE VERY LONG END OF BOND YIELDS WHICH HAVE UPSET MR. BESSENT, WHO GOT VERY EXCITED IN AMERICA TALKING ABOUT DOING BUYBACKS BECAUSE HE'S VERY CONCERNED ABOUT WHAT IS HAPPENING IN THE TREASURY MARKET. IF YOU TRACE BACK WHY U.S. TREASURY YIELDS HAVE BEEN RISING AT THE LONG END OF THE CURVE IT COMES BACK TO JAPAN. A LOT OF RESEARCH ON BLOOMBERG THE LAST FEW DAYS SHOWING TERM PREMIUMS AND JAPAN HAVE BEEN RISING MORE QUICKLY THAN ANY OTHER PART OF THE G10 COMPLEX. RISING LONG TERM PREMIUMS IN THE U.S. -- IN JAPAN HAVE BEEN FILTERING THROUGH TO THE U.S., GERMANY, EVERYBODY IS AFFECTED BY WHAT IS CHANGING IN JAPAN. SO WHEN YOU HAVE A 30 YEAR AUCTION IN JAPAN, THE CONSEQUENCE IF IT DOESN'T GO WELL EVERYBODY IN THE REST OF THE GLOBAL WORLD HAS TO SAY THAT COULD BE A PROBLEM FOR US. AS IT HAPPENS, THE CONDITIONS FOR TODAY'S SALE ARE QUITE DECENT. YIELDS ARE NEAR THE HIGH END OF THE RANGE. THEY ARE STILL ABOVE 4% AS WE SAW EARLIER. THERE ARE SIGNS A LITTLE BIT OF MONEY IS COMING BACK FROM OFFSHORE BACK INTO JAPAN. THERE IS SPECULATION THE BIG PENSION FUND G PIF WILL START TWEAKING ITS ALLOCATIONS MORE TOWARDS LONG-TERM DEBT IN JAPAN AS WELL. SO THINGS ARE FALLING INTO PLACE TO PROBABLY MAKE TODAY'S AUCTION A DECENT ONE IN TERMS OF JGB 30 YEAR. I'VE SAID THAT BEFORE ABOUT AUCTIONS AND THEY HAVE NOT GONE WELL. IF IT DOES FAIL, IT'S PRETTY BAD NEWS FOR TREASURIES, FOR GERMAN CONTRACTS, FOR THE U.K., FOR MOST OF THE WORLD. BUT IT LOOKS AS THOUGH IT WILL PASS OFF OK AND THAT WILL BE A HUGE RELIEF. NEXT WEEK THE U.S. TREASURY IS DOING 10 YEAR AND 30 OR AUCTIONS AND THEY WON'T BE EASY EITHER. YVONNE: MARK CRANFIELD JOINING US, ALL THINGS TO WATCH ON JAPAN. LET'S BRING IN JASON PANG, PORTFOLIO MANAGER AT J.P. MORGAN ASSET MANAGEMENT TO CONTINUE THIS CONVERSATION. THERE WAS A LOT OF TALK ABOUT THE AUCTION AND TERM PREMIUM COMING BACK. SHOULD WE EXPECT A NEW TRADING RANGE? JASON: I THINK THERE IS A COMPETING ASSET DYNAMIC GIVEN THAT WE SEE 30 YEAR HYPERSCALING . THAT IS COMPETING WITH GLOBAL GOVERNMENT BONDS. THE YIELDS AND SPREAD A PRODUCT ARE VERY ATTRACTIVE TO INVESTORS. I GUESS IN TERMS OF THE TERM PREMIUM COME UNTIL WE SEE SOME DEGREE OF FISCAL NORMALIZATION OR DISCIPLINE, I THINK THAT WILL REMAIN UNDER STRESS. WHAT IS GOOD NEWS IS THE COMPENSATION IS THERE. THEY CAN PERHAPS IMPROVE NEAR-TERM WITH INFLATION AND OIL PRICES HIGHER. STRUCTURALLY SPEAKING WE THINK WITH ENOUGH VALUE CREATION THE CARRY COMPOSITION COMING FROM GOVERNMENT YIELDS OR HYPERSCALER PRODUCTS COULD OFFSET THE CAPITAL LOSSES. DAVID: IS THAT THE RECENT -- MY PEN JUST FELL. IS IT THE IDIOSYNCRASIES OF WHY THE LONG AND IS BLOWING UP? IS THERE ANYTHING ELSE THERE? HOW ARE YOU LOOKING AT THIS AS SOMEONE WHO WAS IN THE MARKET? JASON: I THINK WITHIN GLOBAL MARKETS WE DEBATE THE CREDIBILITY PREMIUMS AND THE ASSET PUT ON THE LONG END DURATION WHICH HAS BEEN UNDERWHELMING THE PAST FEW TRADING SESSIONS. I THINK WHAT IS PROBABLY CLEAR IS AS FISCAL FUNDING ON THE LONG END INCREASE, PERHAPS YOU REACH A SATURATION POINT WHERE THE INTEREST RATE SERVICE BECOMES LESS SUSTAINABLE. THIS IS A SPECIFIC MORE TOWARDS THE DEVELOPED BOND MARKETS GLOBALLY. I THINK GOING BACK TO MY POINT, WE SHOULD REACH A SATURATION POINT WITH SUFFICIENT COMPENSATION. THAT IS THE CONCERN IN THE MACRO MARKETS. FOR US I THINK THE WAY THAT WE SEE IT IS I BELIEVE THERE IS AN OPPORTUNITY HERE IN TERMS OF THE BOND INVESTMENT PRODUCTS AND FIXED AT COME. AT WHAT VALUATION AND WHEN I THINK FOR WHAT IT'S WORTH INCREMENTALLY FOR US WE’'VE BEEN LOOKING AT THE TERM PREMIUM. A LOT OF IT THEN IS POSITED ON THE HIGHER OIL PRICE. I KNOW IT DOES NOT LOOK LIKE IT TODAY BUT WE SHOULD THINK ABOUT WHAT HAPPENS WHEN BASE EFFECTS ON CPI NORMALIZE IN THE NEXT YEAR AND WHAT HAPPENS IF YOU REACH A SATURATION POINT WHERE OIL PRICES REACH A BETTER EQUILIBRIUM. THAT IS A VERY ATTRACTIVE MACRO SET UP WITH VALUATIONS FOR BONDS GENERALLY. YVONNE: YEAH. I'M WONDERING HOW YOU SEPARATE THE WINNERS AND LOSERS. IT SEEMS LIKE A LOT OF ANGST AROUND DEVELOPED MARKET BONDS. WHY DO YOU THINK THERE IS A BIT OF DIVERGENCE? JASON: I THINK IN TERMS OF THE FISCAL EXPANSION, IN TERMS OF THE BROADER ASIAN MARKETS AND EM HAS MORE IDIOSYNCRASIES, BUT OVERALL IN TERMS THE FISCAL EXPANSION DELTA IS LESS COMPARED WITH THE CURRENT YEAR MARKETS. ON TOP OF THAT THERE IS NO COMPETING HYPERSCALER SUPPLY IN THE ASIAN MARKETS. SO IT'S NOT LIKE YOU ARE SEEING THAI GOVERNMENT BONDS SAYING I NEED TO HYPERSCALE, NOTHING OF THAT SORT. SO THERE ARE NO COMPETING ASSETS. THAT GOES INTO THE DISCUSSION WE TYPICALLY TALK ABOUT, IT IS ABOUT THE MYSTIC PRESENCE FOR MANY OF THESE COUNTRIES. SO PERHAPS IF YOU ARE IN THAILAND, INDONESIA, MANY OF THESE COUNTRIES HAVE THEIR OWN DOMESTIC BANKS THAT NEED TO INVEST. THEY DON'T GO AND BUY A 30 YEAR IG CREDITS IN THE U.S. NECESSARILY, THEY BUY THEIR OWN GOVERNMENT BONDS AND DEBT MARKETS FOR THAT IS PROVIDING DIVERSITY. THAT IS WHAT I THINK TO ME I DO BELIEVE THE VALUE CREATION IS BEING OBSERVED WITHIN ASIA LOCAL AND EM LOCAL, GIVEN THE INTEREST RATES ARE CORRELATED. I THINK THAT GIVES US THE ALPHA ASYMMETRY. YOU WANT THE VALUE CREATION, BUT USING THE LOCAL TECHNICAL DYNAMIC, WHICH GIVES A BETTER BALANCE. DAVID: SO UNDERWEIGHT DOLLAR. JASON: YES, WE HAVE BEEN SHORT DOLLAR QUITE SOME TIME ALREADY. THE MESSAGE TODAY IS WE ARE STILL MORE INCLINED TO MAINTAIN THAT OVER TIME. YVONNE: IN ASIA, DO I FOCUS ON HIGH YIELD, LOW YIELD, OIL IMPORTERS? JASON: WITHIN THIS REGION THEMATICALLY, AND YOU TOUCHED ON THIS TALKING ABOUT AGAIN, -- ON THE YEN, IF YOU LOOK AT THE LAST TWO YEARS WITH ACTUALLY SEEN TAIWAN LOWER AT 27 EVENTS. WE HAVE SEEN KOREAN WON DO PHENOMENALLY WELL. NOW IT IS CAN YOU GENERATE RETURNS WITH THE DOLLAR YEN. THE THEME IS THE SAME. BASICALLY ALL THE CAPITAL THAT HAS GONE INTO U.S. GROWTH STOCKS COME AS THE MARKETS HAVE STARTED CORRECTING OR NORMALIZING IT IS COMING BACK TO CAPITAL WITHIN THE EXPORT CYCLE, COMING HOME TO ROOST. THE MEDICALLY THAT IS THE WAY WE ARE RUNNING THE ANALYSIS. WE WANT TO PLAY THIS CAPITAL REPATRIATION NORMALIZATION. WE THINK NOT ONLY THE YEN BUT THE KOREAN WON AND TAIWAN DOLLAR A VERY ATTRACTIVE CURRENCIES FOR THAT IS ONE OF OUR CENTERPIECES WOULD LIKE TO ENGAGE IN RIGHT NOW. IN TERMS OF THE ASIAN HIGH YIELD SPACE, THIS GOES MORE TO INDONESIA, THE PHILIPPINES, INDIA, I THINK THEY ARE STILL STRUGGLING GIVEN THE EXTENDED HIGHER OIL PRICE, FISCAL DEFICITS AND REFLECT IT IN AND SO FORTH. THE VALUE WAS THERE BUT I THINK THAT IS MORE OF A NEXT YEAR SET UP WITH INVESTMENT. WE IDENTIFY THE VALUE, WE REALLY LIKE THE CARRY. WE NEED OIL TO NORMALIZE AND PERHAPS TERM PREMIUM TO NORMALIZE AS WELL, BUT THOSE ARE THE DEEP VALUE ASSETS THAT CAN BE ATTRACTIVE. DAVID: ONCE THE BASE EFFECTS BECOME MORE FAVORABLE, THEN YOU HAVE THE SET UP VERY ON KOREA AND TAIWAN, FOR BOND INVESTORS LOOKING FOR STRATEGIES, WHAT ARE THE TYPE OF STRATEGIES THAT CAPTURE THOSE OPPORTUNITIES AND WHAT'S THE BEST WAY TO PLAY TAIWAN AND SEPARATELY PLAY KOREA? JASON: THIS HAS TWO WINGS TO IT. THE TYPICAL BOND INVESTOR, YOU CAN CHOOSE TO GET YOUR CURRENCY VIA DERIVATIVES. YOU CAN ALSO BUY CASH BONDS FOR THE STRUGGLE WITH CASH BONDS IS WHAT YOU ALLUDED TO. JGB, DO YOU WANT TO BUY THE GOVERNMENT BOND AND SUFFER CAPITAL LOSS TO GET THE CURRENCY? PROBABLY NOT. IF YOU BUY THE FX, YOU HAVE TO BUY THE CARRY. THAT IS NOT ATYPICAL. THE WAY I WOULD SAY IT IS YOU WANT TO ENGAGE IN RATES WHEN YOU SEE MORE VALUE. ON THE FLIPSIDE IN TERMS OF CURRENCY, WHAT WE'VE BEEN DOING OVER HERE IS WE'VE BEEN EXPANDING OUR UNIVERSALLY TRADED BONDS. NOT ONLY DO YOU GET A CALL OPTION WITH DIFFERENT SECTORS, DEFENSE, SEMIS, BANKS, SECTOR DIVERSITY, BUT ON TOP OF THAT YOU GET THE EXPORTS. IF YOU LOOK AT THE CORRELATION, THE FX AND EQUITY CORRELATIONS HAVE ACTUALLY FLIPPED. PREMISED OFF OF THAT, WE THINK THAT IF YOU THINK EQUITIES CAN GO DOWN, MOST OF THEM ARE MORE BALANCED BUT YOU