Daybreak Weekend: US Jobs Preview, UK Diversity, BOJ Meeting

Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.200 --> 0:00:13.600 This is Bloomberg day Break Weekend, our global look at 0:00:13.600 --> 0:00:15.520 the top stories in the coming week from our day 0:00:15.520 --> 0:00:18.600 Break anchors all around the world. Straight Ahead on the program, 0:00:18.640 --> 0:00:21.360 we look to the October jobs Report in the US, 0:00:21.680 --> 0:00:24.959 along with some big name tech earnings. I'm Tom Busby 0:00:25.079 --> 0:00:25.680 in New York. 0:00:26.000 --> 0:00:28.200 I'm Caroline Heppi here in London, where we're shining a 0:00:28.280 --> 0:00:32.680 light on equity and equality in the UK's financial services sector. 0:00:33.320 --> 0:00:35.640 I'm dek Krisner looking ahead to the next meeting of 0:00:35.680 --> 0:00:38.720 the Bank of Japan as well as the Fintech Summit 0:00:38.760 --> 0:00:39.479 in Hong Kong. 0:00:45.200 --> 0:00:49.400 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:49.440 --> 0:00:53.360 eleven three, on New York, Bloomberg ninety nine to one, Washington, DC, 0:00:53.760 --> 0:00:58.640 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius 0:00:58.800 --> 0:01:02.160 XM one twenty one, and around the world on Bloomberg Radio, 0:01:02.240 --> 0:01:05.600 dot Com and The Bloomberg Business. 0:01:08.600 --> 0:01:09.160 Good day to you. 0:01:09.240 --> 0:01:11.480 I'm Tom Busby, and we begin today's program with the 0:01:11.520 --> 0:01:15.360 October jobs Report. We get non farm payroll numbers this 0:01:15.520 --> 0:01:18.679 coming Friday, eight thirty am Wall Street Time and for 0:01:18.800 --> 0:01:21.520 more on what to expect and how this could impact 0:01:21.520 --> 0:01:25.839 FED policy. We're joined by Michael McKee, Bloomberg International Economics 0:01:25.880 --> 0:01:30.120 and Policy correspondent, Well Michael. The first of November, just 0:01:30.240 --> 0:01:34.039 days before a contentious presidential election and a Federal Reserve 0:01:34.120 --> 0:01:37.399 policy meeting, we get the October jobs report. What are 0:01:37.400 --> 0:01:38.480 you expecting to see? 0:01:39.240 --> 0:01:44.640 I don't know. I realized that that's not a satisfactory answer. 0:01:44.680 --> 0:01:47.840 Here's the problem is, we've had the two hurricanes, and 0:01:48.120 --> 0:01:51.400 we've had the Boeing strike ongoing, and the longer that 0:01:51.440 --> 0:01:55.160 goes than suppliers to Boeing have to lay off people 0:01:55.240 --> 0:01:57.520 because they're not buying their parts and things like that. 0:01:57.640 --> 0:02:01.160 So there's some real unknowns of where this is going 0:02:01.240 --> 0:02:04.760 to come down. And the distribution of forecasts so far 0:02:04.920 --> 0:02:08.680 is very very wide, all the way from about zero 0:02:09.480 --> 0:02:12.000 and there it's possible we could get a negative number 0:02:12.040 --> 0:02:14.400 all the way up to another surprise like we got 0:02:14.520 --> 0:02:17.839 last month over two hundred thousand. So it's really hard 0:02:17.840 --> 0:02:20.960 to tell what's going to happen. Now. The Fed is 0:02:21.000 --> 0:02:25.320 going to look past all of that external impacts on 0:02:25.400 --> 0:02:28.079 the economy and they'll focus on the unemployment rate, which 0:02:28.080 --> 0:02:32.880 would not be affected by the hurricanes or the strike, 0:02:33.400 --> 0:02:35.400 and as long as that doesn't move too much, it 0:02:36.280 --> 0:02:39.640 won't really impact what the FED thinks about the economy. 0:02:40.360 --> 0:02:45.119 But certainly a headline that says zero jobs created or 0:02:45.720 --> 0:02:50.640 two hundred and fifty thousand jobs created might influence some voters. 0:02:51.240 --> 0:02:54.160 So the unemployment rate expected to hold steady no matter what. 0:02:54.280 --> 0:02:58.320 Four point one percent. Let's talk about that varying number. 0:02:58.520 --> 0:03:02.919 Because the hurricanes were Stating and Helene the really bad 0:03:02.960 --> 0:03:05.560 one North Carolina that was actually in September, so it'll 0:03:05.639 --> 0:03:09.560 really show up in the numbers here because the survey 0:03:09.680 --> 0:03:11.680 ends mid October, right for all. 0:03:11.560 --> 0:03:17.320 These Yeah, we didn't see a huge effect for September. 0:03:18.400 --> 0:03:20.160 It was at the end of the month, so it 0:03:20.240 --> 0:03:23.640 depends on how fast people got back to work. Which 0:03:23.680 --> 0:03:26.480 is one of the issues with this is we don't 0:03:26.520 --> 0:03:28.240 really have a good handle on it. Part of the 0:03:28.240 --> 0:03:31.799 problem is all the damage in the Appalachians, in East 0:03:31.800 --> 0:03:36.360 Tennessee and western North Carolina were for the most part, 0:03:36.400 --> 0:03:41.640 in areas that are not heavily populated, and economists try 0:03:41.640 --> 0:03:44.240 to go back and look at the impact of hurricanes 0:03:45.320 --> 0:03:48.960 that have come before, but the ones we've seen in 0:03:49.200 --> 0:03:53.240 recent years have been things like Harvey and Houston. Well, 0:03:53.240 --> 0:03:57.080 that's a very populated area, and so maybe more people 0:03:57.120 --> 0:04:00.360 were out of work for a while. In this case, 0:04:00.760 --> 0:04:05.560 this was also much more destructive. Harvey flooded a lot, 0:04:06.360 --> 0:04:10.400 but this wiped out entire towns. We've all seen the pictures, 0:04:10.680 --> 0:04:13.520 and so those are jobs that may never come back. 0:04:14.200 --> 0:04:16.960 And how do you count that. I mean, it's really 0:04:17.200 --> 0:04:20.880 a rough model of how many people might live in 0:04:20.880 --> 0:04:23.000 the area and have jobs. So it's going to be 0:04:23.080 --> 0:04:28.599 really hard to know whether this is a huge impact 0:04:28.600 --> 0:04:32.240 event or not. The BLS should tell us what it 0:04:32.400 --> 0:04:34.240 thinks the impact was. 0:04:34.760 --> 0:04:37.640 On the other hand, we have seen a bit of 0:04:37.640 --> 0:04:42.039 an upside surprise in weekly jobless claims since that hurricane 0:04:42.080 --> 0:04:44.560 correct the more destructive of the two. 0:04:44.720 --> 0:04:48.320 Well, we've seen it. We saw an immediate bump, and 0:04:48.360 --> 0:04:51.560 then in the last week it came down, but the 0:04:51.839 --> 0:04:54.920 continuing claims have remained elevated, gone up a little bit 0:04:54.960 --> 0:04:57.960 because people are still out of work in those areas, 0:04:57.960 --> 0:05:00.960 but they're not filing new claims. It seems like the 0:05:01.120 --> 0:05:04.400 unemployment offices for those states were very efficient at getting 0:05:04.400 --> 0:05:07.040 people in and getting them on the rolls. But it 0:05:07.080 --> 0:05:11.120 does mean that the jobless claims numbers are much more 0:05:11.200 --> 0:05:15.440 volatile than they were, and that makes it also hard 0:05:15.680 --> 0:05:17.760 to try to figure out what the job's numbers are 0:05:17.800 --> 0:05:18.160 going to be. 0:05:18.520 --> 0:05:20.599 Now, let's go back to what you discussed before. You 0:05:20.680 --> 0:05:25.599 mentioned that strike, that massive crippling strike at Boeing. The 0:05:25.640 --> 0:05:29.320 machinist union rejected a deal thirty five percent wage increase 0:05:29.360 --> 0:05:33.400 over four years. But this thing, it could be a 0:05:33.440 --> 0:05:37.200 long protracted strike. How will that impact the economy going forward? 