Brazil Election Heads to Runoff, Bessent Downplays Concerns on Yields, AI

SHERY: THIS IS THE ASIA TRADE. I AM SHERY AHN IN TOKYO. ASIAN STOCKS SET FOR OPENING GAINS AFTER A SLOW DOWN IN THE U.S. JOBS MARKET THESE TRADERS CUT BETS ON ON OCTOBER FED HIKE. SAUDI BACK YEMENI FORCES BEGIN AND OPERATION TO RETAKE TERRITORY FROM REBELS. BRAZIL'S PRESIDENTIAL RACE LOOKING LIKELY TO HEAD TOWARD RUNOFF WITH BOLSONARO LEAVING LULA DA SILVA IN THE EARLY COUNT. ONE OF AI'S BIGGEST GLOBAL BACKERS, SOFTBANK FOUNDER OF MASAYOSHI SON ISSUES A RARE WARNING ON RISKS AROUND THE TECHNOLOGY. PAUL: I AM PAUL ALLEN IN SYDNEY. LET'S TAKE A LOOK AT THE SET UP FOR TRADING ACROSS ASIA. WE HAVE NIKKEI FUTURES RIGHT NOW LOOKING SOMEWHAT FLAT. A LITTLE BIT TO THE UPSIDE. THE YEN PRETTY WEAK, DESPITE A LITTLE BIT OF SOFTNESS THAT WE SAW IN THE U.S. DOLLAR AFTER THOSE JOBS NUMBERS. THE U.S. DOLLAR HAD ITS WORST DAY IN A MONTH FOLLOWING THAT REPORT. WE WILL GET A LITTLE BIT MORE ON THAT IN A MOMENT. IN AUSTRALIA, MEANWHILE, THE ASX UP .3% AT THE OPEN AND THAT IS RIGHT, UP AND RUNNING, TRADING IN AUSTRALIA. WE HAD DAYLIGHT SAVING OVER THE WEEKEND. ONE STOCK WE ARE WATCHING, CSL, IS UP .75 PERCENT TO THE UPSIDE. THE PHARMACEUTICAL COMPANY AGREEING TO PAY AS MUCH AS $1.6 BILLION TO -- A DRUG DEAL. LET'S TAKE A LOOK AT OIL PRICES. THIS IS SOMETHING JIM CHALMERS HAS BEEN COMMENTING ON OVER THE WEEKEND. HE CALLED THE WAR AND ECONOMIC DISASTER FROM A COST-OF-LIVING POINT OF VIEW AND WE HAVE CRUDE PRICES ABOVE 102 DOLLARS PER BARREL. THERE ARE DEVELOPMENTS IN THE MIDDLE EAST, NOT THE LEAST OF WHICH YEMEN TAKING ON THE REBELS, AND WE WILL BRING YOU MORE ON THAT STORY IN A MOMENT AS WELL. TAKE A LOOK AT THE YIELD FROM THE 10 YEAR, PULLING BACK FROM HIGHS WE SAW EARLIER IN THE MIDDLE OF LAST WEEK. PRETTY ELEVATED. 5.2 7%. BOND TRADERS ARE SCALING BACK EXPECTATIONS FOR FURTHER FEDERAL RESERVE TIGHTENING AFTER SEPTEMBER THE U.S. PAYROLL GROWTH CAME IN WELL BELOW FORECAST. THAT FUELED EXPECTATIONS THAT POLICYMAKERS WILL LEAVE RATES UNCHANGED IN THIS MONTH EVEN AS INFLATION CONCERNS LINGER. BLOOMBERG'S MLIV STRATEGIST, MARK CRANFIELD, JOINS US NOW WITH MORE. SO BETS ON TIGHTENING IN OCTOBER PERHAPS GETTING PUT TO ONE SIDE BUT WHAT CAN WE SAY ABOUT DECEMBER AND THE FIRST FEW MONTHS OF 2027? MARK: CERTAINLY, DECEMBER IS VERY MUCH ON THE TABLE FOR AN INTEREST RATE HIKE BOTH IN THE U.S. AND IN OTHER MARKETS AS WELL. JAPAN, EUROPE, ALL LOOKING AT POTENTIAL RATE HIKES. WE HAVE VERY STRONG INFLATION DATA FROM EUROPE AS WELL BUT YOU HAVE AN INFLATIONARY PULL NEXT WEEK. U.S. CPI IS THE BIGGEST PIECE OF DATA THAT WILL COME AND IT WOULD NEED TO BE EXTRAORDINARILY HIGH TO PERSUADE THE FEDERAL RESERVE THEY NEED TO DO ANYTHING IN OCTOBER. PRETTY MUCH, THAT IS DONE AND DUSTED NOW. THIS WEEK, HOWEVER, IS HUGE FOR BOND TRADERS. WE HAVE 10 YEAR AND 30 YEAR AUCTIONS IN THE U.S. AND JAPAN. THAT IS A RARE TIME WHERE THEY COME TOGETHER. THE 30 YEAR HAS BEEN THE MOST DIFFICULT PART OF THE YIELD CURVE ACROSS THE WORLD. WE ARE SEEING EVEN IN THE U.K., YIELDS HITTING 6% ALREADY IN THE 30 YEAR SECTOR. THE U.S. IS VERY MUCH UNDER PRESSURE AND EVERYBODY ELSE IS AS WELL. THIS VICIOUS CYCLE BETWEEN TREASURIES, JGB'S, AND THE EUROPEAN MARKETS AS WELL. FRANCE, ITALY, SPAIN, ALL COMING UNDER PRESSURE. THOSE NEED TO GO SMOOTHLY. OTHERWISE, BOND INVESTORS WILL BE VERY ANGST HE. BY THE END OF THE WEEK, ALL WE WILL BE HEARING ABOUT -- ANGSTY. BY THE END OF THE WEEK, ALL WE WILL BE HEARING ABOUT IS WHAT BOND VIGILANTES CAN DO. PAUL: HE IS PRETTY RELAXED ABOUT IT. HE IS DOWNPLAYING CONCERNS, SAYING THIS IS NOT IDIOSYNCRATIC . YIELDS RISING GLOBALLY. HOW PERSUASIVE IS THIS ARGUMENT? MARK: I THINK BOND INVESTORS WILL SEE THAT AS BEING A BIT DISINGENUOUS. AFTER ALL, IT WAS TREASURIES THAT KICKED OFF THE PROBLEMS IN THE OTHER MARKETS SO IT WAS RISING TREASURY YIELDS THAT SPREAD ACROSS TO JAPAN, SPREAD ACROSS TO EUROPE, AND NOW FEEDING BACK INTO TREASURIES AS WELL. ALTHOUGH HE MAY BE FEELING RELAXED AND SAY IT IS A GLOBAL PROBLEM WHEN IT WAS TREASURIES THAT STARTED IT IN THE FIRST PLACE SO THEY NEED TO SEE SOME STABILITY IN THE AMERICAN MARKETS TO HELP EVERYBODY ELSE. IN THE VERY SHORT TERM, THERE WERE ISSUES IN FRANCE THAT MAY HAVE BECOME EVEN MORE ANXIOUS FOR TRADERS THAN THEY WERE IN THE TREASURY MARKET, THE POLITICAL PROBLEMS AND FRANCE RELATED TO THEIR BUDGET. WE HAD FRENCH AND GERMAN YIELDS SPREADING OUT. THAT WAS STARTING TO AFFECT ITALY AND SPAIN AS WELL. IT'S A VICIOUS CYCLE AND TREASURIES ARE REALLY CAUGHT UP IN THE MIDDLE OF THE WHOLE ISSUE. IT NEEDS A LOT OF STABILITY IN EUROPE AS WELL FOR EVERYONE TO CALM DOWN AND TAKE A BREATH AND MAYBE THIS IS THE WEEK WHEN IT ALL HAPPENS. PEOPLE ARE VERY EDGY. YOU CAN SEE CRACKS APPEARING IN THE CREDIT MARKETS AS WELL. PEOPLE ARE TALKING A LOT ABOUT LAST WEEK'S PARAMOUNT BOND ISSUE. YOU ALREADY HAD A DELUSION OF ISSUANCE FROM PEOPLE TO FUND THE AI PROGRAMS IN THE BUILD OUT WITH THE DATA CENTERS SO MARKETS ARE VERY EDGY IN THE BOND SPACE AND THAT IS NOT A HEALTHY SITUATION FOR ANYBODY. IT IS AMAZING THE EQUITY MARKETS CAN SEEM SO SERENE WHEN THERE'S ALL THESE THINGS GOING ON IN THE DEBT WORLD. PAUL: LET'S TALK A LITTLE BIT MORE ABOUT THAT SERENITY. DESPITE ALL THE GLOOM, THE NASDAQ HIT A HIGH ON FRIDAY. AT WHAT POINT DO YIELDS NEED TO REACH BEFORE YOU START TO SEE CRACKS APPEAR IN EQUITIES? MARK: THAT REALLY DEPENDS ON THE EARNINGS SITUATION. WE ARE ENTERING THE EARNINGS SEASON AND WE HAVE ALREADY SEEN MICRON TECHNOLOGY HAVE EXTRAORDINARY RESULTS WHICH IS HELPING TO SUPPORT -- THIS IS ONE OF THE REASONS WHY IT NASDAQ IS SO HIGH AND WE ARE EXPECTING VERY GOOD NUMBERS FROM THE OTHER BIG AMERICAN COMPANIES AS THEY START TO REPORT AND OF COURSE FROM KOREA AND TAIWAN AS WELL. SO IF THE EARNINGS CAN CONTINUE TO JUSTIFY EVALUATIONS WHICH ARE IN MARKETS, THEN PEOPLE LOOK PAST WHAT IS HAPPENING IN THE BOND MARKET. IF WE SEE A VERY RAPID SELLOFF IN THE DEBT MARKET, THAT IS A COMPLETELY DIFFERENT STORY AND ALL BETS ARE OFF BUT IF YIELDS ARE GRADUALLY GOING UP AND THE FEDERAL RESERVE IS TAKING AN APPROACH WHERE THEY DON'T RAISE INTEREST RATES AGAIN UNTIL DECEMBER AND THEN MAYBE ONCE MORE LATER NEXT YEAR, THAT IS THE KIND OF THING EQUITY MARKETS CAN ABSORB. THEY CAN HANDLE THE FORWARD PRICING IN THAT RESPECT. WHAT THEY CANNOT HANDLE IS A DISORDERLY BOND MARKET. PROVIDING THE BIG AMERICAN COMPANIES COME THROUGH WITH STRONG EARNINGS, THEN PEOPLE WILL BE REASSURED THAT THE TECH SPACE IS ALMOST IMMUNE TO WHAT IS GOING ON IN THE REST OF THE WORLD. SHERY: MARK CRANFIELD THERE. WE ARE ALSO SEEING FISCAL CREDIBILITY TESTED IN BRAZIL. THE PRESIDENTIAL ELECTION LOOKS LIKELY TO HEAD TOWARD A RUNOFF WITH RIGHT WING SENATOR BOLSONARO'S URGING TO A SURPRISE LEAD OVER LULA DA SILVA IN EARLY ACCOUNTING. WE DO HAVE THE LATEST NUMBERS WHEN IT COMES TO 85% OF THE VOTE COUNTED IN BRAZIL WITH BOLSONARO AT 48.5% AHEAD OF LULA'S 43 POINT 5%. THIS IS QUITE SURPRISING GIVEN SOME POLLS THAT PUT HIM AHEAD. >> INVESTORS CAME INTO THIS THINKING THAT A LEAD OF MORE THAN FOUR PERCENTAGE POINTS FOR LULA WOULD REINFORCE HIS STATUS AS A FRONT RUNNER IN A POTENTIAL ROUTES IN OUR AND THAT IN TURN WOULD WEIGH ON ASSETS. SO FAR, WE ARE SEEING BOLSONARO HAVE A STRONG SHOWING WHICH WOULD BE POSITIVE FOR ASSETS TOMORROW. -- THE CANDIDATE MOST LIKELY TO COMMIT TO FISCAL ADJUSTMENT. IF FLAVIO HOLDS HIS LEAD, WE ARE EXPECTING THEM TO REACT WELL TOMORROW MORNING AS WELL AS EQUITIES AND SWAP RATES SHOULD ALSO FALL. SHERY: BUT YOU SAID IT, RIGHT? IT'S LIKELY WE MIGHT SEE FISCAL CONSOLIDATION FROM BOLSONARO SIDE OF THINGS BUT WE HAVE NOT NECESSARILY SEEN DETAILED ECONOMIC PLANS SO WHAT ARE MARKETS RIGHT NOW FACTORING IN? GIOVANNA: THAT IS ABOUT RIGHT. WE HAVE NOT SEEN EITHER OF THE CANDIDATES PRESENT DETAILS OF THE FISCAL PLAN. SO IF FLAVIO ADVANCES IN A STRONG POSITION, WE EXPECT TO SEE A HONEYMOON PERIOD WITH MARKETS WITH ASSETS RALLYING BUT OF COURSE INVESTORS WILL BE LOOKING FOR ANY DETAILS ON HOW ACTUALLY HE INTENDS TO BRING DEBT LEVELS DOWN. I THINK THAT IS REALLY WHAT IS KEY FOR MARKETS. AT THIS POINT, IT'S PRETTY MUCH A BINARY SCENARIO. A STRONG