Japan PM Ishiba Set to Resign After Trade Deal: Reports |Bloomberg: The China Show 07/23/2025
Half an hour away from the opens in Hong Kong, Shenzhen and Shanghai.
You’re watching The China Show. I’m Yvonne Man with David Ingles.
All right, let’s get to it. Our top stories today.
Stocks across the region are rallying after President Trump announcing a trade
deal with Japan, setting tariffs at 15% in exchange for market access for US
cars and agriculture. Treasury Secretary Scott Bessen say
he’ll meet next week with Chinese negotiators expected to extend their
ongoing trade truce. And the Philippine markets open this
hour in focus, of course, as Manila strikes its own U.S.
trade deal following President Marcos’s visit to the White House.
And Bloomberg has told the U.S. nuclear weapons agency was breached in a
widespread hack that Microsoft is now blaming on groups backed by Beijing. Welcome to the show.
Hope you’re all well. A lot of top stories to get through
today and you guys will be witnessing over the next 2 hours or so something
special as it pertains to our ability to fit in everything into our rundown
today. Let’s start things off in what markets
are doing this, particularly in Tokyo, with the topics up 2.6%.
Automakers in focus, double digit gains across sub Toyota’s up in the high
single digits. Subaru is up almost 12, 13%.
This is really on the back of the trade deal that was announced from President
Trump about an hour or so back. That leads us into the fix markets and
what we’re doing as far as dollar yen is concerned.
Philippine peso also in focus, given, of course, that specific trade deal, 22,
19% is the tariff on Philippine goods going into the United States.
The peso is doing this. The old that of course, cash market
opens up this hour. Can we change the boards, please?
If we can. The bond markets in focus, too.
We have a 40 year bond auction today, which was supposed to be a top story.
It could still be consequential for markets, but we’ll get to that once we
do have an indication of demand. Very quickly, China overnight session, a
rally taking place there, turn over almost 1.9 trillion renminbi on Tuesday
in the cash markets there. Shanghai Composite, two and a half year
high will unpack the reawakening of the onshore markets in a moment.
But as you can see, some stocks to watch, some sectors in focus amidst
everything that’s taking place. Across the news front here, what a
positive surprise this Japan trade deal seemed to be, right?
We were I don’t know. We basically had to wrap up our entire
rundown this morning and rebuild it as we had our morning call this morning.
Just given the fact that, yes, it was a lower tariff rate, which was unexpected.
Also, you know, the fact that this, you know, sectoral tariffs, according to
NHK, might also be lowered as well when it comes to autos, which has been a big
choking point in these trade negotiations.
And for markets, you know, they’re saying this is definitely good news,
positive for stocks in particular and even for Asia, both future, Right.
That he really tied this trade deal to his own future after that big setback in
the upper house. Well, I mean, there were questions
whether or not this would happen because of what took place over the weekend.
And I think that sets those questions now and just answer those questions,
too. To a large extent.
It’s also worth pointing out, though, that most of the details that have come
so far to President Trump and of course, on the Japanese side, they’ve also
mentioned they need to be paying close attention.
They need to read closer into the fine print of what actually was was agreed
on. But yes, there’s Japan.
There is there’s the JGB auction. Of course, there’s the Fed conversation
as well around the job security of Jay Powell and this onshore market rally in
China, among many other things that we’re talking about.
Yeah, there’s so much talk about anti evolution.
Right. And the fact is that there are actually
traders out there. Now, you mentioned in the swaps, Right.
They’re starting to to price in the possibility of China actually emerging
out of deflation on the back of these industrial policies.
Yeah. I mean, what led the rally overnight
these what’s led the rally this week platform companies and when you take a
bigger step back solar stocks also catching a very strong bid overnight.
Those are three sectors that have it in focus amidst intense price competition
or the pushback against that. It’s also worth pointing out, top of the
next hour, we have a joint departmental briefing taking place in Beijing.
So we’ll see what that will bring us as far as news flow is concerned, where
called higher 3/10 of 1%, we’re to think of earnings season as well.
We can get to that in a moment. But yes, everything so far is leading
possibly what this means for the bigger potential trade deal ahead, which is the
one with China. On that note, the framework, can we use
Japan? So President Trump says he has reached a
trade deal with Japan, will be setting tariffs at 15% and see Washington’s
major Asian ally invest $550 billion in the US.
It just signed the largest trade deal in history, I think maybe the largest deal
in history with Japan. We worked on it long and hard and it’s a
great deal for everybody. I always say it has to be great for
everybody. It’s a great deal a lot different from
the deals in the past, I can tell you that.
And it is the auto sector that is definitely benefiting from this news
here in Japan. You take a look at the likes of Subaru,
Mazda. Now we’re actually up a limit up for
that stock in Tokyo this morning. Obviously, the US is one of their key
markets as well. But even for Subaru to the US is the
main market for them and we are seeing double digit gains of 15% or higher
there for some of these automakers here today.
And so let’s let’s bring in our whole team.
Right. You have a Japan deal.
You have a Philippine framework as well. Let’s bring in our Asia trade co-anchor,
Sherri. She joins us from Tokyo.
Our Manila reporter Cliff Harvey Benson and China correspondent then Menlow are
all here. Sherry, I’ll start with you.
They seem to be catching the market bit by surprise.
How positive is this news? You know, we have seen the Japanese yen
gain ground and reverse earlier losses. We’re seeing JGB yields rising and the
obviously stocks you mentioned some of those automakers in the.
Mention Subaru, for example, that has more than 70% of its global sales going
to the United States. We have Mazda as well.
Toyota also seeing its best day since August of last year.
So markets are pretty impressed with the deal so far, but the details are still
pretty scarce. What we’ve heard from President Trump,
as we heard from him earlier, is that this would be a historic deal.
What do we know so far that it will be 50% on Japanese goods going into the
United States? Domestic media NHK reporting that that
will include 50% tariffs on Japanese autos that would be coming down from
25%. Those 25% tariffs were expected to have
a 9 billion impact on major Japanese carmakers.
So that’s a sigh of relief if we actually do get that confirmed.
Prime Minister Ishiba coming out earlier today saying that even he needs to see
the details of these agreements. So we’re still watching out for that.
We’re also watching what happens to Rice, because, of course, that’s a very
sensitive and symbolic sector here in Japan.
And NHK also reporting that Japan is set to increase the import ratio of US rice
not necessarily talking about tariffs because, remember, if you bring it down,
the tariff rate for rice, what is the competitive advantage of the US?
Could be a big question so far. We know that, for example, last year US
imports of rice were about 40% of total imports into Japan.
So we’ll be watching what this actually means when it comes to this very
sensitive sector for the Japanese public.
We also have some details about a $550 billion investment into the United
States. And we heard from President Trump that
that will include a joint venture with Japan for the Alaska LNG project.
Sherry, how does he sell this now in in Japan domestically as a win?
It is going to be a net positive for the Japanese economy.
I talked about the impact on the auto sector, and the auto issue was a big one
because when it comes to the Japanese trade surplus against the US, 80% of
that included cars. So including cars in this deal, that
could mean bringing us cars into the US, although that could be a concession.
It could also be just good news for the broader economy.
Of course, Prime Minister Ishiba, as you said, needs to sell this because he’s
also just suffered a historic defeat when it comes to the Upper House
election over the weekend. And he is now preparing to have
discussions with opposition parties about other key issues domestically,
like bringing down the sales tax at the moment.
Whether that’s a temporary or permanent reduction, of course, is a key question.
Will he need to make more concessions? Cost of living was a big issue.
Rice is a big part of that. We will wait for details when it comes
to those rice imports from the US. But we know that rice prices are still
higher, about 60% already from last year.
So what the implications are for the broader Japanese economy?
That’s how Prime Minister Ishiba will try to sell this to the domestic public.
But of course, given his historic defeat, I had heard from my colleagues,
for example, Paul Jackson saying that this could be the leverage that the
prime minister has to keep his job because his vow to stay in power,
despite the fact that he suffered this big defeat for his ruling LDP.
Now that there is a trade deal, what will happen to the prime minister is a
key question. The last three LDP leaders have lost the
upper house election, have had to quit. In the next two months.
We’ll see how much time this buys him there on this, I guess you could say
success on this trade deal amendment. I’m bring you and right now so that the
good news continues right that we’re hearing that Stockholm is the next
meeting between Besson and his counterparts in China.
What do we know so far. Yeah, happening next week, Monday and
Tuesday. And Scott Benson has already signaled
that he is, or at least the US is likely to extend that deadline for the trade
truce that is expiring on August 12. We don’t know whether it’s just going to
be another three month extension or a longer term one.
Certainly the atmosphere has been warming up recently between the two
sides after China stepped up, the shipments of us, the United States and
the US also rolled back some beef curbs right on things like ethane, jet engine
parts and of course those h t and video chips to China.
That was touted as a really big win in US-China relations and really prompted
whether or not there is going to be this grand bargain with China.
And of course, the question is, will it follow the template of what Japan has
achieved, you know, some sort of commitment in terms of investment from
China. But of course, Scott Bethune also said
that this time to talk is going to be broadening, broadening out to cover
issues like China’s purchase of this sanctioned oil from Russia and Iran.
And again, it just shows you that the US still has many other levers and excuses
to place more tariffs on China, whether its an end in itself or is it, you know,
a push to get China to do more to rein in Putin on his war in Ukraine?
The other things got better and better and mentioned that U.S.
wants to see is China shift towards this consumer driven economy.
And already we’re seeing China taking some concrete steps on that front
reading in those intensified competition.
So that could be another sort of positive signal whether or not the US
will use that to as a justification to give China a little bit more slack when
it comes to those tariffs. That’s still to be determined.
All right. Futures are pointing to the extension of
the Asia rally volumes until Tokyo, up 80% compared to the average were
stronger as well on the Philippine peso. To Manila now.
Cliff Benson is with us right now to talk us through the details of that
separate agreement. Cliff, between Bongo Marquez and
President Trump. What do we know?
Hi. Good morning, David.
