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This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis along with Doug Krisner. Join us each day for the stories making news and moving markets in the Asia Pacific. You can subscribe to the show anywhere you get your podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.

This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis along with Doug Krisner. Join us each day for the stories making news and moving markets in the Asia Pacific. You can subscribe to the show anywhere you get your podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.

Earlier today, shareholders in Tesla voted in favor of CEO Elon Musk's compensation package. They also voted to move the company's state of incorporation to Texas from Delaware. However, the pay vote is only advisory, and it doesn't guarantee Musk will get his package worth right now mark to market at around a forty eight point four billion dollars you know. Back in January, a judge in Delaware nullified that compensation plan. Tesla to be fair is expected to appeal, and if the appeal fails, moving Tesla's legal home to Texas, that would allow the board to revive the pay package in a new state, potentially with more favorable courts. Brian Well.

Earlier today, shareholders in Tesla voted in favor of CEO Elon Musk's compensation package. They also voted to move the company's state of incorporation to Texas from Delaware. However, the pay vote is only advisory, and it doesn't guarantee Musk will get his package worth right now mark to market at around a forty eight point four billion dollars you know. Back in January, a judge in Delaware nullified that compensation plan. Tesla to be fair is expected to appeal, and if the appeal fails, moving Tesla's legal home to Texas, that would allow the board to revive the pay package in a new state, potentially with more favorable courts. Brian Well.

Joining us is Dana Hall, Bloomberg News Senior Technology Report. Her to shed some further light on this. So we don't know the actual margin of the wind, but we didn't have that post on X from Elon Musk saying that they were passing by a wide margin. What have we heard from investors on both sides?

Joining us is Dana Hall, Bloomberg News Senior Technology Report. Her to shed some further light on this. So we don't know the actual margin of the wind, but we didn't have that post on X from Elon Musk saying that they were passing by a wide margin. What have we heard from investors on both sides?

Yeah, so, you know, the voting has been going on for quite a while and you saw Tesla do a very big outreach campaign to retail investors and the big wild card was how are the large shareholders going to vote. We still don't know the margin of victory, but it was obviously pretty big. I mean, Elon Musk was very happy at the shareholder meeting today. When he came on to stage, he did like a little dance and he said, I you know hot, damn, I love you guys, or something like that, and you know, he was in a very expansive mood. I haven't heard much reaction from shareholders so far today. I mean, obviously so some of the larger funds, like the Norwegian Sovereign Wealth Fund and Helpers. You know, they'd put out statements ahead of the vote saying that they were planning to vote against the pay package. But you know, the people that were for it were for it. And this is you know, this is a good outcome from us, and it's a strong outcome for Tesla as they still kind of wrestle with the Delaware decision.

Yeah, so, you know, the voting has been going on for quite a while and you saw Tesla do a very big outreach campaign to retail investors and the big wild card was how are the large shareholders going to vote. We still don't know the margin of victory, but it was obviously pretty big. I mean, Elon Musk was very happy at the shareholder meeting today. When he came on to stage, he did like a little dance and he said, I you know hot, damn, I love you guys, or something like that, and you know, he was in a very expansive mood. I haven't heard much reaction from shareholders so far today. I mean, obviously so some of the larger funds, like the Norwegian Sovereign Wealth Fund and Helpers. You know, they'd put out statements ahead of the vote saying that they were planning to vote against the pay package. But you know, the people that were for it were for it. And this is you know, this is a good outcome from us, and it's a strong outcome for Tesla as they still kind of wrestle with the Delaware decision.

So Dan, as I understand it, Back in twenty eighteen, he worked out a deal with a board making him eligible for these stock options if he was able to get Tesla to hit certain milestones. He was successful in that, but in January, a judge in Delaware nullified the plan. What was the basis for that ruling? Can you remind us?

So Dan, as I understand it, Back in twenty eighteen, he worked out a deal with a board making him eligible for these stock options if he was able to get Tesla to hit certain milestones. He was successful in that, but in January, a judge in Delaware nullified the plan. What was the basis for that ruling? Can you remind us?

