Daybreak Weekend: Fed Meeting, Eurozone Data, BOJ Decision

Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.880 --> 0:00:13.440 This is Bloomberg Daybreak Weekend, our global look at the 0:00:13.480 --> 0:00:16.040 top stories in the coming week from our Daybreak anchors 0:00:16.079 --> 0:00:18.320 all around the world, and straight ahead on the program, 0:00:18.320 --> 0:00:20.599 a look ahead to this week's FED meeting, what it 0:00:20.720 --> 0:00:24.360 means for monetary policy. I'm Tom Busby in New York. 0:00:24.640 --> 0:00:27.040 I'm Caroline Head in London, where we're looking ahead to 0:00:27.080 --> 0:00:29.319 the Eurozones Big economic data job. 0:00:29.560 --> 0:00:31.960 I'm Brian Curtis in Hong Kong. We look ahead to 0:00:32.000 --> 0:00:36.040 the machinations of one key central bank, and then what's 0:00:36.120 --> 0:00:38.440 next for a key industry that would hope to curb 0:00:38.520 --> 0:00:40.000 the power of central banks. 0:00:43.880 --> 0:00:47.840 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:47.880 --> 0:00:51.360 Eyleod on Free Own, New York, Bloombergen ninety nine to one, Washington, 0:00:51.479 --> 0:00:55.680 d C, Bloomberg ninety two to nine, Boston, Bloomberg nine sixty, 0:00:55.760 --> 0:01:00.680 San Francisco, DAB Digital Radio, London, Sirius XM one twenty one, 0:01:00.760 --> 0:01:03.520 and around the world on Bloomberg Radio dot Com and 0:01:03.600 --> 0:01:05.200 via the Bloomberg Business APPA. 0:01:08.560 --> 0:01:10.600 Good day to you. I'm Tom Busby. We begin the 0:01:10.600 --> 0:01:13.440 program with a look ahead to this week's Federal Preserve 0:01:13.520 --> 0:01:17.880 Policy Meeting, a decision on rates expected on Wednesday. Twenty 0:01:18.080 --> 0:01:20.640 meetings in a row with either a rate increase or 0:01:20.680 --> 0:01:23.560 no change at all, will the Fed finally vote to 0:01:23.600 --> 0:01:26.360 cut rates for more. We're joined by Michael McKee, Bloomberg 0:01:26.480 --> 0:01:30.760 International Economics and Policy correspondent. Michael, I think the handwriting 0:01:30.800 --> 0:01:33.280 is on the wall. What are you expecting to see 0:01:33.280 --> 0:01:34.920 though this week from the Fed? 0:01:35.000 --> 0:01:37.119 The handwritings on the wall? And for the first time, 0:01:37.160 --> 0:01:39.760 as you mentioned, in a very long time, we're actually 0:01:39.760 --> 0:01:44.119 going into this saying it matters what they do for 0:01:44.160 --> 0:01:47.080 so long. We've been saying they're stuck higher for longer, 0:01:47.160 --> 0:01:49.280 and it doesn't matter what they do at their meeting. 0:01:49.320 --> 0:01:50.440 It's going to be what they. 0:01:50.280 --> 0:01:52.400 Say about the future. Well, that one's going to be 0:01:52.400 --> 0:01:57.240 both because there is a slight chance of a fifty 0:01:57.280 --> 0:02:01.000 basis point move because they didn't fit rule it out 0:02:01.080 --> 0:02:04.560 before the quiet period began. Nobody really thinks that's going 0:02:04.600 --> 0:02:07.240 to happen, but it's out there, so it'll be the 0:02:07.280 --> 0:02:10.000 first thing people will look at is how much did 0:02:10.040 --> 0:02:13.840 they cut? And so that will be important. Then we 0:02:13.919 --> 0:02:17.480 get the summary of economic projections new forecasts for the 0:02:17.520 --> 0:02:21.240 economy and the dot plot, and that'll capture some attention 0:02:21.480 --> 0:02:22.160 as well. 0:02:22.680 --> 0:02:25.560 Now, the Fed has always said we are data dependent. 0:02:25.840 --> 0:02:28.160 Any move we make is all depends on the data. 0:02:28.639 --> 0:02:30.920 Let's talk about the data we saw this past week 0:02:31.160 --> 0:02:34.399 consumer and producer price inflation. How will that factor into 0:02:34.440 --> 0:02:35.079 this decision? 0:02:35.480 --> 0:02:37.320 Kind of a downside surprise. 0:02:37.960 --> 0:02:40.679 Yeah, well that's what cemented. I think the view that 0:02:40.760 --> 0:02:43.960 we do twenty five instead of fifty and really took 0:02:44.000 --> 0:02:48.040 away the hope of the fifties folks, because while we 0:02:48.120 --> 0:02:52.000 got a very small increase in core CPI over what 0:02:52.200 --> 0:02:56.680 was anticipated and the same in PPI, it doesn't suggest 0:02:56.680 --> 0:02:59.160 that the inflation is going to be going the other 0:02:59.200 --> 0:03:02.400 way or there's a huge danger of inflation accelerating. It 0:03:02.520 --> 0:03:05.120 just shows that the battle is not won yet and 0:03:05.160 --> 0:03:07.919 the FED can't rest on its laurels. And so that's 0:03:07.960 --> 0:03:12.720 why people are saying they shouldn't go fifty because that 0:03:12.840 --> 0:03:14.800 might send the wrong message. They want to send the 0:03:14.840 --> 0:03:18.680 message that we are still vigilant against inflation. 0:03:18.320 --> 0:03:19.840 And we're going to keep an eye on it. 0:03:20.480 --> 0:03:25.560 And as last week, Christopher Waller from the Federal Reserve said, 0:03:25.680 --> 0:03:29.880 if data from this point on show that fifty is 0:03:30.160 --> 0:03:32.760 worth doing They can easily do that, but right now 0:03:32.800 --> 0:03:33.560 they're not ready to. 0:03:34.040 --> 0:03:36.160 Now some of the people who are calling for a 0:03:36.200 --> 0:03:39.040 fifty basis point cut, I think the Fed waited too 0:03:39.080 --> 0:03:41.320 long to initiate this cut, that they kind of missed 0:03:41.360 --> 0:03:43.560 the boat at the end of July and we saw 0:03:43.600 --> 0:03:46.400 some very troubling data about jobs. We saw a little 0:03:46.480 --> 0:03:51.600 uptick in inflation growth. Do you think they missed the boat, 0:03:51.640 --> 0:03:54.839 do you think? Or is it steady as she goes 0:03:54.880 --> 0:03:55.800 and they're on the right path. 0:03:55.920 --> 0:04:00.600 Well, it's impossible to say, except in hindsight that they 0:04:00.640 --> 0:04:04.160 were behind the curve. The argument is that, as you noted, 0:04:04.200 --> 0:04:07.800 the labor market has slowed a lot. We haven't seen 0:04:07.920 --> 0:04:13.760 consumers spending really slow yet, except that the people's savings 0:04:13.760 --> 0:04:16.839 are kind of dwindling, and so there's a feeling that's 0:04:16.839 --> 0:04:19.760 going to happen at some point. The thing about in 0:04:20.279 --> 0:04:24.760 