0:05:37.520 --> 0:05:40.960 Well, it'll have a huge impact in the data because 0:05:41.480 --> 0:05:46.640 the Boeing is the major influence in durable goods just 0:05:46.680 --> 0:05:49.760 because they're the most expensive durable good you can buy. 0:05:50.760 --> 0:05:54.760 One airplane is a lot of money, so we will 0:05:54.800 --> 0:05:57.240 see distortions in that. So you'll be looking at the 0:05:57.480 --> 0:06:03.719 x transportation part of durable goods, the number of people 0:06:03.800 --> 0:06:08.200 who are out of work. If you're on strike, you're 0:06:08.360 --> 0:06:13.560 counted as employed but not at work, and so that 0:06:13.600 --> 0:06:17.120 won't have a major effect. But where you would see 0:06:17.120 --> 0:06:20.840 it is in the companies that make the parts that 0:06:20.920 --> 0:06:26.279 go into Boeing planes. Boeing had been continuing to buy 0:06:26.600 --> 0:06:30.800 its supplies and now they're cutting back on that. So 0:06:30.880 --> 0:06:34.360 maybe we start to see some machine shops and things 0:06:34.400 --> 0:06:34.719 like that. 0:06:34.839 --> 0:06:36.479 Well, Spirit Aerosystems. 0:06:36.000 --> 0:06:41.000 Spirit Aerosystems layoff people and those people may show up 0:06:41.040 --> 0:06:45.680 as unemployed, and that could have an impact on the 0:06:45.760 --> 0:06:49.320 jobless straight although the feeling is that it hasn't been 0:06:49.800 --> 0:06:53.400 fast enough to effect this month, but it could next month. 0:06:53.640 --> 0:06:53.800 Well. 0:06:54.120 --> 0:06:57.800 October Jobs report coming out this coming Friday eight thirty 0:06:57.839 --> 0:07:00.640 am Wall Street Time our thanks to Michael McKay, Bloomberg 0:07:00.680 --> 0:07:05.040 International Economics and Policy correspondent. We move next to corporate earnings, 0:07:05.080 --> 0:07:08.240 with much of the Magnificent seven reporting their latest results 0:07:08.320 --> 0:07:12.400 this week, key names like Apple, Amazon, Alphabet, Microsoft, and 0:07:12.520 --> 0:07:15.640 Meta Platforms. For more on some of what we can expect, 0:07:15.720 --> 0:07:20.320 we're joined by Mandeep Singh, Bloomberg Intelligence Senior Tech industry analyst, 0:07:20.920 --> 0:07:23.400 man Deep Thank you for joining us. Let's start with 0:07:23.520 --> 0:07:26.640 what we already know this past week. Tesla the first 0:07:26.760 --> 0:07:29.160 of the big tech names to post earnings, surprising Wall 0:07:29.240 --> 0:07:32.240 Street with a profit and an upbeat outlook. Do you 0:07:32.320 --> 0:07:34.640 expect this momentum to continue with some of the other 0:07:34.840 --> 0:07:38.240 big names, Apple, Amazon, Meta, Microsoft, I think so. 0:07:38.840 --> 0:07:43.440 And what they said was look, their demand for their 0:07:43.560 --> 0:07:46.480 cars is strong, and on the AI front, they seemed 0:07:46.520 --> 0:07:49.840 to be making a lot of progress where everyone was 0:07:49.960 --> 0:07:54.400 questioning their ROBOTAXI timeline. After the event, I think some 0:07:54.560 --> 0:07:57.680 of the fears went away with their earnings and they 0:07:57.800 --> 0:07:59.880 had more clarity on the call in terms of what 0:08:00.120 --> 0:08:02.920 they are doing on the AI front. And that really 0:08:03.040 --> 0:08:05.960 bodes well for the big tech companies that are reporting 0:08:06.520 --> 0:08:13.920 next week, whether it's Meta, Alphabet, Amazon, even Apple, simply 0:08:14.000 --> 0:08:16.960 because Microsoft is obviously the big bell weather when it 0:08:17.080 --> 0:08:21.400 comes to AI, and look when it comes to cloud. 0:08:22.080 --> 0:08:26.160 There's been a big tailwind from AI spend because all 0:08:26.240 --> 0:08:29.080 these companies that are raising their capex, that are setting 0:08:29.160 --> 0:08:33.240 up AI infrastructure, they are able to monetize it through 0:08:33.320 --> 0:08:37.280 their cloud. And we saw from Microsoft last quarter the 0:08:37.360 --> 0:08:42.240 AI contribution to Azure verse seven percentage points. This quarter 0:08:42.320 --> 0:08:44.800 will probably be higher at least nine to ten percent 0:08:44.880 --> 0:08:48.400 if you ask me. And look if with Alphabet they 0:08:48.440 --> 0:08:51.640 said it was multi billions, they didn't quantify the percentage 0:08:51.679 --> 0:08:56.080 point contribution by I expect their cloud revenue Google Cloud revenue, 0:08:56.120 --> 0:08:59.280 which is a forty billion dollar run lad business, will 0:08:59.320 --> 0:09:04.199 get a lift AI. Same thing for Amazon. Amazon, given 0:09:04.520 --> 0:09:06.839 its size on the cloud side, with over one hundred 0:09:06.840 --> 0:09:09.840 billion dollar runder, it probably will not have the same 0:09:10.000 --> 0:09:13.480 magnitude as Microsoft and Google, but clearly it will get 0:09:13.520 --> 0:09:16.720 a lift from AI, so that's the common thread. And Meta, 0:09:16.920 --> 0:09:21.160 we know they've done extremely well on the ad side 0:09:21.320 --> 0:09:25.400 because of applying AI for recommendations and ads, so I 0:09:25.520 --> 0:09:28.719 expect them to have a good quarter as well. 0:09:29.200 --> 0:09:29.360 Well. 0:09:29.480 --> 0:09:34.360 Yeah, the advertising mostly affects Meta and Amazon. Yeah, but 0:09:35.000 --> 0:09:37.880 cloud computing, like you said, seems to almost all of 0:09:37.960 --> 0:09:41.760 them have a hand in that as well as artificial intelligence, 0:09:41.800 --> 0:09:43.920 some more than others though with artificial intelligence. 0:09:44.120 --> 0:09:47.760 Yeah, and look, I mean, given these companies will raise 0:09:47.880 --> 0:09:50.520 CAPEX again, it will be interesting to see how the 0:09:50.640 --> 0:09:56.240 markets react, because for cloud companies like Microsoft and Google, 0:09:56.920 --> 0:10:00.480 I think the reaction will be positive on CAPEX increases 0:10:00.600 --> 0:10:03.760 simply because they are able to show the monetization in 0:10:03.880 --> 0:10:07.280 their cloud segment. For someone like Meta, I mean, clearly, 0:10:07.400 --> 0:10:09.800 their growth rates are way higher than some of the 0:10:09.880 --> 0:10:13.800 smaller names like snap Interests, So I think that just 0:10:13.920 --> 0:10:16.719 goes to show they are executing very well on the 0:10:16.800 --> 0:10:20.240 AD side. But it's harder for investors to see how 0:10:20.360 --> 0:10:24.360 much of that CAPEX increase is translating into real revenue. 0:10:24.760 --> 0:10:27.880 It's helping their product, but it's not as separate line 0:10:27.960 --> 0:10:30.559 as you have with Microsoft and Google and Amazon. And 0:10:30.679 --> 0:10:33.120 I think that's where it'll be interesting to see how 0:10:33.559 --> 0:10:37.760 investors react to Meta earnings, given expectations. 