Automakers Surge After US, Japan Strike Trade Deal | Bloomberg: The Asia Trade, 7/23/25

Automakers Surge After US, Japan Strike Trade Deal | Bloomberg: The Asia Trade, 7/23/25

ROLE IT SHOULD PLAY. A♪ SHERY: THIS IS “THE ASIA TRADE.” HAIDI: A COURSE IS OPEN AHEAD FOR ASIA AS INVESTORS AWAIT HIGH-STAKES U.S. MEGA CAP EARNINGS LOOKING FOR EVIDENCE THE RATE CAN BE SUSTAINED. AND THE TREASURY SECRETARY TO MEET CHINESE OFFICIALS NEXT WEEK FOR A THIRD ROUND OF TRADE TALKS. SCOTT BESSENT SAYING HE EXPECTS AN EXTENSION TO THEIR TROOPS. PLUS, MICROSOFT ACCUSES CHINESE-SPONSORED HACKERS OF A CAMPAIGN OF GLOBAL ATTACKS EXPLODING FLAWS IN ITS SHARE POINT SOFTWARE. SHERY: WE HAVE SEEN SOME VOLATILITY IN ASIAN MARKETS, OF COURSE CONTINUING AS WE FACTOR IN THE TRADE NEGOTIATIONS HAPPENING BETWEEN JAPAN AND THE UNITED STATES RIGHT NOW. WE KNOW THE TOP JAPANESE TRADE NEGOTIATORS IN THE WHITE HOUSE FOR THOSE NEGOTIATIONS AT A TIME WHEN WE ARE ALSO FOLLOWING THE EUROPEAN UNION JAPAN SUMMIT HERE IN TOKYO AS WELL THIS WEEK. WE HAVE SEEN THE NIKKEI UNDER PRESSURE FOR THE LAST TWO SESSIONS. WE ARE SEEING GAINS FOR FUTURES UP .1% WHILE THE JAPANESE YEN IS HOLDING STEADY. OF COURSE, WHAT WE WILL BE WATCHING ARE JGB’S BECAUSE WE HAVE SEEN SIGNIFICANT PRESSURE ON THE LONG END PART OF JGB’S AND WE DO HAVE A 40-EURO BOND OPTION TODAY WHICH WILL GIVE US A TEST OF DEMAND WHEN IT COMES TO APPETITE FOR LONG-TERM DEBT, BUT TAKE A LOOK AT HOW TREASURIES ARE ALSO TRADING. WE HAVE SEEN THEM GAINED GROUND FOR THE LAST FIVE SESSIONS. WHERE WATCHING U.S. STOCKS AS WELL. WE CONTINUE TO HEAR FROM SECRETARY BESSENT, HIS SUPPORT FOR CHAIR POWELL AS WE SEE WERE CONSTANT ATTACKS FROM PRESIDENT TRUMP AS WELL, BUT IT IS ALL ABOUT THOSE TECH EARNINGS AND WE ARE EXPECTING THE MAGNIFICENT 7 TO SEE A 14% RISE WHEN IT COMES TO PROFITS FOR THE SECOND ORDER. PRESIDENT TRUMP SAYS THE U.S. HAS REACHED A TRADE DEAL WITH THE PHILIPPINES, SETTING A 19% TARIFF RATE ON THE COUNTRY’S EXPORT. HE ANNOUNCED THE AGREEMENT AFTER MEETING WITH PRESIDENT FERDINAND MARCOS, JR.. HOW MUCH OF A WIN IS THIS FOR THE PHILIPPINES GIVEN THAT THE THREAT WAS ABOUT 20% AND IT JUST WENT DOWN ABOUT A PERCENTAGE POINT? THERE IS NO OFFICIAL STATEMENT OR READ OUT YET FROM THE PHILIPPINES’ SIDE, SO WE DO NOT KNOW HOW THEY ARE FRAMING IT, BUT IT IS HIGHER THAN THE 70% FROM WHAT WAS ANNOUNCED IN APRIL, BUT WHAT WE DO KNOW SO FAR IS A REPORT FROM A LOCAL BROADCASTER SAYING WHILE PRESIDENT MARCOS SPOKE TO THE PRESS SHORTLY AFTER THE MEETING WITH PRESIDENT TRUMP ESSENTIALLY CONFIRMING THE DEAL AND DESCRIBING IT AS A “SIGNIFICANT ACHIEVEMENT,” AND ACCORDING TO THAT REPORT, MARCUS ALSO CLARIFIED THAT THE ZERO TARIFFS TRUMP ANNOUNCED ON SOCIAL MEDIA WILL ONLY APPLY TO SPECIFIC OR CERTAIN PRODUCTS, INCLUDING U.S.-MADE CARS. IT IS IMPORTANT TO NOTE THAT PHILIPPINE OFFICIALS PREVIOUSLY SAID THEY WOULD NOT BE ABLE TO OFFER ZERO TARIFFS FOR U.S. PRODUCTS BECAUSE IT WOULD HURT GLOBAL BUSINESSES, BUT THEY ARE PREPARED TO INCREASE PURCHASES OF U.S. CAR PRODUCTS AND BOOST EXPORTS OF SEMICONDUCTORS AS WELL AS COCONUT AND MANGO PRODUCTS TO THE U.S. HAIDI: DID WHAT INITIALLY WAS 17% AND THEN WENT UP TO 20%, AND WE HAVE GOTTEN DOWN TO 19%. DO WE GET AN IDEA OF HOW HARD PRESIDENT TRUMP AND HIS TEAM ARE NEGOTIATING? THERE SEEM TO BE VERY FEW EXCEPTIONS, VERY LITTLE LEEWAY FOR THESE TRADING PARTNERS AND ALLIES. OF COURSE, THE PHILIPPINES HAS LONG BEEN A FRIEND OF THE UNITED STATES AND CLOSE ALLY, SO, I MEAN, THIS DEAL MAY HAVE BEEN THE BEST THAT PRESIDENT MARCUS COULD GET, BUT IT IS CERTAINLY NOT IDEAL, AND HE HAS TO GO BACK TO MANILA AND BASICALLY EXPLAIN THIS TO HIS COUNTRYMEN, AND THIS MAY BE SEIZED UPON BY HIS POLITICAL OPPONENTS. OTHER TRADE PARTNERS, JAPAN’S TOP TREATY NEGOTIATORS ARE IN THE WHITE HOUSE AS WE SPEAK TO TRY TO REACH AN ACCORD. IN THE MEANTIME, THIS AUGUST 1 DEADLINE IS GETTING EVER CLOSER. SO FAR, WE HAVE SEEN VERY FEW OF THE 90 DEALS IN 90 DAYS THAT WAS BOOTED ABOUT BACK IN APRIL. SHERY: IN THE MEANTIME, ARE WE SEEING A SOFTER STANCE WHEN IT COMES TO NEGOTIATIONS WITH CHINA NOW THAT WE AT LEAST HAVE A FRAMEWORK? WE ARE EXPECTING MORE CONVERSATIONS LAST WEEK? THAT’S RIGHT. SECRETARY SCOTT BESSENT SAID HE IS GOING TO SWEDEN FOR THE THIRD ROUND OF THESE NEGOTIATIONS, THIS TRUCE. NOT A FULL AGREEMENT. WITH THE CHINESE. OF COURSE THIS IS A MUCH MORE LENIENT APPROACH TO THE SECOND LARGEST ECONOMY THAT THE UNITED STATES IS TAKING HERE. SECRETARY BESSENT SAID — DISCUSSED SOME OF THE THINGS THAT MIGHT BE ON THE TABLE, ON THE AGENDA, AND HE DID SAY TRADE IS GOING VERY WELL. “IT’S IN A GOOD PLACE” I BELIEVE WERE HIS WORDS. I WAS STRUCK THAT AMONG THE DISCUSSIONS WOULD BE OIL SALES FROM IRAN AND RUSSIA. THIS SUGGESTS THAT, AGAIN, THE TRUMP ADMINISTRATION IS TAKING A DIFFERENT STANCE — A HARSHER STANCE — WITH PRESIDENT VLADIMIR PUTIN AND HIS CONTINUED WAR IN UKRAINE AND THE LACK OF PROGRESS TOWARD CEASE FIRE, LET ALONE THE END OF THE WAR. HAIDI: WE KNOW CHINA AND THE PHILIPPINES CONTINUE TO HAVE THESE ENCOUNTERS IN THE SOUTH CHINA SEA. DO WE KNOW IF THIS CAME UP IN THE TALKS, IN THE BROADER SCOPE AROUND REGIONAL SECURITY? DEFINITELY DID. PRESIDENT TRUMP IN A TRUTH SOCIAL ANNOUNCEMENT TODAY MADE A REFERENCE TO WORKING MORE CLOSELY WITH THE PHILIPPINES MILITARILY. HE DID NOT PROVIDE MORE DETAILS, BUT THE DISCUSSION IN THE TALKS RESIDENT MARCUS HELD IN WASHINGTON HAD TO DO WITH BOOSTING SECURITY TIES AND PROMOTING PEACE AND STABILITY IN THE INDO PACIFIC REGION. OBVIOUSLY, ALL OF THIS WILL HAVE REFERENCE TO CHINA. DURING THE WHITE HOUSE BRIEFING EARLIER TODAY BETWEEN THE TWO LEADERS, PRESIDENT TRUMP SAID HE DOES NOT FIND IF THE PHILIPPINES GETS ALONG WITH BEIJING, IF ONLY TO PROMOTE ITS OWN INTEREST, BUT HE DID PRAISE MARCOS FOR HIS EFFORTS TO BRING THE U.S. CLOSER TO THE PHILIPPINES AFTER HIS PREDECESSORS MOVED TO PIVOT THE PHILIPPINES TOWARD CHINA. THOSE TWO PRESIDENTS MADE SURE THAT AT THE END OF THE DAY THAT LONG-STANDING ALLIANCE WILL STAY STRONG, DESPITE ALL THE DIFFERENCES THAT THEY HAD. IN FACT, PRESIDENT MARCUS HAD REALLY TRIED TO LEVERAGE, TO HIGHLIGHT THIS LONG-STANDING ALLIANCE TO SECURE BETTER TRADE TERMS FOR THE PHILIPPINES. SHERY: HOW IS THE PHILIPPINE ECONOMY AND POLITICS ARE DOING RIGHT NOW AND HOW ARE WE EXPECTING THE PUBLIC TO RECEIVE THIS DEAL? PRESIDENT MARCUS CAME TO WASHINGTON UNDER PRESSURE TO DELIVER AN ECONOMIC WIN. HE IS CERTAINLY TRYING TO DO THAT BECAUSE OF POLITICAL PRESSURE AFTER THE MIDTERM ELECTIONS. HE IS ALSO SEEKING TO GROW THE PHILIPPINE ECONOMY TO ABOVE 5%, WHICH OBVIOUSLY WILL BE SET BACK BY HIGHER U.S. TARIFFS, SO THERE’S LIKELY TO BE A LOT OF CRITICISM DOMESTICALLY ABOUT THE OUTCOME OF THESE TALKS. ALREADY, WE HEAR FROM SOME ANALYSTS CRITICIZING THE OUTCOME, SAYING THAT THE PHILIPPINES MIGHT BE GETTING THE SHORTER END OF THIS DEAL, BUT BASED ON WHAT WE KNOW SO FAR FROM LOCAL MEDIA REPORTING, MARCOS IS SEEKING TO FRAME THIS AS A WIN FOR HIS ADMINISTRATION. HAIDI: THANK YOU. SOME OF THE OTHER TRADE HEADLINES WE ARE KEEPING TRACK OF, THAILAND SAYS IT IS CLOSE TO A DEAL FOR THE U.S. TO LOWER THREATENED 36% TARIFF RATES BEFORE THE AUGUST 1 DEADLINE. THE PRIME MINISTER SAID HE EXPECTS TALKS TO CONCLUDE IN DAYS AND HE EXPECTS A CONCLUSION IN LINE WITH THEIR SOUTHEAST ASIAN NEIGHBORS. THE TRUMP ADMINISTRATION SAYS ITS TRADE DEAL WITH INDONESIA WILL UNLOCK $50 BILLION IN MARKET ACCESS. AN OFFICIAL TELLS BLOOMBERG JAKARTA WILL ELIMINATE ALL NONTARIFF MEASURES ON U.S. GOODS AND DROP BARRIERS THAT COULD HAVE HIT AMERICAN TECH COMPANIES. PRESIDENT TRUMP ANNOUNCED A DEAL FOR A 19% TARIFF RATE LAST WEEK, BUT WE ARE TOLD IT WILL ONLY BE IMPLEMENTED IN THE COMING WEEKS. CHINA HAS SUSPENDED ITS ANTITRUST INVESTIGATION INTO THE LOCAL UNIT OF DUPONT AHEAD OF TRADE TALKS WITH THE U.S. IN STOCKHOLM. IT WAS AMONG A FLURRY OF COUNTERMEASURES BEIJING ANNOUNCED TO HIT BACK ON PRESIDENT TRUMP’S RECIPROCAL TARIFFS ON CHINESE PRODUCTS. SHERY: COMING UP, WE LOOK AHEAD TO EU-JAPAN TRADE TALKS IN TOKYO TODAY. UBS WEALTH MANAGEMENT ALSO EXPLAINS WHY THEY ARE CONFIDENT THAT THE BULL MARKET IN THE U.S. STOCKS HAS LEGS, AND THE ASIAN DEVELOPMENT BANK SHARES THEIR VIEWS ON THE IMPACT OF REGIONAL TRADE DEALS. MUCH MORE AHEAD. THIS IS BLOOMBERG. ♪ I THINK THAT CONCERNS THAT THERE HAVE AT SOME POINT SPIN OVERREACH IN WHAT YOU MIGHT THINK OF AS PUBLIC POLICY LIBERAL ARTS ARE QUITE LEGITIMATE, AND I THINK SECRETARY BESSENT IS RIGHT TO BE RAISING A QUESTION THERE. HAIDI: THAT WAS WALL STREET WEEK CONTRIBUTOR AND FORMER U.S. TRADE SECRETARY LARRY SUMMERS TALKING