Bessent Dares Traders On Yen, Rhee Says Don't Panic Over Won Moves | The Asia Trade 9/9/2026

AVRIL: THIS IS "THE ASIA TRADE," I’M AVRIL HONG IN SINGAPORE. THERE ARE CONSIDERS ABHIGHER FED INFLATION RATES AHEAD OF KEY INFLATION DATA. BRENT IS JUST AWAY FROM $100 A BARREL. SCOTT BESSENT DARES TRADERS TO BET AGAINST THE YEN SUGGESTING HE’S STRENGTHENING THE CURRENCY WITH INSIDE INFORMATION. HAIDI: I’M HAIDI STROUD WATTS IN ASIA. WE ARE LOOKING AT A BUOYANT START TO THE MID-WEEK SESSION. LOOKING LIKE STRENGTH OUT OF THESE MARKETS INCLUDING KOREA OBVIOUSLY IN PARTICULAR. WE’RE SEEING THE KOSPI FUTURES .6%. THIS AFTER THE PHILADELPHIA INDEX SAW THE 1.3% GAIN IN THE OVERNIGHT SESSION. NIKKEI FUTURES LOOKING SOFTER, QUITE A BIT OF DISTRACTION WHEN IT COMES TO THE YEN TRADE. BUT NEW YORK TRADED CRUDUP BY 1.3% THIS. CONCERN WHEN IT COMES TO BROADER ENERGY MARKS CONTINUES TO PERSIST AS WE CONTINUE TO SEE THESE GEOPOLITICAL AND WAR-RELATED UNCERTAINTIES. BUT THE MAJOR STORY OVERNIGHT IS WHAT WE’RE GOING TO SEE POTENTIALLY WITH THE YEN ALONG WITH U.S. TREASURIES. THESE COMMENTS FROM SCOTT BESSENT WERE REMARKABLE, DARING TRADERS TO BET AGAINST THE YEN, QUOTE, I AM THE HOUSE NOW. CHALLENGING THEM TO COUNTER HIS EFFORTS TO STRENGTHEN THE JAPANESE CURRENCY, SAYING HE MAKES MARK CALLS NOWADAYS. HE’S EFFECTIVELY DOING SO WITH INSIDE INFORMATION. LET’S BRING IN OUR BLOOMBERG EQUITIES TRADER SONNY BELCHER. WHAT DO WE MAKE OF THIS? >> IT IS INTERESTING COMMUNICATION AND A DIFFERENT TYPE OF COMMUNICATION IF THE TREASURY WE HAVE NOT SEEN BEFORE. WHAT INFORMATION IS HE PUTTING IN IT’S QUOTE CONFUSING FOR THE B.O.J., THEY ARE BEING PUSHED INTO A SORT OF CORNER. THEY WANT TO MANAGE THEIR OWN ECONOMY AND THEIR OWN FINANCIAL STABILITY SO THESE ARE REALLY INTERESTING COMMENTS AND WONDER WHETHER THIS HAS GOT A BROADER IMPLICATION ABOUT THE TREASURY MARKET WHICH IS WHY SCOTT IS BEING SO FORTHCOMING, OR SO FORCEFUL IN HAIDI: WE DID SEE THE BENEFIT OF ELEVATED YIELDS AS WELL. IT SEEMS LIKE THERE’S DATA BUYBACKS AS WELL. >> THERE’S TWO THINGS HERE. HE NEEDS TO HAVE IMPACT ON THE MARKET. HE LOOKS TO BRING THAT DOWN TO $500 BILLION. HE’S GOT JUST SHY OF $400 BILLION OF BUYING HE CAB DO. THAT ROUGHLY TRANSLATES TO $10 BILLION TO $15 BILLION BUYING PROGRAM WHICH IS MEANINGFUL TO BE A MARGINAL BUYER IN THE TREASURY MARKET AND IMPACT YIELD. BUT THE MORE LONGER TERM QUESTION IS, IS IT SUSTAINABLE? IS THIS JUST ANOTHER FORM OF FINANCIAL REPRESSION BY TRYING TO HOLD YIELDS DOWN THAT WANT TO GO HIGHER. ACTUALLY, WHOSE JOB IS IT TO REALLY ANCHOR IN YIELDS? IS IT THE TREASURE’S JOB IN MAYBE THROUGH MORE SENSIBLE DEFICIT SPENDING? OR IS IT THE FEDERAL RESERVE’ JOB? I THINK THAT’S WHERE SOME OF THIS STUFF, SOME OF THIS BUYING CAN HAVE A SHORT TERM IMPACT BUT MAY NOT FIX THE UNDERLYING PROBLEM OF WHY YIELDS ARE MOVING HIGHER. HAIDI: IT’S INTERESTING, A GOOD SETUP FOR THEM GOING INTO THE ASIA SESSION BUT A SETUP FOR KOREA. SUNNY: KOREA SEEMS TO BE BUCKING THE TREND. KOREAN CORPORATES ARE OUT THERE BUYING BACK TEAR THEIR OWN SITE, NAMELY SAMSUNG ELEK TREASONNICS AND S.K. HIGH NICK. YOU’VE SEEN FOREIGNERS RETURN SO THAT BUYING HAS COME THROUGH. AND THEN I THINK THE MARKET IS LOOK AT SOME OF THE ADVANCES IN CHATGPT-6, WHAT THIS MEANS FOR THE SEMICONDUCTOR TRADE WHETHER THIS IS PRODUCTS AGAIN DRIVING GREATER DEMAND FOR SEMICONDUCTORS SYSTEM OF SEMIS HAVE REALLY BROKEN OUT A LITTLE BIT PARTICULARLY MEMORY STOCKS AND THE TRADE IS BECOMING INTERESTING. IT’S BEEN THE PRO SEMI, LONG SEMIS, SHORT SOFTWARE TRADE. THAT WILL BE AN INTERESTING ONE TO WATCH FOR THE NEXT FEW WEEKS. HAIDI: SUNNY, THANK YOU FAR CONTEXT. BLOOMBERG EQUITIES STRATEGIST SUNNY BANGA FOR US. AVRIL: WE HAVE BEEN TRACKING HOW PRICE HAVE BEEN FLARING. THEY HAVE STRUCK A VITAL EXPORT HUB NEAR KHARG ISLAND, FOLLOWING A FAILED MIZ MISSILE ATTACK ON AN AMERICAN WARSHIP IT IS SHATTERING THE HOPE THAT THE CONFLICT WAS MOVING FROM PHYSICAL HOSTILITIES TO ECONOMIC PRESSURE. DERRICK JOINS US NOW. TELL US HOW WE GOT THAT STRIKES AND COUNTERSTRIKES. DEREK: I’LL TELL YOU FROM MARCO RUBIO. WHEN THEY TRY TO HIT U.S. NAVAL SHIPS THEY’LL GET HIT THEMSELVES. THE BACK AND FORTH IS PRETTY STRAIGHTFORWARD, HE SAID, FOR EVERY TIME THEY DO THAT OR TRY TO DO THAT THEY’RE GOING TO LOSE TANKERS. THE U.S. MAKING CLEAR IF IRAN LAUNCHES ANYTHING THERE WILL BE RETALIATION. THAT PUTS US INTO THIS TIT FOR TAT PHASE. WE’VE HAD OFFICIAL IRANIAN MEDIA SAY THERE WERE STRIKES TARGETING MILITARY FACILITY IN JORDAN THAT AMERICAN TROOPS USE, SO WE’RE CONTINUING INTO THIS SORT OF SITUATION HERE BUT THE U.S. HAS SAID LOOK IF YOU SHOOT AT TANKERS, WE ARE GOING TO INCAPACITATE YOURS. THAT DOESN’T NECESSARILY MEAN PUTTING THEM AT THE BOTTOM OF THE STRAIT OF HORMUZ. IT DOES MEAN TRYING TO TAKE OUT ENGINE ROOMS AND THINGS LIKE THAT SO THEY’RE FUNCTIONALLY NOT ABLE TO SHIP, YOU KNOW. AT THE SAME POINT WE’VE SEEN SHIPPING STATES WARN TODAY ABOUT INCREASING FRAGMENTATION IN THE GLOBAL SHIPPING TRADE CAUSED BY A LOT OF THESE CONFLAGRATIONS AND HORMUZ BEING A GREAT EXAMPLE OF THE SORT OF PLACE WHERE A REGIONAL CONFLICT CAN REALLY KIND OF IMPACT THE BROAD GLOBAL ECONOMY ALMOST IN AN INSTANT. AVRIL: WHAT PHASE OF APPLYING ECONOMIC PRESSURE SHOULD THE U.S. BE IN AT THIS STAGE? AND DO THESE ACTIVE HOSTILE IT IS I DISTRACT FROM THAT GOAL? DEREK: I THINK, AVRIL, THE U.S. HAS SAID IT WANTS TO BE DOING ECONOMIC PRESSURE AND THAT’S GOING TO BE THE WAY THAT IT’S GOING TO TRY AND BRING IRAN TO HEEL TO A NEGOTIATING POSITION, TO KIND OF END THE WAR ON AMERICAN TERMS. BUT CLEARLY THAT HASN’T WORKED YET. I THINK THE BIG QUESTION IS GOING TO BE, AS IT HAS BEEN, WHAT THE U.S. IS GOING TO DO VIS-A-VIS IRANIAN TRADING PARTNER, PARTICULARLY THE BIGGEST ONE ON OIL WHICH IS CHINA. THERE’S BEEN NO SENSE YET THAT THE U.S. IS WILLING TO SORT OF UPTIP THE U.S.-CHINA RELATIONSHIP BEFORE TRUMP MEETS WITH XI JINPING IN WASHINGTON. THAT’S A KEY THING TO WATCH FOR LATE THEY ARE MONTH, WHETHER ANYTHING TANGIBLE COMES OF THAT. BUT SO FAR, WE’VE SEEN A LOT OF THINGS GO ON IN THE LAST SIX-PLUS MONTHS. WE HAVE SEEN MILITARY, ECONOMIC, WE’VE SEEN ALL SORTS OF THINGS. IRAN’S ECONOMY IS NOT IN THE STRONGEST POSITION RIGHT NOW, ALL OF THAT IS TRUE. BUT HAS ANY SINGLE THING FORCED IRAN TO CHANGE ITS COURSE? NO. NOT YET. THAT’S THE THING THAT THE U.S. IS TRYING TO FIND IS WHAT’S GOING TO HAPPEN THERE. ON THE FLIP SIDE, IT IS NOT A POLITICALLY POPULAR OPINION IN IRAN RIGHT NOW TO BE ON THE SIDE OF CONCESSIONS TO THE UNITED STATES. SO THAT COMES WITH ITS OWN LITTLE FORMS OF RISK AND THOSE TWO THINGS GET VERY, VERY DIFFICULT. WE’VE GOT THE NOVEMBER ELECTIONS IN THE U.S. COMING UP. PRICING PRESSURE A WHOLE BUNCH OF OTHER THINGS. THOSE RADIATE THROUGHOUT THE ECONOMY. ALL OF THAT PUTTING PRESSURE ON THE U.S. ECONOMY WALKING INTO THOSE SO-CRITICAL LEKS. CERTAINLY THE U.S. IS FOCUSED ON THAT THE TRUMP ADMINISTRATION IS FOCUSED ON THAT. BUT IN TERMS OF A WAY OUT OF THIS? HAVEN’T SEEMED TO FIND ONE YET. AVRIL: BLOOMBERG’S SENIOR EDITOR THERE. HAIDI: THERE’S STABILIZATION WITH THE LABOR MARKET IN EUROPE, 2.8% WAS ALSO WHAT BLOOMBERGS ECONOMICS HAD BEEN EXPECTING AS WELL. LABOR FORCE PARTICIPATION, 64.4%. THAT NATURAL RATE OF EMPLOYMENT NUMBER SITS AROUND 3.1%, WHICH IS THE POST-2020 AVERAGE. 