Daybreak Weekend: Tesla Earnings, European Headwinds, Japanese Inflation

This is Bloomberg Daybreak Weekend, our global look at the
top stories in the coming week from our Daybreak anchors
all around the world. Straight Ahead on the program, we
look to Kevin Worsh's bid to be the next chair
of the Federal Reserve. Plus a preview of earnings from Tesla.
I'm Nathan Hager in Washington.
I'm callin Hetger in London, where we're looking ahead to
first quarter European earnings amidst broader headwinds.
I'm Doug Krishner looking at how the war in Iran
is impacting Japanese inflation.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleven three YEARO New York, Bloomberg ninety nine to one, Washington, DC,
Bloomberg ninety two nine, Boston, DAB Digital Radio, London Celia
XM one twenty one, and around the world on Bloomberg Radio,
dot Com and the Bloomberg Business App.
Good day to you. I'm Nathan Hager. We begin today's
program with the Federal Reserve. On Tuesday, Former Fed Governor
Kevin Walsh is set to testify before the Senate Banking
Committee in his bid to succeed J Powell as chair
of the world's most powerful central bank. For more on
what to expect, we're joined by Stuart paul, Us, economist
with Bloomberg Economics. Of course, Stewart, As you know, this
hearing is coming amid the backdrop of ongoing investigations into
the current FED Chair J Powell and Governor Lisa Cook.
So what can we expect? Fireworks on Capitol Hill.
That's a pretty sure bet. I do expect to see
fireworks during the Senate Banking Committee hearing this Tuesday. Not
only are we likely to see some pushback from Democrats,
but even one very important Republican on the committee, and
that Senator Tom Tillis from North Carolina, has expressed concerns
about the DOJ probe into the FED chipping away at
the Fed's independence, and so he pledged to halt Kevin
Walsh's advancement through the nomination process until the DOJ probe
is resolved. So as much as we're going to see
some pushback from Democrats, I think that this entire conversation
about the DOJ probe and about the Fed's independence is
going to be something that we hear from both sides.
Of the aisle and until the DOJ probe is resolved,
the best bet is that the nomination just sort of
stays in committee, stalling out, and that could last for
several weeks, if not months at this point.
Well, if that were to play out that way, what
would that mean for the Federal Reserve itself? Does it
just go without a chair?
Does J.
Powell stay on longer?
Yeah?
So Chairman Powell has three important roles.
Really.
The first is as Chairman of the Federal Open Market Committee,
which is the main monetary policy and interest rates setting
organ of the Federal Reserve System. The second role that
he has is as Chairman of the Federal Reserve Board,
and that's really what we're talking about, that role when
we talk about Kevin Warsh's nomination. And he's also a
governor of the Federal Reserve System. And so in the
event that Kevin Walsh is not confirmed or his confirmation
is really delayed, Chairman Powell just stays in his role
as all three, as a governor, as Chairman of the Board,
and as chairman of the FOMC. In the event that
we do see Kevin Walsh advance through the confirmation process,
he will become Chairman of the Board, and it will
be really up to current Chairman Powell to decide what
he wants to do with his governorship and then what
that means for the leadership of the Federal Open Markets Committee.
So right now we're thinking about rather a narrow slice
of Chairman Powell's responsibilities that are going to be sort
of influx until the next Chairman of the Board is confirmed.
It's just mostly going to be the status quote, with
Chairman Powell presiding over the Board as a sort of
pro tem or emeritus chair and also Chairman Powell presiding
over the FOMC, the Interest Rates setting body effectively as
a governor and as chairman of that body.
No, of course, in the lead up to this hearing Stewart,
President Trump has talked about, you know, testing that independence,
possibly firing Chairman Powell if he doesn't leave the board
as he puts it on time. Can the President do that?
You know, I don't think that Chairman Powell is really
subject to much risk of being fired by President Trump.
President Trump has very little scope for removing Chairman Powell
for cause, and that is what's required by statute. In fact,
the DOJ probe into expenses at the Federal Reserve. Is
basically an attempt to lay groundwork for removing him for cause,
but it doesn't seem as though there's much of a
path to pursue in that direction. And in the event
that the DJ probe continues, the Senate looks as though
they would be very wary of advancing any successor FED
chairman's nomination through the process. So even if the President
were to attempt to fire Chairman Powell, it seems as
though any successor chairman would really face a lot of
pushback in the Senate, which would limit the President's ability
to lower interest rates as he is currently expecting the
next FED chairman to do.