ABOUT THE SCOPE OF THE FED’S INDEPENDENCE. THIS IS WHAT WE ARE WATCHING WHEN IT COMES TO ONGOING NEGOTIATIONS. A NUMBER OF COUNTRIES, INCLUDING THAT 19% DEAL STRUCK WITH THE PHILIPPINES, BUT WE ARE ALSO WATCHING TRADE NEGOTIATIONS WITH JAPAN, WITH THE CHIEF TRADE NEGOTIATOR ENTERING THE WHITE HOUSE TO DISCUSS TARIFFS WITH PRESIDENT TRUMP. WE ARE GETTING AN UPDATE, PRESIDENT TRUMP TO IMPOSE A 15% TARIFF ON GOODS FROM JAPAN. WE ARE SEEING THE YEN GAIN AGAINST THE DOLLAR. INCLUDING INVESTMENT AT HIS DIRECTION, $550 BILLION INTO THE UNITED STATES. THE IMPOSITION OF A 15% TARIFF, OF COURSE, FROM JAPAN, 550 BILLION DOLLAR INVESTMENT INTO THE U.S. THEY WILL BE OPENING JAPANESE MARKETS TO TRADE, INCLUDING CARS, ACCORDING TO THE PRESIDENT’S STATEMENT, AND RECIPROCAL TARIFFS WILL BE PAID TO THE U.S., TALKING ABOUT WHAT HE HAS CHARACTERIZED AS A MASSIVE DEAL WITH JAPAN, PERHAPS THE LARGEST DEAL EVER MADE, SAYING THIS IS AN EXCITING TIME FOR THE U.S. WE KNOW THIS HAS BEEN AN ONGOING SOURCE OF TENSION BETWEEN THE TRADITIONAL ALLIES AND IT COMES DAYS AFTER THE HISTORIC ELECTION LOST FOR THE JAPANESE PRIME MINISTER. THE TRADE NEGOTIATOR FROM JAPAN MEETING WITH SCOTT BESSENT, THE U.S. COMMERCE SECRETARY, WHO SAID DO NOT BE SURPRISED IF WE ARE ABLE TO IRON OUT SOMETHING PRETTY QUICKLY, AND IT SEEMS WE ARE GETTING THAT CONFIRMATION FROM THE U.S. SIDE, IF NOT FROM JAPAN. WE ARE WAITING FOR THAT CONFIRMATION AS WELL. THIS IS JUST CROSSING THE BLOOMBERG AS YOU HAVE SAT DOWN TO HAVE A CHAT WITH US. YOUR FIRST REACTION. DOES THIS REMOVE ANY CONCERN THAT HAS BEEN OVERSHADOWING JAPANESE ASSETS? IT DOES, IN PARTICULAR BECAUSE THE TARIFF RATE THAT WAS IN THE LETTER TO JAPAN WAS 25%. THERE WAS ALWAYS SOME ANTICIPATION THAT ONCE JAPAN’S ELECTIONS WERE OUT OF THE WAY, THAT WOULD MAKE IT EASIER, FOR THE JAPANESE SIDE, ANYWAY, TO DO WHATEVER IT NEEDED TO DO IN ORDER TO COME TO SOME SORT OF A DEAL. 15% IS LOWER THAN 25%. IT IS LOWER THAN MOST OF THE OTHER DEALS THAT HAVE SO FAR BEEN ANNOUNCED. HAIDI: BETTER PERHAPS THAN THE COMPROMISE WITH THE PHILIPPINES. YES, THEY HAVE DONE BETTER THAN THE PHILIPPINES, BUT THEY HAVE PROMISED $550 BILLION OF INVESTMENT, WHICH IS ONE OF PRESIDENT TRUMP’S FAVORITE THINGS THAT HE WANTS, PARTICULARLY UNDER HIS DIRECTION. AND CARS. ALTHOUGH THE QUESTION IS, IF THEY DO MAKE CARS — MAKE U.S. CARS AVAILABLE IN JAPAN, WILL JAPANESE CONSUMER BUT — WILL JAPANESE CONSUMERS BY THE? — WILL JAPANESE CONSUMERS BUY THEM? MORE IMPORTANTLY, THE TARIFFS WILL COME INTO PLACE, AND TARIFFS GOING FROM 10% AS THEY ARE NOW ACROSS THE BOARD TO 15% INSTEAD OF 25%, THAT IS OBVIOUSLY A BONUS FOR JAPAN, WHICH IS A VERY EXPORT-ORIENTED ECONOMY STILL, SO THAT WILL BE A BIG HELP FOR THEM. I DID NOT SEE ANY DETAILS ON WHAT IT DOES AS FAR AS TARIFFS ON STEEL, ALUMINUM, AUTOMOBILES, WHICH ARE SET AT 25% FOR AUTOMOBILES AND 15% FOR STEEL AND ALUMINUM. I DON’T KNOW IF ANYONE EXPECTED THOSE TO GO AWAY. FOR JAPAN, IT IS PROMISING. FOR THE REST OF ASIA, IT MIGHT BE PROMISING. IT UNDERSCORES THAT ASIA IS GETTING MORE OF THESE DEALS AGREED AND EVEN IF THE TARIFFS WILL BE MORE THAN THE 10% BASE RATE, THEY ARE COMING IN SIGNIFICANTLY LOWER THAN THE THREATENED RECIPROCAL TARIFF RATES, SO FROM ASIA’S POINT OF VIEW, THAT IS POTENTIALLY GOOD NEWS, AND IF NOTHING ELSE, IF THIS DOES BRING MORE CERTAINTY, THEN WE HAVE SEEN IN THE TARIFF SPHERE, THAT WILL ALSO BE A BENEFIT FOR THOSE COUNTRIES. THE ULTIMATE IMPACT ON THE U.S. ECONOMY BOTH AS FAR AS GROWTH AND INFLATION IS CONCERNED, IS SOMETHING WE WILL BE LOOKING TO SEE OVER THE COMING MONTHS, BUT IN THE SHORT TERM, MOST ASIAN MARKETS WILL LOOK AT THIS AS A PLUS. SHERY: YOU CAN SEE RIGHT NOW NIKKEI FUTURES JUMPING. YOU MENTIONED THOSE CAR TARIFFS. WE HAVE NO CLARITY IF THOSE 25% TARIFFS ON JAPANESE CARS WILL BE REDUCED. WE ONLY KNOW THAT THE DEAL INCLUDES CARS. DOES THAT MEAN U.S. CARS COMING INTO JAPAN FOR THOSE TARIFFS BEING REDUCED? WE KNOW THE COLLECTIVE IMPACT ON CARMAKERS THIS YEAR BECAUSE OF THAT TARIFF COULD HAVE BEEN ABOUT $19 BILLION FOR JAPAN AND THAT IS A HUGE PART OF THE JAPANESE ECONOMY. WHEN IT COMES TO THE EQUITY MARKETS, WHEN IT COMES TO INVESTORS LOOKING AT JAPANESE MARKETS, DO YOU GET MORE CONFIDENCE, ESPECIALLY ON THOSE EXPORTERS, BIG JAPANESE CARMAKERS, DEPENDING ON WHAT THE DETAILS OF THIS TRADE DEAL IS, AT A TIME WHEN, OF COURSE, WE HAVE ALSO MORE FISCAL CONCERNS PRESSURING THE JGB SPACE AS WELL? GARFIELD: AS YOU OUTLINED, THERE’S A LOT OF THINGS THAT NEED TO BE FILLED IN ON THE DETAILS FRONT. EVEN IF YOU ASSUME THAT 25% TARIFFS ON AUTOS STAY, THIS IS STILL GOOD NEWS FOR JAPANESE EQUITIES. IF THOSE ALL COME DOWN TO 15%, THAT IS GREAT NEWS BECAUSE THAT IS A SIGNIFICANT IMPROVEMENT OVER WHAT THERE HAD BEEN. ALSO, THE POTENTIAL — BECAUSE YOU CANNOT REALLY BE SURE ABOUT A LOT OF THINGS WITH PRESIDENT TRUMP, BUT THE POTENTIAL THAT THE UNCERTAINTY — LIKE, THE RIDE DOWN, WE HAVE RULES IN PLACE, THAT WILL BE A BIG RELIEF FOR JAPANESE CUSTOMERS. AS FAR AS THE JGB MARKET, THIS COULD ALSO BE A PLUS. ONE OF THE THINGS THAT HAS BEEN MAKING JGB MARKETS SO DIFFICULT IS THE CONCERN ABOUT WHAT THE BANK OF JAPAN DOES. IN A LOT OF WAYS, IT SHOULD BE LOOKING TO RAISE SHORT-TERM INTEREST RATES. IT IS RELUCTANT TO DO THAT IN THE FACE OF STILL — IN THE FACE OF ELEVATED INFLATION, ELEVATED ENOUGH THAT IT IS DEFINITELY ON TARGET FOR ITS LONG-TERM GOAL OF KEEPING THAT HIGH OR HIGHER THAN IT USED TO BE. THAT HAS PUT A LOT OF PRESSURE ON THE LONG END OF THE JGB MARKET BECAUSE OF CONCERNS ABOUT INFLATION AND ABOUT WHAT IS GOING ON WITH BOJ POLICY. THAT COULD BE A MAJOR POSITIVE. WE HAVE A 40-YEAR OPTION TODAY, WHICH WAS ALREADY LOOKING LIKE IT MIGHT GO OFF OK BECAUSE THE GLOBAL BOND HAD SLOWED DOWN. IN FACT, IT REVERSED A BIT. THIS ALSO AT THE MARGINS MAKES THE JGB OUTLOOK A BIT MORE POSITIVE, ESPECIALLY AT THAT LONGER END, WHICH HAS BEEN THE PAIN POINT. SHERY: BLOOMBERG’S GARFIELD REYNOLDS WITH THE OUTLOOK FOR JAPANESE MARKETS. WE GET THESE LATEST LINES WHEN IT COMES TO THOSE TRADE NEGOTIATIONS WITH THE UNITED STATES. WE ARE HEARING THAT JAPANESE GOODS WILL BE TAXED AT 15% FOR THOSE PRODUCTS GOING INTO THE U.S. PRESIDENT TRUMP SAYING THAT JAPAN WILL OPEN THE COUNTRY TO TRADE INCLUDING CARS. WHAT THAT MEANS WE ARE NOT QUITE SURE YET. WE KNOW THERE IS A 25 PERCENT TARIFF ON CARS AND CAR PARTS FROM JAPAN WHICH HAS HAD A BIG IMPACT ON THE JAPANESE ECONOMY. WERE TALKING ABOUT CARMAKERS SITTING IN IMPACT OF $19 BILLION THIS FISCAL YEAR, AND THIS AUTO SECTOR IN JAPAN EMPLOYING 5.6 MILLION PEOPLE. WERE TALKING ABOUT 8% OF JAPAN’S WORKFORCE GENERATING ABOUT 10% OF GDP, SO GETTING MORE DETAILS ABOUT THE CAR AGREEMENT WILL BE VERY IMPORTANT. WE ARE SEEING NIKKEI FUTURES TO THE DOWNSIDE, BUT WE HAVE SEEN A POP EARLIER WHILE THE JAPANESE YEN IS RIGHT NOW HOLDING STEADY AS WE FOLLOW ALSO THAT 40-YEAR BOND AUCTION WE WILL GET TODAY. THIS IS BLOOMBERG. ♪ HAIDI: LET’S GET YOU THE LATEST HEADLINES WE ARE WATCHING FROM THE CORPORATE FRONT. TEXAS INSTRUMENTS SHARES FALLING 30% AFTER ISSUING A DISAPPOINTING FORECAST. THE CHIPMAKER SAYS AUTOMOTIVE AND INDUSTRIAL DEMAND IS NOT BOUNCING BACK AS FAST AS HOPED. SECOND QUARTER RESULTS BEAT ESTIMATES BUT HEAVY CAPITAL SPENDING AND GLOBAL CHIP RIVALRY ARE SQUEEZING PROFITABILITY. AND A WARNING ELON MUSK MAY NOT BE DONE WITH U.S. POLITICS. IT APPEARS TO BE THE FIRST TIME SPACEX HAS INCLUDED SUCH RISK FACTORS INTO ITS TENDER OFFERS. THE MOST RECENT OFFER VALUES THE COMPANY AT ABOUT $400 BILLION. THE 7-ELEVEN OWNER SAID A CANADIAN SUITOR DID NOT GRASP JAPAN’S REGULATORY LANDSCAPE AND CHOSE TO WITHDRAW. CHINA’S TOP MEDICAL DEVICE MAKER IS WEIGHING A SECOND LISTING IN HONG KONG THAT COULD RAISE AT LEAST $1 BILLION ACCORDING TO PEOPLE FAMILIAR WITH THE MATTER. IT HAS ALREADY TOPPED $16 BILLION THIS YEAR. SHARES HAVE FALLEN MORE THAN 20% SINCE THEIR 2021 PEAK AND 2020 FOR REVENUE MISSED ESTIMATES. SHERY: TAKE A LOOK AT HOW JAPANESE ASSETS ARE TRADING AT THE MOMENT. WE ARE ALREADY SEEING THAT REACTION FROM THE TRADE HEADLINES THAT WE GOT WITH PRESIDENT TRUMP TALKING ABOUT 15% TARIFFS ON JAPANESE GOODS, NOT TO MENTION THAT HE IS SAYING THAT JAPAN WILL OPEN THE COUNTRY TO TRADE, INCLUDING WHEN IT COMES TO CARS. WE CAN SEE NIKKEI FUTURES GAINING 1.4%, AND WE HAVE BEEN WATCHING THE JAPANESE YEN WHICH STRENGTHENED IN THE IMMEDIATE AFTERMATH OF THE HEADLINES, BUT WE ARE NOW SEEING A LITTLE BIT OF DOWNSIDE PRESSURE. OF COURSE, WE HAVE SEEN THE UPPER HOUSE ELECTIONS OVER THE WEEKEND BRINGING MORE POLITICAL RISK INTO THE FOREFRONT IN JAPAN. WE ARE WATCHING