SHOWING FOR A FLYWHEEL. A FLUFFY A WIN IS POSITIVE FOR ASSETS. BUT AS WE MOVE FORWARD, INVESTORS -- ANY DETAILS ON WHAT HIS PLAN ACTUALLY ENTAILS. SHERY: WE HAVE OF COURSE SEEN PRESIDENT TRUMP'S INFLUENCE IN LATIN AMERICA, ESPECIALLY HIS INTEREST IN BRAZIL AND HIS RELATIONSHIP WITH THE BOLSONARO FAMILY. WHAT CAN WE EXPECT FROM THE ELECTIONS? GIOVANNA: WELL, IF FLAVIO BOLSONARO DOES BECOME THE PRESIDENT, THEN WE CAN EXPECT WASHINGTON TO HAVE CLOSER TIES TO BRAZIL. AND WE HAVE SEEN A SHIFT TO THE RIGHT IN LATIN AMERICA. WE SAW THAT IN COLUMBIA, PERU, AND ARGENTINA. JAIR BOLSONARO COME OUT -- JAIR BOLSONARO HAS BEEN SEEN AS AN ALLY TO TRUMP. WE SHOULD EXPECT CLOSER TIES TO WASHINGTON. HOWEVER, LULA, ON THE OTHER HAND, HAS BEEN CLOSER TO CHINA. HE HAS DEFENDED SOVEREIGNTY. A LOT OF HIS CAMPAIGN HAS BEEN AROUND THE TOPIC OF SOVEREIGNTY AND TARIFFS. SO IT'S KIND OF A BINARY SCENARIO IN THAT SENSE, TOO. BUT WE STILL HAVE A LONG WAY UNTIL THE SECOND ROUND TO BE ABLE TO MAKE A CALL ON THAT. SHERY: AND WE HAVE SEEN LEADING UP TO THIS ELECTION DOMESTIC ISSUES PLAGUING BRAZIL INCLUDING THAT MAJOR BANK FRAUD CASE THAT NOW HAS BEEN TIED TO THE SUPREME COURT AS WELL. HOW HAS THIS INFLUENCED SOME OF THE BRAZILIAN PEOPLE'S SENTIMENT TOWARDS THE VOTE? GIOVANNA: YES. THE SUPREME COURT CRISIS HAS PLAYED A BIG PART. WE SAW A LOT OF SUPPORT FOR FLAVIO INCREASE BOTH IN TERMS OF POLES AND THE PREDICTION MARKETS BECAUSE A LOT OF BRAZILIANS ASSOCIATE THAT SITUATION -- THAT CRISIS TO LULA. SOME SAW THE CRISIS AS BENEFICIAL TO FLAVIO IN THE POLLS. BUT OF COURSE IT'S GOING TO BE A BRUTAL CAMPAIGN UNTIL THE LAST MINUTE. EVERYONE WAS EXPECTING THE RACE TO BE DEADLOCKED SO WE STILL HAVE QUITE SOME ROAD TO GET THERE. SHERY: BLOOMBERG EMERGING MARKETS REPORTER GIOVANNA THERE. COMING UP, INDONESIA'S NEW FINANCE MINISTER TELLS US EXCLUSIVELY HOW SOVEREIGN WEALTH FUND DANANTARA FITS INTO THE GROWTH STRATEGY AND THE COMMITMENT TO FISCAL RESPONSE ABILITY. A RARE NOTE OF CAUTION ON AI SAFETY. WE EXAMINE HOW THOSE CONCERNS SQUARE WAS SOFTBANK'S BIG INVESTMENT IN OPENAI. YOU ARE WATCHING BLOOMBERG. >> IT'S A DOVISH AND THE MARKET IS REACTING THAT WAY. >> WHEN I TAKE A STEP BACK AND PUT THE BIGGER PICTURE TOGETHER ON THE LABOR MARKET, NOTHING HAS CHANGED. >> THAT'S A PRETTY SOLID REPORT. THE UNEMPLOYMENT RATE PICKED UP BUT SOME OF THAT IS RISING PARTICIPATION. >> WE ARE STILL REALLY JUST ON ONE MORE BAD INFLATION NUMBER AWAY FROM THEM BLOWING THE TRIGGER ON A HIKE. >> THE OTHER BIG ISSUE IS JUST THE CALENDAR SET UP AND THE OPTICS OF HIKING RIGHT IN FRONT OF THE MIDTERMS. I THINK THEY WANT TO PROBABLY TRY TO AVOID THAT. >> WE HAVE AN ELECTION BUT THE FED IS INDEPENDENT AND IT'S MAKING DECISIONS BASED ON THE DATA. ELECTIONS HAVE NOTHING TO DO WITH IT. PAUL: SOME OF OUR GUESTS REACTING TO THE LATEST U.S. PAYROLLS REPORT WHICH SANCHEZ 29,000 JOBS ADDED IN SEPTEMBER AND THAT WAS WELL BELOW ESTIMATES. JOINING US NOW IS THE CHIEF AIPAC ECONOMIST AT VANGUARD. THANK YOU SO MUCH FOR JOINING US TODAY. IN THE WAKE OF THAT JOBS REPORT, WE HAVE SEEN MARKETS REPRICING THE CHANCES FROM OCTOBER RATE HIKE. THE CHANCES NOW DIMINISHING. IS THAT YOUR VIEW AND ARE WE STILL ON TRACK FOR AN INCREASE IN DECEMBER? >> THANKS FOR HAVING ME TODAY. WELL, I MEAN, I THINK WHEN YOU LOOK AT THAT, WE HAVE BEEN EXPECTING IN THE NEXT INTEREST RATE HIKE IN DECEMBER. I DO THINK THAT THE WEAKER LABOR MARKET REPORT ACTUALLY REDUCED THE URGENCY OF THE HIKE IN THE NEAR TERM BUT IT DOESN'T REALLY REDUCE THE NEED TO HIKE INTEREST RATES, RIGHT? IF YOU ARE LOOKING ACROSS THE WORLD, THE COMMON THEME IS THAT GROWTH IS MUCH MORE RESILIENT THAN EXPECTED AND THEN THERE IS RENEWED INFLATION RISK SO IT DOES SHOW THAT WE SHOULD BE LIVING IN A WORLD WITH INTERESTS THAT ARE HIGHER RATHER THAN LOWER. PAUL: THERE WAS ANOTHER KEY PIECE OF DATA BEFORE THE DECEMBER MEETING, NOT THE LEAST OF WHICH IS USCP I NUMBERS NEXT WEEK SO WHEN YOU LOOK AHEAD TO THAT, I MEAN, HOW MUCH DO YOU JUDGE THE CPI AND INFLATION GLOBALLY? IT'S DUE TO ELEVATED ENERGY COSTS, RISING FERTILIZER COSTS, ALL INSPIRED BY THE U.S.-IRAN WAR. HOW MUCH IS DUE TO THE AI BUILDOUT? IF THE WAR WAS TO END SOON, WITH THAT ALTAR YOUR INFLATION PREDICTIONS? QIAN: WE ARE EXPECTING INFLATION TO REACH AROUND 3% OF CORE PCE BY THE END OF THIS YEAR. AND THEN WE ARE -- ACTUALLY DECLINED BY THE END OF 2027. WHEN YOU LOOK AT THE INFLATION, RIGHT, NOW OBVIOUSLY, LARGE PART ESPECIALLY -- IS DUE TO THE HIGHER ENERGY PRICES. AND THEN THERE'S, AT THIS MOMENT, I WOULD SAY A LIMIT TO THE PASS-THROUGH OF THE CORE INFLATION. MAYBE YOU SEE SOME HIGHER TRANSPORTATION COSTS, HIGHER FOOD COSTS. THE PASS-THROUGH SO FAR HAS BEEN LIMITED. ON THE OTHER HAND, AI CAPEX IS PUSHING THE GOODS PRICES UP. AI IS REALLY A DEMAND SHOCK IN THE NEAR TERM AND POTENTIALLY COULD BE A SUPPLY SHOCK IN THE LONG TERM BUT AT THIS MOMENT, WE ARE DEFINITELY SEEING BOTH THE HIGHER ENERGY PRICES AND ALSO AI CAPEX ARE ACTUALLY KEEPING INFLATION PRETTY AGGRAVATED AT THIS MOMENT. PAUL: ALSO CONSPIRING TO KEEP YIELDS ELEVATED AS WELL. BUT WE HEARD FROM THE U.S. TREASURY SECRETARY, SCOTT BESSENT, EARLIER. HE IS DOWNPLAYING RISING YIELDS. HE SAYS IT'S NOT IDIOSYNCRATIC. IT'S UP GLOBALLY. ARE YOU SIMILARLY RELAXED ABOUT WHAT IS HAPPENING IN THE YIELD ENVIRONMENT OR DO YOU SEE THEM MOVING HIGHER? QIAN: WELL, I MEAN, WHEN YOU LOOK AT THE YIELD HIGHER ACROSS THE WORLD, I THINK FUNDAMENTALLY, THERE IS ACTUALLY -- WE FLATTENED OUR GLOBAL COMPETITION FOR CAPITAL. THERE'S LESS SAVING. THAT MEANS LESS SUPPLY FOR CAPITAL. THAT KIND OF COMPETITION IS ACROSS THE GOVERNMENT COME ACROSS THE WORLD. YOU DO SEE THAT THERE IS A FISCAL SUSTAINABILITY CONCERN IN THE U.S., EUROPE, AND MANY DEVELOPING COUNTRIES BUT THERE'S ALSO COMPETITION FOR CAPITAL FROM THE PRIVATE SECTOR, RIGHT? BECAUSE OF THE AI INVESTMENT SO TO THAT EXTENT, I THINK THIS KIND OF PRIOR YIELD REFLECTS ITS HIGHER FOR LONGER NEUTRAL RATE. WE DO SEE A NEUTRAL RATE THAT ACTUALLY IS RISING TOWARDS 3.5% IN THE U.S. AND POTENTIALLY, YOU KNOW, EVEN HIGHER. SO WHEN YOU SEE THAT KIND OF HIGHER NEUTRAL RATE, PLUS TERM PREMIUM IS ALSO RISING BECAUSE OF THE CONCERN AND ALSO UNCERTAINTY ABOUT FISCAL UNCERTAINTY AND SUSTAINABILITY AND TO A CERTAIN EXTENT, SOME UNCERTAINTY ABOUT MONETARY POLICY, RIGHT, THEN I THINK WE SHOULD ACTUALLY EXPECT THIS KIND OF YIELD TO STAY ELEVATED AND HIGHER FOR LONGER, RIGHT, IN THE NEAR TERM AND ALSO IN THE MEDIUM TERM. PAUL: HIGHER FOR LONGER RATES AS WELL. ANOTHER BIG CENTRAL BANK MEETING THIS WEEK. THIS -- THE RESERVE BANK OF INDIA IS A WHITE EXPECTATION THAT 25 BASIS POINTS INCREASE IS A LOCK. IS THERE ANY REASON TO THINK THAT ISN'T? QIAN: I THINK WHEN WE LOOK AT OUR, RPI HAS BEEN HOLDING BACK FOR A WHILE. AT THIS MOMENT -- R BI HAS BEEN HOLDING BACK FOR A WHILE. ALSO INFLATION IS LIKELY TO BREACH 5% IN SEPTEMBER AND EVEN MOVING TOWARDS 6%, RIGHT, IN THE FOURTH QUARTER OF THIS YEAR. I THINK THERE IS A LOT OF REASON FOR, YOU KNOW, RPI TO ACTUALLY HIKE. TO A CERTAIN EXTENT, THEY WOULD EMPHASIZE THIS IS AN INSURANCE HIKE TO PREVENT THAT SECOND ROUND INFLATION EFFECT INSTEAD OF THE START OF THE AGGRESSIVE TIGHTENING CYCLE. WE DO EXPECT THEM TO HIKE THIS WEEK AND POTENTIALLY AGAIN IN DECEMBER. AND ALSO I THINK THE TIGHTER GLOBAL FINANCIAL CONDITION AND THE PRESSURE WILL ALSO ADD ADDITIONAL PUSH FOR RBI TO HIKE INTEREST RATE. PAUL: A LITTLE PRESSURE COMING OFF OF THE RUPEE AFTER THE JOBS REPORT ON FRIDAY OUT OF THE U.S. AND WE DID SEE THE U.S. DOLLAR SOFTEN AND IT HAD A PRETTY BAD DAY RELATIVELY SPEAKING ON FRIDAY. IT'S NOT REALLY TRANSLATED PARTICULARLY EVENLY ACROSS THE FOREX SPACE. IF YOU TAKE A LOOK AT THE YEN, STILL VERY WEAK. WHAT IS YOUR OUTLOOK HERE? QIAN: TO A CERTAIN EXTENT, YOU KNOW, I THINK THE BOJ IS QUITE AN EXCEPTION. YES, WE DO EXPECT THE BOJ TO HIKE BUT FOR MOST OF THE GLOBAL CENTRAL BANKS, WE ARE TALKING ABOUT RECALIBRATION HIKES OR INSURANCE HIKES BUT I THINK FOR THE BOJ, THE THING IS THAT THEY ARE REALLY LAGGING BEHIND THE CURVE FOR QUITE A WHILE, RIGHT? SO AT THIS MOMENT, WE TALK ABOUT THE OIL SHOCK, HIGHER ENERGY PRICES, IT WAS REALLY JUST ACTUALLY JUST INCREASING THE