Iran, US Trade Tanker Attacks, Strong US Payrolls Fuel Fed Hike Bets | The Asia Trade 9/7/2026

>> THIS IS THE ASIA TRADE. I AM AVRIL HONG IN SINGAPORE. YOUR TOP STORIES THIS HOUR. ASIAN EQUITIES SET TO OPEN HIGHER AS TRADERS LOOK AHEAD TO U.S. INFLATION DATA DUE LATER THIS WEEK WHICH COULD TILT FED RATE BETS. OIL GAINS AFTER THE U.S. AND IRAN TRADE ATTACKS. TEHRAN SAYS A NEW RESTRICTED ZONE WILL BE DECLARED OUTSIDE THE WATERWAY SOON. CHINA INJECTS BILLIONS OF DOLLARS INTO ITS LARGEST BANKS AND INSURERS AS BEIJING TO SUSTAIN GROWTH IN A SLOWING ECONOMY. PAUL: I AM PAUL ALLEN IN SYDNEY. HERE IS TRADING ACROSS ASIA. WE HAD A PRETTY DECENT POP IN THE INDEX IN THE U.S. ON FRIDAY TO CLOSE THINGS OUT TO PROVIDE A BIT OF A TAILWIND FOR SOME OF THE TECH NAMES IN KOREA AND JAPAN AS WELL. KOSPI FUTURES BETTER BY 4% AT THE MOMENT, PRETTY DECENT INDICATOR TO THE OPEN FOR THE NIKKEI AS WELL. MASTEC FUTURES LOOKING KIND OF FLAT AT THE MOMENT. A LOT OF ACTION IN THE OIL SPACE AS USUAL. THE U.S. AND IRAN EXCHANGING TIT-FOR-TAT STRIKES IN THE GULF. THE U.S. STRIKING BACK AT IRANIAN TARGETS SO WE HAVE GOT BRENT CRUDE GAINING A LITTLE . PRODUCTION QUOTAS LARGELY UNCHANGED BUT THAT COULD BE LARGELY SYMBOLIC WITH TRAFFIC IN THE STRAIT OF DISRUPTED. THE SPOT PRICE TICKING UP A LITTLE, PERHAPS SOMETHING TO DO WITH THE JOBS REPORT WE SAW EARLIER. WE WILL DIG INTO THAT LITTLE LATER AS WELL BECAUSE IT WILL HAVE IMPLICATIONS FOR THE FED. PRESIDENT TRUMP WEIGHING IN ON THAT AS WELL. LET'S TAKE A LISTEN. >> A RATE HIKE COULD REASSURE THE BOND MARKET. IF YOU WOULD LIKE TO SEE -- PRES. TRUMP: TO ME, IT'S A RATE CUT BECAUSE WE SHOULD BE AT 1% OR HALF A PERCENT. WE SHOULD NOT BE AT 4%. PAUL: LET'S GET A LITTLE BIT MORE ON THE OUTLOOK FOR THE FED. SO WE HAVE GOT USE TO PRESIDENT TRUMP WITH COMMENTARY ON THE FED NOW BUT IF WE TAKE A LOOK AT THE JOBS REPORT, THE HEADLINE NUMBER WAS STRONG. A BIT OF A NUANCE THERE? >> THERE IS BACKDROP HERE WHERE THE NEW FED GOVERNOR WANTS TO ESTABLISH THE INFLATION FIGHTING CREDENTIALS AND THEY ARE LOOKING VERY CAREFULLY A PARTICULARLY ON THE CPI DATA COMING IN THIS WEEK. HAVING SAID THAT, THIS WAS A STRONG JOBS REPORT. THE ONE COMFORT IS THAT THE AVERAGE HOURLY EARNINGS DID NOT TICK UP. NOW ALL EYES ON CPI WHICH WILL REALLY GIVE INVESTORS MUCH MORE CLARITY AS TO WHERE THE FED HEADS. AVRIL: AND OF CLARITY YOU THINK FOR TREASURY INVESTORS GIVEN HOW WE ARE ALSO PERHAPS HEADING INTO THE POTENTIALLY ANOTHER VOLATILE WEEK FOLLOWING OFF OF LAST WEEK? IT'S A SHORTENED TRADING WEEK AND WE ALSO HAVE THE TREASURY SET TO GIVE US A BIT MORE DETAILS ON THAT EXPANDED BUYBACK PLAN. >> THAT'S RIGHT. PART OF THE BOND MARKET'S REACTION OVER THE LAST SEVERAL WEEKS HAS BEEN WHETHER THE TREASURY OR THE FED IS LOSING CONTROL SO A PART OF THIS WEEK WHERE THE CPI DATA HEADS, WITH THE MARKETS ARE PRICING IN, AND IF THE FED ACTIONS THAT APPROPRIATELY WILL RESTORE CREDIBILITY, FROM THE TREASURY'S POINT OF VIEW AS YOU RIGHTLY POINTED OUT, THEY DO HAVE ROOM TO MOVE. THEY CAN DRAW DOWN SOME OF THE ACCOUNT BALANCE WHICH IS SITTING OVER 900 BILLION AT THE MOMENT AS PART OF OPERATIONS BUT THIS IS REALLY SIMPLE. IT DOES NOT SOLVE THE UNDERLYING ISSUE. IF YIELDS NEED TO GO HIGHER BECAUSE INFLATION EXPECTATIONS ARE TOO HIGH, THAT IS A JOB FOR THE FED TO SOLVE FOUR. PAUL: WE ALSO HAVE CHINA INJECTING BILLIONS OF DOLLARS. ON THE ONE HAND, YOU COULD SAY THAT THIS IS -- THIS SHOULD GIVE SOME CONFIDENCE. DOESN'T REALLY INSPIRE CONFIDENCE. QUICKSET IS A GREAT POINT. WITH CHINA SPECIFICALLY, IT'S IN A MORE CLASSICAL LIQUIDITY TRAP AS AN ECONOMY. VERY SAVINGS RICH NATION, HUGE TRADE SURPLUSES. WHAT IS IT REALLY DOING? IT IS INJECTING CAPITAL INTO ITS BANKS. THESE BANKS ARE HOLDING GREATER AMOUNTS OF CHINESE GOVERNMENT BONDS. STATE AND FEDERAL. THOSE ARE YIELDING VERY LOW YIELDS AND PUTTING PRESSURE ON NET INTEREST MARGINS FOR THE BANKING SYSTEM AND INJECTING CAPITAL INTO THE INSURANCE SECTOR AND A LOT OF THESE INSURANCE COMPANIES HAVE RELIED ON HIGHER BOND YIELDS IN THE PAST. THOSE ARE NOT THERE ANYMORE SO THIS COULD BE A SIGN THAT THEY ARE TRYING TO SOLVE -- SHORE UP SOLVENCY. IT IS REALLY JUST LIQUIDITY MOVING IN PARTS OF THE FINANCIAL SYSTEM TO SORT OF SHORE UP INVESTOR CONFIDENCE. >> MIGHT THIS FORESHADOW IN SOME WAY POTENTIAL RATE EASING AND IF SO, WHAT ARE YOU EXPECTING IN TERMS OF ANY MARKET IMPACT FROM THIS RECAPITALIZATION? >> THAT IS GOING TO BE INTERESTING FOLLOW-THROUGH HERE. I THINK FROM THE RATES POINT OF VIEW, SURE, CHINA CAN CUT RATES AND IT COULD BE A PRECURSOR FOR A RATE CUT IN CHINA. THE REALITY IS THAT HOUSEHOLD SECTOR IN CHINA HAS NOT REALLY BEEN BORROWING IN THE CORPORATE SECTOR IN CHINA HAS BEEN FAIRLY CAUTIOUS SO REALLY FROM THE CHINESE AUTHORITIES POINT OF VIEW, THEY NEED TO STIMULATE CONSUMPTION SO THE STATE COUNCIL REALLY HAS TO PUT IN MEASURES TO REALLY ENCOURAGE CONSUMPTION AND PERHAPS BRING THE CHINESE CONSUMER CONFIDENCE FURTHER UPWARDS BUT THESE MEASURES ARE VERY MUCH TO RESTORE -- TO BRING AN AMPLE LIQUIDITY TO THE FINANCIAL SYSTEM TO ENSURE THAT CONFIDENCE REMAINS HIGH. PAUL: THANK YOU. LET'S TAKE A LOOK AT COMMODITIES. OIL AT THE TOP. WE ARE SEEING SOME GAINS OF THE PAST COUPLE OF TRADING SESSIONS AS THE U.S. AND IRAN EXCHANGE MORE STRIKES IN THE GULF OF HORMUZ. WE HAVE GOT ALSO OPEC-PLUS AS I MENTIONED AGREEING TO KEEP PRODUCTION QUOTAS UNCHANGED BUT IT COULD BE A LARGELY SYMBOLIC MOVE AT THE MOMENT. BRENT CRUDE, WE HAVE SOME COMMENTS AS WELL FROM THE U.S. ENERGY SECRETARY, CHRIS WRIGHT, ON THE ROLE OF THE U.S. NAVY IN THE STRAIT OF HORMUZ. LET'S TAKE A LISTEN. >> IT IS THE U.S. NAVY THAT IS ASSURING THAT THIS FLOW COMES OUT. WE WISH IRAN WOULD STOP DOING WHAT THEY ARE DOING BUT WE ARE DEGRADING THEIR CAPACITIES TO BE THAT THEN WE ARE LEARNING AND GETTING BETTER AND BETTER AT DEFENDING FROM THEIR ATTACKS. THIS IS A LOSING GAME FOR IRAN. PAUL: IRAN SAYS IT HAS TARGETED THREE OIL TANKERS COMMITTEES AND WHAT IT CALLED AN UNAUTHORIZED ROOT THROUGH THE STRAIT OF HORMUZ. THE IRGC CLAIMED IT ATTACKED THE U.S. DRONE AND UNMANNED VESSEL. THE STRIKES WERE IN RETALIATION FOR AMERICAN ATTACKS ON IRANIAN TANKERS OVER THE WEEKEND. FOR MORE, JOINED BY MICHAEL HEATH. IT'S HARD TO KEEP TRACK OF SOME OF THESE TIT-FOR-TAT STRIKES NOW. ARE WE ANY FURTHER ALONG IN THIS CONFLICT THEN WE WERE A MONTH AGO? >> THIS IDEA I GUESS FOR THE U.S. IS PROBING AROUND FOR THE SENSITIVE POINT WHERE THEY COULD REALLY START TO HURT IRAN AND MAKE IT WANT TO COME BACK TO THE TABLE AND OF COURSE, ONE OF IRAN'S STRENGTHS HAS BEEN USING DRONES WERE MISSILES TO TRY TO HIT ANY WESTERN OIL TANKERS GOING THROUGH THE STRAIT OF HORMUZ SO THE U.S. RESPONSE OBVIOUSLY IS TO DO THE SAME FOR IRAN. THREE TANKERS HAVE BEEN HIT RECENTLY. IRAN SAYS IT FIRED ON SOME TANKERS AS WELL BUT THERE'S BEEN NO INDEPENDENT CORROBORATION. IT JUST LOOKS LIKE WE ARE SORT OF ALMOST DEGENERATING TO THIS LOWER LEVEL. THIS EFFORT TO SHOW THE WILL IS THERE. THE IRGC HAS THE UPPER HAND WITHIN FACTIONS WITHIN THE GOVERNMENT. THEY WILL TRY AND MAINTAIN A HARD LINE. HIS PRESTIGE IS TIED TO THIS. HE DOESN'T WANT TO GO BACK DOWN EITHER SO WE COULD BE AT THIS LOW LEVEL CONFLICT FOR QUITE SOME TIME. PAUL: WHAT COULD BREAK US OUT OF THIS? I HAVE ONE EYE AHEAD TO THE MIDTERMS. YOU MENTIONED THE INTENTION IS FOR THE U.S. TO HURT IRAN. KEEPING PRICES ELEVATED, KEEPING PRESSURE ON INFLATION. COULD THERE BE A BREAKING POINT IN THE OTHER DIRECTION? >> THE 1.I GUESS IN PRESIDENT TRUMP'S FAVOR IS HE IS A LAME DUCK. HE COULD RUN FOR OFFICE AGAIN. IF HE SEES SOMEHOW GETTING RID OF THIS REGIME OR OVERTHROWING IT OR AT LEAST PUTTING IT BACK IN ITS BOX, HE MIGHT LOOK AT THAT AS A LEGACY ISSUE AND WORTH TAKING THE PAIN IN THE MIDTERMS BUT YOU KNOW, FOR THE PATENT -- FOR THE FUTURE OF IT, THEY ARE NOT GOING TO BE VERY KEEN ON THAT AND IT'S AN UNPOPULAR WAR. IT'S DRIVING UP PRICE AT THE PUMP. SO IRAN IS REALLY HITCHING THEM WHERE IT HURTS. IT'S JUST HARD TO SEE. I MEAN, YOU NEVER KNOW WITH IRAN. WITH A DICTATORSHIP LIKE THAT, THINGS CAN MOVE QUITE QUICKLY OR DRAG ON. IT'S REALLY A WAITING GAME AND TRYING TO KEEP UP THE FACADE OF STRENGTH ON THE WEST SIDE AT LEAST ANYWAY. PAUL: MICHAEL HEATH THEY ARE. STILL, ISSUE IS SAID TO GET A SLEW OF DATA FROM CHINA, JAPAN, AND KOREA. THE CHIEF ECONOMIST WILL BE WITH US TO GIVE US HER OUTLOOK. OUR EXCLUSIVE CONVERSATION WITH THE PRESIDENT ON WHERE HE IS SEEING MORE GROWTH AFTER A BLOCKBUSTER IPO. THIS IS BLOOMBERG. ♪ >> HERE IS A LOOK AT THE WEEK AHEAD. WE GET JAPAN'S SECOND-QUARTER GDP FIGURES ON TUESDAY, WIDELY EXPECTED TO BE REVISED HIGHER AND STRONGER. CAPITAL SPENDING. ANTITRADE FIGURES ARE ALSO DUE WITH EXPORTERS. CHINA'S AUGUST CONSUMER AND PRODUCER PRICES ARE BOTH EXPECTED TO EDGE HIGHER FROM THE PREVIOUS MONTH AND ATTENTION SHIFTS TO EUROPE ON THURSDAY WHERE THE ECB IS WIDELY EXPECTED TO HIKE RATES AND AS THE U.S. INFLATION PRINT THAT WILL BE CLOSELY WATCHED ON FRIDAY, HOT PRINT WILL ALL BUT SEALED IN A FED HIKE FOR