JGB YIELDS AS WELL. WE HAVE THAT 40-YEAR BOND AUCTION TODAY AS WELL, TESTING INVESTOR APPETITE. WHAT THE TRADE HEADLINES WILL DO FOR JAPAN AND THE BROADER ECONOMY AS THIS AUTO SECTOR IS NOW COMPRISING 10% OF JAPAN’S GDP WILL BE A KEY QUESTION AS WE GET THE DETAILS OF THAT TRADE DEAL. THIS IS BLOOMBERG. ♪ HAIDI: TAKE A LOOK AT WHAT WE ARE WATCHING WHEN IT COMES TO COMMODITIES. ONE OF THE COOL STORIES WE HAVE SEEN IS THE STORY WE HAVE SEEN IN IRON OR. RISING TO A FIVE-MONTH HIGH. THERE HAVE BEEN BROAD SIGNS THAT SURPRISE AT REFORMS IN IRELAND MAY BE GAINING TRACTION. IRON OR IN PARTICULAR HAS BEEN SEEING THAT CLOSE CORRELATION. SOME DAM PROJECT NEWS IN CHINA HELPING HIGH LIQUIDITY’S, RESPONDING WITH THAT SENTIMENT WAS THERE WHEN IT COMES TO SUPPLY-SIDE REFORMS FOR CHINESE STEEL. INDUSTRY POLICY, WE ARE SEEING A BIT OF AN INDUSTRY BOOST COMING LATER TODAY WITH THE IRON ORE OUTPUT EDGING UP AS WELL. WE ARE ALSO WATCHING GOLD POTENTIALLY SEE A BIT OF A PULLBACK EVEN AS WE HAVE SEEN THAT GAIN ALONGSIDE THE WEAKER DOLLAR. A LITTLE BIT MORE POSITIVE SENTIMENT WHEN IT COMES TO TRADE GIVEN A DEAL HAS BEEN REACHED WITH THE PHILIPPINES AND THE U.S. AND NOW PRESIDENT TRUMP SAYING A DEAL WITH JAPAN HAS BEEN REACHED IN THIS EIGHTH ROUND OF NEGOTIATIONS TAKING PLACE WITH THE CHIEF TRADE NEGOTIATOR AT THE WHITE HOUSE AT THE MOMENT. THAT TARIFF RATE SET AT 15%, WHICH IS A PRETTY SIGNIFICANT IMPROVEMENT ON WHAT HAD EARLIER BEEN THREATENED IF IT COMES TO FRUITION. INVESTORS CONTINUING TO SEE PROGRESS BEING MADE ON TRADE TALKS BETWEEN THE U.S. AND ITS KEY PARTNERS, AND SOME OF THAT JAPAN NEWS WILL BE HELPING SENTIMENT. SHERY: YEAH, BUT YOU SAID IT — WE NEED TO SEE THE DETAILS BECAUSE WE HAVE COME DOWN FROM THAT THREATENED 25% WHICH INITIALLY WAS 24% AND I WE ARE AT 15%, STILL RELATIVELY BETTER THAN THE 19% THAT THEY PHILIPPINES GOT, BUT IT’S DIFFICULT TO MAKE THESE COMPARISONS BECAUSE YOU HAVE TO LOOK AT THE DETAILS, AND RIGHT NOW, WE DO NOT HAVE THE DETAILS. PRESIDENT TRUMP SAYING JAPAN WILL OPEN THE COUNTRY TO TRADE, INCLUDING CARS. WHAT DOES THAT MEAN? WILL JAPAN BRING IN MORE AMERICAN CARS? WILL THEY BE ALLOWED? THERE WERE TALKS ABOUT SAFETY STANDARDS ARE BEING LOWERED AND SO FORTH. WE ARE ALSO WATCHING TALK ABOUT 25% SECTORAL TARIFFS. THERE WAS SUPPOSED TO BE A HIT ON JAPANESE CARMAKERS OVER $19 BILLION THIS YEAR. YOU CAN SEE NIKKEI FUTURES POINTING TO THE UPSIDE OF MORE THAN 1% IN CHICAGO AND SINGAPORE, ALMOST 1% AS WELL. DOES THIS CHANGE THE CALCULATION WHEN IT COMES TO THE BANK OF JAPAN, WILL BE THE KEY QUESTION. THE BANK OF JAPAN HAS NOT MOVED IN TERMS OF NORMALIZING POLICY AND HIKING RATES BECAUSE OF THE UNCERTAINTY COMING FROM TARIFFS. THAT WAS A BIG PART OF THE BOJ’S CALCULATION, BUT WE HAVE HAD CORE INFLATION ABOUT 2% OR THREE YEARS ALREADY, SO WILL THIS MOVE THE NEEDLE WHEN IT COMES TO MORE CERTAINTY FOR THE JAPANESE ECONOMY? WILL BOJ GOVERNOR UEDA WANT TO NORMALIZE POLICY FASTER? THE JAPANESE YEN HOLDING STEADY AFTER THAT LITTLE POP WE SAW EARLIER. HAIDI: WE ARE STILL SEEING QUITE A BIT OF VULNERABILITY WHEN IT COMES TO JGB’S AS WELL, THE IMPLICATIONS OF OPPOSITION PARTIES HAVING GROWN INFLUENCE, GIVEN THE DISASTROUS RESULT FOR THE GOVERNMENT AND FOR THE PRIME MINISTER WHO IS STILL HANGING ON. THE FISCAL EXPANSION RISK CONTINUES TO SIMMER IN THE MARKET. THE ELECTION RESULTS SAY WE COULD SEE EVEN FURTHER PRESSURE WHEN IT COMES TO JGB, SO WHAT’S THE TRADING WHEN IT COMES TO 20 OR 40-YEAR BONDS PARTICULARLY CLOSELY IN THE COMING DAYS. ON THE ONE HAND, THAT HE IS STILL HANGING ON HIS LEADER SHOWS SOME RESILIENCE. HE TALKED ABOUT PRESSURE POINTS WHEN IT COMES TO THESE NEGOTIATIONS BETWEEN THE U.S. AND JAPAN THAT PRESIDENT TRUMP DID MENTION IN SOCIAL MEDIA POSTS. LOTS OF QUESTIONS ABOUT WHAT THIS ACCESS TO THE AUTO SECTOR REALLY MEANS. ALSO RICE, BECAUSE AS YOU INVESTIGATED, RICE IS MORE OF A NATURAL, CULTURAL FIXATION AND POINT OF PRIDE. WHAT DOES ACCESS TO THE RICE MARKET FOR THE U.S. ACTUALLY MEAN? IF THERE WILL BE ANY ACCESS, RIGHT? AS YOU SAID, IT IS A POINT THAT RAISES A LOT OF NATIONALISM IN THIS COUNTRY. JAPAN AND JAPANESE FARMERS, IT IS VERY IMPORTANT WHEN IT COMES TO THOSE RICE GRAINS AND WHAT IMPORTING FROM ABROAD WILL MEAN. WE HAVE SEEN THE IMPACT — THE PRICE OF RICE DOUBLE OVER THE PAST YEAR, SO THE NEED IS THERE. IF THAT MARKET ACTUALLY CAN BE OPENED IS ANOTHER QUESTION. WE ARE STILL TRYING TO UNDERSTAND WHAT INCLUDING CARS MEANS FOR THIS TRADE DEAL. WE KNOW THAT PART OF THE ECONOMY GENERATES ABOUT 10% OF JAPANESE GDP, SO WE WILL HAVE TO CONTINUE TO WATCH WHAT THE DETAILS ENTAIL, BUT WHAT’S INTERESTING IS THAT THE JAPANESE YEN, AS YOU CAN SEE, HAS WEEKEND .2% AFTER THAT INITIAL POP HIGHER AGAINST THE U.S. DOLLAR, PERHAPS BECAUSE OF ALL OF THOSE RISKS. YOU TALKED ABOUT THE 40-YEAR BOND AUCTION THAT WE HAD TODAY, BUT WE HAVE SEEN THAT REALLY INCREASE THE PRESSURE WHEN IT COMES TO THE LONG END OF JAPANESE BONDS BECAUSE OF THOSE FISCAL CONCERNS. THE UPPER HOUSE ELECTION OF REALLY RAISING THE POLITICAL INSTABILITY IN THIS COUNTRY AND WHAT THAT MEANS WHEN IT COMES TO THE JAPANESE YEN. WE HAVE SEEN A LITTLE BIT MORE BULLISH TREND PHONE — FORM AFTER THE UPPER HOUSE ELECTIONS BECAUSE THE ELECTION IS OUT OF THAT WAY, BUT WHAT THAT MEANS FOR THE LONG RUN IS STILL A QUESTION. LET’S DISCUSS THIS WITH OUR NEXT GUEST, PROFESSOR OF INTERNATIONAL STUDIES WHO JOINS ME RIGHT NOW IN THE TOKYO STUDIO. I KNOW YOU’RE JOINING US TO TALK ABOUT THE EU-JAPAN SUMMIT COMING UP, BUT AT THE SAME TIME, OF COURSE, WE HAVE NOW THESE TRADE HEADLINES COMING FROM WASHINGTON. 15% TARIFFS ON JAPANESE GOODS. IS THAT A GOOD OUTCOME FOR JAPANESE NEGOTIATORS? WE ARE SPEAKING OF A VERY MIXED RESPONSE FROM THAT. MANY PEOPLE WOULD HAVE EXPECTED A BETTER RESULT, OF COURSE, AND WE ARE RIGHT AT THIS JUNCTURE, RIGHT AFTER THE ELECTION, AND THE RESULT IS DISASTROUS FOR THE CURRENT GOVERNMENT, SO THEY WILL BE JUDGED VERY HARSHLY FOR THAT. SHERY: WE JUST MENTION A FEW ITEMS THAT HAVE BEEN STICKING POINTS. WE DON’T HAVE DETAILS, BUT HOW IMPORTANT IS IT THAT JAPANESE NEGOTIATORS HELD STRONG WHEN IT COMES TO SENSITIVE ISSUES LIKE RICE AND CARS? THERE IS A LOT OF CONFUSION, EVEN WITHIN JAPANESE POLITICS WHEN IT COMES TO RICE, SO WE TAKE A VERY MIXED MESSAGE FROM PRESIDENT TRUMP. IT DOES SEEM TO SOME PEOPLE THAT PRESIDENT TRUMP IS BEGINNING TO BE COOPERATIVE, BUT STILL, RICE IS SOMETHING THAT IS IMPORTANT FOR THE JAPANESE PEOPLE, IN PARTICULAR FOR JAPANESE FARMERS, SO THERE CAN BE LONGER-TERM TURMOIL FOR THAT, AND NOT HEADING INTO THE SELECTION, BUT STILL AMID HUGE CONFUSION. HAIDI: I SUPPOSE IN A WAY IT WOULD HAVE BEEN WORSE IF THIS DEAL DOES INCLUDE MEANINGFUL CONCESSIONS FOR SUPPORTERS. DO YOU EXPECT THIS TO POTENTIALLY COMPOUND THAT? YES, OF COURSE, BUT AS YOU CAN SEE, IN MANY PERSPECTIVES, THE JAPANESE ARE NOT READY TO CONFRONT THIS RESULT AT THIS MOMENT. WE DON’T REALLY STILL NO IF THE GOVERNMENT CAN CONTINUE OR NOT. HAIDI: WHAT ARE YOUR EXPECTATIONS WHEN IT COMES TO THE EU-JAPAN SUMMIT GIVEN THERE’S SO MUCH NOISE AND DISTRACTION HAPPENING AT THE MOMENT WHEN IT COMES TO THESE NEGOTIATIONS WITH THE U.S.? YES, ORIGINALLY, THE EU SIDE WAS EXPECTED TO HAVE TWO VERY IMPORTANT ISSUES, ONE IS FREE TRADE AND ONE IS SECURITY. ADDITIONAL ARE SECURITY AND DEFENSE AND RULE-BASED INTERNATIONAL BORDER, BUT THIS SUMMIT CAME AT A VERY DISASTROUS MOMENT THAT WE COULD THINK OF. I DON’T KNOW IF THE GOVERNMENT IS READY TO HAVE THIS VERY IMPORTANT SUMMIT BETWEEN JAPAN AND THE EU BECAUSE OF THE TURMOIL IMMEDIATELY AFTER THE ELECTION. ELSEWHERE, JAPAN AND THE EU ARE FACING CHALLENGES TOGETHER, FOR EXAMPLE, THE TRUMP ADMINISTRATION AND RUSSIAN AGGRESSION IN UKRAINE AND CHINESE EXPANSIONISM, BUT I DO NOT THINK THE GOVERNMENT IS READY AT ALL TO CONFRONT ALL THESE ISSUES. SHERY: HOW DO YOU EXPECT THE JAPANESE PUBLIC TO RECEIVE THIS TRADE DEAL WITH THE UNITED STATES? THIS A DEAL AS A WHOLE IS ALWAYS EXPECTED BY JAPANESE AUDIENCES, BUT AT THE SAME TIME, IT HAS CHANGED A LOT. JAPANESE AUDIENCES ARE LOOKING AT IT CRITICALLY, BUT AT THE SAME TIME, THEY ARE EXPECTING THAT SOMETHING WILL CHANGE IN A VERY SHORT PERIOD OF TIME. SHERY: GOOD TO HAVE YOU WITH US. REACTING NOT ONLY TO THAT EU-JAPAN SUMMIT COMING TODAY BUT ALSO TO THAT TRADE DEAL THAT JUST BROKE IN THE LAST FEW MINUTES. 