Yeah, I mean that is really the pressure that the
President has put, not just on Chairman Powell, but arguably
on Kevin Warshire as he heads into this hearing. Now,
if he does make it past the confirmation process, even
after all these drama points that we've been talking about,
will you even have the votes on the FED Open
Market Committee to deliver the cuts that the President wants.
Probably not. The committee is rather hawkish, especially this year,
and there are a lot of committee members who are
worried that the public is starting to raise their inflation expectations,
and as inflation expectations become unanchored, so too does actual inflation.
People expects prices to rise in the future, so they
rush out and buy things today and beget the very inflation.
That they fear.
The FED is very focused right now on pushing back
against rising inflation expectations, and so they're sending messages to
the public. They're sending messages to markets that they want
to keep their foot on the brakes. They do not
want to swiftly cut rate as the President would prefer.
So even if we do see a Chairman Warsh, which
I think is a long shot in the near term,
even if we were to see a Chairman Walsh, I
think it would be very difficult for him to achieve
the sort of interest rate cuts that the President wants
right now.
Wow, all right, well, thank you for this, Stuart, great
having you on with us. That's Stuart Paul, us economist
at Bloomberg Economics. Let's take a look now at some
stocks making news in the week ahead. I'm Nathan Hager,
joined by Bloomberg News senior equities reporter Bailey Lipschultz. Says
the earnings parade continue moving from banks to tech. Really
in the coming week, Bailey, we hear from Tesla on Wednesday.
We've heard a lot from Tesla already, the disappointment and
the delivery numbers. I think I saw a story that
a bunch of the cyber trucks that have been sold
already have been bought by SpaceX. What does that mean
for Tesla this week?
Well, the big thing to keep in mind that was
a fascinating story from Dana hole Ye to your point,
which kind of called out that the majority of these
are cyber trucks are really being not only bought by SpaceX,
but other companies. I think she also called out the
boring company and Neuralink, so Musk Inc. Continuing to evolve.
But the big thing to keep in mind when we
do get earnings from Tesla is the fact that, at
least according to the cell side and most bowls, this
is no longer really a car company. This is a
robotics company. This is a driver list technology company. So
the big thing will be any updates on the state
of ROBOTAXI, any updates on optimists, because if you think
about it for a while, Tesla Auto sales have been declining,
and as much as we want to call out the
fact that the stock right now is down more than
ten percent year to date, it's still a company that's
driven by one man and one man only, and that's
Elon Musk and his vision for grand plans. So any
updates and commentary that can kind of allay any of
the uncertainty over the costs to build out some of
their technologies will certainly be top of mind.
Well, we do know that on Thursday, Intel is going
to be reporting earnings as well. This company's in the
middle of a turnaround. It's the middle of a lot
of investment as well from the government and other sources.
So what can we expect from their earnings.
Yeah, it'll be a key story in Intel, ironically as
a partner with Terra fab so something sticking kind of
on theme. This has been one of the big winners
so far this year. You're looking at a stock price
at least right now, up more than eighty percent, and
the big topic of discussion the results and with any
kind of commentary for management, as you mentioned, will be
on that recovery, on that turnaround story. How much demand
are they seeing for server CPUs are they seeing any
type of issues or knock on effects from supply chain
and pricing. Obviously we've been kind of tracking what the
fallout is for PC demands and over on the memory
side of things as it relates to the san disk
or micron, So that'll be certainly something top of mind.
And obviously the big question will still be on what
do margins look like, what do shipments look like? But
this has been a pretty much red hot stock so
far this year, and if you really look at it
on an eighteen month basis as well, pretty sharp return.
Yeah, to your point, Bailey, the stock is up double
digits and then some so far this year. So what
kind of volatility could we expect around the earnings given
the outperformance that it's been seeing so far.