SEPTEMBER. JOINING US NOW IS THE HEAD OF RESEARCH AND CHIEF ECONOMIST. GOOD TO HAVE YOU IN THE STUDIO. FOLLOWING ON FROM THE JOBS NUMBERS ON FRIDAY OUT OF THE U.S., WHAT IS YOUR BASE CASE FOR THE FED? >> WE JUST MOVED OUR BASE CASE, CALLING FOR A CUTS. WE JUST SHIFTED THAT STANCE. I THINK WHAT HAS CHANGED IS NOT REALLY THE MACRO NARRATIVE WE HAVE BEEN HOLDING ONTO BUT I THINK WHAT THEY TOLD THE JACKSON HOLE. ON BASELINE WAS THAT THE FED WILL HOLD UNTIL THEY GET A REASON TO HIKE. WHAT WARSH IS TELLING YOU IS THEY ARE GOING TO HIKE BECAUSE OF THE POINTS HE IS MAKING ON INFLATION UNTIL YOU SEE A REASON TO HOLD. THE JOB NUMBERS CLEARLY ARE NOT A REASON FOR THEM TO HOLD. CLEARLY EXCEEDED EXPECTATIONS BY A WIDE MARGIN. WE WOULD NEED TO HAVE SEEN SOMETHING LIKE 25,000 OR A NEGATIVE NUMBER OF JOBS FOR THEM TO BE ABLE TO HOLD RATES SO THIS IS A SUPERSTRONG NUMBER UNDER THE RADAR. WE KNOW THINGS ARE NOT -- CONSUMER CONFIDENCE, ESPECIALLY AT THE LOWER END OF THE CURB IS SUPER WEAK. JOB CREATION IS HAPPENING IN A VERY LOPSIDED MANNER SO IT'S LIKE THREE SECTORS ACCOUNTING FOR ALMOST 70% OF THE JOB CREATION IN THE LAST FEW YEARS AND BEYOND THAT, JOB CREATION IS NEGATIVE. IT'S A BIT OF THE K-SHAPED THAT YOU ARE SEEING NOT JUST IN THE U.S. BUT IN KOREA, CHINA, ACROSS THE BOARD IN ASIA AS WELL. HAVING SAID THAT, THE HEADLINE NUMBER IS STRONG AND WE THINK THE FED GOES IN SEPTEMBER. AVRIL: K-SHAPED IS DRIVING THINGS IN CHINA IN SOME SENSE. EXPORTS GROWTH NUMBER EXPECTED TO DO WELL AS WELL. I WONDER ASIDE FROM THAT WHAT IS YOUR TAKE ON WHAT IS GOING TO DRIVE EXPORTS GROWTH IN CHINA? MORE THE SENSE OF THE TECHNOLOGICAL CAPABILITIES OR THE PRICING FACTOR WHEN IT COMES TO EXPORTS OUT OF CHINA? >> ABSOLUTELY. SOMETHING THAT WE EXPECT TO PREVAIL IN THIS NUMBER. TRADE SURPLUS SET ABOVE 105 BILLION DOLLARS WHICH IS STILL SUPERSTRONG AND I THINK WHAT YOU HAVE SEEN OUT OF THE CHINA EXPORT NUMBERS IS OBVIOUSLY THE AI TECH CYCLE WHICH IS GETTING EXTENDED. INCREASINGLY, YOU HAVE SEEN INDICATION THAT AI RELATED EXPORT GROWTH IS STRONG SO I THINK CHINA CONTINUES TO BENEFIT FROM IT. AGAIN, IF YOU LOOK AT THE NUMBERS ACROSS THE BOARD AND YOU TRY TO ASK YOURSELF IS THIS A VOLUME DRIVEN PICKUP OR IS IT A VALUE DRIVEN PICKUP? I WOULD SAY VOLUME IS JUST 10% TO 20% OF THE WHOLE IMPACT, RIGHT? THE DEMAND IS HUGE. CAPACITY CREATION IS NOT HAPPENING AT THAT PACE. 70% OF THE CAPACITY COMES OUT OF KOREA. YOU NEED TIME FOR THE CAPACITY TO GET BUILT UP AND DEMAND IS EXCEEDING SUPPLY BY HUGE MARGINS SO 80% OF THE PICKUP IS PRICES, SOMETHING WHICH IS GETTING REFLECTED BOTH ON THE EXPORT GROWTH SIDE AND THE IMPORT GROWTH SIDE. AVRIL: WHAT IS IT GOING TO TAKE FOR US TO SEE MORE PASS-THROUGH INTO INFLATION THEN? >> YOU HAVE SEEN PART OF IT ALREADY. WHEN WE ARE STARTING THIS YEAR OFF, YOU WILL INFLATION FOR THE DEVELOPING ECONOMIES. I THINK SLOWLY, THE CONCERN FOR A DEVELOPED ASIA IS MOVING TOWARDS CHIP INFLATION BECAUSE I MEAN, LOOK AT THE RAM PRICES. IT HAS BECOME 15 TO 17 FOLD AND WE ARE COMING OUT OF A TIME WHEN TECHNOLOGY PRICES HAVE BEEN COMING DOWN AND SUCH A STEEP RISE IN JUST A COUPLE OF YEARS TELL YOU THAT EVENTUALLY AT SOME POINT, THESE PRICES GET TRANSMITTED TO CONSUMER PRICES SO IF YOU LOOK AT THIS ONE INFLATION, JUST LIKE THE CONSUMER -- COMPUTER SOFTWARE COMPLEMENT, IT IS LESS THAN 1% BUT INFLATION IS RUNNING AT 25%. EVENTUALLY, YOU SEE THE IMPACT COMING INTO CONSUMER ELECTRONICS AND SOME OF THE CONFIDENCE IN CPI. SO I THINK THIS IS A RISK BECAUSE YOU ARE SEEING REALLY HUGE INCREASES ON THE MICROELECTRONICS PART OF IT. AVRIL: DOES THAT FACT THAT CASE FOR FASTER POLICY NORMALIZATION INCLUDING THE LIKES OF JAPAN? WHAT ARE YOU EXPECTING OUT OF NEXT WEEK AND THE SUBSEQUENT MEETINGS FOR THE REST OF THE YEAR? DEEPALI: I THINK MOST OF THE CENTRAL BANKS, IF YOU LOOK AT THE DEVELOPED MARKETS WITHIN ASIA OR OUTSIDE OF ASIA, ARE BOUND TO HIKE SOONER THAN THE MARKET THOUGHT. WE HAVE ECB, SAID, BOK -- FED, BOK DOING BACK TO BACK. THIS COMING OUT OF DEFLATION PHENOMENA IS PRETTY STRONG. THE PICKUP IS CLEARLY VERY STRONG. IF YOU JUST LOOK AT THE CONSUMPTION STORY WITHIN ASIA, JAPAN CONSUMERS ACTUALLY GOING FAIRLY STRONG BECAUSE OF THE WAY TO PICK UP THE -- YOU ARE SEEING ACROSS THE BOARD. SEPTEMBER IS CLOSE TO A DONE DEAL IF YOU ASK ME. THE QUESTION REALLY IS HOW FAST DO THEY GO AFTER THE SEPTEMBER HIKE? SOMETHING WHICH THEY HAVE NOT DONE AND WHICH THEY FEEL WILL NOT HAPPEN BUT THE QUESTION TO ME REALLY IS DOES THE BOJ STOP AT 175 AS THE TERMINAL RATE OR DO THEY GO TO 2% GIVEN THE FOCUS NOW SO MUCH ON YEN APPRECIATION THAT YOU ARE SEEING FROM THE LATEST INTERVENTION THAT YOU ARE SEEING NOT JUST FROM AMERICA BUT COORDINATED INTERVENTION TO PROP IT UP? AVRIL: INTERESTING THAT THE INFLATION PICTURE MIGHT NOT BE AFFECTED AS MUCH. MAYBE IT'S ALSO FROM AI AND HOW THAT IS LEADING INVESTMENTS IN JAPAN BUT TALK TO US ALL SO HOW DOES THAT AFFECT WHEN YOU LOOK AT SOME OF THE OTHER ECONOMIES IN THE REGION AND HOW THEY ARE MANAGING THINGS FISCALLY AND ON THE INFLATION FRONT COMPARED TO DEVELOPED MARKETS. DEEPALI: ABSOLUTELY. FOR EMERGING MARKETS, THEY HAVE BEEN IN GENERAL SURPRISED ON THE INFLATION FRONT. THERE HAS BEEN A PICKUP DRIVEN BY PEOPLE IN -- INFLATION AND YOU HAVE SEEN THE SECOND-ROUND IMPACT OF FUEL INFLATION ONTO CORE INFLATION BUT SOME OF THE LARGER MARKETS HAVE ACTUALLY MANAGED FUEL INFLATION REALLY WELL. LOOK AT INDIA, ONE OF THE MAJOR IMPORTERS OF OIL. THE PASS-THROUGH TO DOMESTIC RETAIL PRICES HAS NOT BEEN AS MUCH AND I THINK THE BIG PART OF THE OIL STORY REALLY HAS BEEN ONE OF DEMAND DESTRUCTION. SO THERE'S BEEN REAL DEMAND DESTRUCTION COMING ON FROM CHINA FOR VARIOUS REASONS BECAUSE CAPACITY UTILIZATION HAS BEEN LOW AND THEY ARE MORE RELYING ON GREENER SOURCES OF ENERGY. INDIA HAS DIVERSIFIED AWAY FROM THE MIDDLE EAST TOWARDS RUSSIA AND THE DEVELOPED MARKET HAS BEEN USING THEIR FISCAL POLICY BUFFERS TO REALLY PROTECT THE CONSUMER. THE STORY FROM THE FUEL INFLATION HAS BEEN MORE POSITIVE THEN YOU WOULD HAVE EXPECTED FOR DEVELOPING ASIA. THIS CHIP INFLATION STORY IS A REAL STORY WHICH IS MORE OF A STRUCTURAL STORY. WHICH WILL TAKE SOME TIME TO PAN OUT. >> WE HAVE TO CHANGE THE LENS THROUGH WHICH WE LOOK AT INFLATION AND DEVELOPING ASIA. THANK YOU SO MUCH. OUR HEAD OF RESEARCH AND CHIEF ECONOMIST FOR AIPAC. MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. >> AT LEAST FIVE PEOPLE WERE KILLED AFTER AN AMAZON CARGO PLANE OVERSHOT A RUNWAY BY THE INTERNATIONAL AIRPORT. FOR MORE, A BLOOMBERG EDITOR JOINS US NOW. TELL US ABOUT WHAT HAPPENED AND WHAT HAPPENS NEXT? >> WELL, THIS IS A PLANE THAT WAS OPERATING FOR AMAZON FOR ITS AIR CARGO ARM, OPERATED BY 21 AIR WHICH IS BASED IN MIAMI. IT WAS COMING INTO MIAMI INTERNATIONAL FROM SAN JUAN, PUERTO RICO. AND WHAT HAPPENED IN FACT WAS VERY MUCH UNDER INVESTIGATION. THERE'S NOT A LOT OF DETAILS OUT YET. WHAT WE KNOW IS THAT IT SLAMMED -- FROM AUTHORITIES, IT SLAMMED INTO SEVERAL VEHICLES NEAR THE AIRPORT. FROM PICTURES AND VIDEO, IT LOOKS LIKE THIS COULD BE SOME KIND OF PARKING LOT, TRAP SOME PEOPLE INSIDE THE CARS. FIVE DEAD AND FIVE INJURED. I THINK THREE OF WHICH CRITICALLY. SO THIS IS A SERIOUS INCIDENT THAT A FIRE BROKE OUT. IT SEEMS TO BE EXTINGUISHED RELATIVELY SOON BASED ON WHAT WE HAVE SEEN BUT IT'S ALL UNDER INVESTIGATION NOW. IT SEEMS TO BE A MAJOR INCIDENT. PAUL: VERY MUCH SO. OBVIOUSLY, INVESTIGATORS LOATHE TO PREJUDICE THE CAUSE BUT WE DO KNOW THIS WAS A 32-YEAR-OLD PLANE. IN THERE LIKELY TO BE QUESTIONS ABOUT THE AGE OF AMAZON'S FLEET OR ARE THERE GOING TO BE OTHER QUESTIONS ABOUT AMAZON'S OPERATIONS AS WELL? >> WELL, I MEAN, THAT IS SURELY GOING TO COME UP IN THE CASE OF THIS PLANE. THEY OPERATE A NUMBER OF THESE 76 EVIDENCE WHICH ACTUALLY ARE NO LONGER IN PRODUCTION, BOEING 767S WHICH ARE NO LONGER IN PRODUCTION FOR COMMERCIAL USE AT ALL BUT OF COURSE WE SEE THEM AROUND A LOT BECAUSE THEY ARE USED BY THESE CARGO AIRLINES AND YES, THEY WILL BE INVESTIGATING THE USUAL POSSIBLE CAUSES SUCH AS TECHNICAL PROBLEMS OR PILOT ERROR, MAY BE WHETHER SURELY, THE PLANE'S AGE SHALL BE ONE THING THEY WILL BE LOOKING AT. THAT IS CLEAR. AVRIL: TONY, THANK YOU FOR BRINGING US THE LATEST ON THIS. SOME OTHER TOP GLOBAL HEADLINES WE ARE FOLLOWING. INDONESIA HAS HALTED FLIGHTS AT SEVERAL AIRPORTS AFTER ASH FROM THE MOUNTAIN SPREAD ACROSS JAVA AND SUMATRA. THE AIRPORT IS SAID TO REMAIN CLOSED UNTIL 5:30 P.M. LOCAL TIME BUT OFFICIALS HAVE WARNED OF FURTHER DISRUPTIONS AS ERUPTIONS CONTINUE. AND IT REALLY TALLEY SUGGESTS AT LEAST 370 FLIGHTS AND AROUND 23,000 PASSENGERS HAVE BEEN AFFECTED. UKRAINE IS RESIGNED TO RUSSIA'S WAR DRAGGING ON THROUGH ANOTHER WINTER AND WANTS ADDITIONAL SUPPORT FROM ALLIES INCLUDING AIR DEFENSE AND ENERGY ASSISTANCE. PRESIDENT ZELENSKYY SPOKE TO REPORTERS AFTER TALKS IN KYIV WITH TRUMP'S NEGOTIATING DO WELL. ALONG WITH SECURITY CHIEFS FROM THE U.K., FRANCE, AND GERMANY. WYCOFF SAID THERE HAD BEEN PROGRESS WITH RUSSIA AND THAT THEY HAD BROUGHT