15% TARIFFS ON JAPANESE GOODS GOING INTO THE UNITED STATES, AND OF COURSE, PRESIDENT TRUMP SAYING THE DEAL COULD INCLUDE CARS. WE HAVE NO IDEA AT THIS POINT WHAT EXACTLY THAT MEANS, BUT WE ARE SEEING AFTER HOURS TOYOTA GAINING FOR THE 2%. WE KNOW JAPANESE CARMAKERS WERE SOME OF THE LARGEST HIT HERE IN JAPAN BECAUSE OF TARIFFS THAT WERE EXPECTED TO COST ABOUT $19 BILLION THIS FISCAL YEAR. SUBARU ALSO ONE OF THE ONES THAT HAS MORE THAN 70% OF ITS SALES COMING FROM THE U.S., SO THE AUTO SECTOR WILL BE ONE WE WILL BE WATCHING AT THE MARKET OPEN IN ABOUT 20 MINUTES. THIS IS BLOOMBERG. ♪ HAIDI: MICROSOFT HAS BLAMED CHINESE STATE-SPONSORED HACKERS FOR A WEEK-LONG ATTACK ON ITS SHAREPOINT SOFTWARE. WHAT DO WE KNOW ABOUT THESE HACKS AND WHAT WE HAVE HEARD FROM MICROSOFT? ANNABELLE: THIS IS A SOFTWARE, JUST TO LAY IT OUT — IT IS WIDELY USED BY GOVERNMENT AGENCIES AND ALSO BUSINESSES AROUND THE WORLD. MICROSOFT, AS YOU SAID, DOES ALLEGE THOSE ATTACKERS ARE FROM CHINA. MORE ON THAT IN A MOMENT, BUT HOW THEY HAVE BEEN ABLE TO EXPLOIT VULNERABILITIES AS WELL IS IMPORTANT BECAUSE THERE ARE TWO DIFFERENT WAYS TO USE MICROSOFT SHAREPOINT. THE FIRST IS VIA THE CLOUD, AND THAT HAS NOT BEEN AFFECTED, AS WE UNDERSTAND, BUT THERE IS ANOTHER WAY IT CAN BE USED, THROUGH ON-PREMISE SERVICES, AND THAT IS WHERE THE VULNERABILITIES SEEM TO HAVE ARISEN. THERE’S OTHER GROUPS POSSIBLY INVOLVED AS WELL. WE SHOULD NOTE THAT WE HAVE GOT A RESPONSE FROM BEIJING. THEY ARE FIRMLY DENYING ANY SORT OF INVOLVEMENT, BUT AS WE SAID, STILL TRYING TO COME TO TERMS WITH EXACTLY WHAT DATA COULD HAVE BEEN COMPROMISED. SHERY: WE HAVE TO NOTE ALSO THAT THIS COMES AT A TIME WHEN MICROSOFT WAS TRYING TO BOLSTER ITS CYBER DEFENSES. ANNABELLE: YES, IT HAS CERTAINLY BEEN AT THIS EFFORT FOR QUITE A PERIOD. MICROSOFT HAS BEEN THE SUBJECT OF A RANGE OF DIFFERENT HACKS AND HIGH-PROFILE STRING OF HACKS IN RECENT YEARS. A VERY CHALLENGING TASK FOR A COMPANY OF THE SIDE HOW WIDESPREAD THE USE OF THEIR SOFTWARE IS, AND ALSO THE TECHNIQUES HACKERS ARE USING ARE PRETTY INSIDIOUS BECAUSE EVEN AFTER SECURITY FIXES GET ROLLED OUT, PEOPLE WE SPOKE TO SAID VULNERABILITIES WOULD STILL EXIST BECAUSE HACKERS COULD STILL MAINTAIN ACCESS TO ANY COMPROMISED SERVERS, EVEN IF THOSE SERVERS HAD BEEN PATCHED OR REPAIRED. YES, ESSENTIALLY ABLE TO CONTINUE TO GAIN BACKDOOR ACCESS, BUT TO YOUR POINT AROUND IMPROVING SECURITY, MICROSOFT HAS MADE SEVERAL STRIDES IN THIS SPACE, MAKING SEVERAL HIGH-PROFILE HIRES, FOR INSTANCE, FROM THE LIKES OF THE U.S. GOVERNMENT. THOSE EXECUTIVES ARE SAID TO BE MEETING WITH SENIOR EXECUTIVES ON AN ONGOING OR EVEN WEEKLY BASIS TO TRY TO FIGURE OUT WAYS TO MAKE THE SOFTWARE EVEN MORE RESILIENT. HAIDI: GENERAL MOTORS SHARES ARE DROPPING SHARPLY AFTER THE COMPANY SAID IT SUFFERED A 1.1 BILLION DOLLAR HIT FROM PRESIDENT TRUMP’S TARIFFS. THEY SAY PLANS ARE IN PLACE TO ENSURE THEIR SUPPLY CHAIN REMAINS RESILIENT AMID MOUNTING TRADE RISKS. TARIFFS HAVE HAD SOME PRESSURE AS WE HAVE ADJUSTED TO THEM, BUT AS WE JUST SET ON OUR EARNINGS CALL, WE ARE 90 DAYS IN TO THIS AND OUR PLANS ARE STILL CONSISTENT WITH WHAT WE SAID AT THE BEGINNING AND WE WILL CONTINUE TO EXECUTE ON THAT. WE HAVE A STRATEGY THAT IS BOTH SHORT-TERM AND LONG-TERM. IN THE SHORTER TERM, WE TALKED ABOUT OUR ABILITY TO OFFSET 30% OF THE TARIFF IMPACT THROUGH SOME COST AUSTERITY AS WELL AS SOME MANUFACTURING CHANGES AND PRICING, BUT WE THINK THAT AS WE MAINTAIN OUR CONSISTENT PRICING STRATEGY WHERE WE LOOK AT THE DEMAND FOR OUR VEHICLES AND WHERE THAT SITS AND OUR DISCIPLINED INVENTORY APPROACH THAT WE CAN CONTINUE TO ABSORB THAT AND REFLECT IT IN OUR TRADITIONAL AND CONSISTENT PRICING ACTIONS RATHER THAN GOING OUT AND ANNOUNCING BIG TARIFF-RELATED INCREASES BECAUSE WE DO NOT THINK THAT IS NECESSARILY GOOD FOR THE CONSUMER AS WELL, SO PRICING IS PART OF IT, BUT NOTHING OUT OF THE ORDINARY OR EXTRAORDINARY FROM WHAT OUR STRATEGY HAS BEEN. BREAKING INTO THESE COMMENTS FROM PRESIDENT TRUMP WHEN IT COMES TO TARIFFS AND THAT TRADE DEAL WITH JAPAN. SOME LITTLE ELECTIONS THAT TOOK PLACE, SOME OTHER THINGS HAPPEN, BUT WE HAD 1 — THE SPEAKER SAID WE ARE ONE HEART ATTACK AWAY FROM LOSING THE MAJORITY. WE DON’T WANT TO BE THERE, AND I THINK THE RESULTS OF WHAT WE ARE DOING TOGETHER WILL GIVE US A TREMENDOUS MIDTERM. WE ARE GOING TO WORK TOGETHER VERY HARD. WE ARE GOING TO MAKE ALL THOSE ROBO CALLS TO YOU AND WE ARE GOING TO PICK IT UP AND WE ARE GOING TO INCREASE — I THINK WE SHOULD INCREASE BY A LOT, BUT DESPITE THIS INCREDIBLY NARROW MARGIN THAT YOU HAVE ALREADY FULFILLED, THINK OF THIS — MORE PROMISES THAN ANY CONGRESS IN GENERATIONS. THERE HAS BEEN NO CONGRESS LIKE THIS CONGRESS IN TERMS OF ACHIEVEMENT THAT PEOPLE CAN EVEN THINK OF. WE HAVE TO TAKE WORLD WARS OUT. WE CAN TAKE A COUPLE OF THINGS OUT, BUT BASICALLY, THERE HAS NEVER BEEN ANYTHING LIKE THIS, AND WE DID THIS WITH VERY SMALL MAJORITIES. I WANT TO THANK JOHN THUNE ALSO BECAUSE THE SENATE HAS BEEN — AND ALL THE PEOPLE IN THE SENATE BECAUSE THEY HAVE BEEN TERRIFIC ALSO. BUT I ESPECIALLY TONIGHT WANT TO THANK SPEAKER JOHNSON FOR DOING A JOB BUT I THINK — [CHEERS AND APPLAUSE] I THINK HE’LL GO DOWN — AND I THINK HE HAS A LONG WAY TO GO, AND I THINK HE WILL GO DOWN AS ONE OF THE GREATEST SPEAKERS AT ANY TIME IN HISTORY. AND I SAY THIS — YOU NEEDED A VERY PRECISE PERSONALITY TO GET THESE VOTERS. IF YOU HAD SOMEBODY THAT WAS JUST A LITTLE BIT OFF, YOU WERE GOING TO LOSE 20 VOTES AND YOU COULD NOT LOSE ANY, SO I JUST WANT TO THANK YOU. EVERYBODY BELIEVES THAT, TOO, MIKE. AND KELLY IS HERE. HI, KELLY. ALSO, A MAN OF GREAT COURAGE, STEVE SCALISE. HE IS OUR MAJORITY LEADER. I TOLD THE STORY SO MANY TIMES, BUT HE WAS VERY BRAVE. I SAW HIM ON THE WORST OF TIMES. I WAS THERE AT HIS HOSPITAL LATE AT NIGHT WITH HIS INCREDIBLE WIFE, AND WE THOUGHT STEVE WAS NOT WITH US, HE WAS GOING TO BE A GONER, AND HE WAS TOUGH. I ACTUALLY THINK YOU LOOK BETTER NOW THAN YOU DID THEN. YOU LOOK BETTER NOW THAN YOU DID BEFORE THIS HORRIBLE THING HAPPENED, SO WHATEVER THE HELL YOU ARE DOING, YOU ARE GOING TO HAVE TO LET US KNOW, ALL RIGHT? BUT HE IS GREAT. AND ANOTHER GUY WHO I HAVE REALLY GOTTEN TO LIKE, AND USUALLY THIS DOES NOT HAPPEN BECAUSE I USED TO HAVE LITTLE ARGUMENTS. I WOULD SAY, HE IS A TOUGH GUY. HE IS IN NASTY, TOUGH GUY, AND THEN I REALIZED HOW TALENTED AND GOOD HE WAS AND WE GOT TO BE REALLY GOOD FRIENDS. TOM EMMER. HE IS INCREDIBLE, ACTUALLY. BUT HIS WIFE — OH, THERE SHE IS. BUT SHE LIKED ME. SHE SAID, YOU DON’T UNDERSTAND MY HUSBAND. HE’S REALLY — AND SHE TURNED OUT TO BE RIGHT. HIS GREATEST ASSET. THANK YOU BOTH. INCREDIBLE. AND EVERY OTHER MEMBER OF CONGRESS THAT IS WITH US. WE HAVE ALMOST PRETTY MUCH A FULL CONTINGENT. SOME OF YOU HAVE YOUR SPOUSES, AND WE APPRECIATE IT AND THAT IS WHY WE APPRECIATE WHAT YOU HAVE HAD TO GO THROUGH. THESE WERE LATE NIGHTS, AND A LOT OF THEM, TOO. IF WE TURNED OFF THE PHONES AT 3:30 IN THE MORNING, WE WERE NOT WORKING VERY HARD. IT WAS REALLY SOMETHING. I JUST WANT TO THANK YOU ALL. WE ALSO HAVE SECRETARY SCOTT BESSENT. IS SCOTT HERE SOMEPLACE? I THINK SO. SCOTT, THANK YOU VERY MUCH, SCOTT. WE JUST CAME IN FROM THE OVAL OFFICE WHERE A FEW PEOPLE GOT TO WATCH NEGOTIATION WITH JAPAN. IT WAS INTERESTING. DOUG BURGER BERGER I THINK MIGHT BE HERE SOMEPLACE. DOUG? AND I SAID TO THE JAPANESE TRADE REPRESENTATIVES — AND THESE WERE THE TOP PEOPLE — WE CONCLUDED THE ONE DEAL DONE AND NOW WE ARE GOING TO CONCLUDE ANOTHER ONE BECAUSE THEY ARE FORMING A JOINT VENTURE WITH US IN ALASKA, AS YOU KNOW, FOR THE LNG. I SAID WE WILL ALL DO THAT TOGETHER WITH CHRIS. IS CHRIS HERE? CHRIS, RIGHT? IF YOU COULD SET THAT UP, DOUG, THAT WOULD BE GREAT, BUT THEY ARE ALREADY NOW. THIS WAS THE ONE THEY HAD TO MAKE. THANK YOU VERY MUCH. AND HOWARD LUTNICK, WHO IS TERRIFIC. HE WAS TERRIFIC. HOWARD. HE WILL NEVER GO BACK INTO PRIVATE INDUSTRY AGAIN BECAUSE HE HAS SEEN NUMBERS THAT ARE SO BIG — THIS DEAL IS THEY SAY THE BIGGEST DEAL EVER MADE. BIGGEST DEAL EVER MADE, AND WE HAVE EUROPE COMING IN TOMORROW AND THE NEXT DAY AND WE HAVE SOME OTHER ONES COMING IN. WE ARE DOING THINGS THAT HAVE NEVER BEEN DONE BEFORE AND OUR COUNTRY IS BECOMING RICH AGAIN AND THAT’S THE WAY IT SHOULD BE. THEY ARE NOT TAKING ADVANTAGE OF US. AND HOWARD WILL NEVER GO BACK INTO PRIVATE. YOU KNOW, HE HAD A BIG COMPANY, BUT THE BIGGEST DEAL YOU EVER MADE IS LIKE A QUARTER OF A LINE OF THE DEAL WE JUST MADE. THANK YOU VERY MUCH, SCOTT. GOOD JOB. GOOD JOB, SCOTT. THANK YOU VERY MUCH. IN FACT, SCOTT, COME HERE. I’M GOING TO HAVE SCOTT SAY GRACE. GIVE A LITTLE PRAYER, YES? I HOPE THE TELEVISION STAYS ON. YOU KNOW THEY HAVE A TENDENCY TO TURN OFF, BUT I THINK THAT’S GOOD. WHAT DO YOU THINK, BRIAN, YES? NOBODY DOES IT LIKE THIS MAN. HE IS BETTER AT THIS THAN HE IS AT HOUSING, BUT HE’S GOOD AT