2.7% VERY, VERY COMFORTABLY BELOW. THAT WE ARE SEEING SOME OF THOSE SECTORS THAT HAVE FACED HEADWINDS, WEATHER DISRUPTION, CON INSTRUCTION ACTIVITY HAS BEEN SUB DUDE ACROSS THE MANUFACTURING SECTOR. THAT’S ALL BECOMING QUITE A BIT MORE STABLE THROUGH THAT DATA. STILL TO COME, WE’RE LIVE FROM THE K.B. FINANCIAL GROUP CAREER CONFERENCE IN SEOUL. STEVEN ENGEL IS ON THE GROUND AT THE EVENT. STEVE? STEPHEN: WHAT A GREAT TIME TO BE HERE AT THE K.B. FINANCIAL CONFERENCE. WE HAVE A WHOLE HOST OF VERY IMPORTANT GUESTS. ONE WAS TELLING ME THE BOOM IN A.I. CHIPS AROUND THE WORLD HEAD BY KOREA, SAMSUNG AND S.K. HYNIX, HAS BEEN A BLESSING TO THE KOREAN ECONOMY, BUT AGAIN, CONCENTRATED LARGELY IN TWO STOCKS. WE’LL TALK ABOUT THAT AS WELL AS THE MACRO CONDITIONS AND CENTRAL BANK POLICIES AROUND THE WORLD. GREAT LIST OF GUESTS COMING UP IN JUST A FEW MINUTES. WE’RE GOING TO HAVE MARK GONZI, DIGITAL BRIDGE C.E.O. WE’LL TALK ABOUT THAT A.I. BUILDOUT, CELL TOWERS, AND THEN LATER AT 9:00 KOREAN TIME, AS YOU CAN SEE ON THE CLEAN THERE WE’LL HAVE LOUIE VINCENT GOVE AND A FIRESIDE CHAT WITH FORMER B.O.K. GOVERNOR RHEE CHANG YONG. YOU DON’T WANT TO MISS. THAT THIS IS BLOOMBERG "THE ASIA TRADE." HAIDI: LET’S TAKE A LOOK AT OIL MARKS. WITH THE STRIKES AND COUNTERSTRIKES BY IRAN AND THE U.S. BRENT EARLIER APPROACHING THE $100 A BARREL MARK. IT’LL BE INTERESTING TO SEE IF TECH CONTINUES OUTPERFORMING, SEEN SOME SOFTNESS IN NIKKEI FUTURES. THE YEN MANAGING TO RALLY STILL TO THE HIGHEST LEVEL WE’VE SEEN IT SINCE FEBRUARY AND OF COURSE THERE ARE THESE COMMENTS COMING THROUGH FROM THE TREASURY SECRETARY, SCOTT BESSENT, TALKING ABOUT HOW HE IS THE HOUSE NOW. JOINING US IS THE SENIOR MACRO STRATEGIST, ALWAYS GOOD TO SEE YOU. TALK TO US FIRST OFF. THE FOCUS IS ON OIL PRICES BUT WHAT IS YOUR SENSE OF WHETHER THE JAPANESE CURRENCY CAN CONTINUE TO RALLY AT THESE LEVELS. HOMIN: SO NOW, IF YOU LOOK AT THE MARKET PRICING FOR THE BANK OF JAPAN, IT NOW POINTS TO CLOSE TO MAYBE 2% BY THE SECOND HALF OF 2027. SO THAT’S ROUGHLY MAYBE FOUR HIKES FROM THE CURRENT LEVEL. AND THIS IS WHAT WE’VE BEEN EXPECTING SINCE MID AUGUST TO REFLECT THE CHANGING TONE OF POLICY DISCUSSION IN TOKYO AND ALSO PARTICULARLY WITHIN THE BANK OF JAPAN. SO THAT’S DEFINITELY BEGINNING TO BE A FACTOR FOR THE MARKET PRICING FOR THE YEN. WE DO SUSPECT THAT IT’S STILL DIFFICULT FOR THE CURRENCY TO RALLY SIGNIFICANTLY FROM HERE SO IT’S QUITE POSSIBLE THAT WE START FACING SOME RESISTANCE FOR THE DOLLAR-YEN. MAYBE AROUND THE 150 LEVEL. BECAUSE AT THE END OF THE DAY, OUR SUSPICION IS THAT THE -- POLICYMAKERS ARE HAPPY WITH A KIND OF RANGE THAT’S BELOW 160. THAT’S MORE MANAGEABLE. AND IF THEY CAN SOMEHOW CAP THE STRENGTH OF THE DOLLAR AGAINST THE YEN AND THE WEAKNESS OF THE CURRENCY THEN PERHAPS THEY CAN LIVE WITH AN OUTCOME THAT STILL TAKES A FEW MORE HIKE NECESSARY BANK OF JAPAN AND POTENTIALLY SOME HAWKISH GUIDANCE. THIS IS KIND OF HOW WE’RE LOOKING AT THINGS. CERTAINLY THE DEVELOPMENT IN THE MIDDLE EAST WILL BE ANOTHER KIND OF HEADWIND. SO A RANGE FOR THE YEN, THIS IS WHAT WE HAVE, MIGHT BE GOATING CLOSE TO AN IMPORTANT RESISTANCE LEVEL AT 150. FOR THE DOLLAR-YEN. AVRIL: SO CAP YEN WEAKNESS IS ON JAPANESE POLICYMAKER SIDE. WHAT ABOUT WHETHER TREASURY SECRETARY SCOTT BESSENT IS GOING TO BE OK WITH THAT? HOMIN: WE’LL HAVE TO SEE, YOU KNOW, WHAT HIS TRUE DEMANDS ARE. BUT YOU KNOW, WE NOW SEE A BIT OF SHIFT IN THE MARKET’S TONE REGARDING THE YEN’S WEAKNESS. I MEAN WHAT WE FACED, MAYBE A FEW WEEKS AGO. WHEN WE HAD A JOINT INTERVENTION BETWEEN JAPAN AND THE U.S., WE HAD A THREAT OF DOLLAR-YEN CROSSING 160 AND GOING WELL BEYOND THAT THRESHOLD AND POTENTIALLY TRIGGERING SOME SIGNIFICANT, MORE SIGNIFICANT ACTION BY THE JAPANESE GOVERNMENT, POTENTIALLY INVOLVING THE SALE OF U.S. TREASURIES. WE HAVE SEEN THAT ALREADY. BUT WE WERE GRAPPLING WITH THE POSSIBILITY THAT THERE COULD BE EVEN MORE AGGRESSIVE ACTION. SO FROM BESTENT’S PERSPECTIVE THAT SITUATION IS UNCOMFORTABLE. NOW IF YOU ASK, YOU KNOW, WHERE THE MARKET IS RIGHT NOW, MAYBE THE TONE IS SLIGHTLY DIFFERENT. PEOPLE ARE BEGINNING TO PARE DOWN THEIR VERY AMBITIOUS EXPECTATIONS FOR THE DOLLAR-YEN AND WITH THE BANK OF JAPAN MOVING NOW, PERHAPS THE CURRENCY VALUE IS BETTER ANCHORED AND IF YOU CAN KIND OF KEEP IT THAT WAY WITH MAYBE, YOU KNOW, INCREASING IMPACT ON THE GLOBAL BOND MARKET, MAYBE THAT’S AN OUTCOME THE U.S. GOVERNMENT CAN LIVE WITH. BUT AGAIN, YOU KNOW, WE ARE NOT THERE YET. SO WE’LL HAVE TO SEE SOME CONCRETE ACTION. AND YOU KNOW THAT REALLY COMES DOWN TO THE B.O.J. ACTION FOR THE REMAINDER OF THE YEAR, REMAINDER OF THE WEEK AND ALSO FOR THE NEXT 12 MONTHS. AVRIL: YOU TALK ABOUT GLOBAL DEBT MARKETS, TREASURIES IN PARTICULAR HAVE BEEN IN THE SPOTLIGHT. WHAT’S YOUR SENSE OF THE EXPANDED BUYBACK PLAN DETAILS THAT MARKS NEED TO SEE COMING OUT OF THE TREASURY DEPARTMENT, AND SOME QUELLING IN TERMS OF DISRUPTIONS WE’VE BEEN SEEING OF GLOBAL DEBT OF LATE. HOMIN: THE BUYBACK PLAN, WE UNDERSTAND THE SENSITIVITIES AROUND THE SPECIFIC LEVELS OF YIELDS FOR U.S. TREASURY MARKET, ESPECIALLY FOR THE LONGER END. BUT THESE PLANS IN OUR VIEW ARE NOT GOING TO CHANGE THE FUNDAMENTAL SITUATION WHICH IS THE U.S. GOVERNMENT STILL CONTINUES TO RUN A SIGNIFICANT AMOUNT OF DEFICIT DESPITE THE FACT THAT YOU HAVE POSITIVE GROWTH. AND THE MECHANICS OF THIS ACTION INVOLVE BASICALLY, YOU KNOW, BUYING DEBT ON THE LONGER END AND POTENTIALLY FILLING THAT GAP WITH THE ISSUANCE OF SHORTER TERM U.S. BILLS AND U.S. TREASURY BILLS AND YOU KNOW THAT’S REALLY BASICALLY, YOU KNOW, THAT’S NOT GOING TO HAVE A LASTING IMPACT. SO OUR PERSPECTIVE IS, IT’S OUNDERSTANDABLE THAT THEY WANT TO SUR SURPRISE PRIZE SOME OF THE SHORTS FOR SPECIFIC ISSUES. BUT THE LONGER TERM, THE MARKET CONSENSUS COMPLETELY RIDES ON THIS. IT’S THE OTHER FACTORS THAT’S GOING TO DETERMINE THE YIELD, NOT THIS ACTION. AVRIL: HOMIN, ALWAYS GREAT TO CHAT. THANK YOU FOR PROVIDING THIS CONTEXT. HOMIN LEE IS SENIOR MACRO STRATEGIST AT LOMBARD. WE HAVE MORE AHEAD ON "THE ASIA TRADE," THIS IS BLOOMBERG. ♪ >> I DON’T BELIEVE IN ESCALATING THE CONFLICT. THAT’S NOT CONSTRUCTIVE. BUT OUR TARIFFS ARE NECESSARY TO PROTECT OUR WORKERS, PROTECT OUR COMPANIES, AND OUR COMMUNITIES. WE CAN’T LET AMERICAN GOODS INTO CANADA TARIFF FREE WHILE THEY CHARGE OUR COMPANIES TO EXPORT THEM. HAIDI: CANADIAN PRIME MINISTER MARK CARNEY AFTER OTTAWA IMPOSED TARIFFS ON THE U.S., THE U.S. IMPOSED TARIFFS ON CANADA LAST MONTH. THE U.S. IS LOOKING TO BAN SOME CANADIAN DAIRY AND AUTOS. PRESIDENT TRUMP SAID HE’LL CUT CANADIAN PRODUCTS OUT OF GOVERNMENT CONTRACTS. AS TENSIONS BETWEEN THE TWO NEIGHBORS CONTINUE TO BUILD, THEY ARE WORK TOWARD A NEW RELATIONSHIP THAT WOULD RAIN FRIDGE TRADE TO SECURITY. SOURCES SAY OTTAWA HAS MADE A DEEPER E.U. PARTNERSHIP A TOP PRIORITY AND THE EUROPEAN COMMISSION PRESIDENT IS EXPECTED TO ANNOUNCE A PLAN NEXT WEEK IN FRANCE. CANADA’S RETALIATORY TARIFFS ON U.S. IMPORTS IS NOW IN FORCE, ADDING A NEW LAY OAF PRESSURE ON AN ALREADY-STRAINED TRADE RELATIONSHIP. THE FORMER TRADE REPRESENTATIVE SAID THE U.S. AND CANADA STILL HAVE SIGNIFICANT COMMON INTERESTS. SPEAKING WITH STEVEN ENGEL IN SEOUL, SHE SAID THOSE SHARED PRIORITIES CAN HELP BOTH COUNTRIES MOVE BEYOND THE CURRENT TRADE TENSIONS. >> I’M DISTRESSED BY IT. I THINK THE RELATIONSHIP BETWEEN THE U.S. AND CANADA IS ONE OF THE MOST IMPORTANT THAT WE HAVE. THE GOOD NEWS IS I THINK IT WILL CONTINUE TO BE ONE OF THE MOST IMPORTANT THAT WE HAVE. HICCUPS NOT WITHSTANDING. I THINK WE’RE IN FAR ROCKY TIME OVER THE NEXT SEVERAL MONTHS. MAYBE THE NEXT COUPLE OF YEARS. SPEAKING AS A VETERAN NEGOTIATOR WITH THE CANADIANS ON ISSUES LIKE SOFTWOOD LUMBER, MARKET ACCESS IN THE DIGITAL SPACE, THE CANADIANS ARE VERY HARD TO NEGOTIATE WITH. SO I -- I KNOW WHAT MY SUCCESSOR IS GOING THROUGH. BORDER STATES AND BORDER PROVINCES NEED EACH OTHER. AND IF YOU TALK TO THE U.S. UNIONS, ON OUR SIDE OF THE BORDER, THEIR BRETHREN NORTH OF THE BORDER WORK TOGETHER AND ARE VERY CLOSE AND NEED EACH OTHER AND VALUE EACH OTHER. SO THE POLITICS AREN’T AS CLEAN AS -- OR AS SIMPLE AS ONE WOULD AUTOMATICALLY ASSUME. ULTIMATELY THERE’S SO MANY THINGS THAT WE HAVE, SO MANY INTERESTS WE HAVE IN COMMON THAT WILL NOT GO AWAY. ONE GEOGRAPHY, TWO, EXTERNAL COMPETITIVE FORCES. YOU KNOW, CANADA MAY WANT TO DO MORE BUSINESS WITH CHINA, BUT THE FACT OF THE MATTER IS, CHINESE BUSINESS WILL WIPE OUT, YOU KNOW, MANUFACTURING NORTH OF THE BORDER WHETHER THEY LIKE IT OR NOT UNLESS THEY ARE PART OF THE NORTH AMERICAN FORTRESS OR FORTRESS NORTH AMERICA THAT PRIME MINISTER CARNEY TALKED ABOUT. RARE EARTH, MAGNETS, MINERALS. CANADA HAS LOTS OF THEM. AGAIN, THERE’S AN AREA WHERE WE CAN BE WORKING TOGETHER ON THAT. STEPHEN: IT’S AN INTERESTING POINT YOU MAKE ABOUT CANADA POSSIBLY KO COZYING UP MORE TO CHINA. THRIVES IN CHINA WHEN MARK CARNEY WENT TO BEIJING. HE WAS VERY DELIBERATE IN HIS VERBIAGE. NEW WORLD ORDER. HE KNEW HE WAS PLAYING THAT BEFORE THE CAMERAS. BUT HE EMPHASIZE THAT DO YOU THINK IT IS A NEW WORLD ORDER? IT’S DIFFERENT FROM THE DAYS OF YOU OR THE USTR? >> I THINK IT’S A NEW WORLD ORDER BUT NOT NECESSARILY PERHAPS WHAT YOU’RE IMPLYING. STEPHEN: HOW SO? >> NEW WORLD ORDER IF YOU TAKE A LOOK AT CHINA’S CONTRIBUTION TO GLOBAL ECONOMIC GROWTH, VERSUS THE U.S. CONTRIBUTION TO GLOBAL ECONOMIC GROWTH, CHINA’S CONTRIBUTION IS NEGATIVE. THE U.S. CONTRIBUTION CONTINUES TO BE POSITIVE. VERY POSITIVE. WE ARE -- BY PULLING IN IMPORTS FROM THE WORLD. CHINA, BY FLOODING THE WORLD WITH EXPORTS BECAUSE OF NONMARKET ECONOMY POLICIES, AND OVERPRODUCTION, AND OVERCAPACITY, AND DUMPING AT NONECONOMIC PRICES, THAT’S UNDERMINING MANUFACTURING THROUGHOUT THE WORLD. NOW, I AM NOT A GREAT FAN OF ASPECTS OF OUR ADMINISTRATION’S TRADE POLICY BUT I WILL SAY THE TARIFFS WOKE UP THE REST OF THE WORLD TO THAT OVERCAPACITY BECAUSE IT HAS BEEN LOOKING FOR OTHER PLACES TO GO AND IS SHOWING UP ON OTHER SHORES. THAT’S GOING TO HAVE AN IMPACT ON CANADA AS WELL AS EVERYBODY ELSE. AVRIL: SUSAN SHARP, FORMER U.S. TRADE REPRESENTATIVE AND ADVISER AT BROWN. TAKE A LOOK AT THE START OF TRADING HERE IN AUSTRALIA, THIS MID-WEEK SESSION. LAST CLOSED A LITTLE SOFTER, DESPITE THE PUSH IN ENERGY PRICES AND COPPER-ADJACENT NAMES AS. WE WE COULD SEE MORE UPSIDE BENEFIT WHEN IT COMES TO THESE. THE AUSSIE DOLLAR IS ONE TO WATCH AS WELL GIVEN THE STRENGTH WE’VE SEEN OVER THE PAST FOUR MONTHS. CONTINUING TO PUSH HIGHER AT 7220 WITH EXPECTATIONS R.B.I. HAS TO GO AGAIN. ALSO WATCHING DOLLAR-YEN GIVEN THE PIG MOVES IN THE JAPANESE YEN THIS WEEK. SIDNEY FUTURES UP -- SYDNEY FUTURES UP ABOUT .2%. ACROSS ASIA, WE ARE EXPECTING A PARTICULARLY GOOD DAY WHEN IT COMES TO CHIPMAKER. WE HAD A STRONG LEAD FROM THE PHILADELPHIA SEMICONDUCTORS OVERNIGHT. 