Yeah? I mean, so a shareholder sued Musk. The case is called Tornetta versus Musk, and argued that the board was rife with conflicts of interest and that you know, it wasn't really a fair negotiation. I mean that Musk was basically pressuring the board to give him this package, and then there was just a lot of problems with the way that the package was disclosed. And so the judge kind of came out with this two hundred page ruling that really shocked everybody back in January and really infuriated Musk. He immediately talked about, you know, it's time to leave Delaware as our corporate home. And so this shareholder meeting was like a reaction to that, like, we're going to revote on the pay package and move to Texas. And you know, I think that Tesla's hope is that by re ratifying the same pay package from twenty eighteen, that they are answering a lot of the concerns that the judge had. They're saying, look, investors are still for this plan. They fully know what they're getting into. We have a lot more disclosures. Our proxy statement even links to your two hundred page opinion. So it's their effort to kind of answer her concerns.

Yeah? I mean, so a shareholder sued Musk. The case is called Tornetta versus Musk, and argued that the board was rife with conflicts of interest and that you know, it wasn't really a fair negotiation. I mean that Musk was basically pressuring the board to give him this package, and then there was just a lot of problems with the way that the package was disclosed. And so the judge kind of came out with this two hundred page ruling that really shocked everybody back in January and really infuriated Musk. He immediately talked about, you know, it's time to leave Delaware as our corporate home. And so this shareholder meeting was like a reaction to that, like, we're going to revote on the pay package and move to Texas. And you know, I think that Tesla's hope is that by re ratifying the same pay package from twenty eighteen, that they are answering a lot of the concerns that the judge had. They're saying, look, investors are still for this plan. They fully know what they're getting into. We have a lot more disclosures. Our proxy statement even links to your two hundred page opinion. So it's their effort to kind of answer her concerns.

This really is a very interesting stretch from twenty eighteen ton Now. I mean, if you ask a lot of people the narrative on Tesla's stock as well, it's down more than fifty percent. You know, it is up over four hundred dollars at one point. Now it's at one eighty two. But they forget that back in twenty eighteen, when he signed on to this package and it was approved by seventy three percent of the vote, the stock was on a split adjusted basis around twenty four dollars, and now at one eighty two, that's a massive that's a massive move. So this is really kind of like pure capitalism at work, right, Oh yeah.

This really is a very interesting stretch from twenty eighteen ton Now. I mean, if you ask a lot of people the narrative on Tesla's stock as well, it's down more than fifty percent. You know, it is up over four hundred dollars at one point. Now it's at one eighty two. But they forget that back in twenty eighteen, when he signed on to this package and it was approved by seventy three percent of the vote, the stock was on a split adjusted basis around twenty four dollars, and now at one eighty two, that's a massive that's a massive move. So this is really kind of like pure capitalism at work, right, Oh yeah.

One hundred percent. I mean, you know, you can look at the pay package and say, Elon Musk did what the comp plan kind of asked to do. He met these crazy, big, very ambitious, very aggressive targets. He deserves to be paid and you know, not only did he enrich himself, but he enriched lesions of shareholders, both big and small, and that it's crazy enough to reward him for doing that. On the flip side, the intention of the twenty eighteen pay package was to incentivize Musk to stay focused on Tesla, and even though he did meet all the milestones, he then sold his Tesla shares to buy Twitter, which he renamed X and he has started yet another X, yet another company known as X dot Ai. So he's still very interested in many, many, many other things. And so what I'm most curious about is, you know, beyond the legal wrangling around the current paid package, like, at what point does the Tesla board come back and like potentially incentivize him again, Like is he going to get a new pay package going forward?

One hundred percent. I mean, you know, you can look at the pay package and say, Elon Musk did what the comp plan kind of asked to do. He met these crazy, big, very ambitious, very aggressive targets. He deserves to be paid and you know, not only did he enrich himself, but he enriched lesions of shareholders, both big and small, and that it's crazy enough to reward him for doing that. On the flip side, the intention of the twenty eighteen pay package was to incentivize Musk to stay focused on Tesla, and even though he did meet all the milestones, he then sold his Tesla shares to buy Twitter, which he renamed X and he has started yet another X, yet another company known as X dot Ai. So he's still very interested in many, many, many other things. And so what I'm most curious about is, you know, beyond the legal wrangling around the current paid package, like, at what point does the Tesla board come back and like potentially incentivize him again, Like is he going to get a new pay package going forward?

Let's talk about the approval of Musk's move, moving the headquarters from Texas or to Texas, I should say, from Delaware. Is this all about the strategy to try to get the pay package the ruling on the pay package overturned. Where is there something that we have to understand about his thinking and the way he views doing business in Delaware versus Texas.