HOUSING. THAT’S GREAT, SCOTT. HI, EVERYONE. THANK YOU, MR. PRESIDENT. WE ARE SO GRATEFUL FOR YOU, GRATEFUL FOR YOUR SACRIFICE, AND FOR YOUR HEART FOR PEOPLE, YOUR HEART FOR THIS COUNTRY, YOUR HEART TO DO WHAT’S RIGHT NO MATTER WHAT, AND I’M SO GRATEFUL THAT THE LORD CALLED US TO BE TOGETHER FOR SUCH A TIME AS THIS , AND SO I REALLY APPRECIATE YOU , AND I KNOW I CAN SPEAK FOR EVERYONE OUT HERE THAT YOU ARE A TREMENDOUS LEADER, AND WE THANK GOD FOR YOU, AND WE THANK GOD FOR THE FIRST LADY AND YOUR FAMILY AND EVERYTHING THAT YOU HAVE GONE THROUGH FOR THIS COUNTRY, AND WE ARE PROUD TO STAND WITH YOU. THANK YOU. THANK YOU. OK, LET’S PRAY. FATHER IN HEAVEN, WE THANK YOU. WE ARE SO GRATEFUL THAT WE HAVE THIS TIME TO STAND IN YOUR PRESENCE. FATHER GOD, WE ARE AT THE WHITE HOUSE, FATHER GOD, THE MOST POWERFUL PLACE — HAIDI: WE ARE JUST HEARING THEIR FROM PRESIDENT TRUMP SPEAKING TO A GROUP OF REPUBLICANS IN THE WAKE OF, OF COURSE, THIS RECEPTION WITH REPUBLICAN MEMBERS OF CONGRESS AT THE WHITE HOUSE IN THE WAKE OF WHAT APPEAR TO BE SUCCESSFUL NEGOTIATIONS WITH JAPAN ON TRADE. WE ARE STILL WAITING TO HEAR FROM THE CHIEF NEGOTIATOR’S SIDE WHEN IT COMES TO JAPAN, BUT PRESIDENT TRUMP OVER THE PAST HALF HOUR OR SO ANNOUNCING THE DEAL OF A 15% TARIFF WITH JAPAN. HE ALSO SPOKE ABOUT CALLING FOR JAPAN TO OPEN THEIR COUNTRY TO CAR IMPORTS, AGRICULTURAL IMPORTS. THESE ARE STICKING POINTS GIVEN THESE EIGHT ROUNDS OF NEGOTIATIONS WE HAVE SEEN TAKE PLACE IN THE WHITE HOUSE. IT WOULD BE VERY INTERESTING TO SEE WHAT THOSE DETAILS ARE, GIVEN HOW POLITICALLY SIGNIFICANT THEY WOULD BE FOR JAPAN, HOW SENSITIVE THESE SECTORS HAVE BEEN IN THE COURSE OF THESE NEGOTIATIONS. IT ALSO COMES AFTER THE DEAL WAS ANNOUNCED WITH THE PHILIPPINES AS WELL, JUST DAYS BEFORE THE AUGUST 1 DEADLINE FOR THE IMPOSITION OF RECIPROCAL TARIFFS ON DOZENS OF TRADING PARTNERS. WE ALSO HEARD A LITTLE BIT MORE DETAIL WHEN IT COMES TO THE DIFFICULTY OF NEGOTIATIONS WITH JAPAN WITH PRESIDENT TRUMP SPEAKING AT AN EVENT WITH GOP LAWMAKERS JUST BEFORE, SAYING THAT THE DEAL IS A LOT DIFFERENT TO DEALS OF THE PAST. HE DID MENTION ALASKAN RESOURCES WHEN IT COMES TO LNG, BUT WE REALLY NEED TO SEE MORE DETAILS AS TO WHAT THESE KEY SECTORS ARE AND COMPROMISES, CONCESSIONS, IF THEY WERE MADE, WHAT ARE THEY? SHERY: YEAH, WHAT JAPANESE INVESTMENTS INTO THE LNG PROJECT WILL MEAN, RIGHT? THIS PROJECT SUPPOSED TO COST ABOUT $44 BILLION, AND THAT PIPELINE, OF COURSE, IS A KEY QUESTION ON HOW JAPAN ACTUALLY DEALS WITH THIS, BUT LET’S DISCUSS THE BROADER TRADE DEAL, ESPECIALLY WITH THE 15% TARIFFS ON JAPANESE GOODS. LET’S BRING IN OUR JAPAN GOVERNMENT AND ECONOMY EDITOR PAUL JACKSON. WE STILL DO NOT HAVE DETAILS. PRESIDENT TRUMP SAYING THEY WILL OPEN THE COUNTRY, INCLUDING CARS. WHAT POTENTIALLY COULD THAT MEAN? PAUL: I THINK IT MEANS RELAXING SOME OF THE SAFETY RESTRICTIONS ON SOME IMPORTS OF AMERICAN CARS. I THINK ONE OF THE THINGS PRESIDENT TRUMP IS LESS A MIRROR OF IS THAT THERE IS NOT MUCH DEMAND FOR AMERICAN CARS BECAUSE THE STREETS ARE A LOT NARROWER IN JAPAN. AMERICAN CARS ARE BIG, NOT SO POPULAR HERE. THAT IS MORE OF A FACTOR, BUT FOR HIS PERSPECTIVE, THIS IS THE KIND OF THING HE WANTS TO KNOCK OUT IN THESE GRANDSTANDING ANNOUNCEMENTS THAT HE MAKES. IT’S LIKE, YEAH, THEY ARE OPENING TO CARS AND TRUCKS AND AMERICAN FARM PRODUCTS. SHERY: AND WHAT THAT MEANS FOR THE OTHER SIDE WHEN IT COMES TO THE AUTO SECTOR AND TARIFFS ON JAPANESE CARS GOING INTO THE U.S. COULD THAT ALSO MADE A REDUCTION ON SECTORAL TARIFFS WHICH WOULD BE HUGE FOR THE JAPANESE ECONOMY IF IT WERE TRUE? THAT IS A KEY POINT. WE DON’T HAVE ANY DETAILS ON THAT, AND CRITICALLY, LOWERING THOSE CAR TARIFFS IS MORE DIFFICULT TO ASK OF THE AMERICANS BECAUSE THEY’VE GOT THAT ABOARD WITH A LOT OF OTHER COUNTRIES, SO IF YOU START DOING PIECEMEAL CHANGES TO THOSE TARIFFS, THAT OPENS UP QUITE A CAN OF PROBLEMS FOR TRUMP IN TERMS OF CONSISTENCY. SHERY: CONSISTENCY NOT REALLY ONE OF THE THINGS HE IS KNOWN ONE OF THE THINGS HE IS KNOWN FOR. PAUL: IF WE LOOK AT THE RECIPROCAL FIGURE, HE SHOULD GET — ISHIGA CAN SELL THIS AS A PRETTY GOOD FIGURE. VIETNAM’S TRADE SURPLUS WITH THE U.S. IS ABOUT TWICE THE SIZE OF JAPAN’S AND IT GOT A DEAL FOR AROUND 20% ON THE RECIPROCAL TARIFFS, SO I THINK ANYTHING ABOVE 20% WAS GOING TO BE CONSIDERED A BAD DEAL FOR JAPAN, SO GETTING BELOW 20% I THINK WAS A KEY BENCHMARK FOR THE JAPANESE. 15%, 10% WAS PROBABLY THE BEST OUTCOME. 15%, NOT BAD, BUT WE HAVE THAT BIG QUESTION MARK ABOUT WHERE THE AUTO TARIFFS ARE. SHERY: WE ALSO HAVE ALUMINUM AND STEEL TARIFFS, BUT AS YOU SAID, CONSISTENCY STICK AROUND, WE ARE GETTING THE MARKET OPENS HERE IN JAPAN AND THE NIKKEI GAINING 1/10 OF 1%, A ONE PERCENT POP AT THE OPEN IN THE JAPANESE YEN IS WEEK BEGINNING — WEAKENING AGAINST THE U.S. DOLLAR, IT WAS STRONGER AGAINST THE GREENBACK WHEN THE TRADE LINES DROPPED BUT WE ARE WATCHING THE JGB SPACE, WE HAVE THE 40 YEAR BOND AUCTION TODAY. WE WILL TEST THE DEMAND FOR THE LONG AND AND THE SECTORIAL TARIFFS IS SOMETHING WE ARE WATCHING. TRUMP IS TALKING ABOUT OPENING JAPAN, INCLUDING CARS, BUT DO THOSE ALSO BEING 25% TARIFFS, WE ARE NOT SURE. SOUTH KOREA IS ALSO OPENING. NEGOTIATIONS ARE ONGOING AS WELL. THE KOSPI GAINING 6/10 OF 1%. WE EXPECT TRADE NEGOTIATIONS BETWEEN THE U.S. AND ALSO WASHINGTON THIS WEEK. THESE ARE BLANKET TARIFFS AROUND THE WORLD, SOUTH KOREA STILL FACING 25%. WHEN IT COMES TO THE JAPANESE ECONOMY, HOW MUCH OF A DIFFERENCE DO 15% TARIFFS MAKE ESPECIALLY WHEN IT COMES TO THE BANK OF JAPAN BECAUSE WITH THIS UNCERTAINTY OVER TRADE WAS PERHAPS ONE OF THE BIGGEST BLOCKS IN GETTING TO NORMALIZATION ON THE RATE HIKE? AS WE REPORTED YESTERDAY, OFFICIALS AT THE BANK OF JAPAN WERE THINKING EVEN WITH THE ELECTION RESULTS AND TRADE NEGOTIATIONS GOING AS THEY WERE, THEY WERE THINKING THEY WERE STILL ON COURSE FOR THE GRADUAL RATE HIKE CYCLE. SO IT’S A MATTER OF TIMING. ONE OF THE KEY POINTS IS THE AUTO SECTORIAL TARIFFS AND WE STILL DO NOT KNOW, WE ARE ASSUMING THEY WILL STAY AT 25%. WITH CLARITY ON THE RECIPROCAL TARIFFS, IT MAKES IT EASIER FOR THE BANK OF JAPAN TO DECIDE WHEN IT MIGHT GO NEXT. WE ARE NOT TALKING ABOUT NEXT WEEK’S MEETING. THE HOLD IS A SLAMDUNK PRETTY MUCH BUT IT PERHAPS OPENS UP THE POSSIBILITY OF A MOVE IN THE BOTTOM AT THE EARLIEST — IN THE FALL AT THE AUDIENCE — EARLIEST. WHEN IT COMES TO THE JAPANESE SIDE IT’S BEEN A LONG [INDISCERNIBLE] WE ARE NOW HEARING THAT THE NEGOTIATORS MISSION HAS BEEN COMPLETED. NO DETAILS IN TERMS OF WHAT THAT MEANS BUT SEEMINGLY A CONFIRMATION THAT THE TRADE DEAL IS COMPLETE. WHEN IT COMES TO THE DOMESTIC POINT OF VIEW, TRUMP HAS BEEN GIVEN TO SENSITIVE SECTORS FOR THE U.S. BUT HOW DOES IT GET SOLD DOMESTICALLY TO THE U.S., IN TIMES OF STRIFE FOR THE RULING PARTY? I THINK THE MESSAGE THAT THE MISSION HAS BEEN COMPLETED, IT COULD BE LINKED TO THE FUTURE OF THE PRIME MINISTER, WHO SAID HE WOULD SOLDIER ON BECAUSE HE HAD RESPONSIBILITIES AND ONE WAS TRADE. WE HEAR REPORTS HE WILL LINK HIS FUTURE TO DEVELOPMENTS IN TRADE NEGOTIATIONS. DO WE HAVE ANY DEVELOPMENTS? I THINK WE HAVE A PRETTY BIG DEVELOPMENT TODAY. [LAUGHTER] ALL EYES NOW WILL BE ON THE PRIME MINISTER OF JAPAN AND WHETHER HE DECIDES THIS IS THE CLEAN MOMENT FOR HIS LEGACY AFTER A BRUTAL ELECTION RESULT, A MOMENT WERE HE CAN DELIVER SOMETHING TO THE PEOPLE AND LEAVE WITH DIGNITY. HAIDI: PAUL JACKSON, AS WE TRY TO DECIPHER WHAT WE HAVE HEARD SO FAR. A LOT MORE FROM TRUMP AND VERY LITTLE FROM THE JAPANESE SIDE, THE TRADE NEGOTIATOR SAYING HIS MISSION HAS BEEN COMPLETED. CALVIN, GREAT TO HAVE YOU WITH US. A LOT OF DEVELOPMENTS WHEN IT COMES TO THE TRADE DEAL. MARKET ACCESS TO SENSITIVE SECTORS LIKE AUTOS, AND CULTURE, WE DO NOT HAVE A LOT OF DETAIL. DOES IT CREATE OPPORTUNITY FOR JAPANESE ASSETS THAT HAVE BEEN WEIGHED DOWN BY THE DOMESTIC FISCAL SITUATION ON BROADER TARIFF CONCERNS? I THINK THE POLITICAL SITUATION AND WHAT HAS TRANSPIRED A FEW MINUTES AGO SETS BACK THE BOJ DECISION TO HIKE THIS YEAR. WE DO NOT EXPECT THEM TO DO SO. EVEN WITH THE 15% TARIFF WE EXPECT THE JAPANESE ECONOMY [INDISCERNIBLE] AND WITH THE YEN RALLYING A LITTLE WE THINK IT WILL BE HARD FOR THE BOJ TO FURTHER HIKE RATES THIS YEAR. AUTO EXPORTS COMPRISE 30% OF JAPANESE EXPORTS TO THE U.S. SO ANY POTENTIAL TARIFF WILL LIKELY HURT EXPORTS AND JAPAN HAS BEEN HIT BY OTHER COUNTRIES AS WELL, ASEAN COUNTRIES ARE BUYING CHINESE CARS SO EVEN IF YOU THINK OF AUTO TARIFFS IN THE U.S., EVEN 15%, AUTO EXPORTS WILL BE HIT SIGNIFICANTLY. HAIDI: WHAT OPPORTUNITIES DO YOU SEE, GIVEN THESE CONCERNS