ACTUALLY ARE LOOKING AT FX REPATRIATION. ON THE FLIPSIDE WE BELIEVE THERE IS INSTANCES WHERE YOU GET CAPITAL INFLOWS INTO THE EQUITY MARKET, YOU GET EQUITY UPSIDE AND YIELD ON TOP AND THE FX. THE WAY WE HAVE MIGRATED THE TRADING VIEW IS WE ARE NOT ONLY ENGAGING IN TRADITIONAL BONDS BUT WE STARTED LOOKING AT NOT ONLY FX BUT THE OPTIONALITY. YVONNE: JASON PAYNE, ASIAN FIXED INCOME PORTFOLIO AT J.P. MORGAN. THE TRUMP ADMINISTRATION IS CONSIDERING NEW TARIFFS ON SHIP IMPORTS. SOME COMPANIES MAY BE SPARED. AND WE ARE COUNTING DOWN THE TRADES OPENING IN POSITIVE TERRITORY COME UP ABOUT .2%. THIS IS "THE CHINA SHOW." HAPPY THURSDAY. ♪ YVONNE: WE ARE SEEING A BIT OF A RECOVERY IN THE CHIP SECTOR ON THE BACK OF WHAT WE HEARD FROM BROADCOM, FORECASTING A SHARP SURGEON AI SEMICONDUCTOR DEMAND. IT SAID SALES COULD REACH $230 BILLION WITHIN TWO YEARS. THE MAN FOR ITS CUSTOM CHIPS ARE ACCELERATING AS GOOGLE, OPENAI, ANTHROPIC AND META RAMP UP DATA CENTER SPENDING. THIS REDUCE OPTIMISM THAT BROADCOM COULD CHALLENGE NVIDIA'S DOMINANCE IN AI CHIPS. DAVID: THE TRUMP IS IS WEIGHING FRESH TARIFFS ON IMPORTED SEMICONDUCTORS, POTENTIALLY EXPANDING TO SERVER AND CONSUMER ELECTRONICS. LET'S BRING IN OUR MANAGING EDITOR TO TALK US THROUGH THE DETAILS OF WHAT WE KNOW SO FAR OF HOW SOME OF THESE PRODUCTS COULD BE SPARED. REPORTER: A COUPLE OF THINGS AT PLAY, THIS IS THE LATEST IN TRUMP'S ATTEMPT TO REBUILD HIS TARIFF WALL THAT WAS STRUCK DOWN BY THE SUPREME COURT AND ALSO THE LATEST ON A COUPLE OF DIFFERENT EFFORTS THE TRUMP ADMINISTRATION HAS TAKEN TO APPLY TARIFFS TO SEMI CONDUCTORS , SEMI CONDUCTOR PARTS. IT WAS ANNOUNCED IN JANUARY A TARIFF THAT IMPACTED NVIDIA AND SOME OF THE CHIPS THAT IT WAS WORKING ON AND SENDING TO CHINA. THIS TIME AROUND WHAT THEY ARE SAYING IS THEY ARE TRYING TO TARGET THE BROADER CATEGORY YOU JUST MENTIONED, THIS IDEA OF DATA SERVERS IN PARTICULAR, IMPACTING POTENTIALLY DATA SPENDING. THEY DID SAY THIS WOULD BE COUPLED WITH SOME SORT OF INCENTIVES TO DRIVE COMPANIES TO BUILD IN THE UNITED STATES IF THEY HAVE SOME KIND OF DOMESTIC INVESTMENT. TSMC, MICRON, LUTNICK MENTIONED IN THE SAME INTERVIEW HE WAS EXPECTING MORE TO COME OUT OF TAIWAN NEXT WEEK, SOME OF THE INVESTMENT ANNOUNCEMENTS. THE IDEA WOULD BE BASICALLY LOOKING INTO HOW SOME OF THESE COULD CONVINCE COMPANIES TO BUILD AND THE UNITED STATES AND BE EXEMPTED FROM SOME OF THESE TARIFFS OR ELSE THEY WILL HAVE TO IMPORT THINGS TO THE UNITED STATES. YVONNE: THE DIFFERENCE IS NOT JUST MAYBE TARIFFS ON JUST SEMI CONDUCTORS, YOU'RE TALKING ABOUT PRODUCTS THAT CONTAIN SHIPS AS WELL . REPORTER: THIS IS WHERE A LOT OF THE CRITICISM COMES IN ON WHAT LUTNICK IS PROPOSING. DATA CENTER INVESTMENT IS ALREADY MASSIVE. WE PUBLISHED SOME REPORTING YESTERDAY ABOUT HOW GLOBAL DATA CENTER SPENDING I THINK IS FORECAST TO REACH $32 TRILLION BY 2050, MASSIVE NUMBERS. IN THE U.S. IN PARTICULAR THERE HAS BEEN A LOT OF LOCAL BACKLASH ABOUT BUILDING OF DATA CENTERS. YOU FACTOR THAT INTO THE CALCULUS AS WELL. LOOKING AT THESE TARIFFS, IF THAT IS A COMPONENT THAT COULD BE AFFECTED, YOU'RE LOOKING AT MAY BE DRIVING UP SPENDING ON DATA CENTERS EVEN HIGHER. YVONNE: JILL, THANK YOU VERY MUCH. ALL THINGS CHIPS THIS MORNING. WE ARE GOING TO TRACK HOW SOME OF THE DOMESTIC CHIPMAKERS AND CHINA REACT TO SOME OF THE NEWS THAT WE ARE HEARING FROM THE LUTNICK INTERVIEW WITH CNBC. IN HANG SENG, THE PREMARKET IS UP. LOOKS LIKE WE ARE SEEING A DECENT RALLY UNDERWAY COME UP ABOUT .7 PERCENT. FUTURES ARE GETTING HIGHER. AND THE STRONGER REM B, TALKING ABOUT 671. PLENTY MORE AHEAD. THIS IS BLOOMBERG. ♪ YVONNE: WE ARE WATCHING CLOSELY SOUTHBOUND FLOW'S. WE HAVE SEEN SIX STRAIGHT DAYS OF MAINLAND BUYING INTO HONG KONG. WE ARE WATCHING OF COURSE MSCI CHINA APPROACHING AROUND THE 50 DAY MOVING AVERAGE LEVELS NOW. FINANCIAL STOCKS CONTINUE TO OUTPERFORM ACROSS THE REGION GIVEN WHAT WE'VE SEEN WITH THE RATES MARKET AND WHERE SOVEREIGN BOND YIELDS HAVE BEEN. THE YIELD SPREAD BETWEEN THE CHINA TENURE AND TREASURIES IS NEAR THAT RECORD AMID THE TREASURY SELLOFF. WE ARE STILL WAITING FOR SOME DATA FROM PMI, THE RATING OF THE PRIVATE GAUGE, STILL DEALING WITH SOME LOW TURNOVER. DAVID: IT WAS VERY LOW YESTERDAY. I'M LOOKING AT THE TOTAL FOR YESTERDAY. IT WAS PROBABLY BOTTOM THREE IN TERMS OF THE TOTAL. WE ARE LOOKING AT 1.75 TRILLION MAINLAND TURNOVER, WHICH WOULD BE LOW ENOUGH, YES, THAT WOULD BE THE THIRD LOWEST LEVEL TOTAL OF THE YEAR. I THINK THAT IS SOMETHING TO LOOK AT TODAY GOING INTO THE SESSION. WE ARE LOOKING AT DECENT GAINS AWAY FROM THE BOND MARKETS. EQUITY MARKETS ARE SEEING SOME CUES FROM ACROSS THE REGION AND FROM THE U.S. OVERNIGHT. THE CHIP STORY, WE HAD A BOUNCE, BUT SEPARATELY DONALD TRUMP IS MULLING MORE TARIFFS. PLATFORM DELIVERY COMPANIES AND FLOW TODAY AMIDST FURTHER TIGHTENING AROUND VIOLATIONS AND ON COMPETITION. AND JUST SOME CHANGES AND ANALYST RATINGS, SOME CHANGES FROM THE STREET. WE WILL GIVE YOU MORE ON THAT ANY MOMENT. THAT IS COMING UP NEXT. DAVID: WELCOME BACK. YOU ARE WATCHING "THE CHINA SHOW ," COUNTING DOWN TO THE OPENING TRADE. IT SEEMS LIKE WE HAVE TURNED THE PAGE ON THE SEASON. WE WILL SEE WHAT HAPPENS. LESS OF THE TOWARD HOT AND HUMID TO SUMMER IN HONG KONG. JUST TO SAY BE THANKFUL, TOMORROW IS NEVER PROMISED, AS THEY SAY, SO BE THANKFUL FOR THE HERE AND NOW GOING INTO THE SESSION TODAY IN THE BRIGHT AND BEAUTIFUL. YVONNE: IT FEELS LIKE SENTIMENT IS CHANGING, THE BOND MARKET SELLOFF. YOU HAVE TO WONDER WHAT IS HAPPENING WITH THE DOLLAR-YEN. WAS IT JUST A RATE CHECK OR INTERVENTION? USUALLY IF THERE ARE SIGNS OF SPECULATION IT IS PROBABLY A BIGGER MOVE. MAYBE IT WAS JUST A SLIGHT RATE CHECK. IT IS CERTAINLY ENOUGH TO SHOW THE ANGST AROUND THE BOND MARKET RIGHT NOW. WE ARE TAKING A BREATHER TODAY. THAT IS HELPING THE EQUITY STORY. THE DOLLAR IS ALSO WEAKER. THAT LIFT IN THE YEN IS LIFTING THE LIKES OF WOMEN BE AND THE KOREAN WON, SEEMS TO BE FEELING SOME OF THE EQUITY GAINS. ONSHORE MARKETS ARE STILL REALLY LED BY THE LIKES OF THE STAR 50 COME UP SOME 100% ON THE SHANGHAI GAUGE, CHINEX SING PRONOUNCED MOVES AT THE GET GO. WE ARE ALSO LOOKING INTO SOME CHIP MOVES, HARRY LUTNICK TALKING ABOUT POSSIBLE NEW MEASURES AROUND CHIP RESTRICTIONS. WE WILL SEE HOW THAT DOES WITH SOME OF THESE HONG KONG-LISTED CHIPMAKERS. HONG KONG IS UP ABOUT .6%, THE HANG SENG. WE ARE GETTING CLOSE TO THAT 25,500 LEVEL THIS MORNING. DAY SIX YESTERDAY WAS A SUSTAINED NET BUY FOR MAINLAND INVESTORS. WE WILL SEE IF WE SEE A DAY SEVEN. IT LOOKS LIKE THERE ARE SIGNS OF BUYING. HSTECH LEADING THE CHARGE UP CLOSE TO 1% THIS MORNING. ON THE CHIP SIDE, THERE IS COUNTER FORCES. YOU HAVE THE TERROR OF THREATS, THE TARIFF RISKS, BUT YOU ALSO HAVE BROADCOM. THE INITIALLY THERE WAS A DISAPPOINTMENT IN THE EARNINGS. I THINK THE OUTLOOK SHIFT OF THE MARKET A LITTLE BIT TO BE MORE FAVORABLE. REALLY THAT IS HELPING IN TERMS OF SOME OF THE DOMESTIC PLAYERS, TSMC AND OTHERS ALL RALLYING TODAY. SHEIN, IT WAS LISTED IN THE LAST FEW DAYS AND IT CONTINUES TO BE A DOWN STORY. THE NEWS TODAY IT IS JOINING THE HANG SENG COMPOSITE AND CLOSE TO TWO WEEKS FROM NOW, SEPTEMBER 15. DAVID: JUST SPEAKING OF LISTING, THIS OTHER IPO THAT IS NOW ON THE RADAR, TENCENT-BACKED AI START UP IN FLAME HAS DRAWN STRONG DEMAND. THAT IS AN UNDERSTATEMENT WHEN YOU LOOK AT THE NUMBERS,, ESPECIALLY THE RETAIL BOOK FOR THOUSAND TIMES OVERSUBSCRIBED. LET'S BRING IN OUR ASIAN EQUITIES DEPUTY MANAGING EDITOR TO HELP US UNDERSTAND. THE BOOK ON THE SEEMS TO BE FLYING ON THE RETAIL FRONT. WHAT DO WE KNOW? REPORTER: IT'S INTERESTING FOR A FEW REASONS, ASIDE FROM HOW MUCH FUN IT IS TO SAY THE NAME. THE TENCENT TIE-IN IS INTERESTING. TENCENT IS THE MAJOR CONSUMER, THEY BUY OVER 80% OF THEIR PRODUCT. TENCENT IS ALSO A MAJOR BACKER. THE OTHER REASON IS IN FLAME IS THE LAST OF THE FOUR LITTLE DRAGONS TO GO TO THE MARKET. THE CHIPMAKERS THAT HAVE DONE REALLY WELL