Yeah, that'll obviously be a big question for the investment community,
as we call it on the desk Price of Perfection. Potentially,
this is a company that when we look at what
the options are implying that move would be more than
nine percent, So that would be a pretty sharp move
in either direction. And when you keep in mind, this
is the company that has been volatile after earnings. If
you go back to the start of twenty twenty four,
there have been twenty six percent declines, twelve percent to climb,
seventeen percent to clients, a lot of red on the
screen on earnings days. Again, the big thing to keep
in mind this is a turnaround story. But I certainly
think that if you pull the investors in this company,
what we can see typically is when a company has
a move like Intel has over the last few weeks
and months, is that the sel side expectations. So whether
we call it a meter or abyss meat or a
beat is not quite what the whisper number, what the
buyside investors are looking for, So that can lead to
initial headline beats that we see stocks move in the
other direction, and then we kind of have to unpack. Well, sure,
the analyst at the likes of a Morgan Stanley or
Wells Fargo or what have you pencil in this for
the estimates, but the investors who have been piling into
the stock were actually expecting a market increase. So certainly
something to keep in mind and they immediate aftermath and
certainly what it could be for the longer term in
terms of competition.
And along with Intel on Thursday, we're going to get
results from American Express as well, maybe a little more
color on the consumer after what we heard from the
big banks this past week.
Yeah, it'll be interesting to see what they say. Obviously,
we've kind of talked at nauseum across the newsroom about
the divide and bifurcation of the credit card market when
you look at American Express certainly catering to either a
more kind of income oriented consumer or simply people who
want to have the platinum cards and are willing to
pay the hefty annual fee for some of those perts.
One of the things that has been interestingly flagged across
some of the analysts notes and even with news that
they recently struck a deal to acquire a company called HyperCard,
is this push potentially into AI, expense and management AI.
Earlier this month introduced their anx agentic Commerce Developer Kit,
so really trying to focus on how they can kind
of thread that needle of being a payments company, being
a credit card company, and also cutting costs and powering
growth from the commerce side of things utilizing things like AI. Obviously,
that was such a big buzzword for the last year
and really few years, so certainly seeing how the company
can lean on some of those AI tools and what
that ultimately could mean for the bottom line.
Thank you for this, Bailey, great having you on with us.
That's Bailey Lipschultz, senior equities reporter for Bloomberg News. Coming
up on Bloomberg day Break weekend, we'll look to first
quarter European earnings amidst broader headwinds. I'm Nathan Hager, and
this is Bloomberg. This is Bloomberg day Break Weekend, our
global look ahead at the top stories for investors in
the coming week. I'm Nathan Hager in Washington. Up later
in our program and we'll look at how the war
in Iran has affected inflation in Japan. But first, in
the coming days, Europe's biggest companies share details about their
recent performance with the market. The disclosures come at a
pivotal time, as war and inflation threatened to undermine the
profit outlook for twenty twenty six. For more, let's go
to London and bring in Bloomberg day Break Europe ankor
Caroline Hepger Nathan.
The war in Iran is a key topic for public
and private companies operating across a broad range of sectors.
For one, it is pushing up inflation. The latest data
for the Eurozone shows headline inflation rose by two point
six percent year on year in March. That was more
than economists had expected. It's up from one point nine
percent in February, driven by pump prices, but on certainty
around the path of energy prices also does remain extremely high.
As companies prepared to report first quarter earnings in Europe,
there may well be other themes that emerge on consumer sentiment,
AI disruption and concerns about excesses in private credit. Despite
recent volatility in markets, the CEO of the London Stock Exchange,
Julia Hoggard, has told Bloomberg she's optimistic about prospects here
in the UK.
Look, the simple reality is we have the biggest pipeline
we've had since two thousand and five. So this reform
agenda is bearing fruit. Our lawyers and our bankers are
very busy right now in preparing transactions, and those transactions
are coming in not just from the UK but around
the world. But there is always more you can do.
You have to think of the exchange product in the
same way that any company thinks of any product. Does
it serve the needs of its clients, and so a
lot of what we're factioning on right now is we've
had massive reform to enhance retail participation in the UK
because actually there were quite a lot of European regulations
it made it quite hard for retail to access regulated
markets unlike him and therefore we have reversed those in
the UK and now we're working on the cultural engagement
campaigns in the UK for retail to increase their participation
for our pension funds as well to increase their participation
not only with public companies but with private companies, and
that is where the majority of the focus is because
the reform agenda has been so swift and so profound
of the UK that most of our checklist we've actually
checked off.
That was the London Stock Exchange CEO Julia Hoggart. So
how our firms navigate in the current environment and which
earnings stories should we be looking at in the coming days.
Joining me now is Bloomberg's senior stratus for equity markets,
Michael Musika, and our private equity reporter Sweat to Gopinath.
Welcome to both of you. Michael, I want to start
with you thinking about the public markets and whether there's
any evidence that the Middle East tensions are already affecting performance.