So the U.S. will impose a 19% tariff on the
Philippines that is lower than the 20% announced earlier this month, but higher
than the 17% that was announced in in April.
So President Marcos says that the Philippines in exchange will open the
market for U.S. products such as such as cars.
And at the same time, the Philippines will import more soy wheat.
And so I read products as well as medicines from the from the United
States. So despite the slight reduction, the
Philippine president considers this development as a
significant achievement following his White House visit and meeting with
President Donald Trump. All right, Cliff, thank you for that
wrap up there, Cliff. And they’re also our thanks to Shery Ahn
and our team. And it seems like day that we are really
starting to get more of these trade deals being done before this August 1st
deadline, which continues to be what music to many investors ears.
Right. Let’s bring in Christy Tai now,
investment strategist at Franklin Templeton Institute.
Christine, we’re starting to get more frameworks, at least in this part of the
world, on what these trade deals are going to look like with the US.
Has our frame your investment strategy overall as we count down to the rest of
the year now. Hi, good morning.
Yes, I think we have seen now the low hanging fruit which is the US Japan
trade deal that’s been plugged. Right.
So it also showcases that, you know, when both countries want it to do as
equally badly. And this was evidenced by, you know,
this us Japan parts being like the eighth or the ninth rounds before a deal
actually came into materialization. So, you know, this goes to show that,
you know, if that kind of premise will probably lead to a proper deal or at
least a framework. So we have 15% tariffs and Japan
promising to produce half a trillion dollars of U.S.
goods, and Japan increasing access to American producers of cars, trucks, rice
and agri products as what Trump is claiming.
Now, the surprise as well is the ten percentage point reduction from the
original Liberation Day tariffs. So what it also means for markets is
that we we think that, you know, this auto tariffs pot is probably going to be
a key swing factor or a key influence. You know, it’ll be interesting to see
how EU auto tariffs will pan out. Right.
And Trump also striking a deal with the Philippines, 90% tariffs overall.
These and more trade deals ahead. What this means for markets is that it
reduces the risk of countries having to mention or impose retaliatory measures
post August 1st. And as we’re also watching very closely,
is the deal with China before the August 12 deadline.
And now we’re talking about an extension.
So there’s still some time. And I think essentially it puts the risk
on the markets in the meantime. Well, in the meantime, Kristie, let me
pick up on that, because as you point out, markets are welcoming this news
positively. If you take a step back, though, you
notice the tariff levels have been creeping up, right?
Japan’s at 15%. Southeast Asia, we’re closer to 20%.
We weren’t even at 10% six months ago. The markets in six months time look back
at this time and say that was actually a negative for these markets.
Well, I think the markets have been pricing in some some some part of
tariffs. Right.
So it’s either between 10% or 20%. I think that’s the kind of threshold and
a range that markets are putting it. Of course, if you compare with, you
know, the base, which is very low single digits, then we are definitely was off.
But I think there is already the adjustments being put in markets in a
premium in, you know, in either share prices or bond yields that are pricing
in some form of tariffs. Now, are we going to be worse off?
And that remains to be seen, because as we are looking at right now, is the
start of a trade deal and the proof is in the pudding because whether or not
this gets carried out and I think that this US-Japan trade deal, if you look
at, you know, the promise of half a trillion dollars worth of US goods
purchases from Japan, you know, that is leverage, right?
So at the end of the day, I think that will be a lot more negotiated
negotiations. And the actual impact either on prices,
on inflation remains to be seen. But, you know, we are definitely was all
compared with low single digit. But, you know, we are not worse off.
We’re better off if, you know, if it’s below 20%.
All right. And you are still bullish on Japan.
We’ll get your take on that, that that line that you’re saying that Japan
remains a compelling value play, Kristie, on their investment strategies.
Our Franklin Templeton, she’s staying with us.
We’re also going down the opens of trade in Shanghai, Shenzhen and Hong.
We’ve talked about the futures have been indicator higher here.
There’s Asia rally that seems to be getting a bit more mojo.
Now. Your reference rate just crossing the
total Bloomberg as well. 714 this morning.
This is the China show. Equity markets are on the front foot
this morning as you get to US futures. And Asia is really being carried on its
shoulders by the Nikkei in Japan. They’re two and a half percent following
that trade deal that President Trump just announced.
Yeah. Let’s bring in Christie Todd, an
investment strategist of Franklin Templeton Institute.
And, you know, your Japan call overall, Kristie, you saying, you know, the
market is still a good value play. You know, obviously before this trade
deal, you were already saying that. And despite all this kind of political
uncertainty that’s going on in the country.
So what is the play on Japan now? Well, we have been bullish on Japan for
some time, and I think this is definitely holding up.
And we have we have seen, I think, the political situation and also the tariff
issues being a disruption. And but overall, I think the
fundamentals in Japan remain right. And we are seeing reforms being being
maintained and companies are delivering. And also the wage rises, although are
still negative, real wage, but at least we are looking at wage increments.
That’s happening and inflation is a problem domestically.
And I think with the political focus and priority by Ishiba now is probably a big
survival. Right.
And he has to address the domestic issues.
So we do expect that. I think the the main issue about Japan
is, of course, the hurdle on debt and fiscal rights.
And this is not common. This is not a just, you know, in
particular Japan. Right.
Everyone’s facing that 200% debt to GDP, of course, is big.
But at this point in time, you know, we we do think that, you know, there are
more positives, that fiscal issues are definitely a long term issue that Japan
has to deal with. But in the near term, the policy reforms
that corporate reforms that are taking place and inflation being tackled, these
are some of the positives that we continue to see value in Japanese
companies that are, you know, reporting positive earnings and valuations are not
as fresh as the others. Well, others, but potentially, I’m not
sure if you’re alluding to I mean, United States.
Right. I mean, the market’s doing well.
Some stocks better than others. It’s quite a narrow rally taking place.
Are you concerned over valuations in the U.S.?
Where do you think the S&P 500 is going to be this time next year?
That’s a great question. So we do have a survey by our
portfolio managers and analysts and, you know, all nearly 500 of them.
And the consensus is that the S&P 500 for this year will end around, you know,
nearly just 56,000 and around 5550 900. Now, there are reasons why we are more,
I would say, conservative, you know, for the rest of the year with this year.
But, you know, the long term medium run is still for the S&P 500 to hit higher.
Now, in the meantime, then, you know, you’ve mentioned.
Right, you know, valuation, right. That’s extended.
So what’s the game plan for the second half?
You know, we’re looking at a correction, a consolidation, at least a healthy
pullback. Sometime between August and October.
We still have a few event risks ahead of us.
Right. And markets had a strong run.
Right. So we are looking at rotation and this
rotation is bringing us to some other markets that could be quite interesting,
underappreciated. And you’re looking at China, unusual
markets that have been also doing pretty well only recently.
So I think we are expecting that rotation to move out of US equities,
some of the overvalued ones potentially into some of the better prospects type
of, you know, we are looking at companies with better balance sheets and
this is the earnings season, the second quarter earnings season, yeah, it’s
looking quite decent. Well, they hold a rate of 4% is pretty
easy to beat. So we are looking at more positive
earnings surprises. But it is it is still is a well extended
markets in terms of, you know, valuation and pricing.
So rotation and broadening of the markets, that’s what you do best.
Kirsty, we hear you. Thank you so much.
Christie Todd, an investment strategist at Franklin Templeton Institute there
for us. Going into the open today, let’s call it
1% of the Hang Seng index and we are a bit higher on the Asia market.
This rally is extending more on that in a moment.
You’re watching the China show. Good morning. All right.
Welcome back. The opening bell under 4 minutes away
and we are likely going to see a decent gap higher at the open here.
Let’s call it 1% interest. And of course, the markets are also very
much in focus today. Yeah, it’s the auto sector.
It’s the tech sector, as you say, that’s really driving this.
And so we’re leaning towards risk here this morning on the back of all these
trade deals that we heard overnight as well.
And this morning, NIO is up some 8% here from what we saw, the 80 hours on the
back of these kind of new product launches as well for the automaker.
We have the open coming up next. This is bloomberg. Welcome back.
I think we’re talking about trade deals. I’m not sure.
Anyway, we are. We are.
So a couple of markets are opening up, mainland markets, Hong Kong in a couple
of seconds, Philippines as well. One market that’s been up and running 90
minutes now and really feeling the tailwinds from trade negotiations.
And a trade deal is Japan, 15% tariffs that markets up substantially to 3%.
Autos are up in double digits. We are looking to see whether or not
that shows up in sort of semi proxies within the Chinese market, which has
been rallying as well of late. Yeah, you know, it’s two sort of things
going on, right? Yes.
There’s more talks of talks in Stockholm between Scott Bessen and actually it’s
kind of about next week, Monday, Tuesday and and they’re talking about extending
that August 12 deadline. So again, once again, that could be
positive for the market. On the flipside, domestically, you’re
getting more of this theme of Chinese regulators trying to halt either
excessive coal production overcapacity that really is kind of leading a lot of
analysts to start pricing in the possibility of China getting out of
deflation. You’re starting to see that not just in
some of these stocks, but the some of the swaps, which will tell you a little
bit more about. But, yes, overall, that really leads to
the A-share market really playing catch up to what we’ve been seeing Hong Kong.
We continue to see that David been talking about the turnover that we’re
seeing on the CSI 300, for example, that’s basically passed 1 trillion of
the last few days as well. So we’re up about a fifth of 1% will
continue. Watch trend over here this morning we’re
seeing in terms of yields are actually heading higher this morning, the bond
market. But keep in mind what we’re seeing in
the commodities space, that continues to be kind of a hot spot here.
Still seen bit in copper on steel. Iron ore, though, is taking a bit of a
step back, but it’s been a pretty ferocious rally, too, of late.
And Shanghai crude is also higher this morning.
We watch, of course, of the big caps like Seattle.
That’s also doing quite well here today. So things are looking pretty good.
Hong Kong better, though, relatively speaking, about 7/10 of 1% here right
now. Saved but it goes to eight shares is
tech is seriously the one that we need to focus on here today, just given the
kind of we’re leaning more towards the growth names, our leaderboard, the auto
sector as well. UBS is James Wang and his team have an
interesting call, though. Be careful, the earnings season and that
might be a headwind here potentially for Hong Kong stocks given what they’re
seeing, which could be potential downgrades.