NEW IDEAS TO KYIV WITHOUT ELABORATING. GERMANY'S FAR RIGHT AFD HAS WON 44% OF THE VOTE. THE STRONGEST EVER SHOWING IN A STATE ELECTION AND WILL AHEAD OF THE CHANCELLOR'S CDU IT'S A MAJOR CHALLENGE TO THE POLITICAL ESTABLISHMENT WITH THE PARTY UNDERPERFORMING EXPECTATIONS. LEADERS SAY THEY WILL SEEK COALITION PARTNERS IN AN EFFORT TO FORM A GOVERNMENT. THIS IS BLOOMBERG. ♪ >> WE ARE CLOSE TO FULL EMPLOYMENT IF NOT AT FULL EMPLOYMENT. CONDITIONS ARE VERY STABLE AND SOLID. >> THE STRONG DATA SEEMS TO BE CORRECTING FOR SOME OF THE SEASONAL ISSUES WE ARE SEEING. >> IS GOING TO BE THE CPI THAT WILL BE THE DAY -- DATA POINT EVERYONE HAS TO WATCH TO SEE WHEN THIS MACRO UNCERTAINTY UNFOLDS. >> THIS KIND OF CONFIRMS WHAT WE HAVE KNOWN ABOUT THE LABOR MARKET AND PUTS THE ONUS BACK ON THE INFLATION. >> THE PRICE ACTION WILL BE TAKING IT A LITTLE TOO FAR. A DELAY MARKET THAT IS DOING FINE BUT REALISTICALLY, IT'S GOING TO BE THE INFLATION DATA. >> YOU HAVE TO EXPLAIN WHY YOU ARE NOT RAISING RATES. GROWTH IS FINE, HIRING IS FINE. UNEMPLOYMENT IS LOW AND INFLATION IS TOO HIGH. AVRIL: SOME OF OUR GUESTS ON BLOOMBERG TV REACTING TO THE FRIDAY U.S. JOBS REPORT AND OF COURSE, PAUL, IT WAS INTERESTING TO SEE IN TERMS OF HOW JOBLESS RATE CAME IN IN LINE. LABOR FORCE PARTICIPATION ALSO IMPROVED BUT YOU LOOK UNDER THE HOOD A LITTLE IN TERMS OF JOBS ADDED. 160 2000. SOME ANALYSTS HAVE POINTED OUT YOU ARE SEEING THAT MOSTLY COMING IN FROM LEISURE, HOSPITALITY, EVEN FOR LOCAL GOVERNMENT EDUCATION SO THAT THE TEACHERS. BY IN TERMS OF SOME OF THE OTHER SECTORS WHICH ACTUALLY SHED JOBS, LOOK AT THE BOTTOM OF THIS PAGE AND HOW IT SHOWS YOU FINANCIAL ACTIVITIES, INFORMATION. THESE ARE SECTORS THAT AS WE KNOW, ARE SEEN AS MORE PRONE THROUGH AI JOBS TO DISPLACEMENT SO THAT IS SOMETHING TO FACTOR INTO THE EQUATION AS WELL EVEN AS WE SEE THE STRONG 162,000 NUMBER ON THE HEADLINE AND OF COURSE NO DOUBT COMPLICATING MATTERS FOR THE U.S. CENTRAL BANK, PAUL. PAUL: YES, THOSE JOB NUMBERS, WHILE STRONG, DO COME WITH A VERY LARGE ASTERISK, DON'T THEY? AT SOME OF THE COMMENTATORS WERE POINTING OUT, THE FOCUS NOW SHIFTING TO CPI AT THE END OF THE WEEK SO LET'S TAKE A LOOK AT WHAT WE CAN EXPECT. WE ARE EXPECTING TO SEE A .4% INCREASE MONTH ON MONTH FOR THE CPI NUMBERS IN AUGUST BUT IF WE STRIP OUT THE VERY VOLATILE ENERGY PRICES AT THE MOMENT, THAT NUMBER SHRINKS TO .2% FOR CORE CPI SO THAT GIVES US A NUMBER OF 2.4% ON HERE WHICH WOULD BE THE SLOWEST INCREASE SINCE 2021. WE HEARD FROM A COUPLE OF FED SPEAKERS BEFORE THEY WENT INTO THE QUIET PERIOD AHEAD OF THE NEXT FED MEETING. JOHN WILLIAMS CALLED THE INFLATION DATA ENCOURAGING. THE CLEVELAND FED PRESIDENT, WHO WAS NOT THE CENTER OF THE LAST MEETING, SAYS THE FED NEEDS TO ACT TO COOL PRICES SO STILL GOING TO BE A CALL AS TO WHETHER OR NOT WE GET A RATE INCREASE AND WE ARE SEEING A LITTLE BIT OF POSITIONING GOING ON ON THE RIGHT OF THE SCREEN. NOT A LOT OF CHANGE IN THE FUTURES. GOLD IS HOVERING AROUND THE 4004 HUNDRED MARK BUT YOU HAVE A COUPLE OF IMPORTANT TREASURY AUCTIONS COMING UP. THE 10 YEAR AND 30 YEAR COMING UP AS WELL. AVRIL: MAYBE THE TREASURY TELLS US A BIT MORE ON HOW THAT WILL UNFOLD BUT AS YOU SAW IN THE PAGE, DOLLAR-YEN IS WHERE -- IS ALSO IN THE SPOTLIGHT. INTERESTING HOW THE CURRENCY HELD ONTO GAINS DESPITE THE U.S. JOBS NUMBERS. GOLDMAN SACHS SAYS THE CASE FOR BEING TACTICALLY LONG THE YEN HAS STRENGTHENED AFTER ITS RECENT RALLY. INVESTORS ARE WIDELY EXPECTING THE BANK OF JAPAN TO HIKE RATES LATER THIS MONTH. FOR MORE ON THE END, WE ARE JOINED BY JOHN CHEN. SO TALK TO US ABOUT THIS GOLDMAN CASE AND WHY HAS MARKET SENTIMENT ALSO TURNED MORE CONSTRUCTIVE ON THE JAPANESE CURRENCY? >> SO I THINK IF YOU RECENTLY, THE SENTIMENT HAS REALLY TURNED MORE POSITIVE ON THE YEN AFTER THE BIG 2% RALLY OF THE YEN AGAINST THE DOLLAR LAST WEEK. I THINK THERE ARE TWO FACTORS AT PLAY HERE. FIRST OF ALL, IT'S DEFINITELY EXPECTATIONS OF FASTER BOJ RATE HIKE IF YOU LOOK AT PRICING, THE SEPTEMBER DECISION IS MORE THAN FULLY PRICED IN AND THE GOVERNOR HAS ALSO KIND OF, YOU KNOW, ENDORSED SUCH A MOVE BY SEPTEMBER BUT PEOPLE ARE EXPECTING A FASTER PACE OF HIKE BEYOND THE SEPTEMBER MEETING. IN AN EXTREME CASE WHERE THE YEN STAYS WEAK, THERE COULD BE LIKE THREE CONSECUTIVE BOJ HIKES. THAT POSSIBILITY SHOULD NOT BE RULED OUT SO A LOT OF PEOPLE ARE BEING VERY HAWKISH ON BOJ EXPECTATIONS AND OF COURSE, THERE IS SPECULATION OF A POTENTIAL ALLOCATION SHIFT THERE. BECAUSE THE MANAGING COMMITTEE HAD AN UNUSUAL MEETING IN AUGUST AND THAT WAS UNUSUAL BECAUSE THEY HAD ALREADY IN MARCH DECIDED THAT A REVIEW OF THE STRATEGY WAS NOT NECESSARY BUT THE FACT THAT THEY HAVE CONVENED ANOTHER MEETING IN JUST FIVE MONTHS TIME TELLS A LOT ABOUT, YOU KNOW, THE DISCUSSIONS GOING ON IN THE BACKGROUND AND MAYBE THAT WAS BECAUSE OF THE SEARCH -- THE SURGE IN JGB YIELDS AND THAT MAY BE FORCING THEM TO -- AND ALSO OF COURSE, WE HAVE LIKE A FINANCE MINISTER CALLING FOR PENSION FUNDS TO BRING MORE MONEY BACK HOME SO THERE'S A LOT OF SPECULATION GOING ON AND OF COURSE, SUCH CHANGES MAY NOT HAPPEN IN THE NEAR FUTURE BUT I THINK FOR NOW, JUST A SPECULATION OF THAT IS ENOUGH TO PUT A FLOOR UNDER THE YEN. >> AND WITH THE POTENTIAL SHIFTS IN ALLOCATION AND MAY BE THE BOJ HIKES COMING THROUGH, WHAT ARE THE NEXT LEVELS YOU ARE GOING TO BE WATCHING ON THE JAPANESE CURRENCY? >> FOR NOW, THE IMMEDIATE LEVEL WILL BE 155 .2. THAT WILL BE THE POSTER LIE INTERVENTION HIKE BUT BEYOND THAT, I THINK 155 IS A KEY LEVEL FOR DOLLAR-YEN NOT JUST BECAUSE IT IS A ROUND NUMBER BUT ALSO BECAUSE THERE'S A LOT OF OPTIONS. AND OF COURSE LIKE AFTER THE INTERVENTION DRIVEN RALLY, THERE'S STILL A LOT OF OUTSTANDING SHORT POSITIONS ON THE YEN IF YOU LOOK AT THE LATEST CFTC DATA. IT WOULD SUGGEST HEDGE FUNDS HAVE ACTUALLY RAMPED UP THEIR SHORT POSITIONS EVEN AFTER THE JOINT INTERVENTION BY THE U.S. AND JAPAN AND IF WE GET A CLEAN BREAK OF THE DOLLAR-YEN BELOW 155, THEN IT MIGHT TRIGGER, YOU KNOW, MORE UNWINDING OF THOSE OUTSTANDING DECISIONS AND WE ARE POTENTIALLY LOOKING AT DOLLAR-YEN GOING ALL THE WAY DOWN TO THE 150 LEVEL. PAUL: THAT IS BLOOMBERG'S JAPAN FX AND RATES REPORTER THERE. LET US TAKE A LOOK AT SOME OF THE MOVERS WE MIGHT EXPECT TO SEE AT THE OPEN IN KOREA. WE DID HAVE A PRETTY DECENT MOVE IN THE INDEX ON FRIDAY IN THE U.S. BEFORE THE CLOTHES, CANS OF MORE THAN 3% AND IT LOOKS LIKE WE ARE GOING TO SEE SOME OF THOSE TRANSLATED INTO THE TECH HEAVY KOSPI TODAY. FUTURES POINTING HIGHER BY ALMOST 4%. THE TWO TECH GIANTS, SK HYNIX, SAMSUNG ELECTRONICS, POISED FOR PRETTY DECENT GAINS AT THE OPEN. ASIAN STOCKS HAVE BEEN ENJOYING SOME PRETTY STRONG -- AFTER OPENAI ROLLED OUT ITS LATEST AI MODEL WHICH HAS BEEN REIGNITING THE TECH TRADE. MARKETS PRICING IN A RUSH OF IPO'S AS AN TOPIC IN MOONSHOT LOOK TO PRICE THEIR IPO'S THIS YEAR. FOR MORE ON THE SET UP, LET'S GET TO BLOOMBERG MARKETS REPORTER ANTHONY STEPHENS. ANTHONY, CAN TALK US THROUGH SOME OF THOSE LEADS FROM THE U.S. WHICH ARE COMING INTO TODAY. WHAT ARE THE DRIVERS? >> SO STRONG COMPARED TO THE S&P. THE S&P WAS KIND OF WEIGHED BY THE STRONG JOB NUMBERS AT THE MARGIN. LED BY MEMORY, SPECIFICALLY THE DRAM ETF WAS UP 6%. HYNEK'S ADR WAS UP 8%, TRADING AT A PREMIUM SO THERE WAS A LOT OF BULLISHNESS AROUND THE MEMORY SPACE AND WHAT COULD HAVE BEEN THE DRIVER OF THAT. LOOKS LIKE ONE OF THE DRIVERS OF THAT WAS HOW STRONG GPT SIX WAS IN THE FORM OF LONGFORM WORK, LONGFORM PRODUCTIVITY. USING OTHER SOFTWARE. SO THIS SPEAKS TO AN INCREASED MEMORY SHEET -- MEMORY USAGE AND SPEAKS TO THE FACT THAT THE ADDRESSABLE UNIVERSE OF AI USE CASES KEEPS INCREASING, THAT AI CAN ACTUALLY USE SOFTWARE AS A REPLACEMENT FROM KNOWLEDGE WORK. THAT HAS REIGNITED THE TECH TRADE. WE SAW SANDISK AND OTHER MEMORY SPACE HITTING THE U.S. QUITE STRONG SO IN TERMS OF THE NEEDS, KOREAN MEMORY BUT ALSO THE MEMORY PLAYS IN TAIWAN AND CHINA AND IT LOOKS LIKE IT'S A VERY STRONG SET UP. IN TERMS OF JAPAN, WHAT IS INTERESTING IS IN RECENT TIMES, THE SEMICONDUCTOR MENU SUPPLY CHAIN HAS LAGGED IN JAPAN. IT HAS LAGGED THE BANKS QUITE SHARPLY SO WE WILL SEE WHETHER THAT RATIO REVERTS AS WELL WITHIN JAPAN. OUTSIDE THAT, IN CHINA, WE CONTINUE TO SEE THEM BLAME THE HARDWARE SECTOR AND THERE IS NO REASON FOR THAT WITH THIS KIND OF STRONG LEAD FROM THE AI SUPPLY CHAIN IN THE U.S. PAUL: YES, AND TALK TO US ABOUT THE DEMAND PICTURE AS WELL. YOU KNOW, THROUGH THE LENS OF THE LATEST ON THE AI IPO PIPELINE? >> THERE SEEMS TO BE AN AI IPO IN PRETTY MUCH EVERY MAJOR MARKET IN THE WORLD. YOU HAVE IN HONG KONG MOONSHOT IS LOOKING TO RAISE AROUND $5 BILLION. AS PER LAST REPORTING. THAT COULD HAVE BEEN BROUGHT FORWARD TO THIS YEAR AS OPPOSED TO THE FIRST QUARTER OF 2027. YOU POTENTIALLY HAVE DEEPSEEK COMING TO THE STAR BOARD EVEN THOUGH THAT DEAL IS VERY WIDE IN SCOPE OF SIZE. THEY HAVE NOT MAILED THAT DOWN AND IN EUROPE, YOU HAVE THEM RAISING THE PRE-IPO FINANCING AS WELL, TARGETING THE IPO OF THIS KIND OF DATA CENTER IN