Well, it is already starting to impact companies, especially in
Europe and especially in the consumer sector. We had earnings
report from our luxury companies LVMH here Ames as well
as a beverage company per Ricard. The three of them
had very underwhelming results and most of it was blamed
on the war. For luxury companies, it's a tricky one
those companies. They don't have a very big customer base
in there, like in terms of sales it's between five
and ten percent, depending on the companies. Richmond is the
one with the highest one with about ten percent. But
those customers are very affluent and they travel a lot,
and they buy luxury goods everywhere in the world when
they travel, which they haven't been able to. So the
reality for those companies is we've been waiting for a
recovery in the luxury sector in the constrmer sector for
a while now, and our recovery is becoming completely elusive.
Okay, So that important sector then in Europe looking a
little bit tricky. What are the big names and we
should be looking out for in the next few days
that are going to report that we can think about.
So lots of CONSUMERUS are going to come, but I
will talk about one specific sector which is different is
the tech sector. The reason is that next week we
have SAP. Sapeople are the biggest companies in Europe and
in the software and services sector, a sector that was
massively impacted by AI potential disruption. I say potential because
at the moment we don't see any evidence of that disruption,
but the sector was battered. The whole sector was battered
in the US and in Europe, and SAP in particular,
So it would be interesting to see what they are
going to say and what will be there forward guidance.
I did see a story that you put out a
few days ago that was looking over all European businesses
that actually there is a view that analysts are still
being much too optimistic about the earnings potential of European
businesses for the whole of this year. I mean, things
are very uncertain though, aren't they. So how do you
think about that?
That's right, so you have like a very lofty expectations,
but that that's valid for pretty much the whole world
and in the US, we're talking fifteen percent, and in
growth this year in Europe it's double digit as well,
like teny eleven percent. These earning expectations were set up
like at the end of last year kind of and
they haven't come down. They haven't come down because analysts
still expect fiscal stimulus in Europe to kick in like
aggressively this year. They expect growth to improve. But the
problem is the war is changing all that. I mean,
first of all, you have input cars that are rising. Second,
interest rates might be rising as well. Growth might be impacted.
Already we're seeing like economic surprises in Europe plunging into
negative territory. And on top of that, the stimulus is coming, yes,
or it has started already, but if governments need to start,
you know, real locating resources to different areas because of
the war, and because oil prices are our one hundred
dollars barrel, that's going to delay all of that. So
earnings growth might be like also very very high. The
expectations might be very high.
Too high, too high.
Yeah, yeah.
Indeed, we've seen some europe countries already, you know, trying
to offer some help for consumers and businesses outside of
the war. What do you think is the biggest macro
risk facing companies?
So interest rates is a big one. I mean, we
came from last year expecting a European Central Bank on hold,
a FED that was going to reduce rate at least
three or four times this year, same for the Bank
of England, and now we are we have completely flipped.
The FED is likely to stay on hold at once,
the ECB is likely to raise interest rates two to
three times, and the BO as well. I mean you've
seen in England especially rates are already very high. So
it's going to impact boring for the government, is going
to impact companies how to finance their their growth and
their activity. And that's a that's a big, big risk market.
Okay, that's interesting. Yeah, absolutely, Michael, thank you for those
thoughts on the public companies that we're expecting to report
in the next few days. I don't think we can
really have a conversation though about first quarter results, the
impact of the war of inflation, the worries that investors have,
without also thinking about private markets that have had also
a very interesting I'll put it that way. First quarter
you've had more private credit withdrawal limits. You've also got
a bit more concern about private markets that central banks
are raising. So Sweater, I want to bring you in
now on this just talk us through some of the
big factors that private markets and investors have been in
the last few months.
Yeah, it's been an interesting period of time. Indeed, it's
all really down to the debate about the impact of
sas of rather the impact of AI on SaaS, the
SaaS apocalypse that you referenced earlier. Private capital firms piled
into software firms during the COVID dealmaking boom, and many
of those companies are now being disrupted by AI, or
at least at the threat of being disrupted by AI.
And we've seen the AI related sell off in public
markets extend to the listed private capital firms, and a
number of them, the likes of Blue Out especially, are
also having to drop gates on vehicles catering to retail
investors in particular because as you say, a lot of
them are scrambling to exit. And more broadly, the increased
volatility we've seen in public markets also means it's that
much more difficult to exit assets. Now it's not much
more difficult to sell and monetize assets, which is a
big problem for an industry that's facing pressure from investors
to return cash back.