0:10:37.080 --> 0:10:37.640 Have gone up. 0:10:37.920 --> 0:10:40.600 But they'll probably come out and say you're raising their capex. 0:10:40.679 --> 0:10:44.400 And I think in one queue the reaction was negative, 0:10:44.440 --> 0:10:48.800 in two Q was positive. So I'm expecting it'll be 0:10:49.120 --> 0:10:49.960 a mixed. 0:10:50.320 --> 0:10:52.840 Are you expecting is Meta going to be the standout 0:10:52.880 --> 0:10:54.280 this week out of those five? 0:10:54.600 --> 0:10:54.640 No. 0:10:54.880 --> 0:10:56.960 If I had to bet my money, I would say 0:10:57.040 --> 0:11:00.959 expectations are lower for Alphabet. I mean, I would say 0:11:01.000 --> 0:11:05.520 a lot of folks are investing Alphabet to disappoint given 0:11:05.600 --> 0:11:08.439 the pressure on their search business from open Ai and 0:11:08.600 --> 0:11:13.440 Perplexity and all these new companies. So it's always about 0:11:13.520 --> 0:11:16.559 expectations and you have to frame it in accordance to 0:11:16.679 --> 0:11:21.439 where investor expectations are. So investor expectations are lowest for Alphabet, 0:11:21.800 --> 0:11:23.480 and that's where you know if they come out and 0:11:23.600 --> 0:11:26.800 say search business is holding up and they are seeing 0:11:26.840 --> 0:11:29.920 tailwind from YouTube and cloud, you will see a bigger 0:11:29.960 --> 0:11:32.920 stock reaction there compared to a Meta or Microsoft, where 0:11:32.960 --> 0:11:34.280 expectations are already high. 0:11:35.280 --> 0:11:38.920 Interesting and of course, as you mentioned, advertising revenue is 0:11:39.000 --> 0:11:41.800 going to be always a big revenue gainer. 0:11:42.160 --> 0:11:42.360 Yeah. 0:11:42.400 --> 0:11:46.160 I mean, and look AI has shown that you know, 0:11:46.760 --> 0:11:50.600 you can get a lift in at targeting from application 0:11:50.720 --> 0:11:53.720 of AI. The content recommendation is much better. So all 0:11:53.800 --> 0:11:57.040 those things are there, but they're probably reflected in Meta's 0:11:57.480 --> 0:12:00.480 estimates for Q and twenty twenty five. 0:12:00.559 --> 0:12:03.880 At this point, well, let's talk about the last of 0:12:03.960 --> 0:12:07.000 the Magnificent seven in Nvidia. We won't get Q three 0:12:07.040 --> 0:12:10.439 earnings until November nineteenth, with its new line of Blackwell chips. 0:12:10.960 --> 0:12:13.600 What are you expecting? Are you expecting more blowout news 0:12:13.679 --> 0:12:16.839 from Nvidia or has that kind of subsided No? 0:12:17.040 --> 0:12:20.520 I think if anything, what Jensen has told us so 0:12:20.679 --> 0:12:23.719 far this quarter is demand is off the charts and 0:12:23.960 --> 0:12:28.520 he is setting expectations for a blowout quarter. So if anything, 0:12:28.640 --> 0:12:32.600 I expect all the maxiven to do very well beat 0:12:32.679 --> 0:12:34.840 and raise. I think Tesla was the one who could 0:12:34.840 --> 0:12:37.000 have disappointed, so we saw beat and rais from them. 0:12:37.280 --> 0:12:39.800 I expect others to do the same. But with Nvidia, 0:12:39.920 --> 0:12:42.199 the growth rate is we are talking about eighty percent 0:12:42.320 --> 0:12:45.079 growth rate in the quarter and they'll probably blow it 0:12:45.240 --> 0:12:45.960 out once again. 0:12:46.120 --> 0:12:48.600 Wow, a lot to look forward to. Our thanks demand 0:12:48.640 --> 0:12:53.120 deep sing Bloomberg Intelligence senior tech industry analyst, and coming 0:12:53.160 --> 0:12:55.160 up on Bloomberg day Break weekend, we'll shine a light 0:12:55.240 --> 0:12:59.400 on equity and inclusion efforts in the UK's financial services sector. 0:12:59.840 --> 0:13:14.720 I'm Tom Busby and this is Bloomberg. This is Bloomberg 0:13:14.800 --> 0:13:16.839 day Break weekend, our global look ahead at the top 0:13:16.880 --> 0:13:19.720 stories for investors in the coming week. I'm Tom Busby 0:13:19.760 --> 0:13:22.319 in New York. Up later in our program a look 0:13:22.320 --> 0:13:25.040 ahead to this week's Bank of Japan meeting and monetary 0:13:25.160 --> 0:13:29.160 policy decision. But first, as the UK celebrates Black History 0:13:29.240 --> 0:13:32.320 Month this October, a spotlight has been placed on diversity 0:13:32.640 --> 0:13:36.400 and inclusion efforts in the country's financial services sector. In 0:13:36.440 --> 0:13:38.760 the wake of the Black Lives Matter movement. British companies 0:13:38.800 --> 0:13:42.720 claim they wanted to seriously address racial disparities, but four 0:13:42.880 --> 0:13:46.040 years later, have those commitments been honored for more. Let's 0:13:46.080 --> 0:13:48.040 go to London and bring in Bloomberg day Break euro 0:13:48.160 --> 0:13:50.160 banker Caroline Hepgar Tom. 0:13:50.400 --> 0:13:54.000 Black workers and diversity practitioners in the City of London 0:13:54.080 --> 0:13:58.840 have told Bloomberg that corporate priorities are shifting away from diversity. 0:14:00.040 --> 0:14:04.760 Research from Bain Consultancy and the Black Talent Charter estimates 0:14:04.800 --> 0:14:08.280 that at the current rate, it will take fifty years 0:14:08.400 --> 0:14:11.800 for the proportion of black talent in financial and professional 0:14:11.920 --> 0:14:15.640 services to get close to four point four percent, which 0:14:15.760 --> 0:14:19.840 is the percentage of black employees in the UK's working 0:14:19.920 --> 0:14:24.200 age population. Despite issues surrounding diversity coming to the four 0:14:24.320 --> 0:14:27.000 in twenty twenty after the murder in the US of 0:14:27.160 --> 0:14:32.800 George Floyd, black representation in financial services has not significantly 0:14:33.000 --> 0:14:37.960 improved since then, and in some sectors it's worsened. Bloomberg 0:14:38.040 --> 0:14:42.040 reporter Tia Adabayo has spent weeks investigating how firms in 0:14:42.120 --> 0:14:45.760 the City of London have quietly rolled back on efforts 0:14:45.800 --> 0:14:50.680 to diversify their workforce, a contrast to the public pledges 0:14:50.800 --> 0:14:55.920 that global corporations made after the outcry that was sparked 0:14:56.040 --> 0:15:00.040 by Floyd's murder in the US. Those that she we 0:15:00.120 --> 0:15:03.560 spoke to said the city has quote given up on 0:15:03.720 --> 0:15:08.520 inclusion efforts, leaving black workers feeling abandoned and quitting the 0:15:08.600 --> 0:15:12.040 sector at a higher rate than their peers, but change 0:15:12.120 --> 0:15:15.640 could be a foot. While reporting on the ethnicity pay 0:15:15.720 --> 0:15:19.080 gap is not yet mandatory in Britain, the new Labor 0:15:19.160 --> 0:15:24.240 government recently committed to introducing a draft bill mandating it 0:15:24.760 --> 0:15:29.560 in this parliamentary session. Many finance firms have already started 0:15:29.640 --> 0:15:34.880 publishing the data. Overall, DEI professionals say a more deliberate 0:15:35.000 --> 0:15:38.480 approach needs to be taken. That was the opinion of 0:15:38.640 --> 0:15:42.280 Mark Lomas, who is the head of culture at Lloyd's 0:15:42.280 --> 0:15:45.400 of London, who spoke to tia Adebayo for the Peace. 