recessions is they're based on confidence, and all of a sudden, 0:04:24.800 --> 0:04:28.919 people lose confidence, both consumers and businesses lose confidence in 0:04:28.960 --> 0:04:33.680 their ability to pay for new what economics would call investments, 0:04:34.480 --> 0:04:37.640 all the stuff you buy, and so they pull back 0:04:37.680 --> 0:04:40.080 on their spending. And right now it doesn't seem to 0:04:40.120 --> 0:04:44.120 be the case, businesses have slowed down. We don't really 0:04:44.160 --> 0:04:47.200 know whether that's because they are waiting, and it does 0:04:47.200 --> 0:04:49.400 seem logical they are waiting to see the results of 0:04:49.400 --> 0:04:53.360 the presidential election and what the tax and regulatory regime 0:04:53.600 --> 0:04:57.960 will be like going into the new year. Consumers through 0:04:58.360 --> 0:05:02.400 the back to school have been spending. We'll see if 0:05:02.400 --> 0:05:06.680 that continues, but the latest indications from the high frequency 0:05:06.680 --> 0:05:09.840 indications from retailers are that people are still spending. So 0:05:10.040 --> 0:05:13.159 it doesn't look like there has been a seizure of 0:05:13.600 --> 0:05:18.240 lack of confidence seizure among people yet. So it's hard 0:05:18.279 --> 0:05:20.840 to say with any certainty that they may or may 0:05:20.839 --> 0:05:23.279 not have missed the boat. The only thing that you 0:05:23.440 --> 0:05:25.919 do know is that it takes a long time for 0:05:26.000 --> 0:05:29.040 monetary policy to hit the economy. You're going to hear 0:05:30.120 --> 0:05:33.600 after Wednesday, especially Donald Trump, who's already said this, the 0:05:33.680 --> 0:05:36.240 Fed shouldn't be cutting rates and it's going to be unfair, 0:05:36.279 --> 0:05:38.799 and it's going to be a boost to Biden and Harris. 0:05:40.000 --> 0:05:43.640 But it's not because you won't really see any impact 0:05:44.120 --> 0:05:47.719 on the economy until next year from even a twenty 0:05:47.720 --> 0:05:51.440 five basis point cut. So if things deteriorate between now 0:05:51.480 --> 0:05:53.000 and the end of next year, you could say they 0:05:53.000 --> 0:05:54.720 got behind the curve, but we don't know yet. 0:05:54.760 --> 0:05:58.200 Well, we have a big decision this Wednesday from the 0:05:58.240 --> 0:06:02.360 Federal Reserve. Our thanks to Michael McKee, Bloomberg International Economics 0:06:02.400 --> 0:06:05.680 and Policy correspondent for full FED coverage, be sure to 0:06:05.720 --> 0:06:08.400 tune in Wednesday one thirty pm Wall Street Time for 0:06:08.400 --> 0:06:12.479 a Bloomberg surveillance special, The Fed Decides, joined Tom Kaine, 0:06:12.720 --> 0:06:15.520 John Ferrell, and Lisa Abramowitz as they break down the 0:06:15.560 --> 0:06:18.400 decision with the biggest names in finance, economics, and business. 0:06:18.760 --> 0:06:23.320 That's one thirty Wednesday on Bloomberg Radio and Television. We 0:06:23.360 --> 0:06:27.280 move now to the logistics and services delivery giant FedEx, 0:06:27.360 --> 0:06:29.920 and with its busiest time of year nearly here, FedEx 0:06:29.920 --> 0:06:33.400 reports first quarter earnings this Thursday. So how will an 0:06:33.520 --> 0:06:37.200 organizational restructuring impact its earnings ahead of the holiday season. Well, 0:06:37.200 --> 0:06:40.920 for more, we're joined by Lee Clascow. He's Bloomberg Intelligence 0:06:40.960 --> 0:06:43.640 Senior Transport, Logistics and Shipping analyst. 0:06:44.000 --> 0:06:44.560 Will Lee. 0:06:44.920 --> 0:06:47.040 Let's start with what you expect to see in FedEx's 0:06:47.080 --> 0:06:50.520 earnings report this week, coming off a very strong Q 0:06:50.600 --> 0:06:51.400 four in June. 0:06:51.680 --> 0:06:54.240 Yeah, Well, thanks for having me. You know, I think 0:06:54.279 --> 0:06:58.520 that FedEx's should report another solid earnings report. You know, 0:06:58.560 --> 0:07:01.360 they were show me story for so many quarters, and 0:07:01.920 --> 0:07:04.360 they've really shown the market, if you will, that they 0:07:04.400 --> 0:07:07.400 can't execute on their strategy. They have a bunch of 0:07:07.440 --> 0:07:11.360 restructuring plans that are underway that are expected to save 0:07:11.840 --> 0:07:15.640 a significant money, over two billion dollars in physical twenty 0:07:15.680 --> 0:07:18.520 twenty five on top of the one point eight billion 0:07:18.560 --> 0:07:21.520 that they saved in twenty twenty four. So you know, 0:07:21.760 --> 0:07:25.840 they're really doing all the right things. They're restructuring their 0:07:25.920 --> 0:07:30.080 businesses into one main reporting business. They are changing the 0:07:30.160 --> 0:07:33.520 way they operate their air fleet, and they're really taking 0:07:33.640 --> 0:07:36.640 costs out, something that that company didn't do for a 0:07:36.680 --> 0:07:41.600 long time. It really became an old fat company, and 0:07:41.640 --> 0:07:45.080 they're really taking a good look inside and making it 0:07:45.120 --> 0:07:47.000 a much more productive organization. 0:07:47.320 --> 0:07:50.240 Well, they also laid off tens of thousands of workers 0:07:50.280 --> 0:07:51.120 in the last year or so. 0:07:51.480 --> 0:07:54.560 Yeah, I mean they you know, that's always an unfortunate event, 0:07:54.720 --> 0:07:57.400 but you know, they, like I said, there was a 0:07:57.440 --> 0:08:00.280 lot of fat, if you will, that needed to be them. 0:08:00.880 --> 0:08:05.160 And with the you know, advent of technology advancements and 0:08:05.160 --> 0:08:08.080 productivity tools that they're able to use you just simply 0:08:08.120 --> 0:08:11.440 don't need as many people as you once did, whether 0:08:11.680 --> 0:08:15.120 you know that's on the dock or you know in accounting. 0:08:15.680 --> 0:08:17.200 Does robotics play a lot into that? 0:08:17.840 --> 0:08:19.960 Not so much robotics for FedEx. I mean, you know, 0:08:20.040 --> 0:08:23.320 they have really state of the art sorting facilities across 0:08:23.560 --> 0:08:26.280 the country and the world. You know that does a 0:08:26.280 --> 0:08:29.600 lot of that automation, and that's able to save not 0:08:29.640 --> 0:08:33.800 only time but money for the company. So that is 0:08:33.800 --> 0:08:37.520 definitely in net positive, but that's not really what's driving 0:08:38.360 --> 0:08:39.920 I would say the head cuts a lot of that. 0:08:40.000 --> 0:08:43.160 The head count reduction is really on the corporate side. 0:08:43.720 --> 0:08:48.359 Now, in addition to those job cuts, there's also capital expenditure. 