High bar in that rebound might actually also impact sentiment there, though, as
well. We’ll get that call from Charlotte Yang
joining us there a little bit later on. But today, the tech space is doing okay
ten So Baidu, Alibaba are in the Green Bay.
Want to show me, though, ahead in the opposite direction, watching the auto
space. So NIO is the big one.
There you go. 9% was on a 10% gain.
The nio overnight in the u.s. markets, there’s a lot of confidence
among analysts now about these product launches and the like.
And Baidu as well were up some 4% there. So, you know, it seems like overall
things are looking good for the tech sector.
C guys also upgraded that stock NIO by by the way, to now imply a 32% increase
according to the latest price targets there.
A $48 is where they thinking that stock could fly a solar stocks as well.
As we talk about anti-evolution in the while, I really want to see the
beneficiaries of that. People say it’s solar.
That certainly is the key focus here, but we’re not seeing that too much
upside there. Probably stocks is a mixed bag overall.
And coal stocks, we talked about this. There’s these inspections have been
launched in China to halt the excessive coal production.
So the government may look at even closing coal mines, producing above
permitted levels as part of a crackdown on over mining, which is a big story
that we’ve been tracking as well. That’s why you’re seeing some of these
coal miners doing okay. That’s why we’re up about 1% for most of
that day. Yeah, we’re sticking with the hot and
heat theme, of course, being produced by either solar or coal.
And as you can see, those markets have been rallying, rather, on fire.
So this is as of the close. And of course, we have to adjust for the
opening today. So high since 2022 already for the
Shanghai Composite that markets that specific index has actually outperformed
the rest. That’s index.
It’s constituency dependent. Of course, it’s a function of that.
We’re now within half a percent as I speak on the CSI 300 of taking out the
Pilbara well, the early November highs of 2024.
And of course, as you want to pointing out, on average one and a half trillion
so far, daily turnover onshore. That’s in fact on a chart that looks
like that. That’s coming up on your screens very
shortly. As of the close yesterday, nearly 1.9
trillion was actually sold. July has been almost as good as fab,
which followed the deep Seek moment. So that’s really starting to wake up as
far as that indicator for markets. Now, on the other side of things, quite
literally coming here to Hong Kong, the we have a story to tell.
We’ll get to this in a moment with Charlotte.
But the big number for you is 800 billion.
That’s the amount of net purchases across the stock connect into Hong Kong
so far. Year to date, we’re about seven months
in and 880 was, of course, the full year total, which was at a record last year.
So we’re barely into the second half and if one, we’re already seeing totals
equaling. What we saw for the entirety of 2024.
Yeah, we still got five months to go. We’ll see how this all plays out over
more of the rally and what we’re seeing in the onshore markets as well and
offshore. Let’s bring in our Asia actors, reporter
Charlotte Yang. She’s with us.
Tell us a bit more about the surge in these cell those have been talking about
for weeks now, but what’s behind it and how sustainable can it be?
Yeah, so we’re talking about some very serious momentum here.
Like they’ve just sat on the 800 billion.
That’s just steps away from last year’s iPhone four year level and also a
previous target. So what’s really fueling it and showing
that they have the accounting for these quality companies listing Hong Kong,
particularly in the Internet sector, as well as those new consumption names?
And also and also at a time when the domestic market still underperforming
relatively versus Hong Kong. And so 60 analysts actually expecting
this full year sales money inflows to exceed over 1 trillion HKD, even though
the second half on the pace could be a bit slower.
And mostly because of the dry powder, there was last dry powder from mutual
funds as well as insurance companies to buying.
But the estimates looking at mutual funds may add 100 billion HKD and also
insurance companies having another $200 billion into to Hong Kong.
There’s a call from UBS and James Wong, who puts coming to show a few times.
I note that he’s been wrong a couple as well, a couple of times.
But anyway, just to caveat that, he’s been correct as well.
In some cases, timing is very difficult here.
James. You know we like you can Comstock’s
could feel the pressure because of earnings What’s what’s the thesis.
Yeah so Ives they’re saying some near-term headwinds for Hong Kong market
particularly that earnings down so they’re saying about around 4% for the
HCI consensus earnings downgrades because of those competitive pressure.
We’re in sectors such as food delivery and also we could be seeing a slight
rebound in a high VO that could be a headwind.
Also, there’s limited expectations for stimulus, but while the macro economy is
still struggling, I mean UBS is still overall positive view on Hong Kong China
markets, but they’re refreshed targets for HCA up for HS I and on MSCI China,
they actually seen, you know, less than 1% upside for HCA, HCA and also less
than 4% for MSCI China. You know, so and so it’s some cautious
outlook there. Charlie thank you so much from Yang
there our asia equities reporter right. The other big story where we’ve been
tracking is this hack, Microsoft and the details that in fact just emerged in the
let’s call it 90 minutes or so. So Microsoft saying, well, the hack the
targeting and SharePoint software. Now, a source tells Bloomberg that the
US nuclear weapons agency has been infected with Microsoft, earlier saying
that Chinese state sponsored groups were to blame for this animal.
Julia’s a tech reporter, tech correspondent here with us to take us
through the details of what we know on the story.
Yeah, well, I think you’ve sort of given the sort of headline here, which is that
this is an agency that maybe could have been caught up in the hack.
We’re hearing this information from a source.
This is the nuclear weapons agency. It sits underneath the Energy
Department. The Energy Department has said that some
of its systems were compromised, but they didn’t directly respond to this
one. That’s why we’re going along with our
sources here. But in the case of this agency, so the
NSA, it’s essentially responsible for making sure that US nuclear weapons are
safe, they’re secure, and also that they’re effective.
So given that kind of information that they would have in terms of the
capabilities and the stockpiles, there’s obviously a lot of concern about the
data that could have been compromised. What we understand is that no sensitive
or classified information has been accessed, but we are still trying to
understand the extent of the damage, given that this is extremely widespread
taking not just this agency but other government groups in the US, like the
Education Department, Florida’s Department of Revenue, the Rhode Island
General Assembly, governments in Europe, the Middle East, I mean, it’s quite
widespread and as well there’s the links back to China with business as well, are
also said to have been hacked. Yeah, they’re pointing the finger on
some of these state sponsored hackers in China.
What do we know on what went wrong, how this attack happened and how widespread
is it? Yeah, well, the hack does seem to be
widespread. We’re still trying to understand the
extent of the damage on it, the China hacker access or that link to China we
can get to in a moment. But you’re asking as well about how the
compromise came about as the software in question is Microsoft SharePoint, and
this is essentially used for data management and storage.
And so the way that you can access SharePoint is essentially either via the
cloud, and that’s the newer version and the newer way and more widely used.
But there’s also an older version for how you access, and that’s through
On-premise servers and that’s where the vulnerability seems to have happened in
terms of the groups that have been linked to this.
So there’s two in question in particular, there’s Lin and Typhoon and
also violent typhoon. These are both hacking groups that have
fairly well known the had been linked directly to the Chinese government in
the past. Is the third one as well that they call
out in this statement. Here you can see a storm hyphen 20 603
also said to be based in China. China, for its part, has responded via
its embassy in the US and it. Saying that they haven’t got any link to
this and they’ve certainly strongly pushed back on the allegation as well.
But still, Microsoft as a business is really trying to to boost its its
credibility in this space. And they have made a sizable number of
hires in the security space as well from the US government.
We understand those executives are meeting with senior management on a
weekly basis to try and make the software more resilient.
But again, at Microsoft, it’s it’s it’s ubiquitous essentially.
It’s software. It’s used all around the world.
And that does leave it open to vulnerabilities just based on the scale
of its use. I’m just.
Just because of where it is, really. Bill, thank you.
Animal Jewellers there on the latest on this this hack we’re yeah, we’re getting
more details now on some of the lines coming through out of Japan here.
So this is local news NHK. Right.
So we’ll see if we can get this match. But they’re hearing a little bit more
details of this US-Japan trade deal. So they agree on maintaining 50% tariffs
when it comes to steel. So this is one of maybe the holding sort
of where we think that they have held and maybe we haven’t seen too much
change there as well. Obviously, President Trump has been
quite keen on on keeping the steel industry competitive.
We’ve seen that with the likes of that UK trade deal as well.
So maybe they’re holding their their, you know, holding firm here when it
comes to steel. But that, again, you know, we’ll see
what impact that has on the market because, you know, the fact is NHK is
right about how auto tariffs have come down.
That has been seen as a very, very big positive when it comes to some of these
automakers overall. Yeah, so far, the direction of travel
seems to be favorable for markets. This has been a pattern and I would
imagine this will be the pattern that will follow across these markets this
time of the day when we do have more details on trade coming through, we have
a headline comes through and then we understand ever so slowly, bit by bit
what the details are of anything that was or not.
In Japan’s case, that’s the one. That’s the one today.
Rebar futures in China, 2/10 of 1%. There’s been rising for a separate
story, the Mega-dam project and of course, everything else in between.
Right. Very quickly.
But 11 minutes into the session, cash market in Manila, 4/10 of 1%.
Philippine composite. 20% to 19%.
Tariffs overnight was what they agreed on with Bongbong Marcos and President
Trump, President Bombo Marcos and President Trump, of course, in the White
House as well. Right before we all find out about the
separate one, which is, of course, Japan.
Plenty more ahead. This is Bloomberg. Right.
Welcome back. Chinese markets are on the front foot,
half of 1% in the Hong Kong markets. CSI 303/10 of 1%.
So we’re now within 0.4% of a level that we hit right before the U.S.
elections back in November of last year. Then we cascaded lower.
So above that, we’re back to September 20, 24 levels.
A quick glance at turnover. We’ve been tracking this as an indicator
of market activity and market sentiment. We’re now nearing ¥300 billion in just
the first 14 minutes of the session. So this market is really waking up in
many ways here. Yeah, it is.