ON THE MARKET, WE REMEMBER THEY ARE EXPLOSIVE DEBUTS ON THE MARKETS. THAT IS WHAT PROBABLY THE RETAIL INVESTORS AND CHINA ARE HOPING FOR WHEN THEY LOOK AT ENFLAME. THE OVER 4000% OVER 4000% OVERSUBSCRIPTION IS LOWER THAN THE AVERAGE FOR CHINA FOR THESE KIND OF ISSUERS. THE AVERAGE IS OVER 4500. THAT SHOWS THE ENTHUSIASM FOR THE CHIP STORY, FOR THE AI STORY IN CHINA FOR ALL OF THESE IPO'S COMING TO THE MARKET. YVONNE: WHAT WE KNOW ABOUT THEIR FUNDAMENTALS? IT SEEMS LIKE THE RELATIONSHIP WITH TENCENT IS QUITE STRONG, WHICH MAY DIFFERENTIATE FROM ITS PEERS BUT IT'S ALSO NOT QUITE PROFITABLE. REPORTER: THAT'S RIGHT, WHICH IS NORMAL FOR THIS TYPE OF COMPANY. THE TENCENT RELATIONSHIP IS THE BIG DIFFERENTIATOR. THEY RELY ON TENCENT FOR A LOT OF THEIR SALES FOR A LOT OF THEIR SALES FULL TOP TENCENT USES THEM FOR OTHER FUNCTIONS. INVESTING OF THIS COMPANY IS REALLY A BET ON TENCENT AND HOW FAR AHEAD THEY CAN PUSH WITH THEIR AI AMBITIONS. THAT IS WHAT MAKES THEM DIFFERENT. YVONNE: THANK YOU, THAT IS OUR ASIAN EQUITIES DEPUTY MANAGING EDITOR ON ENFLAME. DAVID: IT IS FUN TO SAY. YES. YOU KNOW WHAT IT REMINDS ME OF, BUT THIS WILL AGE ME, THE BANGLES " ETERNAL FLAME"? YVONNE: THAT SONG IS A BANGER. THE 19 80'S KID. DAVID: BEST TIME TO BE GROWING UP. YVONNE: WE DID SEE A LITTLE MORE IN TERMS OF THE REGULATORY SIDE OF THINGS. THE LATEST BATCH OF EARNINGS ALSO SUGGEST MAYBE THE IMPACT OF THE PRICE COMPETITION IN THE SECTOR IS FADING MORE QUICKLY THAN EXPECTED, REMOVING A MAJOR WORRY FOR INVESTORS EVEN AFTER CURBING FOOD DELIVERY VIOLATIONS, THIS OVER COMPETITION AND THE LIKE. THAT IS NOT REALLY DETERRING SOME OF THESE STOCKS. WHAT DID WE LEARN FROM THIS EARNINGS SEASON? IS IT THAT THE PRICE WARS ARE BEHIND US NOW? REPORTER: I THINK THAT IS ONE OF THE KEY TAKEAWAYS FROM CHINA TECH COMPANIES. THEY ARE CALLING BACK PROFITS AND THEN FOR JD AND ALIBABA, THOSE ARE THE COMPANIES THAT HAVE THEIR QUICK COMMERCE SEGMENT AND NARROW THEIR LOSSES SIGNIFICANTLY. BASED ON THE PEOPLE THAT WE'VE TALKED TO, THEY ARE EXPECTING THIS TREND NOT TO JUST BE SEASONAL, IT'S GOING TO BE STRUCTURAL. I THINK THEY HAVE BETTER COST DISCIPLINE. THEY REALIZE LAST YEAR, THOSE KIND OF LOW-END PRICE YVONNE: YVONNE: COMPETITIONS DON'T WORK. AW, THOSE DEALS ARE GONE. REPORTER: I THINK THOSE ARE GONE. DAVID: WE HAVE TO PAY FOR OUR BOEBERT T NOW. REPORTER: NO MORE FREE BOBA TEA. THEY WERE ABLE TO DEFEND THEIR HIGH ORDER VALUES. THOSE DEALS DON'T RELY ON THE AGGRESSIVE PROMOTIONS. THAT IS ONE OF THE REASONS PEOPLE THINK THE OLD STRATEGY, THE OLD PLAYBOOK LAST YEAR, WE'VE SEEN IT DOESN'T WORK ANYMORE. THOSE PLAYERS IN THAT MARKET THAT WOULD TRY TO FOCUS MORE ON THE COST DISCIPLINE. ALTHOUGH IN THE MARKET, YOU DON'T EXPECT INVESTORS TO REWORD A COST DISCIPLINE MORE THAN REVENUE GROWTH. REVENUE GROWTH IS STILL DRAGGED DOWN BY THE CONSUMER SIDE OF THINGS LIKE THE MACRO ENVIRONMENT. BUT THE DISCIPLINE IS ACTUALLY HELPINGTHEIR EARNINGS. I THINK THE EARNINGS ESTIMATE HAS BEEN REVISED UP MORE THAN 500 FROM THESE SHEARS LOW SO FAR. -- FROM THIS YEAR'S LOW. IF YOU SAW SHARES REBOUNDING MORE THAN 46% BEFORE CUTTING A LITTLE INTO THE EARNINGS SEASON. I THINK THIS TYPE OF RECOVERY IS ACTUALLY VERY ENCOURAGING. DAVID: WHEN DOES IT BECOME MORE OF A GROWTH AND REVENUE STORY THAN A COST DISCIPLINE STORY? HAVE THEY TROUGH TO IS THE QUESTION, HOW HAS THIS NARRATIVE IMPACTED VALUATIONS AND CONVERSATIONS SURROUNDING VALUATIONS? REPORTER: I THINK COST DISCIPLINE IS ONE THING THAT THEY DO KIND OF FOCUS ON. THE REVENUE GROSS IS A BIGGER STORY THAT CAN DRAG SHARE IMPROVEMENT. I THINK ALL OF THE THREE COMPANIES HAVE TO WORK HARD ON THAT. IT'S NOT JUST LIKE YOU ARE IMPROVING MARGINS AND THEN PEOPLE JUST REWARD YOU. YOU REALLY NEED TO SHOW SOMETHING ON TOPLINE GROWTH. IN ALIBABA'S CASE IT IS CLOUD, IT IS AI, JD IS HOW THEY WILL NARROW THEIR LOSSES IN OFFSHORE INVESTMENTS AND IMPROVE THE MARGIN FOR THE E-COMMERCE BUSINESS. AND THE OTHER CASE I THINK IT IS THE KEY EXPANSION INTO OFFSHORE, HOW THEY ARE GOING TO GROW THE TOPLINE GOING FORWARD. THAT IS ONE OF THE KEY DIFFERENTIATORS GOING FORWARD. DAVID: JEANNIE, REALLY GOOD ANGLE ON THIS RECENT EARNINGS REPORT CARD, SET OF REPORT CARDS. I LOOK AT THE MARKETS AS WE HAD TO THIS SHORT BREAK, THE KOSPI IS LEADING ACROSS THE ASIA-PACIFIC COME HANG SAYING ABOUT THE MIDPOINT, JAPAN IS FLAT. LOTS MORE AHEAD. THIS IS "THE CHINA SHOW." DAVID: FOOTSTEPS IN THE SAND. OBVIOUSLY THIS IS THE TERM PREMIUM STORY, ALSO THE YEN STORY RELATED. WHAT WE ARE SEEING NOW, THIS IS CURRENT, THE BIG MOVE IN THE NEW YORK SESSION OVERNIGHT TOOK A TWO15822. WE ARE CLOSE TO THAT AGAIN. WE ARE STRENGTHENING BACK TO THE LOWS THAT WE'VE SEEN SINCE THAT POINT IN TIME. WE STILL DON'T HAVE A LOT OF INFORMATION WHETHER THIS IS A RATE CHECK, OFFICIAL INTERVENTION OR WHAT, BUT THE MARKET IS VERY SENSITIVE TO A LOT OF THINGS RIGHT NOW. YVONNE: THE DOLLAR WEAKNESS STORY SEEMS TO BE PERCOLATING THROUGH THE REGION AS WELL. IT'S NOT JUST THE YEN STORY. WE ARE TALKING ABOUT THE FIXED TODAY FROM THE PBOC WAS THE LOWEST IN THE CYCLE ACCORDING TO MARK CRANFIELD. THERE IS A LOT ON TAP. DM SOVEREIGN BONDS, THAT IS WHERE ALL THE PAIN HAS BEEN. CHINA'S GOVERNMENT BOND SALE MEANWHILE ARE EXPECTED TO PICK UP AFTER A LAW AS AUTHORITIES SEEK TO BOOST A SLUGGISH ECONOMY . THE INCREASED ISSUANCE IS LIKELY TO PROMPT THE PBOC TO INJECT MORE LIQUIDITY. DAVID: LET'S BRING IN OUR RATES REPORTER TO TALK US THROUGH THIS. THE UNDERSTANDING IS THE ECONOMY NEEDS A LITTLE BIT OF A PUSH. WE MIGHT GET FURTHER ACTIVITY WHEN IT COMES TO UNUSED PARTS OF THE BUDGET. WHAT WE KNOW ABOUT THE FUNDRAISING ABOUT TO HAPPEN TO FUEL THAT? REPORTER: AS WE KNOW THIS YEAR, THE GOVERNMENT ALREADY USED AROUND 68% OF THE QUOTA FOR THIS YEAR. THEY ARE AROUND 76% LAST YEAR FOR THE MARKET EXPECTATION IS THERE COULD BE FASTER BOND SALES IN THE UPCOMING MONTHS BY THE END OF THIS YEAR. ACTUALLY THE MARKET PRICING ALREADY HAS PRICED IN SOME OF THESE EXPECTATIONS. AT THE CURRENT MOMENT I WOULD SAY THE IMPACT COULD BE VERY LIMITED FOR BOND TRADERS, ESPECIALLY IF THEY'VE ALREADY PURCHASED LONG TENORS IN THE CURRENT CYCLE. THAT PUSHED THE 10 YEAR BOND YIELD BELOW 1.7%. DAVID: YEAH. SO WHEN YOU LOOK AT THE U.S. TREASURY MARKET, WHAT DOES IT MEAN FOR THAT SPREAD? WE ARE CLOSE TO THE RECORD BETWEEN THE TWO TENS. REPORTER: WE ARE A FEW AWAY FROM REACHING THE RECORD HIGH. GIVEN THE CURRENT MARKET CONDITIONS, I WOULD SAY THE IMPACT ON THE CGP'S ARE NEGATIVE, ESPECIALLY WHEN YOU HAVE SUCH A LONG YIELD COMPARED WITH GLOBAL PEERS. I'VE BEEN TALKING TO FUND MANAGERS AND THEY ARE THINKING ELSEWHERE IN THE FIXED INCOME MARKET ARE MORE ATTRACTIVE. THERE ARE EVEN HAVING HIGHER YIELDS. THE IMPACT ON THE YEN SO FAR IS VERY LIMITED. THE YEN IS HAVING A DIFFERENT STORY HERE. IT IS BOOSTED BY THE RAPID TRADE SURPLUS AND PEOPLE EXPECTING THAT COULD BE ANOTHER RECORD YEAR THIS YEAR. ALSO ANOTHER KEY ELEMENT IS THERE IS A TOP DATE TO AIM FOR A STRONGER CURRENCY. YVONNE: WE HEARD THE COMMENTS FROM THE PBOC GOVERNORS SAYING THEY DON'T NEED TO DEPRECIATE THE CURRENCY TO BOOST TRADE. DOES THAT MEAN THEY ARE WILLING TO ALLOW FOR THIS DEPRECIATION TO CONTINUE? REPORTER: THE MARKET EXPECTATION IS THE PBOC IS TRYING TO ALLOW A GRADUAL YEN APPRECIATION. WE ARE SEEING IN RECENT DAYS FOR SOME OF THE FIXING HAS BEEN WEAKER THAN MARKET EXPECTATIONS FIVE MONTH ALREADY EVERY SINGLE TRADING DAY. THAT IS THE LONGEST SINCE OUR DATA STARTED IN 2018. THIS WEEK THE GAP BETWEEN THE FIXING ON THE MARKET EXPECTATIONS HAVE BEEN WIDENED. WE ARE SEEING THE STATE BANKS ARE STILL IN THE MARKET THIS WEEK. THEY ARE TRYING TO INTERVENE AND TRYING TO BUY AND SELL DOLLARS IN ORDER TO CONTROL THE SPOT AROUND 6.72 PER DOLLAR. WE ARE SEEING A VERY LOW VOLATILITY. THE VOLATILITY IS AT THE LOWEST IN MORE THAN A DECADE. SO I WOULD SAY THE APPRECIATION WOULD BE GRADUAL BECAUSE AS WE SEE THE ADJUSTMENT IS VERY