0:08:48.400 --> 0:08:51.760 They've really pulled back or are they just you know, really. 0:08:52.200 --> 0:08:55.200 FedEx was famous for buying a lot of planes, maybe 0:08:55.240 --> 0:08:57.920 even if they didn't need them. What they have done 0:08:58.000 --> 0:09:00.800 is they've refreshed their fleet into a much more fuel 0:09:00.800 --> 0:09:05.000 efficient fleet, getting rid of some of the older, less 0:09:05.040 --> 0:09:09.760 efficient planes, and they're also parking a lot more equipment. 0:09:09.840 --> 0:09:12.040 So you know the reality is they don't need as 0:09:12.040 --> 0:09:14.880 many planes as they once did. And not only does 0:09:14.960 --> 0:09:17.199 it need as many, but you know, not just because 0:09:17.440 --> 0:09:20.800 from a restructuring of their air freight network. They also 0:09:20.880 --> 0:09:22.920 don't need as many because a lot of the planes 0:09:22.960 --> 0:09:25.400 either can can do more with less, if you will. 0:09:25.840 --> 0:09:28.560 Now, speaking of freight, you have reported that there's a 0:09:28.640 --> 0:09:31.160 possibility of them spinning off that freight unit. 0:09:31.280 --> 0:09:32.240 Is that still in play? 0:09:32.440 --> 0:09:35.280 Yeah, so they're freight unit is or less than truckload business. 0:09:36.040 --> 0:09:40.280 That's it's a very good business, but it's currently under 0:09:40.280 --> 0:09:44.400 a strategic review. You know, we expect that could generate 0:09:44.400 --> 0:09:47.080 an enterprise value of between thirty and thirty three billion 0:09:47.160 --> 0:09:50.120 dollars for the company. You know, right now, the less 0:09:50.120 --> 0:09:53.280 than truckload market is having a little issues with demand. 0:09:53.960 --> 0:09:55.880 Demand is down for a. 0:09:55.840 --> 0:09:58.679 Lot of the carriers that are in the market, and 0:09:58.800 --> 0:10:01.560 the reason for that is we're really coming up against 0:10:01.600 --> 0:10:05.400 tough comparisons. One of their large competitors went out of 0:10:05.440 --> 0:10:09.520 business last year and we're kind of past that anniversary. Also, 0:10:10.040 --> 0:10:13.040 you know, the ism has been in contraction territory for 0:10:13.120 --> 0:10:16.160 something like twenty one over the last twenty two months. 0:10:16.160 --> 0:10:20.160 So that's not great for LTL demand because it tends 0:10:20.200 --> 0:10:21.240 to be a leading indicator. 0:10:21.840 --> 0:10:25.200 Now a lot of businesses and consumers pulling back on 0:10:25.240 --> 0:10:28.679 spending times are tight, especially as we're coming into the holidays. 0:10:28.960 --> 0:10:30.960 Do you think there's going to be a lot fewer 0:10:31.040 --> 0:10:34.760 packages people choosing ground instead of air. I mean is 0:10:34.840 --> 0:10:37.720 how will this affect FedEx in the coming months. 0:10:37.800 --> 0:10:40.880 Yeah, So the consumer is obviously an important constituent for 0:10:41.080 --> 0:10:44.480 not only FedEx ups, Deutsche Posts, but really all modes 0:10:44.480 --> 0:10:48.400 of transportation that I cover. We're relatively bullish on the consumer. 0:10:49.000 --> 0:10:51.960 You know, we think that a couple of things are 0:10:52.000 --> 0:10:54.720 going to happen a you know, we are transitioning back 0:10:55.080 --> 0:10:58.760 from buying services to now going back to buying stuff. 0:10:59.600 --> 0:11:01.520 We all so believe that we are going to have 0:11:01.520 --> 0:11:04.240 a real peak season this year pecause of that, and 0:11:04.400 --> 0:11:08.520 seasonality is continuing is coming back into the market because 0:11:08.520 --> 0:11:11.559 we've gone so many years from the pandemic of these 0:11:11.640 --> 0:11:16.040 crazy dislocations that made comparisons next to them possible. So 0:11:16.320 --> 0:11:18.720 you know, we're getting back to seasonality. We think there's 0:11:18.760 --> 0:11:22.000 going to be a peak, which I think could surprise 0:11:22.120 --> 0:11:24.720 demand on the upside. And we're really gonna be paying 0:11:24.760 --> 0:11:27.920 close attention during the earnings call on Thursday on when 0:11:28.000 --> 0:11:31.080 management talks about you know, what they are expecting from 0:11:31.160 --> 0:11:33.840 peak from their conversations with their shippers. 0:11:33.640 --> 0:11:37.320 Well FedEx fiscal first quarter earnings out after Wall Street's 0:11:37.320 --> 0:11:40.119 closing bell this Thursday, and our thanks to Lee Classical 0:11:40.320 --> 0:11:44.520 Bloomberg Intelligence senior transport, logistics and shipping analysts. Coming up 0:11:44.559 --> 0:11:46.520 on Bloomberg day Break weekend to look ahead to the 0:11:46.520 --> 0:11:50.840 eurozones big economic data drop. I'm Tom Busby and this 0:11:51.160 --> 0:12:04.040 is Bloomberg. This is Bloomberg day Break weekend, our global 0:12:04.080 --> 0:12:06.360 look ahead at the top stories for investors in the 0:12:06.400 --> 0:12:09.400 coming week. I'm Tom Busby in New York. Up later 0:12:09.440 --> 0:12:11.840 in our program, we look ahead to a meeting from 0:12:11.880 --> 0:12:14.040 one of the key central banks in Asia, the Bank 0:12:14.080 --> 0:12:17.520 of Japan. But first, as expected, the European Central Bank 0:12:17.520 --> 0:12:20.920 cut rates again at its most recent policy meeting, three 0:12:21.000 --> 0:12:24.360 months after its first cut in five years. Will lower 0:12:24.400 --> 0:12:27.760 borrowing costs lead to economic prosperity for the block for more, 0:12:28.120 --> 0:12:30.080 Let's go to London and bring in Bloomberg day Break 0:12:30.120 --> 0:12:31.960 europbanker Caroline hepgar. 0:12:32.200 --> 0:12:35.480 Tom in Europe, it seems that rake huts are like buses. 