1.3% HIGHER IN THE NEW YORK SESSION. WE SHOULD SEE ASIA CHIPMAKERS SET FOR GAINS. OIL AS WELL, WE HIT THE $100 MARK WHEN IT COMES TO BRENT. MORE AHEAD ON "THE ASIA TRADE," THIS IS BLOOMBERG. ♪ AVRIL: HAIDI TODAY THE FAUX FOCUS IS GOING TO BE ON HOW WE ARE SEEING THE YIELD BACK THE BALANCE OF MY TIME. CAN IT CONTINUE ITS RALLY? OIL PRICES TICKING HIGHER AS WELL. THEN THE SPECTER OF ELEVATED GLOBAL YIELDS AND LET’S ALSO RECAP HOW WE GOT TO THIS STAGE ON BRENT BECAUSE IT WAS THAT STRIKE ON MONDAY THAT WAS FIRST REPORTED BY "THE WALL STREET JOURNAL" FROM IRAN ON U.S. WARSHIP AND THEN THESE COUNTERSTRIKES THAT CAME FROM THE U.S., TARGETING IRANIAN TANKERS INCLUDING THOSE LINKED TO THE IRGC WHICH THIS WEEK HAS GOTTEN US FROM NEARER TO THE 93 HANDLE TO WHERE WE ARE NOW. ALMOST 100 BUCKS A BARREL, HAIDI. HAIDI: ALL OF THIS, AVRIL, PUSHING THROUGH TO THOSE EXPECTATIONS THAT GLOBAL CENTRAL BANK, THE FED, FRONT AND CENTER, WILL HAVE TO RYNE IN INFLATION AND BECOME MORE HAWKISH. EVEN THIS AS WE CONTINUE TO KIND OF SEE A PRETTY MUTED PASS-THROUGH TO INFLATION NUMBERS AT THIS POINT. IT’S HARD TIGER IN WHEN WE’VE SEEN OIL PRICES PRESSING HIGHER FOR SO MANY WEEKS. YET OF COURSE THIS IDEA OF THAT SORT OF AT LEAST LONGER TERM WAR CONTINUING. BUT YOU MENTIONED SOME OF THE OTHER THEMES WE’RE WATCH, DOLLAR-YEN IS ONE OF THEM. THAT 152 HANDLE IS STILL VERY MUCH IN FOCUS AT THE MOMENT. 153.54 IS WHERE WE’RE AT. ALSO WATCHING OTHER DOLLAR-YEN PAIRS. ALSO THAT COMPARE TY DOLLAR WEAKNESS STORY. NIKKEI UP BY ABOUT .6%. WELL SEE HOW THE YEN STORY AFFECTS EXPORTERS. CHIPMAKERS SHOULD GET A GOOD RIDE TODAY FOLLOWING GAINS IN IN THE PHILADELPHIA SEMICONDUCTORS INDEX OVERNIGHT ALONG WITH THE BOOST WE’RE SEEING IN KOREA AS WELL. TREASURIES ARE WATCHING THE THEE-YEAR ELEVATED YIELDS, GIVING SOME SUPPORT TO THE TREASURY OPTION. IT WAS ALL THAT SCRUTINY OVER THE TREASURY SECRETARY’S COMMENTS ABOUT HOW HE HAS THIS ASYMMETRIC INFORMATION. AVRIL: HAIDI IT’S INTERESTING, YOU TALK ABOUT ELEVATED YIELDS DEREK SPITE THIS, IT’S STILL LIKE BORROW, WE’RE STILL SEEING THEM AROUND THE WORLD, SWARMING DEBT MARKET, DRIVING THAT SURGE AND ISSUANCE. 18 COMPANIES ARE MARKETING BONDS IN THE U.S. MARKET LATER WHILE IN EUROPE 20 ISSUERS HAVE RAISED SOME $32.2 BILLION THROUGH DEBT OFFERINGS. LET’S BRING IN BLOOMBERG MARKET REPORTER ANTHONY STEPHENS. WHAT IS DRIVING THIS RUSH OF DEBT ISSUANCE? HOW SIT COMING TO MARKET SO TIGHT? ANTHONY: THERE’S THE INCREASED TRADE NEEDING FUNDING AND THE DEBT MARKS ABLE TO PROVIDE THAT. THE REASON FOR THAT IS NOMINAL YIELDS ARE QUITE HIGH. INVESTORS IS INCENTIVE SIZED TO GET A PIECE OF THE TECH TRADE. ON A NOMINAL YIELD LEVEL THEY’RE GETTING QUITE GOOD YIELDS. THAT IS A CYCLE THAT’S IN PLAY NOW. I HAVE THIS BIG TICKET A.I. NAMES GOING TO THE MARKET ONCE AGAIN. YOU HAVE AMAZON LOOKING TO RAISE A STERLING BOND, AMAZON IS THE LARGEST HYPERSCALER BOND RAISER THIS FAR AT AROUND $90 BILLION. IT HAS HAD SOME IMPACT BUT NOT ENOUGH TO DETER THIS COMPANY. SIMILARLY SOFTBANK IS GOING TO NEW YORK AFTER IT RAISED THE BOND IN THE RETAIL MARKET IN JAPAN AND AGAIN SOFTBANK C.D.S. HAS HAD SOME IMPACT BUT WITH THE SIZE OF THE OPEN AMPLE I. INVESTMENT BEING KIND OF FRONT AND CENTER, THEY KNEAD TO PUSH OUT THE DURATION OF THEIR FUNDRAISING. THAT’S AN INTERESTING CONCEPT HERE WITH THE WEIGHTED AVERAGE COST OF CAPITAL THE MARKET IS REWARDING THIS THESE TECH COMPANY FOR PUSHING OUT THE DURATION OF THEIR FUNDRAISING AND IT’S INTERFERING WITH THE SOVEREIGN INCOME. THERES A LOT OF APPETITE FOR A.I. DEBT AND THAT’S DRIVING THE ISSUANCE AND TIGHTNESS OF THE SPREAD. AVRIL: IT’S INTERESTING AGAINST THIS, SOFTBANK HAS BEEN RALLYING THIS WEEK. WHAT DO YOU THINK OF THE TECH MOVES ACROSS THE REGION TODAY? ANTHONY: WE HAVE BEEN PRIZING THE G.P.T.-6, THAT DROVE THE SOFTBANK RALLY YOU WERE TALKING ABOUT ALMOST 30%. TODAY WE ARE GOING BACK INTO LIKE MORE OF A HARDWARE KIND OF DEEP DIVE. WE SAW NEWS OUT OF QUALCOMM THAT IT’S BEING TAPPED TO DO AMAZON DATA CENTER INVESTMENTS. THE TAIWAN THESE STOCKS ASSOCIATED WITH QUALCOMM WILL BE IN FOCUS. SIMILARLY WE SAW MEMORY STAGE A LITTLE BIT OF A BOUNCE YESTERDAY. HYNIX QUITE STRONG. ASIA HAD A SHARP DOWNTURN IN THE BACK END OF YESTERDAY’S SESSION AS THE OIL PRICE STARTED TO IMPINGE ON MARKETS. MAYBE WE SHAKE SOME OF THAT OFF GOING BY THE U.S. LEADS. LASTLY IN CHINA, PEOPLE HAVE BEEN LOOKING AT THE OPTICAL STOCKS VERY CLOSELY. THERE WAS THE BIG OPTICAL MOVE IN THE U.S. OVERNIGHT FROM CORNING’S VERIZON DEAL, WE HAD THE LIGHT E.T.F., UP VERY STRONGLY. CHINESE HAS LAGGED TAIWAN ON THE WAY UP. MAYBE OPTICAL NAMES WILL CATCH FIRE LATE BIT TODAY. OVERALL, THERE ARE POCKETS OF STRENGTH PUT PEOPLE HAVE AN EYE ON HOW HIGH OIL IS AND HOW MUCH MORE CAN THE TECH TRADE ONE WHILE THE GEOPOLITICAL AND MACROSITUATION REMAINS SO UNCERTAIN. HAIDI: ONE OF SOUTH KOREA’S LARGEST FINANCIAL INSTITUTIONS IS STARTING ITS KOREA CONFERENCE TODAY. THE A.I. BUILDOUT IS EXPECTED TO BE A MAIN THEME FOR CONVERSATIONS. STEPHEN ENGEL SAT THE EVENT AND JOINS US NOW WITH OUR NEXT GUEST. STEVE? STEPHEN: OUR NEXT GUEST, WE’LL PICK UP ON WHAT ANTHONY WAS TALKING ABOUT, THE A.I. BUILDOUT AND WHERE IT IS STANDING RIGHT NOW IN NOVICOR’S MINDS. MARK GANZI, DIGITAL BRIDGE C.E.O., FOCUSED ON NEXT GENERATION DIGITAL INFRASTRUCTURE. TALKING DATA CENTERS, OFF LONG HISTORY WITH CELL TOWERS AND THE LIKE. YOU’RE THE PERFECT PERSON TO TALK ABOUT THIS RIGHT NOW. HOW FROTHY IS THE A. INCH BUILDOUT RIGHT NOW? KOREA IS GOING HEADLONG INTO THIS AREA. EVEN THEY HAVE A DIP BECAUSE OF THOSE, YOU KNOW, LEVERAGED E.T.F.’S FOCUSED ON TWO CORE COMPANIES, SAMSUNG ELECTRONICS AND S.K. HYNIX. WHAT’S YOUR VIEW AS YOU BUILD OUT MORE? >> DATA CENTERS, IT’S INTEREST, YOU HAVE THE CAPEX CYCLE WHICH CONTINUED TO GO WE’RE SPENDING ALMOST $00 BILLION A YEAR IN CAPEX AND DON’T SEE ANY OF THAT ABATING ANY TIME SOON. TO KEEP UP WITH COMPUTE AND TO KEEP UP WITH THE GROWTH OF TOKENNIZATION WE HAVE TO CON TO PUMP THE ECOSYSTEM, WHICH IS THE HARD CORE INFRASTRUCTURE, WHICH IS POWER, COMPUTE, CONNECTIVITY AND FIBER. THAT PART OF THE ECOSYSTEM HAS NOT TURNED OFF. INVESTORS ARE SMART, RIGHT. THEY’RE SANGUINE ABOUT WHAT’S HAPPENING. EVERYONE IS WAITING TO FIGURE OUT, WHO WHEN DO WE MONETIZE A.N. THAT’S THE UNLOCK HERE IN THE CYCLE. STEPHEN: THEN YOU GET NEWS REPORT, NVIDIA SPENDING ANOTHER $3.5 BILLION, AND TAIWAN, THEY PUMPED UP THEIR PARTNERS WHETHER IT WAS CHIP SET MAKERS AND THE LIKE. LAST CONCERN THAT THERE’S A CIRCULAR NATURE TO INVESTMENT THAT’S CREATING FALSE DEMAND. DO YOU SEE IT THAT WAY? >> WE WATCHED THE CIRCULAR NATURE OF THE FIBER BUSINESS IN THE EARLY THOUSAND TWOS WHEN WE HAD DOT COM BLOWUP. YOU HAD I.O.U.’S FEETING OTHER COMPANIES. THIS IS STRUCTURALLY DIFFERENT. WHAT’S HAPPENING IS THE CHIPMAKERS THEMSELVES AREN’T ON THE, NO THE PROPRIETARY LEASE. YOU’RE PUTTING A CREDIT WRAPPER BEHIND THAT LEASE. YOU’RE NOT SIGNING A SYNTHETIC LEASE. SO THE DIFFERENCE BETWEEN A SYNTHETIC LEASE AND HARD EQUIPMENT IS VERY DIFFERENT. AND NVIDIA IS QUITE SMART. I GIVE JENSEN ALL THE CREDIT IN THE WORLD, HE’S A GREAT PARTNER OF OURS, AND HE’S VERY SMART. HE’S BUYING DEEPER LOYALTY TO HIS CUSTOMER BASE. HIS CUSTOMERS TODAY ARE HYPERSCALERS. BUT THE CUSTS OF THE FUTURE ARE ENTERPRISES THAT. ABILITY TO WRAP HIS CHIP INTO A FULLY INTEGRATED SOLUTION WHICH ARE A.I. FACTIES ENABLED HIM TO GO DEEP ENTIRE THE STACK WHICH IS AGAIN WE COME BACK TO THE INDUSTRIAL USE CASES IN A.I. STEPHEN: YOU TALKED ABOUT THE COMMERCIALIZATION AS WELL. IN PRIVATE EQUITY YOU HAVE LIMITED PARTNERS WHO