ROBUST AND PEOPLE ARE STILL BULLISH ON THE YEN. WE ARE SEEING GOLDMAN ALREADY SAYING THE YEN COULD REACH TO AROUND FIVE PER DOLLAR IN THE NEXT SEVERAL YEARS. OF COURSE, THAT MAY NOT BE A LEVEL THAT COULD BE REACHED BY THE END OF THIS YEAR, BUT PEOPLE ARE STILL OPTIMISTIC. DAVID: IF WE GET TO FIVE BY THE END OF THIS YEAR, WE WILL HAVE A DIFFERENT SET OF ISSUES. I RISK, THANK YOU SO MUCH, FX RATES REPORTER. JUST AN UPDATE ON OTHER STORIES WE ARE TRACKING. THE HONG KONG JOCKEY CLUB HAS REPORTED RECORD ANNUAL WAGERING AND LOTTERY TURNOVER OF MORE THAN $42 BILLION. THAT IS HELPED BY GROWTH IN RACING AND FOOTBALL BETTING COME UP ALMOST 4% FROM THE PREVIOUS YEAR. BUT THE CLUB SAYS THE LAUNCH OF HORSERACING ORIGINALLY SCHEDULED FOR OCTOBER OF THIS YEAR WILL BE POSTPONED AFTER A RECENT RISK ASSESSMENT FROM AUTHORITIES. SNOWFLAKE SHARES SURGED IN EXTENDED TRADING AFTER THE SOFTWARE COMPANY RAISED ITS FULL-YEAR SALES FORECAST, TOPPING ESTIMATES ON THE STREET. IT IS DRIVEN BY GROWING DEMAND FOR AI ASSISTANT COCO. MORE THAN 2000 CUSTOMER ACCOUNTS BEGAN USING THE PRODUCT, MEANING THE TOTAL IS ABOUT 9000. YVONNE: DATA CROSSING BLOOMBERG, THIS IS THE RATING OF THE CHINA SERVICES PMI, BETTER-THAN-EXPECTED, A BIT OF IMPROVEMENT FROM5 THE PREVIOUS MONTH. 1.4 FOR AUGUST. THE COMPOSITE IS WELL ABOVE, 52.1. SO THE PRIVATE GAUGE NUMBERS SHOWING MUCH MORE FAVORABLE NUMBERS COMPARED WITH THE OFFICIAL, WHICH CONTINUES TO SHOW SLIGHT IMPROVEMENT BUT STILL AND CONTRACTION. DAVID: SO THE NEXT IN LINE FROM THIS WE WILL BE ENTERING THE WINDOW FOR THINGS LIKE CREDIT NUMBERS IN ABOUT A WEEK AND THE ACTIVITY WILL BE VERY TELLING IN TERMS OF THE PMI AND CONFIRMATION FROM THE ACTUAL ACTIVITY NUMBERS. WE HAVE PLENTY MORE AHEAD. THIS IS BLOOMBERG. >> THE UNITED STATES GOVERNMENT NEGOTIATED THIS DEAL VERY CAREFULLY. WE TAKE BUSINESS PRACTICES AND CONFIDENCE IN OPERATIONS EXTREMELY SERIOUSLY. THE MAJORITY OF THE DIRECTORS OF THE COMPANIES WILL BE AMERICAN. WE WILL HAVE VERY STRICT CONTROLS OVER THE FLOW OF FUNDS IN THE BUSINESS AND HOW BUSINESS OPERATIONS ARE CONDUCTED. YVONNE: THAT WAS THE U.S. ENERGY SECRETARY CHRIS WRIGHT UNVEILING A WAVE OF ENERGY DEALS AIMED AT BOOSTING VENEZUELA'S OIL PRODUCTION. HE ALSO TOLD BLOOMBERG CHINA WILL NOT HAVE ANY DEBT CLAIMS TO REVENUE FROM NEW OIL PRODUCTION IN VENEZUELA. COMMENTS CAME AFTER CHINA CALLED FOR ITS INTERESTS IN VENEZUELA TO BE PROTECTED FOLLOWING THE GRANTING OF OILFIELD CONCESSIONS TO A U.S.-BACKED ENERGY COMPANY FOR SOME OF THE FIELDS WERE PREVIOUSLY OPERATED THROUGH VENTURES LIKE TO CHINESE COMPANIES. DAVID: WE ALSO SPOKE TO THE CEO OF CHEVRON ON HOW HE THINKS THE DEALS COULD BENEFIT THE U.S. AND ALSO VENEZUELA. >> IT IS A WIN FOR AMERICAN AND REGIONAL ENERGY SECURITY, IT IS A WIN FOR U.S. REFINERS ARE WOULD PREFER THIS TYPE OF CRUDE OIL, IT IS A WIN FOR THE VENEZUELAN ECONOMY TO SEE THE INVESTMENTS THAT WILL BE MADE. WE'VE BEEN HERE FOR 100 YEARS. WE ARE PART OF THE PATH OF THIS COUNTRY. WE ARE HERE TODAY WITH JOBS AND INVESTMENT AND WE ARE PLEASED WE REACH THESE AGREEMENTS THAT WILL ALLOW US TO INVEST $7 BILLION THROUGH THREE DIFFERENT JOINT VENTURES OVER THE NEXT FIVE YEARS TO MORE THAN TRIPLE PRODUCTION FROM WHERE IT WAS THE YEAR BEFORE PRESIDENT TRUMP CAME INTO OFFICE. WE HAVE GOOD FACILITIES. WE HAVE GOOD PEOPLE. THROUGH THE LAST SEVERAL YEARS WHEN THINGS HAVE BEEN MORE DIFFICULT, WE'VE BEEN ABLE TO MAINTAIN OUR ASSETS. WE'VE BEEN ABLE TO INVEST AND GROW PRODUCTION FROM A LOW OF ABOUT 40,000 BARRELS PER DAY TO OVER 250,000 TODAY AND WE ARE ON OUR WAY TO OVER 600,000 BY 2031. >> BROADLY SPEAKING I'VE HEARD YOU SAY THIS COULD BE FOR DECADES AND DECADES OF DEVELOPMENT. CAN YOU SHARE JUST HOW MUCH RESERVES ARE UNDER THESE SPECIFIC FIELDS THAT ARE IN THE STEEL? >> WE ARE DOING A LOT OF TECHNICAL WORK AS WE'VE ADDED SOME TO OUR PORTFOLIO TO DO THE ENGINEERING ASSESSMENTS AND REALLY CHARACTERIZE THE SIZE OF THE RESOURCE. I WILL SAY IT IS MANY BILLIONS OF BARRELS. IT IS HEAVIER IT OIL, WHICH TAKES DIFFERENT TECHNOLOGIES TO PRODUCE, BUT OVER TIME THAT PRODUCTION WILL LAST DECADES. THIS IS NOT A FEW YEARS, THIS WILL BE DECADES. >> $7 BILLION IS THE MOST WE'VE SEEN AND OIL MAJOR CONE BIT TO VENEZUELAN -- COMMIT TO BUT HIS WILL IN PRODUCTION SINCE THE OUSTER OF NICOLAS MADURO. IS THIS INVESTMENT SPLIT WITH THE JOINT VENTURE PARTNER, AND ALSO HOW ARE YOU THINKING ABOUT CAPEX? ARE YOU CHANGING ANYTHING IN TERMS OF YOUR OUTLOOK TO ACCOMMODATE THE VENEZUELAN INVESTMENT? >> THE $7 BILLION IS 100% BASIS. IT IS THREE JOINT VENTURES, IT IS US IN THE STATE COMPANY WHO WAS OUR PARTNER WHO WILL MAKE THE INVESTMENTS OVER TIME. OUR CAPITAL AND GUIDANCE TO INVESTORS IS UNCHANGED. WE HAVE ACCOUNTED FOR THIS IN OUR FORWARD GUIDANCE AND PLENTIFUL SOME OF OUR OVERALL CAPITAL SPENDING WILL NOT CHANGE. WE HAVE ROOM FOR THIS IS PART OF THAT PLAN. YVONNE: THAT WAS THE CEO OF CHEVRON SPEAKING IN CARACAS. A CHECK ON THE MARKETS, TRACKING THE YEN AND REAL. WE ARE CONTINUING TO SEE IT STRENGTHEN. 158.46. WE ARE OFF SOME OF THE INITIAL, THE OVERNIGHT LOW POINT WAS 158.22. WE WILL SEE IF THIS EXTENDS AND SUSTAINS GIVEN THE BROAD DOLLAR WEAKNESS WE'VE SEEN IN ASIA. THAT IS ONE THING TO WATCH AS WE COUNT DOWN TO THE 30 YEAR JGB BOND ACTION. DAVID: IN ABOUT TWO HOURS. AS MARK POINTED OUT, THE DEMAND FOR THAT SPECIFICALLY BECAUSE IT IS A BACKEND STORY. IF YOU COMPARE TERM PREMIUM, JAPAN IS REALLY UP THERE, IF NOT HIGHER THAN THE U.S. DEMAND FOR THAT WILL REALLY AFFECT THE BOND MARKET NARRATIVE OVER THE NEXT 24 HOURS OR SO. THE HONG KONG STORY PERHAPS HAS TO DO WITH THE JAPANESE YEN BEING SO WEAK AND WHERE IT IS. IT IS EYEING BILLION DOLLAR PROPERTY DEALS TO ENTER JAPAN IS OUR UNDERSTANDING BASED ON THE INFORMATION WE HAVE. LET ME JUST BRING THAT UP. THAT APPEARS IN THE FORM OF A HEADLINE. WE HAVE MORE DETAILS, WE WILL SEE IF WE CAN. I DO HAVE MORE DETAILS RIGHT NOW. THIS IS BASED ON PEOPLE WE HAVE SPOKEN WITH. THIS IS PART OF GEORDIE AND'S. THEY ARE NOW LOOKING AT OVER A BILLION FOR MIXED-USE ASSETS WITH HIGH-END OFFICE, PRIME RETAIL TOKYO LOCATIONS. YVONNE: OK, MAKING MOVES HERE IN THE ENTRY TO JAPAN, A BIG STEP WHEN IT COMES TO JARDINE. IN CHINA, THIS IS A TITANIUM STOCK, YEAH, IT IS LIKE TITANIUM, 187, A SOLID DEBUT. CHINA OPTICAL STOCKS, GIVEN THE BROADCOM OUTLOOK. WHEN YOU HEAR THE LIKES OF THE VISIBILITY RIGHT NOW, THE AI OUTLOOK, IT MIGHT BE QUITE FAVORABLE WITH THE OPTICALS. THEY ARE SAYING1 AI SEMI REVENUE COULD REACH50 BILLION IN FISCAL 2027 AND MORE THAN DOUBLE IN 2028. THE BROADCOM STORY, OPTICS A LITTLE MIXED IN CHINA. THE RISK SENTIMENT DOING BETTER THAN YESTERDAY. VOL IS STILL LOW, MORE SIGNS OF GREEN AND EQUITIES ARE POINTING HIGHER. WE WILL HAVE A LOT MORE IN THE SECOND HOUR OF "THE CHINA SHOW." STAY TUNED. YVONNE: WELCOME BACK THE CHINA SHOW. A LOOK AT THE CSI 300 AND WE ARE SEEING GAINS ACROSS EQUITIES NOT JUST IN THE AND OFFSHORE MARKETS, BUT THE REST OF THE REGION LOOKING. TOPIX, KOSPI. TAIWAN WITH PRESSURE UNDER THE EQUITY SPACE. WE ARE SUSTAINING SOME OF THE STRENGTH WE HAVE SEEN IN THE LAST 10 TO 12 HOURS. THAT AT LEAST IS LEAVING THE WEAKNESS IN THE DOLLAR TO LIFT UP WRIST SENTIMENT, LIFTING THE REST OF ASIA FX AS WELL. AT 158 LEVELS, 158.51. IN TERMS OF WHAT THAT LEADS TO WITH JGB YIELDS AND THE REST OF THE GLOBAL PONDS SPACE -- GLOBAL BONDS SPACE IS LOOKING LIKE THIS. THERE IS A BIT OF A BREATHER. NIKKEI IS FLAT. TOPIX IS DOING MUCH BETTER. THE BANK SIDE OF THINGS IS HELPING GIVEN THE RATE SITUATION. YOU SEE SOME OF THE CHIPMAKERS, LIKE THE BROADCOM NEWS. TAIWAN HEADING THE OPPOSITE DIRECTION. BONDS ARE DOING THIS. WE WERE TALKING ABOUT A THREE HANDLE FOR THE JGB 10 YEAR YESTERDAY, WE HAVE SEEN MORE STABILIZATION AND THINGS HEADED THE OPPOSITE DIRECTION. THE 30 YEAR JAPAN GGP DOWN SOME NINE BASIS POINTS, SITTING AROUND THE 4 HANDLE. WE ARE SEEING A REVERSAL FROM THE LAST FEW SESSIONS. DAVID: ARGUABLY THE BEST CONDITIONS TO AUCTION OUT A 30 YEAR THIS WEEK. THE WINDOW FOR THAT IS QUITE NARROW. IT GOES TO THE JAPANESE YEN STORY, WHICH IS WHY WE WERE OBSESSING OVER THIS 30 YEAR BOND SALE TODAY. 