Do you think that there are particular sectors. I mean,
you mentioned, you know, SaaS companies that are in focus,
but are their particular sectors that are seeing special sort
of stress because a lot of the issues with private credit,
they've been individual red flags, and everybody's been wondering is
it more systemic? Is it isolated to some companies and sectors.
Tech more broadly is the most disrupted sector right now.
As you were saying, horizontal software companies in particular, there's
sort of buy and bulk up model that private equity chased.
Essentially means that you have these sprawlink software companies that
have a number of sort of disparate services that they
offer to customers in one sort of bulky package, and
a lot of these clients are now pushing back against
those types of packages because they can cut costs by
turning to cheaper AI solutions. So horizontal software that's most
at risk. Professional services, which is again one of the
more attractive sectors for private capital, that's also at risk. Essentially,
any kind of knowledge work that can be replaced by
AI is at risk, and that was a very attractive
sector for private capital in recent years.
And do you think that there is a specific impact
on private markets from what's been happening in the Middle East.
I mean, obviously inflation and interest rates. So far, we.
Haven't really seen private companies turn away from the Middle East,
essentially because they rely on the region's sovereign wealth funds
for a lot of their funding. Being capital just this
week announced a new office in Abu Dhabi. It's actually
their first in the region. And we've also seen several
deals come through. We've seen Blackstone deploying to the region,
livingked a couple of deals. Recently they announced in aircraft
leasing venture with the Dubai firm. This month, they also
committed about two hundred and fifty million to a new
payments and FRA structure platform based in Abu Dhabi. And
we've seen large Middle Eastern investors actually continue to deploy
money externally. An Abu Dhabi Royal investment firm invested in
and Richard Goering's hospitality business, which is you know, Annibel
of the private club in Mayfair. It's also the IV
chain of restaurants. So we are seeing them make the
kind of splashy investments abroad that they use for pre war.
That's interesting to understand the given that GCC investors have
been so crucial underpinning big investments in US tech and
banks and taking stakes and businesses. Really interesting point, Switzer,
Thank you so much for being with me. That is
a sweat of open off our private equity reporter alongside
Bloomberg's senior strategist for equity markets, Michael Masika, setting you
up for the week ahead when it comes to European earnings,
and we will of course have full coverage and all
the announcements on Bloomberg platforms as earning season kicks off
in the next few days. I'm Karen Hepge here in London.
You can catch us every weekday morning for Bloomberg Daybreak.
Youre at beginning at six am in London. That's one
am on Wall Street.
Nathan, Thanks Caroline, and coming up on Bloomberg day Break weekend,
we'll look at how the war and Iran has affected
Japanese inflation. I'm Nathan Hager and this is Bloomberg.
Hey, wouldn't it be great if life came with remote control?
You know, you could hit pause when you needed to
or hit rewind like that time you knock down that
wasp's nest. Well, life doesn't always give you time to
change the outcome, but pre diabetes dos. With early diagnosis
and a few healthy changes, you can stop pre diabetes
before it leads to type two diabetes. To learn your risk,
take the one minute test today at do I Have
Prediabetes dot org, brought to you by the AD Council
and It's pre Diabetes Awareness Partners.
I'm Nathan Hager in Washington with your global look ahead
at the top stories for investors in the coming week,
when we'll get insights on how the war in Iran
has affected Japanese inflation. Let's get to Bloomberg's Doug Krisner,
host of the Daybreak Asia podcast.
Thanks Nathan. Not only those higher oil prices likely increase
Japanese inflation, but a weaker yen is pushing import prices
for other goods higher. So the question now is whether
markets will be surprised at all by the march readings
on Japan's CPI and PPI. For a closer look, I'm
joined by Bloomberg's Brian Fowler. Brian is senior editor for
the ECOGOV team covering North Asia and Brian joins us
from our studios in Tokyo. Thank you for being here.
Give me a sense of what the market is expecting
to see in these inflation readings.
Brian, Yeah, so just a little bit of background. So
these data, which come out four days ahead of the
next BOJ policy decision, will be hugely watched. We saw
them in February. The main gauge, which excludes fresh food
but includes energy. That main gauge fell to one point
six percent in February, and that was slower than the
boj's target for the first time in almost four years,
largely because of subsidies meant to cap utility call. Now,
the market expects to see a big spike in March
because of course the energy prices and the oil price
hikes that we've seen since the escalation of the Middle
East conflict are going to have a big impact. So
we definitely will see inflation picking up in March, and
the question will be is that enough to tilt the
BOJ towards a hike.