And, you know, it continues to be a good news story when it comes to trade here
as well. Also, a flipside, what we’re seeing
domestically in China. Right.
The latest story really has been China now warning it may shut down coal mines,
guilty of exceeding production limits and is the latest sign of regulators are
getting serious about reining in overcapacity across industries.
Let’s bring in Stephen Savchenko, who leads or Asia energy coverage.
There is a bit of urgency in what we’re hearing so far.
How far are they going to go in really trying to curb some of the
overproduction that we’re seeing in the coal industry?
You know, there is a very large coal glut in in China at the moment.
Coal production continuously has hit a record high year after year.
Now, that’s not necessarily down to the mines themselves.
China has been pushing for energy security since the Russia’s invasion of
Ukraine in 2020 to send energy prices surging around the world.
It caused shortages in certain markets and China wanted to avoid that.
So they decided to really jump down and double down on production of domestic
coal resources. Now, there are levels that these mines
are supposed to be producing, and as this does help bring down prices of coal
for four Chinese miners, it’s actually brought it down a little too much.
Chinese domestic coal prices earlier this year hit the lowest level in about
four years. It tested the lowest level since 2009.
And when you’re at such a low level, it is not beneficial for these main
producers, these coal producers. They they need to make better profits.
And I think that’s one of the things that China is looking at.
You know, coal is a major industry for the economy and shoring up prices,
making sure that this oversupply sort of goes away, will assist in pushing prices
to a more reasonable level and thus also potentially creating better profits.
Now, we’re not sure exactly which mines will be shut, and we’re in the early
days here. I think it could also be a situation
where the government puts out this statement,
which was reported in local media and then maybe the mines just cooperate from
there. Just the fear of any action from Beijing
will push them to make sure that their production is curbed.
But at the moment, you know, we’re likely going to see record levels of
coal production this year. That likely won’t change.
Well, let’s see what happens next year, especially as China is supposed to start
reducing consumption of the fuel and peak emissions by the end of this
decade. Stephen, I’m sorry to put you on the
spot here. You know, we’ve got a headline.
I wonder if you could comment on this. And this is on Japan and Tariffs on
steel. The US and Japan agreed to keep 50%
tariff on steel and aluminum. That’s according to the NHK.
That headline doesn’t mean anything without any context.
I wonder, do you have any contacts here? Yeah, the context just has to be about
Nippon Steel buying U.S. Steel.
So earlier this year, as part of the landmark deal for Nippon Steel to buy us
steel, Trump didn’t want a company to come in and close their factories.
They wanted the US Steel, the name this very historic company to continue
producing, actually expand production. And they wanted Nippon Steel to invest
in the company. This was actually part of essentially
part of what Tokyo thought as the trade deal, which we saw, you know, they
accomplished earlier today, according to Trump, that they were able to come to
some sort of agreement. Now, the reason why Trump has tariffs on
steel is they want to protect that steel industry.
They don’t want Nippon Steel closing factories and they want to make sure
that a lot of the steel is still produced in the United States.
So I think that’s why Japan, according to the NHK, would agree to such tariff
at the same time. Japan isn’t in and isn’t really
interested in selling more steel to the U.S.
I think they really are, especially through Nippon Steel.
They’re focusing focusing on developing that market domestically by by investing
in the production there. The US has potentially enormous steel
demand going into the future with with the transition to to green energy.
There will require more steel as well as, you know, through the IBM building
data centers and also more infrastructure for that will require
materials as well. So there is a lot of potential demand.
And Trump wants to make sure that that demand is met with U.S.
businesses and US resources, something that it seems that the Japanese trade
negotiators are fine with. Stephen Kaczynski there, thank you so
much, sir, for that contact. Sorry to put you on the spot there.
Fantastic context there from Stephen Kaczynski there.
Over in Singapore. We covered coal and, you know, we ended
up covering covering steel. Okay.
Now, speaking of Japan in the US, we now have confirmation coming through of
Ishiba on the specific tariffs on cars that they did strike the deal with the
US to cut car tariffs now to 15%, which was earlier reported.
Markets had been rallying already, but yet that is now confirmation for you of
about 15%. Now, speaking of tariffs on the US,
let’s pivot now and have a look at Europe and what it means for China.
I know that’s fairly complicated. So you have your stance of forcing
Europe to recalibrate how Europe then invests and those links with mainland
China now, where Chinese companies once focused on buying infrastructure, things
like ports, power grids, they’re now actually building their own factories
with the help of local state subsidies. Now, senior reporter James Mager is with
us from Beijing to talk us through today’s big take.
James, yet, what are the key lines here, James?
I think the first thing and to take this back to Japan, Ursula von der Leyen and
to their cost us here in Japan today meeting with Prime Minister Ishiba.
Then they’re coming to China tomorrow to meet with President Xi Jinping and
President Emily Chang. And so I think the first thing you’ll be
seeing today is the Europeans and the Japanese discussing how to deal with
America. And then they’ll be discussing how to
deal with China. And then the European leaders will come
here tomorrow to meet with President Xi and Premier Li and to really discuss the
huge economic and trade issues that the European Union has with China right now.
You know, as our story today shows, there is an increasing amount of
investment from China, from Chinese companies like Catl of BYD, that is
going into Europe, going to European markets in Portugal and Hungary and
Slovakia. But there is also a massive increase in
Chinese exports going to Europe. The trade deficit, the China the trade
surplus that China has with Europe is rising.
And the Europeans are really not happy about that.
They’re not happy that European companies are selling less in China.
They’re not happy that European companies can’t get access to government
procurement procurement in China. They’re not happy that they feel
themselves being shut out of markets, that the Chinese are blocking exports of
rare earth magnets, even just temporarily, to Europe.
And they’re also they see that more and more Chinese exports are coming into
that market. And Chinese companies like the idea
coming into the market building factories and then are going to
outcompete European car companies. So there’s a lot of tension, tension
from the economic side that’s going to be discussed tomorrow when those
European leaders are here. Also, obviously, they’re going to
discuss the war in Ukraine. You’re obviously very unhappy that China
has not condemned that invasion of Ukraine by Russia and continues to
support Russia through trade. So what would be considered success then
in this meeting? And what do you think are going be the
key kind of talking points and the issues on the table?
I think the expectation for success should be very, very low.
The Europeans basically have said there is not going to be any statement.
We may reach some kind of, you know, have some kind of agreement on climate
change. But even that is looking dicey.
The basically, the European leaders are coming here to lay out again to the
Chinese leadership all the ways in which they’re unhappy to put on the table.
Again, all the problems they have with what China is doing across the broad
spectrum of the relationship. You know, the most recent one is the
rare earth export controls that were put in place in April.
But even prior to that, European, European leaders and European
governments were very, very unhappy with the economic relations with China, trade
relations with China. And they weren’t seeing any improvement
from that on the Chinese side. And honestly, the Chinese don’t seem to
really want to make any changes on those things.
You know, basically two sort of two or three years ago, the former European
foreign policy head, Josep Borrell, described the previous
iteration of this of this of this summit as a dialogue of the deaf.
And from everything we’re hearing in the preparations for tomorrow, it sounds
like it’s going to be the same. The Europeans have to come and they’re
going to say the same complaints they’ve had in the past.
And the Chinese are going to come out with the same statements they’ve had in
the past. And it doesn’t seem like at this moment
there is going to be any movement on either side.
Well, James, that last comment just now might go into answering this next
question. How tense really are ties between the
two sides here? I mean, I think I think it’s incredibly
tense there. As I as I said at the beginning, there
is just so many areas in which they are fundamentally opposed to each other.
There are some areas like climate change where the Europeans and the Chinese both
are much more positive, at least comparatively, to the Americans with
actually trying to work together. But, you know, I think that the reaction
and the reception that Ursula von der Leyen and our cluster are going to get
in Japan today is going to really be very, very warm that, you know, they’re
talking about defense, industrial cooperation.
They’re talking about, you know, doing something on climate change.
They’re talking about economic security. They’re talking about the joint problems
they have with China. And then they’re going to come to China
tomorrow. And the reaction or the welcome they get
here is going to be very, very cold. And I think that kind of sums up how bad
relations right now are between the European Union, many European countries
in and of themselves and the Chinese government.
James, great stuff. James Baker there, our senior reporter
on our big take here this morning. Of course, you can read the full big
take there on the terminal. Take a look at some breaking lines that
we’re getting from the prime minister in Japan.
So talking to the Japanese people, it seems I’m trying to sell this deal.
Right. So they will increase the U.S.
rice imports within the existing bracket and the deal will not sacrifice Japanese
agriculture at all. So and there’s something on chips, too,
Dave, that you’ve been tracking as well. Yes.
In fact, let let me just go back to that as well.
Yes. The issue about, say, Japan will not be
disadvantaged from any terrorism chips. So it does seem, of course, they’re
they’re not walking back, just to be clear, they’re clarifying that many of
the things they agreed on in the last few hours or so will be advantageous to
Japan. Markets are reacting that way.
Plenty more ahead. This is the China show. Welcome back to the China show.
A look at the CSI 300 a half hour into the session.
It’s a sunny day out in Shanghai. And yeah, we are seeing this equity
rally continue, not just when it comes to onshore markets.
We’re talking about overall. You take a look at Japan’s doing right.
It’s on fire. The Nikkei is more than two and a half
percent here this morning on the back of this trade deal with the U.S.
The prime minister Ishiba speaking to reporters once again.
And just clarify what actually was agreed upon in this deal.
And it’s getting complicated because he’s not answering questions on whether
he will stay as prime minister. And we’re getting a a separate report
earlier on that he might decide on his future in August.
The reason that’s important is because there were questions around them being
able to deliver a treaty which he’s now defending as a good thing, which when
you look at markets, are treating it as a good thing and that he’s putting some
context into what they’ve said. You know, half a trillion investment
into the US. Number one, they won’t be disadvantaged
in chips. Number two, rice and cars and they’re
bringing that down to tariffs on steel, for example, on the on the Nippon Steel
deal. So a lot of these things are
complicated, But yeah, he’s bringing them into very domestically focused
political context. But markets are, I guess, on our screens
right now. In fact, I believe these are at session
highs there on the Nikkei, 80% heavier on volumes for this time of the day.