0:12:35.520 --> 0:12:38.280 You wait five years for one, and then two arrive 0:12:38.400 --> 0:12:41.800 in quick succession. When the EU became one of the 0:12:41.800 --> 0:12:45.440 first major central banks to cut its lending rate, this summer, 0:12:45.520 --> 0:12:50.040 it hearted progress made on tackling inflation. This time around, 0:12:50.040 --> 0:12:53.400 the bank delivered another twenty five basis point cut, citing 0:12:53.440 --> 0:12:57.840 further progress against their economic goals. But European Central Bank 0:12:57.880 --> 0:13:01.720 President Christine Lagarde says that you per area growth risks 0:13:01.800 --> 0:13:05.559 are now tilted to the downside. Speaking at a news 0:13:05.559 --> 0:13:09.040 conference in Frankfurt following the committee's decision to once again 0:13:09.200 --> 0:13:13.960 lower boring costs, she emphasized the importance of economic data 0:13:14.320 --> 0:13:15.239 going forwards. 0:13:16.120 --> 0:13:18.760 So the President, the Vice President and I welcome you 0:13:18.840 --> 0:13:24.040 today to our press conference. The Governing Council today decided 0:13:24.160 --> 0:13:29.000 to lower the deposit facility rate, the rate through which 0:13:29.040 --> 0:13:33.760 we steer the monetary policy stance, by twenty five basis points. 0:13:35.120 --> 0:13:39.720 Based on our updated assessment of the inflation outlook, the 0:13:39.800 --> 0:13:44.800 dynamics of underlying inflation, and the strength of monetary policy transmission, 0:13:45.360 --> 0:13:49.599 it is now appropriate to take another step in moderating 0:13:49.679 --> 0:13:56.720 the degree of monetary policy restriction. Recent inflation data have 0:13:56.880 --> 0:14:00.960 come in broadly as expected, and the latest ECB staff 0:14:01.000 --> 0:14:07.199 projections confirm the previous inflation outlook. Fiscal and structural policies 0:14:07.559 --> 0:14:11.240 should be aimed at making the economy more productive and 0:14:11.320 --> 0:14:15.560 competitive which would help to raise the potential growth and 0:14:15.720 --> 0:14:21.120 reduce price pressures in the medium term. Mario Draggy's report 0:14:21.560 --> 0:14:25.240 on the Future of European Competitiveness and then recall it 0:14:25.360 --> 0:14:29.840 as report on empowering the Single Market stress the urgent 0:14:30.200 --> 0:14:35.640 need for reform and provide concrete proposals to make this happen. 0:14:36.680 --> 0:14:41.600 The risks to economic growth remain tilted to the downside. 0:14:42.240 --> 0:14:46.240 Lower demand for your area exports, owing for instance, to 0:14:46.280 --> 0:14:50.840 a weaker world economy or an escalation in trade tensions 0:14:50.880 --> 0:14:55.480 between major economies, would weigh on your area growth. We 0:14:55.760 --> 0:14:59.400 have consistently said, and we repeat again that we shall 0:14:59.440 --> 0:15:03.640 remain data dependent, and that is particularly justified in view 0:15:03.720 --> 0:15:06.040 of the uncertainty that abounds. 0:15:06.880 --> 0:15:09.920 That was the European Central Bank President Christine Lagarde speaking there. 0:15:10.080 --> 0:15:14.360 Despite the upbeat sentiment of Eurozone policy makers, growth is 0:15:14.520 --> 0:15:18.800 faltering across the region's largest economies and consumer confidence remains 0:15:18.920 --> 0:15:24.760 below pre pandemic levels. The ECB's latest projections downgraded output 0:15:24.840 --> 0:15:27.800 over the next three years, whilst the outlook for underlying 0:15:27.800 --> 0:15:31.520 inflation nudged higher for this year and twenty twenty five. 0:15:32.440 --> 0:15:35.800 In the coming days, markets will receive more European inflation 0:15:36.000 --> 0:15:41.160 data alongside the Bloomberg September Eurozone Economic Survey, which may 0:15:41.200 --> 0:15:45.280 help to guide the two remaining ECB policy meetings that 0:15:45.320 --> 0:15:48.120 are left this year. All of this is something I've 0:15:48.160 --> 0:15:52.680 been discussing with Bloomberg's senior Euro Area economist David Powell. 0:15:55.520 --> 0:15:58.040 The most important data point will beginning this upcoming week 0:15:58.040 --> 0:15:58.320 to you. 0:15:58.880 --> 0:16:04.040 Is that the finallying on CPI for the month of August, 0:16:04.680 --> 0:16:08.800 and that will allow us and others to look at 0:16:09.480 --> 0:16:12.760 as a more grammar look at underlying measures of inflation. 0:16:13.640 --> 0:16:17.160 But basically, broadly speaking, those measures are coming down. The 0:16:17.240 --> 0:16:21.400 headline number isn't very far from the ECB's target right 0:16:21.440 --> 0:16:25.240 now and all moving in the right direction. A real 0:16:25.320 --> 0:16:29.200 number that's is concerned to the ECB's services inflation that 0:16:29.240 --> 0:16:35.040 has remained uncomfortably high at over four percent, and that's 0:16:35.040 --> 0:16:38.440 what the ECB is focused on. This is the second reading, 0:16:38.520 --> 0:16:40.840 so it's unlike it moved that much from the from 0:16:40.880 --> 0:16:43.320 the first reading, so it'll be more important for the 0:16:43.360 --> 0:16:45.640 ECV on terms of inflation. We get the reading for 0:16:45.800 --> 0:16:48.800 September and that's out on the first in October. 0:16:50.120 --> 0:16:54.280 Is there a danger that the ECB has been overconfident 0:16:54.440 --> 0:16:57.320 on tackling inflation. They haven't ruled out a further cut 0:16:57.360 --> 0:16:58.120 in October. 0:17:00.040 --> 0:17:08.879 Well, these policy rates, deposit rate is in very restrictive territory. 0:17:09.000 --> 0:17:11.399 We think that kind of a neutral level would be 0:17:11.440 --> 0:17:14.800 about two percent. So monetary policy has been very tight. 0:17:15.359 --> 0:17:19.080 We have seen that in the economy, with the economy 0:17:19.160 --> 0:17:23.280 having flatlines for a long time in your area, and 0:17:24.720 --> 0:17:27.920 they have made significant progress on inflation. Like I said, 0:17:27.960 --> 0:17:32.479 the headline number now is now very close to the target. 0:17:32.840 --> 0:17:36.199 And when we look at measures of cost pressure, so 0:17:36.760 --> 0:17:40.520 wage growth and negotiated wages, things like that, they're all 0:17:40.560 --> 0:17:44.680 moving in the right direction. And an ECV can't wait 0:17:44.720 --> 0:17:49.200 until they're actually there to cut because voluntary policy operates 0:17:49.200 --> 0:17:51.359 with the long leag They've got to be more forward 0:17:51.400 --> 0:17:53.679 looking and they see everything going in the direction they 0:17:53.760 --> 0:17:56.000 want it to be going, and I think monetary policy 0:17:56.040 --> 0:17:57.240 can be less restrictive. 