So, Brian, I want to pick your brain a little
bit more about the BOJ and its thinking. But before
I do, I have to ask about that print on
Tokyo CPI. I know that it's used sometimes as a
leading indicator of what we're likely to see in the
national CPI reading. And as I recall that Tokyo CPI
print was cooler than expected, was that sort of an aberration?
What do you think?
Yeah, so it is a leading indicator, although to some
extent it gets a little bit distorted because of certain
subsidies that are effective only in the capitol and not nationwide,
so a little bit of a It's a guidepost, but
I wouldn't say it's a direct correlation, and I think
we probably will see a bigger impact on the nationals scale.
So, as you mentioned, the BOJ meeting is at the
end of the month. Obviously we're going to have the
rate decision. We'll also get an update on the quarterly
economic outlook. I'm curious about what the BOJ is likely
to do, not just in terms of inflation forecasting, but
also where the BOJ thinks the Japanese economy is going
to end up.
Yeah, so in terms of the forecast, we expect the
BOJ to lift its inflation outlook for this year fairly sharply.
We've spoken to officials off the record around the BOJ,
and they've indicated that the CPI will get a boost
and growth also probably will get a downward revision. We
don't have any specifics on that, except there's an expectation
that the higher energy prices could weigh on consumption and
investment to some extent.
So when I think about war in the Middle East
and the closure of the Strait of Hormus, it's not
just the disruption of oil. There are other resources desperately
needed by economies in the Asia Pacific. Obviously, these resources
are not getting to their destinations, and that I would
think is likely to have an inflationary impact as well.
Yeah, so we've already seen the Japan's government take steps
to try to secure supplies of other products that are
related to oil, such as napta, and these products are
critical in producing plastics and other things in the across industry.
So we could well see inflation kind of ripple throughout
the economy, and I think that's a big concern at
the BOJ.
So what about a rate hike? Is that a possibility?
Well, just a little bit of background. So Ueita when
he raised rates in July twenty twenty four. The next
few days we saw global market meltdown, and that had
a lot to do with what was happening at the FED,
but many blamed the boj for spurring the turmoil with
an unexpected move. So since then, Uaida has really stepped
up his communications. Up until a few weeks ago, everything
was pointing toward a hike. At the end of this month,
he was sending the usual sort of nuanced language, but
it was very consistent and you could see the reaction
in the market. If you look at the Bloomberg terminal
and do the WRP function world interest rate probability, we
were up to seventy percent priced in hike for April
twenty eight. We've seen that now come back quite sharply
as Uida has shifted his messaging just a little bit
to emphasize all the uncertainty surrounding the Middle East conflict
and how that's really showing no signs of clearing up.
That makes it a little bit harder for him to hike,
because obviously the policymakers don't like to do a lot
when they don't know what's coming ahead.
Do we have an indication as to how consumers are feeling.
What's sentiment like right now?
Yeah, So I think consumers would like to see any
sort of step that could help the end, which of
course would be a rate hike and and you know,
in that sense mitigate the sort of inflationary impact we've
seen from rising import costs. And so I think, you know,
there's a lot of support at the local level for
the BOJ to continue normalizing policy.
But hasn't there been a lot of positivity when it
comes to the wage side.
Yeah, So the wage we are getting the results for
annual wage negotiations, and it's looking like they're going to
be almost as high as they were last year. Last
year was we saw the biggest gains in more than
three decades. This year, maybe a couple decimal points slower,
but five percent for the main union group RENGO, which
is you know, historically way higher than it's been up
until a couple of years ago. So that's looking like
the momentum is holding.
So you mentioned the fact that the end has been
very weak, and I'm wandering away from an actual rate hike,
whether in prevention in some form might be called for.
Are we not at that point right now? In overall
yen weakness as it relates to the dollar.
Well, we're very much at the point where it's being
talked about, it's being hinted at. We had Finance Minister
Katayama in Washington meeting with Scott Bessant and kind of reaffirming,
reaffirming their shared concern about the en, and she came
out of that talking about how she is poised to
take quote bold steps unquote. Bold steps, of course are
reference to interventions. So there's definitely the thread of it,
and I think the next time to look for it,
especially would be after the BOJ meeting, if the end
weeken substantially after that.