WANT RETURNS. D.P.I. ZO HOW LONG IS YOUR LEASH? MARC: WELL OUR LEASH, THANKFULLY, WE’VE BEEN DOING THIS 3 YEARS. WE’VE GOT FOUR DECADES OF RETURNS. WE WERE EARLY IN DATA CENTERS. WE STARTED BUILDING AND DEVELOPING DATA CENTERS 13 YEARS AGO. WE HAVE ALREADY HAD OUR FIRST CYCLE OF D.P.I. RETURNED ABOUT $11 BILLION TO INVESTORS BECAUSE WE WERE THE FIRST ONES THERE. SO NOW WHAT’S NEXT IN WHAT’S NEXT FOR US IS CONTINUING TO BUILD NEW THINGS THAT ARE ADJACENT TO THIS A.I. SUPERCYCLE AND ULTIMATELY RETURN THAT THAT CAPITAL AND SOME OF THE THINGS WE’RE THINKING ABOUT IS POWER. WE’RE VERY, VERY FOCUSED ON POWER. REALLY AS YENSEN SAYS, THE WAY YOU GET TO A TOKEN IS THROUGH THE ELECTRON. YOU’RE SEEING ALL OF THE PUSHBACK TODAY IN COMMUNITIES AROUND DATA CENTERS. AND REALLY THAT PUSHBACK SAND POWER. POWER ULTIMATELY IS A VERY SENSITIVE ENERGY. >> ENERGY. >> BOTH ARE. REALLY THE I HAVE RAINIZATION OF DATA CENTERS SAND POWER CONSUMPTION. PEOPLE ARE SMART. THEY LOOK AT THEIR UTILITY BILL. LOOK AT THEIR GAS BILL. THEY SAY WHAT’S GOING ON? MY COST OF POWER IS GOING UP. WHO IS THE BILLING? -- WHO IS THE VILLAIN? THE CLASSIC THING IS A.I. STEPHEN: IT’S NIMBY. NOT IN MY BACKYARD. YOU HAVE TO GIVE BETTER REASONS FOR THIS INVESTMENT IN THEIR BACKYARD. MARC: GIVE SAM ALTMAN ALL THE CREDIT ERIC HE SAID, WE’VE DONE A HORRIBLE JOB TAKING OUR CASE TO THE STREETS. GO BACK IN TIME TO THE LATE 1990’S WHERE CELL TOWERS WERE THE VILLAIN. WE TURNED THAT AROUND, IT WAS NOT AN ISSUE THAT WAS CAUSING E.M.E. EXPOSURE OR CANCER. CELLULAR PHONES BECAME PUBLIC SAFETY. AND CELL PHONES BECAME THE WAY OF COMMUNICATION. THINK ABOUT A WORLD WHERE WE TURN OFF A.I. THINK ABOUT A WORLD WHERE WE TURN OFF COMPUTE. WE’RE AT OMOMENT WHERE WE CAN’T GO BACKWARDS IN TIME. CAN’T STUFF THE A.I. JEANNIE BACK IN THE BOTTLE. WE NEED TO HAVE COMPUTE THAT POWERS OUR REFRIGERATORS, OUR CARS, OUR WAY OF LIFE REVOLVES AROUND COMPUTE. WE CAN’T PUT THAT BACK IN THE BOTTLE. STEPHEN: YOU’RE GOING TO BE FOLDED INTO SOFTBANK VERY SOON. YOU CAN’T TALK ABOUT THE DEAL BUT YOU CAN TALK ABOUT, HOW MUCH DOES THIS HYPERSCALE YOUR BUSINESS GIVEN THE AGGRESSIVE BUILDOUT STRATEGY? MARC: WHAT WE APPRECIATE ABOUT SOFTBANK, WE HAVE A SHARED COMMON VISION ABOUT WHERE A.I. IS GOING. WHAT I APPRECIATE ABOUT MASA, HE HAS A FULL VIEW OF THE STACK. WHEN YOU THINK ABOUT INVESTING IN A.I. IT STARTS WITH POWER, THEN DIGITAL INFRASTRUCTURE. THIS IS WHERE SOFTBANK IS QUITE SKILLED. THEY UNDERSTAND HARD WARE, G.P.U.’S, T.P.U.’S. HE UNDERSTANDS LLM’S WITH HIS COMMITMENT TO A.I. WITH THE TOP OF THE STACK, TORE FULLY VERTICALLY INTEGRATED, WHAT IT BRINGS TO THE SOFTBANK ECOSYSTEM IS POWER THROUGH OUR ACQUISITION OF BARCLAY. THE LARGEST DEVELOPER OF DIGITAL INFRASTRUCTURE IN THE WORLD WHICH IS US. THEN YOU BRING ALL THAT EXPERTISE WITH SOFTBANK. WE CAN DELIVER FULLY INTEGRATED SOLUTIONS TO CUSTOMERS. THAT’S REALLY UNIQUE. NOBODY ELSE IN THE WORLD CAN SAY THAT. MASA CAN SAY THAT TO CUSTOMER WE CAN DELIVER THE FULL AMPLE I. STEPHEN: THEY FILED FOR THE I.P.O., LOTS TO TALK ABOUT. FUTURE CONFERENCE WITH YOU, MARG. THANK YOU FOR YOUR TIME ON BLOOMBERG TELEVISION. KEEP WATCHING "THE CHINA SHOW" AND "ASIA TRADE" AND BLOOMBERG AS A WHOLE. HAIDI BACK TO YOU AS WE KICK OFF COVERAGE OF THE K.B. FINANCIAL GROUP KOREA CONFERENCE. HAIDI: FANTASTIC CONVERSATION TO START THE MORNING WITH STEPHEN ENGEL THERE IN SEOUL WITH MANY, MANY TO COME. MORE AHEAD HERE ON "THE ASIA TRADE." THIS IS BLOOMBERG. ♪ HAIDI: APPLE -- AVRIL: APPLE IS POISED TO UNVEIL ITS NEXT IPHONE, IT COULD BE OVER $2,000. OUR HEAD OF GLOBAL TECH RESEARCH, MANDEEP SINGH. WE WERE TALKING ABOUT THE APPEAL OF THE PHONE. THESE ARE PREMIUM LEVELS OF PRICING. WHAT DO YOU MAKE OF IT? MANDEEP: WITH APPLE’S LAUNCH THERE’S ALWAYS EXCITABLE. PORTLE IS A NEW PHONE FACTOR. THE PRICE POINT IS RICH COMPARED TO THE PRO LINEUPS. FROM THAT PERSPECTIVE I DENT SEE A BIG UPGRADE CYCLE EVEN WITH THE NEWNESS OF THE FORM FACTOR. WITH APPLE THEY HAVE A HISTORY OF CONTINUING TO RETAIN THEIR CUSTOMER BASE. FROM THAT PERSPECTIVE THE CUSTOMER BASE IS STILL VERY LOYAL REGARDLESS OF WHATEVER HAPPENS WITH THIS LAUNCH. HAIDI: SO MUCH OF THE FOCUS HAS BEEN ON THE DOWNSIDE, NOT SO MUCH WITH META. WHAT DO YOU THINK OF THIS? MANDEEP: I SPENT MY ENTIRE WEEKEND SENDING MESSAGES TO INSTINCT, THE NEW PERSONALIZED AGE. METABUILDS ON THAT LAUNCH WHICH IS SAYING THAT’S A BIG CATEGORY, THE PERSONAL AGENT CATEGORY IS GOING TO BE HUGE. THEY WANT TO CONNECT TO, YOU KNOW, YOUR EMAIL. YOUR CALENDAR. YOUR WHATSAPP. AND THEY WANT TO TRANSACT ON BEHALF OF THE USER AND THINK ALREADY KNOW A LOT ABOUT THAT USER. SO FROM THAT PERSPECTIVE IT MAKES A TON OF SEASON METAHAS A DISTRIBUTION. THEY HAVE BEEN SAVING ALL THAT COMPUTE WHICH THEY HAVEN’T BEEN RENTING OUT. AND IT WILL BE INTERESTING TO SEE IF THEY HAVE AN UPDATE LIKE WHAT WE HAVE SEEN WITH INSTINCT WHICH IS A STARTUP AND HAS SEEN VIRAL ADOPTION OVER THE WEEKEND IN THE U.S. HAIDI: MAKE SENSE OF THESE HARDWARE AND SOFTWARE RELEASES TO COME. BLOOMBERG INTELLIGENCE’S HEAD OF GLOBAL INTELLIGENCE, MANDEEP SINGH. SOFTBANK IS PLANNING TO MEET WITH INVESTORS TO GAUGE INTEREST IN A MASSIVE BOND SALE. A SOURCE SAYS THE COMPANY’S EXECUTIVES WILL HOLD DISCUSSIONS AT CITI’S OFFICE IN NEW YORK NEXT WEEK. SOFTBANK IS SAID TO BE CONSIDERING RAISING $10 BILLION TO $20 BILLION FROM A JUNK BOND SALE WHICH MAY INCLUDE A TRAUNCH IN EUROS. SAMSUNG SAYS IT PLANS TO ADOPT ITS HIGH-END LITHOGRAPHY EQUIPMENT FOR HIGH-VOLUME MANUFACTURING BY 2028 WHILE TSMC PLANS TO USE IT FROM 2030. THE MACHINE, WHICH COSTS AROUND $400 MILLION APIECE IS ALREADY BEING USED BY INTEL TO HELP MAKE ITS LAPTOP CHIPS. ALPHABET AND BLACKSTONE’S NEW CLOUD VENTURE SAID TO HIT DELAYS AT SEVERAL PLANNED DATA CENTER SITES. SOME SAY THE ISSUES INCLUDE A DATA CENTER’S DEVELOPER’S INABILITY TO DELIVER AND UNSUITABLE SITES. THE PROJECT PLANS TO RENT GOOGLE CHIPS TO CUSTOMER STARTING IN 2027. MORE AHEAD ON "THE ASIA TRADE." THIS IS BLOOMBERG. ♪ HAIDI: LET’S TAKE A LOOK AT HOW JAPAN ASSETS ARE FARING. THE FOCUS HAS BEEN ON THE YEN THAT’S APPROACHING THE 153 HANDLE. IT’S BEEN QUITE REMARKABLE THE MOVE SINCE 160 LAST WEEK THAT WE’VE BEEN SEEING. INVESTORS LOOKING AT THESE COMMENTS FROM KATAYAMA AND BESSENT AS WELL THROUGH FRESH EYE, I SUPPOSE. AND BESSENT’S RECENT COMMENTS TO CONGRESSMEN TRADERS SAYING HE IS THE HOUSE NOW AND KNOWS PERHAPS MORE THAN MOST WHAT THE B.O.J. IS GOING TO DO, AND CERTAINLY PRICING SURROUNDING THE CENTRAL BANK’S HIKES NOT JUST NEXT WEEK BUT POTENTIALLY IN THE REST OF THE MEETS FOR THE YEAR OUT OF THE B.O.Y., THAT’S SOMETHING THAT’S PROPELLED THE JAPANESE YEN ALTHOUGH WHEN IT COMES TO WHETHER THIS CAN CONTINUE AGAINST THE BACKDROP OF THE OIL RALLY, THAT REMAINS TO BE SEEN AS WELL. MAYBE KEEPING INVESTORS ON EDGE. DON’T FORGET THE FIVE-YEAR OPTION YESTERDAY OUT OF JAPAN, WE SAW WEAKER DEMAND THAN THE 12-. AVERAGE. J.G.B. FUTURES POINTING TO A LITTLE BIT OF PRESSURE. IN THE MEANTIME, JAPAN’S 10-YEAR BOND YIELD HIT ITS HIGHEST LEVEL SINCE THE 1990’S FUELING SPECULATION THAT JAPANESE INVESTORS COULD START BRINGING MONEY HOME. AFTER YEARS OF SEEKING HIGHER RETURNS OVERSEAS. THERE’S NO SIGN OF A MAJOR MOVE SO FAR. THE REPATRIATION TRADE COULD HAVE SIGNIFICANT IMPLICATIONS FOR THE YEN AND GLOBAL BOND MARKETS. FOR MORE, LET’S CROSS TO TOKYO AND RATES REPORTER JOHN CHANG IS HERE FOR US. WHAT ARE INVESTORS SEEING AND WHY ARE THEY TALK ABOUT JAPANESE MONEY COMING HOME IN WHAT ARE THE IMPLICATIONS FOR GLOBAL MARKETS? JOHN: I THINK THE KEY HERE IS REALLY THE YIELD LEVEL. FOR DECADES, JAPANESE INTEREST RATES WERE NEAR ZERO AND THAT HAS REALLY ENCOURAGES JAPANESE INVESTORS TO PUT HUNDREDS OF BILLIONS OF DOLLARS OVERSEAS BECAUSE THEY CAN EARN A MUCH BIGGER RETURN OVERSEAS. AND YOU KNOW, FOR EXAMPLE, THEY HAVE BEEN -- THEY HAVE BEEN THE BIGGEST BUYERS OF U.S. TREASURIES AND THEY HAVE BEEN MAJOR INVESTORS IN OVERSEAS BONDS AND OVERSEAS EQUITIES AS WELL. BUT I THINK NOW WITH J.G.B. YIELDS AT 3% THAT’S CHANGED THE WHOLE PICTURE. THAT MEANS THEY CAN EASILY EARN HIGHER RETURN AT HOME WITH UP -- WITHOUT TAKING ON THAT RISK THEY HAVE TO TAKE WHEN INVESTING OVERSEAS. SO YOU KNOW, LIKE THAT’S WHY THIS TALK OF REPATRIATION HAS REALLY GAINED TRACTION RECENTLY AND I THINK WHAT WAS INTERESTING FROM OUR CONVERSATIONS WITH INVESTORS IS THAT FOR THE REPATRIATION STORY TO HAVE AN IMPACT ON THE MARKET, IT DOESN’T REALLY REQUIRE JAPANESE INVESTORS TO SELL THE ENTIRE OVERSEAS ASSETS BUT YOU KNOW, JUST DIRECTING INCREMENTAL NEW MONEY INTO JAPANESE