PRESSURE FOR THE BOJ TO ACT IN A TIMELY MANNER AND A FASTER PACE. THE BOJ, LOOK AT THE JAPAN -- INFLATION HAS BEEN MUCH MORE SUSTAINABLE AT 2% AND THE AUGUST TOKYO CPI REPORT WAS SHOWING UNDERLYING INFLATION ALMOST APPROACHING 3%. TO THAT EXTENT, WE DEFINITELY FEEL THE BOJ NEEDS TO HIKE INTEREST RATES. YOU KNOW, WE DO EXPECT ONE IN DECEMBER AND THEN TWO MORE IN THE FIRST HALF OF NEXT YEAR. AGAIN, DEPRECIATION IN PRESSURE THAT IS SOMETHING THEY NEED TO CONSIDER. PAUL: CHIEF ECONOMIST VANGUARD, THANK YOU FOR YOUR ANALYSIS TODAY. WE HAVE MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. >> WE DECIDED TO RELEASE STRATEGIC STOCKS OF DIESEL AND CRUDE OIL UNDER THE COORDINATION OF THE INTERNATIONAL ENERGY AGENCY. THEY WILL MEET IN THE COMING HOURS AND DAYS TO ORGANIZE THIS. SO AS TO BE ABLE TO RELEASE UP TO 100 MILLION BARRELS OF DIESEL AND CRUDE OIL OVER THE NEXT FOUR MONTHS. SHERY: WE OF COURSE HAD SEEN THE U.S. TRYING TO PRESSURE EUROPE WHEN IT COMES TO RELEASING THOSE DIESEL STOCKS, ESPECIALLY WITH THE POTENTIAL OF THE U.S. -- THAT THE U.S. COULD BAN EXPORTS OF DIESEL THEMSELVES. TAKE A LOOK AT HOW DIESEL HAS BEEN TRADING IN THE EUROPEAN DIESEL SESSION. WE ACTUALLY SAW THE PRICE RISE AND RALLY MORE THAN 8% AT ONE POINT AFTER THE ANNOUNCEMENT OF THAT G7 RELEASE. AND A LITTLE BIT OF A MIXED PICTURE WHEN IT COMES TO THE OIL SIDE OF THINGS. WE HAVE A LITTLE BIT OF PRESSURE IN THE PREVIOUS SESSION. WE CONTINUE TO SEE THE SAUDI FLOWS FROM THE EAST-WEST PIPELINE. WE ARE TALKING ABOUT THAT RUNNING AT AROUND 80% CAPACITY. THAT HAS LED TO A LITTLE BIT OF DOWNSIDE IN PRICES ALTHOUGH THE FACT THAT WE ARE SEEING SOME RELIEF DOESN'T NECESSARILY MEAN THAT SUPPLIES ARE COMING BACK IN FULL FORCE SO YOU ARE SEEING BRAND, FOR EXAMPLE, IN THE ENERGY -- EARLY ASIAN SESSION SEEING GAINS. ALSO THAT ESCALATION WE ARE SEEING IN THE MIDDLE EAST. TAKE A LOOK AT THE HEADLINES WE ARE FOLLOWING BECAUSE YEMEN'S SAUDI BACKED MILITARY HAS LAUNCHED A FULL-SCALE OPERATION TO RECAPTURE ALL AREAS UNDER THE CONTROL OF IRAN BACKED HOUTHI FORCES. FIGHTING HAS ESCALATED SINCE EARLY LAST MONTH. THE HOUTHIS CAPTURED STRATEGIC AREAS ON THE WEST COAST AND THAT BOLSTERED THE GROUPS CONTROL OVER THE CHOKEPOINT THAT SAUDI ARABIA HAD BEEN USING TO EXPORT OIL AND BYPASS THE STRAIT OF HORMUZ. IRAQ HAS ARRANGED A SUPERTANKER TO MOVE TO MILLION BARRELS OF CRUDE OIL THE ON THE STRAIT OF HORMUZ. THE TRANSIT MARKS A SHIFT IN HOW IRAN'S MARKETS -- IRAN MARKETS ITS CRUDE, REACHING REFINERS RELUCTANT TO GO THROUGH THE WATERWAY. THEY ARE SEEKING FUNDING FOR MORE TANKERS AND ALTERNATIVE EXPORT ROUTES THROUGH TURKEY AND SYRIA. THE PENTAGON HAS REMOVED U.S. BOMBERS FROM THE U.K. BASE AT THE CENTER OF LAST WEEK'S EXPECTED ATTEMPTED TERRORIST ATTACK. AN OFFICIAL SAYS ALL AMERICAN BOMBERS DEPLOYED AT RAF HAVE RETURNED TO THE U.S. THE NEW YORK TIMES REPORTS THAT THE WITHDRAWAL WAS URGENT AFTER NEW THREATS EMERGED OF A PLOT LINKED TO IRAN. WE WILL HAVE PLENTY MORE, COMING UP ON THE ASIA TRADE. MORE DETAILS ABOUT THE OIL MARKETS AND THE ESCALATION IN THE MIDDLE EAST, NOT TO MENTION OF COURSE THE MARKET OPENS ACROSS ASIA IN ABOUT HALF AN HOUR. THIS IS BLOOMBERG. SHERY: PAUL, WE CAN TO FOLLOW -- WE CONTINUE TO FOLLOW THE BRAZILIAN ELECTIONS. PRESIDENT ACTUALLY TRAILING AT AROUND 44% OF THE VOTE. THAT IS A LITTLE BIT OF A SURPRISE BECAUSE COMING INTO THE ELECTION, SOME POLLS PUT PRESIDENT LITTLE AHEAD OF BOLSONARO. FLAVIO OF COURSE IS THE SON OF FORMER PRESIDENT JAIR BOLSONARO. THE RISK RIGHT NOW, FISCAL CREDIBILITY FOR THIS COUNTRY. THE MARKETS ARE STILL PREFERRED FLYWHEEL BOLSONARO. INVEST -- FLAVIO BOLSONARO. INVESTORS ASSOCIATING HIM WITH STATE ASSET SALES AND PERHAPS A STRONGER FISCAL ADJUSTMENTS. BLOOMBERG ECONOMICS, FOR EXAMPLE, SAYS BOLSONARO WINNING COULD ACTUALLY LOWER 10 YEAR YIELDS BY 70 BASIS POINTS AND STRENGTH IN THE BRAZILIAN REAL ALMOST 3%. WE WILL CONTINUE TO FOLLOW THE STORY BECAUSE INVESTORS ARE THINKING, OK, MARKETS PREFER BOLSONARO'S PRESIDENCY. BUT AT THE SAME TIME, THEY ARE NOT SEEING A LOT OF ECONOMIC DETAILS WHEN IT COMES TO HIS PLANS ON THE FISCAL SIDE OF THINGS. PAUL: LET'S TAKE A LOOK AT HOW WE ARE SHAPING UP FOR TRADE HERE IN ASIA. I MEAN, FUTURES LOOKING PRETTY MUTED AT THE MOMENT, SHERY. WE ARE SEEING SOME MODEST UPSIDE FOR NIKKEI FUTURES. YOU WERE TALKING A MOMENT AGO ABOUT HOW YEMEN PLANS TO CRACK DOWN ON THE HOUTHI REBELS IN THAT COUNTRY. THIS COULD PUT FURTHER PRESSURE ON THE OIL PRICE AND WE ARE IT ELEVATED. OPEC-PLUS HAS AGREED TO KEEP QUOTAS UNCHANGED BUT G7 PARTNERS ARE PLANNING TO RELEASE 100 MILLION BARRELS OF IMMERSION -- EMERGENCY DIESEL. ELEVATED DIESEL PRICES ARE REALLY STARTING TO BITE IN ECONOMIES AROUND THE WORLD, NOT THE LEAST OF WHICH THE U.S. THE NIKKEI FUTURES STARTED OFF THE DAY FLAT, TICKING TO THE UPSIDE BY 1.7 PERCENT. INDONESIA'S NEW FINANCE MINISTER SAYS THE COUNTRY IS COUNTING ON SOVEREIGN WEALTH FUND DANANTARA TO HELP DRIVE ITS GROWTH FOR AMBITIONS. SPEAKING EXCLUSIVELY TO BLOOMBERG, HOW THE FUND IS IMPROVING STATE OWNED ENTERPRISES. >> RIGHT NOW, WE ARE COMMITTED TO THE 3% FISCAL RULE AND MAXIMUM 60% OF THE DEPTH TO GDP RATIO AND THAT IS SIGNALING THE CONFIDENCE OF THE MARKET THAT WE CAN CONTINUE. >> YOU TALK ABOUT HOW THE 3% IS A GUARD RAIL AND YOU'RE COMMITTED TO 3% YET MORE AND MORE OF YOUR PROJECTS ARE BEING FUNDED OFF BUDGET BY THE LIKES OF DANANTARA AND STATE OWNED ENTERPRISES. HOW DO YOU VIEW THE RISK TO YOUR FISCAL STANDING? SUAHASIL: DANANTARA IS A SOVEREIGN ENTITY. IT IS SOVEREIGN. DANANTARA HAS BEEN TASKED BY OUR PRESIDENT WHO IS VERY KEEN TO SEE THAT DANANTARA HANDLES ALL OF OUR STATE OWNED ENTERPRISE. THEY ARE SO MUCH EFFICIENCY THAT WE CAN GET FROM DANANTARA. AND WE BELIEVE THAT WITH ALL THOSE EFFORTS THAT DANANTARA HAS BEEN DOING, ALMOST TWO YEARS THAT THEY COME INTO EFFECT AND THAT IN THE LAST YEAR OR SO, IT'S -- THEY START TO CLEAN UP THEIR STATE OWNED ENTERPRISES. THEY CLEAN UP THE BOOK. THEY ARE MAKING SURE THEY CAN OPERATE IN THE MORE EFFICIENT WAY. THEY HAVE ROOMS. THEY HAVE ROOM FOR IMPROVEMENT, ROOM FOR INVESTMENT. THIS IS SOMETHING THAT THEY HAD TO WORK. AND RIGHT NOW, WE ARE IN VERY CLOSE COMMUNICATION WITH DANANTARA. ME, MYSELF, AS THE MINISTER OF FINANCE, WITH THE CEO OF DANANTARA, THE COO OF DANANTARA. WE START TALKING FROM DAY ONE TO UNDERSTAND EACH OTHER'S POSITION , UNDERSTAND EACH OTHER'S SITUATION. AND THEN WE WORK TOGETHER FOR THE BETTERMENT OF THIS COUNTRY. ANOTHER PERSPECTIVE HERE. IMAGINE THAT THE STATE OF INDONESIA, AND THE HEAD OF STATE, THE PRESIDENT, HAS TWO ARMS. ONE ARM IS THE STATE BUDGET. THE OTHER ARM IS THE DANANTARA. THE DANANTARA IS THE CONSOLIDATION OF THE STATE ASSETS. THEY WORK FOR THE IMPROVEMENT OF THIS COUNTRY. SO BIG VISION, BIG PERSPECTIVE, BIG ITS CAN BE -- IDEAS CAN BE CHANNELED THROUGH THE WORK OF THE STATE BUDGET AND ALSO CAN BE CHALLENGED THROUGH THE WORK OF THE DANANTARA. OF COURSE, EACH ONE OF US MUST UNDERSTAND THE CORRIDOR ON HOW WE CAN TALK. HASLINDA: I'M SURE YOU HAVE MADE TARGETS FOR YOURSELF. WHAT CAN BE EXPECTED BY THE INTERNATIONAL COMMITTEE AT THE END OF YOUR FIRST YEAR AND AT THE END OF YOUR SECOND YEAR? SUAHASIL: I INTEND TO MANAGE THE STATE BUDGET. AND AS CREDIBLE AS POSSIBLE. MY TAGLINE IS ALWAYS [SPEAKING INDONESIAN]. LET ME TRANSLATE THAT BECAUSE IT'S INTERNATIONAL. THE BUDGET GROWS THE ECONOMY. THE BUDGET THAT PROTECTS THE PEOPLE. THE BUDGET THAT IS CREDIBLE FOR OUR SUSTAINABILITY. IN ORDER TO DO THAT, BECAUSE THAT IS AN INTENTION, I WILL WORK VERY CLOSE WITH EVERY INSTITUTION IN INDONESIA. THE TWO ARMS, OBVIOUSLY, BY NATURE, WE ARE WORKING TOGETHER WITH OUR FINANCIAL SECTOR STABILITY FORUM. THAT IS ALSO VERY IMPORTANT. AND THEN WE ARE MANAGING INDONESIA. OF COURSE, NOT ONLY FROM THE CENTRAL GOVERNMENT BUT ALSO TALKING TO A LOT OF LOCAL GOVERNMENTS. HASLINDA: INVESTORS CAN EXPECT POLICY CONTINUITY FROM YOUR PREDECESSOR? SUAHASIL: FROM TIME TO TIME, WE ALWAYS RECONSIDER OUR POSITION AND THAT RECONSIDERATION MIGHT END UP IN THE NEW POLICY BUT INDONESIA HAS ALREADY SHOWN IN THE 20 YEARS HOW FISCAL CREDIBILITY AND HOW FISCAL SUSTAINABILITY HAS BEEN MAINTAINED. OUR INDONESIAN BUSINESS