Let's talk about the approval of Musk's move, moving the headquarters from Texas or to Texas, I should say, from Delaware. Is this all about the strategy to try to get the pay package the ruling on the pay package overturned. Where is there something that we have to understand about his thinking and the way he views doing business in Delaware versus Texas.

Yeah, I mean, so Tesla's corporate headquarters is already in Texas. That move happened in late twenty twenty one, and you know, Musk lives in Texas. A lot of executives are now based there. They have a big workforce there. And I think that, you know, Musk's frustration with Delaware Chancery Court, which kind of came to a head over you know, not just the long trial over his compensation plan, but also a trial over Tesla's acquisition of Solar City. Like he just is done. He would rather be in Texas, which I think has you know, a very much newer you know, I mean, corporate law is not as well established in Texas. But I think that you know, he's Musk is just ready to kind of have everything be in the same state. And yeah, going forward, any litigation that he would face would not be subject to Delaware Chancery court. That's why in the past like twenty four hours, you've seen a lot of lawsuits filed in Delaware court because Tesla could announce that they've successfully, you know, have moved their legal jurisdiction to Texas like any day now. I mean, it could be, it could happen very fast once there's a legal filing.

Yeah, I mean, so Tesla's corporate headquarters is already in Texas. That move happened in late twenty twenty one, and you know, Musk lives in Texas. A lot of executives are now based there. They have a big workforce there. And I think that, you know, Musk's frustration with Delaware Chancery Court, which kind of came to a head over you know, not just the long trial over his compensation plan, but also a trial over Tesla's acquisition of Solar City. Like he just is done. He would rather be in Texas, which I think has you know, a very much newer you know, I mean, corporate law is not as well established in Texas. But I think that you know, he's Musk is just ready to kind of have everything be in the same state. And yeah, going forward, any litigation that he would face would not be subject to Delaware Chancery court. That's why in the past like twenty four hours, you've seen a lot of lawsuits filed in Delaware court because Tesla could announce that they've successfully, you know, have moved their legal jurisdiction to Texas like any day now. I mean, it could be, it could happen very fast once there's a legal filing.

Danna, we had to pop in the stock today. But I'm curious about those who wanted to vote against this and big, huge pension funds like Calsters and CalPERS. Is there any thinking or were there any threats from them that they might you know, divest to a certain degree.

Danna, we had to pop in the stock today. But I'm curious about those who wanted to vote against this and big, huge pension funds like Calsters and CalPERS. Is there any thinking or were there any threats from them that they might you know, divest to a certain degree.

No, I mean that is certainly one avenue. I mean you have to sort of ask yourself if you're that unhappy with the company, like why are you still an investor? But I think that some investors, you know, would feel like shareholder activism is the way to go, and they try to try to engage with the company internally. And obviously, you know, Musk and board chair Robin Denholm had a lot of meetings with big institutional investors over the past couple of weeks. I have not heard anything from any of the funds that said that they were no on pay about divestment.

No, I mean that is certainly one avenue. I mean you have to sort of ask yourself if you're that unhappy with the company, like why are you still an investor? But I think that some investors, you know, would feel like shareholder activism is the way to go, and they try to try to engage with the company internally. And obviously, you know, Musk and board chair Robin Denholm had a lot of meetings with big institutional investors over the past couple of weeks. I have not heard anything from any of the funds that said that they were no on pay about divestment.

Could there be more lawsuits? Do you think?

Could there be more lawsuits? Do you think?

Oh?

Oh?

Absolutely?

Absolutely?

Yeah?

Yeah?

Always.

Always.

I mean someone could too to stop the moved Texas once they're in Texas. Like, I mean, yeah, there there there there's always a lot of litigation around things like this.

I mean someone could too to stop the moved Texas once they're in Texas. Like, I mean, yeah, there there there there's always a lot of litigation around things like this.

I'm kind of curious about this too. I know it's counterfactual or speculation whatever, but what might Elon Musk have done if he lost this vote?

I'm kind of curious about this too. I know it's counterfactual or speculation whatever, but what might Elon Musk have done if he lost this vote?

I think he would have been upset. It would have been kind of like a stinging rebuke of both the legal strategy and of his tenure as the CEO. But you know, I mean he would have he would have probably continue. I mean, I don't think it would have changed, you know, it would have wouldn't have changed, you know, I don't know if he would have. I don't think he would have quit necessarily. I mean, he still owns thirteen percent of the company.