DOMESTIC ASSETS COULD HAVE A BIG IMPACT ON THE YEN AND J.G.B., FOR EXAMPLE. THAT CAN ALSO REMOVE A MAJOR SOURCE OF DEMAND FOR GLOBAL MARKETS AND THAT’S WHY THE REPATRIATION STORY IS NOT JUST A JAPAN STORY. IT ALSO HAS IMPLICATIONS ON U.S. TREASURY YIELD, EUROPEAN BOND MARKETS AND MORE BROADLY THE GLOBAL FUNDING CONDITIONS. HAIDI: YIELDS ARE ALREADY REAL -- AVRIL: YIELDS ARE ALREADY RELATIVELY HIGH AND WE HAVEN’T SEEN MAJOR REPATRIATION. WHAT MIGHT A TRIGGER BE FOR THIS, FOR THE MONEY TO COME HOME? JOHN NORTH CAROLINA I THINK THAT’S INTERESTING FROM THE DATA WE HAVE SEEN SO FAR THIS YEAR, THERE’S LITTLE EVIDENCE OF ANY SORT OF REPATRIATION HAPPENING. IF WE LOOK AT THE BREAKDOWN OF INVESTOR GROUPS, JAPANESE LIFE INSURERS HAVE BEEN MARGINALLY SELLING OVERSEAS BONDS. PENSION ACCOUNTS OF TRUST BANKS HAVE CONTINUED TO PILE INTO OVERSEAS ASSETS. I THINK ONE KEY HERE IS THE PROSPECT OF THE CONTINUED RISE IN YIELDS BECAUSE WHILE 3% ON 10-YEAR J.G.B. IS ATTRACTIVE, IF YIELDS CONTINUE TO RISE THAT MEANS IF INVESTORS BUY NOW THEY’LL BE SITTING ON LOSSES ON PAPER. SO I THINK ONE KEY THING FOR INVESTORS IS THEY NEED TO HAVE THE CONFIDENCE THAT YIELDS ARE ALREADY NEARING THE PEAK BEFORE THEY CAN BUY A BIT MORE DOMESTIC BONDS, FOR EXAMPLE. AND I THINK THE OTHER FACTOR REALLY IS STABILIZATION OF THE YEN BECAUSE AS MORE AND MORE JAPANESE INVESTORS BUY EVERSEAS BOND ON HEDGE, THAT MEANS THEY ARE ALSO MORE EXPOSED TO FX RISK AND THAT MEANS IF IF THE YEN CONS TO STRENGTHEN IT WILL DIRECT INTO THEIR OVERSEAS RETURN. WE ARE ALREADY SEEING SOME SIGN OF THE YEN GAINING MOMENTUM, REACHING 155 PER DOLLAR. IF WE GET A CONTINUATION OF THAT, MAYBE JAPANESE INVESTORS WILL BE MORE INCENTIVIZED TO PUT MONEY BACK AT HOME. SO I THINK WHAT IS REALLY IMPORTANT TO MONITOR WOULD BE THE FLOWS DATA NOT COMING MONTHS TO SEE THERE’S ANY CONCRETE SIGNS OF EREPATRIATION HAPPENING. AVRIL: BLOOMBERG’S JOHN CHENG THERE. THE OUTPERFORMER IS LIKELY TO BE SOME OF THESE SEMICONDUCTOR NAMES OUT OF THE KOREAN MARKET IN PARTICULAR. SAMSUNG, S.K. HYNIX. THIS IS WHERE WE LAST TRADED AT THE CLOSE. IT’LL BE THOSE TECH STOCKS GETTING THE BENEFIT, THE UPLIFT IF THE BROADER RALLY FROM OVERNIGHT. THE PHILLY SEMICONDUCTOR INDEX UP BY 1.3%. BEYOND TECH, ASIAN STOCKS LOOK LIKE THEY’LL HAVE TO CONTENT WITH SUSTAINED HIGHER PRICING WHEN IT COMES TO BRENT CRUDE PRICES. BRENT NEARING $100 A BARREL AS WE CONTINUE TO DEE SY DISRUPTIONS TO ENERGY FLOWS, INCREASINGLY A PROLONGED PERIOD OF CHALLENGE FOR THE MARKETS WITH NO RESOLUTION IN SIGHT WHEN IT COMES TO THE U.S.-IRAP WAR. NOW SPREADING THROUGH TO SOME OF THE REGIONAL PROXIES AGAIN AS WELL. THE U.S. SAYING IT DESTROYED IRANIAN TANKERS AFTER THE U.S. NAVY SHIP HAD BEEN TARGETED AS WELL SYSTEM OF RATCHETING UP IN TERMS OF THOSE PRESSURES. THE MARKET OPENS IN SYDNEY, SEOUL AND TOKYO ARE NEXT. THIS IS BLOOMBERG. ♪ AVRIL: THIS IS THE ASIA TRADE, WE’RE COUNTING DOWN TO MAJOR MARKET OPENS. IT’LL BE AN INTEREST DIG. BOTH JAPAN AND KOREA CLOSING INTIVE, WHETHER THE TECH MOMENTUM CAN CONTINUE IS A KEY QUESTION FOR INVESTORS TODAY. HAIDI: CERTAINLY AN UPLIFT IF THE PHILADELPHIA SEMICONDUCTORS INDEX PUTTING ON 1%, SO WE SHOULD SEE A.I. AND SEMICONDUCTOR STOCKS DOING WELL TODAY. BEYOND TECH WE ARE GOING TO SEE THAT STRUGGLE FOR THE BROADER MARKETS AS THE DRAG ON ENERGY FLOWS, DISRUPTION THROUGH THE STRAIT OF HORMUZ AND INCREASED HOSTILITIES WILL CAN’T TO PLAY REALLY A KEY ROLE IN CHALLENGING INVESTOR SENTIMENT. THAT’S BEFORE WE EVEN GET TO SOME OF THE UNCERTAINTY OVER THE YEN AND TREASURIES. AVRIL: AND GIVEN HOW WE ARE WATCHING OUT FOR THE TREASURY DEPARTMENT’S BUYBACK PLAN DETAIL, THAT’S SOMETHING ELSE THAT COULD KEEP INVESTORS ON EDGE AS WELL, THAT WE HAVE INFLATION DATA OUT OF THE U.S. TOWARD THE END OF THE WEEK. ALL THIS WILL COME AHEAD OF THE FED AND THE B.O.J. DECISION NEXT WEEK. FOR THE MOMENT THOUGH IN THE EARLY GOINGS, YOU’RE SEEING THAT CONTINUED PRESSURE BOTH IN JAPAN AND AS WE WATCH FOR HOW SOUTH KOREA FARES IN THE EARLY GOINGS THERE IS ALSO THAT NOT VERY INSPIRING LEAD THAT WE GOT OUT OF WALL STREET FOLLOWING ON FROM THEM COMING BACK IF A LONG WEEKEND. EVEN THOUGH THERE WERE POCKETS OF STRENGTH WHEN IT CAM TO TECH. WE ARE WATCHING TO SEE HOW THE CHIPMAKERS FARE IN THE REGION AFTER GETTING A BIT OF THAT MOMENTUM SAPPED OUT TOWARD THE END OF THE TRADING DAY. WE’RE SEEING THE KOSPI STARTING THE DAY ON THE FRONT FOOT. ALSO WATCHING WHAT THE JAPANESE YIELDS ARE DOING OF COURSE, YESTERDAY WAS ALSO ABOUT HOW EVEN THE BELLY OF THE CURVE DIDN’T SEE -- SEEM TERRIBLY -- DIDN’T SEE TERRIBLY STRONG DEMAND, IT WAS QUITE WEAK INDEED. WE ARE BACK AT THE K.B. FINANCIAL CROUP KOREA CONFERENCE AND THIS TIME LOOKING AT MARKETS AND BUSINESS ENVIRONMENT AMID GEOPOLITICAL VOLATILITY. OUR CHIEF NORTH ASIA CORRESPONDENT STEVE ENGEL IS STAND BY AT THE EVENT WITH OUR NEXT GUEST. STEVE? STEPHEN: THANKS SO MUCH, AVRIL. SO MUCH TO TALK ABOUT. SQUEEZE IT INTO EIGHT MINUTE HERE’S WITH LOUIE GOVE WITH A HONG KONG BASED FINANCIAL SERVICES COMPANY. LET’S START WITH RISING BOND YIELDS ACROSS THE WORLD, WHETHER IT’S THE U.K., U.S., JAPAN, GERMANY, ALL AT THE SAME TIME. IT’S A CRITICAL JUNCTURE RIGHT NOW. HOW DO YOU SEE THIS PLAYING OUT? WHAT DOES IT REPRESENT? >> NOT CHINA. NOT RISING BOND YIELDS IN CHINA. STEPHEN: I LEFT CHINA OUT. >> RISING BOND YIELDS. FIRST, THANKS FOR HAVING ME. I THINK IT CORRESPONDS TO SIMPLE MACROREALITY. WE LIVE IN A WORLD WHERE GOFFS ARE FOLLOWING SIMPLE BUDGET POLICY. U.S. WILL BE AT 7% G.D.P. FAIRLY EASY MONETARY POLICY, RISING PROTECTIONISM AND THEN WARS. ONE OF MY FAVORITE SAYINGS IS THAT IF TRUTH IS THE FIRST CASUALTY OF WAR, BONDS ARE USUALLY A CLOSE SECOND. WARS ARE FUNDAMENTALLY INFLATIONARY. ANY ONE OF THESE FACTORS WOULD BE BEARISH BONDS YOU PUT THEM ALL FOUR TOGETHER AND YOU HAVE WHAT WE HAVE. BOND YIELDS RISING EVERY DAY. UNTIL ONE OF THESE THINGS CHANGES IT’S HARD TO GET THAT FIRED UP ABOUT BONDS. STEPHEN: WHICH ONE CHANGES FIRST? WE’RE IN TWO FOREVER WARS, SOME WOULD YES DESCRIBE IT, IN UKRAINE AND IRAN. THEN THERE’S RENEWED INFLATIONARY CONCERN THAT WE’RE GETTING FROM THE PRICE OF PRESENT UP TO 100 BUCKS OR THEREABOUTS. LOUIS: I WOULD HOPE THE ONE THAT CHANGES IS PROTECTIONISM ACTUALLY. AS BOND YIELDS RISE, THE PRESSURE ON GOVERNMENTS TO DO SOMETHING ABOUT RISING PRICES WILL GO UP. AND I THINK YOU SAW LATE BIT OF THAT. SAW THAT TRUMP TURNED AROUND AND SAID WE’LL BRING IN WHATEVER IT WAS, TURN DOWN SOME ARGENTINE BEEF. SO I THINK THAT MAYBE THE FIRST THING THAT GOES IS THE INHERENT PROTECTIONISM THAT’S BEEN A KEY DRIVER OF OUR WORLD REALLY SINCE COVID. STEPHEN: YOU NOTICE THE BORDER WAR BETWEEN THE YATES AND CANADA. LOUIS: I SAID THAT WITH A VERY LOW LEVEL OF CONVICTION. I THINK THAT’S WHY THE PATH OF LEAST RESISTANCE IS BOND YIELDS GOING UP. STEPHEN: WHAT DOES IT MEAN FOR THE AMPLE I. TRADE, WHETHER THERE COULD BE A TRADE OOTHER RISKY EQUITIES OR EMERGING MARK HOURS, DO YOU SEE THAT? LOUIS: I THINK THE AMPLE I. TRADE IS ONE OF THE CONTRIBUTORS TO THE RISING BOND YIELDS, TO BE HONEST. IF YOU LOOK AT THIS YEAR, ONE OF THE BIG SURPRISES HAS BEEN THE CAPITAL INTENSITY OF THE A.I. BOOM THAT WE’RE GOING TO. IT’S VERY DIFFERENT FROM PREVIOUS TECH BOOMS THAT WERE NOWHERE NEAR AS CAPITAL INTENSIVE. SO YOU KNOW, WHEN YOU HAVE THIS YEAR, THE DEBT NEEDED BY THE BIG HYPERSCALERS, THEIR DEBT NEEDS TO FUND THE CAPITAL SPENDING BOOM IS ROUGHLY EQUIVALENT TO 70% OF THE U.S. BUDGET DEFICIT. NOBODY HAD THAT IN THEIR NUMBERS TWO YEARS AGO. SO ALL OF A SUDDEN IT’S LIKE WE’VE ADDED ANOTHER U.S. BUDGET DEFICIT INTO THE BALANCE WHERE, YOU KNOW, THAT’S MORE DEMAND FOR CAPITAL. EVERYBODY IS COMPETING FOR CAPITAL. PRICE OF CAPITAL GOES UP. STEPHEN: HOW ARE YOU POSITIONING YOUR PORTFOLIOS, I KNOW YOU HAVE 60-20-20, SO 60% EQUITIES, 20% CASH OR SHORT-TERM INVESTMENTS AND THEN CRITICAL MINERALS GOLD OR COPPER AT A RECORD HIGH RIGHT NOW. YOU LIKE COP HER SILVER, PLATINUM BETTER THAN GOLD? LOUIS: ABSOLUTELY. I THINK THE STARTING POINT WE HAVE TO ACKNOWLEDGE IS THAT THE OLD 60-40 OF YESTERYEAR IS FINISHED. IT DOESN’T WORK. BONDS ARE NO LONGER DIVERSIFYING EQUITY RISK. YOU’VE SEEN THIS. YOU SAW IT IN COVID. YOU SAW WHEN THE UKRAINE WAR HAPPEN. SAW IT WHEN HORMUZ HAPPEN. EQUITIES FALL. BONDS INSTEAD OF PROVIDING YOU LOWER VOLATILITY AND NEGATIVE CORRELATION ALSO FALL. SO THEY NO LONGER DO THE JOB THAT THEY DID FOR PORTFOLIOS FOR 30 YEARS. INTERESTINGLY WHAT DOES DO THE JOB NOW IS ENERGY STOCKS. FEW PEOPLE REALIZE THIS, BECAUSE WE TALK ABOUT TECH ALL DAY. BUT IF