ABOUT GLOBAL BONDS IN THE LONGER AND PERSIST EVEN WITH THESE DEVELOPMENTS ON TRADE? THE LONG END OF THE CURVE GOING UP, A LOT OF JAPANESE PENSION FUNDS WILL LIKELY FIND IT LESS ATTRACTIVE TO CONVERT FROM THE YEN INTO THE DOLLAR TO BUY U.S. TREASURIES SO THERE WILL BE LESS DEMAND FOR THE U.S. DOLLAR AND THE JAPANESE YEN COULD BE MORE SUPPORTIVE GIVEN THE FACT THAT OUTFLOWS FROM THE JAPANESE INTO THE DOLLAR HAS BEEN A MAIN CAUSE OF WEAKNESS IN THE JAPANESE YEN OVER THE LAST THREE YEARS. SO THE YEN COULD HOVER 144 SHORT-TERM BUT MEDIUM-TERM IT WILL LIKELY BREAK 140. BANK OF JAPAN HAS LESS INCENTIVE TO HIKE. THE LAST OF THE RULING LDP IN THE ELECTIONS OVER THE WEEKEND MEANS [INDISCERNIBLE] AS WE MOVE ON TO THE END OF THE YEAR. WITH THE RULING COALITION LOST THEIR COULD BE A CHANGE IN THE LEADER SO IT WILL BE HARD TO EXPECT THE BOJ TO HIKE RATES OVER THE NEXT SIX MONTHS. SHERY: SO YOU DO NOT EXPECT THE BANK OF JAPAN TO MOVE FORWARD THE NEXT RATE HIKE, DESPITE THE FACT WE HAVE MORE TRIP CERTAINTY ON THE TRADE FRONT? WE HAVE INFLATION ACCELERATING ABOVE 2% ON CORE CPI AND WE THOUGHT PERHAPS THERE WAS ONLY ECONOMIC UNCERTAINTY HOLDING THE BOJ BACK AND IF THE BOJ DOES NOT MOVE, WHAT ARE THE IMPLICATIONS FOR JAPANESE STOCKS? WE HAVE SEEN MOMENTUM AND OPTIMISM GIVEN THE LOOSE POLICY HERE. LARGELY BECAUSE OF THE JAPANESE YEN AND I THINK WHERE THE SITUATION IS CONCERNED NOW THE JAPANESE YEN WILL HOLD AT THESE CURRENT LEVELS AND COULD STRENGTHEN SHORT-TERM BASIS BUT IF IT HAPPENS OBVIOUSLY INFLATION MEDIUM TO LONG-TERM WILL BE MORE MUTED. DO NOT FORGET THE WEAKNESS OF THE JAPANESE ECONOMY NEEDS TO BE MORE SUSTAINED GIVEN THE 50% TARIFF COMING IN. NOT GOOD NEWS FOR JAPAN, — 15% TARIFF COMING IN. IF IT INCLUDES AUTOS AS WELL IT WILL MAKE IT REALLY HARD FOR THE JAPANESE ECONOMY TO GROW THIS YEAR AND WE THINK PERHAPS THEY MIGHT HAVE TO TAKE A CUT. JAPANESE CENTRAL BANK CAN LOWER QUANTUM WERE TIGHTENING IS CONCERNED. ALLOWING JAPANESE BONDS TO ROLLOVER AND EASING AT BUYING AT THE MOMENT. WITH A TIGHTER SUPPLY OF TENURES COMING THROUGH PERHAPS WHERE USER CONCERN THERE’S ROOM TO GO UP MORE AND THAT WOULD BE MORE OF A TIGHTENING THAN ANYTHING ELSE. THE JAPANESE YEN HAS ROOM TO STRENGTHEN FURTHER FROM HERE. SHERY: KEVIN WITH THE OUTLOOK ON THE JAPANESE MARKETS, GREAT TO HAVE YOU WITH US AS WE WATCH THE AUTO STOCKS, A HUGE JUMP WHEN IT COMES TO JAPANESE CARMAKERS. WE EXPECT MORE DETAILS COMING FROM THE DEAL WITH THE UNITED STATES. PRESIDENT TRUMP HAS SAID JAPAN WILL OPEN TO TRADE INCLUDING CARS, WE HEAR FROM THE PRIME MINISTER OF JAPAN THAT HE WILL GET FURTHER DETAILS FROM THE TOP TRADE NEGOTIATOR WHO WILL HOLD CALLS AND MEETINGS AS NEEDED WITH WASHINGTON. WE DO NOT HAVE DETAILS WHEN IT COMES TO THE CAR TARIFFS ON JAPANESE AUTOS GOING INTO THE UNITED STATES BUT YOU CAN SEE ALREADY SOME ARE HEAVILY EXPOSED TO THE U.S. MARKET GAINING GROUND, TOYOTA 1/5 OF ITS BUSINESS COMES FROM U.S. SALES. HAIDI: BREAKING NEWS WHEN IT COMES TO FURTHER DEVELOPMENTS IN THE MICROSOFT SHAREPOINT BREACH. THE U.S. AGENCY RESPONSIBLE FOR THE MAINTENANCE AND DESIGN WAS BREACHED BY A HACK OF MICROSOFT SHAREPOINT SOFTWARE ACCORDING — NO SENSITIVE OR CLASSIFIED INFORMATION HAS BEEN COMPROMISED IN THE ATTACK ON THE NATIONAL NUCLEAR SECURITY ADMINISTRATION. MICROSOFT PUTS THE BLAME ON CHINESE HACKERS FOR THE CAMPAIGN THAT HAS BREACHED ORGANIZATIONS AROUND THE WORLD. THE U.S. AGENCY RESPONSIBLE FOR MAINTAINING AND DESIGNING NUCLEAR WEAPONS IN THE U.S. WAS AMONG THE GROUPS WHO WERE BREACHED BY THE HACK SO THE GROUP HAS A MISSION THAT INCLUDES PROVIDING U.S. NAVY AND SUBMARINES WITH NUCLEAR REACTORS AND PLAYS A KEY ROLE WHEN IT COMES TO COUNTERTERRORISM AND TRANSPORT OF NUCLEAR WEAPONS. WE ARE MONITORING CLOSELY. MORE AHEAD ON THE ASIAN TRADE. THIS IS BLOOMBERG. ♪ SHERY: WE ARE GETTING MORE UPDATES WHEN IT COME TO THE U.S.-JAPAN TRADE DEAL, SETTING TARIFFS ON JAPANESE AUTO IMPORTS AT 15%, DOWN FROM THE 25%. WE HAVE SEEN THE UPSIDE WHEN IT COMES TO JAPANESE EQUITIES, ESPECIALLY IN AUTOMAKERS WITH THE TOPIX GAINING MORE THAN 2%, EVEN THE JAPANESE YEN REVERSING SOME EARLIER DECLINES AGAINST THE U.S. DOLLAR AND GAINING 1/10 OF 1% AT THE 147 LEVEL. WE CONTINUE TO HEAR FROM THE PRIME MINISTER HE NEEDS TO LOOK CLOSELY AT THE DETAILS OF THE AGREEMENT, JUST GETTING NEWS AND LOCAL MEDIA REPORTING 15% TARIFFS ON JAPANESE AUTO IMPORTS. ADP AND GEOPOLITICAL RISKS, GROWTH FOR DEVELOPING ASIA INCLUDING CHINA WAS CUT TO FOUR .7 PERCENT, OUTLOOK FOR ASIA FOLLOWING — FALLING HALF A PERCENTAGE POINT, THE ONLY MAJOR ECONOMIES GETTING HIGHER FORECASTS ARE VIETNAM AND TAIWAN. JOINING US IS ALBERT PARK. VIETNAM IS ONE OF THE COUNTRIES THAT FINALLY HAD A U.S. TRADE DEAL, 20% TARIFF ON THAT ECONOMY WE ARE GETTING NEWS NOW OF THE JAPANESE TRADE DEAL AS WELL, AND THE OVERALL PICTURE FOR ASIA. THE FORECAST WE HAVE RELEASED TODAY IS BASED ON THE TARIFFS THAT EXISTED PRIOR TO YESTERDAY. IT DOES NOT ACCOUNT FOR WHAT HAS HAPPENED IN THE PHILIPPINES AND JAPAN. IF YOU THINK THE NEW AGREEMENTS OR FOR COUNTRIES WHO DO NOT GET AN AGREEMENT, TARIFFS WILL REVERT TO HIGHER RATES THAN THE 10% ACROSS-THE-BOARD, THE ADDITIONAL HEADWINDS FOR GROWTH IN THE REGION, IT MIGHT HAVE BEEN A TYPO. THE FORECAST FOR VIETNAM HAS BEEN DOWNGRADED FROM 6.6% TO 6.3%. ALL ACROSS SOUTHEAST ASIA, WHICH IS THE MOST IMPORTANT EXPORT DEPENDENT REGION OF ASIA, WE ARE SEEING DECLINE IN MANUFACTURING, A LOT OF THIS — LOSS OF BUSINESS CONFIDENCE, CRIPPLING EFFECTS OF CONTINUED UNCERTAINTY. HOPEFULLY BY AUGUST 1 THERE WILL BE CLARITY AND WITH GREATER CERTAINTY WILL ALLOW BUSINESSES TO PLAN MORE COHERENTLY AND HOPEFULLY WE CAN SEE SOME BENEFITS OF THAT. SHERY: GOOD THING YOU MENTIONED THAT BECAUSE SOUTHEAST ASIA’S GROWTH OUTLOOK IS THE LARGEST REVISION AMONG SOME REGIONS FOR THE ADB SO WHERE ARE YOU SEEING AT THIS POINT THE BRIGHT SPOTS? IN THE REGION? SOUTH ASIA CONTINUES TO BE THE FASTEST GROWING REGION, INDIA WE ARE DOWNGRADING SLIGHTLY BUT IT IS STILL A DECENT GROWTH RATE AND ALTHOUGH WE DOWNGRADE VIETNAM, IT STILL THE FASTEST GROWING COUNTRY IN SOUTHEAST ASIA. THE OTHER IS THE PHILIPPINES WHICH WE ARE ALSO DOWNGRADING DOWN 5.6%, BUT THAT’S RELATIVELY HIGH FOR THEM AND COMPARED TO OTHER COUNTRIES IN THE REGION SO COMPETITIVE ECONOMIES STILL HAVE ADVANTAGES AND ARE STILL PERFORMING. WE HAVE SEEN CONSISTENT RESILIENCE OF DOMESTIC DEMAND AND SENTIMENT, BUT THESE HEADWINDS FROM THE EXTERNAL ENVIRONMENT ARE CREATING REAL CONCERNS AND REAL HEADACHES. EVEN THOUGH THERE IS A LITTLE BIT OF A RELIEF THAT TARIFFS ARE NOT VERY HIGH, 40% FOR MANY ECONOMIES IN SOUTHEAST ASIA, BUT STILL HIGH TARIFF RATES. 19% TARIFF RATES ON INDONESIA AND PHILIPPINES, 20% TARIFF ON VIETNAM, 15% TARIFF ON JAPAN, THESE ARE HISTORICALLY HIGH TARIFF RATES, WHICH WILL HAVE EFFECTS. WHAT HAS BEEN INTERESTING TO ME IS EQUITY MARKETS HAVE STILL BEEN FAIRLY ROSY ABOUT THE CHANGES. WE KNOW WHEN LIBERATION DAY WAS ANNOUNCED ON THE HIGH TARIFF RATES WERE PUBLICIZED, THE MARKETS REACTED VERY NEGATIVELY BUT RIGHT NOW WE SEE A VERY STRONG RECOVERY IN EQUITY MARKETS. I’M NOT SURE IF THEY PRICED AND FULLY ALL OF THE EFFECTS THAT WILL LIKELY OCCUR. IT HAS BEEN A BIT HARD TO FORECAST BECAUSE THERE WAS A LOT OF FRONT LOADING OF IMPORTS TO THE U.S. ANTICIPATING HIGHER TARIFFS IN THE FUTURE AND THAT HAS MADE GROWTH LOOK BETTER EVERYWHERE THAN PERHAPS WE MIGHT SEE LATER ONCE THE HIGHER TARIFF RATES SET IN FOR LONGER. HAIDI: WHAT — ONE OF THE OTHER THINGS IS SORT OF THE LONGEVITY OF TARIFFS, RIGHT? DO YOU WORRY ABOUT THE LONGER-TERM COMPOUNDING OF TARIFFS? ONCE THEY ARE IMPLEMENTED THEY CAN BE DIFFICULT TO GET RID OF. OF COURSE AND WE SEE SO MANY CHANGES IN POLICIES COMING FROM THE U.S., ONE THING YOU HAVE SEEN AN RESPONSES OTHER COUNTRIES ARE LOOKING TO DIVERSIFY TRADE PARTNERS AND DEEPEN TRADE INTEGRATION WITH MORE RELIABLE TRADING PARTNERS. WE COULD SEE GREATER INTEGRATION OF COUNTRIES WITHIN ASEAN, WITH EACH OTHER, AND WITH OTHER REGIONS OF THE WORLD INCLUDING EUROPE OR THE GULF STATES AS ONE WAY TO HEDGE AGAINST THE CONTINUED UNCERTAINTY, WHICH, THE LONGER THEY LAST, THE MORE STICKY THEY ARE, PARTLY BECAUSE OF THE POLICY PERSISTENCE, BUT ALSO BECAUSE THE EFFECTS OF INVESTMENT CHOICES, PEOPLE WILL START TO REORIENT SUPPLY CHAINS IF THE TARIFFS LAST FOR QUITE A WHILE AND IT IS NOT EASY TO UNWIND THOSE VERY QUICKLY. HAIDI: YOUR PROJECTIONS WHEN IT COMES TO HEADLINE GDP FOR CHINA IS UNCHANGED. DOES THE TRADE TRUCE MAKE YOU MORE OPTIMISTIC ABOUT THE POSSIBILITIES FOR CHINESE GROWTH GIVEN THE DOMESTIC STRUCTURAL ISSUES THEY ARE CONTENDING