SECTOR, GLOBAL COMMUNITIES CAN EXPECT THAT WE WILL CONTINUE THAT KIND OF CREDIBILITY. PAUL: THAT IS THE INDONESIAN FINANCE MINISTER SPEAKING EXCLUSIVELY WITH INSIGHT ANCHOR BUCKLAND ON IN. LET'S GET TO SOME OTHER GLOBAL HEADLINES THAT WE ARE FOLLOWING. PAKISTAN'S FOREIGN MINISTRY IS CALLING FOR AN INVESTIGATION AFTER ACCUSING INDIA'S BOARD SECURITY FORCE OF KILLING TWO UNARMED CIVILIANS. ISLAMABAD SAYS THE TWO PAKISTANI CIVILIANS WERE KILLED ON FRIDAY ALONG THE BORDER BETWEEN THE TWO COUNTRIES. INDIA HAS REJECTED THE ALLEGATIONS LINKING THE INCIDENT TO DRUG TRAFFICKERS OPERATING FROM PAKISTAN. TAIWAN'S ENVOY TO THE U.S. SAYS THERE HAS BEEN NO CHANGE IN WASHINGTON'S POLICY TOWARDS THE ISLAND. PRESIDENT TRUMP'S RECENT SUMMIT WITH XI JINPING HAD SPARKED UNCERTAINTY ABOUT THE U.S.'S COMMITMENT TO TAIWAN, RAISING THE STAKES FOR A PLANNED $14 BILLION ARMS SALE. >> WE ARE GETTING WHAT WE HAVE. OBVIOUSLY, THE SPEED COULD BE A LITTLE FASTER BUT WE HOPE THAT THE UNITED STATES UNDERSTANDS VERY WELL THE THREAT THAT WE ARE UNDER AND I AM VERY SURE THAT WE WILL BE -- THEY WILL BE PROVIDING US WITH THE NECESSARY EQUIPMENT. PAUL: MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. ♪ SHERY: TAKE A LOOK AT HOW WE ARE SETTING UP FOR THE MARKET OPENS IN 20 MINUTES FROM NOW. WE HAVE CHINA AND SOUTH KOREA ON HOLIDAYS BUT WHEN IT COMES TO THE JAPANESE MARKET, WE ARE SEEING THE YEN FIRM A LITTLE BIT AGAINST THE U.S. DOWN TOWARDS THE 157 LEVEL. WE HAD HOTTER THAN EXPECTED TOKYO INFLATION LAST WEEK AND ALSO COUPLE THAT WITH WEAKER U.S. PAYROLLS THAT WE GOT LAST WEEK AS WELL AND COMMENTS COMING FROM THE PIE MINISTER THAT PRESIDENT TRUMP DIRECTLY RAISED A WEEK YEN -- FROM THE PRIME MINISTER THAT PRESIDENT TRUMP DIRECTLY RAISED A WEAK YEN. NIKKEI FUTURES POINTING TO SOME UPSIDE, 1.7% AT THE MOMENT. KEEP AN EYE ON JGB'S. THE TWO YEAR YIELD CLOSE TO THE 2% LEVEL. THE 10 YEAR YIELD TRADING AT THE 3% LEVEL. SORT OF THE HIGHEST LEVEL SINCE THE MID-1990'S BUT TODAY, WHAT WE WILL BE WATCHING, THE PRIME MINISTER SET TO DELIVER A POLICY SPEECH AS PARLIAMENT RECONVENES, OUTLINING HER GOVERNMENT'S ECONOMIC AGENDA. THAT INCLUDES A CONTENTIOUS PROPOSAL TO TEMPORARILY CUT THE CONSUMPTION TAX ON FOOD. THE SENIOR EDITOR FOR NORTH EAST ASIA ECONOMICS AND GOVERNMENT, BRIAN FOWLER, JOINS ME WITH MORE ON THIS. SHE WILL PROBABLY WANT TO SEE -- ONE BIG ONE IS THE CONSUMPTION TAX CUT. BRIAN: I WOULD EXPECT SHE'S GOING TO DELIVER A PEP TALK TO JAPAN. SHE MAY SET HER COMMENTS AGAINST THE BACKDROP OF HER GRAND VISION TO BOOST THE ECONOMY. I MEAN, TOUCHING ON THE YEN, SHE HAD BEEN ASKED ABOUT THE WEEKEND RECENTLY AND SHE SAID BASICALLY THAT HER HOPE IS THAT A STRONGER ECONOMY WILL SOLVE THE YEN PROBLEM BY REVIVING FAITH IN THE YEN. SO THAT BRINGS US TO THE SALES TAX CUT AND I THINK COST OF LIVING IS A HUGE ISSUE THAT SHE WANTS TO ADDRESS SO SHE WILL TALK ABOUT THE SALES TAX CUT. BIG QUESTION IS HOW IT IS GOING TO BE FUNDED AND TO DATE, SHE SAID SHE'S GOING TO BE LOOKING FOR COST SAVINGS ELSEWHERE IN THE BUDGET. TO HELP TO BOOST -- TO PAY FOR THAT. I DON'T KNOW THAT SHE WILL BE VERY SPECIFIC THIS TIME. SHE WILL PROBABLY SAY SOMETHING ABOUT WANTING TO MAINTAIN A PROACTIVE AND YET RESPONSIBLE FISCAL POLICY AND PRETTY MUCH LEAVE IT AT THAT. SHERY: SHE KEPT SAYING NO DEFICIT FINANCING BONDS GIVEN THE PRESSURE WE HAVE SEEN ON JGB'S. INTERESTING TO SEE THAT RHETORIC COMING FROM THIS ADMINISTRATION ABOUT HOW THE PRIME MINISTER IS NOT A REFLATION NEST. OF COURSE, WE TALKED TO THE FINANCE MINISTER AS WELL. BUT A LOT OF THE MARKET PRICING RIGHT NOW IS STILL FOR THOSE FISCAL CONCERNS. BRIAN: I THINK THE MARKET DOESN'T ENTIRELY BELIEVE THIS IDEA THAT SHE'S NOT A REFLATION IST. EVERYTHING WE HAVE SEEN FROM HER POINTS TO TRYING TO REFLATE THE ECONOMY, MUCH LIKE HER PROTEGE -- HER PREDECESSOR, ABE, DID. SHE ALSO WANTS TO WALK A FINE LINE HERE BECAUSE SHE, YOU KNOW, NEEDS THE YEN TO BE A LITTLE BIT STRONGER. TRUMP IN HIS DISCUSSIONS COMPLAINED ABOUT THE WEEK YEN -- WEAK YEN AS DRIVING THE U.S. TRADE DEFICIT. IT'S IS PUTTING UPWARD PRESSURE ON PRICES AND THAT IS A BIG PROBLEM FOR TAKAICHI SO I THINK SHE WILL TRY TO CONTINUE ALONG THAT LINE. DON'T WORRY, I AM NOT A REFLATIONIST. I JUST WANT TO BE STRONG AND RESPONSIBLE. SHERY: BRIAN FOWLER, GOOD TO HAVE YOU WITH US. BLOOMBERG'S SENIOR EDITOR FOR NORTH EAST ASIA ECONOMICS AND GOVERNMENT. AS WE ARE FOLLOWING THE JAPANESE MARKETS, A LOOK AHEAD TO SUMMER EARNINGS AS WELL BECAUSE THE EARNINGS SEASON IS GETTING STARTED HERE IN JAPAN. WE DO HAVE RETAIL GIANTS FAST RETAILING AND SEVEN AND I KICKING OFF THIS SEASON LATER THIS WEEK. THE UNIQLO OWNER'S ANNUAL PROFIT IS EXPECTED TO SURGE WITH A FOCUS ON WHETHER STRONG OVERSEAS GROWTH CAN OFFSET SOFTER SALES IN JAPAN. 7-ELEVEN'S PARENT IS ALSO EXPECTED TO RETURN TO QUARTERLY SALES GROWTH BUT CUSTOMER TRAFFIC REMAINS A KEY CHALLENGE AS TAILWINDS FROM HIGHER FUEL SELLING PRICES BEGIN TO FADE. LET'S BRING IN OUR NEXT GUEST WHO SAYS INFLATION REMAINS THE KEY FACTOR SHAPING JAPAN'S RETAIL AND CONSUMER SECTOR. JOINING US NOW IS ROY LARK, CO-FOUNDER AT CONSULTANCY JAPAN CONSUMING. WE TAKE THIS FIRST OF ALL FROM THE CONSUMER POINT OF VIEW. HOW ARE YOU SEEING THEIR ATTITUDES AND BEHAVIOR CHANGING NOW BECAUSE OF RISING PRICES? >> -- ROY: AS YOU SAY, PRICES ARE CURRENTLY TOP OF MIND FOR MOST HOUSEHOLDS SO THEY ARE CHANGING THEIR SHOPPING BEHAVIOR ACCORDINGLY. AND IT USED TO BE THAT THEY WOULD VISIT SEVERAL SUPERMARKETS WITHIN A WEEK. NOW, PEOPLE ARE CONSOLIDATING THE PURCHASES DOWN TO ONE RELIABLE SUPERMARKET THAT CAN OFFER THEM A GOOD PRICE QUALITY RATIO AND THEN TOPPING UP AT MANY SUPERMARKETS AND THEN POSSIBLY AT CONVENIENCE STORES. SHERY: I MEAN, LET'S TALK A LITTLE BIT ABOUT THE RETAIL SIDE OF THINGS. HE MENTIONED MY BASKET AND I SHOT FROM THERE VERY OFTEN THESE DAYS. I WAS ALSO BUMMED OUT TO SEE -- HAD TO CLOSE THEIR DOORS AFTER 58 YEARS. SUCH AN ICONIC LANDMARK OF TOKYO. WHAT ARE YOU SEEING IN TERMS OF HOW THESE RETAILERS ARE RESPONDING TO THE TIMES? ROY: SO WE ARE GOING TO SEE A LOT MORE CONSOLIDATION. CONVENIENCE STORES, THERE'S ONLY THREE PLAYERS. ELECTRONICS IS VERY HIGHLY CONSOLIDATED NOW. BUT WE ARE GOING TO SEE VERY RAPID CONSOLIDATION IN DRUGSTORES AND REALLY FOR THE FIRST TIME EVER, WE ARE GOING TO SEE A LOT OF ACQUISITION ACTIVITY IN SUPERMARKETS. -- IT'S A SMALL SUPERMARKET. TRYING TO BE ACQUIRED BY LIFE. WE WILL SEE A LOT MORE OF THAT BECAUSE SCALE, THE ABILITY TO OFFER LARGER AND BETTER RANGES OF PRIVATE LABEL TO GUARANTEE LOWER PRICES AND TO MAKE SURE THAT NO THE CONSUMERS ARE CHOOSING THE SINGLE SHOPPING LOCATION RATHER THAN MULTIPLE ONES. IT'S YOUR STORE THAT THEY CHOOSE. THE OTHER THING I WOULD LIKE TO MENTION IS THAT WE ARE ALSO SEEING NEW PERFORMANCE. I THINK PPIS, ROBINHOOD SUPERMARKET IS REALLY INTERESTING. IT'S INTERESTING. WE ARE SEEING CHANGES IN THE WAY CONVENIENCE STORES ARE ADJUSTING THEIR FORMATS. AGAIN TO TRY AND MAKE SURE THAT PEOPLE CHOOSE THEIR STORE RATHER THAN SOMEBODY ELSE'S. SHERY: WHEN IT COMES TO THOSE NEW TRENDS, HOW MUCH HAS EVERYTHING CHANGED BECAUSE OF E-COMMERCE AS WELL? I MEAN, THIS ECONOMY TO ME IS FASCINATING BECAUSE YOU SEE LOWER CREDIT CARD USAGE, MORE CASH. YOU ALSO SEE LESS DIGITIZATION THAN A LOT OF OTHER ASIAN ECONOMIES BUT AT THE SAME TIME, E-COMMERCE SEEMS TO BE REALLY LEAVING ITS MARK. ROY: I THINK THE IDEA THAT JAPAN IS BEHIND OTHER ASIAN MARKETS IN TERMS OF E-COMMERCE, BEHIND WESTERN MARKETS, IS SOMETHING OF A MISNOMER. STORES ARE SO EASILY ACCESSIBLE IN JAPAN AND SHOPPING IS STILL A MAJOR LEISURE ACTIVITY EVEN THOUGH PEOPLE MIGHT NOT ACTUALLY BE SPENDING. MOST RETAILERS HAVE GONE FOR THE OMNI MODEL FROM THE GET-GO GO. AMAZON, RAKUTEN, VERY SUCCESSFUL IN JAPAN, STILL GROWING VERY STRONGLY. MOST RETAILERS, HIGH STREET RETAILERS ALSO HAVE VERY STRONG E-COMMERCE OPERATIONS AND ARE TRYING TO INTEGRATE THAT INTO THEIR STORE NETWORKS IF YOU LIKE. LESS SO MAYBE IN FOOD. BUT FOOD IS STILL ONE OF THE LARGEST E-COMMERCE SECTORS JUST IN TERMS OF OVERALL SALES. ¥2 TRILLION IN THAT. OMNI, IS 3% TO 4% TOTAL FOOD SALES COME FROM ONLINE. I DON'T EXPECT THAT TO CHANGE QUICKLY BECAUSE IT IS EASY TO SHOP IN