YOU LOOK AT THE PAST FIVE YEAR, THE S&P ENERGY HAS OUTPERFORMED THE S&P TECH INDEX. THE S&P OVER THE PAST FIVE YEARS THE BEST PERFORMING SECTOR IN THE U.S. WHAT’S FASCINATING IS IT’S 3.5% OF THE S&P 500. NOBODY CARES. ALL WE TALK ABOUT IS TECH WHICH IS 40% OF THE S&P 500. YOU WOULD THINK WITH ENERGY HAVING THE BEST PERFORMANCE OVER THE LAST FIVE YEARS AND A NEGATIVE CORRELATION TO THES REOF THE MARKET EVERYBODY ONE LIKE, ENERGY IS AWESOME, LOAD ME UP WITH ENERGY. BUT NOBODY IS DOING THAT. LOOK, BEFORE YOU WERE 60-40, 60 EQUITY, 40 BONDS. NOW YOU NEED 60 EQUITY, 0% ENERGY AND 0% METALS. THE INFRASTRUCTURE SPENDING BOOM THAT WE ARE IN THE MIDDLE OF, WHETHER FOR A.I. WHETHER TO RENEW OUR ELECTRICITY GRIDS, WHETHER TO RENEW OUR WEAPONS STOCKPILES THAT ARE BEING MASSIVE DILI DEPLETED BY THESE TWO CONFLICT, THE DEMAND FOR ALL SORTS OF METALS, STARTING WITH RARE EARTHS OF COURSE, WHICH ARE OBVIOUSLY IN THE HEADLINE AND WILL CONTINUE TO BE. BUT COPPER, TIN, GOLD, PLATINUM, ALL THESE THINGS WILL CONTINUE. STEPHEN: WE’RE IN SOUTH KOREA. LET’S TALK ABOUT THE KOREA MARKET. YOU TALKED ABOUT 40% TECH ON THE S&P. THERE’S TWO COMPANIES REALLY THAT’S DRIVEN THE A.I. BOOM HERE. SAMSUNG ELECTRONICS AN S.K. HYNIX. THERE WAS SOME FOREIGN PULLOUTS WHEN THERE WAS THIS LEVERAGED E.T.F. BLIP, I GUESS IN MAY OR THEREABOUTS. WHAT’S PREVENTED THE FOREIGNERS FROM COMING BACK EN MASSE TO THOSE TWO PLAYS? TOO CONCENTRATED IN THOSE TWO COMPANIES? LOUIS: THERE’S THE CONCENTRATION. THE CRYA BOOM HAPPENED QUICKLY. A YEAR AND A HALF AGO WHO CARED. IT’S HAPPENED REALLY QUICKLY. I THINK IT HAPPENED AT A TIME WHEN U.S. W.E.C.KITIES ARE DOING WELL. EUROPEAN EQUITIES ARE DOING WELL. IF YOU’RE A FOREIGNER YOU’RE LIKE, OK, GREAT. KOREA HAVING A PARTY. HAVING A GOOD TIME. I’M FINE HERE. SO THERE’S ADDING KOREA RIGHT NOW FEELS LIKE REALLY ADDING PERHAPS VOLATILITY TO YOUR PORTFOLIO. THE RETURNS HAVE BEEN SUPER IMPRESSIVE BUT YOU CAN SEE WHY FOREIGNERS PERHAPS HAVEN’T MASSIVELY RUSHED IN. ONE QUICK WORD ON KOREA BECAUSE IN JULY, I THINK WE SAW SOMETHING I’VE NEVER SEEN IN MY CAREER. WHICH WAS THE BENCH MARC, THE KOSPI WAS DOWN BY A THIRD. KOREAN BANKS WERE UP 5%. NEW IN MY CAREER I’VE NEVER SEEN A BENCHMARK DOWN A THIRD AND THE BANKS UP 5%. SO IT TELLS YOU, I THINK, THAT THE UNDERLYING FUNDAMENTALS OF KOREA, WHEN THE BANKS ACTUALLY DO FINE, TO ME THAT GIVES ME A LOT OF COMFORT. IT GIVE MASSACHUSETTS LOT OF CONFIDENCE. BECAUSE THE BANKS AT THE END OF THE DAY ARE THE PEATING HEART OF YOUR MARKETS. STEPHEN: I ONLY HAVE 90 SECONDS LEFT. WHAT’S YOU VIEW ON CHINA. THEY DON’T HAVE AN INFLATION PROBLEM OR THE HIGH YIELDS, BUT WHERE’S THE SMART MONEY? THE DOMESTIC ECONOMY IS POOR RIGHT NOW. LOUIS: ONE OF THE FAST NATEING THINGS IN CHINA, THIS YEAR’S DATA HAS BEEN POOR. ONE OF THE BIG QUANDARIES EVERYBODY HAS IS WHY ISN’T CHINA STIMULATING? THERE’S NO INFLATION. THEY COULD BE STEPPING ON THE GAS IF THEY WAND. CLEARLY THEY DON’T. I PERSONALLY BELIEVE THAT ONE OF THE REASONS THEY’RE NOT PERHAPS DOING MORE IS THE WHOLE STRAIT OF HORMUZ CRISIS. IF, YOU KNOW, THE PERCEPTION IS THE U.S. IS TRYING TO BOX US IN ENERGETICALLY BY BOMBING RUSH. BY TAKING VENEZUELA, BY TAKING IRAN, IT MAKES SENSE PERHAPS TO NOT STIMULATE UNTIL YOU HAVE A BETTER VISIBILITY OF WHAT THE ENERGY LANDSCAPE IS GOING TO BE. I’LL CONCLUDE ON THIS. IF EITHER WE GET RESOLUTION IN RUSSIA-UKRAINE, OR RESOLUTION IN THE GULF THIS COULD OPEN THE DOOR FOR CHINESE STIMULUS AND ANOTHER LEG UP FROM THE 2024 AND 2025 BULL MARKET. STEPHEN: I DON’T THINK WE’LL GET MORE VISIBILITY WHEN TRUMP AND XI MEET NOT COMING WEEKS. LOUIS: I AGREE. STEPHEN: THANK YOU FOR YOUR TIME. BACK TO YOU GUYS. MORE COVERAGE INCLUDING THAT BIG FIRESIDE CHAT THAT I’M GOING TO BE HOSTING WE THIS FORMER BANK OF KOREA GOVERNMENT RHEE COMING UP IN THE NEXT HALF-HOUR. HAIDI: CAN’T WAIT FOR THAT CONVERSATION. WE HAVE MORE IF THE K.B. FINANCIAL GROUP KOREA CONFERENCE COMING UP. WE’LL HEAR FROM JEFFRIES GLOBAL HEAD OF EQUITY SUPPORT. AND WE’LL BE HEARING EXCLUSIVELY IF THE FORMER BANK OF KOREA GOVERNOR WHO WILL BE JOINING STEVE FOR THE FIRESIDE CONVERSATION ALL ABOUT SOUTH KOREA’S ECONOMY, FINANCIAL MARKETS, IMPACT OF A.I., JUST A FEW MINUTES’ TIME. BUT FIRST, WE’VE SEEN THE U.S. DESTROYING FIVE IRANIAN TANKERS AFTER A NAVY WARSHIP WAS TARGETED. WE HAVE THE LATEST WHEN IT COMES TO THIS ESCALATING MIDDLE EAST CONFLICT NEXT. THIS IS BLOOMBERG. ♪ HAIDI: LET’S TAKE A LOOK AT HOW JAPAN ASSETS ARE FARING AFTER THE SOFTNESS A DAY AGO WHEN IT CAME TO STOCKS. YOU’RE LOOKING AT FLATNESS ON THE BENCHMARK. YIELDS HAVE BEEN IN FOCUS. YOU’RE TRENDING LOWER ON THE 10-YEAR, NUDGING EVEN FURTHER BELOW THE 29 HANDLE THE JAPANESE CURRENCY HAS BEEN FRONT AND CENTER, GETTING AN ASSIST AS WELL FROM SECRETARY TREASURY SCOTT BESSENT TALKING ABOUT HOW HE IS THE HOUSE, HE MAYBE HAS MORE INSIGHTS THAN ANYBODY ELSE ON THE B.O.J. POLICYMAKERS, THEIR THINKING THE MANEUVERING. THAT QUOTE ON THE RIGHT OF YOUR SCREEN IS THE VERBATIM OF WHAT HE SAID ON HOW JAPANESE POLICYMAKERS ARE PART OF THAT CONVERSATION AS WELL. FOR MORE ON THE YEN LET’S BRING IN BLOOMBERG STRATEGIST MARK CRANFIELD. IT’S BEEN QUITE A FEW WEEKS IN TERMS OF THE SHIFT IN THE JAPANESE CURRENCY IN TERMS OF HOW VIEWERS ARE VIEWING IT. THEN HEARING COMMENTS LIKE THAT FROM BESSENT WHAT DO YOU MAKE OF THAT? MARK: GENERALLY SPEAKING WHEN MAJOR POLICYMAKERS STICK THEIR NECK OUT WITH THOSE KINDS OF THINGS THEY LIVE TO REGRET IT. DOESN’T ALWAYS HAPPEN IMMEDIATELY, BUT NOT USUALLY A WISE THING TO TAKE ON MARKETS IN THAT WAY. OF COURSE THE YEN SITUATION HAS BEEN A BIT OF GOOD FORTUNE IN SOME RESPECTS. THE INTERVENTION WAS QUICKLY FOLLOWED UP BY COMPRESSION IN INTEREST RATE SPREADS. JAPANESE YIELDS GETTING TO THE POINT WHERE IT FORCED MORE SHORT POSITIONING SQUEEZED OUT OF THE MARKET. SO THAT WAS HELPFUL. NARRATIVE CHANGING A LITTLE BIT TOWARD THE U.S. DOLLAR IN GENERAL. SO A LITTLE WEAKER THERE. HELPING THE YEN STRENGTH AND BIT. CROSSES IN PARTICULAR THE DETERIORATION, PARTICULARLY THE EURO AND THUSWISE FRANK RELATIVE TO THE YEN THAT REALLY HELPED PLAY A PART IN WHAT WE’RE SEEING PLAY OUT IN DOLLAR-YEN AND MORE RECENTLY THE CANADIAN-YEN SPREAD. ALL THIS FEEDING BACK HEAVY TO DOLLAR-YEN AS WELL. AND GPIF MAY BE BRINGING MORE MONEY BACK HOME AS WELL. THE YEN NARRATIVE HAS BEEN IMPROVING ANYWAY IN ADDITION TO SOME OF THE THINGS THAT SCOTT BESSENT HAS SAID. BUT HE MIGHT HAVE A BIT MORE WORK TO DO ON THE TREASURY MARKET. WE’LL HEAR ABOUT THAT LATER TODAY, I THINK. AVRIL: ON THAT, HOW MUCH WOULD HE HAVE TO COME THROUGH WITH THE EXPANSION OF THE BUYBACK PLAN FOR THE MARKET CONCERNS TO BE EASED. I MEAN, HE’S BEEN PRETTY TIGHT LIPPED ON THE EXACT AMOUNT SO FAR. MARK: SPECULATION IN THE MARKET IS BUYBACK WILL BE BETWEEN $4 BILLION AND $10 BILLION U.S. DOLLARS. THAT’S A PRETTY WIDE RANGE, PLENTY OF ROOM FOR MANEUVER IN THAT. ROOM FOR DISAPPOINTMENT IF IT DOESN’T COME NEAR THE TOP OF THE RANGE. YIELDS HAVEN’T MOVED AROUND TOO MUCH OVERNIGHT. YOU CAN SEE THAT PEOPLE ARE ANTICIPATING THIS 10-YEAR AUCTION TONIGHT IN ADDITION TO THE BUYBACK AT THE SAME TIME. THEY GET DISAPPOINTED WITH THE SCALE OF THE BUYBACK THAT MAY AFFECT HOW THE AUCTION PLAYS OUT. THERE’S A 30-YEAR AUCTION COMING UP TOMORROW AS WELL. TRICKY WEEK FOR TREASURY TRADERS. IN THE BACKGROUND, THERE DOESN’T APPEAR TO BE MUCH GOING ON TO CONVINCE PEOPLE THAT THE U.S. IS GETTING A HAND ON ITS DEFICITS. IN FACT, THE -- BESSENT WAS TALKING LAST NIGHT ABOUT RUSHING THROUGH THE SPENDING PACKAGES IN CASE THE DEMOCRATS TAKE MORE CONTROL PARTICULARLY AS WELL. ALL IN ALL, FIXED INCOME TRADERS WON’T BE TAKING THIS EASY AT ALL. WOULDN’T BE TOO SURPRISED IF IN A WEEK’S TIME YIELDS ARE HIGHER IN THE UNITED STATES. AVRIL: ESPECIALLY AGAINST THE BACKDROP OF EL VOITED OIL PRICES. WHAT ARE THE RISKS HERE? MARK: PRETTY HIGH. IT WAS NOT ON PEOPLE’S TEMPLATE TO HAVE OIL BACK AT $100. I THINK PEOPLE GOT USED TO TO THE IDEA THAT YOU’D SETTLE BETWEEN $80 AND $90. GOT USED TO TO THAT RANGE THEY HAVE ESCALATION OF CONFLICTS AGAIN IS SOMETHING THAT PEOPLE WERE HOPING WAS ALREADY DONE. IT WAS IN THE BACKGROUND. IT’S NOT. IT’S COMING BACK FRONT AND CENTER. WE’LL HAVE MORE SUPPLY SHOCKS. THE WHOLE COMMODITY COMPLEX IS GOING THROUGH ANOTHER SUPER CYCLE. WEATHER IMPACT WITH THE SUPER EL NINO AS WELL. NOT GOING TO GET ANY EASIER. WHAT’S HAPPENING IN THE MIDDLE EAST IS MAKING IT WORSE AS WELL. ALL THAT HAS TO BE PRICED INTO MARKS. IT’S GOING TO KEEP INFLATION EXPECTATIONS HIGHER FOR LONGER THAT. ALL FEEDS BACK INTO THE