I would think the biggest stand out in this deal is what Asia but just
confirmed. Right.
The auto tariffs that has been lowered from 25% initially discussed 15 to 15 to
25% would have been a pain for a lot of these automakers that do export
significantly to the US. 15% wonder how reasonable that is for
the likes of of the Subarus of the world.
But we certainly have seen the auto sector really liking this news that this
trade deal has been put in place. Yeah, the steel thing is industrialized
even such as you mentioned this to us and this is maybe part of the whole
Nippon Steel deal that maybe, you know, for him to actually approve this merger,
you have to keep those steel tariffs at 50%.
Yeah. And that’s, I guess, not a qualifier of
why that deal does now make sense to be able to ensure that the US interests are
protected as far as that that specific deal is concerned?
Again, all of these things maybe don’t make sense without context, but yes,
we’re trying to put everything together for you.
It’s a bit confusing, but yes, so there’s that.
We’re also looking at, you know, one of the big stories we’re going to talk
about today, which is 40 year bond auction, but we’ll set that aside for
now. That’s really not.
But just to mention, we should get more information at 40 a bond auction in
about 90 minutes or so. What does this mean for trade talks,
which the other news overnight was we’re looking at Stockholm next week, of
course, for China and the U.S., They’re yeah, they’re they’re they’re choosing
very interesting European countries to meet in Geneva, London and now
Stockholm. Yeah.
You got to wonder, you know, there are beautiful places.
Maybe that’s when you can get some good vibes because Bessen did mention it is
actually good vibes leading up to it because his intention, it seems, is that
they’re going to work on some extension, right?
That maybe August 12th for China is not set in stone just yet to not out markets
like this because we are getting trade progress in trade,
arguably looking at the tariff levels that have been announced, not the worst
case scenario, but certainly higher than the base case this time last year
without the tariff conversation. In fact, what we know so far here’s
what’s been announced and agreed on so far.
So we’re waiting for a few big things. Of course, China is not in there.
We’ll talk about China, maybe later on. India, not just yet.
That that’s a little bit more complicated.
I think when you talk about access to the car market, we talk about Japan be
complicated and it’s a bit more complicated, arguably so far as that’s
concerned. But yeah, here are some of the this is
now the new normal as it pertains to trade.
Are these restrictive as far as trade relationships are concerned?
Who knows? Right up just very, very quickly here,
let’s have a look at markets and where we are.
So we’re doing quite well across the benchmark.
MSCI Asia-Pacific is up. That’s because of what’s taking place in
Japan. Mark Cranfield is with us right now to
give us more context on whether or not, Mark, this this this rally has legs or
is this simply repositioning as we’ve ever so slowly receded back from the
from the brink? Well, if you look at Japan in
particular, obviously the driver today is the transportation subindex.
And there could be plenty of upside there because a 15% tariff on Japanese
autos is a huge relief to investors. I thought it’s going to be a lot worse
than that. And if you think of a company like
Toyota, Toyota motor is the biggest component in the topics index, even
after today’s very big rally. And it is up more than 10% today, it is
still underwater for the year to date. So if global investors are looking for a
catch up trade, look no further than Japanese car makers because there is
plenty of room for those kind of companies to catch up with the big
stocks around the world and Japan. And of course, then the topics index in
particular has lagged behind the performance of Korea, Hong Kong, China.
Most of the major indices in Asia. So there’s lots of room as we look ahead
to the rest of the second half of the year.
There’s lots of room here for people that have been staying out of Japan
waiting for this trade deal. This is looking like a great chance for
them to get in, maybe to reduce exposure to some of the markets, which have done
really well in the first half of the year and start to move allocations back
towards Japan. This could well be a turning point for
Japanese stocks into the second half and there’s plenty of room for them to go.
What’s happening in the GGP market? Right.
Racine is a little bit of a melt up in yields now.
Mark, what’s the thinking behind that among the bond traders now ahead of this
40 year bond auction, of course. It’s all about the Bank of Japan.
So what has changed significantly? The Bank of Japan has repeatedly been
saying that unless there was a trade deal, they weren’t going to consider
raising interest rates again. Now we have a trade deal and we have a
Bank of Japan meeting next week. Suddenly, the whole yield curve is
jumping. And most significantly, we’ve seen today
the two year yield has jumped into an area where it is fully pricing a 25
basis point hike for next week. That changes the dynamics completely.
And you can see also the turnaround in the yen is partly a fact of the short
term yields jumping. The long end of the curve is a whole
nother story, and that’s the 48 weeks and that’s dicey enough.
But what has changed today is what happened at the short end of the curve.
Now, the Bank of Japan probably isn’t going to raise interest rates next week.
It’s probably already decided it needs more time to look at the trade deal.
But there is one and now is going to really raise the odds for September or
October. Suddenly, traders are much more serious
about the possibility of higher interest rates in Japan sooner rather than later.
At the same time as people keep on talking about the chance the Federal
Reserve will lower interest rates before too long.
You put those two together, it’s negative for the dollar is positive for
the yen. This dollar move could have quite a way
to go yet. Yeah, we’re certainly seeing the two
here as well, moving as you say. Mark, thank you so much for covering all
things Japan for us this morning, Mark Greenfield.
Other strategies, he also talked about that carry trade, the yen.
That’s still very much intact right now, that trade.
Beyond that, we’re taking a look at these Japan autos.
Right. Because it seems like the big sort of
highlight in this U.S. Japan trade deal was the prime minister
issue, but did confirm in just the last couple minutes that it looks like to be
a 50% tariff on automobiles imported from Japan.
That is confirming earlier local reports as well.
That’s why you’re seeing double digit gains for the likes of Toyota Subaru.
This morning for more, let’s bring in our senior editor, Ruth Stevenson for
more. You know, before this, they were bracing
for a 25% tariff, which would have been brutal.
What does 15% mean for the auto sector now for Japan?
Yeah. I mean, this is a classic relief rally.
I mean, everyone had sort of worked on the assumption that we were going to see
a 25% tariff. The stock
prices of various carmakers had priced that in.
I mean, you know, depends on the car maker when you talk about the actual
impact. It seems like Toyota has already been
preparing for some level of tariffs and has there even reports that it’s been
lowering some of its prices in advance of something like this, whereas, for
example, other carmakers, Nissan and Honda, which actually have manufacturing
capacity in the US, they’ve already been shifting production
over there in anticipation of this. And so, look, they’re all going to have
to weather this storm. And you know, what remains to be seen is
whether it continues beyond, you know, the Trump administration.
Right. Who does this benefit the most?
And markets are trying to think I mean, it’s certainly good for the sector.
Some of the names that have been floated with the most exposure to the US names
like Subaru, for example. Reed, do we have to distinguish or does
this, you know, float all boats, as they say?
Yeah, I mean, you know, benefit I mean, from what level, right?
I mean, essentially who. That’s a good point.
Yes. Hurt I guess, in this instance.
I mean, Subaru certainly is very reliant on the U.S.
for a lot of its sales. So they’re probably going to see a large
hit. You know, in aggregate, we were looking
at, you know, a hit of about 19 billion for all of Japan’s carmakers combined.
I mean, Toyota, you know, just by sheer scale, is going to make up the largest
chunk of that. I mean, as we know, you know, Nissan has
its own sort of internal issues around management and just, you know, an aging
model lineup in addition to the tariff situation.
Honda is a little bit behind on its EV strategy.
That may be somewhat of a relief, actually.
And so really, it really depends on which carmaker you’re looking at.
But look, Japan’s carmakers have been through many storms in the past,
including, you know, the the the the huge rally in the yen, you know, almost
30 years ago. And so really,
they’re they’re just sort of adjusting here and shifting production to where it
makes sense. And and then, of course, we’re just
going to have to see how all of this shakes shakes out.
But I mean, for now, we’re looking at a relief rally, as you saw with the the
the share gains this morning. Right.
There was a price tag, right. $550 billion of investment into the
U.S.. I’m just wondering, does this what what
part of that is going to be from the auto sector in particular?
Are automakers in Japan serious now about possibly moving manufacturing to
the U.S.? Well, look, they’ve been doing that for
four decades now. I mean, there there’s this report of an
LNG deal up in Alaska. That’s certainly part of the 550 billion
figure. I’m sure there are a lot of other
components there. But, look, it’s it’s a big figure that’s
meant to grab headlines. And so to a certain extent, it looks
like it’s doing its trick. Right.
Reed, thank you so much. Reed Stevenson, our senior editor there
in Tokyo. Really important context.
It’s it’s good, relatively speaking. There we go.
Okay. We have some big guests coming up on
your screens shortly. Scott he U.S.
Treasury secretary and Commerce Secretary Howard Lutnick.
Of course, we’ll be joining Bloomberg Surveillance later tonight if you need
to. Of course, watch those times on your
screens here in the Asia Pacific. That is, of course, Wednesday morning in
the United States. Certainly, there’s will be a lot to talk
to about this is about this Japan trade deal, the talks in Stockholm with China
next week as well. And of course, based on talking about he
sees no need right now to try to fire Jay Powell.
Certainly there’s a lot going on as well.
More coming up with Shawn Stein from the US-China Business Council.
The president there. Joining us, more on how tariffs,
industrial policy and geopolitics are reshaping the business landscape for
American companies operating in China. This is Bloomberg. While U.S.
Treasury Secretary Scott Bastian says he will meet his Chinese counterparts in
Stockholm next week for talks aimed at extending a tariff truce.
But despite the pause in hostilities, the US-China Business Council has found
that a record share of U.S. firms froze their investments in China
this year as trade ties worsen. Joining us from Hong Kong is the group’s
president, John Stein. John, it’s great to have you.
I know you’re on your way to China to meet with some of your members there and
the like. First and foremost, though, before we
get to the survey, you know, there’s talks that are going on in Sweden
between U.S. and China next week.