I think he would have been upset. It would have been kind of like a stinging rebuke of both the legal strategy and of his tenure as the CEO. But you know, I mean he would have he would have probably continue. I mean, I don't think it would have changed, you know, it would have wouldn't have changed, you know, I don't know if he would have. I don't think he would have quit necessarily. I mean, he still owns thirteen percent of the company.

Very quickly, last question, this new stock exchange that may be established in Dallas. Do you think he will list Tesla and some of his other companies on that change?

Very quickly, last question, this new stock exchange that may be established in Dallas. Do you think he will list Tesla and some of his other companies on that change?

Yeah, that I do not know. I mean I would imagine that the exchange would have to get up and running for a bit.

Yeah, that I do not know. I mean I would imagine that the exchange would have to get up and running for a bit.

First, All right, we'll leave it there.

First, All right, we'll leave it there.

Ran I was just going to say, Don, was the workout coming on this program? Get questions from all over the place, but good questions and good answers. Donna, thank you very much. Dana Holt Bloomberg need Who's senior technology report him. We wanted to take a closer look at markets, and we're joined by Villain Sells, a global CIO at HSBC Global Private Banking and Wealth with us here in our studios in Hong Kong. Villain, thanks very much for coming in. So we are starting to kind of get into the area again about worrying about growth scares. We had jobless claims have another bounce in the US and we've seen a little bit of a softening of the data. Is it rational to be worried about growth or should we just include it in let's say, a group of scenarios that are possible and that should be discounted.

Ran I was just going to say, Don, was the workout coming on this program? Get questions from all over the place, but good questions and good answers. Donna, thank you very much. Dana Holt Bloomberg need Who's senior technology report him. We wanted to take a closer look at markets, and we're joined by Villain Sells, a global CIO at HSBC Global Private Banking and Wealth with us here in our studios in Hong Kong. Villain, thanks very much for coming in. So we are starting to kind of get into the area again about worrying about growth scares. We had jobless claims have another bounce in the US and we've seen a little bit of a softening of the data. Is it rational to be worried about growth or should we just include it in let's say, a group of scenarios that are possible and that should be discounted.

Well in our discussion with our clients. It's remarkable that you know, in the past six months there is a complete swing. You know, we were talking about we're asking about the risk of a recession six twelve months ago. This is no longer the case. And I agree with them, and I agree with Yellen on this as well. You know, data are slowing a little bit, but from a very strong position, you know, So that basically means that, you know, it gives the FED the opportunity to to to cut in September. Interview. So I think this is actually a good thing that we are coming from that very strong to a milder economic growth, and in the rest of the world we're actually seeing a slight acceleration. So we're broadening out our exposure, adding Europe and Asia to the US, but continuing also to be comfortable with the US stop.

Well in our discussion with our clients. It's remarkable that you know, in the past six months there is a complete swing. You know, we were talking about we're asking about the risk of a recession six twelve months ago. This is no longer the case. And I agree with them, and I agree with Yellen on this as well. You know, data are slowing a little bit, but from a very strong position, you know, So that basically means that, you know, it gives the FED the opportunity to to to cut in September. Interview. So I think this is actually a good thing that we are coming from that very strong to a milder economic growth, and in the rest of the world we're actually seeing a slight acceleration. So we're broadening out our exposure, adding Europe and Asia to the US, but continuing also to be comfortable with the US stop.

So vellamy, You do believe that US rates then are restrictive right now, and it would be a prudent thing for the Fed to begin cutting a SAP, I would imagine, right. So yeah, so.

So vellamy, You do believe that US rates then are restrictive right now, and it would be a prudent thing for the Fed to begin cutting a SAP, I would imagine, right. So yeah, so.

Indeed cutting in September. Even if they cut in September, obviously those raids will remain restricted. The real rate is at a very elevated level, and it has been on that plateau for quite a long time. You know, they have excluded more or less rate hikes. The dots did not include anybody who was looking for a rate hikes, So that's a good signal, and obviously that also allows people to go into bonds. So one of the biggest flows that we are seeing is people locking in those bond yields with that you know, comforting message from the Fed.

Indeed cutting in September. Even if they cut in September, obviously those raids will remain restricted. The real rate is at a very elevated level, and it has been on that plateau for quite a long time. You know, they have excluded more or less rate hikes. The dots did not include anybody who was looking for a rate hikes, So that's a good signal, and obviously that also allows people to go into bonds. So one of the biggest flows that we are seeing is people locking in those bond yields with that you know, comforting message from the Fed.