LONG END OF THE TREASURY AND OTHER BOND CURVES AS WELL. HAIDI: OUR BLOOMBERG M LIFE ANALYST MARK CRANFIELD. U.S. FORCES HAVE DESTROYED FIVE IRANIAN TANKERS AFTER TWO ATTEMPTS TO HIT A NAVY WARSHIP WITH BALLISTIC MISSILES IN AS MANY DAYS. ACCORDING TO THE U.S. CENTRAL COMMAND, MOST TANKERS WERE HIT IN THE GULF OF OMAN. LET’S BRING UP BLOOMBERG EDITOR MIKE MICHEL HEATH. THIS UNDERSCORES HOW DIFFICULT IT IS TO KIND OF MAINTAIN JUST AN ECONOMIC PRESSURE CAMPAIGN. THIS KIND OF MILITARY OPERATIVE RESTART KEEPS COMING BACK. MICHAEL: IT LOOKS LIKE THE U.S. WANTED TO SHIFT TO AN ECONOMIC CAMPAIGN TO KEEP IT AT A LOW LEVEL. THE US HAM I THINK REVOLUTION THEIR GUARD CORPS HAS OTHER IDEAS. THEY SEEM DETERMINED TO KEEP UP THE MILITARY PRESSURE AND FORCE THE U.S. TO RESPOND AS. WE IT ALSO SORT OF RAISES QUESTION MARKS OVER SOME OF THE COMMENTS BY U.S. OFFICIALS THAT IRAN HAS NO MORE HARDWARE AND IT’S -- ITS MILITARY IS BASICALLY DESTROYED BECAUSE THEY JUST -- THEY SAY THEY LAUNCHED BALLISTIC MISSILES AT A U.S. BASE IN JORDAN. THEY’VE ORDERED CREWS TO ABANDON SHIP OFF THE COAST OF KUWAIT AND BAHRAIN. IT DOES SUGGEST THEY’VE STILL GOT THE ASSETS TO KEEP DOING THIS. AND YOU KNOW, THEN THERE’S POTENTIAL EVEN OF CONTAGION THERE AS WELL. AS THEY WERE SAYING, THE PLAY THAT PEOPLE THOUGHT IT WAS GOING TO BE DOESN’T SEEM TO BE COMING TO PASS. HAIDI: TENSIONS CONTINUE IN ISRAEL BETWEEN THE I.D.F. AND HEZBOLLAH AND WE’RE SEE RIC NATION OF ISSUES IN SOUTHEAST ASIA AS WELL. IT’S BACK IN ACTION. MICHAEL: DEFINITELY. YOU’VE GOT HOUTHIS FIRING ON THE RED SEA, ANOTHER WAY OF GETTING OIL OUT. AND THEY ARE ARMED, SEEM TO HAVE HIT SAUDI ARABIA FACILITIES SEVERAL TIMES AND WILL CONTINUE TO DO SO. IT RAISES THE SPECTER OF ONGOING PROBLEMS WITH ENERGY SPRIES AND IT’S HARD TO SEE HOW IT ENDS. WE WERE TALKING EARLIER ABOUT OMAN AND IRAN, YOU KNOW, COMING TO SOME SORT OF AGREEMENT WITH THE STRAIT OF HORMUZ. BUT WHETHER THAT’S REALISTIC WHETHER THAT SOLVING ANYTHING, I THINK IS AN OPEN QUESTION. HAIDI: BLOOMBERG EDITOR MICHAEL HEATH AS WE CONTINUE TO WATCH THE IMPACT ON OIL PRICES. WE HAVE MORE AHEAD ON "THE ASIA TRADE." THIS IS BLOOMBERG. >> I DON’T BELIEVE IN ESCALATING THE CONFLICT. THAT’S NOT CONSTRUCTIVE. BUT OUR TARIFFS ARE NECESSARY TO PROTECT OUR WORKERS, PROTECT OUR COMPANIES, AND OUR COMMUNITIES. WE CAN’T LET AMERICAN GOODS INTO CANADA TARIFF-FREE WHILE THEY CHARGE OUR COMPANIES TO EXPORT THEM. HAIDI: CANADIAN PRIME MINISTER MARK CARNEY SPEAKING AFTER OTTAWA IMPOSED TARIFFS ON THE U.S. AMERICAN DUTIES ON CANADIAN GOODS TOOK EFFECT LAST MONTH. THE U.S. IS LOOKING TO BAN SOME CANADIAN DAIRY AND AUTOS. PRESIDENT TRUMP SAID HE’D CUT CANADIAN PRODUCTS OUT OF U.S. GOVERNMENT CONTRACTS. TENSIONS BETWEEN THE TWO NEIGHBORED SPIKED BUT THE E.U. AND CANADA ARE SAID TO BE WORK A NEW AGREEMENT THAT RANGES FROM TRADE TO SECURITY. THE EUROPEAN COMMISSION PRESIDENT IS EXPECTED TO ANNOUNCE A PLAN NEXT WEEK IN FRANCE. CANADA’S RETALIATORY TARIFFS ON THE U.S. ARE IN FORCE, ADDING A NEW LAYER OF PRESSURE TO AN ALREADY-STRAINED RELATIONSHIP. FORMER TRADE REPRESENTATIVE SUSAN SCHWAB SAID THE TWO COUNTRIES HAVE COMMON INTERESTS. THE SAID THOSE SHARED PRIORITIES CAN HELP MOVE THE COUNTRIES MOVE BEYOND THE CURRENT TRADE TENSIONS. SUSAN: I’M DISTRESSED BY IT. I THINK THE RELATIONSHIP BETWEEN THE U.S. AND CANADA IS ONE OF THE MOST IMPORTANT THAT WE HAVE. THE GOOD NEWS IS I THINK IT WILL CONTINUE TO BE ONE OF THE MOST IMPORTANT THAT WE HAVE, HICCUPS NOT WITHSTANDING. EDGE WE’RE IN FAR ROCKY TIME OVER THE NEXT SEVERAL MONTHS. MAYBE THE NEXT COUPLE OF YEARS. SPEAKING AS A VETERAN NEGOTIATOR WITH THE CANADIANS ON ISSUES LIKE SOFTWOOD LUMBER, LIKE MARKET ACCESS IN THE DIGITAL SPACE, THE CANADIANS ARE VERY HARD TO NEGOTIATE WITH. SO I KNOW WHAT MY SUCCESSOR IS GOING THROUGH. BORDER STATES AND BORDER PROVINCES NEED EACH OTHER. AND IF YOU TALK TO THE U.S. UNIONS ON OUR SIDE OF THE BORDER, THEIR BRETHREN NORTH OF THE BORDER WORK TOGETHER AND ARE VERY CLOSE AND NEED EACH OTHER AND VALUE EACH OTHER. SO THE POLITICS AREN’T AS CLEAN OR AS SIMPLE AS ONE WOULD AUTOMATICALLY ASSUME. ULTIMATELY THERE’S SO MANY THINGS THAT WE HAVE, SO MANY INTERESTS WE HAVE IN COMMON THAT WILL NOT GO AWAY. ONE GEOGRAPHY. TWO, EXTERNAL COMPETITIVE FORCES. YOU KNOW, CANADA MAY WANT TO DO MORE BUSINESS WITH CHINA BUT THE FACT OF THE MATTER IS CHINESE BUSINESS WILL WIPE OUT, YOU KNOW, MANUFACTURING NORTH OF THE BORDER WHETHER THEY LIKE IT OR NOT UNLESS THEY ARE PART OF THE NORTH AMERICAN FORTRESS OR FORTRESS NORTH AMERICA THAT PRIME MINISTER CARNEY TALKED ABOUT. RARE EARTHS MAGNETS, MINERALS, CANADA HAS LOTS OF THEM. AND AGAIN, THERE’S AN AREA WHERE WE COULD BE WORKING TOGETHER ON THAT. STEPHEN: IT’S AN INTERESTING POINT YOU MAKE ABOUT CANADA POSSIBLY COZYING UP TO CHINA. I WAS IN CHINA WHEN MARK CARNEY WENT TO BEIJING AND HE WAS VERY DELIBERATE IN HIS VERBIAGE. NEW WORLD ORDER. HE KNEW HE WAS PLAYING THAT BEFORE THE CAMERAS BUT HE EMPHASIZED THAT. DO YOU THINK IT’S A NEW ORDER? THAT’S DIFFERENT FROM THE DAYS OF YOU OR THE USTR? SUSAN: I THINK IT’S A NEW WORLD ORDER BUT PERHAPS NOT WHAT YOU’RE IMPLYING. STEPHEN: HOW SYSTEM OF SUSAN: IF YOU TAKE A LOOK AT CHINA’S CONTRIBUTION TO GLOBAL ECONOMIC GROWTH VERSUS THE U.S. CONTRIBUTION TO GLOBAL ECONOMIC GROWTH CHINA’S CONTRIBUTION IS NEGATIVE. THE U.S. CONTRIBUTION CONTINUES TO BE POSITIVE. VERY ITIVE. BY PULLING IN IMPORTS IF THE WORLD, CHINA, BY FLOODING THE WORLD WITH EXPORTS BECAUSE OF, YOU KNOW, NONMARKET ECONOMY POLICIES, AND OVERPRODUCTION, AND OVERCAPACITY, AND DUMPING AT NONECONOMIC PRICES, THAT’S UNDERMINING MANUFACTURING THROUGHOUT THE WORLD. NOW, I AM NOT A GREAT FAN OF ASPECTS OF OUR ADMINISTRATION’S TRADE POLICY. I WILL SAY THE TARIFFS WOKE UP THE REST OF THE WORLD TO THAT OVERCAPACITY BECAUSE IT HAS BEEN LOOKING FOR OTHER POLICES TO GO. AND IT’S SHOWING UP ON OTHER SHORES. AND THAT’S GOING TO HAVE AN IMPACT ON CANADA AS WELL AS EVERYBODY ELSE. HAIDI: THAT WAS SUSAN SCHWAB FORMER U.S. TRADE REPRESENTATIVE. MORE AHEAD ON "THE ASIA TRADE," THIS IS BLOOMBERG. ♪ HAIDI: LET'S GET YOU BACK TO SOEUL. >> -- MEMBERS HAD A MEETING ON THAT DAY. IT'S A DIFFICULT PERIOD. WE TRIED REALLY HARD TO KEEP THE ECONOMY STABLE AND KEEP INVESTOR CONFIDENCE. FOR MY PART ON THE DAY OF THIS DECLARATION, I GAVE AN INTERVIEW WITH BLOOMBERG TO KEEP INVESTOR CONFIDENCE AND AFTER THE INTERVIEW, MANY PEOPLE SAID IT DID A LOT TO EASE INVESTOR CONCERN AND FOR THAT I'M VERY GRATEFUL TO BLOOMBERG TO PROVIDE THAT OPPORTUNITY. STEPHEN: TAKE US BACK TO THAT TIME, IT WAS A POLICY YOU CAME UP WITH ON, UNLIMITED LIQUIDITY, BUT YOU DON'T WANT TO DO TOO MUCH TO SPOOK AND SEND THE SIGNAL WE ARE PANICKING. >> HE DIDN'T REALLY NEED VOLATILITY TO COVER THE MARKET. THE REAL CONCERN IS INVESTORS THINKING AFTER THIS FAILED ATTEMPT AT MARTIAL LAW, THE QUESTION OF IMPEACHING THE PRESIDENT CAME UP. AND DURING THE IMPEACHMENT PROCESS, IT WOULD MAKE THE ECONOMY VERY UNSTABLE. IN THE INTERVIEW WITH BLOOMBERG I EMPHASIZED KOREA HAD PREVIOUS EXPERIENCE OF PRESIDENTIAL IMPEACHMENT AND IT USUALLY TOOK SIX MONTHS TO RULE AND IN BETWEEN, KOREAN POLITICS AND POLICY WAS KEPT SEPARATE. THERE WAS NOT MUCH DAMAGE TO THE ECONOMY. WE SHOWED THE PREVIOUS EXPERIENCE TO EASE INVESTOR CONCERN AND THAT WORKED. STEPHEN: A POLITICAL EVENT AND NOT A STRUCTURAL ISSUE. >> YES. STEPHEN: ON THE FLIPSIDE OF THE COIN, WHAT YOU ARE MOST PROUD OF , WHAT'S THE ONE THING YOU WISH YOU HAD A BETTER GRASP OF? I PRESUME ITS CURRENCY POLICY. >> THERE ARE MANY. BUT THE EXCHANGE RATE POLICY -- NOT JUST THE POLICY BUT THE COMMUNICATION, THERE ARE A LOT OF THINGS I COULD'VE DONE BETTER. AFTER I TOOK MY OFFICE, THE U.S. FED INCREASED INTEREST RATES VERY AGGRESSIVELY. THE KOREAN WON FELL. AS I MENTIONED, AFTER MARTIAL LAW ANNOUNCEMENT , THE PENSION FUND, THERE WAS A LOT OF OVERSEAS INVESTMENT IN THE U.S. AND THAT DECREASED THE KOREAN WON AS WELL. PEOPLE WERE PANICKING. BEYOND A CERTAIN LEVEL THERE'S CRITICIZING THAT IT WAS A FAILURE AND IT'S HARD TO DEFEND. STEPHEN: WHAT IS YOUR OUTLOOK NOW? THE WON ON MONDAY HIT A TWO YEAR-. BA --A TWO YEAR HIGH. >> FIRST OF ALL, THESE DAYS, KOREA'S FX MOVEMENT IS DRIVEN -- INSTEAD OF TRADE FLOWS. THE INVESTORS TOOK THE MONEY OUT TO REALIZE THEIR GAINS. WHATEVER THE EXCHANGE RATE DEPRECIATES AS A CREDITOR, MANY INVESTORS ALSO GAINED. WE DON'T NEED TO BE PANICKED. I CANNOT SAY THESE THINGS PUBLICLY IN THE OFFICE. IT'S VERY HARD TO COMMUNICATE. I'M OUTSIDE THE OFFICE. STEPHEN: I GIVE YOU FULL PERMISSION TO BE AS