WITH? I THINK CHINA CONTINUES TO FACE EXTERNAL AND INTERNAL PRESSURES. WE SAW ROBUST GROWTH NUMBERS FROM CHINA IN THE FIRST HALF OF THE YEAR SO THE 4.7% GROWTH FOR CHINA WE FELT WAS A FAIR READ ON WHAT WE CAN EXPECT ON WE KNOW THE GOVERNMENT WILL BE COMMITTED IN TERMS OF POLICY NUMBERS TO AGGRESSIVELY REACH THEIR GROWTH TARGETS. THEY HAVE BEEN EXPANDING MONETARY AND FISCAL SIDE AND BECAUSE INFLATION IS SO LOW IT STILL GIVES THEM SPACE TO BE FAIRLY AGGRESSIVE IN TRYING TO ADDRESS GROWTH CONCERNS. PROPERTY PRICES CONTINUE TO DECLINE, EVEN IN FIRST TIER CITIES, ALTHOUGH NOT AS FAST. WE STILL HAVE PERSISTENT PROBLEMS OF CONSUMER CONFIDENCE IN CHINA. THE EXTERNAL TRADE ENVIRONMENT IS MORE STABLE RIGHT NOW. WE KNOW THOSE ALSO HAVE A DEADLINE WITH CURRENT AGREEMENT SO IT IS UNCLEAR WHAT WILL BE LONGER-TERM ARRANGEMENTS. HAIDI: ALBERT, ALWAYS GREAT TO HAVE YOU WITH US. MORE ON THE ASIAN TRADE. THIS IS BLOOMBERG. HAIDI: WE HAVE MORE MUSINGS FROM DONALD TRUMP WHEN IT COMES TO THE FATE OF JAY POWELL, SAYING HE WILL NOT BE THERE FOR MUCH LONGER, ONLY A SHORT WHILE, HE SAYS. HIS TONE — HIS TERM ENDS IN MAY. HIS SEPARATE TERM AS FED GOVERNOR ENDS IN JANUARY 2028. THIS COMES AS WE HEAR FROM SCOTT HASSAN SAYING HE SEES NO REASON FOR JAY POWELL TO STEP DOWN, THAT THERE IS NOTHING THAT TELLS HIM HE SHOULD STEP DOWN, THAT POWELL SHOULD BE ABLE TO SEE OUT HIS TERM IF HE WANTS TO AND HE BELIEVES MONETARY ACTIVITY INCLUDING THE RENOVATION PROJECT SHOULD BE REVIEWED. WE SAW A SIGH OF RELIEF WHEN IT COMES TO U.S. TREASURIES GAINING FOR THE FIFTH DAY AS WE HEARD FROM SCOTT BESSENT SEEMINGLY OFFERING SUPPORT FOR POWELL. SHERY: AT LEAST SOME RELIEF FOR MARKETS WHEN IT COMES TO THE JAPAN TRADE DEAL, 15% TARIFFS ON JAPANESE GOODS AND LOCAL MEDIA REPORTING WE MIGHT ALSO GET 15% ON JAPANESE AUTO IMPORTS INTO THE U.S. SO YOU SEE AUTOMAKERS HAVE BEEN DOING PRETTY WELL AND YOU CAN WATCH ACROSS JAPAN, GAINING GROUND, PRESSURE ON THE LONG END AS WE HEAD TOWARDS THE 40 YEAR BOND AUCTION TODAY. IT’S ABOUT THE TRADE DEAL AND AUTOMAKERS GAINING AT THE MOMENT GIVEN THE ONGOING NEGOTIATIONS. JAPAN HAS AN EU SUMMIT THIS WEEK . TRUMP IS TALKING ABOUT EUROPEAN COUNTRIES BUYING THEIR MILITARY HAIDI: ASIAN SHARES PROBABLY ON THE RISE AFTER CONFIRMATION OF A TRADE DEAL WITH JAPAN, TRUMP ALLUDING TO ACCESS POINTS INCLUDING AUTOS, AGRICULTURE, SOME OF THE MOST CRITICAL AND DOMESTICALLY SENSITIVE SECTORS THAT HAVE BEEN NEGOTIATED. NIKKEI 225 POPPING BY A 1.7%, TOPIX CLIMBING IN THE EARLY PART OF THE DAY, LOOKING LIKE WE SEE MOMENTUM TO BURST INTO A HIGHER TRADING RANGE. JGB FUTURES SEEN AS A CLEAR NEGATIVE WHEN IT COMES TO JAPANESE BONDS. SHERY: LET’S BRING IN A PROFESSOR AT THE NATIONAL GRADUATE INSTITUTE FOR POLICY STUDIES IN TOKYO TO TRY TO UNDERSTAND THE TRADE DEAL. WE DO NOT HAVE A LOT OF DETAILS YET BUT WHAT WE UNDERSTAND IS 15% OF TARIFFS WILL BE APPLIED TO JAPANESE GOODS AND THAT COULD INCLUDE JAPANESE AUTOS. CAN THE PRIME MINISTER SELL THIS AS A GOOD DEAL TO JAPANESE PUBLIC? I HOPE SO, EVEN AFTER SOME MISERABLE RESULTS IN THE ELECTION OVER THE WEEKEND. THIS IS UNLIKE — UNEXPECTED SURPRISE TO ME [INDISCERNIBLE] SHERY: WHAT ARE SOME KEY STICKING POINTS FOR THE JAPANESE PUBLIC? WE’VE SEEN EVERYTHING DISCUSSED, IMPORTS OF RICE, CAR IMPORTS. WHAT COULD BECOME MORE SENSITIVE FOR THE JAPANESE PUBLIC WHEN ACCEPTING THE DEAL? THIS SHOULD BOOST THE JAPANESE ECONOMY AT THE MACRO LEVEL. 15% IS LOWER THAN THE 25% SO IT SHOULD BOOST THE JAPANESE ECONOMY. THAT SAID, FOR AUTOS, WE NEED TO CHECK WITH JAPAN BUT IF IT IS 15% FOR THE AUTO INDUSTRY, IT’S LOWER THAN THE GLOBAL AVERAGE. ON THE OTHER HAND, WE WORRY ABOUT THE IMPACT ON JAPANESE RICE PRODUCTION. ACCORDING TO MY ESTIMATES THE AGRICULTURAL PRODUCTION EMPLOYMENT WOULD [INDISCERNIBLE] BY 17%. [INDISCERNIBLE] HAIDI: YOU HAVE SAID THE IMPACT OF TARIFFS WOULD BE MARGINAL AND COMES TO OVERALL GDP. HOW MUCH IMPACT DOES IT HAVE ON WHAT WE EXPECT FOR THE BANK OF JAPAN? IT MIGHT BE MARGINAL ACCORDING TO MY UPDATED ESTIMATES, JAPANESE ECONOMY COULD BE BOOSTED BY .1% BUT STILL HE SAYS OF ALL THE MACRO LEVEL [INDISCERNIBLE] ON THE SACTOWN WROTE — SECTORAL LEVEL THE IMPACT COULD BE MUCH LARGER THAN A MACRO LEVEL. HAIDI: WHEN IT COMES TO BROADER EXPECTATIONS FROM THE JAPANESE PUBLIC, HOW ACCEPTABLE WOULD IT BE POLITICALLY IN TERMS OF UNCERTAINTY OVER DOMESTIC POLICY GIVEN THE ELECTION RESULTS AND INFLUENCE FROM OPPOSITION POLICYMAKERS? I AM AN ECONOMIST SO I AM NOT IN A GOOD POSITION TO TALK ABOUT POLITICAL ISSUES. IT WOULD DEFINITELY BENEFIT JAPANESE ECONOMY AT THE MACRO LEVEL BUT THERE MIGHT BE A STRONG OBJECTION TO OPEN JAPANESE RIGHT EXPORTS — RICE EXPORTS TO OVERSEAS BUT ON THE OTHER HAND CURRENTLY RICE PRICE IN THE MARKET HAVE BEEN TWO TIMES HIGHER THAN BEFORE SO IMPORTANT RICE FROM U.S. [INDISCERNIBLE] INFLATION IN DOMESTIC FRONT SO THAT WOULD BE GOOD IN JAPANESE SOCIETY FOR THAT SECOND THERE IMPORT OF RICE FROM U.S. IN MY VIEW. SHERY: WHAT HAS BEEN DIFFICULT FOR THE JAPANESE PUBLIC IS THE WEAKER YEN. WE SEE A LITTLE STRENGTH NOW AFTER THE TRADE DEAL ANNOUNCEMENT BUT WE ARE STILL AROUND THE 146 LEVEL AGAINST THE U.S. DOLLAR. IS THE JAPANESE YEN MOSTLY GUIDED BY THE BOJ ON WHAT THE FED DOES AND HOW MUCH OF THE TRADE UNCERTAINTIES AND STABILITY WE MIGHT SEE ON THE TARIFF SIDE, HOW MUCH OF IT COULD IMPACT THE YEN? A WEAKER YEN COULD BE ATTRIBUTED TO THE POLICY RATE HIKE BY THE BOJ [INDISCERNIBLE] [INDISCERNIBLE] IT HAD CAUSED JAPANESE IMPORT INFLATION UP [INDISCERNIBLE] I DO LIKE TO SEE SOME ADJUSTMENT BY BOJ IN POLICYMAKING TO MAKE JAPANESE YEN [INDISCERNIBLE] [INDISCERNIBLE] WEAKER THAN CURRENT RATE OF 140 SO I DO SEE SOME ADJUSTMENT IN EXCHANGE RATE MARKET [INDISCERNIBLE] JAPANESE CURRENT IMPORT OF INFLATION WILL DO FOR JAPANESE ECONOMY AT MACRO LEVEL. SHERY: PROFESSOR, IT IS REALLY GOOD TO HAVE YOU WITH US. WE ARE GOING THROUGH THE TRADE DEAL WITH THE U.S. AND FOLLOWING THE JGB SPACE, SEEING YIELDS RISING ACROSS THE BOARD AS WE HEAD TOWARDS THE 40 YEAR BOND AUCTION IN JAPAN, THE FIRST TEST OF INVESTOR APPETITE FOR SUPERLONG DEBT, AFTER THE HISTORIC ELECTION DEFEAT FOR PRIME MINISTER ISHIBA IN THE UPPER HOUSE ELECTION THIS WEEKEND. FOR MORE LET’S BRING IN PAUL DOBSON. HOW CONSEQUENTIAL WILL THE 40 YEAR BE WHEN WE SEE A LOT OF VOLATILITY IN THE JGB SPACE AND INVESTORS ARE STILL DIGESTING WHAT THE TRADE DEAL WITH THE U.S. WILL MEAN? YEAH. THERE WILL BE A LOT OF ONUS ON THE AUCTION EVEN THOUGH THE MARKET IS GRABBING THE LIMELIGHT. PEOPLE ARE WORRIED ABOUT THE LACK OF DEMAND FOR LONG-TERM GOVERNMENT BONDS AND THAT IS PUSHING UP BORROWING COSTS AS REPRESENTED BY THE YIELDS THAT WE WILL FOCUS CLOSELY ON THE DEMAND AND SUPPLY METRICS. TODAY’S NEWS IS INTERESTING IN THAT MAY IT PUSHES THE BOJ CLOSER TO ANOTHER RATE HIKE, IT COULD BE MORE POSITIVE FOR LONG END BONDS IF IT BRINGS DOWN INFLATION BUT ON THE OTHER AND TO THE HIGHER RATES ACROSS THE CURVE COULD BE NEGATIVE. AND THE STABILITY OF THE GOVERNMENT IS IN PLAY AND WHETHER HAVING DONE THE TRADE DEAL IT MOVES THE PRIME MINISTER CLOSER TO THE EXIT. IF IT’S THE CASE, HIM SEEING — HIM BEING SEEN AS MORE FINANCIAL RESPONSIBLE COULD BE BAD NEWS FOR THE BOND MARKET. ANOTHER CONSIDERATION IS OVERSEAS INVESTMENT — INVESTORS SITTING ON DOLLARS THINGS LOOK ATTRACTIVE BECAUSE OF THE DIFFERENTIALS BETWEEN JAPANESE AND U.S. MARKETS YOU CAN GET PICKUPS WITH YOUR HOLDING DOLLARS, EQUIVALENT OF A 7% PLUS YIELD ON 40 YEAR BONDS AND CONVERTING YOUR DOLLARS TO YEN SO THAT’S ATTRACTED TO OVERSEAS INVESTORS. HOW STRONG DEMAND IS FROM THE DOMESTIC SIDE. HAIDI: WHEN IT COMES TO THE CARRY TRADE IS THERE SOMETHING THAT WILL BE ONGOING FROM THE ELECTION RESULTS WERE DOMESTIC POLITICAL IMPLICATIONS? THERE ARE A BUNCH OF HEDGE FUNDS TALKING ABOUT IT, SOME MARKET METRICS INCLUDING THE FUTURES POSITIONING SUGGEST IT’S ON PEOPLE BORROWING THE YEN IN ORDER TO INVEST OVERSEAS WHERE YOU CAN GET HIGHER INTEREST RATES ON YOUR DEPOSIT. OTHER THINGS ARE IN FAVOR DEPENDING ON HOW FAST THE BOJ HIKE WOULD MAKE A DIFFERENCE FOR PEOPLE PUTTING ON THE CARRY TRADE, THE CONSENSUS IS IT WILL GO SLOWLY AND INTEREST RATES WILL ONLY LIFT SLOWLY AND THAT DOES NOT TAKE AWAY BENEFITS OF BORROWING AND YEN AND AND OTHER HAND THE CHANCE OF HIGHER INTEREST RATES OVERSEAS IS STILL THERE PLUS VOLATILITY FOR THE YEN HAS BEEN FALLING, HELPING YOU TO BUY CHEAPER OPTIONS AND GIVES MORE CERTAINTY WE WILL SEE SHARP SWINGS IN THE CURRENCY THAT MIGHT UNDERMINE THE SLOW ACCUMULATION OF MONEY YOU ARE SUPPOSED TO GET FROM PUTTING ON THE CARRY TRADE SO PEOPLE ARE LOOKING AT IT AS A THING TO THROW INTO THE MIX. IF THE TRADE DEAL TURNS OUT TO BE POSITIVE FOR THE YEN IT MIGHT MAKE IT UNCOMFORTABLE IN TERMS OF THE TIMING IF IT SUPPORTS THE PARENT — THE CURRENCY SHORT-TERM. HAIDI: PAUL DOBSON WITH MARKET REACTION TO THE NEWS THIS MORNING ON TRADE. THIS IS BLOOMBERG. ♪ SHERY: TAKE A LOOK AT EMERGING MARKETS, AMIDST THE FLURRY OF TRADE DEALS THIS MORNING INCLUDING THE ONE SECURED WITH THE PHILIPPINES WHEN THE PRESIDENT VISITED THE WHITE HOUSE AND WHAT WE SEE FROM JAPAN. THE DOLLAR IS PARAMOUNT WHEN IT COMES TO THE FALL IN THE U.S. DOLLARS, FURTHER NEGATIVITY WHEN IT COMES TO COMMENTARY FROM DONALD ON HOW LONG POWELL MIGHT LAST IN THE JOB. TRUMP SAYS THE U.S. HAS REACHED A TRADE DEAL WITH THE PHILIPPINES, 19% TARIFFS ON THE COUNTRIES EXPORT. HE MET WITH THE PRESIDENT OF THE PHILIPPINES AT THE WHITE HOUSE. OUR REPORTER JOINS US FROM MANILA. 