Do you see it as a possibility though, that if growth does slow, maybe not all the way to recession, but if it does slow measurably, that that could actually lead to a further big balance in the megacaps.

Do you see it as a possibility though, that if growth does slow, maybe not all the way to recession, but if it does slow measurably, that that could actually lead to a further big balance in the megacaps.

So to the extent that indeed those are growth style stocks, you know, which are interest rate sensitive, Indeed, that could you know, help the growth style companies. You know, Our strategy for the moment is actually to broaden it out, not to give up on the MACT seven because their earnings growth is solid. But when you look at earnings momentum over the next number of quarters, where the acceleration is in earnings growth is in other sectors those obviously are cheaper as well. So we broaden out our exposure in the equity market built from a geographical perspective, but also within the US across other sectors, so for example, industrials and financials.

So to the extent that indeed those are growth style stocks, you know, which are interest rate sensitive, Indeed, that could you know, help the growth style companies. You know, Our strategy for the moment is actually to broaden it out, not to give up on the MACT seven because their earnings growth is solid. But when you look at earnings momentum over the next number of quarters, where the acceleration is in earnings growth is in other sectors those obviously are cheaper as well. So we broaden out our exposure in the equity market built from a geographical perspective, but also within the US across other sectors, so for example, industrials and financials.

I'm wondering as I'm listening to you, thinking about maybe slower growth in the US. We know that growth in Europe has been weak for some time. The ECB is now leaning into that by delivering a bit of accommodation. Laguard, yes, putting some caveats in as she cuts interest rates, you know, data dependency. We get that. But I'm wondering whether or not growth in Europe may pick up at a rate that at some point could rival, at least rival what we're seeing in the US is that misguided.

I'm wondering as I'm listening to you, thinking about maybe slower growth in the US. We know that growth in Europe has been weak for some time. The ECB is now leaning into that by delivering a bit of accommodation. Laguard, yes, putting some caveats in as she cuts interest rates, you know, data dependency. We get that. But I'm wondering whether or not growth in Europe may pick up at a rate that at some point could rival, at least rival what we're seeing in the US is that misguided.

It's picking up. We are coming out of free session, we have come out of recession, and so that is, you know, giving that momentum, and that I think the opportunity or the excuse if you want to call it that for people to you know, start to think about, you know that that very big valuation differential between the US and Europe, and that you know, can be unlocked by that cyclical momentum. Indeed, when you look at the growth forecast. But that's more sort of for twenty twenty five, the growth rates you know, for Europe, the UK and the US shouldn't be too far apart, where whereas obviously for twenty twenty four, the US is much much superior. But indeed you could have that narrowing of that gap.

It's picking up. We are coming out of free session, we have come out of recession, and so that is, you know, giving that momentum, and that I think the opportunity or the excuse if you want to call it that for people to you know, start to think about, you know that that very big valuation differential between the US and Europe, and that you know, can be unlocked by that cyclical momentum. Indeed, when you look at the growth forecast. But that's more sort of for twenty twenty five, the growth rates you know, for Europe, the UK and the US shouldn't be too far apart, where whereas obviously for twenty twenty four, the US is much much superior. But indeed you could have that narrowing of that gap.

So I'm personally of the view that we are going to get a little bit of a growth scare here. People are going to be concerned about it, whether or not least a recession. That's way down the road. But then I know, in your overways the US and Japan, I think everybody can understand that. But emerging market Asia, now, if you get a US slowdown, what appens to emerging market Asia?

So I'm personally of the view that we are going to get a little bit of a growth scare here. People are going to be concerned about it, whether or not least a recession. That's way down the road. But then I know, in your overways the US and Japan, I think everybody can understand that. But emerging market Asia, now, if you get a US slowdown, what appens to emerging market Asia?

Well, emerging Marketsia for US, you know, there are well within each that there are three countries that were overweted to Japan. It's India and South Korea. So, you know, India, we do think, you know that people shouldn't exaggerate, you know, the election news. I do think that you can get continued you know, reforms, especially on the subject of you know, technology and advanced manufacturing. Obviously there is you know, very you know, positive longer term growth look out look in India as well, So I think that market will rebound and so we want to be there. South Korea is more because of the semiconductor you know, pick up as well. So we are selective within the region, but we're actively diversifying as we are still neutral on mainland China and Hong Kong, because we don't think that the rally that you've seen a number of weeks ago will extend as long as you don't have an acceleration in economic growth or in earnings. So we're doing that active diversification, being selective. But yeah, because of India and South Korea and then Japan, we have the overweight here as well.