STORE. EVERYTHING IS NEARBY, EASILY ACCESSIBLE, AND ALSO BECAUSE STORES ARE SUCH A HIGH COST FOR JAPANESE RETAILERS THAT THEY DON'T HAVE A REAL INCENTIVE TO MOVE EVERYTHING ONLINE. SHERY: ROY, I JUST MENTIONED EARLIER HOW WE ARE EXPECTING FAST RETAILING RESULTS. WE ARE EXPECTING THEM TO DO PRETTY WELL BECAUSE OF THEIR SALES TO FOREIGNERS IN JAPAN AND ALSO OVERSEAS SALES. ARE WE SEEING MORE OF THAT DRIVE BY JAPANESE COMPANIES TO TRY TO TARGET THE OVERSEAS MARKET JUST BECAUSE OF THE INFLATIONARY CONCERNS IN THIS COUNTRY, NOT TO MENTION THE BROADER LONG-TERM DEMOGRAPHICS ISSUE? ROY: I AM AFRAID YOU CUT OUT IN THE MIDDLE OF THAT BUT I CAN TALK A LITTLE BIT WITH FAST RETAILING. THEY RECENTLY JUST SAID THAT THEY HAD SALES IN SEPTEMBER DESPITE THE FALL DOWN. AND IN THE DOMESTIC MARKET, IT FEEDS INTO WHAT WE SAID EARLIER. PEOPLE ARE LOOKING FOR REAL PRICE QUALITY VALUE AND THIS IS SOMETHING THAT UNIQLO PROVIDES AND IS NOT REALLY EASY FOR OTHERS TO PROVIDE. IT IS SO FAR AHEAD IN TERMS OF THEIR UBIQUITY IN THE MARKET, THE VALUE OF THEIR BASICS IF YOU WANT TO BUY UNDERWEAR. WHY WOULD YOU GO ANYWHERE ELSE ON THIS YOU WANT TO GO -- IF YOU NEED TO GO FOR THE REALLY LOW COST OPTIONS TO DON QUIXOTE OR SOMETHING LIKE THIS. IT IS MUCH MORE FUN TO SHOP AT THE UNIQLO IF YOU CAN ACCESS IT. IT BASICALLY WORKS. OVERSEAS, THEY HAVE REALLY BEGUN TO REFINE THE MODEL OF HAVING LARGE FLAGSHIP STORES THAT CREATE GOOD BRAND AWARENESS AND AROUND SMALLER STORES WHICH THEY CAN EXPAND QUICKLY AND THEN HAVE ON THE CHANNEL TO SUPPORT IT SO UNIQLO IS ALSO DOING VERY WELL NOW, SUPPORTED BY HIGH RESULTS IN JAPAN. SHERY: REALLY GOOD TO HAVE YOUR INSIGHTS. YOU CAN CATCH JAPAN AHEAD EVERY MONDAY AT 8:40 AM IF YOU ARE WATCHING IN TOKYO, SUBSCRIBERS CAN WATCH ON THE TERMINAL USING THE TV <GO> FUNCTION. THIS IS BLOOMBERG. SHERY: THE BIGGEST GLOBAL AI INVESTORS, MASAYOSHI SON, SAYS HE'S WORRIED ABOUT SAFETY RISKS AS MACHINES QUICKLY GAIN MORE ABILITY. SPEAKING AT A TECH FORUM, HE REPEATED HIS PROJECTION THAT AI WILL ACCOUNT FOR AT LEAST 20% OF GLOBAL GDP BY 2040. HE'S CALLING FOR GLOBAL COOPERATION ON AI GUARD RAILS, SAYING THE TECHNOLOGY CAN BE DANGEROUS IN THE WRONG HANDS. >> I THINK WE DON'T HAVE ANY MORE LUXURY OF HAVING HUMAN FIGHT AGAINST HUMAN. THERE WILL BE A BIGGER ISSUE OF HUMAN AGAINST SUPER INTELLIGENCE. YOU KNOW? THAT IF THE SUPER INTELLIGENCE BECOMES SO SMART, AND IF BAD USAGE BY BAD HUMAN USE THE WRONG USAGE, THIS CAN BECOME SUPER DANGEROUS. PAUL: NOW, DESPITE CONCERNS ABOUT THE SAFETY OF AI, THE HARDWARE ECOSYSTEM CONTINUES TO BUILD CAPACITY. TOSHIBA IS SET TO DOUBLE ITS CAPACITY ON HARD DISK DRIVES ACCORDING TO THE NIKKEI. IT COULD HELP JAPANESE SUPPLIERS EXTEND A RALLY. FOR MORE, LET'S GET TO OUR MARKETS REPORTER, ANTHONY STEPHENS. SO ANTHONY, WHAT IS THE BROADER IMPLICATION OF THE TOSHIBA HEADLINE? ANTHONY: THIS SPEAKS TO THE FACT THAT DESPITE THE CONCERNS AROUND AI SAFETY, YOU CONTINUE TO HAVE THIS BUILDOUT OF AI INFRASTRUCTURE, WHETHER WE ARE TALKING ABOUT THE FRONTIER OR THE MORE SEDATE MODELS PEOPLE USE FOR CODING OR WHAT NOT AND THAT IS DRIVING A SPATE OF RISK APPETITE ACROSS THE TECH SUPPLY CHAIN. NOTABLY IN JAPAN WHERE THERE ARE PLENTY OF NAMES FOR THE YEAR. IRONICALLY, A LOT OF THOSE NAMES ARE ACTUALLY IN THE HARD DISK DRIVE SPACE, IN THE PASSIVE COMPONENTS SPACE, IN THE MOTORS SPACE. SO THAT SPACE WILL GET SOME FUNDAMENTAL VALIDATION FROM THIS NEWS. ALSO INTERESTINGLY, IT HAS PUT A LINE UNDER JAPAN'S MASK -- MACRO RISK. WE ARE SEEING VOLATILITY SHARPLY LOWER COMPARED TO WHAT HAS BEEN HAPPENING IN THE FX WORLD. WE HAD THESE CONCERNS AROUND AGAIN. THE TECH TRADE REALLY GETTING THE KIND OF EARNINGS MOMENTUM TO POWER THROUGH ANY KIND OF MACRO ISSUES AND THAT IS PRETTY MUCH WHAT HAS BEEN TRADED ACROSS THE REGION WHERE WE SEE TECH OUTPERFORM OTHER SECTORS EVEN THOUGH YIELDS TRACK HIGHER. THE TOSHIBA IN FOCUS MEANS THAT IS A FUNDAMENTAL -- FOR THE RALLY. PAUL: HOW ABOUT THE REST OF THE REGION? WHAT ARE WE EXPECTING TO SEE? ANTHONY: WE CONTINUE TO SEE LEADERSHIP FROM TAIWAN. TSMC IS THE BIGGEST STOCK IN THE REGION AND IT IS INTEGRATED QUITE STRONGLY FROM OVERNIGHT PRICE ACTION, FRIDAY NIGHT PRICE ACTION. IT'S UP TO ALMOST 3%. AND THAT SHOULD UNDERLINE TECH RISK-TAKING ACROSS THE REGION. WE HAVE NOTABLE UNDERPERFORMANCE BY THE CHINESE AI ECOSYSTEM WHICH HAS REALLY STRUGGLED IN RECENT WEEKS TO KEEP UP WITH THE U.S. DEVELOPMENTS IN THAT MARKET IS INDICATING LOWER AGAIN SO THAT BIFURCATION WILL BE VERY INTERESTING TO WATCH WHEN WE COME INTO ASIA LIVE TRADING. PAUL: ANTHONY STEPHENS, THANK YOU. LET'S TAKE A LOOK AT WHAT TO EXPECT WHEN TRADING DOES GET UNDERWAY AT THE TOP OF THE HOUR IN JAPAN. NIKKEI FUTURES POINTING HIGHER BY ABOUT ONE POINT 5%. IN AUSTRALIA, WE ARE -- IT'S A PUBLIC HOLIDAY ACROSS MUCH OF AUSTRALIA TODAY BUT MARKETS ARE STILL TRADING. MOST SECTORS ARE IN THE GREEN. WE ARE TAKING A LOOK AT CSL AS WELL, BETTER BY .9% AFTER THE PHARMACEUTICAL GIANT AND DID AN EXCLUSIVE PACT WITH -- THERAPEUTICS. A MARKET OPEN IN TOKYO, UP NEXT. THIS IS BLOOMBERG. ♪ SHERY: THIS IS THE ASIA TRADE. WE ARE COUNTING DOWN TO ASIA'S MAJOR MARKET OPENS AND OF COURSE WE WILL BE REACTING TO THE LATEST WHEN IT COMES TO THE EMERGING MARKETS TRADE AS WELL WITH BRAZILS ELECTIONS NOW GOING TO THE RUNOFF, OCTOBER 25, IT HAS BEEN DECIDED, WITH FLAVIO BOLSONARO LEADING INCUMBENT PRESIDENT LOW. THIS WILL BE A VERY INTERESTING TRADE BECAUSE WE HAVE SEEN THE DOLLAR NOW LOSE GROUND AGAINST EMERGING MARKET CURRENCIES, REACTING TO WEAKER U.S. PAYROLLS. PAUL: THE WEAKER U.S. PAYROLLS -- WE SAW A BIT OF ACTION ON THE BOND FRONT AS WELL SO WE WILL BE CLOSELY WATCHING THE START OF TRADE AND U.S. DEBT IN THE JAPAN SESSIONS 10 YEAR YIELDS AND TWO YEAR YIELDS EASE OFF THE HIGHS. LET'S SEE HOW ENDURING THAT IS, SHERY. SHERY: ESPECIALLY AROUND JGB'S AS WELL WHEN WE HAVE BEEN TALKING ABOUT THE 10 YEAR YIELD BEING AROUND THE 3% LEVEL, HIGHEST SINCE THE MID-1990'S, NOT TO MENTION THE TWO YEAR YIELD NEAR THAT 2% LEVEL AS WELL, A LOT TO DO WITH FISCAL CONCERNS IN JAPAN. WE WILL BE HEARING FROM THE PRIME MINISTER, RECONVENING PARLIAMENT AND GIVING A POLICY SPEECH. THE EXPECTATION RIGHT NOW IS SHE WILL GIVE US A BIT MORE DETAILS WHEN IT COMES TO THE EXPECTED TAX CONSUMPTION HERE IN JAPAN. ALL OF THAT HAS REELED THE MARKETS HERE. I MENTIONED THE DOLLAR HAD ITS WORST DAYS IN WEEKS ON THAT U.S. PAYROLLS DATA, WEAKER THAN EXPECTED. SO WE HAD SEEN A LITTLE BIT OF STRENGTH FOR THE JAPANESE YEN HEADED TOWARDS THE 157 LEVEL. AND REMEMBER, LAST WEEK, WE ALSO HAD HOTTER THAN EXPECTED TOKYO INFLATION SO THAT IS REALLY FANNING THOSE EXPECTATIONS OF WHAT HAPPENS TO THE BANK OF JAPAN IN ITS UPCOMING RATE HIKES. THE NIKKEI AT THE MOMENT GETTING 1% EARLY IN THE TRADE BUT OF COURSE WE DON'T HAVE SOUTH KOREA, MAINLAND CHINA ALSO CLOSED, SO FLOWS COULD BE LIMITED AND A LOT OF TRADING COULD HAPPEN IN JAPAN AS WE CONTINUE TO WATCH THE TECH SECTOR. IN EARNINGS WEEK, WE HAVE RETAILERS IN JAPAN COMING OUT -- RETAILING REPORTING. PAUL: LET'S TAKE A LOOK AT ENERGY PRICES, SHERY, BECAUSE THERE HAS BEEN A BIT OF NEWS FLOW. BRENT ABOUT 102 DOLLARS A BARREL. YEMEN SIGNALING IT'S GOING TO BEGIN AN OFFENSIVE AGAINST THE HOUTHI REBELS SO I POSSIBLE ESCALATION IN THIS CONFLICT ABOUT TO TAKE PLACE IN THE -- ON THE RED SEA COAST OF SAUDI ARABIA. IT'S GIVING A LITTLE BIT OF SUPPORT TO SOME OF THOSE AUSTRALIAN ENERGY NAMES IN THE EARLY GOING. TAKE A LOOK AT THE YIELD SPACE. WE HAVE THE 10 YEAR RETREATING FROM THOSE HIGHS THAT WE SAW MID LAST WEEK. NOW 5.25, DOWN A COUPLE OF BASIS POINTS FROM THE U.S. SESSION. YIELDS ALSO DECLINING ON THE SHORTER END OF THE CURVE AS WELL . TWO-YEAR YIELDS DOWN ALSO. WE HEARD FROM THE AUSTRALIAN TREASURER, JIM CHALMERS, OVER THE WEEKEND AS WELL. HE WAS CALLING THE WAR AND ECONOMIC DISASTER FROM A COST OF LIVING POINT OF VIEW, ALSO SAYING THAT THE END OF THAT CANNOT COME SOON ENOUGH. LET'S GET TO OUR SENIOR MACRO STRATEGIST AT LOMBARD. THANK YOU AS ALWAYS FOR JOINING US TODAY AND I DO YOU WANT TO START WITH WHAT WE HAVE BEEN SEEING IN THE BOND MARKET. YIELDS EASING OFF A LITTLE IN THE START OF THE JAPAN SESSION TODAY BUT YOU KNOW, WE