We’re hearing that more of these trade deals that the U.S.
is really kind of coming up with with with Asia and before that August 1st
deadline. It seems like things are materializing
right now. What is sentiment on the ground like and
what are our conversations with your members now about what’s to come?
Yeah, I think the members and I think business in general is very pleased to
see that we’ve got talks coming up next week.
You know, one of the real problems that we’ve had is neither side really
understands the other side very well and there hasn’t really and there still
isn’t really a working mechanism for the two sides to have regular ongoing
communication. So these high level talks are really
important. So businesses are optimistic that this
can leads to a continued sort of easing in the tension between between the two
countries. If we look at the previous meetings, you
know, we were in the middle of the trade war when they went in to Geneva.
And in Geneva, they negotiated sort of a truce on the ever escalating tariffs.
And the tariffs then came down. And then we had a new front in the trade
war on that front. In the trade war was export controls.
And then in London, the export controls started to come down.
And so our hope is that now that we’ve got a sort of a truce or a cease fire on
export controls and on tariffs, that we can now get into the more important
conversations about market access and about the other types of things that
hold back American companies from competing and trying to show business is
very optimistic and very pleased to hear about the meetings.
They’re coming next week. Sean, David, here, the the direction of
travel seems to be clear. There’s the issue of a deadline that’s
coming up. And I wonder if your members are
assuming that we will get a trade deal before the deadline.
If we if we don’t, what are some of the what are some of the Plan B BS that some
of the members are putting in place in case we don’t get clarity before that
deadline? Yeah, I think it goes without saying
there’s going to be a deal. There has to be a deal.
And for a couple of reasons. The first is, you know, the president
himself tweet on June 9th, he said, we have come to an agreement, you know,
between the two countries and now we’re waiting for it to be signed off by
President Trump and by President Xi. A couple of weeks later, we had the
president come out and announce we have a deal, we have a framework deal.
And so to now go back and say, oh, you know, we had a deal, but we don’t really
have a deal, seems like a very unlikely outcome.
So by far, the most likely outcome that everyone is seeing is a continuation of
of of where we are now after August 12th.
But there’s another part that I think doesn’t get as much coverage as
particularly the U.S. side, and that’s the China’s reaction
and what China’s expectations are. I’ve spoken to a number of Chinese
officials who say that, you know, it’s it’s sort of a bit of a fallacy to
assume that the only person who decides whether the deal gets extended or not is
on one side of the shift, but that both sides of the Pacific are going to be
involved in this decision. And so they will say, you know, what’s
the alternative? If we don’t have a deal, then we don’t
have a deal and then we go back to Geneva.
We go back to Geneva, which is something that both sides would find unthinkable.
So I think everyone’s prediction is that.
And go and life will continue as much as it has been.
Asked how companies are sort of and are sort of hedging.
Large companies aren’t. Large companies are by and large,
assuming that it’s going to continue on August 12th.
And so they’re dealing with other more challenging issues like what are we
doing about the are the real problems for the SME is the asset manager where
the real problem is because they don’t have the financing and the funding that
might be available to a larger company. So what we’ve seen is we saw that cities
and their huge numbers of them, remember, we’ve got, you know, thousands
and thousands of cities that are dependent on imports from China.
What they had to do was we talked about a 90 day deal, which that came out of
Geneva. They saw that as a 60 day deal.
They realized they had 60 days to get goods on the water to make sure that
they beat some sort of change in tariffs.
So that’s where we’re seeing the reaction is in some is the larger
companies are mostly continuing with the expectation that that things will
continue as they have done. MM Right.
And I guess a good example that we’ve talked about in recent weeks here in the
show is in video and of course H 20 Chip Speaking of market access, Sean, you you
seem very confident that we will be getting a deal based on, I think the
rhetoric coming from the White House in terms of specific deals on market
access. Sean.
What do you think we will see what is a realistic expectation to have?
So right now, the biggest impediment actually to market access deals under
the current framework is the fentanyl tariffs.
Right now we’ve got 30% tariffs on China plus what we got during Trump.
One point out of that, 30%, 20% are the fentanyl related tariffs.
But even we can’t just look at that in isolation is what does that mean for
imports into the U.S. market?
When the U.S. imposed those tariffs on China, China
imposed retaliatory tariffs. And those tariffs are affecting some
very important sectors in the United States.
It’s affecting large displacement automobiles.
Big exports for certain U.S. companies.
It’s affecting. It’s affecting energy exports and it’s
affecting agricultural exports. And so what that means is it means that
the key to getting any further progress and actually getting not one giant deal
to move forward, but getting a lot of the small deals that the president seems
to like is is the key is getting sensible tariffs down.
So that’s where we’re we’re the most optimistic.
You would have noted that about three weeks ago, China took action to restrict
the sale of two very critical precursors or for a fence to no.
And so we understand on the U.S. side, the United States is monitoring
that now to see what is the actual effect on fentanyl supply in the U.S.
How is that affecting the availability of precursors to various cartels and
what’s happening and say to the street price of fentanyl and the other measures
that you have? So really, where business is seeing the
biggest opportunity for a breakthrough is progress on fentanyl and then lowers
tariffs on the U.S. side, which then opens the door for
China to lower tariffs. It lets us sell agriculture, lets us
sell airplanes, lets us sell automobiles that lets us sell energy.
So I think that’s the area that’s most ripe for progress near its most ripe for
the deal. And again, those are the kind of deals,
something very important for the President to be able to announce
agriculture purchases for the Midwest, etc..
Shortfall. That thought for a second.
We just have some breaking news that’s crossing here.
This is local news mainichi out of japan and they are now reporting that the
prime minister ishiba will announce his resignation by the end of august.
So that is what they’re reporting here right now.
We did hear from asia, but just a few moments ago talking about this trade
deal that’s been set with the US and avoiding those questions of whether he
was going to stay in power or not. There’s been multiple reports saying
that his future is really determined by this trade deal and maybe by August he
would have more of an indication of where he is going to be.
So Mainichi, now let’s keep in mind it’s still local reporting said that the
Prime Minister Ishiba is going to be resigning by the end of next month.
Okay, I’m looking at market reaction. Markets are looking at this development
positively. Nikkei 2 to 5.
You look at the line chart, there’s an incremental leg higher on the Nikkei.
There’s also weakness coming to separately in the Japanese currency,
what you see on your screen. So we’ve taken out earlier on to 147
handle or a little bit below that at about that level as we speak the Nikkei
2 to 5 heading into its lunch break 8 minutes from now is actually gaining
even further. Right now.
We’re up about a couple of more points from when the news before the news
broke. So we’re now about 3% higher in the
Nikkei here. Yeah, I mean, does it eliminate the
political uncertainty, I guess when it comes to Japan, maybe that’s what’s been
taking out of this market here right now.
But certainly, you know, I guess it was sort of his goal maybe that to try to
get this U.S. trade deal in place first.
That bought a bit of time here. We’ll see if this is correct, though.
Of course, a still a lot of speculation just reporting internally, locally here
right now. But, yes, as Japanese markets are
actually rallying on this news. Shawn, I’ll bring it back to you.
And U.S. and China, whether we can bring a Segway
back into this, I thought was very interesting in your in your survey with
members not just talking about the tariff threats, but also what’s been
going on domestically in China, this whole anti-evolution sort of theme where
regulators are now really trying to crack down on overcapacity, subsidies
that are be putting in some parts of the of the economy.
How is it impacting U.S. companies that are operating in the
mainland now? Yeah, that’s a really important point,
because so much of the oxygen has been taken off the by discussions of tariffs
and export controls that we’ve gotten in many cases away from the really core
issues that help prevent American companies and other global companies
from being as competitive as they could be in China.
And so the first thing that we’re seeing is that we have fully 66% of companies
who are telling us that their Chinese competitors are receiving benefits of
different types from the Chinese government.
Maybe it’s discounted loans, maybe it’s. FREELAND, maybe it’s construction, maybe
it’s other things. But what’s the impact of that?
66% is we’re now seeing that almost everyone across the board is seeing
deflation in their sector. We’re seeing and companies that haven’t
yet seen deflation in their sector believe that they’re going to start
seeing deflation in the sector in the very near future.
But the upshot of all of this isn’t just what it means for the China market,
isn’t just what it means for declining sort of profitability in the ability to
sell in the China market. What I think is even more worry is that
we have over 40% of our member companies say that the problem of Chinese
industrial policy isn’t just limited to China, but that over the next five years
they believe that it’s going to affect their competitiveness in global markets.
And so what we have then is we have international it’s actually spillover
from Chinese overcapacity and Chinese subsidies and other project programs
that China has to support their own businesses.
So in China, we get deflation, we get lower competitiveness, and we get new
Chinese companies that are able to to grow, partly due to their own
innovation, partly to their own work, but partly also due to subsidies.
But increasing this is going to become a problem globally as companies from
around the world are fighting for market share in third country markets.
Sean, thank you so much for joining us. Sean Stein, their president, U.S.
Business Council, and have a great trip to China as well.
As we were just talking about here, we’re going to switch back to Japan
because the markets are moving now on this report from Mainichi that we might
not have a prime minister in Japan in a few weeks time.
And August is when the timing of when this report is citing that the plans to
resign. In terms of market reaction, it’s worth
noting that we are going into the Japanese lunch break.
So inopportune time really, but we’ll get futures copywriting.
As far as the currency markets goes, the yen is not against the dollar.
It’s down against most of its peers as well.
That’s number one. Nikkei is seeing a little bit of a leg
higher following the news that’s come out.
But also we’re looking at that Nikkei vol index is actually seeing a
substantial leg higher. Also on the back of this news will be
live out of Tokyo coming through as we go into this lunch break.
Yeah, go ahead. As the trade negotiator is speaking this
hour, talking about this U.S. and Japan trade deal, they’re saying
mutually beneficial does not include steel and aluminum, though.
Plenty more ahead. This is Bloomberg. All right.
11:29 a.m. in Tokyo.
We joke about this is now becoming the Japan show and certainly is just given
the news that we’ve been getting here the last few minutes.
Nikkei 2 to 5 is up more than 3% on this news.