0:15:45.720 --> 0:15:48.960 I think we see this challenge across lots of employers, 0:15:49.440 --> 0:15:52.720 and that is essentially making sure that your processes are 0:15:52.920 --> 0:15:55.880 fit for purpose. You are deliberate in how you go 0:15:56.000 --> 0:16:00.440 out to attract talent, you have inclusive recruitment practices, and 0:16:00.600 --> 0:16:04.960 then you have the ability and the practices to retain talent. 0:16:05.360 --> 0:16:08.840 I think at the Lloyd's market why we've been so 0:16:09.080 --> 0:16:13.480 successful is because we've had a very deliberate approach to it. 0:16:13.960 --> 0:16:17.640 It's not impossible, but it takes concerned, concentrated effort. 0:16:17.800 --> 0:16:20.640 Can you tell me a bit more about what you're 0:16:20.720 --> 0:16:23.440 doing in terms of retention, because when we look at 0:16:23.800 --> 0:16:27.760 the statistics, it shows that black talent drops off at 0:16:27.800 --> 0:16:30.720 a sort of mid to senior level, so they're coming 0:16:30.800 --> 0:16:34.240 into the profession but they're not staying. Can you shed 0:16:34.280 --> 0:16:36.000 some light as to why you think that might be 0:16:36.120 --> 0:16:37.560 and what you're doing to combat it. 0:16:38.040 --> 0:16:41.480 I think for every company it's a little different. The 0:16:41.560 --> 0:16:45.120 reality is the further you go up the company structure, 0:16:45.160 --> 0:16:47.520 the less jobs there are. So I think companies that 0:16:47.600 --> 0:16:51.360 are very successful with retaining people do have a number 0:16:51.400 --> 0:16:55.120 of support structures in place. So I think the key 0:16:55.240 --> 0:16:59.760 to success is making sure that you've got diversity equity 0:17:00.040 --> 0:17:03.840 assesses built in to your employee life cycle. Without that, 0:17:04.240 --> 0:17:09.200 without the data to make informed intelligent interventions, progresses is slower. 0:17:09.480 --> 0:17:12.480 And then you know, with the drop off in the 0:17:12.600 --> 0:17:16.639 Lloyd's market, you know, the MPNP survey does say that 0:17:16.720 --> 0:17:20.199 there's slightly higher attrition rates for black and ethnically diverse 0:17:20.240 --> 0:17:24.880 groups and others. However, that is perhaps that talent moving 0:17:24.960 --> 0:17:29.560 from job to job within the market, not necessarily leaving 0:17:29.640 --> 0:17:32.080 the market. I hate to make a judgment call without 0:17:32.160 --> 0:17:35.000 the facts, but I think the stats point to that. 0:17:35.400 --> 0:17:39.480 Specifically, when thinking about the unders in your market, how 0:17:39.600 --> 0:17:43.080 do you support them to ensure that their black employees 0:17:43.119 --> 0:17:45.679 are not just there but having a good experience. How 0:17:45.760 --> 0:17:48.640 do you build a culture that makes people want to stay? 0:17:48.920 --> 0:17:52.879 So there is a wealth of support available, and you 0:17:52.920 --> 0:17:55.399 know the reason for that is you know, one of 0:17:55.440 --> 0:17:59.160 the aims of our culture strategy is to ensure inclusive 0:17:59.240 --> 0:18:02.560 practices that enable high performance. And we are very clear 0:18:02.680 --> 0:18:05.159 that the more inclusive it is, the more people have 0:18:05.280 --> 0:18:08.720 an opportunity to speak up, to share their views, to 0:18:08.840 --> 0:18:12.480 feel included, that is better for the end outcome. We 0:18:12.600 --> 0:18:14.320 have a good focus on making that happen. 0:18:14.520 --> 0:18:21.080 What about speaking out publicly compared to supporting internally. Can 0:18:21.160 --> 0:18:23.119 you speak to the importance of doing that and is 0:18:23.160 --> 0:18:25.399 that something you try to do at Lloyd's. 0:18:25.680 --> 0:18:28.840 So I think that's very different for different companies. So, 0:18:29.200 --> 0:18:32.560 you know, in George Floyd, during the kind of aftermath 0:18:32.800 --> 0:18:35.920 of the George Floyd killing, lots of companies kind of 0:18:35.960 --> 0:18:39.280 were very public and effusive about the statements around race equality. 0:18:39.880 --> 0:18:43.120 Maybe some of that hasn't been followed through. I think 0:18:43.160 --> 0:18:45.520 for each company it's important to do what's right and 0:18:45.680 --> 0:18:48.359 what your employees are with their employees think is the 0:18:48.400 --> 0:18:52.600 best thing. At Lloyd's we take an approach that we 0:18:52.760 --> 0:18:55.640 listen to our employees and we respond in the most 0:18:55.680 --> 0:18:59.439 appropriate manner, rather than having a blanket kind of approach 0:18:59.520 --> 0:19:02.320 to it. But yes, it is very important that employees 0:19:02.440 --> 0:19:04.920 have a voice. They're able to talk about what's important 0:19:04.960 --> 0:19:08.000 to them, and that is something that we do consistently, 0:19:08.280 --> 0:19:12.200 so it's not a case of just reacting to an event. 0:19:12.640 --> 0:19:16.080 Consistently promoting people's stories, you know, these things are part 0:19:16.119 --> 0:19:19.639 of the fabric of working for Lloyd's and increasingly throughout 0:19:19.640 --> 0:19:20.679 the Lloyd's market as well. 0:19:20.920 --> 0:19:23.680 I'd like to talk briefly about twenty twenty then and 0:19:23.800 --> 0:19:27.600 that sort of ground swell of feeling. I know you 0:19:27.680 --> 0:19:31.000 weren't at Lloyd's at the time, but as a D 0:19:31.080 --> 0:19:35.840 and I professional, how did it feel to see issues 0:19:35.880 --> 0:19:38.240 that you've been talking about for the length of a 0:19:38.320 --> 0:19:41.320 career suddenly thrust into the forefront. 0:19:41.720 --> 0:19:45.359 So, look, it's always good when there's a focus on 0:19:46.080 --> 0:19:48.800 diverse talent, and you know, I would like it not 0:19:49.000 --> 0:19:52.200 to have to be as a result of a horrendous situation, 0:19:52.480 --> 0:19:55.640 regardless of the group that's affected by it. But look, 0:19:55.760 --> 0:19:59.119 it's positive when there's a focus on these things. However, 0:20:00.040 --> 0:20:01.719 it's more positive when this follow through. 0:20:02.080 --> 0:20:06.520 That was Mark Lomas form the insurance marketplace Lloyd's of London. 0:20:06.880 --> 0:20:09.200 So just how equal is the city of London and 0:20:09.520 --> 0:20:13.080 are firms making any progress. It's something that I asked 0:20:13.119 --> 0:20:15.920 Tiba about as she walked me through her in depth 0:20:16.040 --> 0:20:17.520 reporting on the subject. 