19%. 17% WAS FLAGGED EARLIER. IS THIS A WIN? WHEN THE PRESIDENT DESCRIBED THIS BY THE SIGNIFICANT DEVELOPMENT ALREADY EVEN WITH THE MARGINAL REDUCTION AND ALSO SPEAKING WITH PHILIPPINE MEDIA IN WASHINGTON, THE PRESIDENT SAYS THE PHILIPPINES WILL OPEN THE MARKET FOR CERTAIN U.S. PRODUCTS, INCLUDING CARS AND PHILIPPINES WILL PURCHASE MORE SOY AND WE AND MEDICINES FROM THE UNITED STATES. AT THE MOMENT THAT’S THE INFORMATION WE HAVE WITH RESPECT TO THE TRADE UNDERSTANDING WITH THE U.S. AND PHILIPPINES. HAIDI: IN TERMS OF WHAT WAS DISCUSSED ON SECURITY AND DEFENSE, THEY ARE ALLIES AND EVEN IN RECENT MONTHS WE SEE ENCOUNTERS BETWEEN CHINA AND THE PHILIPPINES IN THE SOUTH CHINA SEA. WAS THAT DISCUSS DENTAL? — WAS NOT DISCUSSED AT ALL? IS CLOSELY WATCHED DURING THIS VISIT BY PRESIDENT MARCOS. DURING THEIR MEETING AT THE WHITE HOUSE, BOTH LEADERS DISCUSS THE ASPECT OF THEIR RELATIONSHIP. WE ALSO SAW REAFFIRMATION OF THEIR LONG-STANDING ALLIANCE. WE KNOW PRESIDENT MARCOS UNDER HIS ADMINISTRATION BOLSTERED THE DEFENSE TIES WITH THE UNITED STATES, IN PART DUE TO MINIMALIST TERRITORIAL DISPUTE WITH CHINA OVER THE SOUTH CHINA SEA — MANILA’S ONGOING DISPUTE WITH CHINA OVER THE SOUTH CHINA SEA. PRESIDENT TRUMP FOR HIS PART SAYS PHILIPPINES IS AN IMPORTANT NATION MILITARILY AND THE COUNTRIES WILL WORK TOGETHER. SHERY: OUR MANILA REPORTER WITH THE LATEST ON THE TRADE NEGOTIATIONS AS WE FOLLOW OTHER TALKS, THAILAND SAYS IT IS CLOSE TO A DEAL WITH THE U.S. TO LOWER THE THREATENED 36% TARIFFS RATE FOR AUGUST 1, THE THAI FINANCE MINISTERS SAYS TALKS SHOULD CONCLUDE IN DAYS AND HE EXPECTS A REDUCTION IN LINE WITH SOUTHEAST ASIA NEIGHBORS. THE TRUMP ADMINISTRATION SAYS THE TRADE DEAL WITH INDONESIA WILL UNLOCK $50 BILLION IN MARKET ACCESS. AN OFFICIAL TELLS BLOOMBERG JAKARTA WILL ELIMINATE ALL NONTARIFF MEASURES ON U.S. GOODS AND DROP BARRIERS THAT COULD HAVE HIT AMERICAN TECH COMPANIES. TRUMP ANNOUNCED THE DEAL FOR 19% TARIFFS RATE LAST WEEK BUT WE ARE TOLD IT WILL ONLY BE IMPLEMENTED IN THE COMING WEEKS. CHINA HAS SUSPENDED ITS ANTITRUST INVESTIGATION INTO THE LOCAL UNIT OF DUPONT AHEAD OF THE TRADE TALKS BETWEEN THE U.S. AND STOCKHOLM. THIS WAS AMONG A FLURRY OF COUNTERMEASURES BEIJING ANNOUNCED IN EARLY APRIL 2 HIT BACK AGAINST TRUMP’S RECIPROCAL TARIFFS ON CHINESE PRODUCTS. MORE AHEAD. THIS IS BLOOMBERG. ♪ HAIDI: WE ARE LEARNING MORE DETAILS ABOUT THE MICROSOFT HACK TARGETING SHAREPOINT SOFTWARE. THE U.S. NUCLEAR WEAPONS AGENCY HAS BEEN AFFECTED WITH MICROSOFT SAYING CHINESE STATE-SPONSORED GROUPS ARE TO BLAME. ANNABELLE, WHAT DO WE KNOW? WE NEED TO CAVEAT THIS. THIS IS ACCORDING TO PEOPLE FAMILIAR WITH THE MATTER BUT WE DO NOT HAVE CONFIRMATION YET FROM A DIRECT AGENCY AFFECTED ON THIS. THIS IS PERHAPS ONE OF THE MOST HIGH-PROFILE GOVERNMENT DEPARTMENTS CAUGHT UP IN THE HACKS, THE NUCLEAR WEAPONS AGENCY IS UNDER THE ENERGY DEPARTMENT WHICH HAS SAID SOME SYSTEMS HAVE BEEN AFFECTED. IN THE CASE OF THE AND NSA THERE IS CLEARLY A LOT OF CONCERN ABOUT THE TIME — THE TYPE OF DATA THAT COULD HAVE BEEN ACCESSED. THE AGENCY HAS A BROAD MISSION BUT IS BASICALLY RESPONSIBLE FOR MAKING U.S. NUCLEAR WEAPONS ARE SAFE AND SECURE AND AFFECT GIVE. SO CLEARLY THEY WILL BE A LOT OF DATA ON THE STOCKPILES AND CAPABILITIES. THE DATA THAT SEEMS TO BE ACCESS DOES NOT SEEM TO PERTAIN TO THAT BUT NO SENSITIVE OR CLASSIFIED INFORMATION HAS BEEN COMPROMISED. WE ARE TRYING TO LEARN THE EXTENT OF THE DAMAGE WHICH DOES NOT JUST PERTAIN DIRECTLY TO NNSA, BUT OTHER DEPARTMENTS LIKE THE EDUCATION DEPARTMENT IN THE U.S., FLORIDA’S DEPARTMENT OF REVENUE, A LOT OF DIFFERENT DEPARTMENTS CAUGHT UP IN THIS AND GOVERNMENT DEPARTMENTS IN THE MIDDLE EAST AND EUROPE. THIS IS WIDESPREAD. HAIDI: HOW DID THIS HAPPEN, GIVEN HOW WIDESPREAD IT IS WITH SECURITY SO PARAMOUNT? MICROSOFT HAS FACED A STRING OF HACKS RECENTLY. THEY HAVE TRIED TO BOLSTER THEIR CAPABILITIES AND WE UNDERSTAND SECURITY PERSONNEL MEETS WITH SENIOR EXECUTIVES WEEKLY TO TRY TO MAKE THE SOFTWARE MORE RESILIENT. MICROSOFT SOFTWARE IS USED AROUND THE WORLD, IT IS SO WIDESPREAD AND IT LEAVES IT OPEN TO HACKS AND WHAT WE HEAR NOW IS THE VULNERABILITY IN THE SOFTWARE, MICROSOFT SHAREPOINT WHICH MANAGES DATA, HAS BEEN AFFECTED. YOU CAN EITHER ACCESS SHAREPOINT BY THE CLOUD OR ON PREMISE. THAT IS WHERE THE VULNERABILITY HAS ARISEN. MICROSOFT HAS IDENTIFIED WHAT THEY SAY THEY GROUPS ARE RESPONSIBLE FOR THIS ARE TWO HACKING GROUPS, BOTH LINKED BACK TO THE CHINESE GOVERNMENT. A THIRD HAS BEEN IDENTIFIED AND MICROSOFT SAYS THAT IS ALSO BASED IN CHINA. CHINA SAYS THEY ARE NOT INVOLVED AND FIRMLY DENY BUT MICROSOFT REALLY TRYING TO IMPROVE THE CREDIBILITY OF IT SOFTWARE. HAIDI: LET’S LOOK AT FUTURES TRADING IN THE U.S. AND START OF TRADING ACROSS GREATER CHINA. A BOOST TO SENTIMENT WHEN IT COMES TO THE JAPAN AND PHILIPPINES TRADE DEALS BUT JAPAN FRONT AND CENTER DESPITE STILL WAITING FOR DETAILS ON WHAT MARKET ACCESS PRESIDENT TRUMP WAS TALKING ABOUT IN AREAS LIKE RICE, AGRICULTURE, AND AUTOS. S&P FUTURES LOOKING MARGINALLY HIGHER, TAIWAN FUTURES LOOKING UP POP HALF A PERCENT. CHINA FUTURES TRADING HIGHER BY QUARTER OF 1% BUT THE KEY FOCUS IS THE RALLY WE SEE IN JAPAN. SHERY: THE NIKKEI HAVING THE BEST DAY SINCE LAST JULY BUT WE CONTINUE TO WATCH CHANGES IN THE JAPANESE GOVERNMENT AFTER THE UPPER HOUSE ELECTIONS AND HISTORIC DEFEAT OF THE LDP. TODAY IT’S ABOUT THE TRADE NEGOTIATIONS WITH THE U.S. RESULTING IN 15% TARIFFS ON JAPANESE GOODS AND ACCORDING TO LOCAL MEDIA, 15% ON AUTO IMPORTS FROM JAPAN AND WE SEE MASSIVE GAINS WHEN IT COMES TO TOYOTA, THE BEST DAY SINCE LAST AUGUST AND HONDA GAINING MORE THAN 9%. THE AUTO SECTOR EMPLOYS MORE THAN 5 MILLION PEOPLE IN JAPAN, 8% OF THE JAPANESE WORKFORCE. IT GENERATES 10% OF GDP. WE NEED MORE DETAILS. THE PRIME MINISTER SAID HE NEEDS TO LOOK CLOSELY AT THE DETAILS OF THE AGREEMENTS ACHIEVED BY HIS TOP TRADE NEGOTIATOR IN WASHINGTON. IN THE JGB SPACE WE HAVE A 40 YEAR BOND AUCTION AS YIELDS RISE ACROSS THE BOARD. THAT IS IT FROM THE ASIA TRADE. THE CHINA SHOW IS NEXT.

“Bloomberg: The Asia Trade” brings you everything you need to know to get ahead as the trading day begins in Asia. Bloomberg TV is live from Tokyo and Sydney with Shery Ahn and Haidi Stroud-Watts, getting insight and analysis from newsmakers and industry leaders on the biggest stories shaping global markets.

Chapters:
00:00:00 – Bloomberg: The Asia Trade begins
00:02:35 – Trump sets 19% tariff on the Philippines
00:11:17 – BREAKING: US to impose 15% tariff on Japanese goods
00:13:27 – Trump says Japan pledges $550 billion investment into the US
00:30:09 – University of Tsukuba’s Atsuko Higashino on US-Japan trade pact
00:36:13 – Microsoft links software breach to suspected Chinese state actors
00:40:04 – BREAKING: Trump suggests Japan pact may be the biggest economic deal ever made
00:49:27 – Trump signals incoming LNG JV with Japan focused on Alaska
00:51:55 – Markets open in Japan, South Korea & Australia
00:53:20 – Trump says Japan will open their country to US trade including cars
00:56:57 – UBS Global Wealth Management’s Kelvin Tay on market outlook
01:03:05 – BREAKING: US nuclear weapons agency breached in Microsoft hack
01:05:42 – ADB Chief Economist Albert Park on Asia growth outlook
01:16:27 – National Graduate Institute for Policy Studies’ Kenichi Kawasaki on US-Japan trade
01:23:49 – Investor appetite for long Japan debt tested after Ishiba’s historic defeat
01:28:18 – Trump reaches new economic agreement with the Philippines
01:33:16 – Chinese hackers exploit Microsoft flaws, US nuclear agency hit
——–
More on Bloomberg Television and Markets

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