EUROPE WITH A PLAY ON SOVEREIGN AI AND IN THE U.S., OBVIOUSLY, YOU HAVE THE BIG ONE, ANTHROPIC. THERE IS A BIT OF BACK AND FORTH ON THE IPO. REUTERS REPORTING MAYBE THEY PUSHED BACK THE IPO JUST A TOUCH AND MAYBE THAT IS TO TARGET THE HIGHER VALUATION AS THE PACE OF PROGRESS IN THE LLM SPACE CONTINUES TO SURPRISE ON THE UPSIDE. THE PACE OF INCREMENTAL IMPROVEMENTS KEEPS COMING TICKET FIRST. IF YOU KEEP TRACK OF THE SCORES OF THESE IPO -- THE LLM'S FROM THE START OF THE YEAR UNTIL NOW, YOU SEE A HOCKEY STICK SHAPE IN TERMS OF THE CAPABILITIES OF THESE MODELS AND THAT IS WHAT THE MARKET IS EXCITED ABOUT AND WHY BANKERS ARE SO BUSY. >> YOU HAVE BEEN VERY BUSY AS WELL. THANK YOU SO MUCH FOR THAT ANALYSIS. BLOOMBERG MARKETS REPORTER ANTHONY STEPHENS FOR US. BLOOMBERG HAS LEARNED THAT DEEPSEEK IS PLANNING TO DEPLOY AT LEAST 160,000 HUAWEI AI CHIPS AT A MASSIVE NEW DATA CENTER IT IS BUILDING IN INNER MONGOLIA. DEEPSEEK INTENDS TO USE HUAWEI'S NEXT GENERATION CHIPS TO OPERATE ITS MODELS THROUGH THE TIMELINE FOR INSTALLATION. IT WILL DEPEND ON HUAWEI'S PRODUCTION CAPABILITIES. THE MOVE WOULD CREATE ONE OF THE LARGEST KNOWN CLUSTERS OF HUAWEI AI CHIPS. IT POSTED A 52% JUMP IN AUGUST SALES AS STRONG DEMAND FOR AI SERVERS CONTINUES TO DRIVE GROWTH FOR NVIDIA'S KEY ASSEMBLY PARTNER. REVENUE CAME IN AT 29.1 BILLION DOLLARS, MAINTAINING THE PACE OF GROWTH SEEN IN JULY. IT HAS BEEN BUOYED BY GLOBAL INVESTMENTS IN CLOUD INFRASTRUCTURE IN RECENT QUARTERS. WE HAVE MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. PAUL: JAPAN'S FIND IT -- FINANCE MINISTER IS REPORTEDLY SET TO KEEP HER JOB IN THE UPCOMING CABINET RESHUFFLE ACCORDING TO JAPANESE DOMESTIC MEDIA. THE DECISION WOULD BACK HER HANDLING OF THE ECONOMY IN THE END. BLOOMBERG'S TOKYO ECONOMY AND GOVERNMENT REPORTER JOINS US NOW WITH MORE SO SHE LIKELY IS TO STAY IN THE CABINET. WHAT WAS PROBABLY BEHIND THIS DECISION AND HOW IS IT GOING TO BE PERCEIVED BY MARKETS? >> SO I THINK POLICY CONTINUITY ON MARKET STABILITY IS THE BIGGEST REASON BEHIND HER TAKING OFFICE. THE PRIME MINISTER HAS ROLLED OUT A SERIES OF POLICIES WITH A 14 YEAR GROWTH STRATEGY AND RECORD-SIZED BUDGET REQUEST. THAT HAS RAISED CONCERNS ABOUT TOKYO'S PHYSICAL OUTLOOK. HE PLAYED AN IMPORTANT ROLE IN REASSURING THE MARKET THE GOVERNMENT REMAINS COMMITTED TO FISCAL SUSTAINABILITY, HELPING KEEP THE RISE IN BOND YIELDS GOING TOO FAR. SHE IS OF COURSE A KEY PLAYER IN THE ONGOING BUDGET REFORM INITIATIVE AS WELL AND OF COURSE ON THE CURRENCY SIDE, SHE HELPED SECURE THE REAR JOINT U.S.-JAPAN CURRENCY INTERVENTION TO SUPPORT THE YEN IN JULY. SO FOR THE MARKET, REPRICING HAS PUSHED YIELDS HIGHER THAN THE YEN LOWER SO IT WOULD BE A KIND OF REASSURING SIGN OF CONTINUITY. PAUL: LET'S ASSUME SHE REMAINS FINANCE MINISTER. TALK TO US ABOUT SOME OF THE OTHER CABINET MINISTERS. WHAT IS THIS RESHUFFLE GOING TO MEAN? >> YES, SURE. SO FOR ME, THIS LOOKS MORE LIKE A SHUFFLE TO STRENGTHEN THEM POLITICALLY RATHER THAN SOMETHING LIKE A POLICY RESET. THEY ARE LIKELY TO KEEP MUCH OF HER CORE TEAM IN PLACE. AND SUZUKI IS EXPECTED TO REMAIN AS THEIR LIBERAL DEMOCRATIC PARTY. WE ARE LIKELY TO SEE SOME CONTINUITY IN HER KEY ECONOMY SECURITY POLICY. AT THE SAME TIME, THEY MAY MAKE SOME MINOR CHANGES. THE JAPAN INNOVATION PARTY. SO YOU KNOW, THESE PERSONNEL CHANGES AND CHOICES COULD HELP HER STRENGTHEN HER STANDING POLITICALLY AND PROBABLY SHORE UP HER BASE AHEAD OF THE NEXT YEAR'S LEADERSHIP RACE. PAUL: BLOOMBERG TOKYO ECONOMY AND GOVERNMENT REPORTER, ERICA, THANK YOU. JAPAN SAYS PROGRESS IS BEING MADE ON A $550 BILLION INVESTMENT PROGRAM THAT HELPS SECURE LOWER U.S. TARIFFS ON KEY EXPORTS INCLUDING CARS. THE FIRST TWO ROUNDS OF PROJECTS HAVE FOCUSED ON U.S. ENERGY, NATURAL RESOURCES, AND NUCLEAR INFRASTRUCTURE. FUTURE INVESTMENTS ARE EXPECTED TO TARGET AI AND SEMICONDUCTORS. TOKYO ALSO SINCE WASHINGTON HAS CONFIRMED THERE WILL BE NO ADDITIONAL TARIFFS BEYOND THOSE AGREED TO LAST YEAR. AVRIL: MEANTIME, JAPANESE TAXI HEALING APP OPERATOR GO IS DOWNPLAYING COMPETITION FROM UBER, SAYING IT LEAD OVER RIVAL APPS CONTINUES TO WIDEN. THE PRESIDENT SPOKE TO US EXCLUSIVELY ABOUT HIS OUTLOOK FOR THE BUSINESS AS IT SEEKS WAYS TO EXPAND DOMESTICALLY AND ACROSS ASIA. >> I THINK THE BIGGEST AREA OF GROWTH POTENTIAL IS THE APP PENETRATION RATE IN THE JAPANESE MARKETS. COMPARED WITH OTHER CITIES AROUND THE WORLD, THE PERCENTAGE OF TAXI RIGHTS IN JAPANESE CITIES THAT ARE BOOKED THROUGH APPS IS STILL VERY LOW. AROUND A 20% RANGE. OVERSEAS, THE AVERAGE APP PENETRATION RATE HOVERS BETWEEN 70% AND 19% SO WE SEE THAT GAP BETWEEN THE 20% RANGE AND THE 70% TO 90% AS A SIGNIFICANT OPPORTUNITY FOR GROWTH. AVRIL: WHAT I HAVE NOTICED IS WHEN I FIRST ARRIVED IN JAPAN ABOUT TWO YEARS AGO, THERE WERE NOT MANY UBERS AROUND. NOW, I FIND THAT IT IS EASIER TO USE THE UBER APP. HOW DO YOU COMPETE IN AN ENVIRONMENT WHEN RIVALS ARE TAKING MORE OF THE MARKET SHARE? >> NOT TRULY. OUR COMPETITORS WANT TO GAIN MARKET SHARE IN JAPAN. SO THEY HAVE BEEN WORKING FOR US TO INCREASE THEIR SUPPLY SHARE. AS YOU MENTIONED, THE NUMBER OF TAXIS AVAILABLE THROUGH UBER HAS INCREASED STEADILY. BUT WHEN YOU LOOK AT THINGS SUCH AS THE NUMBER OF USERS IN JAPAN AND DIFFERENCES IN USAGE TIME, THE GAP BETWEEN GO, WHICH IS NUMBER ONE, AND THE COMPETITORS BELOW US IS ACTUALLY CONTINUING TO WIDEN SO RATHER THAN OUR COMPETITORS CATCHING UP WITH US, THE NUMBER ONE PLAYER IS ACTUALLY PULL -- PULLING FURTHER AHEAD. IN JAPAN, RATHER THAN SEEING OTHER APPS AS OUR MAIN COMPETITORS, THE STRONGER COMPETITION COMES FROM PEOPLE HEALING TAXIS ON THE STREETS OR GETTING TAXIS AT TAXI STANDS. THE CHALLENGE FOR US HAS BECOME HOW WE COMPETE AGAINST THOSE ALTERNATIVES. COMPARED WITH THOSE OPTIONS, WE DON'T REGARD OTHER APPS AS PARTICULARLY FORMIDABLE COMPETITORS. QUOTES WE HAVE SEEN A LOT OF TOURISTS IN JAPAN BECAUSE OF A CHEAPER JAPANESE YEN. HOW IS THAT IMPACTING YOUR BUSINESS? >> THE NUMBER OF VISITORS COMING TO JAPAN HAS CONTINUED TO RISE SIGNIFICANTLY BUT EVEN AFTER THAT GROWTH, THEY STILL ACCOUNT FOR ONLY A FEW PERCENT OF TOTAL TAXI CUSTOMERS SO EVEN IF THAT NUMBER WERE TO DOUBLE FROM WHERE IT IS TODAY, WE BELIEVE THE IMPACT WOULD STILL BE RELATIVELY SMALL. THAT SAID, OVERSEAS PHYSICISTS HAVE A HIGH PROPENSITY TO USE -- OVERSEAS VISITORS HAVE A HIGH PROPENSITY TO USE THEM. WE ARE TAKING INITIATIVES IN AREAS SUCH AS AIRPORTS AS WELL BUT IN TERMS OF THE IMPACT ON THE OVERALL BUSINESS, WE STILL SEE IT AS RELATIVELY LIMITED. >> BUT GIVEN AS YOU MENTIONED HOW IMPORTANT THEY CAN BE, DO YOU PLAN TO TRY TO INCREASE THOSE NUMBERS OF FOREIGN TOURISTS FOR YOUR BUSINESS AND HOW WOULD YOU DO THAT? QUOTES WE ARE CURRENTLY PURSUING ROAMING AGREEMENTS WITH MAJOR COMPANIES OVERSEAS. FOR EXAMPLE, WE PARTNERED WITH SOUTH KOREA. WHEN KOREAN CUSTOMERS TRAVEL TO JAPAN, THEY CAN OPEN UP THE APP AND USE IT TO CALL A TAXI. ON THE BACKEND, EVEN THOUGH THE CUSTOMER IS USING THE APP TO -- THE DRIVER'S SIDE APP IS PROVIDED BY GO. BY CONNECTING THE SERVICES THROUGH ROAMING, CUSTOMERS ARE ABLE TO USE OUR TAXI NETWORK. WE ARE NOW WORKING ON SIMILAR PARTNERSHIPS WITH COMPANIES IN CHINA, ASEAN, AND AROUND THE WORLD. AS A RESULT, USAGE BY INBOUND OVERSEAS CUSTOMERS IS CONTINUING TO INCREASE AND I THINK WE ARE COMPETING QUITE EFFECTIVELY IN THAT AREA. >> LET'S TALK A LITTLE BIT MORE ABOUT JAPAN'S UNIQUE ENVIRONMENT FOR TAXIS GIVEN OF COURSE THE DEMOGRAPHIC ISSUES HERE AS WELL WHERE YOU HAVE A SHRINKING POPULATION AND PERHAPS A SHORTAGE OF DRIVERS. HOW DOES AGO PLAY INTO THAT LANDSCAPE? >> IF YOU LOOK AT THE BROADER TRENDS IN JAPAN'S MARKETS, THE OVERALL TAXI MARKET HAS BEEN GRADUALLY SHRINKING FOR THE PAST 30 YEARS. BUT AFTER COVID, THAT TREND ACTUALLY BEGAN TO REVERSE SLIGHTLY AND THE MARKET HAS STARTED GROWING. ONE MAJOR FACTOR IN THAT TREND REVERSAL IS THE INTRODUCTION OF GO, INDIVIDUAL TAXI DRIVER ANNUAL INCOMES HAVE GRADUALLY INCREASED. COMPARED WITH OTHER OCCUPATIONS, BEING A TAXI DRIVER HAS BECOME A MORE ATTRACTIVE CAREER. AND A NUMBER OF DRIVERS HAVE STARTED TO RECOVER. IN TOKYO, FOR EXAMPLE, THE PROPORTION OF TAXI DRIVERS IN THEIR 20'S AND 30'S IS STEADILY INCREASING AND IT IS BECOMING AN OCCUPATION THAT CAN BE SUFFICIENTLY ATTRACTIVE EVEN TO YOUNGER WORKERS. >> I WANT TO ALSO ASK YOU ABOUT THE OPPORTUNITIES THAT ROBOTAXIS PRESENT BECAUSE I UNDERSTAND YOU HAVE COOPERATION WITH WAYMO AND THE TAXI SERVICE HERE IN JAPAN AS WELL. WHAT IS THE POTENTIAL OF THIS MARKET AND HOW IMPORTANT IS IT FOR GO? >> FIRST OF ALL, I THINK ROBOTAXIS ARE EXTREMELY POSITIVE FOR JAPAN'S TAXI INDUSTRY AS A WHOLE. ALTHOUGH THE NUMBER OF DRIVERS HAS GRADUALLY STARTED TO INCREASE, THERE ARE STILL NOT ENOUGH OF THEM. ROBOTAXIS SHOULD BE ABLE TO FILL THAT SUPPLY GAP SO FROM THE PERSPECTIVE OF THE OVERALL TAXI MARKET, THIS IS A VERY POSITIVE DEVELOPMENT. FOR GO SPECIFICALLY, IT'S POTENTIALLY EVEN MORE POSITIVE. IN JAPAN TODAY, YOU DON'T HAVE TO USE AN APP TO GET A TAXI. YOU CAN HAIL ONE ON THE STREET. GET ONE