Reports of mine ichi that the prime minister ishiba will announce his
resignation by the end of this month. This is on the back.
Of course, the u.s. and Japan coming on an agreement.
That trade deal, dave. Yeah, there we go.
Yen crisis to say the yen is weaker. We’ve now taken out 147 session highs on
dollar yen thereabouts. There’s a lot of trade going on.
In fact, a pedestrian is it’s getting extremely, extremely tight.
Euro yen now trading at one 7263. The yen is also weaker against most of
its other major peers. Let’s bring in Sherry on our co-anchor.
Of course, She’s in Tokyo for us, covering initially what was a trade
conversation, Sherry, that’s now morphed into something political.
What would what could be the implications of this, Sherry?
It’s an interesting development, right? Because coming into the headlines from
the trade negotiations with the United States, there was some speculation that
what does that mean for Prime Minister Ishiba?
Because he just software that historic defeat in the upper house election that
when the LDP now is set to govern without both chambers of the legislative
branch and we haven’t seen that happen them having not a majority since the
party founding. So
the continuation of trade negotiations with the US was seen as one reason why
Prime Minister Ishiba was vowing to stay on as leader.
But now local media reporting that he will actually resign by the end of the
month. So what that means for the next
leadership here in Japan is a key question, because we have seen, of
course, before Prime Minister Shinzo Abe, this revolving door of prime
ministers that have ruled only by about a year or so.
And could we see a repeat of that. And who could be the biggest candidates
right now to replace him will be a key question.
When the ruling LDP now faces many different challenges, including having
lost the upper House majority concessions to smaller opposition
parties that have asked everything from really lowering the sales tax at this
point, more fiscal spending. What that means for the markets,
especially JGBs. Remember, we do have that 40 year
auction coming out in just less than an hour.
So what we see, the increasing pressure on the long end of a sovereign debt here
in Japan will be a question for markets going forward.
Yeah, it’s why we’ve seen maybe this melt up in yields once again as well.
We’re getting into this, getting more confirmations, I guess, from the Japan
side of what really came through in this trade deal.
Alcazar are the trade negotiators is still speaking and talking a little bit
more about the break down that U.S. steel aluminum tariffs seem to be still
in place, confirming at least auto tariffs are coming down to 15% and
they’re saying it’s mutually beneficial. This trade deal, how are they going to
sell this to Japan right now, Sherry? Overall when it comes to the net impact
of lower tariffs, this is expected to be better than the 25% that was threatened
on Japan. So policymakers will be able to sell
this to the Japanese public as surely being beneficial for the economy.
Better at least on the 25% tariff as originally planned, better than the 24%
tariffs that were initially threatened as well.
15% tariffs on Japanese cars, though that’s still higher than the existing
two and a half percent rate. But everything to do with trade
negotiations and tariffs is relative, right?
So the fact that the tariffs on Japanese cars came down, what happens to the 25%
tariffs on South Korean cars will be a key question.
If you can have that relative advantage, that’s another way to be able to sell
this deal to the Japanese public. Of course, very important because this
auto sector is very important for the Japanese economy.
It generates about 10% of Japan’s GDP. It employs more than 5 million people.
That’s about 8% of the Japanese workforce.
We have seen, of course, the immediate reaction from car makers, from the likes
of Toyota, from the likes of Subaru. Toyota that sells about 20% of its
global sales, come from the US to borrow more than 70% as well.
President Trump has talked about opening the country, opening Japan to US car
imports. We’ll have to continue to watch that
because we’ve talked extensively about how American cars may not necessarily be
appealing for the Japanese public. So even opening that market, what that
could potentially mean. We’ll continue to watch what the
developments are around Iran, as you said, the aluminum and steel tariffs.
But of course, those sectoral tariffs are in place for other countries as
well. All right, Sherry.
Thank you. Sherry on there.
We rushed her back to the studio just to get through all this breaking news.
And we’re rushing William Show as well. So there’s a chance.
Japan Sherry, Deputy director. Well, it’s great to have you on the
program. Thanks so much for for joining us here.
So it’s a last minute request, but then the news reports of Ishiba resigning by
the end of next month. What’s your take on all this?
You know, obviously, people he’s been dealing with a lot of pushback from
people for him to resign. It seems like he was waiting at least to
get this trade deal through first. What would this mean overall for Japan
now? Yeah, I think certainly I think this is
sort of a major action that he decides to sort of push through.
I know that we’re still waiting for more details on the trade deal, but certainly
issues about market access. On on rice and other agricultural
products that certainly will elicit reaction from Japanese voters,
especially within the LDP, which is so dependent on the agricultural vote.
And so I think what this means is that we’re sort of entering a period of
speculation as to who’s going to be the next leader.
There are a number of possible internal candidates such as
such a Yoshi or the and also a finance minister, Kato.
But there’s also the possibility of maybe the LDP and Komeito working with
other coalition partners and selecting a leader out of there.
Right now, it’s there’s just a lot of speculation.
Right. William David here.
Just maybe one a follow there to to what?
We’re still speculating, as you point out.
Right. So can we still assume, though, that it
will be the LDP that is at the forefront here?
I mean, I have to admit, this is really hard to say, right, especially given the
what’s been going on with Japanese politics.
But I think my best guess is that it will still remain in the LDP.
It will still be a LDP leader who replaces Prime Minister Ishiba.
But I do think that there is a window where there might be other
possibilities. But my my best you know, if I were a
betting man, which I’m not. My best bet is that it will be a LDP
leader as a way to sort of ensure that there is some kind of continuity with
the obviously, this important trade deal, as well as to really, frankly,
just to calm things down a little bit, because I think to be very frank, I
think Japan is entering a sort of election fatigue between both leadership
as well as parliamentary elections. And I think some kind of stability would
be desirable. William, markets are taking this trade
deal very positively right now, is one of the lowest sort of tariff rates we’ve
seen. And some of the major nations that does
trade with the US. How big of a win do you think this is
going to be for Japan? I think this is a really significant win
for Japan. If you take the reality that the Trump
administration always was going to insist upon a 10% baseline tariff, as
well as frameworks for long term market access to ensure long term a pathway
towards trade balances and sort of trade deficits.
I think given those existing circumstances, Japan did quite well in
terms of, you know, lowering the reciprocal trade tariff down to 15%, as
well as to lower the the automotive tariff from 25% down to 15%.
I think these are both significant developments for Japan.
Obviously, we’re still waiting on more details in terms of what exactly does
market access constitute as well as the sectoral tariffs on other things like
steel and aluminum and as well semiconductors.
But I think for now, I think markets are reacting as as I think most of us would
as well. Yeah, We’re trying to figure out
numbers, too. William Section two, three, two.
Is it 15% or is it 12 and a half percent?
What do you know or what insights would you have there?
Well, I was actually arguing with one of your editors about this over email, but
my understanding is that it’s actually 12.5%.
So down from 25% down to 12.5%. But the United States also has a 2.5%
automotive tariffs. So 12.5 plus 2.5 equals 15.
That that is my best understanding right now.
And I certainly there has been plenty of Japanese media that are reporting it as
12.5, not 15. Plus 2.5.
12.5. Okay.
How would we classify that for for the Irish sector, for example?
I mean, are these term levels still manageable for this industry?
For example, you know, 25% was just painful, but 12 and a half percent still
seems pretty high. I think the automotive look, I mean, I
can’t speak for the automotive industry, but my best understanding from my own
conversations with industry folks is that while they, you know, I’m sure they
don’t want to pay 12.5, I still think that they regard it as a significant
step forward. Certainly, it makes it a lot easier for
Japanese automakers like Mazda as well as Subaru, who are very dependent on the
U.S. market and dependent on exports.
I think the 12.5 figure is is helpful for them.
It was certainly a significant step forward for them, and I think they will
work to find ways to to address it. The other thing they’ll point out is
that the $550 billion of Japanese investments in the United States, which
would vault Japan from number one in FDI in the United States to clearly number
one head and shoulders of number one in FDI in the United States.
My question is how much of that will also involve automotive investments in
the United States? And so I think that also sort of changes
the equation in terms of how how the Japanese automotive industry will look
at these developments. And William does that number 550
billion. Does that seem like a new number two?
Is that in other words, is that is that fresh out of the oven or.
Or what? Can you imagine a world where that is
some way, a total of what’s been collated so far and possibly, obviously
fresh investment? In other words, what I’m trying to
figure out is, is that something new? I believe Well, to be fair, I also don’t
know myself. Right.
But I know that Japan is currently under $60 billion of investment.
The United States, you have the 100 billion from SoftBank in Asia, you have
the $26 billion from Nippon Steel. In U.S.
Steel, you have you know, so so I think these investments, along with the the
again, we’re so short on details, the the joint venture between the U.S.
and Japan in Alaskan LNG, I think these will play a major chunk of the 550
billion. But I think there will be other
investments down the line as well. The ISHIBA, the government previously
back in February talked about raising Japanese investments in the U.S.
to 1 trillion. This will easily vault way past that to
about what is it like 1.4 billion, 1.4 trillion.
So I think these are really all very significant developments and certainly
it’s what the White House wanted. Does this change materially the trade
surplus that Japan has with the United States?
The White House says President Trump specifically has has has called on and
has called out countries because of that imbalance of trade.
We can obsess over the details, but at the end of the day, this is change that.
Well, I think it does change the trade surplus because, one, by having more
Japanese investments in the United States, it bolsters the American trade
balance sheet. The other point, the phrase is that
Japanese government, as well as Japanese industry, have been sort of raising this
recently, which is instead of having us pay these tariffs, why not let us use
these these tariffs that we would pay in in as investments in the United States?
Right. Let’s put this would be tariff moneys to
use as investments in the United States. Now, I don’t again, I am still short on
details of the exact parameters of the $550 billion investment in the United
States. But my suspect, I would suspect that
certainly there was some calculation that said, why don’t we shift from
tariffs into much more productive and growing approaches of investing in the
United States? And I think that probably was also
helpful in the negotiations as well. William, thank you so much for the
update and apologies that we rushed you in.
Thank you for agreeing to that fairly last minute William show there.