0:20:17.920 --> 0:20:21.040 So, Caroline, one person actually summed it up really well, 0:20:21.080 --> 0:20:23.680 and that person is Pauline Miller. She's got twenty years 0:20:24.040 --> 0:20:28.040 of experience running DEI firms across the city, including State 0:20:28.119 --> 0:20:31.080 Streets and Berkley's, And what she said to me is 0:20:31.160 --> 0:20:35.359 that at the moment, we're experiencing this perfect storm of 0:20:35.680 --> 0:20:40.840 economic headwinds, industry backlash, and also disappointing results from initiatives, 0:20:40.920 --> 0:20:44.040 which is driving a real pullback from a lot of 0:20:44.160 --> 0:20:47.440 city firms. And that's been reflected in the accounts of 0:20:47.480 --> 0:20:50.160 black employees that I've spoken to, many of whom wanted 0:20:50.200 --> 0:20:54.800 to keep their identities private. They've said they've noticed subtle changes, 0:20:55.000 --> 0:20:58.720 so fewer Black History Month speakers, for example, fewer networking 0:20:58.760 --> 0:21:01.320 events for people of color. So we're not seeing the 0:21:01.400 --> 0:21:05.840 same regulatory pressure that is present in the States just yet, 0:21:06.520 --> 0:21:10.760 but firms are reassessing their commitments and that's proven in 0:21:10.920 --> 0:21:13.320 the data as well. I spoke to the Taylor Bennett Foundation, 0:21:13.840 --> 0:21:17.320 which is an organization that operates across the communications landscape 0:21:17.359 --> 0:21:21.760 placing diverse candidates in firms such as HSBC and Santander, 0:21:21.920 --> 0:21:24.880 and they said that demand for their paid internship programs 0:21:25.040 --> 0:21:28.200 has actually seen a twenty five percent decline year on 0:21:28.320 --> 0:21:31.040 year since twenty twenty two, and that's despite seeing a 0:21:31.200 --> 0:21:35.200 big uptick in interest in twenty twenty particularly following the 0:21:35.280 --> 0:21:38.440 murder of George Floyd, and that drop in demand is 0:21:38.480 --> 0:21:42.120 coming specifically from financial services and city firms. I also 0:21:42.200 --> 0:21:45.400 spoke to Junior Garber, who founded a similar group called 0:21:45.440 --> 0:21:48.560 Equity City, which works to get the minority candidates into 0:21:48.560 --> 0:21:50.359 the city with a focus on insurance, and. 0:21:50.400 --> 0:21:51.280 He said the same thing. 0:21:51.359 --> 0:21:54.240 Budgets are dwindling and really at the heart of the 0:21:54.320 --> 0:21:58.720 problem seems to be this lack of concerted effort from firms. 0:21:59.040 --> 0:22:01.560 I spoke to one person, Mark Lomas, who's the head 0:22:01.600 --> 0:22:04.520 of culture at Lloyd's of London, and he set out 0:22:04.560 --> 0:22:07.240 the problem really during our conversation. He said, making real 0:22:07.359 --> 0:22:10.840 change takes very deliberate and targeted effort, and not all 0:22:10.920 --> 0:22:11.960 firms are willing to do that. 0:22:12.000 --> 0:22:13.040 So here's a bit of what he said. 0:22:13.359 --> 0:22:16.600 I think we see this challenge across lots of employers, 0:22:17.080 --> 0:22:20.199 and that is essentially and making sure that your processes 0:22:20.240 --> 0:22:23.359 are fit for purpose, you are deliberate and how you 0:22:23.480 --> 0:22:27.720 go out to attract talent, you have inclusive recruitment practices 0:22:28.080 --> 0:22:31.800 and then you have the ability and the practices to 0:22:31.960 --> 0:22:36.040 retain talent. I think at the Lloyd's market why we've 0:22:36.080 --> 0:22:40.160 been so successful is because we've had a very deliberate 0:22:40.440 --> 0:22:43.320 approach to it, so it's not impossible. 0:22:43.560 --> 0:22:46.200 So that was Mark Loma's head of culture at Lloyd's 0:22:46.200 --> 0:22:49.520 of London that you spoke to. You also report on 0:22:49.760 --> 0:22:53.440 black workers facing a ceiling at work or leaving. It 0:22:53.560 --> 0:22:56.639 is having an impact on people in their working lives. 0:22:57.119 --> 0:23:00.360 Yeah, from my conversations, it seems that an uninten did 0:23:00.680 --> 0:23:04.119 consequence of this urgency to act on diversity felt by 0:23:04.160 --> 0:23:06.840 a number of city firms in twenty twenty was that 0:23:07.000 --> 0:23:10.280 some of the DEI strategies that were focused on recruiting 0:23:10.320 --> 0:23:13.440 black talent were rushed and they did it without adjusting 0:23:13.560 --> 0:23:17.000 company culture first. And that's really showing in the experiences 0:23:17.040 --> 0:23:20.080 of black employees and crucially the number of them leaving. 0:23:20.240 --> 0:23:23.760 So the data shows that black talent is leaving firms 0:23:23.840 --> 0:23:26.560 in the city before reaching the top ranks. So at 0:23:26.640 --> 0:23:29.920 UK law firms, black people are four times more likely 0:23:30.040 --> 0:23:32.760 to leave than their white counterparts. And investment banking actually 0:23:33.000 --> 0:23:35.679 the figure for representation at a more senior levels, it's 0:23:35.840 --> 0:23:38.480 just zero point five percent. And we can see in 0:23:38.520 --> 0:23:42.119 the ethnicity pay gap that's persisted too, particularly for black workers. 0:23:42.240 --> 0:23:46.440 So that also suggests concentration at a junior level. But 0:23:46.560 --> 0:23:49.440 employees that I've spoken to really speak to this phenomenon 0:23:49.560 --> 0:23:52.600 of joining through a black focused recruitment scheme like the 0:23:52.680 --> 0:23:55.879 Taylor Bennett Foundation all ten thousand black interns and then 0:23:55.920 --> 0:23:59.479 feeling abandoned without a clear pathway to progression in their 0:23:59.520 --> 0:24:02.720 career contributes to attrition to them leaving. So one of 0:24:02.800 --> 0:24:06.760 those people was Karen Mupeiri. She's a former private equity 0:24:07.160 --> 0:24:10.600 investment operations analyst and she's not a large UK bank 0:24:11.080 --> 0:24:13.439 and she says that since twenty twenty there has been 0:24:13.560 --> 0:24:16.720 divestment from DEI and it's hurting her experience. 0:24:17.240 --> 0:24:20.399 Now it feels a bit more like that conversation has 0:24:20.440 --> 0:24:23.080 almost sort of been put to the back burner, and 0:24:23.600 --> 0:24:27.720 with the economic contraction and sort of companies having to 0:24:27.840 --> 0:24:32.119 reconcile with overhead and challenges, I think THEE and I 0:24:32.359 --> 0:24:34.560 was the first thing to go really and it was 0:24:34.600 --> 0:24:37.399 subtle things like you know, maybe there wouldn't be as 0:24:37.480 --> 0:24:41.800 many networking events for people from saying background, and maybe 0:24:42.240 --> 0:24:44.440 for Black History Months, they wouldn't do quite so many 0:24:44.480 --> 0:24:47.159 things and they wouldn't be quite so many speakers. But 0:24:47.320 --> 0:24:49.879 bit by bit it does feel as though it's not 0:24:50.040 --> 0:24:52.159 really as much of a priority as it used to be, 0:24:52.359 --> 0:24:55.160 and I think that really trickles down into them your 0:24:55.240 --> 0:24:56.800 working life as a black woman. 