TRANSPARENT AS YOU CAN BE. >> PLEASE FORGET ABOUT THE PAST HISTORY. WE DON'T NEED TO PANIC. STEPHEN: YOU TOLD ME YOU ALSO SEE CORRELATIONS TO JAPAN RIGHT NOW WITH THE END, A LOT OF INTERVENTION OR CHATTER OF INTERVENTION BUT ALSO JOINT OPERATIONS WITH THE UNITED STATES WHICH YOU THOUGHT WAS INTERESTING. BUT THEN SCOTT BESSENT SAID NOT TO BET AGAINST THE YEN. WHAT DO YOU MAKE OF THAT? >> I WAS SURPRISED. USUALLY WHEN G7 COUNTRIES INTERVENE IN THE MARKET -- ACTUALLY THIS CASE WAS ALREADY AN EXCEPTION SO I WAS SURPRISED. I SEE THIS QUITE DIFFERENTLY. FIRST INTERVENTION THE MAGNITUDE WAS QUITE BIG AND THE IMPACT WAS LASTING ONLY A WEEK. I CANNOT SAY WHETHER IT IS EFFECTIVE OR NOT. PROBABLY FOR A LARGE COUNTRY LIKE THE U.S. AND JAPAN, THEY HAVE THE ABILITY TO STEER THE FX RATE. FOR OUR CASE AS A SMALL ECONOMY I STRONGLY BELIEVE A POLICYMAKER HAS TO BE HUMBLE. I CAN SMOOTH OUT BUT NOT STEER THE EFFORTS. STEPHEN: THERE ARE SOME FUNDAMENTAL THINGS GOING ON AS WELL. YOU MENTIONED EUROPE WAS NOT CONSULTED, HOW SURPRISED WERE YOU ON THAT AND WHAT DOES THAT INDICATE TO YOU ABOUT THE PRIORITIES IN THE TRUMP ADMINISTRATION? >> IT'S VERY IMPORTANT FOR COOPERATION. A COUNTRY CANNOT HANDLE THIS ALONE. STEPHEN: YOU MENTIONED AS WELL THE SUPER CYCLE AND CHIPS. IT'S AN INTERESTING TIME, YOU CALL IT A BLESSING. THERE'S ALSO RISKS TO THAT. IS IT A BLESSING OR CURSE. >> IT'S A BLESSING. BUT THERE ARE TWO PROBLEMS IN MY OPINION. THE SEMICONDUCTOR INDUSTRY DOESN'T CREATE THAT MANY JOBS. THE SECOND PROBLEM IS THE CURRENT SUPER CYCLE AND BENEFIT -- BUT ALSO PARTIALLY THE WINDFALL OF THE U.S.-CHINA CONFLICT. [INDISCERNIBLE] IT REALLY SLOWED DOWN THE CATCH UP. IF THE CHINESE PRODUCERS -- RAPID PROCUREMENT. NOW CHIPMAKERS ARE FILING UP HUGE CASH. MANY PRODUCERS HAD ALLOWED CASH. IF THEY USED IT FOR INVESTMENT, THE CATCH UP CAN BE QUITE FAST. THE LANDSCAPE OF THE SEMICONDUCTOR INDUSTRY IN THE FUTURE MAY BE DIFFERENT. STEPHEN: ONE AREA I ASSUME YOU WOULD NOT BE ABLE TO TALK AT LIBERTY, WHEN YOU WERE THE BANK OF KOREA GOVERNOR, THE CONCEPT, WHICH IS STARTING TO GAIN GROUND AS WELL WITH TSMC AND TAIWAN, BUT CAREER WITH THE LABOR UNIONS AND DISTRIBUTION OF THE WEALTH EFFECT. AND HOW POTENTIALLY DESTABILIZING IT CAN BE. OR IS IT SOMETHING THAT SAMSUNGS AND SK HYNIXS SHOULD THINK ABOUT PAYING WEALTH DIVIDENDS? >> I THINK THE CASE OF SAMSUNG AND SK HYNIX IS DIFFERENT. HYNIX, THE LABOR UNION HAS AGREED TO THE SCHEMA. THAT'S PERFECTLY FINE. THE RULES FOR DISTRIBUTION IS FINE. THE CASE OF SAMSUNG IS DIFFERENT. -- BELONGS TO THE SHAREHOLDERS. ONE THING YOU HAVE TO AVOID IS IN THIS THE GOVERNMENT SHOULD NOT INTERVENE. IT HAS TO BE LEFT TO THE PRIVATE SECTOR OR THE MAIN PRINCIPLES ARE IN DANGER. STEPHEN: LET'S TALK ABOUT THE MACRO CONDITIONS, RISING BOND YIELDS ACROSS THE WORLD AND AN INTERESTING TIME WHERE BOND YIELDS ARE RISING IN THE UNITED STATES, U.K., GERMANY, THE LIKE. WHAT DOES THAT SIGNAL WE HAVE OTHER BIG STRESSORS IN THE WORLD , INCLUDING TWO WARS THAT DON'T SEEM TO HAVE A CONCLUSION INSIGHT -- IN SIGHT? >> AS AN ECONOMIST, I BELIEVE THE MOST IMPORTANT REASON IS FISCAL. ADVANCED ECONOMIES, WHATEVER THE REASON IS, CREATES AN EXCEPTION. WE HAVE VERY SOUND FISCAL POLICIES. EVEN AFTER THE HIGH INFLATION PERIOD, ADVANCED ECONOMIES INCLUDING THE U.S. AND EUROPE, FISCAL EXPENDITURE CONTINUE TO GROW PARTLY BECAUSE OF WARS. NOW THE AI INVESTMENT IN THE PRIVATE SECTOR THAT ALSO GIVES PRESSURE FOR DIFFERENT SOURCES LIKE THE BOND MARKET. THE GOVERNMENTS SHOW THEY CAN RULE THE FISCAL EXPENDITURES AND I THINK THE HIGHER BOND YIELD WILL COME. STEPHEN: DOES IT INDICATE THERE COULD BE ROTATION OUT OF THE BIG AI NAMES? >> WHAT DO YOU MEAN BY ROTATION? STEPHEN: THE CAPEX SUPER CYCLE, INVESTMENT CYCLE, INTO THE LARGEST NAMES IN AI, PERHAPS AN INDICATION THEY ARE AT RISK. THERE COULD BE A ROTATION TO RISKIER. >> SO FAR, THERE CAN BE LEVERAGES, THEY DO THE IPO AND IT'S A COMBINATION. THE OTHER ISSUE IS WHO WILL BE THE FINAL WINNER. AMONG THE HYPERSCALERS, ONLY A FEW SURVIVE, WILL THEY REDUCE CAPEX EXPENDITURE OR CONTINUE TO NAVIGATE CAPEX EXPENDITURES EVEN THOUGH THERE'S A SMALL NUMBER OF WINNERS. SO FAR WE ARE SAYING EVEN IF THERE ARE ONLY A FEW SURVIVORS IN THE AI COMPETITION, THE DEMAND FOR SEMI CONDUCTORS WILL CONTINUE. THIS IS SOMETHING WE HAVE TO WATCH FOR. STEPHEN: ARE YOU CONCERNED BY THE CIRCULAR NATURE? AVRIL: YOU'RE WATCHING STEPHEN ENGLE ON STAGE WITH THE FORMER BOK GOVERNOR, IT WAS INTERESTING WHAT HE WAS SAYING ABOUT IMPROVEMENT. THE KOREAN WON HAS BEEN RECOUPING A LOT OF LOST GROUND SINCE JULY. ALSO SPOKE ABOUT HOW HE OVERSAW IN HIS TIME STRUCTURAL SHIFTS THAT INFLUENCED THE KOREAN WON WHICH INCLUDES IT BEING AFFECTED MORE BY FINANCIALS THAN TRADE FLOWS. WE ARE WATCHING TO SEE WHAT THE TECH SECTOR OUTLOOK LOOKS LIKE WITH PART OF THE CONVERSATION WITH STEVE ON STAGE WITH THE FORMER BOK GOVERNOR. BLOOMBERG SUBSCRIBERS CAN CONTINUE WATCHING. WE HAVE MORE AHEAD ON THE ASIAN TRADE. THIS IS BLOOMBERG. HAIDI: LET'S LOOK AT WHAT WE ARE WATCHING WHEN IT COMES TO BIG SEMICONDUCTOR NAMES AT THE MOMENT. SAMSUNG ELECTRONICS UP BY 3/10 OF A PERCENT AND WE ARE SEEING SOME UPSIDE AND IT COMES TO SK HYNIX, COMFORTABLY UP BY OVER 1% GOOD -- 1%. WE HAD A PRETTY STRONG HANDOVER FROM WALL STREET OVERNIGHT WITH THE PHILADELPHIA SEMICONDUCTOR INDEX AT 1.3% WE ARE FOLLOWING THE STORY WHEN IT COMES TO ASML, SECURING COMMITMENTS FROM TSMC TO ADOPT ITS NEXT GEN CHIPMAKING TOOLS, THEY AGREED TO A SHIFT IN THE TECHNOLOGY FORMAT. WE ARE SEEING WHAT OUR ANALYST HAVE TO SAY. WHAT DOES IT MEAN FOR THE BROADER SEMI INDUSTRY? >> YES, THIS IS A GOOD MOVEMENT AND ANNOUNCEMENT. THE CHIP INDUSTRY IS KIND OF SMOOTHLY MIGRATING TO THE NEXT GENERATION TECHNOLOGY. ASML, WE PROBABLY HAVE 40 OR 50% HIGHER PRICE. MAY BOOSTING REVENUE AND PROFIT. ALSO IT WAS QUITE AGGRESSIVE. IT SEEMS LIKE TSMC AND SAMSUNG WILL BE INTRODUCING NEW HIGH-END EV TECHNOLOGY. I THINK WE ARE NICELY MIGRATING THE TECHNOLOGY WALL SO THAT SHOULD BE GOOD NEWS. HAIDI: WHAT ABOUT THE TRANSITION TO HIGHER TECHNOLOGY, AND THE SUPPLY CHAIN? >> WHEN IT COMES TO THE HIGH-END TECHNOLOGY, EXPOSURE CAN BE CUT IN HALF. WE HAVE TO DO THE EXPOSURE PROCESS TWICE TO MAKE ONE CHEAP. THAT MEANS WE HAVE TO JOIN THE EXPOSURE AREAS WHICH IS PRETTY DIFFICULT. A PHOTOMASK BLANK SUPPLIER WILL PLAY A KEY ROLE. WHEN IT COMES TO -- IT COULD BE INTRODUCING, IF THAT HAPPENS, ALSO DNP COULD BE THE SUPPLIER. AND THE PHOTOMASK INSPECTION WOULD PLAY A VERY IMPORTANT ROLE TO KEEP THE QUALITY AT A HIGH LEVEL. IN THAT CASE LASER TECH IS A KEY SUPPLIER. WE THINK THIS COULD HAVE AN INTERESTING IMPACT ON THE SECTOR. HAIDI: OUR ANALYST THERE. MORE AHEAD HERE ON "THE ASIA TRADE." THIS IS BLOOMBERG. AVRIL: COUNTING DOWN TO THE OPEN OF CHINESE MARKETS. WE WILL ALSO BE GETTING CPI AND PPI FOR AUGUST, EXPECTED TO SHOW A SLIGHT PICKUP ASIDE FROM THAT, THE MACRO ECONOMIC WEAKNESS HAS ALSO PUT PRESSURE ON CHINESE STOCKS. SEVERAL TECHNICAL INDICATORS INCLUDING STABILIZING MARGIN BORROWING SUGGESTS CHINESE STOCKS MAY BE BOTTOMING OUT AFTER MONTHS OF VOLATILITY. FOR MORE LET'S BRING IN OUR ASIA EQUITIES REPORTER. WHAT IS THE THESIS? . AFTER AN INTENSE SELLOFF, THINGS TURNING A QUARTER, WHAT ARE THE TECHNICAL INDICATORS TELLING US? CHARLOTTE: MANY PEOPLE THINK THE CHINESE STOCK MARKET HASN'T BEEN EXCITING, TURNOVER HAS TURNED DOWN SHARPLY. SHANGHAI COMPOSITE IS BELOW THE ONE YEAR AVERAGE. BUT TWO OBSERVERS AT THAT FOCUS ON HISTORICAL PATTERNS, THEY SAY THESE INDICATORS SUGGEST THAT AND THE LIKELY WAY AHEAD IS UP. IN THE SPRINGTIME, AUSSIE -- OSSE SAW A TURNOVER. THE MARKET REGAINED MOMENTUM. THERE ARE REASONS TO BE HOPEFUL IF YOU FOCUS ON TECHNICAL INDICATORS IN PREVIOUS HISTORICAL PATTERNS. AVRIL: MEANTIME WE ARE WATCHING HOW THE IPO BOOM IN CHINA THIS YEAR HAS HELPED TO CREATE WEALTH FOR INVESTORS AS WELL. WHAT ARE WE SEEING? CHARLOTTE: IPO ALLOCATION HAS USUALLY BEEN A QUICK WAY TO GET MONEY IN CHINA. BUT THIS IS EXCEPTIONAL, SEVEN NEW LISTINGS. YOU COULD EASILY PARK A MONTH OF SALARIES. IF YOU LOOK AT THE TECH FOCUSED IPO'S, THEY'VE AVERAGED MORE THAN 300% RETURNS. IT'S LOOKING LIKE QUICK MONEY FOR RETAIL INVESTORS AND BESIDES THE OUTPERFORMERS, THERE REALLY ISN'T THAT MANY. SOME PRICES ARE PERFORMING, BEING A STOCK PICKER IS HARD. THERE'S ALSO SOME CONSTANTS FOR MONEY MANAGERS WHO SEE A ONE-DAY POP AS A SIGN OF EXUBERANCE. AVRIL: CHARLOTTE, THANK YOU. THAT'S IT FROM THE ASIA TRADE. THE COUNTDOWN TO THE OPEN OF CHINA MARKETS CONTINUES. THE CHINA SHOW IS NEXT. THIS IS BLOOMBERG.