HEARD FROM SCOTT BESSENT, DOWNPLAYING WHAT WE ARE SEEING HERE, SAYING IT'S A GLOBAL TREND, RISING YIELDS. HOW ARE YOU FEELING ABOUT THE YIELD PICTURE? HOMIN: WELL, IF YOU HAVE A SIGNIFICANT SPIKE IN GLOBAL YIELDS FROM THE CURRENT LEVELS, EVENTUALLY, YOU WILL START CREATING PROBLEMS FOR THE EQUITY MARKETS AND RISKY ASSETS. BUT AS THE SECRETARY HAS MENTIONED, SO FAR, THE RISING YIELDS WERE ACTUALLY ACCOMPANIED BY A BETTER EQUITY DYNAMIC. AND ALSO, IF YOU THINK ABOUT THE DRIVERS FOR THE GLOBAL YIELD INCREASES, ACTUALLY, IT HAS BEEN DRIVEN BY RISING REAL INTEREST RATE EXPECTATIONS FOR THE LONG RUN. SO IN OUR VIEW, THE CURRENT -- THE RECENT MOVEMENTS IN GLOBAL YIELDS CERTAINLY ARE SOMETHING THAT IS WORTH MONITORING BUT IT SEEMS TO BE SOLID FUNDAMENTALS AT THE GLOBAL LEVEL. AND WHILE THE NEGATIVE MOMENTUM FOR BONDS COULD CONTINUE IN THE NEAR TERM FOR THE RISKY ASSETS, IT HAS BEEN MANAGEABLE. WE THINK FOR THE REMAINDER OF THE YEAR AND EARLY 2027, THAT DYNAMIC COULD ACTUALLY PERSIST. SO FROM THE ASSET ALLOCATOR'S PERSPECTIVE, YOU KNOW, KEEPING A BIT OF MODEST TILT TOWARDS RISK STILL MAKES SENSE IN THIS ENVIRONMENT. WE HAVE SEEN MANY EPISODES LIKE THIS IN THE PAST AND WE SUSPECT THAT WE ARE GOING TO GET A SIMILAR KIND OF MIX FOR NEXT FEW MONTHS. PAUL: YOU MAKE A GOOD POINT THAT, YOU KNOW, EQUITY MARKETS ARE LOOKING THROUGH RISING YIELDS. BUT IS THERE A THRESHOLD THAT YOU HAVE IN MIND WHERE THIS DOES BECOME A PROBLEM? IS THERE A PROBLEM THAT YIELDS REACH WHERE THEY DO BREAK THE EQUITY MARKET? AND HOW CLOSE TO THAT MIGHT WE BE? HOMIN: SO FIRST OF ALL, OUR CENTRAL-BANK ASSUMPTION IS THAT WE ARE IN THE MIDST OF A KIND OF RISK MANAGEMENT RATE HIKING EXERCISE, NOT NECESSARILY A START OF A MAJOR TIGHTENING EPISODE. AND I THINK THAT'S VERY IMPORTANT AND THAT'S ALSO A POSITION THAT'S ROUGHLY SHARED BY THE FINANCIAL MARKETS EVEN THOUGH THE PRICING FOR CENTRAL-BANK LIKE THE FED IS A BIT MORE AGGRESSIVE THAN WHAT WE ARE ASSUMING CURRENTLY. SO THAT IS THE FIRST POINT. NOW THE SECOND POINT IS IF YOU HAVE ADDITIONAL 50 OR 60 BASIS POINT RISE IN GLOBAL YIELDS DRIVEN PRIMARILY BY THE INFLATION EXPECTATIONS, THAT COULD ACTUALLY FUELED THE EXPECTATION OF SIGNIFICANT CHANGE IN THE MONETARY POLICY STANCE AND COULD START WEIGHING ON RISKY ASSETS. WE ARE NOT THERE YET AND WE SUSPECT THAT THE CURRENT DYNAMIC OF A SLIGHTLY PLATEAUING GLOBAL YIELD WITH THE EQUITY MARKET IS STILL GRINDING UP AND THAT WILL PERSIST. BUT CERTAINLY IF YOU HAVE 50, 60 BASIS POINT INCREASES FROM HERE WITH THE 10 YEAR TREASURY YIELDS GOING BEYOND 6%, THAT COULD BE SLIGHTLY MORE CHALLENGING A SIGNAL FROM THE MARKETS. AND DEFINITELY, WE ARE ON ALERT FOR THAT KIND OF DYNAMIC. PAUL: YOU STILL HAVE SOME RISK APPETITE. WHERE WOULD YOU LIKE TO PUT MONEY TO WORK AT THE MOMENT? HOMIN: WE ARE STILL OVERWEIGHT JAPANESE EQUITIES. THIS IS A CYCLICAL MARKET WHERE THE EARNINGS EXPECTATIONS WILL START REBOUNDING AGAIN AFTER RECENT RECALIBRATION. YOU KNOW, THE STRATEGIC POSITIONING OF JAPAN'S INDUSTRIES ARE QUITE SOLID AND YOU KNOW, IT IS A PERFECT MARKET FOR GLOBAL -- WE CERTAINLY STILL LIKE THE MARKET. AND ALSO EMERGING MARKETS. AGAIN, WHEN YOU HAVE MASSIVE CAPEX BOOM THAT BEGINS TO BROADEN AND DEEPEN TO DIFFERENT COUNTRIES AND SECTORS, EMERGING MARKETS ARE CERTAINLY THE PLACE TO BE. AND ALSO, WE HAVE TO CONSIDER THAT THEIR VALUATIONS ARE STILL QUITE CHEAP COMPARED TO S&P 500 AND SOME OF THE DEVELOPED MARKETS. YES, WE HAVE GLOBAL YIELD VOLATILITY AND ALSO A BIT OF A WORRISOME CENTRAL-BANK POLICY. OUR VIEW IS THAT BEFORE THE END OF THE YEAR, THE DUST SETTLES ON SOME OF THESE QUESTIONS AND THE INVESTORS WILL BE KNOWLEDGED BOARDS THE RISKY ASSETS, -- EQUITIES AND HARD CURRENCY BONDS. PAUL: HERE IN SYDNEY, I WAS -- I NOTED ONE OF YOUR CALLS THAT THE RESERVE BANK IS DONE WITH THE TIGHTENING CYCLE. I DOUBT THEY WILL BELIEVE YOU. WHY DO YOU HOLD THAT POSITION? HOMIN: WELL, FIRST OF ALL, RBA HAS BEEN RELATIVELY AGGRESSIVE IN RAISING RATES COMPARED TO THE OTHER CENTRAL BANKS SO THAT IS THE FIRST POINT. AND THE SECOND POINT IS IF YOU LOOK AT THE ACTIVITY INDICATORS AND SURVEYS, THERE ARE SIGNS OF -- IF YOU LOOK AT THE CONSUMER SURVEYS. THEY STILL REMAIN PRETTY WEAK. THE LABOR MARKET INDICATOR BEFORE THE RBA DECISION WAS ACTUALLY SHOWING A BIT OF WEAKNESS HEADING INTO THAT POLICY MEETING. AND PROBABLY FOR THIS REASON, IF YOU -- THE LANGUAGE FROM THE RBA OFFICIALS AFTER THE DECISION SUGGESTED THEY ARE UP CURRENTLY -- SOMEWHAT CONTENT WITH THE LEVEL OF INTEREST RATE THEY ARE DESCRIBING AS RESTRICTIVE. SO OUR GUESS IS THIS IS BASICALLY THE FINAL HIKE IN THE CYCLE AND THE LIKELY OUTCOME GOING FORWARD IS THEY WILL KEEP THE POLICY ON HOLD UNTIL THE NEW DATA COMES IN AND POTENTIALLY NUDGES THEM IN ANY DIRECTION SO THE HURDLE FOR CHANGING POLICY NOW IN OUR VIEW IS ACTUALLY SLIGHTLY HIGHER AND FOR THAT REASON, WE THINK THE RBA IS DONE. PAUL: ALL RIGHT. HOMIN LEE, SENIOR MACRO STRATEGIST, THANK YOU. SHERY. SHERY: TAKE A LOOK AT SOME OF THE BIG MOVERS IN THE ASIAN SESSION. IN JAPAN, WATCHING THE TECH SUPPLIERS BECAUSE WE HAVE GOT LOCAL MEDIA REPORTS ABOUT TOSHIBA INVESTING $60 BILLION TO DOUBLE THE PRODUCTION CAPACITY FOR HARD DISK DRIVES. ANYTHING RELATED TO THIS COMPANY AT THE MOMENT GAINING GROUND IN THE EARLIER TOKYO'S -- EARLY TOKYO SESSION. WE HAD SEEN SOME OF THE PEERS LIKE WESTERN DAN ISRAEL -- WESTERN DIGITAL BEING PRESSURED BY THE NEWS THAT BLOOMBERG INTELLIGENCE SAYING TOSHIBA'S INVESTMENT PLAN LOOKS MORE LIKE VALIDATION OF THE STRONGER AI AND DATA CENTER STORAGE DEMAND THAN A NEAR-TERM SUPPLY THREAT TO THESE U.S. COMPANIES. TAKE A LOOK AT HOW SOFTBANK IS TRADING. THIS IS A COMPANY THAT HAS BEEN HEAVILY EXPOSED TO THE AI TRADE. REMEMBER THE COMMITMENT OF NEARLY $65 BILLION TO OPENAI. BUT NOTABLY, WE HEARD FROM FOUNDER MASAYOSHI SON SOUNDING THIS UNUSUALLY CAUTIOUS TONE WHEN IT COMES TO AI, SAYING THE SUPER INTELLIGENCE IN THE WRONG HANDS CAN BECOME SUPER DANGEROUS. THAT SAFETY CONCERN AROUND AI CONTINUES. WE HAVE MORE AHEAD ON THE ASIA TRADE. YOU ARE WATCHING BLOOMBERG. >> [SPEAKING FRENCH] >> WE DECIDED TO RELEASE STRATEGIC STOCKS OF DIESEL IN CRUDE OIL UNDER THE COORDINATION OF THE INTERNATIONAL ENERGY AGENCY. THEY WILL MEET IN THE COMING HOURS AND DAYS TO ORGANIZE THIS. SO AS TO BE ABLE TO RELEASE UP TO 100 MILLION BARRELS OF DIESEL AND CRUDE OIL OVER THE NEXT FOUR MONTHS. >> WHEN ALL THE RUSSIAN EXPORTS OF DIESEL ARE SHUT DOWN, WHEN THE CHINESE HAVE SAID WE ARE NOT GOING TO DELIVER ANYMORE DIESEL, AND YOU STILL HAVE A REDUCTION OF DIESEL FLOWS COMING OUT OF THE GULF, BUT WE ARE RESTORING THOSE, BUT THAT TAKES TIME, THIS IS JUST COMMON SENSE. THIS LOWERS DIESEL PRICES IN EUROPE AND AROUND THE WORLD. IT WILL DRIVE DIESEL PRICES DOWN AS THOSE RELEASES COME. IT WILL DRIVE DIESEL DOWN THROUGH THE WINTER IN THE UNITED STATES AND AROUND THE WORLD. PAUL: SO THAT IS FRENCH PRESIDENT EMMANUEL MACRON AND U.S. ENERGY SECRETARY CHRIS WRIGHT ON THE G7'S RELEASE OF EMERGENCY DIESEL FUEL SUPPLIES. SO THAT'S GOING TO BE 100 MILLION BARRELS PLUS OF EMERGENCY OIL AND DIESEL STOCKS THAT ARE GOING TO BE RELEASED OVER THE COMING FOUR MONTHS. AND THAT RELEASE WILL BE COORDINATED BY THE IEA AND WE DID SEE PRICES FOR DIESEL COME OFF A LITTLE BIT ON THE BACK OF THAT NEWS ALTHOUGH STILL A LOT OF STRENGTH THERE. EUROPE GAS FUTURES POINTING HIGHER AS WE START HEADING INTO THE NORTHERN HEMISPHERE WINTER. FOR MORE ON THIS, WE ARE JOINED BY STEPHEN STAPCZYNSKI, WHO LEADS BLOOMBERG'S ASIAN ENERGY COVERAGE. MACRON CALLING THAT A CLEAR SIGNAL TO THE MARKET. HOW ENDURING IS THIS IMPACT GOING TO BE? STEPHEN: YOU KNOW, IT IS SORT OF INTERESTING BECAUSE YOU WOULD THINK THAT YOU WOULD SEE A REALLY BIG KNEE-JERK REACTION AND A DROP IN PRICES NOW THAT THIS IS HAPPENING BUT I THINK THAT THERE'S STILL FEAR IN THE MARKET THAT AS THIS SITUATION, AS THE WAR IN THE MIDDLE EAST CONTINUES, THERE IS A RISK THAT THESE FLOWS WILL CONTINUE TO BE CURTAILED. THERE ARE STILL -- PRICES ARE STILL NEAR RECORD HIGH. THE U.S. POTENTIALLY LOOKING AT CURBING EXPORTS TO SOME DEGREE TO HELP REDUCE PRICES AT HOME. THEY ARE A MAJOR SUPPLIER. AT THE SAME TIME, A RELEASE IS JUST THAT, ONE RELEASE. WE