AT A STATION OR CALL ONE BY PHONE. BUT WITH AUTONOMOUS VEHICLES, YOU WOULD ESSENTIALLY HAVE TO CALL THEM THROUGH AN APP. THAT MEANS AUTONOMOUS TAXIS WOULD HAVE EXTREMELY HIGH APP PENETRATION SO THE MORE AUTONOMOUS DRIVING IS INTRODUCED, THE HIGHER THE APP PENETRATION RATE OF JAPAN'S TAXI MARKET WILL BECOME. >> THE CO-PRESIDENT SPEAKING EXCLUSIVELY WITH MY COLLEAGUES, SHERY AHN COME IN TOKYO. WE HAVE MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. PAUL: JUST UNDER FIVE MINUTES AWAY FROM THE OPEN IN JAPAN, KOREA, AND HERE IN AUSTRALIA AS WELL SO LET'S TAKE A LOOK AT HOW WE ARE SETTING UP FOR THE TRADING WEEK. MIGHT SEE SOME BIDS FOR TECH STOCKS IN JAPAN AND SOUTH KOREA. IT CLOSED OUT VERY POSITIVE SESSION IN THE U.S., UP BY MORE THAN 3% WHICH WAS FAR OUTPERFORMS THE BROADER MARKET THERE. HERE IN AUSTRALIA, WE HAVE GOT A FLAT OPEN. WE MIGHT SEE ENERGY STOCKS PERFORMING REASONABLY WELL ALTHOUGH WE HAVE SEEN CRUDE OIL CATCHING A BID. THIS IS AFTER IRAN AND THE UNITED STATES EXCHANGED TIT-FOR-TAT STRIKES IN THE STRAIT OF HORMUZ OVER THE WEEKEND. WE HAVE THIS MARKET OPENS UP NEXT. THIS IS BLOOMBERG. >> THIS IS THE ASIA TRADE. WE ARE COUNTING DOWN TO ASIA'S MAJOR MARKET OPENS AND OF COURSE, PAUL, FOLLOWING ON FROM THE U.S. JOBS REPORT, THE ATTENTION TO THE U.S. CPI NUMBERS. AHEAD OF THE FEDERAL RESERVE DECISION NEXT WEEK. IT WAS INTERESTING, THE NUANCE BEHIND THE JOBS NUMBERS IN TERMS OF 162,000 JOBS BEING ADDED IN THE U.S., BUT IT'S IMPORTANT TO DISSECT AS WELL WHAT SECTORS THEY WERE COMING FROM. PAUL: THE HEADLINE NUMBER WAS VERY PRESENT. A LITTLE DEEPER AND YOU GET A SOMEWHAT DIFFERENT NARRATIVE BUT YOU ARE QUITE RIGHT ABOUT CPI. THAT WILL BE THE DECIDING FACTOR IT APPEARS FOR THE FED. A TEPID READ. IT'S GOING TO MAKE SOME OF THE QUESTIONS A BIT MORE INTERESTING AND A COUPLE OF IMPORTANT TREASURY OPTIONS OUT OF THE U.S. AS WELL THIS WEEK. AVRIL: THEY ARE COMING IN ACROSS THE CURVE AND IT'S INTERESTING HOW WHEN YOU LOOK AT FED PRICING, THERE'S -- THEY ARE NOT FULLY PRICING IN THE SEPTEMBER HIKE BUT WHEN IT COMES TO THE BANK OF JAPAN, YOU HAVE A 25 BASIS POINT HIKE FULLY PRICED IN AND THEN SOME BY THE END OF THE YEAR SO IN TERMS OF JAPANESE ASSETS, IT HAS BEEN INTERESTING TO SEE HOW THE YEN MOSTLY HELD THOSE GAINS ON THAT FRIDAY DESPITE THE SO-CALLED BLOWOUT JOBS PRINT OUT OF THE U.S. THE DOLLAR WAS FLAT AS YOU KNOW AND TAKING A LOOK AT HOW JAPAN IS OPENING UP TODAY IN TERMS OF STOCKS, YOU ARE SEEING THE TAILWIND FROM WALL STREET WHERE THE PHILADELPHIA SEMICONDUCTOR INDEX RALLIED HARD AND IT IS GETTING THE POSITIVE SOUND BITES AND ANNOUNCEMENTS FROM THE LIKES OF GPT SIX OF COURSE SO MAYBE MORE AI MOMENTUM THAT COULD FUEL KOREA AS WELL BUT IN THE MEANTIME TAKING A QUICK LOOK AT WHAT WE ARE SEEING IN JGB'S AS WELL AS WE SAW LAST WEEK, IT DID POP ABOVE THE THREE HAD ON THE 10 YEAR YIELD JUST VERY SLIGHTLY . TOMORROW, WE ARE GOING TO BE GETTING LABOR CASH EARNINGS IN LINE WITH THAT, SOME GDP NUMBERS. IT'S INTERESTING IN TERMS OF THE JAPANESE CURRENCY, WE HAVE BEEN SEEING FROM THE LIKES OF GOLDMAN THAT THEY SAY THERE IS A STRONGER CASE NOW FOR TACTICAL LONG YEN. LET'S TAKE A LOOK AT HOW KOREA IS FARING AT THE EARLY GOINGS. WE ALREADY SAW SOME OF THIS POSITIONING ON THE NEXT TRADE AND THERE YOU GO. THE KOSPI FUELING THE AI MOMENTUM, EXTENDING GAINS ALREADY THAT WE SAW FROM LAST FRIDAY. MIGHT IT RECLAIM ITS CROWN IN TERMS OF THE ONE BEING IN THE DRIVER'S SEAT AS FAR AS AI TRADING IS CONCERNED? WE ARE OF COURSE SEEING ALSO THE KOREAN WON HOVERING JUST BELOW THE 1350 HANDLE. IT HAS BEEN LEADING GAINS AMONG EM ASIA CURRENCIES AND YOU ARE SEEING THE CHIP BELLWETHER, SAMSUNG, SK HYNIX, THOSE ARE THE ONES THAT ARE FUELING THE AI TRADE FOR THE MOMENT, PAUL. PAUL: ALL RIGHT, LET'S TAKE A LOOK AT HOW WE ARE TRACKING IN AUSTRALIA, JUST OPEN FOR TRADE HERE AS WELL, KIND OF A FLAT SESSION AT THE MOMENT. JUST ABOUT EVERY SECTOR IS IN NEGATIVE TERRITORY WITH A COUPLE OF EXCEPTIONS. IT IS REALLY ENERGY THAT IS PROPPING THINGS UP RIGHT NOW. THAT SECTOR UP 1.32% AND WE HAVE A COUPLE OF COAL MINERS AMONG THE BEST PERFORMING NAMES IN AUSTRALIA AT THE MOMENT AS WELL BUT IN TERMS OF THAT ENERGY STORY, SEEING THE OIL PRICE UP AGAIN AFTER THAT U.S. AND IRAN CONTINUED TO EXCHANGED TIT-FOR-TAT STRIKES AROUND THE GULF OF HORMUZ. LET'S TAKE A LOOK AT WHAT IS HAPPENING IN THE BOND SPACE AS WELL. NOT A LOT OF ACTION IN TERMS OF FUTURES AT THE MOMENT BUT IT'S GOING TO BE A PRETTY BIG WEEK FOR TREASURIES. WE HAVE THE 10 YEAR AUCTION FOR THE U.S. ON WEDNESDAY, TYING THE 30 YEAR AFTER THAT ON THURSDAY AND ALSO THE TREASURY IS GOING TO BE ANNOUNCING DETAILS OF A BOND BY BACK ON WEDNESDAY IN THE U.S. AS WELL SO PLENTY TO WATCH FOR IN THAT SPACE AS WE HAVE THE 10 YEAR YIELD CREEPING UP AROUND TWO-YEAR HIGHS AT THE MOMENT. PLENTY TO DIGEST IN TERMS OF U.S. MARKETS AT THE MOMENT AND JOINING US NOW IS OUR CHIEF MARKET ANALYST. TIM, THANK YOU SO MUCH FOR JOINING US IN SYDNEY TODAY. I WANT TO START WITH THAT JOBS DATA AS WELL. THE HEADLINE NUMBER LOOK FANTASTIC. DIG INTO IT A LITTLE BIT MORE. A LOT OF THE GROWTH CAME FROM RETAIL, HOSPITALITY, AND SOME PRETTY HEFTY LOSSES IN ANYTHING EXPOSED TO FINANCIALS. >> THANKS FOR THE INVITE. I THINK THERE IS SOMETHING IN THE JOBS NUMBERS FOR EVERYONE IF WE LOOK AT IT FROM THE PERSPECTIVE OF THE FEDERAL RESERVE. ON THE HEADLINE, STRONG NUMBERS SO THE HAWKS ON THE FOMC WILL BE LOOKING AT THE STRONG HEADLINE BEAT. WHEN YOU CONSIDER THE NEUTRAL RATE OF JOB GROWTH IN THE U.S. RIGHT NOW, I WILL PUT IT AROUND 50,000 OR SO. STRONG RESULT ON THE TOP LINE AND OF COURSE WE HAD THE UPWARD REVISIONS TO PRIOR MONTHS SO THAT IS A POSITIVE AS WELL BUT IF YOU ARE ONE OF THE DEVILISH MEMBERS, THAT IS SOMETHING YOU CAN TAKE OUT AS WELL. THE WAGE GROWTH, THAT TOOK A LITTLE BIT OF STEP BACK. 3.1%. NOT REALLY A GREAT SOURCE OF INFLATIONARY PRESSURE THE AND OF COURSE THE OTHER THING IS THE HIGH SEASONAL FACTOR OR COMPONENT IN THE NUMBERS AS WELL. SO A STRONG NUMBER FOR AUGUST DOESN'T MEAN WE WILL NECESSARILY GO TO THE RESULT NEXT TIME AROUND AS WELL. STRONG NUMBER BUT I DON'T THINK CONCLUSIVE IN TERMS OF A SLAMDUNK FOR A RATE HIKE AT THIS STAGE. PAUL: WHAT IF WE GET A NUMBER THAT ALSO HAS SOMETHING FOR EVERYONE? IT'S NOT GOING TO BE VERY HELPFUL IS IT? >> THE CPI NUMBER IS THE MISSING PIECE OF THE ECONOMIC PUZZLE FOR THE FEDERAL RESERVE SO IF WE DO GET A PULLBACK ON THE CORE NUMBER ON A YEARLY BASIS TO THE 2.4% WHICH IS EXPECTED, ONCE AGAIN, YOU ARE LOOKING AT A TOSS UP IN THE MIDDLE OF THE MONTH AND THE FOMC MEETING BUT IF YOU DID SEE AN UPSIDE BEAT ONCE AGAIN, I THINK THAT WOULD SWING THE ODDS IN FAVOR OF THE HAWKS ON THE FED BOARD. MAYBE KEVIN WARSH, HE MAY HAVE TO BACK OUT. WITH A HIKE EVEN THOUGH IT MAY BE EARNING THE IRE OF THE PRESIDENT IF HE DOES DO THAT BUT IT ALL HINGES ON THAT CPI AND WE HAD A BIT OF A PREVIEW WITH THE PPI ON THURSDAY AS WELL. >> IF WE DO GET A HOT READ ON FRIDAY, IS THAT YOUR EXPECTATION AT THE NEXT MEETING? >> YES. AS WE SIT HERE RIGHT NOW, STILL LEANING TOWARDS A PAUSE AT THIS POINT. NOT SURE THERE WILL BE ENOUGH OF A MAJORITY TO HIKE INTO WHAT IS ESSENTIALLY A SUPPLY DRIVEN INFLATION SHOCK AT THE MOMENT IF WE LOOK AT WHERE BRENT IS AT THE MOMENT WHAT YOU HAVE MENTIONED IN THE INTRO. OIL IS AT THE HEART OF THE INFLATION ISSUE RIGHT NOW. DOES HIKING RATES ADDRESSED THAT ISSUE? NOT NECESSARILY. MAYBE A LITTLE BIT OF DEMAND DESTRUCTION BUT I THINK IT WILL BE A TIGHT VOTE, LOOKING AT A SPLIT 6-6 VOTE WHICH HAS NOT HAPPENED FOR A LONG TIME SO I THINK IT'S GOING TO BE ONE VOTE EITHER WAY WHICH WILL DECIDE AT BUT STILL FROM MY PERSPECTIVE, LOOKING AT THE JOBS NUMBER, SOLID, NOT SPECTACULAR. STILL LEANING TOWARDS A PAUSE AT THE MOMENT AND MAY BE A PAUSE UNTIL YEAR END. PAUL: COULD YOU ALSO UNPACK FOR US WHAT YOU ARE SEEING IN TERMS OF THE ACTION AROUND U.S. TREASURIES AT THE MOMENT? BECAUSE YOU HAVE YIELD CREEPING HIGHER. THE 10 YEAR IS AROUND THE FOUR-POINT LEVEL WHICH WE HAVE NOT SEEN SINCE 2023. A COUPLE OF KEY OPTIONS THIS WEEK AS WELL AND AN ANNOUNCEMENT FROM THE TREASURY ON BUYBACKS SO A LOT OF VOLATILITY FACTORS TO CONSIDER. WHERE DO WE SEE YIELDS AT THE END OF THE WEEK? >> THAT'S RIGHT. A LOT OF MOVING PARTS FOR THE BOND MARKET AT THE MOMENT. I THINK ONCE AGAIN, INFLATION IS THE MAIN DRIVER AND THAT IS WHY WE ARE SEEING THE 10 YEAR FOR THE U.S. AROUND 4.8 AT THE MOMENT. SO I THINK WE ARE YIELDS GO FROM HERE, THEY WILL PROBABLY TRACK THE OIL PRICE. IF IT PUSHES PAST 100 ON FOR ESCALATION, WE COULD SEE THE 10 YEAR MAKING AROUND 5% BUT IF WE DID SEE A DE-ESCALATION AND A PULLBACK, I THINK U.S. YIELDS PROBABLY DO THE SAME. MULTIFACETED REASON WHY WE HAVE THIS -- SEEN THIS SURGE IN BOND YIELDS. INFLATION IS THE CORE OF THE ISSUE I THINK BUT CERTAINLY FROM AN INVESTOR STANDPOINT WHEN YOU ARE LOOKING AT THE U.S. DEFICIT AT $40 TRILLION AT THE MOMENT, THE DEFICIT BASICALLY PUSHING TO TRILLION AT THE MOMENT. THERE'S A LOT OF WORRIES IF YOU ARE TAKING ON GOVERNMENT