0:17:57.320 --> 0:17:57.520 Now. 0:17:59.560 --> 0:18:03.320 Expect, though, is for the economy in Europe to remain 0:18:03.400 --> 0:18:07.440 under significant pressure. You saw it in the ECB's forecasts 0:18:08.640 --> 0:18:13.000 from this week's bank meeting. How will markets react if 0:18:13.119 --> 0:18:17.200 the incoming economic data isn't positive? Will there be concerns 0:18:17.280 --> 0:18:20.040 that the ECB has left it too late. 0:18:21.359 --> 0:18:24.560 Yeah, I think generally speaking in the your area as 0:18:24.600 --> 0:18:26.879 well as in the US, so around the world, there 0:18:26.920 --> 0:18:31.040 are concerned that that tight monetary policy is really taking 0:18:31.080 --> 0:18:37.080 it all on the economy, and of course the markets 0:18:37.119 --> 0:18:39.639 are react negatively when. 0:18:39.520 --> 0:18:40.680 We get the bad data. 0:18:41.040 --> 0:18:43.280 We're seeing that not only in Europe, in the US 0:18:43.320 --> 0:18:46.200 as well, and. 0:18:46.160 --> 0:18:50.159 So in terms of what that means for others who 0:18:50.160 --> 0:18:55.240 are affected by interest rates, particularly for the European banking space, 0:18:55.320 --> 0:18:57.159 what do you expect from that. 0:18:58.359 --> 0:19:00.440 Well, A lot of banks, of course are benefit from 0:19:00.440 --> 0:19:04.359 the rise in interest rate because their interest rate income 0:19:04.400 --> 0:19:08.720 has gone up, and then they will have a negative 0:19:08.760 --> 0:19:13.120 impact as that comes down, although it won't be immediate 0:19:13.240 --> 0:19:17.320 because for many of these institutions they have longer term 0:19:17.760 --> 0:19:20.800 they have longer term assets and liabilities. They will be 0:19:20.800 --> 0:19:24.119 benefitting for a while from higher interest rates, and we 0:19:24.240 --> 0:19:27.880 have we've we've seen that in the government bond space 0:19:28.240 --> 0:19:29.640 where Italy has. 0:19:29.480 --> 0:19:33.399 Had a very high demand for its bond in recent 0:19:34.000 --> 0:19:38.200 in recent options in order for investors to take advantage 0:19:38.200 --> 0:19:40.440 of these higher interest rates before they come down. 0:19:41.640 --> 0:19:44.040 Will be the effect on the European Central Bank If 0:19:44.040 --> 0:19:46.919 the FED cuts by fifty basis points in the days ahead. 0:19:48.800 --> 0:19:52.800 Well, the the the e c D has been moving 0:19:54.000 --> 0:19:56.359 on its own at its own pace. The e c 0:19:56.560 --> 0:20:00.119 B cut before the FED, and so it really at 0:20:00.040 --> 0:20:02.840 a monetary policy based on what's happening in Europe. Having 0:20:02.920 --> 0:20:05.679 said that, of course, not ignoring what the SAID does. 0:20:06.320 --> 0:20:09.080 What the FED does is an impact on the exchange rate, 0:20:09.600 --> 0:20:12.560 and they'll be watching it closely if the if the 0:20:12.600 --> 0:20:16.080 FED were to have an aggressive move, it would probably 0:20:16.119 --> 0:20:20.840 increase the probability of the ECB moving more aggressively as well, 0:20:21.240 --> 0:20:24.880 meaning it would increase the probability of a move in October, 0:20:25.000 --> 0:20:28.359 although at this stage we don't think that Planckly, what 0:20:28.440 --> 0:20:29.040 do you make. 0:20:28.920 --> 0:20:31.560 Of the idea of higher for longer? Is that really 0:20:31.600 --> 0:20:32.760 true for Europe? 0:20:34.480 --> 0:20:38.439 Well, we have we moved away from that now. The 0:20:38.600 --> 0:20:41.760 CD had its first cut in June and then we 0:20:41.840 --> 0:20:44.240 had to cut yet announced and we think the CB 0:20:44.359 --> 0:20:47.520 will cut again in December, so they have the higher 0:20:47.600 --> 0:20:50.080 the longer idea of this idea of kind of reaching 0:20:51.040 --> 0:20:54.040 a plateau is the chief Aponos the Maank of England 0:20:54.200 --> 0:20:56.679 referred to as a table mountain approach. You kind of 0:20:56.680 --> 0:20:59.240 get up and it's very flat for a long time. 0:20:59.400 --> 0:21:03.640 But this isn't looking like table mountain. It's certainly more 0:21:03.800 --> 0:21:06.800 like a like a a peak that we've come down 0:21:07.480 --> 0:21:10.240 and we think will continue to come down after December. 0:21:10.280 --> 0:21:12.639 In the next year, you'll probably be having cut at 0:21:12.640 --> 0:21:13.560 a quarterly pace. 0:21:14.920 --> 0:21:20.199 How much concern is that within the ECB around the 0:21:20.200 --> 0:21:24.159 growth prospects of Europe? I mean, the US also is 0:21:24.240 --> 0:21:27.719 perhaps cooling, but only a little, and the underlying strength 0:21:27.720 --> 0:21:30.280 of the economy has been evident for months. China has 0:21:30.320 --> 0:21:34.000 seen kind of a lot of big disinflationary pressures. How 0:21:34.080 --> 0:21:36.320 much concern and Europe is exposed to that, How much 0:21:36.320 --> 0:21:38.720 concern is there within the ECB about the slowing pace 0:21:38.760 --> 0:21:40.800 of the economy. 0:21:41.320 --> 0:21:46.280 Well, the ECB has a single mandate just inflation reserved, 0:21:46.400 --> 0:21:51.879 a dual mandate focusing on inflation and employment, so the 0:21:51.920 --> 0:21:54.680 ACB doesn't have to pay as much attention to employment 0:21:54.680 --> 0:21:56.639 as epent. But of course in order to meet this 0:21:56.760 --> 0:21:59.840 sensation objective, it has to look at what's going on 0:22:00.080 --> 0:22:02.639 the economy, because an economy it's too week will produce 0:22:03.520 --> 0:22:05.760 inflation that's below target, and we saw that. 0:22:05.880 --> 0:22:07.800 For many years preceding the pandemic. 0:22:08.880 --> 0:22:13.040 But at this stage they really focused on the inflation 0:22:13.240 --> 0:22:17.159 numbers as a whole, although there are voices that are 0:22:17.200 --> 0:22:21.359 becoming increasingly concerned about the slowdown the economy and the 0:22:21.480 --> 0:22:24.600 potential for that to lead to an undershooting inflation eventually, 0:22:24.880 --> 0:22:28.040 and that's probably why we've seen some more of support 0:22:28.119 --> 0:22:32.480 for a back to back cut at the ECB, needing 0:22:32.520 --> 0:22:36.520 another move in October. As it's reported by Bloomberg. 