158.48. THERE ARE MANY THINGS YOU CAN DO IN 12 HOURS. IN THE FX MARKETS WE HAVE SEEN A SURGE IN DOLLAR-YEN. GOING INTO THE U.S. OPEN YESTERDAY, WE SURGED 158.22. WE STABILIZED, AND THEN IN THE LAST HOUR WE RETESTED CLOSE TO THE LOW OVERNIGHT. I THINK WE GOT THIS LOW AS 128.25, THEN BACK TO 158 AND CHANGE. WE ARE JUST WATCHING THIS CLOSELY. THERE CERTAINLY ARE FOOTSTEPS IN THE SAND OR THE SNOW. BUT IT DOESN'T SEEM LOOKING AT THE MAGNITUDE OF THIS MOVE THAT IT IS SOMETHING WE DON'T NORMALLY SEE IN THE MARKET. THIS IS ABOUT HALF THE MOVE WE SAW IN RECENT WEEKS. YVONNE: THAT DOES STAMP OUT SOME SPECULATION THAT JAPAN DID INTERVENE ONCE AGAIN. WHAT WE HEARD FROM SCOTT BESSENT OF LATE IS THEY ARE BACKING THE BOJ IN THE CORNER THAT YOU BETTER DO SOMETHING IN SEPTEMBER. THAT HAS FUELED SPECULATION THAT THE WILL HAVE TO -- THAT THE BOJ WILL HAVE TO DELIVER. THAT LEAVES A LOT OF PRESSURE. IF THEY DON'T HIKE, THAT COULD LEAD TO MORE REVERBERATIONS ACROSS THE G10 SPACE. DIRECTION IS DRIVING ASIAN MARKETS TODAY AS THE REGION TRIES TO SHAKE OFF MACRO WORRIES. LET'S BRING IN ANTHONY STEPHENS WITH MORE ON SOME MOVERS. ANTHONY: THE FOCUS IS SHIFTING FROM BETA TO ALPHA AND SHARPE RATIOS. ONE OF THE SHARPEST RATIOS IN ASIA IS THE BANKING SECTOR. IT IS THE EASIEST WAY TO TRACK THIS TECH BOOM. THE GROWTH OF THE ASIAN ECONOMIES, THE CASH FLOW FLOODING INTO REGION ECONOMIES, AND THE RATES PRESSURE BEING PLACED ON ASIAN ECONOMIES. KOREAN, JAPANESE FINANCIALS, AND JAPANESE BANKS WERE STRONG YESTERDAY. FLIPPED THE BOARD AND WE WILL SEE WHAT IS STRUGGLING ON THE OTHERS. ASIA'S DOMESTIC STORY FROM A CONSUMPTION SIDE IS A MORE MIXED PICTURE. FAST FASHION IS STRUGGLING. RETAIL SALES MISSED ON JAPAN, EVEN THOUGH THEY CONTINUE TO BUILD OUT NEW STORES. THEY ARE PLANNING TO INCREASE THEIR STORES ACROSS THE COUNTRY. WE HAVE ANOTHER DAY OF STRUGGLES FOR SHEIN. THEY MISSED THE BOARD IN TERMS OF IPO TIMING AND ARE NOW TRADING INTO MASS CONSUMPTION. FLIPPED THE BOARD ONE MORE TIME AND WE GO BACK TO THE MACRO WORRIES. PRESIDENT TRUMP MAY BE JOKING ABOUT RENAMING THE STRAIT OF HORMUZ THE STRAIT OF TRUMP, BUT THE SHIPPING MARKET DOES NOT FIND IT FUNNY. SHIPPING STOCKS ACROSS THE REGION ARE IN A WEAK TAPE. THE KOREAN SHIPPERS QUITE STRONG, THE CHINESE SHIPPERS QUITE STRONG, AND THE JAPANESE SHIPPERS QUITE STRONG. WHEN IT IS NOT WIDESPREAD, NO MATTER THE MACRO PICTURE, YOU CAN SEE THE EXTENT OF THE DISRUPTION IN THE SHIPPING MARKET. WE HAVE TO SEE WHETHER THAT FEEDS INTO SUPPLY CHAINS ACROSS THE BOARD AND DAMAGES THIS MACRO PICTURE FOR THE STRENGTH OF THE ASIAN ECONOMIES. DAVID: I TOO COULD NOT FIT INTO FAST FASHION. THOSE SKINNY JEANS JUST HAD TO GO. [LAUGHTER] THIN VOLUME TRADING NOW, 15% LOWER THAN USUAL ON THE MSCI ASIA-PACIFIC. JOINING US ON SET IS THE GROUP CHIEF INVESTMENT OFFICER AT REUTERS. HOW DO YOU FEEL ABOUT MARKETS THESE DAYS? >> I STILL FEEL PRETTY GOOD. I THINK BIG PICTURE WE ARE IN AN ENVIRONMENT WHERE WE SEE STRONG GROWTH. WE CAN GET CONCERNED ABOUT POPULIST POLICY, BUT ONE OF ITS BENEFITS ITS TO NOMINAL GROWTH. CORPORATE EARNINGS ARE COMING THROUGH. IN SOME AREAS WE HAVE SEEN THE FROTHINESS COME OFF. I WAS CONCERNED IN THE SECOND QUARTER THAT MOMENTUM HAD DONE QUITE WELL. YOU SEE THAT COME RIGHT BACK DOWN IN JULY AND AUGUST. INVESTORS EVALUATING THESE CHEAP COMPANIES. I THINK THE TONE OF THE EQUITY MARKET IS STILL STRONG. THE QUESTION IS WHAT HAPPENS TO BONDS BECAUSE THEY ARE COMPETING FROM A VALUATION STANDPOINT. BIG PICTURE, VERY WORRIED ABOUT SUSTAINABILITY OF DEBT OVER THE MEDIUM TERM. I THINK IN THE SHORTER TERM WE'VE ALSO HAD THE PRESSURE FROM THE MIDDLE EAST, THE CONCERN ABOUT THE OIL PRICE GOING UP, BUT I THINK SCOTT BESSENT WILL TALK MORE TOUGH. I THINK WE WILL SEE A RATE HIKE IN SEPTEMBER AND THAT THE INFLATION DATA SHOULD BE QUITE WELL BEHAVED. THINK THERE'S VALUE IN BONDS AT THIS POINT IN TIME. I WOULD SAY THERE IS A TACTICAL TRAIT THERE AND -- TRADE THERE AND THEY WILL NOT POP THE EQUITY MARKET YET. YVONNE: AT THE LONG END IS WHERE YOU WILL SCOOP UP THE VALUE? >> THE BEGINNING OF THE YEAR WE WERE MUCH MORE WORRIED ABOUT BONDS BECAUSE WE WERE CONSISTENTLY ABOVE THE CURVE IN RATE EXPECTATIONS. NOW WE SEE MORE RATE HIKES PRICED INTO THE FRONT END. THE LONG END, 10'S AND 30'S, THERE'S NOT MUCH VOLATILITY THERE AT THE MOMENT. IN IN ALL, BECAUSE WE THINK -- ALL IN ALL, BECAUSE WE THINK HAVING BEEN NEGATIVE BONDS WE CAN BE MORE CONSTRUCTIVE NOW. DAVID: ON YOUR COMMENT THAT WE WILL PROBABLY GET A RATE IN TWO WEEKS, COULD THAT BE A CATALYST FOR RISK ASSETS? >> THAT IT IS AN UNDERLYING CONCERN ABOUT SUSTAINABILITY OF DEBT, WHICH WILL BE A PROBLEM IF GROWTH SLOWS IN THE STATES. BUT IT IS NOT A PROBLEM JUST YET. AND THERE'S THE QUESTION ABOUT THE AI CROWDING OUT BONDS. THAT IS A BIT OF A DIGESTION PROBLEM. THEN THERE WOULD BE MORE SHORT-TERM CONCERNS, WHAT IS HAPPENING IN THE MIDDLE EAST AND THE CONCERNS OF FED CREDIBILITY. WARSH WAS TRYING TO INDICATE -- DAVID: IT IT GETS CONFUSING BETWEEN THE TWO THESE DAYS. >> WARSH IS SOUNDING MORE HAWKISH. IS HE A DOVE IN WOLF'S CLOTHES? I THINK HE WILL DELIVER A RATE HIKE, AND THE MARKET WILL SEE THAT IS POSITIVE. YVONNE: WE SEEN A WASHOUT IN THE WHOLE AI TRADE IN AUGUST. GIVEN THE CROWDING OUT WE HAVE SEEN ACROSS CREDIT MARKETS, ARE INVESTORS SEEKING FOR THOSE CREDIT ALTERNATIVES? >> GENERALLY WE DON'T SEE MUCH VALUE IN CREDIT RIGHT NOW AND WE ARE POSITIVE ON THE AI STORY. WE ARE LOOKING FOR A MORE DIVERSIFIED APPROACH. HIGH-QUALITY STOCKS WERE LOOKING CHEAP BY THE END OF JUNE, NOW THEY RALLIED A BIT. VALUE AS A START IS ALSO INTERESTING, DIVERSIFYING TO AI RISK AND DOING WELL. THE STORY OF THE EQUITY MARKET IS MUCH BROADER. WE THINK NOW IS THE TIME TO BE FAIRLY DIVERSIFIED. DAVID: WE TALK ABOUT MOMENTUM BEING THE FACTOR TO CHASE BECAUSE IT IS BROADENING OUT. HOW ARE YOU LOOKING AT THAT? >> IN RECENT YEARS AND YOU HAD A SITUATION WHERE HIGH QUALITY, HIGH MOMENTUM STOCKS WERE DOING WELL. THE HYPERSCALERS WERE DOING REALLY WELL. THAT IS THE INITIAL STORY. JUST THIS YEAR WE SEE MOMENTUM DOING WELL WHILE MOMENTUM DID POORLY. I DON'T LIKE SEEING THAT. MOMENTUM WHEN IT IS BACKED BY QUALITY IS FINE. WE HAVE MOMENTUM AND QUALITY UNDERPERFORMING. THAT DIVERGENCE WAS WORRISOME TO ME. FROTHINESS COULD RETURN NO QUESTION, BUT RIGHT NOW WE THINK WE SHOULD TAKE ADVANTAGE OF THAT OPPORTUNITY QUALITY. I SOMETIMES DESCRIBE IT AS AN ECLIPSE. AT THE END OF JUNE WE HAD THAT ECLIPSE. YVONNE: YOU ARE FLYING HERE TO ASIA. WHAT ARE THE THINGS YOU ARE WATCHING OUT FOR, FOR OPPORTUNITIES? WHEN YOU LOOK TO YOU GRAPHICALLY IT SEEMS LIKE NORTH ASIA IS BENEFITING FROM THE WHOLE AI TRADE, CHINA SEEMS TO BE A CATCH UP STORY. >> WE ARE STILL POSITIVE ON THE REGION. THE BIG STORY IN THE LAST YEAR OR TWO HAS BEEN THE OPPORTUNITY TO DIVERSIFY GEOGRAPHICALLY AWAY FROM THE U.S. FOR A LONG TIME IT WAS ABOUT THE MAG 7, CALLED THE LAG SEVEN RIGHT NOW. [LAUGHTER] BUT THE MAG 7 WAS DOMINATING EVERYTHING. PEOPLE ARE LEARNING THIS BENEFIT TO HAVING THAT INTERNATIONAL EXPOSURE. ASIA, IF YOU LOOK AROUND THE WORLD, EUROPE HAS ITS STORY THAT IS MORE VALUE ORIENTED, BUT GROWTH OPPORTUNITY IS STILL ASIA. IF YOU ARE LOOKING FOR AN ECONOMY THAT CAN COMPETE WITH THE U.S. AND TECH, IT IS CHINA. ONE OF THE BIGGEST IN THE AIR TRADE -- AI TRADE IS THE EXTENT TO WHICH CHINA COULD UNDERCUT. BEING DIVERSIFIED, DON'T JUST HAVE EXPOSURE IN THE U.S., I THINK IT IS IMPORTANT. DAVID: YOU REMINDED US OF 2000 AND WHAT HAPPENED THEN. WE ARE ON THE LOOKOUT FOR HOW THE AI TRADE WILL GO WRONG, OR HOPEFULLY NOT WRONG, BUT IN THE SMALLEST CHANCE WE ARE, WHAT IS THE HITCH? WHAT IS THE APPROPRIATE EXPOSURE TO THAT HITCH? >> FROM AN ASSET CLASS PERSPECTIVE IT IS HARD TO DIVERSIFY AGAINST