DEBT. THAT IS WHY THEY ARE DEMANDING HIGH YIELDS AT THE MOMENT BUT I DO THINK TO ANSWER YOUR QUESTION, WHERE WILL THE YIELDS BE BY THE END OF THE WEEK? I WOULD LOOK AT WHERE OIL GOES. >> DO YOU CONSIDER THIS CONFLICT IN IRAN TO BE THE -- TO BE THE BIGGEST HANDBRAKE FOR RISK ASSETS AT THE MOMENT? WHAT'S I DO. IF YOU LOOK AT WHERE WE ENTERED THE YEAR AND WHERE IT IS NOW, THAT EXPLAINS THE PIVOT WE HAVE HAD TO BE ENTERED 2026 EXPECTING RATE CUTS FROM THE FED AND A NUMBER OF OTHER CENTRAL BANKS BUT THAT SCRIPT HAS BEEN FLIPPED ON ITS HEAD. ONCE AGAIN BECAUSE OF THE OIL PRICE. I THINK THERE IS INCENTIVE CERTAINLY IN PART OF THE U.S. PRESIDENT TO MAYBE GET SOME SORT OF A RESOLUTION ON THE STRAIT OF HORMUZ BUT WE DID NOT SEE THAT OVER THE WEEKEND, DID WE? WE SAW FURTHER ESCALATION. BRENT REACTING ACCORDINGLY. THERE IS THE POTENTIAL FOR A RESOLUTION THAT WILL TAKE SOME HEAT OUT OF THE OIL PRICES. THAT WOULD SUIT BOND YIELDS WELL AND SUIT RISK ASSETS ALSO. RIGHT NOW, A LITTLE BIT DIFFICULT I THINK FOR RISK ASSETS TO GAIN A LOT OF UPSIDE MOMENTUM WITH OIL ON THE DOORSTEP OF $100 AT THE MOMENT. PAUL: WHERE IS THE BEST PLACE TO PARK YOUR MONEY AT THE MOMENT? >> A LOT OF MOVING PARTS, ISN'T THERE? RIGHT NOW, WE ARE STILL -- IN TERMS OF COVERING A LOT OF BASES AS AN ASSET RIGHT NOW. IF WE DID GET FURTHER INFLATION, GOLD IS A GOOD STORE OF VALUE AND THAT COULD COME TO THE FOUR AGAIN AS AN UNCERTAINTY HEDGE GIVEN THE GEOPOLITICAL UNCERTAINTY WE HAVE AROUND THE WORLD AT THE MOMENT SO GOLD IS STILL A BUY AT THIS POINT IN TIME WITH THE DEBASEMENT THE THEM ABOUT THE U.S. DOLLAR AND IN TERMS OF THE REST OF THE MARKET, STILL LIKING THE TECH SECTOR AND THE CHIP MANUFACTURER ON PULLBACKS GIVEN WHAT WE HAVE SEEN FROM THE LIKES OF BROADCOM AND SEE XMT RECENTLY WHICH ARE SHOWING REVENUE ACCELERATING SO THE MARKET MAY BE UNDERESTIMATING THE UPTICK IN THE CURRENT CYCLE IN TERMS OF THE CHIPMAKERS. PAUL: THANKS FOR JOINING US. THAT IS TIM, CHIEF MARKET ANALYST. AVRIL: IN THE MEANTIME, LET'S TAKE A LOOK AT HOW ASIA CHIPMAKERS ARE FARING FOLLOWING THE STRONG HANDOVER FROM THE U.S. AND CERTAINLY GPT SIX IS DOING ENOUGH TO STIR AI MOMENTUM THIS MONDAY MORNING. YOU ARE SEEING THE USUAL SUSPECTS. SAINT-SAENS, SK HYNIX LEADING THE CHARGE AND IT'S INTERESTING IN TERMS OF THE JAPANESE AI SUPPLY CHAIN, GIVEN HOW ACTUALLY THEY HAVE BEEN LAGGING IN MARKET TRADE VERSUS THE BANKS. DOES THIS HELP TO SHIFT THE DYNAMIC A LITTLE BIT? WE ARE ALSO SEEING THE LIKES OF SONY NINTENDO. THESE ARE TAKERS WHEN IT COMES TO MEMORY CHIPS. THEY ARE THE ONES THAT ARE GOING THE OTHER DIRECTION IN TRADE TODAY. MITSUBISHI ALSO SEEING A BIT OF PRESSURE. WE HAVE MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. PAUL: OIL IS EDGING HIGHER IN EARLY TRADE AFTER IRAN -- RETALIATION FOR AMERICAN ATTACKS OVER THE WEEKEND. FURTHERMORE, WE ARE JOINED BY MICHAEL HEATH. CAN YOU UNPACK THE LATEST ROUND OF TIT FOR TAT STRIKES REST? >> IT SEEMS LIKE THE U.S. IS SORT OF RETALIATING OR LOOKING FOR A PRESSURE POINT WITH IRAN THAT MIGHT PERHAPS NEED TO A BREAKTHROUGH AND OBVIOUSLY, WE HAVE THESE RANDOM ATTACKS, WHETHER IT IS DRONES OR MISSILES FROM IRAN ON SHIPS GOING THROUGH SO THE U.S. HAS TARGETED THREE IRANIAN -- HAS HIT THREE IRANIAN TINKERERS, ONE OF WHICH DID NOT HAVE OIL IN IT. IRAN SAYS IT HAS RESPONDED WITH ATTACKS AS WELL. THERE HAS BEEN NO INDEPENDENT CORROBORATION OF THAT BUT IT DOES LOOK LIKE WE HAVE ENTERED SORT OF A NEW PHASE OF TIT-FOR-TAT THERE. WHETHER THIS BECOMES THE NORM OR WHETHER THIS IS A ONE-OFF IS HARD TO TELL BUT IT'S AGAIN THIS IDEA THAT BOTH SIDES ARE KEEPING UP A VERY STRONG FACADE THAT THEY CAN WITHSTAND THIS AND KEEP IT GOING AND THEY CAN CAUSE PAIN FOR THE OTHER SIDE SO IT'S REALLY A QUESTION OF DOES ANYONE BREAK? PAUL: THE U.S. ENERGY SECRETARY SAID THE U.S. NAVY IS KEEPING IT OPEN TO A DEGREE. SHIPPING IS -- IS THAT TWO THIRDS NORMAL. HOW ACCURATE IS THIS OBSERVATION? >> REALLY HARD TO TELL. IN ONE OF BLOOMBERG'S REPORTS OVER THE WEEKEND, IT WAS SAYING ONE COMMODITY VESSEL GOT THROUGH BUT THESE ARE THE ONES WITH TRANSPONDERS ON SO A LOT OF THEM ARE GETTING THROUGH AND WE HAVE HAD REPORTS THAT THEY ARE BEING ESCORTED THROUGH BY U.S. SHIPS ON VARIOUS POINTS AS WELL SO PRESUMABLY, WILL IS GETTING THROUGH. THE ACTUAL NUMBERS, NO ONE CAN CHECK. YOU HAVE TO TAKE THEIR WORD FOR IT. THIS IS CLOSER TO OMAN. TO SOME EXTENT, OIL IS GETTING THROUGH BUT THE TAX ON TANKERS IS NEVER GOING TO BE A GOOD THING FOR OTHER SIDE SO AGAIN, IT JUST LOOKS LIKE WE KEEP RUMBLING ALONG. AVRIL: I MEAN, DOES THIS ALSO MEAN DWINDLING HOPES FOR A CONCLUSIVE END TO THE CONFLICT? I WANTED TO ASK ALSO WHAT DO WE KNOW ABOUT YOU RON TALKING ABOUT THIS NEW RESTRICTED ZONE THAT WILL BE DECLARED IN THE COMING DAYS? >> YES, THEY ARE TALKING ABOUT EXPANDING I GUESS SORT OF A NO GO ZONE OR A ZONE WHERE YOU HAVE TO HAVE THEIR AUTHORIZATION TO ENTER THAT WOULD EXPAND OUT ON EITHER SIDE OF HORMUZ UP TO I GUESS THE U.S. BLOCKADE LINE. IN TERMS OF -- WE WILL JUST HAVE TO SEE WHETHER THEY CAN ENFORCE THAT. THAT IS THE MAIN POINT THERE. IN TERMS OF ENDING THE WAR, THERE IS PRESUMABLY A LOT OF BEHIND-THE-SCENES NEGOTIATIONS. WE HAVE TO REMEMBER THERE'S U.S. ALLIES THERE. THE GULF MONARCHIES WHO ARE LOSING A LOT, SUFFERING A LOT HERE, WHO WOULD LIKE AN END TO THE WAR AND FOR THINGS TO GO BACK TO NORMAL. WE HAVE ALSO GOT PAKISTAN THAT HAS BEEN TALKING AS WELL SO WE ARE NEVER REALLY PRIVY TO HOW MUCH DISCUSSION IS GOING ON BEYOND CLOSED DOORS BUT THERE HAVE NOT BEEN MANY REPORTS THAT HAVE COME OUT LATELY THAT HAVE BEEN GIVEN GROUNDS FOR OPTIMISM SO AT THE END OF THE DAY, UNTIL YOU CAN GET HORMUZ SORTED OUT, YOU CANNOT GO ANYWHERE SO THIS WOULD BE THE STARTING POINT I THINK. AVRIL: THANK YOU SO MUCH, MICHAEL HEATH REST. WE ARE OUT WATCHING OUT FOR SOME OF THE DATA COMING OUT OF CHINA LATER THIS WEEK AND IN TERMS OF WHAT THIS COULD POSSIBLY MEAN GIVEN THE READTHROUGH, WE ARE ALSO WATCHING CHINA AND HOW IT HAS INJECTED BILLIONS OR IS SET TO INJECT BILLIONS INTO ITS LARGEST BANKS AND INSURERS. AT LEAST EIGHT FINANCIAL INSTITUTIONS ARE SEEKING 53 POINT $6 BILLION IN FRESH CAPITAL WITH THE FINANCE MINISTRY PROVIDING THE BULK OF THE FUNDING. BANKS HAVE BEEN OUTPERFORMERS IN CHINA'S STOCK MARKET SO FAR AND TO UNPACK THIS, LET'S BRING IN ANTHONY STEPHENS FOR US. WHAT IS YOUR READ ON THIS MASSIVE FUND RAISE? >> IT IS A NICE BIT OF OPERA NEW -- OPPORTUNISTIC TRADING. THE CHINESE BANKS HAVE BEEN STRONG THIS YEAR. THEY CAME UP WITH A GOOD SET OF NUMBERS. THE BIG THREE ARE TRADING AT RECORDS AND USING SOME OF THAT SPACE TO RECAPITALIZE THE BANK USING THE EQUITY MARKETS SO FROM THE CHINESE PERSPECTIVE, YOU HAVE THE SHARE PRICES AT RECORD HIGHS. YOU WANT TO RECAPITALIZE THESE BANKS TO PROVIDE SOME KIND OF CAPITAL BUFFER FOR NET INTEREST MARGINS AND ON THE INSURANCE SIDE FOR SOLVENCY RATIOS. TWO MAY BE CUT RATES, RIGHT? THIS IS A VERY GOOD PIECE OF OPPORTUNISTIC TRADING ON THE FRONT. ALSO THE MINISTRY OF FINANCE BUYING A SIZABLE CHUNK OF THIS OR COMMITTING TO BUY A SIZABLE CHUNK OF THE YUAN. $300 BILLION IS KIND OF SLATED TO BE RAISED BY THE MINISTRY OF FINANCE IN SPECIAL BONDS. THE TOBACCO MONOPOLY IS SLATED TO PARTICIPATE. THAT WILL GIVE SOME CONFIDENCE TO THE REST OF THE DEAL SO ALL IN ALL, IT SEEMS TO BE UP QUITE REASONABLY. IT WILL BE INTERESTING TO SEE WHAT HAPPENS IN TERMS OF FLOWS. DOES THIS CAUSE A REACTION FUNCTION WHERE PEOPLE PRICE IN A POTENTIAL EASING? IT WILL BE INTERESTING TO WATCH -- WHICH HAS BEEN GETTING STRONGER ALL YEAR AND ALSO WATCH CHINESE BONDS WHICH HAVE BEEN BUCKING THE GLOBAL TREND ON WEAKENING BONDS. CHINA'S BOMBS HAVE STRENGTHENED. WILL THIS MARK AND ERIC -- A TURNING POINT GOING FORWARD? >> WHAT ARE WE EXPECTING FROM THE CHINESE BANKS? THEY HAVE BEEN DOING QUITE WELL IN MARKET TRADE. DOES THIS ALSO PERHAPS A SHIFT TO CALCULUS A LITTLE BIT FOR THEM GIVEN HOW THEIR EXPECTATION OF RECAPITALIZATION MIGHT BENEFIT THEM? >> IT IS AN INTERESTING ONE BECAUSE OBVIOUSLY, YOU HAVE THEM KIND OF GETTING DILUTED. EXISTING SHAREHOLDERS ARE DILUTED BY THIS CAPITAL RACE. THE SHARE PRICE WILL HAVE TO TRADE AT A DISCOUNT TO ADJUST FOR THAT INJECTION. IT WILL BE INTERESTING TO SEE HOW MUCH OF THAT IS ERASED OVER A PERIOD OF TIME BUT ALSO WILL IT TRIGGER A ROTATION BETWEEN BANKS AND TECH? THIS LIQUIDITY THAT IS COMING IN THE SYSTEM, WHERE IS HE GOING TO BE APPLIED? GIVEN CHINA'S KIND OF TECHNOLOGY PRIORITIES, YOU WOULD THINK THAT WOULD GO INTO TEXT. IT WAS INTERESTING TO SEE A BIG CALL OPTIONS TRADE IN THE FORM OF CALL OPTION BUYING SO WILL WE SEE SOME KIND OF FOLLOW THROUGH? A VERY STRONG START FROM KOREA AND JAPAN ALREADY TODAY SO WE NEED TO SEE SOME FOLLOW-THROUGH TO GIVE US A HINT THAT THIS ROTATION IS IN PLACE AND ALSO WILL INVESTORS USE THIS DISCOUNT TO CATCH UP TO WHERE THEY SHOULD BE IN TERMS OF BENCHMARK RATES? MOST GLOBAL INVESTORS HAVE MISSED OUT ON THE CHINESE BANK RALLY WHICH HAS OUTPACED EVEN THE U.S. OR EUROPEAN BANK RALLIES. >> YES, SO