Well, emerging Marketsia for US, you know, there are well within each that there are three countries that were overweted to Japan. It's India and South Korea. So, you know, India, we do think, you know that people shouldn't exaggerate, you know, the election news. I do think that you can get continued you know, reforms, especially on the subject of you know, technology and advanced manufacturing. Obviously there is you know, very you know, positive longer term growth look out look in India as well, So I think that market will rebound and so we want to be there. South Korea is more because of the semiconductor you know, pick up as well. So we are selective within the region, but we're actively diversifying as we are still neutral on mainland China and Hong Kong, because we don't think that the rally that you've seen a number of weeks ago will extend as long as you don't have an acceleration in economic growth or in earnings. So we're doing that active diversification, being selective. But yeah, because of India and South Korea and then Japan, we have the overweight here as well.

What would it take for you to change your mind on China? And are you prepared to do that in the event that the government comes to some type of realization that more stimulus is required. Are you able to pivot quickly and maybe to rethink your view on China?

What would it take for you to change your mind on China? And are you prepared to do that in the event that the government comes to some type of realization that more stimulus is required. Are you able to pivot quickly and maybe to rethink your view on China?

Sure, I mean we reconsider it every month at least in our in our investment committees. But what we really need is that, you know, the earnings acceleration and the GDP acceleration. You know, certainly foreigners would be looking for that won't have necessarily, you know, won't won't necessarily be scared of missing the first five or ten percent of the rally. They want to wait and see, to see the evidence in the hard data, you know, So that's what they're waiting for. The Q one earnings results from from China. We're somewhat disappointing, I think, you know here in China as well, the property package was probably a little bit lower than what in my that was expecting. So, you know, people not you know, jumping to conclusions or you know, giving the market the benefit of the data. They want to see the numbers. But then indeed there are there would be in fills once you see them, because obviously that market is extremely cheap, people are extremely underweight, you know, so then indeed we would need to act.

Sure, I mean we reconsider it every month at least in our in our investment committees. But what we really need is that, you know, the earnings acceleration and the GDP acceleration. You know, certainly foreigners would be looking for that won't have necessarily, you know, won't won't necessarily be scared of missing the first five or ten percent of the rally. They want to wait and see, to see the evidence in the hard data, you know, So that's what they're waiting for. The Q one earnings results from from China. We're somewhat disappointing, I think, you know here in China as well, the property package was probably a little bit lower than what in my that was expecting. So, you know, people not you know, jumping to conclusions or you know, giving the market the benefit of the data. They want to see the numbers. But then indeed there are there would be in fills once you see them, because obviously that market is extremely cheap, people are extremely underweight, you know, so then indeed we would need to act.

So we've seen obviously a lot of growth in AI related stock buying in the United States in particular, So I think that's one of the most important trends running through the market. People very concerned about, you know, when does it break, when does it slow down? What do you look at to learn that? I mean, what's the key for that?

So we've seen obviously a lot of growth in AI related stock buying in the United States in particular, So I think that's one of the most important trends running through the market. People very concerned about, you know, when does it break, when does it slow down? What do you look at to learn that? I mean, what's the key for that?

Yeah, So so what we think is, you know, so again this is one of the objectives of broadening, right, and so that people are not only just investing in the max seven and in their trade, you know, because even though we are positive on that and you know, the IMF things that we're going to have up to zero points eight percent boost to global GDP and the medium term because of that, which is very considerable. You know, it's just wise to spread out, you know, especially as that as that valuation differential gives the opportunities elsewhere. But there are related trains that one can do. Even utilities, for example, have been boosted by that energy demount, that would.

Yeah, So so what we think is, you know, so again this is one of the objectives of broadening, right, and so that people are not only just investing in the max seven and in their trade, you know, because even though we are positive on that and you know, the IMF things that we're going to have up to zero points eight percent boost to global GDP and the medium term because of that, which is very considerable. You know, it's just wise to spread out, you know, especially as that as that valuation differential gives the opportunities elsewhere. But there are related trains that one can do. Even utilities, for example, have been boosted by that energy demount, that would.