THE AI TRADE BECAUSE WE ARE SEEING AN INCREASE IN CORPORATE ISSUANCE IN THE DEBT MARKET, AND THAT IS IMPINGING ON THE U.S. BOND MARKET. I DON'T THINK U.S. BOND MARKETS HEDGE AGAINST AI. TODAY THE OPPORTUNITY TO THINK ABOUT AI RISK IS AND HOW YOU CONSTRUCT YOUR EQUITY PORTFOLIO, NOT JUST CHASING MOMENTUM BUT BEING MORE DIVERSIFIED IN HOW YOU ACCESS THE AI STORY. FROM AN ASSET CLASS THERE IS NOT MUCH OF THE HEDGE. GOLD HAS BEEN CORRELATED AS WELL. WE LIKE GOLD AS A HEDGE AGAINST CREDIBILITY CONCERNS. IN JUNE WHEN WE SAW THAT OUTPERFORMANCE OF MOMENTUM VERSUS QUALITY, NOW IS THE TIME TO NOT BE CHASING THE FROTH AND DIVERSIFYING THE EXPOSURE MORE. THERE ARE OPPORTUNITIES IN EQUITIES TO DO THAT. YOU HAVE TO HAVE A WELL CONSTRUCTED EQUITY PORTFOLIO. THERE IS NO EASY ASSET CLASS HEDGE. YVONNE: IT IS INTERESTING THE DEBATE AROUND GOLD REMAINS OUT THERE, WHETHER -- WHAT IS IT? IS IT STILL HAVING THAT SAFE HAVEN STATUS OR DO YOU HAVE TO RECALIBRATE BECAUSE THE CORRELATIONS WITH EVERYTHING -- >> EXACTLY. GOLD WAS DIVERSIFIED TO START WITH. I THINK THE KEY THING TO THINK ABOUT GOLD IS IT ESSENTIALLY DISPLAYS BONDS AS A DIVERSIFIER IN RECENT YEARS. WE WERE CONCERNED ABOUT FISCAL SUSTAINABILITY AND INFLATION AND ULTIMATELY CENTRAL BANKS WERE RUNNING A BIT HOT. IN THAT ENVIRONMENT, GOLD IS A BETTER HEDGE THAN BONDS. THERE IS STILL THAT CONCERN ABOUT FED CREDIBILITY, SO THERE IS STILL A ROLE FOR GOLD. WHEN YOU LOOK AT AN ASSET, YOU THINK WHAT AM I SELLING TO BUY IT? YOU'VE SEEN A REPRICING OF RATE EXPECTATIONS, GIVEN THE POSITIVE CARRY YOU GET FROM BONDS, THEY ARE STARTING TO HER IN THE PORTFOLIO THAT THEY WEREN'T BEFORE. YVONNE: GROUP CHIEF INVESTMENT OFFICER AT SCHRODERS. AS THE TRUMP ADMINISTRATION CONSIDERS FRESH TARIFFS ON SHIP IMPORTS, WE HEAR HOW A KEY COMPANY -- HEAR FROM A KEY COMPANY OF HOW RESTRICTIONS WILL ONLY ACCELERATE AI DEVELOPMENT IN CHINA. THIS IS BLOOMBERG. YVONNE: THE TRUMP ADMINISTRATION IS WEIGHING NEW TARIFFS ON IMPORTED SEMI CONDUCTORS WITH THE MEASURES POTENTIALLY EXPANDING TO CONSUMER-ELECTRONICS THAT CONTAIN CHIPS. THE COMMERCE SECRETARY TOLD CNBC THAT COMPANIES BUILDING IN THE U.S. COULD QUALIFY FOR TARIFF RELIEF AS DC SEEKS TO SPUR MORE DOMESTIC MANUFACTURING. HE SAYS TAIWAN IS SET TO ANNOUNCE A FRESH ROUND OF U.S. INVESTMENT COMMITMENTS NEXT WEEK. DAVID: LET'S DISCUSS THE IMPLICATIONS OF THIS. STEPHEN ENGLE OUR CHIEF NORTH ASIA CORRESPONDENT IS IN TIME ON -- IS IN TAIWAN. TELL US WHAT WE KNOW ABOUT THIS. YOU ARE ON THE GROUND. I ONE IS A MASSIVE, IF NOT THE BIGGEST PART OF THE SUPPLY CHAIN. -- TAIWAN IS A MASSIVE, IF NOT THE BIGGEST PART OF THE SUPPLY CHAIN. STEPHEN: THERE IS A BULLISHNESS IN TAIWAN. MANY OF THESE COMPANIES ARE DEEP INTO THE SUPPLY CHAIN FOR CHIPMAKERS, AND THEY GO WHERE THE CHIPS ARE BEING MADE. WITH A SPECIAL CAVEAT ABOUT CHINA NO DOUBT. THEY CANNOT BASICALLY ALLOW THE GLOBAL OEM'S THAT TAP INTO THE SUPPLY CHAIN HERE CAN'T SEND, FOR EXAMPLE, ASML WOULD NOT BE ABLE TO SELL ITS ADVANCED EXTREME ULTRAVIOLET LITHOGRAPHY GEAR TO CHINA. AND THOSE THAT ARE PART OF THAT, THEY ARE NOT ABLE TO SELL INTO CHINA. THE TREND RIGHT NOW, THE SUPER CYCLE IN THE CHIPMAKING FOR AI IS SO STRONG IN THE U.S. AND ELSEWHERE THAT MANY OF THE COMPANIES I TALKED TO ARE ALSO CONSIDERING FURTHER INVESTMENTS INTO THE UNITED STATES, ADVANCED PACKAGING COMPANY, LARGE COMPANY ALREADY HAS FACILITIES IN BOULDER, COLORADO. THE GENTLEMAN I SPOKE TO EARLIER THIS MORNING, ALSO A GERMAN COMPANY. MARK, WHICH DOES ADVANCED MATERIALS FOR AI CHIPMAKING, THEY ALREADY HAVE 2000 EMPLOYEES IN ARIZONA WHERE TSMC'S BUILDING AND HAS ITS BOUNDARIES THERE. THEY ARE LOOKING AT THESE GEOPOLITICS AS SOMETHING BAKED IN ABOUT THE BIFURCATION BETWEEN CHINA AND THE UNITED STATES, BUT THEY ARE ALSO TAKING ADVANTAGE OF THINGS. I MENTIONED ZEISS. I TALKED TO THE HEAD OF THEIR SEMI CONDUCTOR DIVISION. HE SAID THOSE DECADES OF OPTIMIZATION HAS LED TO HELPING MEET THE DEMAND OUT THERE RIGHT NOW. AND THAT CHINA STILL IS PROBABLY MORE THAN A DECADE BEHIND THEIR TECHNOLOGY. HERE IS MY CONVERSATION WITH THE HEAD OF SEMI CONDUCTORS. >> OBVIOUSLY THIS IS NOT GOOD FOR OUR BUSINESS. WE SEE THE SKEPTICAL. WE DON'T BELIEVE IN THE POSITIVE IMPACT OF THESE EXPORT RESTRICTIONS BECAUSE IT EXTENUATING THE INNOVATION AND CHINA. -- IN CHINA. WE HOPE THAT PRAGMATISM REMAINS STRONG AND THAT WE ARE GOING TO CONTINUE TO BE ABLE TO MAKE -- STEPHEN: AS, PART OF THAT UBS REPORT THEY INDICATED THERE HAS BEEN EVIDENCE THAT CHINA IS STILL VERY RELIANT ON THE ZEISS OPTICS TECHNOLOGY FOR ITS LITHOGRAPHY MOVEMENT AND PURSUIT. WHAT KIND OF DATA DO YOU HAVE THAT YOU KNOW CHINA IS STILL BUYING IT? LEGALLY. THE REPORT MENTIONED CANON AND ALSO ZEISS. >> WE DON'T SELL TO CHINA, NOT DIRECTLY, NOT IN DIRECTLY. THESE ARE RESTRICTIVE MATERIALS. -- RESTRICTED MATERIALS. WE ARE NOT AWARE OF ANY ZEISS BEING SOLD OR MADE AVAILABLE TO CHINA. WE HAVE NO INFORMATION ON THAT. STEPHEN: LET ME TAKE IT BACK A FEW METERS HIGH AND SAY HOW CRITICAL, GIVEN THE 180 YEARS IN EXPERIENCE THAT ZEISS HAS, HOW CRITICAL ARE YOUR OPTICS TO EUV AND DUV DOWN THE ROAD FOR CHINA? >> YOU SAY SOMETHING IMPORTANT. YOU MENTION THE 180 YEARS. OUR ABILITY TO MANUFACTURE IN HIGH PRECISION OPTICS, THIS IS A MANY DECADES OLD TECHNOLOGY AND CAPABILITY. THIS IS EXTREMELY HARD TO COPY. OF COURSE THIS IS GOOD FOR US. THE PROTECTION OF THIS TECHNOLOGY IS VERY IMPORTANT TO US. STEPHEN: I KNOW THE GERMAN GOVERNMENT IS WORKING ON A REPORT. THEY HAVE BEEN GATHERING INFORMATION ABOUT WHERE THOSE VULNERABILITIES ARE IN CHINA, IN PARTICULAR AS IT RELATES TO THE SEMI CONDUCTOR SUPPLY CHAIN AND THOSE CRITICAL MATERIALS. SO GERMAN INDUSTRIES CAN HAVE LEVERAGE IF INDEED IT GOES DOWN THE ROAD OF TRADE FRICTION BETWEEN THE EU AND CHINA. OBVIOUSLY YOUR TECHNOLOGIES IN OPTICS GIVE GERMANY NDU EXTREME LEVERAGE -- GERMANY AND YOU EXTREME LEVERAGE. >> THIS IS THE AREA OF POLITICS. WE ARE NOT POLITICIANS. I AM NOT IN FAVOR OF BEING USED OR BEING LEVERAGED IN A GEOPOLITICAL CONFLICT. I THEREFORE HOPE THAT PRAGMATISM PREVAILS AND KEEPS US DOING BUSINESS GLOBALLY AS MUCH AS POSSIBLE. STEPHEN: ONE OF THE RISKS FRANK DID MENTION AT THE BEGINNING OF THAT REPORT, ESSENTIALLY THAT THE ADVANCEMENTS IN ANY ADMINISTRATION -- TRUMP ADMINISTRATION EXPORT CONTROLS COULD LEAD TO TECHNOLOGIES FROM ASML OR ZEISS, COULD EXPAND TO SOME OF THE LEGACY ISSUES IN LITHOGRAPHY LIKE DUV, DEEP ULTRAVIOLET LITHOGRAPHY. AND THAT WOULD BE A DOWNSIDE TO A COMPANY LIKE SZEISS AND ASML IF THEY ARE NOT ABLE TO SELL THE LEGACY COMPONENTS INTO CHINA. YVONNE: GREAT COVERAGE. OUR CHIEF NORTH ASIAN CORRESPONDENT STEPHEN ENGLE JOINING US FROM TAIPEI. WE HAVE PLENTY MORE AHEAD. THIS IS BLOOMBERG. YVONNE: WE ARE WATCHING OF THE BIOTECH SPACE THIS MORNING. IT IS AND SO LOOK IN MEDICINE. CITI IS HAVING A NEW REPORT, A BUY RATING, A PRICE TARGET OF 85. CLOSE TO DOUBLE OF WHERE THE LEVELS ARE RIGHT NOW. THEY SAY THE COMPANY STANDS OUT WHEN IT COMES TO AI DRIVEN DRUG DISCOVERY SPACE FOR ITS ABILITY TO DISCOVER NOVEL TARGETS AND MOLECULES. WE DID SPEAK WITH THE CEO ON IT A FEW WEEKS AGO. DAVID: HE WAS VERY EXCITED TO HE REALLY HAD TO EXPLAIN TO US IN SIMPLE ENGLISH HOW IT WORKS. 