MAYBE GIVE THOSE CHINESE BANKS A SECOND LOOK. ANTHONY, THANK YOU SO MUCH. BLOOMBERG MARKETS REPORTER ANTHONY STEPHENS FOR US. WE HAVE MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. PAUL: -- AVRIL: A COUPLE OF STOCKS WE ARE WATCHING FOLLOWING ON FROM FRIDAY. THE NIKKEI ANNOUNCING THEY WILL REVISE THE CONSTITUENTS OF THE NIKKEI 225 AND THE THREE ON TOP OF THE SCREEN ARE THE ONES THAT WILL BE ADDED AS PART OF THE SEPTEMBER MOVE AND OF COURSE, THIS WILL COME INTO EFFECT IN OCTOBER. IT HAS BEEN REMOVED OR WILL BE SET TO BE REMOVED. WE ARE OF COURSE SEEING THAT SORT OF REACTION I GUESS IN THE STOCK, DOWN ABOUT 5%. MEANTIME, THE JAPANESE TAXI HEALING OPERATOR IS DOWNPLAYING -- SAYING THE LEAD CONTINUES TO WIDEN. THE PRESIDENT SPOKE TO US EXCLUSIVELY ABOUT HIS OUTLOOK FOR THE BUSINESS AS IT SEEKS WAYS TO EXPAND DOMESTICALLY AND ACROSS ASIA. >> I THINK THE BIGGEST AREA OF GROWTH POTENTIAL IS THE APP PENETRATION RATE IN THE JAPANESE MARKET. COMPARED WITH OTHER CITIES AROUND THE WORLD, THE PERCENTAGE OF TAXI RIDES IN JAPANESE CITIES THAT ARE BOOKED THROUGH APPS IS STILL VERY LOW. AROUND THE 20% RANGE. OVERSEAS, THE AVERAGE APP PENETRATION RATE HOVERS BETWEEN 70% AND 90 PERCENT. WE SEE THE GAP BETWEEN THE 20% RANGE AND 70% TO 90% AS A SIGNIFICANT OPPORTUNITY FOR GROWTH. IN FACT, IN JAPAN, RATHER THAN SEEING OTHER APPS AS OUR MAIN COMPETITORS, THE STRONGER COMPETITION COMES FROM PEOPLE HAILING TAXIS ON THE STREETS OR GETTING TAXIS AT TAXI STANDS. THE CHALLENGE FOR US HAS BECOME HOW WE COMPETE AGAINST THOSE ALTERNATIVES. COMPARED WITH THOSE OPTIONS, WE DON'T REGARD OTHER APPS SUCH AS UBER, DD AS PARTICULARLY FORMIDABLE COMPETITORS. >> LET'S TALK A LITTLE BIT MORE ABOUT JAPAN'S UNIQUE ENVIRONMENT FOR A TAXIS GIVEN OF COURSE THE DEMOGRAPHIC ISSUES HERE AS WELL WHERE YOU HAVE A SHRINKING POPULATION AND PERHAPS A SHORTAGE OF DRIVERS. HOW DOES GO PLAY INTO THAT LANDSCAPE? >> IF YOU LOOK AT THE BROADER TRENDS IN JAPAN'S MARKETS, THE OVERALL TAXI MARKET HAS BEEN GRADUALLY SHRINKING FOR THE PAST 30 YEARS BUT AFTER COVID, THAT TREND ACTUALLY BEGAN TO REVERSE SLIGHTLY IN THE MARKET HAS STARTED GROWING. ONE MAJOR FACTOR IN THAT TREND REVERSAL IS THAT WITH THE INTRODUCTION OF GO, INDIVIDUAL TAXI DRIVERS ANNUAL INCOMES HAVE GRADUALLY INCREASED. COMPARED WITH OTHER OCCUPATIONS, BEING A TAXI DRIVER HAS BECOME A MORE ATTRACTIVE CAREER AND A NUMBER OF DRIVERS HAVE STARTED TO RECOVER. IN TOKYO, FOR EXAMPLE, THE PROPORTION OF TAXI DRIVERS IN THEIR 20'S AND 30'S A STEADILY INCREASING AND IT IS BECOMING AN OCCUPATION THAT CAN BE SUFFICIENTLY ATTRACTIVE EVEN TO YOUNGER WORKERS. >> I WANT TO ALSO ASK YOU ABOUT THE OPPORTUNITIES THAT ROBOTAXIS PRESENT BECAUSE I UNDERSTAND YOU HAVE COOPERATION WITH WAYMO IN THE TAXI SERVICE HERE IN JAPAN AS WELL. WHAT IS THE POTENTIAL OF THIS MARKET AND HOW IMPORTANT IS IT? >> FIRST OF ALL, I THINK ROBOTAXIS ARE EXTERNALLY POSITIVE FOR JAPAN'S TAXI INDUSTRY AS A WHOLE. ALTHOUGH THE NUMBER OF DRIVERS HAS GRADUALLY STARTED TO INCREASE, THERE ARE STILL NOT ENOUGH OF THEM. ROBOTAXIS SHOULD BE ABLE TO FILL THAT SUPPLY GAP SO FROM THE PERSPECTIVE OF THE OVERALL TAXI MARKET, THIS IS A VERY POSITIVE DEVELOPMENT. FOR GO SPECIFICALLY, IT'S POTENTIALLY EVEN MORE POSITIVE. IN JAPAN TODAY, YOU DON'T HAVE TO USE AN APP TO GET A TAXI. YOU CAN HAIL ONE ON THE STREET, GET ONE AT A STATION, OR CALL ONE BY PHONE. WITH AUTONOMOUS VEHICLES, YOU WOULD ESSENTIALLY HAVE TO CALL THEM THROUGH AN APP AND THAT MEANS AUTONOMOUS TAXIS WOULD HAVE EXTREMELY HIGH APP PENETRATION SO THE MORE AUTONOMOUS DRIVING IS INTRODUCED, THE HIGHER THE APP PENETRATION RATES OF JAPAN'S TAXI MARKET. >> THE CO-PRESIDENT SPEAKING EXCLUSIVELY WITH MY COLLEAGUE, SHERY AHN, IN TOKYO. MORE CORPORATE STORIES WE ARE TRACKING. ANTHROPIC IS REPORTEDLY EXPECTED TO COMPLETE ITS LISTING DAYS BEFORE THE U.S. NOVEMBER ELECTIONS. REUTERS SAYS THE COMPANY IS EXPECTED TO BEGIN MARKETING ITS SHARE SALE IN MID-OCTOBER AT THE EARLIEST AND THAT ITS PUBLIC PROSPECTUS IS NOT EXPECTED UNTIL LATE SEPTEMBER. BLOOMBERG HAS LEARNED THAT DEEPSEEK IS PLANNING TO DEPLOY AT LEAST 160,000 HUAWEI AI CHIPS AT A MASSIVE NEW DATA CENTER IT IS BUILDING IN INNER MONGOLIA. DEEPSEEK INTENDS TO USE HUAWEI'S NEXT GENERATION CHIPS TO OPERATE ITS MODELS ALTHOUGH THE TIMELINE FOR INSTALLATION WILL DEPEND ON HUAWEI'S PRODUCTION CAPABILITIES. THE MOVE WILL CREATE ONE OF THE LARGEST KNOWN CLUSTERS OF HUAWEI AI CHIPS. THEY POSTED A 52% JUMP IN AUGUST SALES AS A STRONG DEMAND FOR AI SERVICE CONTINUES TO DRIVE GROWTH. IN NVIDIA'S KEY ASSEMBLY PARTNER. REVENUE CAME IN AT 29.1 BILLION DOLLARS, MAINTAINING THE PACE OF GROWTH SEEN IN JULY. IT HAS BEEN BUOYED BY GLOBAL INVESTMENTS IN CLOUD INFRASTRUCTURE IN RECENT QUARTERS. LET'S TAKE A LOOK AT HOW THE BENCHMARKS ARE FARING IN THE EARLY GOINGS. IT IS REALLY HOW GPT SIX IS PROPELLING THE AI TRADE ONCE AGAIN. YOU ARE SEEING THE NIKKEI RISING UPWARDS OF 2% WITH A GAIN BY THE LIKES OF TOKYO ELECTRON AND ADVANTEST AND THE BELLWETHERS PROPELLING THE SOUTH KOREAN GAUGE. OF COURSE, THIS IS COMING AT A TIME WHERE THIS WEEK, MARKETS ARE STILL MULLING THE FED'S RATE PATH DESPITE THE JOBS NUMB PARENTS ON FRIDAY. MAY BE THE FOCUS HAS ALWAYS HAS BEEN MORE ABOUT THE INFLATION PRINTS THAT IS COMING OUT AT THE END OF THIS WEEK. WE HAVE MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. ♪ >> LET'S TAKE A LOOK AT HOW OIL PRICES ARE TRACKING AT THE MOMENT. STILL IN THIS RANGE. A SADLY FAMILIAR STORY. I RAN HITTING TANKERS. THE U.S. HITTING IRANIAN TARGETS. TRAFFIC IS SO CONSTRICTED IN THE STRAIT OF HORMUZ. WE DO HAVE GOLD CONTINUING TO CATCH A BIT. SOME IMPORTANT DATA COMING OUT OF THE U.S. THIS WEEK WHICH VERY WELL COULD HAVE AN IMPACT ON HOW THE PRECIOUS METAL PERFORMS. OUR NEXT GUEST SEES A HIGH VOLATILE OUTLOOK FOR BRENT CRUDE. LET'S GET SOME OUTLOOK ON THIS. JOINING US RIGHT HERE IN SYDNEY. THANK YOU FOR YOUR TIME TODAY. WE HEARD FROM THE U.S. ENERGY SECRETARY SAYING THANKS TO THE U.S. NAVY, FLOWS THROUGH THE STRAIT OF HORMUZ ARE ABOUT TWO THIRDS NORMAL. THAT IS CAP HARD TO JUDGE. AS I CONSISTENT WITH YOUR OBSERVATIONS? >> WE ESTIMATE THAT WE ARE AT ROUGHLY 60 BARRELS PER DAY. THAT IS ROUGHLY TWO THIRDS. WITH IMPORTANT CONTRIBUTIONS FROM PIPELINES AND ALSO DARK FLOWS THAT INITIALLY DO NOT SHOW UP IN THE DATA BUT EVENTUALLY SHOW UP AS IT TENDS TO GET REVISED HIGHER. PAUL: THE KEY QUESTION IS WHERE IS OIL HEADING? WILL WE BE LOCKED IN THIS RANGE FOR AS LONG AS THIS CONFLICT ENDURES OR CAN YOU SEE A SCENARIO WHETHER PRICE BREAKS OUT OF THIS? >> I THINK THE MOST SUPPORT VARIABLE FOR CRUDE OIL PRICES IS THE AMOUNT OF OIL EXPORTS FROM THE GOLF -- GULF. IN A SCENARIO WHERE THIS NORMALIZES, WE WOULD SEE ABOUT $80 AS THE PRICE. IN AN UPSIDE PRICE SCENARIO, WHERE SHIPPING INDEXES BROADEN AND INTENSIFY, WE SEE IT POTENTIALLY REACHING $120 PER BARREL. THE EVENTS OF THE LAST FEW DAYS TO SUGGEST A RISK OF SHIPPING DISRUPTIONS BROADENING. WE DO RECOMMEND TO HEDGE GEOPOLITICAL RISKS. WHERE THE SUPPLY SHOCKS ARE BIGGER. PAUL: EXHIBIT A IS GLOBAL DIESEL PRICES. WHERE THE CD SETTING? >> WE RECOMMEND TO INVESTORS TO HEDGE GEOPOLITICAL RISK BY BUYING DEFERRED DIESEL PRICE THESE MARGINS ARE AT ALL-TIME HIGHS. IF YOU SEE ONGOING SUPPLY CHAIN RESTRAINTS IN THE MIDDLE EAST OR IN RUSSIA , IT IS VERY LIKELY THAT THIS PAUL: WILL HAPPEN. CAN YOU TALK TO US ABOUT YOUR OBSERVATIONS? WHAT IF WE GET AN UNSEASONABLY WARM WINTER? HOW DO YOU SEE THIS IMPACTING THE DEMAND-SIDE? >> IF WE WERE TO SEE A MILD WINTER, THAT COULD POTENTIALLY AFFECT OIL PRICES. EVEN IF EXPORTS DO NOT PICK UP. WE WOULD EXPECT EUROPEAN AND ASIAN GAS PRICES TO RISE. THIS IS BELOW THE AVERAGE IN EUROPE. MUCH MORE IMPORTANT FOR NATURAL GAS. WHERE THE SHARE OF HEATING HAS CALMED DOWN THE LAST COUPLE DECADES. PAUL: WE NEED TO TALK ABOUT CHINA AS WELL. WHERE MIGHT IT GET ITS MARKET ENERGY FROM? >> CHINA CAN CONTINUE TO ACT AS A STABILIZING FORCE IN GLOBAL CRUDE MARKETS. AS WELL AS NATURAL GAS MARKETS. THEY ARE DOWN ROUGHLY 35% YEAR-OVER-YEAR. A ONE THIRD CONTRIBUTION FROM A SWITCH. WE THINK BOTH DRIVERS OF IMPORTS ARE PRICE-SENSITIVE. AND LARGELY SUSTAINABLE. CHINESE STOCKS ARE STILL HIGH. PAUL: OF COURSE IN THESE SCENARIOS IT MAKES SENSE TO GO LOOKING FOR THIS. WHAT DO YOU SEE HAPPENING WITH OIL AT THE MOMENT? >> IT WAS ROUGHLY 7% BELOW ITS STRENGTH. THAT IS AN EXTREMELY LARGE AMOUNT. WE ONLY SAW GREATER DEMAND DURING COVID. OUR WORKING ASSUMPTION IS THAT ROUGHLY 75% TO 80% OF THAT DEMAND WEAKNESS IT IS TEMPORARY. ASSUMING PRODUCT PRICES MODERATE SOMEWHAT. IT IS STICKY. IT IS STRUCTURAL. I THINK THE RISKS ARE SKEWED AGAIN TO A GREATER PART OF WHAT WE ARE SEEING. PAUL: WE ARE ALSO SEEING THIS IN VENEZUELAN OIL ASSETS. HOW DO YOU SEE IT AFFECTING THE PICTURE GOING FORWARD? >> WE PENCIL IN SOME ADDITIONAL INCREASES. INCOMING CORNERS. TO SEE SHARP INCREASES ABOVE THIS. WE THINK THAT WILL HAPPEN. IT IS A SMALL CONTRIBUTOR TO THE STRENGTH. I HAVE SEEN A VERY SIGNIFICANT SUPPLY. THAT IS