Be absolutely Yeah, it's really quite an interesting phenomenon that we've seen that. All right, Villain, thanks very much for joining us and for coming into our studios with this. Always a pleasure of Villain Cells, Global CIO at HSBC Global Private Banking and Wealth. The Bank of Japan is holding a two day meeting. It will wrap up that meeting later this morning. Joining us now for some discussion is Tarro Kimura, senior Japan Economists for Bloomberg Economics. Tarrow, thank you for joining us. Bloomberg Economics is saying this will be a consequential meeting. Might we see a reduction in bond buying? Right?

Be absolutely Yeah, it's really quite an interesting phenomenon that we've seen that. All right, Villain, thanks very much for joining us and for coming into our studios with this. Always a pleasure of Villain Cells, Global CIO at HSBC Global Private Banking and Wealth. The Bank of Japan is holding a two day meeting. It will wrap up that meeting later this morning. Joining us now for some discussion is Tarro Kimura, senior Japan Economists for Bloomberg Economics. Tarrow, thank you for joining us. Bloomberg Economics is saying this will be a consequential meeting. Might we see a reduction in bond buying? Right?

I think it's really likely that the BOG will announce the cutting its JGB purchases, which is kind of a very momentous pivot from its unconventional Manetali policy, particularly after it's introduced its introduced quantitative qualitative easing back in tow seas and thirteen. That said, I don't think the announcement won't spook the bond market because I expect the BOJ to announce very graudial and modest reduction to JGB hills based on the governor with us a previous comment that he doesn't want to use bond buyings as active policy too. So basically I think he doesn't want to spook the market by QTS. But it's another big step for the buj's normalization to its policy.

I think it's really likely that the BOG will announce the cutting its JGB purchases, which is kind of a very momentous pivot from its unconventional Manetali policy, particularly after it's introduced its introduced quantitative qualitative easing back in tow seas and thirteen. That said, I don't think the announcement won't spook the bond market because I expect the BOJ to announce very graudial and modest reduction to JGB hills based on the governor with us a previous comment that he doesn't want to use bond buyings as active policy too. So basically I think he doesn't want to spook the market by QTS. But it's another big step for the buj's normalization to its policy.

You no doubt about that. And I'm looking on the Bloomberg terminal. I guess the yield right now and the tenure JGB is just around ninety five basis points. I would imagine that the banks in Japan are celebrating this type of action, that the BOJ is finally moving to widen the spread a little bit between the policy rate and you know, let's say a ten year yield, right right.

You no doubt about that. And I'm looking on the Bloomberg terminal. I guess the yield right now and the tenure JGB is just around ninety five basis points. I would imagine that the banks in Japan are celebrating this type of action, that the BOJ is finally moving to widen the spread a little bit between the policy rate and you know, let's say a ten year yield, right right.

Absolutely, So one of the backdrop, I expect the BOJ will to the cut in JGB pursas as soon as this meeting is. Basically, the Marcus doesn't want the BOJA intervene to the long areas anymore. So, absolutely it will welcome and the banks and financial institutions wants higher JGB els that push back the bojs r QT process make it comfortable for the central back.

Absolutely, So one of the backdrop, I expect the BOJ will to the cut in JGB pursas as soon as this meeting is. Basically, the Marcus doesn't want the BOJA intervene to the long areas anymore. So, absolutely it will welcome and the banks and financial institutions wants higher JGB els that push back the bojs r QT process make it comfortable for the central back.

I know it from a few comments. There are some fears that the BOJ still drags its feet a little and doesn't make a move on either interest rates or on the bond buying, and I'm wondering if they If that's the case, if that's what happens, could the end reach the one sixty level to the week side.

I know it from a few comments. There are some fears that the BOJ still drags its feet a little and doesn't make a move on either interest rates or on the bond buying, and I'm wondering if they If that's the case, if that's what happens, could the end reach the one sixty level to the week side.

I think so if the BOJ, which isn't my baseline, and I don't think it will happen, but if the BOJ hold policy on both on rates and JGB purchases, it's gonna like you know, I think it's a it's a good opportunity for yen bears to cease on the opportunity to add more selling pressure to the end and probably it will break one sixty again. That said, I think the view from that the Bank of Japan may hold of is coming from the fact that the Japan's Japan's economy isn't that strong under the state of school. But my view is the BOJ is moving forward looking with this forward looking assessment that the higher waste growth agreed by annual spring wage negotiation will feed into stronger service prices. So that's why I think it's July hike and today's QT announcement is already in the pipeline.