3% TO THE UPSIDE. YVONNE: WE HAVE SOME BREAKING NEWS. DAVID: DO YOU SEE ANYTHING THERE? YVONNE: THIS IS REGARDING BYTEDANCE, THE TIKTOK OWNER. ACCORDING TO OUR SOURCES, THEY ARE GETTING A $30 BILLION LOAN. THIS IS STACKING UP TO BE ONE OF ASIA'S SECOND LARGEST LOANS THIS YEAR. ANOTHER NEWS ON A LOT OF HOW THESE AI PLAYERS ARE TRYING TO DO THIS BUILD UP. MAY BE ANOTHER POSITIVE FACTOR FOR THE AI TRADE TODAY. YVONNE: -- DAVID: WE WILL HAVE A CLOSE LOOK AT WHAT IS HAPPENING IN JAPAN TODAY. PLENTY MORE AHEAD. THIS IS "THE CHINA SHOW." YVONNE: ONE TO RECAP THAT BREAKING NEWS WHEN IT COMES TO BYTEDANCE, DEVELOPER OF TIKTOK, HAS SECURED A NEARLY $30 BILLION LOAN ACCORDING TO PEOPLE FAMILIAR WITH THE MATTER. LOOKS SET TO BE ASIA'S SECOND LARGEST DOLLAR DENOMINATED BORROWING THIS YEAR. WE HEARD THE COMPANY WAS ORIGINALLY SEEKING FOR A $20 BILLION FACILITY, BUT RAISED THAT AFTER GATHERING STRONG COMMITMENTS FROM BANKS. THE DEAL HAS NOT YET BEEN SIGNED. CERTAINLY A BIG ONE TODAY. DAVID: THE FACT THAT WE ARE MOVING FROM 20 INITIALLY TO 30 TELLS YOU THE AMOUNT OF APPETITE CREDITORS HAVE. IT ASTOUNDS ME STILL THAT YOU CAN RAISE THIS MONEY NOW IN THE PRIVATE MARKETS. THIS IS THE SECOND LARGEST. THE BIGGEST ONE WAS IN MARCH FROM SOFTBANK THAT WAS ABOUT $40B. THAT GOES INTO THIS LONGER BACK END OF THE CURVE ANGST STORY. THERE'S SO MUCH TO APPLY AMONGST THE AI PLAYERS, RAISING MONEY IN PRIVATE MARKETS LIKE THIS OR PUBLIC MARKETS THAT GO INTO THIS JAPANESE BOND AUCTION. THE 30 YEAR BOND AUCTION WILL BE VERY MUCH IN FOCUS GIVEN -- OH, OKAY, DOLLAR-YEN. NOW 158.09. SO WE HAVE TAKEN OUT THE LOW OFF LAST NIGHTS MOVE. WE ARE TESTING THE 158 HANDLE ON THIS. THIS WILL BE OUR TOP STORY NOW. 0.4% TO THE DOWNSIDE, SURGED TWICE IN 12 HOURS. THE EXPECTATIONS AROUND THE BOJ IS THEY WILL NOT ONLY MOVE, THEY WILL MOVE BY A BIGGER AMOUNT COMING INTO THE PRICE. WE WILL TALK ABOUT THIS FISCAL STRAIN STORY BECAUSE THE DEBT BURDEN IS SOMETHING WE ARE FOCUSED ON. IT IS 30 BASIS POINTS IT IS PRICED CURRENTLY. THAT SHOULD HAVE AN S. 30 BASIS POINTS, DATA, OR DATUM. A BIGGER THAN EXPECTED MOVE IS BEING PRICED RIGHT NOW. THEY WILL HAVE TO DO IT. MARKETS ARE EXPECTING THEM TO MOVE BY SOMETHING BIGGER THAN USUAL. IT THEN GOES TO WHERE WE ARE IN THE BOND STORY. WE HAD A BIG MOVE DOWN IN YIELDS ON THE 30 YEAR. LET'S HAVE A LOOK AT WHERE WE ARE ON THAT. THIS IS A VERY GOOD INDICATOR. THERE'S A FANTASTIC PIECE FROM THE MACRO FOLKS THAT TALKS ABOUT HOW IF YOU TAKE A MASSIVE STEP BACK, THE SAW -- THERE IS A MASSIVE DEBT BURDEN. WE CAN ARGUE THE PREMIUM TERM IS NORMALIZING, BUT THE AMOUNT OF DEBT THESE ECONOMIES ARE SITTING ON IS MUCH BIGGER THAN WHEN THE TERM PREMIUM WAS BACK 15 YEARS AGO. THEY ARE LOOKING AT THIS DEBT BURDEN STORY AND GOING THAT IS WHY IT IS MORE PRUDENT TO HANG ON TO YOUR FISCAL BULLETS. IT IS NOT JUST A U.S. STORY. IT IS PLAYING OUT ACROSS THE DEVELOPED MARKET SPACE. WE CONTINUE TO TALK ABOUT TERM PREMIUM IN THE U.S., IT IS MUCH LOWER THERE COMPARED TO THE LIKES OF EUROPE. I THINK OUR GUEST EARLIER SAID THERE WAS A TACTICAL OPPORTUNITY. YVONNE: NOW THAT YOU SEE THE SUNRISE UP IN YIELDS, UP UNTIL NOW IT WAS THE BUY GOLD OVER BONDS. NOW THAT WE ARE TALKING ABOUT YIELDS, ESPECIALLY THE U.S. 10 YEAR, THERE IS VALUE EMERGING BACK INTO THE BOND MARKET. THAT PERHAPS MIGHT TILT THE SCALES A BIT ON HOW THEY LOOK AT FIXED INCOME MOVING FORWARD IN THE BACK HALF OF THIS YEAR. THAT IS ONE THING TO WATCH CLOSELY. LET'S BRING IN RUTH CARSON WHO HAS BEEN TRACKING THE YEN ALL DAY TODAY. DID THEY INTERVENE OR NOT? RUTH: ALL DAY AND ALL NIGHT. I WAS GETTING TEXT LAST NIGHT BECAUSE EVERYONE IS SO INTERESTED IN AGAIN AND WHETHER OR NOT THERE WAS POTENTIALLY AN INTERVENTION OF SORTS. IF YOU DO A GIP ON THE DOLLAR-YEN CHART OVER THE LAST 48 HOURS, IT IS CLEAR THAT GOING INTO THE LONDON SESSION THERE WERE PEOPLE DEFENDING AROUND THE 159 LEVEL. IS IT INTERVENTION? PROBABLY NOT. IF YOU LOOK AT THE PRICING ACTION, IF THERE WAS INTERVENTION, USUALLY DOLLAR-YEN MOVES IN A MUCH MORE SIZABLE WAY. AND THIS WAS 1%. ABSOLUTELY THERE IS CHATTER. OF COURSE INVESTORS ARE VERY JITTERY. THIS IS PROBABLY MORE NERVES THAN ANYTHING ELSE. DAVID: OKAY. THE BOJ NEEDS TO HIKE NOW, DON'T THEY? YOU LOOK AT THE NOT SO VEILED CONTEXT COMING THROUGH FROM THE U.S. TREASURY SECRETARY. WHERE IS THE BOJ CONVERSATION? IT IS PERHAPS THE SIZE OF THE MOVE WE ARE LIKELY TO SEE, A FEW DAYS AFTER THE FED WILL ALSO PROBABLY MOVE. >> ABSOLUTELY. IT IS THE SIZE, THE PACE. IS THERE GOING TO BE A SURPRISE ELEMENT, AND WILL IT BE A SURPRISE ELEMENT IF INVESTORS AND MARKETS ARE ASKING FOR IT? THE YEN STORY IS INTERTWINED WITH THE JGB STORY AROUND WHAT THE BANK OF JAPAN IS DOING. SWAPS TRADERS ARE PRICING IN 30 BASIS POINTS OR SO FOR THE SEPTEMBER MEETING. THE NEXT 50 BASIS POINTS, QUARTER-POINT HIKES BY JANUARY. MARKETS ALWAYS WANT MORE. IN THIS CASE, IF THEY ARE DISAPPOINTED WE CAN ABSOLUTELY SEE SOME YEN BEARS STRENGTHENING BETS AS WELL. WE CAN SEE THAT IN THE EXPECTATIONS OF THE YEN. SOME STRATEGISTS ARE CALLING FOR 165 STILL BY THE END OF THE YEAR. THAT IS NOT FAR AWAY. IT CAN GO EITHER WAY. LET'S HOPE THE BANK OF JAPAN IS LISTENING TO MARKETS HERE. YVONNE: THEY HAVE TO DELIVER. DAVID: THEY ARE WATCHING "THE CHINA SHOW." YVONNE: HOPEFULLY. I THINK SCOTT BESSENT AMPED UP THE PRESSURE FOR THEM AHEAD OF THIS BOJ MEETING. RUTH, YOU ALWAYS MAKE FX SO FUN AND EXCITING. DAVID: YAY FOR THE YEN. YVONNE: LET'S BRING IN SOMEONE THAT ALSO MAKES FX FUN, GLOBAL HEAD OF FX STRATEGY AT NATIONAL AUSTRALIA BANK. WHAT WILL THEY HAVE TO DO? ARE THESE MOVES SUSTAINABLE? WILL THEY HAVE TO DELIVER ON SOME JUMBO HIKE? RAY: PROBABLY SO. JUST ECHOING WHAT RUTH HAS BEEN SAYING, I SUSPECT WE HAVE NOT HAD INTERVENTION. IT IS A JITTERY MARKET AND I THINK THIS EXPECTATION SET OFF BY THE BANK OF JAPAN GOVERNOR HINTING AT THE POSSIBILITY OF A GREATER THAN 25 BASIS POINT MOVE I THINK HAS CUT THE MARKET A BIT EXCITED. I AM SOMEWHAT SKEPTICAL. WE KNOW MR. TAKATA DISSENTED AT THE JULY 31 POLICY MEETING. VERY MUCH SITS AT THE HAWKISH END OF THE SPECTRUM. YOU CONTRAST THAT WITH GOVERNOR UEDA, PROBABLY THE MOST CAUTIOUS CENTRAL BANKER GLOBALLY. AS FAR AS WHAT IT MEANS FOR THE YEN, YES, 30 BASIS POINTS ALREADY PRICED. IF THE BOJ DELIVERS EVEN 25 BASIS POINTS AT SEPTEMBER AND HENCE AT THE POSSIBILITY OF AN ACCELERATION AS TO WHEN THE NEXT MOVE MAY COME, THAT IN ISOLATION I DON'T THINK WE'LL CUT IT IN TERMS OF BRINGING ABOUT A TREND REVERSAL IN THE YEN. IT REALLY IS THIS TERM PREMIUM STORY. WE HAVE SEEN A BIG RISE IN BAD PREMIER IN JAPAN RELATIVE TO THE U.S.. WHEN YOU ADJUST FOR THAT IT EXPLAINS WHY THIS NARROWING OF THE YIELD DIFFERENTIAL IN U.S. AND JAPAN HAS NOT SHOWED UP TO DATE AND A STRONGER YEN. THE BOJ PERSISTS IN SUPPRESSING LONGER DATED YIELDS THIRD OF ITS BOND BUYING OPERATIONS. WE STILL HAVE DEEPLY NEGATIVE REAL INTEREST RATES, WHICH EVEN 50 BASIS POINTS OF RATE HIKES IS NOT GOING TO CORRECT, THEN WE CONTINUE TO THINK THAT THE CONDITIONS FOR A SUSTAINED REVERSAL IN THE DOLLAR YEN EXCHANGE RATE ARE SOME WAY AWAY FROM FALLING INTO PLACE. DAVID: THE MOVING TARGET FOR THE BOJ IS WHAT THE FED DOES. LET'S LOOK AT THE FED AND BOJ. DO YOU THINK THE FED IS GOING TO MOVE INTO WEEKS? IF THEY DO, DOES THAT INFLUENCE WHAT THE BOJ NEEDS TO DO A FEW WEEKS AFTER? RAY: QUITE POSSIBLY. THE MARKET HAS BEEN PUT ON THE SCENT OF A SEPTEMBER MOVE AS A RESULT OF KEVIN WARSH'S JACKSON HOLE SPEECH. ALTHOUGH WE HAVE SEEN SOME COUNTERVAILING COMMENTS FROM THE NEW YORK FED PRESIDENT LAST NIGHT. IT IS STILL UP IN THE AIR. ALTHOUGH WE HAVE U.S. PAYROLLS TOMORROW, THE SEMINAL DATA RELEASES THAT WILL DETERMINE WHETHER THE FED GOES ARE GOING TO BE THE CPI AND PPI NUMBERS NEXT WEEK. I THINK THEY WILL HAVE TO BE PRETTY BENIGN TO STOP THE FED FROM MOVING IN SEPTEMBER, AND ASSUMING THEY DO GO, THAT IS GOING TO PUT MORE UPWARD PRESSURE ON THE YEN AND ADDS TO THE PRESSURE ON JAPAN TO RAISE RATES AND STILL DOUBLED DOWN ON THEIR BEING FURTHER INCREASES TO COME. EVEN IN THAT ENVIRONMENT I THINK WE WILL NEED THE THREAT OR THE ACTUALITY OF INTERVENTION IN ORDER TO PREVENT DOLLAR-YEN FROM POTENTIALLY HEADING BACK UP TOWARD THE LATE JULY HIGHS WE SAW AROUND 164 BEFORE WE HAD THOSE INTERVENTIONS FROM JAPAN IN THE U.S.. YVONNE: YOUR YEAR END FORECAST WHEN IT COMES TO YEN, WHAT IS IT NOW? RAY: 160 OR 161 FOR YEAR END. 164, OUR SENSE IS THROUGH INTEREST-RATE MOVES AND JOINT ACTIONS AND VERBAL THREATS, DOLLAR-YEN WILL BE CONTAINED BENEATH THE 164 LATE JULY HIGH, BUT ON THE DOWNSIDE WE DON'T THINK THE 155 AREA WE SAW AFTER THE BEGINNING OF AUGUST INTERVENTION IS GOING TO BREAK. WE ARE LOOKING