SMALLER THAN EXPECTED. THAT IS THE KEY REASON. PAUL: OIL IS SO CLOSELY LINKED TO YOUR OTHER AREAS OF EXPERTISE. WE ARE SEEING GOLD VERY FIRM AT THE MOMENT. DO YOU SEE MORE UPSIDE HERE? >> YES. THOSE OF THE REASONS WE RECOMMEND TO INVESTORS TO GO ALONG. WE THINK THE PRICE TREND WILL REMAIN YOUR FRIEND. WE THINK THAT GOLD OFFERS SOME IMPORTANT DIVERSIFICATION AND TARGETED HEDGING BENEFITS. I WOULD SEE THAT AS PART OF THE SECOND TEAM. WE HAVE SEEN THIS AT MOMENTS WHERE MARKETS WERE WORRIED ABOUT THE BASEMENT. UNORTHODOX INTERVENTIONS. IF WE SELL GOLD PRICES GOING UP. OTHER PRICES GOING DOWN. IT IS CLEARLY ACTING AS A HEDGE. PAUL: WE SAW SOMETHING SIMILAR AFTER THE GLOBAL FINANCIAL CRISIS. >> WE THINK THAT ALONG WITH CENTRAL BANK BUYING IN THE FED OUTLOOK, THIS IS IMPORTANT. WE FIND THAT WHEN INTEREST RATES COME DOWN, GOLD INVESTMENT SURVIVES. AND GOLD PRICES TEND TO GO OUT. THAT SHOULD HELP TO SEND PRICES HIGHER. PAUL: I WANTED TO GET YOUR OUTLOOK ON COPPER AS WELL. IT SEEMS LIKE A ONE-WAY BET RIGHT NOW. IS IT? >> WE REMAIN VERY CONSTRUCTIVE. THERE WERE FACTORS OF SUPPORT. PHYSICAL SUPPORT. WE SEE SOME SIGNIFICANT FINANCIAL SUPPORT. THE DEBASEMENT TEAM, THE AI TEAM, THE HARD ASSET TEAM. LAST BUT NOT LEAST, WE SEE STRUCTURAL SUPPORT. DRIVING ABOUT 50% OF COPPER DEMAND AND COPPER MINING SUPPLY BEING QUITE STRONG. PAUL: THANK YOU SO MUCH FOR JOINING US TODAY. THE COHEAD OF GLOBAL MARKETING RESEARCH AT SAKS -- GOLDMAN SACHS. >> AT LEAST FIVE PEOPLE WERE KILLED AFTER AN AMAZON CARGO PLANE CRASHED AT MIAMI INTERNATIONAL AIRPORT. THE PLANE OPERATED BY 21 AARON OVERSHOT THE RUNWAY AFTER ARRIVING FROM PUERTO RICO. THE PLANE SLAMMED INTO MULTIPLE VEHICLES NEAR THE AIRPORT, FORCING THE AIRPORT TO SHUT SOME OF ITS RUNWAYS. THE CRASH COULD BE THE WORST CARGO RELATED INCIDENT SINCE LAST YEAR. INDONESIA HAS HALTED FLIGHTS AT SEVERAL AIRPORTS AFTER ASH FROM A MOUNTAIN SPREAD ACROSS JAVA AND JAKARTA. IT IS REMAINING CLOSED. OFFICIALS HAVE WARNED OF FURTHER DISRUPTIONS AS ERUPTIONS CONTINUE. AN EARLY TALLY SUGGEST THAT NEARLY 370 FLIGHTS AND 27,000 PASSENGERS HAVE BEEN AFFECTED. UKRAINE IS RESIGNED TO RUSSIA'S WAR DRAGGING ON THROUGH ANOTHER WINTER. AND ONCE ADDITIONAL SUPPORT FROM ALLIES INCLUDING AIR DEFENSE AND ENERGY ASSISTANCE. PRESIDENT ZELENSKYY SPOKE TO REPORTERS AFTER NEGOTIATING WITH TRUMP'S DUO AND THE U.K., FRANCE, AND GERMANY. STEVE WITKOFF SAID THERE HAD BEEN PROGRESS WITH RUSSIA AND THEY BROUGHT NEW IDEAS TO KYIVV WITHOUT ELABORATING. WE HAVE MORE AHEAD. THIS IS BLOOMBERG. PAUL: LET'S TAKE A LOOK AT HOW CURRENCIES ARE FARING. WE HAVE SEEN THIS WHEN IT COMES TO THE YEN. IT IS REALLY ABOUT THIS REPRICING OF WHAT THE BOJ IS GOING TO DO IT IS NEXT MEETING. LATER THIS MONTH. FIVE BASIS POINTS IS PRETTY MUCH BAKED IN ALREADY. AND THEN SOME. IN TERMS OF SWAPS PRICING. MORE THAN ONE HIKE BEFORE THE END OF THE YEAR. BESIDE THAT WE HAVE SEEN SOME OTHER THINGS LINED UP IN THE WAY OF SUPPORTING THE JAPANESE CURRENCY. INCLUDING THE TOP PENSION FUND. IT MIGHT BE ADJUSTING THOSE ALLOCATIONS. TO HELP WITH THE DOMESTIC BOND MARKET. THIS IS FOLLOWING ON FROM SOME OF THESE DISCLOSURES ABOUT A REGULAR MEETING THAT WE SAW A COUPLE OF WEEKS BACK. LOOK AT WHAT WE ARE SEEING ON THE KOREAN CURRENCY. THIS IS TRACKING WHAT WE SEE IN TERMS OF STOCK INFLOWS. GIVEN THE AI MOMENTUM WE ARE SEEING. OVERALL IF YOU LOOK AT THE BLOOMBERG ASIA DOLLAR INDEX WHICH TRACKS SOME OF THESE ASIAN CURRENCIES, YOU ARE SEEING IT ON THE FRONT FOOT TODAY. AUSSIE ALSO SEEING A BIT OF PICKUP. DESPITE WHAT WE ARE SEEING IN ETHICS AND THE STOCK MARKETS, WE WILL BE KEEPING AN EYE ON THIS WHEN IT STARTS TRADING IN A FEW MINUTES FROM NOW. AT THE TOP OF THE NEXT HOUR. THAT IS NEARLY 52% JUMP IN AUGUST SALES AMID STRONG AI DEMAND. WE ARE JOINED BY OUR ASIAN EQUITIES REPORTER. THE TAIWANESE STOCKS LOOKED SET FOR A POSITIVE OPEN. HELPED BY U.S. STOCKS TECH -- MOMENTUM. WHAT IS THE READ ACROSS FROM THE MONTHLY SALES? >> WE ARE SEEING ANOTHER STRONG MONTH. YOU HAVE HAVE SEEN SALES GROWTH BY MORE THAN 50%. EXTENDING THAT FAST PACE HAVE ESTABLISHED. GLOBALLY YOU HAVE COMPANIES BUILDING OUT AI DATA CENTERS. IF YOU LOOK AT HAN HIGH -- HON HAI SHARES, YOU HAVE A MEANINGFUL BUSINESS. TIED TO THE ELECTRONIC SIDE. THAT IS WHY IT IS VERY INTERESTING. YOU NOW HAVE GLOBAL ELECTRONICS. EXPECTED TO LAUNCH A FOLDABLE IPHONE LATER THIS WEEK. THAT COULD REALLY ADD UP TO MOMENTUM. THERE IS NOW VISIBILITY FOR THE SEPTEMBER QUARTER. PAUL: LET'S TALK ABOUT CHINESE EQUITY DERIVATIVES. THEY ARE GAINING POPULARITY RIGHT NOW AS INVESTORS LOOK TO DIVERSIFY FROM CROWDED AI BETS AROUND JAPAN AND KOREA. CAN YOU TELL US A LITTLE BIT MORE ABOUT THAT. ? >> WE ARE HEARING FROM BUCKLEY'S IN BARCLAYS AND UBS. TO BET ON UPSIDE IN CHINESE ONSHORE STOCKS. THAT IS EXPRESSED THROUGH OPTIONS LIKE STREETCARS ON THE CSI 300. FOR SOME OF THE SWAP PRODUCTS. THIS ONE SHOWS THAT IT IS REALLY THAT DIVERSIFICATION APPETITE FOR INVESTORS. THEY WANT TO LOOK BEYOND THOSE CROWDED AI TRADES. MEANING KOREA OR JAPAN OR THE U.S. IF YOU LOOK AT THESE INDEXES, THE EXPOSURE HAS BEEN RISING. INFORMATION TECHNOLOGY IS THAT THE HIGHEST-RATED SECTOR. FOR CHINA, THERE ARE A FEW LONG STRUCTURAL SUPPORTS. THIS IS KIND OF INSULAR FROM THE GLOBAL SHOCK. IT IS REALLY CHEAP TO PUT UP THERE. PERFORMANCE RATES ARE SUBJECTIVE. PEOPLE ARE KIND OF ON EDGE. THAT IS WHY THEY WOULD PREFER IT IS. IT IS CHEAP AND ALSO YOU HAVE THOSE LONG-TERM SUPPORT FACTORS. SO IT IS A CATALYST. YOU CAN SEE SOME MEANINGFUL UPSIDES. WHICH IS WHY WE'RE HEARING FROM TRADERS NOW. IN THE DERIVATIVE SPACE. PAUL: OUR ASIAN EQUITIES REPORTER THERE. WE HAVE MORE AHEAD. THIS IS BLOOMBERG. AVRIL: TO TAINT A TAIL WIND IS REALLY BEING FELT BY THE CHIPMAKERS. THEY ARE RALLYING ABOUT 7%. THANKS TO ALL THIS OPTIMISM AROUND GPD SIX. THIS IS ALREADY FUELED THE PHILADELPHIA SEMICONDUCTOR INDEX ON FRIDAY. WE WILL SEE THIS MOMENTUM. VERY INTERESTING. HELPING TO SHAPE A DYNAMIC FOR THE JAPANESE BANKS. FOCUSING MORE ON THESE JAPANESE AI TRADES. FOR THE MOMENT. GIVEN WE ARE SEEING THESE POSITIVE SIGNALS FROM CHATGPT SIX. DESPITE WHAT YOU ARE WATCHING IN THE TECH LEAD INS, WE ARE ALSO KEEPING TABS ON CHINA FOLLOWING THE EARNINGS SEASON WHICH ACTUALLY SHOWED THE BEST PROFIT GROWTH IN FIVE YEARS. BUT IT HAS NOT BEEN ENOUGH TO REIGNITE A STOCK RALLY. THIS IS COMING AGAINST THE BACKDROP OF A WEAK ECONOMY. DOUBT OVER AI RETURNS. THESE ARE ALL FACTORS THAT HAVE BEEN SAPPING INVESTOR ENTHUSIASM. LET'S BRING IN OUR MANAGING EDITOR FOR ASIAN EQUITIES. WHAT IS THE THESIS HERE? WHY AREN'T INVESTORS AWARDING CHINESE STOCKS? >> I>> THINK A KEY REASON IS A GOOD NEWS IS REALLY PRICED IN. AS WE MENTIONED THERE WAS A GREAT QUARTER LAST QUARTER. PROFIT JUMPS 28%. BUT LOOK AT CSI, DOWN 9% THIS QUARTER. IF YOU LOOK AT THE SECOND QUARTER PERFORMANCE FOR BOTH OF THESE COMPANIES, THEY BOTH DID SO WELL. STAR 50 JUMPS NEARLY 80%. THE CSI 300 WAS UP ABOUT 12%. YOU CAN SEE, ENTHUSIASM WAS PRICED IN AND THAT EVEN WITH CXMT WHICH IS A MARKET DARLING REPORTING TENFOLD REVENUE GROWTH , SHARES BARELY DID EVERYTHING -- ANYTHING AFTER THEY REPORTED. THE INTERNET NAMES PRETTY MUCH DROPPED AFTER THE REPORTED EARNINGS. EXCEPT FOR MEITUAN. YOU MENTIONED CONSUMERS AND REAL ESTATE. STILL VERY MUCH WEIGHING ON THE CHINESE ECONOMY. THEY HAVE REALLY PLAYED HARD AND FAST IN THE AI HAVE TRADE AND THEY HAVE MOVED ON. THAT TRAIN HAS RUN ITS COURSE FOR NOW. AVRIL: SO MUCH SO THAT WE ARE EXPECTING THESE LISTINGS. IN THE NEAR TERM THAT IS DEFINITELY A HEADWIND. THEY ARE LOOKING AT MOONSHOT. THEY HAD A $5 BILLION DEAL IN HONG KONG POTENTIALLY THIS YEAR. ANOTHER GIGANTIC MEMORY CHIP MAKER, ALSO $5 MILLION EXPECTED SOMETIME THIS YEAR. A COMBINED $10 BILLION OF LIQUIDITY DIVERSION FROM INVESTORS LOOKING FOR THE NEXT HOTPLATE. CHINESE STOCK INVESTORS ARE USUALLY VERY TACTICAL AND SHORT-TERM. THEY ARE NOT LOOKING FOR LONG-TERM PLAY. RIGHT NOW, WE ARE LOOKING AT AI ADOPTION. IF YOU LOOK AT THE MEDIA, WHICH HAS BEEN THE HARDEST TO STOCK ONSHORE, THAT IS BECAUSE THEY USED AI TO PRODUCE A TV SHOW THAT HAS BEEN AIRING PROMINENTLY ON SHORE. YOU CAN SEE HOW MUCH MARGIN BOOST THAT KIND OF ADOPTION OF AI WOULD BE FOR THIS COMPANY. PAUL: OUR MANAGING EDITOR FOR ASIAN EQUITIES, THANK YOU. LET'S TAKE A QUICK LOOK AT COMMODITIES BEFORE WE LET YOU GO. THE OIL PRICE FRONT AND CENTER ONCE AGAIN AFTER A VERY FAMILIAR WEEKEND IN THE STRAIT OF HORMUZ. THE U.S. AND IRAN EXCHANGING MORE TIT-FOR-TAT STRIKES. OPEC-PLUS MEMBERS AGREED TO KEEP PRODUCTION UNCHANGED. THIS IS PRETTY SYMBOLIC WITH THE TRAFFIC IN THE STRAIT OF HORMUZ DISRUPTED. THE ENERGY SECRETARY SAYS FLOWS ARE ABOUT TWO THIRDS OF WHAT THEY WOULD NORMALLY BE. WE LOOK AHEAD TO CPI DATA COMING OUT OF THE U.S. TOWARD THE END OF THE WEEK. THAT WILL BE A CRITICAL READ AFTER WHAT WAS A HEADLINE GOOD JOBS NUMBERS FOR NON-FOREIGN PAYROLLS. LOSING A LITTLE GROUND. MARKETS COVERAGE CONTINUES AS WE LOOK AHEAD TO THE START OF TRADE IN HONG KONG, SHANGHAI, AND SHENZHEN.