0:22:36.160 --> 0:22:42.800 News David, there's always a concern amongst the different members 0:22:43.480 --> 0:22:47.400 of the European Union and the Eurozone indeed about the 0:22:47.600 --> 0:22:51.840 differing performance of certain countries and whether or not interest 0:22:51.920 --> 0:22:54.800 rates happen to suit them at the particular business cycle 0:22:54.840 --> 0:22:57.639 that they are in. Who is most worried now? 0:22:59.160 --> 0:23:02.720 Well, when we look around Europe, there are the various 0:23:02.760 --> 0:23:08.399 economies that performed differently. The President of ECV, Christiane Regard, 0:23:08.480 --> 0:23:11.919 highlighted it for press conference with this month that Spain 0:23:12.040 --> 0:23:13.280 and Netherlands. 0:23:12.880 --> 0:23:14.399 Are doing very well, others are not. 0:23:14.760 --> 0:23:17.960 If there's one country that had stopped doing well right now, 0:23:17.960 --> 0:23:22.600 it's Germany. Germany's industrial sector who has had a number 0:23:22.640 --> 0:23:25.520 of hits in recent years from high energy prices as 0:23:25.600 --> 0:23:29.320 result of the war in Ukraine and softening demand in China, 0:23:29.320 --> 0:23:32.399 which is one of its largest export markets, and it 0:23:32.440 --> 0:23:36.280 really does continue to kind of be in thedulgence right now, 0:23:37.280 --> 0:23:42.000 and it's looking like a sick man of Europe as 0:23:42.000 --> 0:23:46.240 it was called for many years before before labor market 0:23:46.280 --> 0:23:47.520 reforms were introduced. 0:23:48.400 --> 0:23:50.800 My thanks, sir to Bloomberg's David Power for taking us 0:23:50.800 --> 0:23:53.000 through the data to watch when it comes to the 0:23:53.040 --> 0:23:56.399 European Central Bank. I'm Caroline Hetger here in London. You 0:23:56.400 --> 0:23:59.800 can catch us every weekday morning for Bloomberg day Break Europe. 0:23:59.800 --> 0:24:02.639 Began at six am in London. That's one am on 0:24:02.760 --> 0:24:03.400 Wall Street. 0:24:03.480 --> 0:24:05.320 Tom, Thank you, Caroline. 0:24:05.400 --> 0:24:07.639 And coming up on Bloomberg day Break weekend, we look 0:24:07.680 --> 0:24:11.119 ahead to a monetary policy decision from the Bank of Japan. 0:24:11.600 --> 0:24:25.640 I'm Tom Busby and this is Bloomberg. This is Bloomberg 0:24:25.680 --> 0:24:27.800 day Break Weekend, our global look ahead at the top 0:24:27.800 --> 0:24:30.800 stories for investors in the coming week. I'm Tom Busby 0:24:30.840 --> 0:24:33.359 in New York. We turn now to Asia and what 0:24:33.520 --> 0:24:35.879 could be a big decision from the Bank of Japan, 0:24:36.240 --> 0:24:39.080 which is weighing just how far to adjust its policy 0:24:39.119 --> 0:24:42.399 easing settings. We get more from Bloomberg Daybreak Asia co 0:24:42.480 --> 0:24:44.719 hosts Brian Curtis and Doug Krisner. 0:24:45.240 --> 0:24:48.000 Tom the Bank of Japan meets in the coming week, 0:24:48.080 --> 0:24:51.840 and this smart money is suggesting no major surprise is expected. 0:24:52.280 --> 0:24:55.280 But what are BOJ officials thinking. Well, a Bank of 0:24:55.359 --> 0:24:59.760 Japan board member says the BOJ will adjust policy provided 0:24:59.800 --> 0:25:04.160 the economy performs in line with projections. We welcome Paul 0:25:04.280 --> 0:25:07.800 Jackson to the air waves Bloomberg Economy Editor to take 0:25:07.840 --> 0:25:10.679 a closer look at what we might expect. Paul bog 0:25:10.840 --> 0:25:14.960 official seem a little nervous here about the volatility that 0:25:15.040 --> 0:25:18.200 was caused by the rate hike in July. So let 0:25:18.240 --> 0:25:20.920 me go out on a limb and say, not likely 0:25:21.040 --> 0:25:22.520 they will make a move this month. 0:25:23.680 --> 0:25:26.399 Yeah, I think you're right there. I think it's a 0:25:26.440 --> 0:25:31.080 time to wait and watch given the extreme volatility we 0:25:31.160 --> 0:25:35.160 saw after that July rate hike. Remember this is only 0:25:35.200 --> 0:25:38.320 the second time the Bank of Japan has raised rates 0:25:38.880 --> 0:25:43.760 in the last seventeen years, so we saw in very 0:25:44.160 --> 0:25:48.199 sharp volatility afterwards the nick K stock index and its 0:25:48.280 --> 0:25:52.960 biggest drop on record following the rate hike. Of course, 0:25:53.320 --> 0:25:56.439 one of the key factors was also US data, which 0:25:56.720 --> 0:26:00.520 fed into the narrative for the Federal Reserve rate cuts. 0:26:00.520 --> 0:26:03.639 So it wasn't just the BOJ rate hike that caused 0:26:03.640 --> 0:26:07.840 that volatility, But still I think there's enough reason there 0:26:08.640 --> 0:26:11.359 for the central Bank in Japan to want to just 0:26:11.480 --> 0:26:15.760 wait and see look at market stability and also to 0:26:16.720 --> 0:26:20.320 look at the impact of that second rate hike in July. 0:26:20.520 --> 0:26:25.399 So I think the widely held consensus for next week 0:26:25.920 --> 0:26:28.640 is there's going to be no move from the Bank 0:26:28.680 --> 0:26:33.800 of Japan, but that does not mean rate hikes aren't 0:26:33.840 --> 0:26:35.879 in the pipeline coming ahead. 0:26:36.080 --> 0:26:39.440 The enormous volatility with the unwinding of that yen carry 0:26:39.480 --> 0:26:42.480 trade as well, which then brings to my mind the 0:26:42.560 --> 0:26:45.879 concern that the BOJ may have when it watches the 0:26:45.920 --> 0:26:49.000 currency perform in markets. Is there a kind of a 0:26:49.040 --> 0:26:51.919 comfort zone that the BOJ has, do you think for 0:26:51.960 --> 0:26:53.200 the en visa e. The dollar? 