AT A CURRENCY THAT PIVOTS AROUND THE 160 LEVEL FOR QUITE SOME TIME, HENCE OUR YEAR END FORECAST AT THE MOMENT NO LOWER THAN 160. WE HAVE NOT GOT DOLLAR-YEN FALLING BELOW 155 UNTIL THE SECOND HALF OF NEXT YEAR. DAVID: OUTSIDE OF THE YEN STORY, WHAT IS THE MOST -- WHAT IS THE OTHER BIG IMPORTANT STORY ACROSS FX MARKETS? WHAT IS THE PIVOT POINT HERE? RAY: I DO THINK ULTIMATELY, WHETHER THE FED WILL GO OR NOT WILL BE KEY. HISTORICALLY IT IS THE TREND IN FED POLICY, WHETHER THEY ARE IN TIGHTENING OR EASING MODE THAT ULTIMATELY DETERMINES WHERE THE DOLLAR IS GOING TO GO. DESPITE THE CONCERNS ABOUT THE U.S. POLICY LANDSCAPE AND WHAT WE SEE AT THE BACK END OF THE CURVE WITH THE TERM PREMIUM THAT IS SUGGESTING INTERNATIONAL INVESTORS NEED A BIGGER PREMIUM TO INVEST IN U.S. MARKETS, I THINK IT IS THE TREND IN INTEREST RATES, AND WHETHER RISK SENTIMENT CAN CONTINUE TO HOLD UP IN THE FACE OF THESE HUGE PRESSURES FROM THE MIDDLE EAST AND OTHER AREAS. I STILL THINK IT IS THE CASE THAT IF WE SEE A BIGGER CORRECTION AND RISK MARKETS AS WE GO THROUGH SEPTEMBER AND OCTOBER, THE U.S. DOLLAR WILL STILL WIN HANDS DOWN, EXCEPT FOR THE SWISS FRANC WHICH IS PROVING ITSELF IS PROVING ITSELF AS THE PREEMINENT SAFE HAVEN CURRENCY. THE DOLLAR I SUSPECT WILL COME TO NO HARM IF WE SEE ANY DEEPER RISK OFF CORRECTION AS WE GO THROUGH SEPTEMBER INTO OCTOBER. DAVID: THANK YOU SO MUCH. GREAT TIME TO HAVE THIS CONVERSATION. THANK YOU FOR CARVING OUT PART OF YOUR MORNING, WELL, MIDDAY FOR US. SO FAR WE HAVE LEANED ON THE NEGATIVES. LET'S LEAN INTO POSITIVES AS YIELDS ARE CLIMBING TO LEVELS LAST SEEN IN MORE THAN A GENERATION BACK. JULIE RAND IS ARE GOING ONE CORNER OF THIS MARKET IS BUCKING THE TREND. WHAT GROUP IS STANDING OUT AS THE BIG WINNER? >> IT IS EMERGING MARKETS. DESPITE THE BAD STREET CREDIT. BOND YIELDS FOR HIGH-YIELDING YEN SOVEREIGNS ARE LOWER THAN EARLY MARCH AT THE START OF THE IRAN WAR. IN ASIA WE SEE SOME EXTREME OUTLIERS. BOND YIELDS COMPARED TO THREE MONTHS AGO IN CHINA, THAILAND AND INDIA HAS FALLEN INSTEAD OF RISEN. YVONNE: WHY DO YOU THINK THERE IS THAT DIVERGENCE? >> WALL STREET TRADERS LOVE A GOOD CARRY TRADE. IF YOU ARE BORROWING U.S. DOLLARS, THE RETURN IS 22% SINCE THE END OF 2024. IN ADDITION THE RETURN SEEMS QUITE STABLE. THEY HAVE BEEN GETTING CAPITAL GAINS FOR SEVEN CONSECUTIVE QUARTERS. ON THE SUPPLY SIDE WE TALKED ABOUT THE SO-CALLED CROWDING OUT. -- CROWDING OUT THEORY. GOOGLE HAS ISSUED BONDS IN THE JAPANESE YEN AND AUSSIE DOLLAR. BUT YOU KNOW THEY WILL NOT ISSUE EMERGING MARKET CURRENCIES. THEY WILL NOT ISSUE IN OFFSHORE CHINESE YUAN. KOREAN WON IS NOW LIQUID. IN THAT SINCE THE FLOOD OF SUPPLY IS RELATIVELY SLOW FOR EMERGING MARKETS. DAVID: IF ONLY THEY COULD DO A PANDA BOND. HOW DOES CHINA FIT INTO THE CARRY CONVERSATION? IT IS VERY LOW YIELDING BUT IT IS A STABLE PLAY. >> THERE HAS BEEN A LOT OF INTEREST IN USING THE CHINESE YUAN AS A FUNDING COST TO DO THE CARRY TRADE. I HAVE HEARD COMPLAINTS THIS MORNING FROM A GOOD CLIENT SAYING THAT THE YEN TRADE DOES NOT WORK BECAUSE THE YEN IS A WELL-MANAGED CURRENCY. WHEREAS IF YOU LOOK AT THE U.S. DOLLAR, THERE IS A LONG-TERM SECULAR TREND. THE CHINESE GOVERNMENT MANAGED THE YUAN, AND YOU CANNOT SAY IT IS GOING ONE WAY OR ANOTHER. IT IS VERY POLICY DRIVEN. MAY SHORT-TERM IT COULD WORK, BUT LONG-TERM CARRY TRADE DOES NOT WORK. DAVID: SAME SYMBOL. YVONNE: IT GETS CONFUSING. BLOOMBERG OPINION COLUMNIST ON THE BIG WINNER IN THIS AGAINST THE RISE IN YIELDS ACROSS MARKETS. WE GOT PLENTY MORE AHEAD. THIS IS BLOOMBERG. YVONNE: BLOOMBERG HAS BEEN TOLD THE BYTEDANCE COMPANY THAT DEVELOPED TIKTOK HAS SECURED A BANK LOAN OF $30 BILLION IN ONE OF ASIA'S BIGGEST LOAN DEALS. THE STRONG RESPONSE OF LENDERS DOES UNDERSCORE INVESTOR CONFIDENCE IS THE COMPANY RAMPS UP IT'S AI AMBITIONS. DAVID: OUR CREDIT REPORTER IS WITH US ON SET TO TALK US THROUGH THIS. WE KNOW IT IS A BIG NUMBER. IN THE LOAN MARKET, HOW SIGNIFICANT IS THIS? >> THIS IS VERY HUGE. NOT ONLY FOR THE BYTEDANCE ITSELF BUT THE ASIA LOAN MARKET. AROUND $30 BILLION LOAN DEAL SIZE IS THE LARGEST EFFORT OFFSHORE DOLLAR LOAN FOR BYTEDANCE ITSELF. LAST TIME IN 2024, WHEN THEY RAISED $10.8 BILLION AND ATTRACTED OVER 30 LENDERS, THIS TIME YOU CAN SEE THE AMOUNT INCREASED SIGNIFICANTLY. FOR THE MARKET IN ASIA, THIS IS THE SECOND LARGEST DOLLAR LOAN IN ASIA SO FAR THIS YEAR. AFTER SOFTBANK'S $40 BILLION JUMBO LOAN FOR AI INVESTMENT. IT IS A HUGE THING FOR THE LOAN MARKET THIS YEAR. THE ASIAN LOAN MARKET EXPERIENCED THE LOWER INSURANCE DEAL SIZE AND 16 YEARS. IT IS VERY SIGNIFICANT TO THE MARKET. YVONNE: CERTAINLY 30 B'S IS A LOT. WHAT ARE PEOPLE TELLING YOU? >> VERY CUTE, VERY HOT, VERY GREAT DEMAND FROM LENDERS. THESE LENDERS WANT TO SQUEEZE IN SUCH A HIGH QUALITY NAME BECAUSE IT IS THE DEVELOPER OF TIKTOK. OUR TEAM HAS BEEN FOLLOWING AND TRACING THESE DEALS SINCE JUNE. THE INITIAL TARGET DEAL SIZE FOR THIS ONE IS $20 BILLION IN THE COMPANY DECIDED TO UPSIZE THE LOAN SIZE WITH $30 BILLION. IN OUR STORY LAST MONTH WE HEARD THIS LOAN THREE DOLLARS. YOU CAN SEE HOW LENDERS ARE AGGRESSIVELY JOINING THE ISSUE. THE LOWER MARGIN AMONG CHINESE TECH COMPANIES, YOU CAN SEE EVEN WITH THIS TIGHT PRICING, THESE LENDERS ARE STILL VERY HUNGRY TO JOIN THE DEAL. DAVID: ON THE U.S. SIDE YOU'D SEEN BIG NAMES LIKE AMAZON AND GOOGLE RAISE IN THE U.S.. ARE WE IN A WINDOW WHERE CHINESE TECH COMPANIES CAN DO THE SAME? >> FOR TECH COMPANIES WE WILL SEE IN THE U.S. AND CHINA THEY ARE AGGRESSIVELY RAISING MONEY FOR AI AMBITIONS AND BYTEDANCE AS WELL. THE COMPANY IS CAUTIOUS THIS TIME. THEY DID NOT DISCLOSE THE PACIFIC -- DISCLOSE THE SPECIFICS, THEY JUST SAID THE MONEY IS FOR GENERAL CORPORATE USES. I WOULD NOT SURPRISED TO HEAR MARKET EXPECTATIONS OF THE COMPANY TO USE PART OF THE MONEY TO FUND THEIR AI CAPACITY. SO FAR IT IS WORTH SEEING OTHER CHINESE TECH COMPANIES. WE HAVE SEEN JD.COM AND TENCENT COMING TO THE OFFSHORE BOND MARKET. ALIBABA, THE JUMBO SHARE PLACEMENT THEY DID RECENTLY. I THINK THE TREND IS STILL THERE. AFTER TALKING TO MARKET PARTICIPANTS RECENTLY THINK THERE IS MORE TO COME. DAVID: FANTASTIC. OUR CREDIT REPORTER. $30 BILLION FOR GENERAL CORPORATE PURPOSES. A REMINDER YOU CAN REWATCH THAT SPECIFIC SEGMENT ON OUR BLOOMBERG VIDEO HUB. YOU CAN EXPLORE LIVE STREAMS AND INTERVIEWS. CHECK IT OUT ON BLOOMBERG.COM/VIDEOS. DAVID: CANNOT RECALL THE LAST TIME WE WERE THIS EXCITED FOR A 30 YEAR YEN BOND AUCTION. [LAUGHTER] BUT ALMOS T CAN'T CONTAIN OURSELVES. I WONDER WHAT THE BID TO COVER WILL BE ON THIS ONE GIVEN THE YEN MOVE. IN CASE YOU MISSED IT, THE JAPANESE YEN TRADING AT A STRONGER LEVEL COMPARED TO LAST NIGHT, WHERE WE WERE LOOKING AT SUSPECTED INTERVENTIONS. YVONNE: WE HAVE BREACHED 158.22. -- 158.22. HOW WE FOUND A FLOOR ON THIS TRADE WILL BE CONTINGENT ON WHAT THIS 30 YEAR BOND AUCTION WILL BRING AND WHAT THE BOJ WILL HAVE TO DELIVER. WHAT YOU SEE AND THE BOND MARKET IS SOME STABILIZATION, BUT THAT 30 YEAR BOND AUCTION, THE BID TO COVER RATIO, WHAT WILL IT SHOW US? MARK GREENFIELD WAS SAYING THIS YEAR'S RANGE HAS BEEN 294 TO 455. IF WE SEE SOMETHING ON THE UPPER PART OF THAT RANGE, COULD BE A TIME OR A GOOD SIGNAL THAT MAYBE IT COULD SEND A RELIEF ACROSS FIXED INCOME MARKETS. IF WE GET A WEAK ACUTION -- WEAK AUCTION THIS WILL REVERBERATE ACROSS THE G10 SPACE. DAVID: SOME OTHER BITS OF INFORMATION FROM THE LAST AUCTION, AND CERTAINLY THE WORLD CHANGED SUBSTANTIALLY SINCE THAT POINT. THE AVERAGE YIELDS ON THE LAST 30 YEAR AUCTION IN JAPAN WAS 3.93%. THE BID TO COVER WAS CLOSER TO 4%. THE TAIL YIELD WAS AT 3.95%. WE ARE NOT TRADING IN THE HIGH 4 SINGLE DIGITS. WE ARE NOW RALLYING TO 4.08. YVONNE: WE ARE GOING THE -- GOING MOLECULAR RIGHT NOW ON THE BID TO COVER. [LAUGHTER] THAT IS HOW SENSITIVE THIS MARKET IS. THAT IS THE NEXT THING TO WATCH. MAKE SURE TO TUNE INTO INSIGHT WITH HASLINDA AMIN ON THE RESULT OF THAT BOND AUCTION. STAY WITH US.