0:24:57.119 --> 0:25:00.480 So that was Karen Mucpereiri, one of the people that 0:25:00.560 --> 0:25:03.359 you spoke to in this investigation. You've also done some 0:25:04.000 --> 0:25:06.560 granuur reporting. I mean you've talked a lot about the 0:25:06.680 --> 0:25:11.160 data and data tracking is another issue, the BAME umbrella, 0:25:11.200 --> 0:25:14.160 which in the UK refers to black Asian and minority 0:25:14.280 --> 0:25:18.200 ethnic people. There's also an issue with this in the data. 0:25:18.640 --> 0:25:21.280 Yeah, so that was actually one of the most interesting 0:25:21.359 --> 0:25:24.080 parts of this reporting, the existence of this data gap 0:25:24.160 --> 0:25:27.080 as it pertains to black talent in the city. Black 0:25:27.119 --> 0:25:32.000 employees and other employees have to volunteer that ethnicity information 0:25:32.280 --> 0:25:36.080 about themselves and it hurts the progress of DEI. 0:25:36.080 --> 0:25:39.960 My thanks to Bloomberg's Tia adda bio. So is corporate 0:25:40.080 --> 0:25:43.840 diversity a fading trend or an issue being brought to 0:25:43.920 --> 0:25:47.360 the four once again? We shall perhaps have to wait 0:25:47.440 --> 0:25:50.480 to see for more. You can listen to teamers conversations 0:25:50.920 --> 0:25:54.440 in full about these issues on Bloomberg's In the City 0:25:54.520 --> 0:25:58.600 podcast with Farci Laqua. I'm Caroline Hepkee here in London 0:25:58.680 --> 0:26:00.680 and you can catch us every week day morning for 0:26:00.720 --> 0:26:03.840 Bloomberg Daybreak. You're at beginning at six am in London. 0:26:04.200 --> 0:26:05.840 That's one am on Wall Street. 0:26:06.160 --> 0:26:09.520 Tom, Thanks Caroline, and coming up on Bloomberg day Break weekend, 0:26:09.600 --> 0:26:12.160 what to expect from a monetary policy meeting this week 0:26:12.600 --> 0:26:15.359 at the Bank of Japan. I'm Tom Busby, and this 0:26:15.720 --> 0:26:29.560 is Bloomberg. This is Bloomberg day Break Weekend, our global 0:26:29.600 --> 0:26:31.520 look ahead at the top stories for investors in the 0:26:31.560 --> 0:26:34.680 coming week. I'm Tom Busby in New York. As the 0:26:34.800 --> 0:26:38.159 yen weekends, there's growing speculation that Japan's Central Bank is 0:26:38.240 --> 0:26:40.800 looking to raise interest rates in the coming months. Could 0:26:40.840 --> 0:26:44.639 the BOJ start this week? Let's turn to Bloomberg Daybreak 0:26:44.680 --> 0:26:47.800 Asia podcast host Doug Krisner for a closer look. 0:26:48.600 --> 0:26:51.240 Tom. Last month, the Bank of Japan's signaled it will 0:26:51.320 --> 0:26:54.960 slow walk its next great hike. That represents a significant 0:26:55.000 --> 0:26:58.800 pivot from the boj's previous guidance. So what changed to 0:26:58.920 --> 0:27:02.359 trigger that shift the boj's thinking. Joining me now is 0:27:02.440 --> 0:27:05.600 Paul Jackson. He is Bloomberg team leader for Eco gov 0:27:05.720 --> 0:27:09.680 in North Asia, joining us from our studios in Tokyo. Paul, 0:27:09.800 --> 0:27:12.680 it's always a pleasure. I thought the BOJ was squarely 0:27:12.800 --> 0:27:17.040 on a path toward normalizing policy. That would have increased 0:27:17.080 --> 0:27:20.320 the possibility that we could have a rate hike in 0:27:20.400 --> 0:27:22.720 the next week. But something changed. What do you think 0:27:22.760 --> 0:27:23.080 it was. 0:27:24.280 --> 0:27:27.800 Well, I think they are still on track to raise 0:27:28.000 --> 0:27:32.080 interest rates at a gradual pace over the coming months, 0:27:32.160 --> 0:27:36.000 but not at this particular meeting. I don't think we're 0:27:36.119 --> 0:27:40.680 in for any Halloween surprise. I think what we saw 0:27:40.840 --> 0:27:46.000 in July was a lot of market instability following the 0:27:46.160 --> 0:27:49.960 rate hike decision. Then, of course it was largely influenced 0:27:50.000 --> 0:27:53.159 by US data, but we saw the melt down in 0:27:53.320 --> 0:27:58.119 markets in August and certainly in Japan. Some of the 0:27:58.200 --> 0:28:01.560 blame was heaped upon the BOJ, although it was a 0:28:01.680 --> 0:28:05.520 very small rate increase that they actually did. So I 0:28:05.600 --> 0:28:09.400 think they're wanting to steer clear of any finger pointing 0:28:09.560 --> 0:28:14.400 this time and take their time before making the next move. Now, 0:28:14.600 --> 0:28:18.600 we did have the Deputy Governor speaking here at Bloomberg 0:28:18.960 --> 0:28:23.560 in Tokyo recently, and he said, yeah, it's very complicated 0:28:23.680 --> 0:28:26.960 when you look at the BOJ communications to try and 0:28:27.400 --> 0:28:31.600 unpick what it means. But essentially, if the inflation outlook 0:28:31.680 --> 0:28:36.720 continues as we expect, we are going to continue raising rates, 0:28:37.240 --> 0:28:40.280 and so far it looks that's what they're going to do. 0:28:40.440 --> 0:28:42.920 So it's a case of when do they move if 0:28:42.960 --> 0:28:43.960 they don't go in October. 0:28:44.040 --> 0:28:47.360 So you mentioned inflation there, Paul, and my recollection is 0:28:47.440 --> 0:28:50.320 that core CPI is running at about a two point 0:28:50.400 --> 0:28:53.200 four percent annual rate. Now we know that inflation in 0:28:53.320 --> 0:28:55.960 Japan has been elevated for some time, and yet the 0:28:56.040 --> 0:29:00.160 BOJ has been very very cautious. To Titan explain that, thinking. 0:29:00.560 --> 0:29:04.520 Well, it's because it's been a national goal in Japan 0:29:04.800 --> 0:29:09.960 to spur price growth that then feeds into wage growth 0:29:10.120 --> 0:29:13.520 and high consumption and high growth for the economy. So 0:29:13.920 --> 0:29:17.080 in a sense, in Japan, inflation has seen as a 0:29:17.200 --> 0:29:22.040 kind of positive force among policymakers. I think the average 0:29:22.080 --> 0:29:24.560 person on the street may have a different view about that, 0:29:25.560 --> 0:29:28.960 but the central bank essentially has been wanting to be 0:29:29.200 --> 0:29:33.800 very cautious about normalizing policy and raising interest rates because 0:29:34.120 --> 0:29:39.080 it wants this innascent inflation trend to hold to dig in, 0:29:39.320 --> 0:29:41.800 keep roots so that we have a kind of anchored 0:29:41.880 --> 0:29:45.680 two percent inflation trend again and all the money in 0:29:45.840 --> 0:29:49.240 Japan gets moving around again. I think that's the goal, 0:29:49.280 --> 0:29:50.760 and that's why they've been cautious. 0:29:50.960 --> 0:29:53.800 So you mentioned men on the street in Japan. I'm 0:29:53.960 --> 0:29:56.400 thinking that a weaker currency is a part of that story. 0:29:56.480 --> 0:29:59.240 And before we get to the performance of the Yan, 0:29:59.400 --> 0:30:02.120 I want to get a sense of what market participants 0:30:02.120 --> 0:30:06.120 are saying right now about the BOJ decision. Earlier I 0:30:06.200 --> 0:30:10.240 spoke with Peter MacGuire. He is the CEO of XM Australia. 0:30:10.360 --> 0:30:12.760 Let's listen in there seems to have been a little 0:30:12.760 --> 0:30:16.840 bit of a policy pivot right now, perhaps the BOJ 0:30:17.040 --> 0:30:19.520 slow walking the next rate hike. How are you feeling 0:30:19.560 --> 0:30:21.880 about what the BOJ may deliver. 0:30:22.440 --> 0:30:24.720 Well, I'm thinking that they won't do it. We won't 0:30:24.720 --> 0:30:27.000 see a ray fike and it's just you know, I 0:30:27.120 --> 0:30:29.960 might again push it out. You've got that yen has 0:30:30.040 --> 0:30:33.680 been nearly one fifty one, so it's been incredibly volatile. 