Fantastic context. Deputy director of the Hudson Hudson
Institute, Japan chair over over in Washington.
We are on the Japanese lunch lunch break.
As far as cash, cash markets go. Futures are still trading down.
As you can see, we’re higher following news that if these reports, rather to be
more specific in Japan, that the prime minister is set to announce his
resignation by the end of August. Plenty more ahead.
This is Bloomberg. All right.
Time for our Trending in China segment, a look at what’s making headlines.
Finally, we’re talking pictures and sparking the conversation on social
media. The People’s Daily has published a
commentary looking ahead to the EU China summit, saying it’s a key moment for
relations. Let’s bring in our China correspondent
to talk us through what’s at stake here. We were just talking to James Maker
about how tense things are between the two nations.
What’s likely going to happen? Yeah, actually, just moments ago we had
that headline, the Chinese commerce minister one went out just coming off a
video call with his EU counterpart and lodging solemn representations over the
latest EU sanctions over two Chinese banks for their role in helping Russia.
And this is the first time that Chinese banks are being implicated in these EU
sanctions. They were accused of offering
cryptocurrency services to Russia, helping Russia to circumvent some of
these sanctions. So it looks like, you know, a lot of
these sticking points, the two main big complaints from the EU has been China’s
trade practices, what von der Leyen has called the weaponizing of supply chain.
And the second thing has been the tacit support of Moscow.
Right. And it looks like these things continue
to remain a sticking point and possibly a stalemate here.
Just look at the we so far and look at Chinese foreign ministers.
WANG Ease trip to Europe recently. We have seen how Kai saw it during the
trip because more levies were announced while he was in Europe.
And this is a People’s Daily article that was published saying that this is a
key moment for China EU ties and saying that this is a chance for a reset.
But the choice lies with the EU, whether they want to lean towards China right
now or if they want to put some distance with China in order to satisfy the US.
So yes, those tariffs with the US has provided an opening.
But the sticking points still remain and it looks like the bar is now very, very
low for any sort of outcome coming out of this summit.
How impressed do you think investors should be, given how low that bar
currently is and how fraught with tensions that the current links are?
Yeah, So a lot of companies are now trying to
circumvent these tariffs by, for example, putting more investments into
European plants. Right.
And we have seen how Chinese investment into the EU over the past six, seven
years has been coming down. But we have also observed how China’s
investments have shifted as well. They used to do a lot of acquisitions
into infrastructure, so things like power grids and ports, they also acquire
a lot of companies, whether it’s in the tech sector, in the agri food business
sector. But then soon there was all these
concerns over national security. Although China’s strategic intentions
and some of these acquisitions started getting blocked.
And then so we see, you know, Chinese investments pulling back over the years
and now they’re starting to invest in their own plants in these EU countries,
sometimes with local state subsidies. They’ve also shifted away from some of
these big countries like Germany, France, and they’ve moved towards some
of the more friendly countries like Portugal, Spain, Hungary.
You just think about Pedro Sanchez, you know, visiting China multiple times,
courting actively for Chinese investments.
Viktor Orban, one of the most pro-China leaders in the EU, getting rewarded with
all these deals from Seattle, from investing in plants there.
And so I guess the big question, even Emmanuel Macron also saying that he
welcomes Chinese investment, but with a caveat there, that competition must be
fair. So the question now is, with Germany’s
new government in place, what is Germany’s new China policy going to look
like? And that would gives us give us a sense
of, you know, the overall tone from the EU in terms of their openness to Chinese
investments. And tomorrow’s EU China summit will give
us a sense of how relations are going as well.
Okay. Maidment Thank you so much, Matt Miller,
our China correspondent. You can read the big context here, not
the full big take on your terminal today.
If you’re a subscriber, you can check it out there on your terminal.
If you are not a subscriber off the terminal, but you are a subscriber on
the Internet. That’s all.
I’m bloomberg.com, right. In other news that we are following this
morning, China has suspended its anti-trust investigations into the local
unit of DuPont. That’s ahead of next week’s trade talks
with the US in Stockholm. Now, the inquiry was among a flurry of
countermeasures Beijing announced in early April to hit back against
President Trump’s so-called reciprocal tariffs on Chinese products.
Now, Treasury Secretary Scott Morrison has offered support for Fed Chair Jay
Powell a day after calling for an exhaustive review of the central bank’s
non-core operations. Now, Bessant has told Fox Business that
he sees no reason for Powell to step down.
The chair has been under fire from President Trump for holding fast on
interest rates while facing Republican attacks over a costly renovation of Fed
headquarters. All right, we’re under a take checking
this handy RC briefing in Beijing. There’s some other things going on this
morning. This has been going on for for much of
the past hour here. There’s been some news on Hainan.
So we’re here with the vice minister of finance, Yao Ming, speaking at this
briefing and talks. Think about expanding the zero tariff
goods to 6600 items in Hainan. So they’re raising the zero tariff,
first tier imports as well, to 74% from 21%.
So that is quite a substantial jump there.
And they are going to begin the custom closure for Hainan on December 18.
So this whole talk of a free trade port is really kind of been sending all these
stocks higher this morning to do the last few days, actually just in
anticipation. Yeah, and it looks like a sell on the
news. In fact, some of those names are
actually on the way. I’m just trying to make more sense of
all these taking place. So it’s an expansion, as everyone is
pointing out, of zero tariff goods, and that’s a good thing on the surface.
But they’re raising the zero tariffs from 274 from from 21%.
So, well, we’ll try and figure this out.
Market reaction is that market reaction today specifically?
But as one is pointing out, you have to take a step back to really get a more
holistic view of how markets have traded really on this specific date, which is
still ongoing. So we’ll get you more details on this,
of course, later on in the program. We have a couple of minutes left and
we’ll see, of course, we get more headlines and plenty more ahead.
This is the China show. In case you missed it, we’re talking
about and why we’re breathing heavy. But it’s been a long day.
The news has been quite intense. And you take a I wasn’t going to Japan
here. So there’s a bit of a relief rally
underway in the auto sector. But overall, it seems like a pretty
broad base on the back of multiple local news reports now.
TBS in the last few seconds saying that the Japanese Prime Minister Ishiba, is
set to decide on his resignation soon. Mainichi put a timeframe on it by August
and I think Sankei also had August and according to their sources as well.
So it seems like now that we have this US-Japan trade deal now his future is
getting more clear. What’s going to happen.
Yeah, here’s here’s the next thing to worry about.
Yeah. For markets, for currency markets
specifically, because the Japanese equity market has actually reacted
positively to this news with a further we were trading at about 3% higher.
And then the news break, we’re now trading at 3.3.
And then maybe in the next hour we’ll get something out of this 40 year bond
auction to talk about. But yeah, it’s been busy on Japan today.
It has, Right. And I think, you know, I guess it’s no
surprise that maybe this could be happening, given the fact that there was
a historic setback for the LDP party. And I think it was the trade deal that
was the only thing that was leaving him hanging for a little bit longer.
And now that we’ve actually see a framework or at least something that is
actually quite seen as quite positive for Japan now, is it time now to step
down and for new leadership, what does it mean for the LDP party, given just
the setback that we saw? Right.
I mean, when it comes to these opposition parties really catering and
maybe even attracting a lot of the local young, younger voters, I think they have
a lot of soul searching to go for the LDP party.
Looking forward to this might actually be good for, if you think about it, for
the LDP, if they’re able to put someone in that might be able to take that
forward on the back of changes taking place there.
A look at Chinese markets going into the lunch break about 30 minutes away.
That’s it from us. We will see you all tomorrow.
“Bloomberg: The China Show” is your definitive source for news and analysis on the world’s second-biggest economy. From politics and policy to tech and trends, Yvonne Man and David Ingles give global investors unique insight, delivering in-depth discussions with the newsmakers who matter.
Chapters:
00:00:01 – Bloomberg: The China Show opens
00:03:52 – What to watch in Greater China today
00:04:36 – Trump announces trade deal with Japan, Philippines
00:12:57 – Franklin Templeton Institute’s Christy Tan on markets outlook
00:23:25 – UBS: Hong Kong stocks may see pressure from earnings downgrades
00:30:34 – Source: US nuclear weapons agency breached in Microsoft SharepPoint hack
00:33:56 – Alert: US, Japan agree on maintaining 50% tariff on steel: NHK
00:35:14 – Trump sets 15% tariff on the Philippines
00:36:38 – China moves to halt excessive coal production
00:41:09 – Alert: Ishiba says agreed with US to set tariffs at 15%
00:41:37 – Europe warms to China’s investments in face of US tariffs
00:46:48 – Breaking: Ishiba says deal won’t sacrifice Japan agriculture
00:51:03 – Trump says Japan deal reached with tariff rate at 15%
00:53:22 – Japan faces test ahead of 40-year government bond sale
00:55:10 – Japan auto stocks gain on US trade deal
01:00:29 – US-China Business Council’s Sean Stein on trade ties with China
01:07:37 – Breaking: Japan PM Ishiba to resign, Mainichi reports
01:13:08 – Breaking: Japan PM Ishiba to resign in August, Mainichi reports
01:18:15 – Hudson Institute’s William Chou on US-Japan trade deal
01:27:36 – Trending in China: EU expects little from China Summit
01:32:20 – Alert: China’s Hainan to expand zero-tariff goods to 6600 items
01:34:02 – Breaking: Japan PM Ishiba to resign, local media report
——–
More on Bloomberg Television and Markets
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37 Comments
Sup thx for 6 subs
Bloomberg hires the children of high officials in the Chinese Communist Party.
Has been shilling for China for 10 to.25.years.
China and the Gloval Higg net worth who are few but own more than half.of the world stocks.
Microsoft hired a bunch of people from Beijing, the hack could have happened from within
❤❤❤❤❤❤❤
Lmfao impressed with the deal 😂
More like a regime change event just happened
Tf is the China Show?
Are you implying the deal is the reason or just is it more TDS or the usual" we hate Trump" because he's delivering
and we are jealous?
What is this show?
Ishiba said he isnt resigning. fake news.
FK Chyna!!!
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