0:26:54.400 --> 0:26:57.960 Ah, well, that's that's a very interesting question. Of course, 0:26:58.240 --> 0:27:02.000 the BOJ would argue that it is not targeting any 0:27:02.400 --> 0:27:07.160 currency levels. But let's face it. You know, the yen 0:27:07.480 --> 0:27:13.320 has been extremely weak against the dollar, and while that 0:27:13.400 --> 0:27:17.159 really helps its global companies, its companies with a lot 0:27:17.160 --> 0:27:20.879 of exports, it inflates the earnings for those companies. For 0:27:21.040 --> 0:27:26.080 domestic operations, it's the opposite. It raises all the costs 0:27:26.080 --> 0:27:31.159 puts pressure on them, and it also makes the power 0:27:31.160 --> 0:27:34.760 of the end for the average Japanese consumer, especially for 0:27:35.480 --> 0:27:40.240 thinking of going abroad, much weaker. So in terms of levels, 0:27:40.560 --> 0:27:44.880 i'd say one sixty is definitely two weak. We see 0:27:44.920 --> 0:27:47.440 a lot of talk about the end getting too strong 0:27:47.480 --> 0:27:51.320 when it's you know, between one hundred, one hundred and ten, 0:27:51.600 --> 0:27:54.480 So we're a long way off that, but for sure 0:27:54.720 --> 0:27:57.159 that the narrative is going to change towards. Is the 0:27:57.320 --> 0:27:59.639 end strengthening too much we get past one twenty, I 0:27:59.680 --> 0:28:00.120 would say. 0:28:00.440 --> 0:28:02.639 It's hard to argue with the math. At the moment, 0:28:02.720 --> 0:28:06.520 it looks like US rates are heading down, that Japanese 0:28:06.600 --> 0:28:09.960 rates are heading up, and when you put that all together, 0:28:10.480 --> 0:28:13.760 it would seem to argue for a stronger yen. The 0:28:13.800 --> 0:28:16.720 pace is what matters, I suppose the most. The pace 0:28:16.880 --> 0:28:20.680 was just too abrupt when we had the July rate hike, 0:28:21.440 --> 0:28:24.199 so some modulation there. But the end will get stronger 0:28:24.240 --> 0:28:25.119 from here, right. 0:28:25.240 --> 0:28:27.919 I think the end is going to get stronger, But 0:28:28.080 --> 0:28:32.760 I think we should be wary of thinking that the 0:28:32.800 --> 0:28:35.840 Bank of Japan has seen that volatility and is now 0:28:35.880 --> 0:28:39.920 scared off hiking again. I think they've been very consistent 0:28:39.960 --> 0:28:43.800 in the messaging that no, no, If forecasts are met 0:28:43.840 --> 0:28:49.080 as we hope, then we are going to continue hiking. Now, 0:28:49.160 --> 0:28:51.720 is it going to be every quarter? No, I don't 0:28:51.720 --> 0:28:55.440 think so, but I think the consensus is that December 0:28:55.960 --> 0:28:59.480 or January is probably the timing for the next rate hike. 0:28:59.560 --> 0:29:03.680 And don't forget we had a story with people familiar 0:29:04.080 --> 0:29:08.200 and their views that BOG officials see this idea that 0:29:08.600 --> 0:29:12.440 a nominal interest rate about one percent is probably around 0:29:12.960 --> 0:29:15.480 the minimum level for the neutral rate. So if you 0:29:15.480 --> 0:29:19.000 think of it in those terms, that's three quarter percentage 0:29:19.120 --> 0:29:22.200 rate hikes that could be in the pipeline. 0:29:22.440 --> 0:29:25.160 Paul, take a step back. Help us understand the macro 0:29:25.360 --> 0:29:30.280 view of the Japanese economy right now, economic growth and inflation, 0:29:30.440 --> 0:29:32.040 how are they performing well? 0:29:32.080 --> 0:29:36.400 The economy has been sputtering. We've been lacking a consumption 0:29:36.480 --> 0:29:40.800 in real terms, and that's really down to inflation. Don't forget, 0:29:40.840 --> 0:29:43.720 Japan has not been used to inflation. It's had decades 0:29:43.720 --> 0:29:47.440 of deflation. The goal in Japan has been to create inflation, 0:29:47.640 --> 0:29:52.160 not crush it, so the optics are very different in Japan. 0:29:52.480 --> 0:29:55.320 Inflation at the moment overall is at two point eight 0:29:55.360 --> 0:30:00.400 percent and that's been really weighing on consumer spending. Really, 0:30:00.440 --> 0:30:03.640 we're looking to see if the economy is kind of 0:30:03.720 --> 0:30:07.480 engaging gears and is now moving towards growth of the 0:30:07.600 --> 0:30:11.240 positive inflation cycle that allows more right hikes. 0:30:11.720 --> 0:30:16.800 Paul, Thank you, Paul Jackson, Bloomberg Economy Editor. Next up, 0:30:16.880 --> 0:30:19.520 we segue from the world of central banks to the 0:30:19.520 --> 0:30:23.560 world of limiting the power of central banks. Cryptos. Coming 0:30:23.640 --> 0:30:26.959 up later this month a very big conference Token twenty 0:30:27.040 --> 0:30:30.600 forty nine. It's going to take place in Singapore. A 0:30:30.640 --> 0:30:36.680 lot of very interesting topics coming up, such as the metaverse, DeFi, NFTs, Gold, Macro, 0:30:36.800 --> 0:30:40.320 of course, Web three dios, and a whole lot more. 0:30:40.360 --> 0:30:43.200 In Joining us now on the program to discuss what 0:30:43.320 --> 0:30:46.760 might be said is Suver shri Ghosh, Bloomberg Crypto Currency 0:30:46.800 --> 0:30:50.600 Reporter with us in our Singapore studio, Suva. I know 0:30:50.680 --> 0:30:54.560 the US elections is a big issue with regard to crypto. 0:30:55.160 --> 0:30:59.000 When we get to this Token twenty forty nine Singapore agenda, 0:30:59.120 --> 0:31:00.600 what will the biggest issue p. 0:31:00.960 --> 0:31:02.959 Firstly, I would like to kind of just give a 0:31:03.040 --> 0:31:06.160 quick summary about this Token twenty forty nine because why 0:31:06.160 --> 0:31:10.040 we care is important. You know, this is the most popular, 0:31:10.560 --> 0:31:17.200 most well represented crypto conference globally that Singapore hosts every year, 0:31:17.760 --> 0:31:20.920 and this time there will be twenty thousand people attending 0:31:21.040 --> 0:31:24.200 globally from across the world, which is double that of 0:31:24.320 --> 0:31:27.520 last year. Coming to your question over here, the main 0:31:27.800 --> 0:31:30.880 themes as we go into the US elections is, of 0:31:30.920 --> 0:31:36.280 course what will be the outcome of the US elections 0:31:36.320 --> 0:31:41.200 results on crypto, especially given that there are two candidates, 0:31:41.480 --> 0:31:45.840 one has very clearly talked about pro crypto, you know, stance, 0:31:46.400 --> 0:31:49.920 and then there is Kamala Harris who hasn't yet given 0:31:49.960 --> 0:31:53.680 a very clear indication of stance on crypto. So that 0:31:53.800 --> 0:31:57.000 will be a very big theme that I expect to 0:31:57.040 --> 0:31:59.600 play out in this conference in Token twenty forty nine 0:32:00.160 --> 0:32:04.520 which starts next week. So we will clearly and very 0:32:04.640 --> 0:32:08.600 openly speak to a lot of venture capital funds and 0:32:08.960 --> 0:32:12.160 are there are big ones coming from US, from Europe, 0:32:12.320 --> 0:32:15.360 from all across the world for four to twenty forty 0:32:15.440 --> 0:32:18.560 nine in Singapore, and we are going to speak to 0:32:18.600 --> 0:32:21.920 them to understand where will they put their money in. 0:32:22.000 --> 0:32:24.400 Because in the back of the theme of US elections, 0:32:24.400 --> 0:32:26.920 there are a lot of projects as well. We saw 0:32:27.280 --> 0:32:29.400 in the last two years, there are projects which had 0:32:29.480 --> 0:32:32.040 and companies which is moved, which were moving out of 0:32:32.280 --> 0:32:36.440 US for a not so favorable climate towards crypto. Then 0:32:37.040 --> 0:32:39.720 these are very crucial stuff that you're looking to cover 0:32:39.800 --> 0:32:40.480 from the crypto. 