I think so if the BOJ, which isn't my baseline, and I don't think it will happen, but if the BOJ hold policy on both on rates and JGB purchases, it's gonna like you know, I think it's a it's a good opportunity for yen bears to cease on the opportunity to add more selling pressure to the end and probably it will break one sixty again. That said, I think the view from that the Bank of Japan may hold of is coming from the fact that the Japan's Japan's economy isn't that strong under the state of school. But my view is the BOJ is moving forward looking with this forward looking assessment that the higher waste growth agreed by annual spring wage negotiation will feed into stronger service prices. So that's why I think it's July hike and today's QT announcement is already in the pipeline.

So what do we need to know? What do we need to understand about the inflation story in Japan? You were talking a moment ago about a weekend and that tends to import inflationary pressures into an economy. You mentioned the wage negotiations too, so we're seeing finally after seeming decades long stagnation in wages, I mean, things are starting to pick up. What do we know about underlying inflation in Japan at the moment?

So what do we need to know? What do we need to understand about the inflation story in Japan? You were talking a moment ago about a weekend and that tends to import inflationary pressures into an economy. You mentioned the wage negotiations too, so we're seeing finally after seeming decades long stagnation in wages, I mean, things are starting to pick up. What do we know about underlying inflation in Japan at the moment?

So the big waste negotiation will absolutely fit into higher waste growth and higher service prices, which we haven't seen seen it in macro data because which the agreement was just made, and I think it's going to be fit into a May and June data that will be due from July or August whatsoever. But it's we can expect that to happen. And also I would say the higher energy prices not because of the kind of demand or whatsoever. But because of the subsidy cut, will the course CPI going on this year and the CPI will comfortably over over boja's two percent target. That will give leeway for the Bank of Japan to do policy normalize the instation, including hiking rates and QT.

So the big waste negotiation will absolutely fit into higher waste growth and higher service prices, which we haven't seen seen it in macro data because which the agreement was just made, and I think it's going to be fit into a May and June data that will be due from July or August whatsoever. But it's we can expect that to happen. And also I would say the higher energy prices not because of the kind of demand or whatsoever. But because of the subsidy cut, will the course CPI going on this year and the CPI will comfortably over over boja's two percent target. That will give leeway for the Bank of Japan to do policy normalize the instation, including hiking rates and QT.

Yeah, you draw some attention to normalization and the fact that you know, sometimes the market wants normalization, sometimes it wants the right policy for what's happening in the economy. So for instance, if the BOJ normalizes and raises interest rates into an economy that is troubled, is not really growing, then the market could react badly. But it seems like what you're saying is the moves are there, or the conditions are there for things to improve going forward, and the BOJA probably will act, just not in a huge way.

Yeah, you draw some attention to normalization and the fact that you know, sometimes the market wants normalization, sometimes it wants the right policy for what's happening in the economy. So for instance, if the BOJ normalizes and raises interest rates into an economy that is troubled, is not really growing, then the market could react badly. But it seems like what you're saying is the moves are there, or the conditions are there for things to improve going forward, and the BOJA probably will act, just not in a huge way.

Right, So my expectation is BOJA will raise race up to zero point five by October, So it's going to be forty basis points from current Zerer point? Why one a policy target upper bound? I don't think zero point four like forty basis point great hike won't wreck k havok to Japan's economy because it's it's it's an aging economy, so the size of the housing construction or housing purchases is just three percent in the whole economy. And also the balance sheet of Japanese corporates are getting healthy, so the limited amount increase in rates increase won't rekabook on their profits as well.

Right, So my expectation is BOJA will raise race up to zero point five by October, So it's going to be forty basis points from current Zerer point? Why one a policy target upper bound? I don't think zero point four like forty basis point great hike won't wreck k havok to Japan's economy because it's it's it's an aging economy, so the size of the housing construction or housing purchases is just three percent in the whole economy. And also the balance sheet of Japanese corporates are getting healthy, so the limited amount increase in rates increase won't rekabook on their profits as well.

Thank you so much for joining us, Tara Kimura, Senior Japan Economists at Bloomberg Economics.

Thank you so much for joining us, Tara Kimura, Senior Japan Economists at Bloomberg Economics.

This has been the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App.

This has been the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App.