HAVE SEEN TIME AND TIME AGAIN THAT THESE EMERGENCY RELEASES THROW A LITTLE BIT OF COLD WATER ON THE MARKET. BUT THE FUNDAMENTALS DON'T CHANGE AND YOU DON'T SEE REFINING CAPACITY INCREASING. YOU DON'T SEE PRODUCTS FLOWING THROUGH THE STRAIT OF HORMUZ INCREASE. THIS WILL JUST BE A TEMPORARY BAND-AID AND YOU WILL SEE PRICES SORT OF RISE AGAIN AFTER THAT. AND YOU ARE SEEING THAT SORT OF REACTION NOT JUST IN THE DIESEL MARKET ITSELF BUT ALSO THINGS THAT COMPETE WITH DIESEL LIKE EUROPEAN NATURAL GAS. IN THE WINTER, DIESEL CAN BE USED FOR HEATING OR POWER GENERATION AND THAT COMPETES DIRECTLY WITH NATURAL GAS AND YOU ARE SEEING ACTUALLY GAS PRICES RISE IN EUROPE INSTEAD OF FALL. PAUL: YES, IN TERMS OF ONE OF YOUR POINTS LIKE THE STRAIT OF HORMUZ REMAINING EFFECTIVELY SHUT, WE HAVE HEARD THE NEWS THAT IRAQ PLANS TO START RUNNING ITS OWN SUPERTANKERS THROUGH THE PERSIAN GULF FOR THE FIRST TIME IN DECADES. IS THIS GOING TO CHANGE THE PICTURE AT ALL IN A MEANINGFUL WAY? STEPHEN: YOU KNOW, I THINK THERE IS AN INTERESTING THING TO LOOK AT IN HORMUZ AND IT'S THAT PRODUCTS AND GAS ARE STRUGGLING TO INCREASE FLOWS OUT OF HORMUZ BUT WHAT HAS BEEN ACTUALLY QUITE RESILIENT HAS BEEN CRUDE SUPPLY. SO WHEN YOU LOOK AT THE DIFFERENT TYPES OF PRODUCTS, CRUDE HAS ACTUALLY COME BACK TOWARDS NEAR PREWAR LEVELS. THAT IS DUE IN PART TO THE SHUTTLING SERVICES, DUE IN PART TO -- BUT ALSO SAUDI ARABIA HAS THEIR EAST-WEST PIPELINE THAT SHIPS OIL FROM THE PERSIAN GULF INTO THE RED SEA AND OUT THROUGH THE BAB EL-MANDAB STRAIT TO CUSTOMERS IN ASIA. THESE WORKAROUNDS HAVE EFFECTIVELY HELPED INCREASE THE AMOUNT OF CRUDE HITTING THE WATERS. BUT WHAT IS INTERESTING IS OIL PRICES REMAIN -- YOU KNOW, BRENT IS AT $100 A BARREL. ABOUT 40% HIGHER THAN WE WERE THEN WHEN THE WORK BEGAN. WHILE THERE IS CRUDE GETTING -- THAN WHEN THE WAR BEGAN. THEY ARE LOOKING AT WAYS OF SHUTTLING THEIR PRODUCT TO CUSTOMERS. THE FACT THAT THE WAR IS STILL ONGOING AND THERE IS A RISK TO SHIPS GOING THROUGH, WE ARE ALWAYS HEARING ABOUT NEW ATTACKS, THAT THIS COULD ALL SPIRAL INTO A WIDER CONFLICT ESPECIALLY WITH THE U.S. BRINGING MAY BE ANOTHER WARSHIP INTO THE REGION. THAT WILL CONTINUE TO ADD A RISK PREMIUM TO PRICES AND THAT IS WHY WE ARE SEEING OIL AT $102 TODAY. SHERY: STEPHEN STAPCZYNSKI WHO LEADS BLOOMBERG'S ASIA ENERGY COVERAGE. LET'S GO A LITTLE BIT MORE IN DEPTH TO THE GEOPOLITICAL LANDSCAPE ACROSS THE MIDDLE EAST. YEMEN'S SAUDI BACKED MILITARY HAS LAUNCHED AN OPERATION TO RECAPTURE AREAS UNDER THE CONTROL OF IRAN BACKED HOUTHI FORCES. FIGHTING HAS ESCALATED SINCE EARLY LAST MONTH WHEN THE HOUTHI S CAPTURED STRATEGIC AREAS. STEPHEN WAS TELLING US ABOUT BAB EL-MANDAB. HOW MUCH OF THIS HAS TO DO WITH THE STRATEGIC IMPORTANCE OF THAT CHOKEPOINT? JILL: YES, GOOD MORNING, SHERY. STEPHEN SET IT UP QUITE WELL THERE, LOOKING AT SOME OF THESE RISKS OF POTENTIAL ESCALATION OF CONFLICT IN THE REGION. AND WHEN YOU ARE LOOKING AT WHAT THIS NEW -- THIS IS YEMEN'S INTERNATIONALLY RECOGNIZED GOVERNMENT NOW GETTING INVOLVED, REALLY STEPPING UP WHAT LOOKS LIKE A FULL-SCALE MILITARY CAMPAIGN AGAINST THE HOUTHIS. REMEMBER, THE HOUTHIS DID NOT GET THAT INVOLVED IN THIS CONFLICT UNTIL CLOSER TO JULY OR SO BUT THEN IT WAS REALLY IN SEPTEMBER THAT THEY WERE ABLE TO SEIZE SOME STRATEGIC AREAS ALONG YEMEN'S COAST, YOU KNOW, THAT ULTIMATELY WERE INTENDED TO CHOKE OFF SUPPLIES OUT OF THE BAB EL-MANDAB STRAIT SO WHAT YOU ARE SEEING NOW IS YEMEN IS TRYING TO RECLAIM THOSE AREAS REALLY SORT OF PUMPING UP THIS CAMPAIGN HERE TO ENSURE THAT SORT OF, YOU KNOW, FREE FLOW OF CRUDE THROUGH THAT REGION WITHOUT THAT RISK TO THAT REALLY CRITICAL STRAIT AT THE RED SEA. YOU ARE LOOKING AT A SIGNIFICANT DEVELOP HERE, PRETTY SIGNIFICANT ESCALATION OF THESE MILITARY ATTACKS IN THE REGION, YOU KNOW, THAT COULD BE ANOTHER TURNING POINT IN THIS CONFLICT. SHERY: LET'S TALK A LITTLE BIT MORE ABOUT THE ESCALATION IN MILITARY PRESSURE BECAUSE WE UNDERSTAND THE U.S. IS ALSO SENDING MORE REINFORCEMENT WHEN IT COMES TO ACTUALLY TRYING TO CAUSE PAIN IN IRAN. WE HAVE BEEN TALKING ABOUT THE ECONOMIC PAIN FOR THE LONGEST TIME BUT WHEN COULD WE SEE A TURNING POINT? JILL: YOU KNOW, I THINK AS STEPHEN ALSO MENTIONED, THOSE 10,000 TROOPS THE U.S. IS SENDING TO THE REGION AGAIN MARKING THAT THE U.S. AT LEAST IS SETTLING IN FOR THIS PROLONGED CONFLICT BUT I THINK WE DO ALSO HAVE TO LOOK AT THE OTHER SIDE OF THIS WHICH IS THE ECONOMIC STRAIN ON IRAN AS WE HAVE BEEN DISCUSSING. I MEAN, YOU KNOW, THE CONTROL OVER THE STRAIT OF HORMUZ IT SEEMS LIKE IT IS SLIPPING TO SOME EXTENT. STEPHEN CITED THIS IDEA OF CRUDE FLOWS. JP MORGAN ESTIMATED WE ARE SOMEWHERE AT 98% OF PREWAR LEVELS WHEN YOU ARE LOOKING AT SOME OF THOSE FLOWS. SO IF YOU ARE IRAN, YOU ARE KINDA, IT SEEMS, LOSING THAT CONTROL OVER WHAT HAS BEEN A REALLY BIG STICKING POINT IN THIS CONFLICT WHICH SORT OF LEAVES THEM WITH THIS IDEA OF DO YOU GO TO THE TABLE AND ACTUALLY NEGOTIATE WITH THE UNITED STATES OVER ISSUES THAT OBVIOUSLY THEY HAVE BEEN COMPLETELY UNABLE TO COME TO ANY SORT OF, YOU KNOW, LONGER LASTING PEACE NEGOTIATION POINT ON? OR DO YOU TRY TO SORT OF SETTLE IN AND ESCALATE THE CONFLICT EVEN FURTHER? IT DOES SEEM LIKE WE ARE SORT OF HITTING THAT BREAKING POINT WHEN IT COMES TO SOME OF THESE OPTIONS THAT IRAN HAS BUT WE WILL ULTIMATELY HAVE TO SEE HOW THEY RESPOND TO SOME OF THESE LATEST SORT OF THREATS OF ESCALATION IN THIS CONFLICT. SHERY: THE BLOOMBERG MANAGING EDITOR WITH THE BASIC -- LATEST ON THE GEOPOLITICS AROUND THE IRAN WAR AND THE APPLICATIONS FOR THE ENERGY SPACE AS WELL HAVE SENT EUROPEAN MARKETS INTO THAT DOWNSIDE PRESSURE LAST WEEK ON THE EURO. FOR EXAMPLE, WE SAW A WEEKLY FALLOUT AND WE WERE COMPOUNDED BY THE FACT THAT WE HAVE BEEN LOOKING AT SOVEREIGN RISK AROUND FRANCE. THAT GLOBAL DEBT SELLOFF WE HAVE SEEN VERY MUCH PRONOUNCED IN FRANCE RIGHT NOW. MISSED DEFICIT TARGETS, POLICY GRIDLOCK REALLY LEADING TO -- TAKE A LOOK AT THE 10 YEAR YIELD ON THE RIGHT SIDE IN THAT CHART. IT HAS BEEN SURGING IN RECENT MONTHS. WHEN IT COMES TO THE PREMIUM INVESTORS ARE ASKING OVER GERMAN BOONES, THAT IS AROUND 152 BASIS POINTS. IT HAS TOUCHED THAT LEVEL FOR THE FIRST TIME SINCE 2011 SO THIS RISK PERCEPTION ON FRENCH DEBT IS JUST WORSENING. I MEAN, LAST WEEK, WE DID GET SOME AMBITIOUS CUTS BY THE GOVERNMENT WHEN IT CAME TO THE DEFICIT BUT THEN YOU LOOKED AT THE FRACTURED PARLIAMENT IN FRANCE AND A LOT OF REALLY SKEPTICISM OF WHERE THAT GOES FROM HERE. YOU SEE STOCKS 50 FUTURES EARLY IN THE -- ASIA SESSION STOXX 50 FUTURES EARLY IN THE SESSION TRADING. AND HERE ACROSS ASIA WITH THESE TECH STOCKS RALLYING. PAUL: LET'S CHECK OUT SOME OF THE TOP GLOBAL HEADLINES THAT WE ARE FOLLOWING. RUSSIA SAYS IT WILL STEP UP ATTACKS ON UKRAINIAN INFRASTRUCTURE. THE WARNING CAME THE SAME DAY RUSSIAN FORCES STRUCK A BRIDGE ACROSS THE RIVER IN KYIV FOR A SECOND TIME AS WELL AS OTHER CIVILIAN INFRASTRUCTURE. IT FOLLOWS A VALVE FROM VOLODYMYR ZELENSKYY TO INCREASE STRIKES AGAINST -- VOW FROM VOLODYMYR ZELENSKYY TO INCREASE STRIKES. -- LAST WEEK'S SUSPECTED ATTEMPTED TERRORIST ATTACK. AN OFFICIAL SAYS ALL AMERICAN BOMBERS DEPLOYED AT THE BASE HAVE RETURNED TO THE U.S. THE NEW YORK TIMES REPORTED THE WITHDRAWAL WAS URGENT AFTER NEW THREATS EMERGED OF A PLOT LINKED TO IRAN. MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. >> A DOVISH REPORT. A LITTLE SOFTER ACROSS THE BOARD. AND THE MARKET IS REACTING THAT WAY. >> FOR ME AT LEAST WHEN I TAKE A STEP BACK AND PUT A BIGGER PICTURE TOGETHER ON THE LABOR MARKET, NOTHING HAS CHANGED. >> THREE-MONTH AVERAGE AROUND 50,000, THAT'S A PRETTY SOLID REPORT. SOME OF THAT IS RISING PARTICIPATION. >> WE STILL I THINK ARE REALLY ONE MORE BAD INFLATION NUMBER AWAY FROM THEM PULLING THE TRIGGER ON A HIKE. >> THE OTHER BIG ISSUE HERE IS JUST THE CALENDAR SET UP AND THE OPTICS OF HIKING RIGHT IN FRONT OF THE MIDTERMS. I THINK THEY WANT TO PROBABLY TRY TO AVOID THAT. >> WE HAVE AN ELECTION BUT THE FED IS INDEPENDENT. IT IS MAKING DECISIONS BASED ON THE DATA. ELECTIONS HAVE NOTHING TO DO WITH IT. PAUL: SOME OF OUR GUESTS REACTING TO THE LATEST U.S. PAYROLLS REPORT WHICH SAW JUST 29,000 JOBS ADDED IN