0:32:40.800 --> 0:32:43.720 Cryptocurrencies I think we can agree. I mean rose in 0:32:44.080 --> 0:32:47.720 popularity pretty dramatically during the pandemic, and then twenty twenty 0:32:47.800 --> 0:32:50.960 two happened in November, the cryptocurrency crash. There was a 0:32:51.000 --> 0:32:55.600 lot of conversation before that about venture capitalist interested not 0:32:55.680 --> 0:33:00.280 only in crypto but in blockchain technology more broadly. Is 0:33:00.360 --> 0:33:04.640 now the notion of artificial intelligence really providing a lot 0:33:04.680 --> 0:33:07.880 of very tough competition for new money that would have 0:33:07.960 --> 0:33:12.560 otherwise maybe flown or flowed into the crypto space or 0:33:12.600 --> 0:33:13.640 the blockchain space. 0:33:13.800 --> 0:33:15.880 I mean, the thing is that you know, the money 0:33:15.960 --> 0:33:18.560 is of course a part of money is limited, and 0:33:18.840 --> 0:33:22.360 venture capital obviously would like to optimize the returns for 0:33:22.480 --> 0:33:26.360 their LPs when it comes to choosing between AI and crypto. 0:33:26.840 --> 0:33:29.440 Of course, in the last year or so, AI was 0:33:29.480 --> 0:33:32.160 a fat but we have been seeing that that fat 0:33:32.280 --> 0:33:36.720 is slightly fading and people are looking more for projects 0:33:36.720 --> 0:33:41.920 which are detailed use case rather than just pure play infrastructure, 0:33:42.000 --> 0:33:45.880 be it in AI or in crypto. So to answer 0:33:45.960 --> 0:33:50.280 your question in a short wait, it's basically venture capital 0:33:50.320 --> 0:33:53.920 funds are looking to invest where the use case is 0:33:53.960 --> 0:33:57.240 more prominent than just going by the tag, which is 0:33:57.280 --> 0:34:00.520 either AI and crypto. And I think personally speaking that 0:34:00.640 --> 0:34:03.760 this will merge in this conference as well, where AI 0:34:03.880 --> 0:34:06.800 and crypto will come together, they will intersect, and we 0:34:06.840 --> 0:34:10.600 will see a lot of investors looking for those kinds 0:34:10.600 --> 0:34:11.160 of projects. 0:34:11.440 --> 0:34:14.240 There's a lot of technical aspects to this. For instance, 0:34:14.280 --> 0:34:19.319 we've seen mining difficulty increase for bitcoin, and you'd have 0:34:19.400 --> 0:34:22.000 thought that that would lead to higher prices, and perhaps 0:34:22.040 --> 0:34:25.520 to a certain degree that happened, but bitcoin has actually 0:34:25.600 --> 0:34:29.520 dropped about ten percent since you have this software code adjustment, 0:34:29.600 --> 0:34:33.319 So you're seeing quite a lot of whipping around volatility 0:34:33.400 --> 0:34:35.240 in cryptos. Will that continue? 0:34:35.640 --> 0:34:40.399 Interesting question, and yes, crypto is a volatile asset and 0:34:40.520 --> 0:34:44.040 it is likely to go ahead in that way, meaning 0:34:44.040 --> 0:34:47.040 that the volatility is likely to continue. Of course, the 0:34:47.120 --> 0:34:51.200 initial support was from the exchange traded funds that were 0:34:51.239 --> 0:34:53.560 there in the US that piled up a lot of bitcoins. 0:34:53.800 --> 0:34:56.480 But then after that the initial demand fizzled out and 0:34:56.920 --> 0:35:01.560 we again saw macroeconomic conditions paramitter like inflation growth, all 0:35:01.600 --> 0:35:04.279 this taking over, and Bitcoin was reflecting that as well. 0:35:04.320 --> 0:35:07.239 In terms of volatility going ahead. You bring a very 0:35:07.239 --> 0:35:12.080 interesting point about mining. Yes, the mining ban in China 0:35:12.280 --> 0:35:15.719 had an impact, but we are seeing you know, spurts 0:35:15.719 --> 0:35:20.279 of mining growth in different parts of the world, and 0:35:20.400 --> 0:35:23.239 that is giving rise to some kind of support on 0:35:23.280 --> 0:35:27.320 the bitcoin prices. At the back end of it, however, yes, 0:35:27.520 --> 0:35:31.040 bitcoin is a volatile asset and no one can say 0:35:31.200 --> 0:35:34.120 what would be the future of the price is going ahead, 0:35:34.600 --> 0:35:38.320 whether the demand and supply will continue to match to 0:35:38.880 --> 0:35:42.600 push prices higher or not. But this token twenty forty 0:35:42.680 --> 0:35:47.040 nine will clearly show the trend of investor demand as 0:35:47.080 --> 0:35:50.160 well as what miners are saying over here, because that's 0:35:50.200 --> 0:35:53.360 going to be crucial for the you know, the aspect 0:35:53.400 --> 0:35:55.800 of what will happen to bitcoin price is going ahead. 0:35:55.960 --> 0:35:58.799 Suva, thanks so much for joining us, Suva. Shrik Ghosh there, 0:35:58.840 --> 0:36:02.719 Bloomberg Crypto Current see reporter. We'll have Dan moorehead, the 0:36:02.719 --> 0:36:06.440 founder and CEO at Pantera Capital speaking there. Mike Novograt's 0:36:06.440 --> 0:36:09.359 a big name as well, CEO at Galaxy Digital. That's 0:36:09.400 --> 0:36:13.200 all coming up in this conference. I'm Brian Curtis in 0:36:13.239 --> 0:36:16.040 Hong Kong along with Doug Crisner. You can catch us 0:36:16.080 --> 0:36:19.480 every weekday here for Bloomberg day Break Asia, beginning at 0:36:19.480 --> 0:36:22.800 eight am in Hong Kong and eight pm on Wall Street. 0:36:23.120 --> 0:36:26.600 Tom, Thank you Brian, and thank you Doug. And that 0:36:26.680 --> 0:36:29.000 does it for this edition of Bloomberg day Break Weekend. 0:36:29.320 --> 0:36:31.520 Join us again Monday morning at five am Wall Street 0:36:31.560 --> 0:36:34.000 time for the latest on markets overseas and the news 0:36:34.040 --> 0:36:37.000 you need to start your day. I'm Tom Buzzby. Stay 0:36:37.000 --> 0:36:39.959 with us. Top stories and global business headlines are coming 0:36:40.000 --> 0:36:40.920 up right now