0:30:33.680 --> 0:30:36.239 We've got a very strong stock market. The Nick guy 0:30:36.280 --> 0:30:39.120 has performed extremely well over the last twelve the way months. 0:30:39.160 --> 0:30:41.280 Everyone knows that it's a market you couldn't be with, 0:30:41.480 --> 0:30:42.720 you know, not being involved in. 0:30:43.520 --> 0:30:44.400 I think that. 0:30:44.800 --> 0:30:48.880 Yeah, the situation in Japan is just it'll be a 0:30:48.960 --> 0:30:52.400 push out and we're not expecting anything dramatic to happen, 0:30:52.480 --> 0:30:55.640 but it's full of surprises and I'm not going to 0:30:55.680 --> 0:30:58.000 say that it won't happen. But at the moment, I'm 0:30:58.080 --> 0:31:01.200 more in the camp that won't happen then will happen. 0:31:01.440 --> 0:31:03.880 So even though the boj is signaling it may push 0:31:03.920 --> 0:31:06.080 out a raidhack, do we have to be worried about 0:31:06.400 --> 0:31:09.320 maybe a little bit of intervention from the Ministry of 0:31:09.400 --> 0:31:12.320 Finance when you're talking about a yen that's flirting with 0:31:12.400 --> 0:31:13.160 one fifty one. 0:31:13.560 --> 0:31:15.720 Yeah, I think so. I mean, you know it's been 0:31:16.840 --> 0:31:19.320 it's always on the back of everyone's mind. If it 0:31:19.440 --> 0:31:22.240 was to tick higher, then naturally, you know, if you 0:31:22.320 --> 0:31:24.520 get that one fifty five, you could see some form 0:31:24.560 --> 0:31:26.640 of intervention. And you can't rule that out because it 0:31:26.720 --> 0:31:28.080 was only a couple of weeks back, or was it 0:31:28.160 --> 0:31:31.480 running at that forty three one forty four, So it's 0:31:31.800 --> 0:31:36.880 again an incredibly volatile trade yen dollar, and I wouldn't 0:31:36.880 --> 0:31:39.160 be surprised that you see it, you know, edge up 0:31:39.240 --> 0:31:41.640 even higher from here, maybe a one fifty three hand 0:31:41.720 --> 0:31:43.760 or Doug, you might see even see a one fifty four. 0:31:43.840 --> 0:31:46.720 But it's just it's got momentum at the moment and 0:31:47.440 --> 0:31:49.280 you can't stand in the road of it because it'll 0:31:49.360 --> 0:31:49.800 run you over. 0:31:50.040 --> 0:31:53.360 He is Peter Maguire, the CEO of XM Australia, and 0:31:53.480 --> 0:31:58.280 an earlier conversation on the Daybreak Asia podcast. Back to 0:31:58.360 --> 0:32:00.680 Paul Jackson in Tokyo. Paul, do you think there's a 0:32:00.840 --> 0:32:02.600 risk right now that we have to talk about it 0:32:02.760 --> 0:32:06.920 as it relates to intervention to defend the currency a bit? 0:32:07.720 --> 0:32:11.400 Well, I think we are getting into the territory where 0:32:12.040 --> 0:32:15.120 officials at the Finance Ministry are going to be feeling nervous. 0:32:15.520 --> 0:32:19.280 When we got into the one fifty mark, the top 0:32:19.440 --> 0:32:23.320 FX official, you know, came out with warnings just saying 0:32:23.640 --> 0:32:25.920 keeping an eye on it on his speculative moves, any 0:32:26.080 --> 0:32:30.600 one sided moves. Those warnings haven't been ramped up, and 0:32:30.840 --> 0:32:32.840 I don't expect they will be until we get much 0:32:33.000 --> 0:32:36.440 closer to the one sixty mark. But I think an 0:32:36.480 --> 0:32:42.000 interesting point here is we had former BOJ executive director 0:32:42.440 --> 0:32:47.280 Momma on speaking at Bloomberg in Tokyo recently, and he 0:32:47.440 --> 0:32:50.840 said he thought that the decision in July to raise 0:32:50.920 --> 0:32:55.800 interest rates was eighty to ninety percent based on weakness 0:32:55.960 --> 0:32:59.400 in the end at that time. And he said, if 0:32:59.480 --> 0:33:02.680 they like, you know, one fifty one fifty five against 0:33:02.720 --> 0:33:05.800 the dollar, then that is going to be putting pressure 0:33:05.840 --> 0:33:08.880 on the BOJ to think about moving earlier. Now. I 0:33:08.960 --> 0:33:12.600 think the context of his remarks suggests he's talking, okay, 0:33:12.760 --> 0:33:16.480 maybe move in December rather than wait until January or 0:33:16.600 --> 0:33:17.320 later next year. 0:33:17.400 --> 0:33:19.440 The other thing that I think is interesting that the 0:33:19.600 --> 0:33:23.040 Fed has kind of been speaking to this idea that 0:33:23.160 --> 0:33:27.280 maybe it needs to modulate the rate at which it 0:33:27.440 --> 0:33:30.680 intends to cut interest rates in the US. So if 0:33:30.800 --> 0:33:33.160 rate cuts in the States get pushed out just a 0:33:33.200 --> 0:33:36.000 little bit, what does it do to the yield curve 0:33:36.040 --> 0:33:39.200 in a way that would influence the boj's thinking. 0:33:39.240 --> 0:33:43.240 Do you think, Well, you know, the pushing out of 0:33:43.560 --> 0:33:48.400 rate cuts by the FED that feeds straight into the 0:33:48.600 --> 0:33:52.840 yen and you know, puts extra weakening pressure on So 0:33:53.760 --> 0:33:56.720 you know, the longer it takes for the next cuts 0:33:56.760 --> 0:33:59.280 to come in, or the more expectations and move back 0:34:00.000 --> 0:34:03.040 the more pressure there is on the end. Now, if 0:34:03.080 --> 0:34:05.280 you look at the meetings, We've got this meeting on 0:34:05.480 --> 0:34:09.200 the thirty first of October. The next one isn't until December, 0:34:09.280 --> 0:34:12.560 so that's quite a long time away, and a lot's 0:34:12.600 --> 0:34:15.200 going to happen in that time. So can we rule 0:34:15.280 --> 0:34:18.200 out intervention in that time? I don't think we can. 0:34:18.520 --> 0:34:20.719 Paul, it's always a pleasure. Thanks so much for making 0:34:20.760 --> 0:34:24.000 time to help us preview the BOJ meeting. He's Paul Jackson, 0:34:24.040 --> 0:34:27.560 Bloomberg ecogov team leader for North Asia, joining us from 0:34:27.600 --> 0:34:30.840 our studios in Tokyo. We turn next to Hong Kong's 0:34:30.960 --> 0:34:33.800 Fintech Week. It will get underway in the days ahead. 0:34:34.239 --> 0:34:38.000 Fintech Week is dedicated to exploring the future of digital 0:34:38.120 --> 0:34:42.520 assets and at the same time fostering innovation within the community. 0:34:43.000 --> 0:34:47.160 Thirty thousand attendees are expected from over one hundred different jurisdictions, 0:34:47.200 --> 0:34:50.160 and organizers are saying the event can serve as a 0:34:50.239 --> 0:34:54.000 platform for incubation. For a preview, now, I'm joined by 0:34:54.000 --> 0:34:57.719 Bloomberg's Annabel Droolers, Bloomberg Tech reporter. She's based in Hong 0:34:57.800 --> 0:35:00.879 Kong and she will be covering fintech Wiek. We thank 0:35:00.920 --> 0:35:02.759 you for making time to chat with me about this. 0:35:03.120 --> 0:35:05.600 Can we take the big picture here. You've got a 0:35:05.640 --> 0:35:07.840 little bit of experience with what goes on here and 0:35:08.360 --> 0:35:09.600 help me set the stage. 