Brian, good stuff. Thank you so much for helping us
at the stage for the Japanese inflation data and the
next meeting of the BOJ. Brian Fowler is Bloomberg Senior
editor for the ecogov team covering North Asia. Brian was
in our studios in Tokyo. Now we go to Hong Kong,
where the third day of the HSBC Global Investment Summit
wrapped up in the last week, and that's where we
caught up with HSBC CEO Georges L. Hendrie. He spoke
with Bloomberg TV host Yvonne Mann and David in Glaze.
I have to kind of start off.
With your take on what's going on in the Middle
East right now. Given that you're born in Lemanon, you
lived there for some time, you were once the head
of the Middle East Office there as well. From your perspective,
what do you think there's this impact that this war
could have on the business.
Yvon of course, we're sad and concerned with what's happening
in the Middle East, and we're concerned not just with
what's happened, but also with how long this will take.
Our immediate priority really is to support our colleagues. We
have more than ten thousand people working in the Middle
East as a region, support their safety, security and their
well being, and we've been doing that very actively over
the last few weeks. But the important thing to say
is we're open for business. We're here to support our customers.
We've been, you know, operational resilient throughout that period, of course,
following government guidance and requests, but we are open for business.
We've been in this region for more than one hundred
and thirty years. The regions has faced challenges in the
past after every challenge, this region has come out of
it more resilient, stronger and with bigger promise for the future,
and this time is no different. We continue to believe
in the long term prospects and the promise that this
region has, and we are here to support our clients
through rough times when there are rough times, be it
those customers in the Middle East or those international customers
operating in the Middle East, and we will see it
through together.
As someone as Yvonn is pointing out, I'll speak up
a little bit because of the around here where I
think all your clients are in town, and it speaks
to the speaks volumes about the volume behind us. As
someone who is very familiar with the region, and you've
just reiterated your commitment to the Middle East. A lot
of people are wondering as a source of capital, as
a wealth club, these big cities like du Buy for example,
what the future holds for these cities as financial centers.
Do people need to rethink that or is there nothing
to retake?
There has been a global trend of diversification of booking
centers that's been taking place for a number of years now,
specifically by our wealth management customers. So they've been using
booking hubs such as Hong Kong, course such as Singapore,
such as the UAE both in Dubai, and of thew
such as Switzerland, the UK, the US, and they have
naturally been diversifying their wealth to be managed across multi
of these hubs, partly to be able to benefit from
the expertise that each market raids and partly as a
matter of list management. That trend continues in so far
that this is you know this concerning the Middleast today, frankly,
we have seen very benign movements. I think the resilience
of the Middle East as a long term hub for
wealth management and captive has not changed. But of course
everybody is hoping to see the end of the current
conflict and training to see the end of the current contribution.
You're also a global trade bank, So what do you
see in terms of change at any of trade flows?
Do you see any of that since this war erupted?
And how does it differ from maybe last year when
we were talking about tariffs.
So trade has certainly been disrupted now it's been TIFFs
of twenty twenty five have disrupted trade with the US.
This time we'll seeing a major disruption in trade far
beyond the Middle East, but in particular towards Asia because
of the strait of Homos clothing. We believe there are
multiple hundred, probably up to eight hundred ships that are
still locked up in the gunf And you know, of
course the passage daily one hundred and fifty ships has
dropped to maybe five to ten ships at best, So
that is hugely disruptive. The impact of such will be
felt way beyond the East, and that is one very
in factor for us, not just in price of goods
oil refined products LNG ANDPG, but also fertilizers, metals, etc.
But it's also going to be felt in the availability
of such goods, and we worry that a continuation of
this conflict will have that impact globally, way beyond the East.
That was HSB see CEO Georgis l Hedri speaking with
Bloomberg TV host Devon Men and David Inglace from the
sidelines of the HSBC Global Investment Summit. I'm Doug Christner.
You can catch us weekdays for the Daybreak Asia podcast.
It's available wherever you get your podcast.
Nathan, Thanks Doug, and that does it for this edition
of Bloomberg day Break Weekend. Join us again Monday morning
at five am Wall Street Time for the latest on
markets overseas and the news you need to start your day.
I'm Nathan Hager. Stay with us. Top stories and global
business headlines are coming up right now.