0:35:10.040 --> 0:35:12.279 Well, I think it's a really interesting stage to set 0:35:12.360 --> 0:35:15.040 because it comes at a kind of a pretty crucial 0:35:15.120 --> 0:35:18.480 time for Hong Kong's crypto pivot. You think about where 0:35:18.600 --> 0:35:20.880 Hong Kong is going with this and the sort of 0:35:20.960 --> 0:35:22.920 inroads that it's made so far, and a lot of 0:35:22.960 --> 0:35:24.920 people in Hong Kong would tell you it's probably not 0:35:25.040 --> 0:35:28.960 panning out quite as have been expected. This conference that's 0:35:29.000 --> 0:35:30.640 coming up this week, they're saying it's one of the 0:35:30.680 --> 0:35:33.440 biggest in Asia. Of course, maybe some of the conferences 0:35:33.440 --> 0:35:35.320 that are held in Singapore might beg to differ on 0:35:35.400 --> 0:35:38.560 that front, but still there's a speaker lineup that really 0:35:38.680 --> 0:35:42.560 speaks to perhaps the city's unique interpretation of crypto, because 0:35:42.560 --> 0:35:44.640 on the one hand, you do have those sort of 0:35:44.760 --> 0:35:47.560 more traditional pure crypto plays that are going to be attending. 0:35:47.640 --> 0:35:50.239 So Bullish, for instance, that's a crypto exchange based in 0:35:50.280 --> 0:35:53.440 the US. There's VARA, it's a regulatory authority from the 0:35:53.480 --> 0:35:55.920 Middle East, from the UAE, and Chain link as well. 0:35:55.960 --> 0:35:58.120 That's another one that's sort of more on the institutional side. 0:35:58.120 --> 0:36:01.640 But still Hong Kong has a eavy host of fintech 0:36:01.760 --> 0:36:05.440 in shure tech, traditional tech businesses vcs. They're also going 0:36:05.520 --> 0:36:06.279 to be intendance. 0:36:06.480 --> 0:36:10.120 What's the regulatory environment like in Hong Kong? Is there one? 0:36:10.239 --> 0:36:10.439 Really? 0:36:10.840 --> 0:36:13.840 Yeah, there's definitely a regulatary environment in Hong Kong. But again, 0:36:13.920 --> 0:36:15.920 going back to that point I made twenty twenty two, 0:36:16.040 --> 0:36:17.839 was when they signaled that they were wanting to start 0:36:17.960 --> 0:36:23.359 licensing retail crypto exchanges. And fast forward a couple of years. Yes, 0:36:23.480 --> 0:36:26.279 you've got three the license and some might say that's 0:36:26.360 --> 0:36:28.360 enough because of Hong Kong. Of course it's only around 0:36:28.440 --> 0:36:30.839 seven or eight million people. But at the same time, 0:36:30.920 --> 0:36:33.760 there's maybe around thirteen that are deemed to be licensed. 0:36:33.800 --> 0:36:36.200 That means have got sort of their initial approvals. We 0:36:36.320 --> 0:36:39.319 haven't seen them being fully greenlit just yet. And then 0:36:39.360 --> 0:36:42.040 it's the question, Okay, what exactly a regulator is planning 0:36:42.080 --> 0:36:44.759 to do about it and will they really proceed full 0:36:44.800 --> 0:36:45.880 steam ahead on this approach. 0:36:45.920 --> 0:36:48.520 As well, we've got a presidential election coming up here 0:36:48.560 --> 0:36:51.400 in the States, and both the Trump campaign and the 0:36:51.480 --> 0:36:55.239 Harris campaign have kind of indicated a friendliness to the 0:36:55.320 --> 0:36:57.080 crypto space. Do you think that's going to be a 0:36:57.160 --> 0:36:59.480 factor in some of the conversations that happen in Hong 0:36:59.560 --> 0:37:01.000 Kong during Fintech Week. 0:37:01.080 --> 0:37:03.799 Yeah, without a doubt. I think pretty much everyone would 0:37:03.840 --> 0:37:07.560 tell you where crypto heads is really based on what 0:37:07.760 --> 0:37:10.480 the US does in terms of regulation. And it's been 0:37:10.520 --> 0:37:13.400 really interesting to watch that trading activity ahead of the 0:37:13.520 --> 0:37:17.560 US election because you've sort of seen bitcoin trading based 0:37:17.640 --> 0:37:20.959 on the expectations of Donald Trump returning to the White House. 0:37:21.320 --> 0:37:24.480 That sort of changed somewhat because Kamala Harris has signaled 0:37:24.560 --> 0:37:27.120 more of an openness and at least in a willingness 0:37:27.160 --> 0:37:29.399 to regulate the sector, and so you've sort of seen 0:37:29.440 --> 0:37:32.359 that evening out somewhat. What's interesting is if you take 0:37:32.400 --> 0:37:34.760 a look at what's happening in the options market, actually 0:37:34.800 --> 0:37:37.280 there's a lot of bets that are building for crypto bitcoin, 0:37:37.320 --> 0:37:39.880 in particular to reach eighty thousand dollars by the end 0:37:39.920 --> 0:37:42.680 of November. That would be a record high for the token. 0:37:42.760 --> 0:37:46.200 But again, it tells you that whoever enters the White House, 0:37:46.520 --> 0:37:48.480 many in the crypto industry would tell you it's going 0:37:48.560 --> 0:37:49.920 to be a positive for the industry. 0:37:50.080 --> 0:37:53.360 So what's happening around stable coins and does that compare 0:37:53.440 --> 0:37:55.520 in any way to what we're seeing in other areas 0:37:55.560 --> 0:37:56.480 of the crypto space. 0:37:56.800 --> 0:37:59.239 Stable coins has been really interesting, I think again it 0:37:59.360 --> 0:38:01.239 kind of comes back to what does the US do 0:38:01.360 --> 0:38:03.840 in this space, and we've actually just seen some inroads 0:38:03.880 --> 0:38:06.880 on that because there was another reintroduction I guess the 0:38:06.920 --> 0:38:10.239 Republican Senator Bill Haggerty. He's someone who's seen as being 0:38:10.320 --> 0:38:12.800 very friendly with Trump, very pro crypto, but he's just 0:38:12.840 --> 0:38:16.000 to introduce some amendments to the Payment stable Coins Act. 0:38:16.680 --> 0:38:18.960 If that brings a regulatory clarity, we could see it 0:38:19.040 --> 0:38:22.560 being adopted elsewhere, but in Asia itself. Actually, Japan has 0:38:22.719 --> 0:38:24.759 seen as being one of the real standouts in this space. 0:38:24.800 --> 0:38:27.919 They already introduced their own legislation more than a year ago, 0:38:28.320 --> 0:38:30.400 and you're just seeing those sort of pilot programs that 0:38:30.440 --> 0:38:32.560 are taking place in Singapore also in Hong Kong. 0:38:32.840 --> 0:38:35.000 Annabelle, thanks so much for chatting with me on the 0:38:35.080 --> 0:38:37.840 crypto space as we look forward to Fintech Week in 0:38:37.960 --> 0:38:41.440 Hong Kong. She's Annabelle Driller's Bloomberg Tech reporter, and I'm 0:38:41.520 --> 0:38:44.280 Doug Prisner in New York. You can join us weekdays 0:38:44.360 --> 0:38:49.040 for the Daybreak Asia podcast, available wherever you get your podcast. Tom, 0:38:49.480 --> 0:38:50.160 Thank you Doug. 0:38:50.440 --> 0:38:52.440 And that does it for this edition of Bloomberg day 0:38:52.480 --> 0:38:54.960 Break Weekend. Join us again Monday morning at five am 0:38:55.040 --> 0:38:57.920 Wall Street Time for the latest on markets overseas and 0:38:58.040 --> 0:39:01.040 the news you need to start your day. I'm Tom Buzby. 0:39:01.200 --> 0:39:01.759 Stay with us. 0:39:02.080 --> 0:39:05.200 Top stories and global business headlines are coming up right now.