SEPTEMBER AND THAT WAS BELOW ALL ESTIMATES. U.S. NATIONAL ECONOMIC COUNCIL DIRECTOR KEVIN HASSETT SAYS THE TRUMP ADMINISTRATION IS SERIOUS ABOUT ADDRESSING THE BUDGET DEFICIT. MEANWHILE, MORE ABOUT WHAT THIS MEANS FOR INFLATION CONCERNS. >> THE PEOPLE WHO ARE EXPECTING, WHO ARE SEEING INFLATION IS GOING TO BE REALLY HIGH RIGHT NOW, THEY ARE JUST NOT LOOKING AT THE RIGHT MODELS SO THEY DON'T UNDERSTAND THE SUPPLY-SIDE ECONOMY COULD BE GREAT AND RIGHT NOW IF YOU GO BACK AND LOOK AT THE MONTHLY TREASURY STATEMENT OR SOMETHING, THAT WE ARE DOING A GREAT JOB. WE GOT A LOT MORE REVENUE BECAUSE OF -- AFFECTS. WE ARE VERY SERIOUS ABOUT THE DEFICIT AND THAT IS VERY POSITIVE FOR INFLATION IN THE LONG RUN. >> AS LONG AS WE HAVE TAKEN -- PICKING ON YOUR BOSS, HE SAID IT IS NOT KEVIN WARSH'S FAULT THAT INTEREST RATES ARE GOING UP. HE'S GOT A DEMOCRATIC LIBERAL FED BOARD THAT IS AGAINST DONALD TRUMP. DO YOU AGREE WITH THAT? AND HAS HE GIVEN UP ON THE IDEA OR HIS DEMAND FOR LOWER RATES? KEVIN: I KNOW THAT KEVIN WARSH HAS A SORT OF UNUSUAL CIRCUMSTANCE TO MANAGE WHICH IS JAY POWELL AND WHAT I VIEW AS A HIGHLY PARTISAN MOVE, HAS REFUSED TO RESIGN. HE IS STAYING THERE. THERE IS A MAJORITY OF DEMOCRAT APPOINTEES WHO HAVE IN THE PAST VOTED TO INCREASE INTEREST RATES OR REDUCE INTEREST RATES IN A PARTISAN PATTERN. SO KEVIN IS GOING TO MANAGE THAT. HE'S GOING TO FIX THE PROBLEM. WE HAVE HIGH CONFIDENCE HE WILL DO THAT AND I THINK THAT RIGHT NOW IF YOU LOOK AT FEDERAL FUNDS FUTURES LOOKING AT THE DATA AND SAYING THAT WE DON'T THINK THE FED IS GOING TO MOVE IN THE FUTURE, I THINK THAT IS A REAL POSITIVE SIGN OF KEVIN WARSH MAKING PROGRESS BECAUSE I THINK THAT A JAY POWELL FED WOULD HAVE HIKED RATES RIGHT INTO THE ELECTION LIKE TO HAVE DONE BEFORE. >> DO YOU BELIEVE THAT POWELL SHOULD BE ON THE BOARD? WHAT IS YOUR VIEW ON THAT, DIRECTOR HASSETT? KEVIN: THE HISTORY IS THAT A CHAIRMAN, WHEN HIS TERM IS UP, LEANS IN PART TO HELP A NEW CHAIRMAN BE SUCCESSFUL. SO YOU SEE THAT IN CORPORATE AMERICA WHEN THERE IS A NEW CEO. THE OLD CEO DOES NOT SEE IN THE ROOM NEXT TO HIM. IF THE DECISION FOR JAY POWELL RIGHT NOW. -- IT IS THE DECISION FOR JAY POWELL RIGHT NOW. PAUL: KEVIN HASSETT SPEAKING WITH BLOOMBERG'S MIKE MCKEE AND DANI BURGER. LET'S TAKE A QUICK LOOK ACROSS ASSETS AT THE MOMENT. THE U.S. DOLLAR INDEX CREEPING UP AGAIN. A BIT OF A ROUGH RIDE ON FRIDAY AFTER THE JOBS REPORT. 10 YEAR YIELD, 5.25, BACKING OFF A LITTLE. MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. ♪ PAUL: LET'S TAKE A LOOK AT HOW EMERGING ASSETS ARE PERFORMING, THROUGH THE LENS OF WHAT IS HAPPENING IN BRAZIL WITH THE ELECTION. THE CONSERVATIVE SENATOR COMING OUT IN POLE POSITION FROM A FIRST ROUND LEADING THE INCUMBENT DA SILVA AFTER THE ROUND. WE HAVE ETF JUMPING AS MARKETS START TO REACT TO BOLSONARO'S LEAD IN THE ELECTION. AS MENTIONED, BOLSONARO UNEXPECTEDLY FINISHING AHEAD OF PRESIDENT DA SILVA IN THE FIRST ROUND. ACCORDING TO BRAZIL'S ELECTORAL COURT, 47.2% TO THE LEFT, 97 PERCENT OF VOTES COUNTED. THE TWO CANDIDATES GOING TO FACE EACH OTHER IN A RUNOFF ON OCTOBER 25. OUR BLOOMBERG REPORTER JOINS US FROM SAO PAULO. HOW ARE THE RESULTS EXPECTED TO AFFECT MARKETS? REPORTER: HELLO, GOOD EVENING. WE ARE EXPECTING THE MARKET TO HAVE A VERY STRONG OPENING TOMORROW MORNING WHEN LOCAL MARKETS OPEN. IT'S BEEN A POSITIVE SURPRISE FOR INVESTORS WHO SEE FLOW FEEL BOLSONARO AS THE MARKET FRIENDLY CANDIDATE, WHO IS THE MOST LIKELY WANT TO CREATE A FISCAL ADJUSTMENT. WE HAVE THIS JAPAN ETF TRACKING THE NATION'S STOCK UP SEVEN POINT 6% IN EARLY TRADING AND TALKING TO INVESTORS AND STRATEGISTS THIS EVENING, WE SEE PEOPLE EXPECTING A 4% OR 5% GAIN IN STOCKS TOMORROW MORNING AND SIGNIFICANT RALLY IN THE CURRENCY UP ABOUT 3% TO 5%. IT IS DEFINITELY SHAPING UP TO BE A OPEN FOR MARKETS TOMORROW MORNING. PAUL: SO THERE'S GOING TO BE A RUNOFF. WHAT IS GOING TO HAPPEN NEXT AND WHAT ARE INVESTORS WATCHING OUT FOR CUSTOMER -- WATCHING OUT FOR? REPORTER: INVESTORS ARE LOOKING ON THE DETAILED PLAN WHICH BOTH CANDIDATES ARE SET TO PROVIDE. NEITHER CANDIDATES HAVE PROVIDED DETAILED PLANS, SO NOW EVEN THOUGH WE ARE SEEING THIS HONEYMOON PERIOD FOR MARKETS, WE NEED TO SEE DETAILS. INVESTORS WILL WATCH CLOSELY FOR ANY CUES IT THE CANDIDATES WILL PROVIDE. FLÁVIO BOLSONARO IS ASSOCIATED WITH AUSTERITY WELL DA SILVA HAS BEEN RELUCTANT TO CUT SPENDING OR COMMIT MORE FIRMLY TO REINING BACK IN SPENDING. NOW INVESTORS WILL BE WATCHING OUT FOR ACTUAL PLANS INSTEAD OF JUST ASSUMPTIONS IN TERMS OF WHAT THE CANDIDATES WILL BE PULLING FORWARD. -- PUTTING FORWARD. PAUL: HOW ABOUT THE INDICATIONS OF THIS RESULT FOR PRESIDENT TRUMP'S INFLUENCE OVER LATIN AMERICA? REPORTER: FLÁVIO BOLSONARO BEING A RIGHT-WING CANDIDATE IS MORE ALIGNED WITH TRUMP. HIS FATHER J YEAR BOLSONARO HAS BEEN SEEN AS A TRUMP ALLY. IF FLÁVIO BOLSONARO DOES BECOME THE PRESIDENT, THEN WE WILL PROBABLY SEE IT LATIN AMERICA'S LARGEST ECONOMY BEING MORE CLOSELY ALIGNED TO WASHINGTON. HOWEVER, IF LULA EMERGES AS THE WINNER, WE STILL HAVE A LONG WAY TO GO. LULA HAS BEEN MORE CLOSELY ALLIED WITH CHINA. HE IS ADVOCATED FOR SOVEREIGNTY AND IT HAS BEEN A CUTE CAMPAIGN PROMISES HOOVES -- OF HIS. HE HAS CRITICIZED FROM PARTIALLY FOR HIS TARIFFS. THAT'S WHERE WE ARE AT. IF LOVE YOU DOES PREVAIL, WE STILL HAVE THREE WEEKS UNTIL THE RUNOFF, A LOT CAN HAPPEN BETWEEN NOW AND THEN. IF BRAZIL DOES SWING TO THE RIG LIKE OTHER COUNTRIES IN LATIN AMERICA, IT IS EXPECTED WE WILL HAVE A GREATER ALIGNMENT WITH WASHINGTON. PAUL: HOW ABOUT THE IMPACT ON THE REALITY AS WELL? >> SOME PEOPLE ARE EXPECTING TOMORROW TO OPEN AT ABOUT FIVE PER DOLLAR OR 3% TO 5% APPRECIATION IN THE CURRENCY, AS FLAVIO IS SEEN AS THE MORE AUSTERE CANDIDATE. WE ARE DEFINITELY EXPECTING A BIG SWING. BUT IT WILL ALSO BE A POSITIVE DATE FOR EQUITIES AND SWAP RATES WHICH ARE EXPECTED TO FALL. SHERY: JOINING US NOW IS THE GLOBAL RATES STRATEGIST AT COLUMBIA THREADNEEDLE. GREAT TO HAVE YOU WITH US. SHE WAS JUST TELLING US ABOUT HOW DIFFERENT INVESTORS ARE TREATING A POTENTIAL WIND BY BOLSONARO VERSUS INCUMBENT PRESIDENT LOU. -- LULA. IS THERE SUCH A MEANINGFUL DIFFERENCE ON WHAT THEY ARE OFFERING ECONOMICALLY AND PHYSICALLY? >> AT THIS POINT, THE KEY ISSUE IS WE DON’'T REALLY KNOW. WE KNOW THE STARTING POINT FOR BRAZIL'S FISCAL DEFICIT SOMEWHERE BETWEEN 8% AND 9% OF GDP. WE KNOW THERE IS SOME CONSOLIDATION THAT IS NECESSARY IN THE NEXT SEVERAL YEARS. BUT WE HAVE NO IDEA WHAT THE PLANS ARE THAT ARE GOING TO BE FEASIBLE, DEPENDING ON WHO WINS THIS ELECTION. I THINK ABSOLUTELY WE WILL SEE A BIG KNEE-JERK REACTION TOMORROW, BUT I WANT TO UNDERSCORE THE UNCERTAINTY AROUND THAT STORY IS STILL VERY HIGH. SHERY: WE ARE LOOKING AT LIVE PICTURES RIGHT NOW OUT OF BRAZIL, AND WE ARE EXPECTING FLÁVIO BOLSONARO TO SPEAK ANYTIME NOW. WE HAVE SEEN THIS ELECTION GO TO THE RUNOFF OCTOBER 25. WE HAVE SEEN THE LEAD BY FLÁVIO BOLSONARO, THE SON OF FORMER PRESIDENT JAIR BOLSONARO OVER PRESIDENT LOU. WHEN IT COMES TO BRAZIL, REAL YIELDS HAVE BEEN HIGH. WHAT HAS BEEN THE IMPACT ON THE ECONOMY IN THE HOUSEHOLDS OF BRAZIL AS WELL AS BUSINESSES TRYING TO DO ANYTHING AND THAT THE ECONOMY? >> THE LEVEL OF REAL YIELDS HAS BEEN A SIGNIFICANT BREAK ON THE ECONOMY OVER THE LAST SEVERAL YEARS. GROWTH IN BRAZIL AT THE MOMENT IS EXPECTED TO BE SOMEWHERE BETWEEN 2%, TWO POINT 5% OVER THE NEXT SEVERAL YEARS. THE EXPECTATION IS IF THERE IS FISCAL CONSOLIDATION, IF THEY ARE ABLE TO START TO BRING THE FISCAL DEFICIT DOWN, IT OPENS UP ROOM FOR THE CENTRAL BANK TO CUT RATES MORE AGGRESSIVELY. I THINK THE MARKETS WILL BE PICKING THAT UP TOMORROW. A LOT DEPENDS ON THE SPEED OF THIS FISCAL ADJUSTMENT AND THERE'S A LOT OF QUESTIONS AT THE MOMENT AROUND THAT. SHERY: FOR OUR VIEWERS, WE CONTINUE TO WAIT FOR FLÁVIO BOLSONARO IN BRAZIL, THESE ARE LIVE PICTURES FOR HIS COMMENTS AFTER HE CAME AHEAD OF INCUMBENT PRESIDENT LULA DA SILVA. NEITHER OF THEM HAVE MANAGED TO SECURE AN OUTRIGHT MAJORITY. YOU ACTUALLY CLOSED OUT YOUR EM CALLS, LOCAL POSITIONS NOT ONLY IN BRAZIL BUT MEXICO, COLOMBIA AND SOUTH AFRICA. WHAT WOULD IT TAKE FOR YOU TO MEANINGFULLY BUILD THOSE TRADES BACK? >> WE CLOSED THOSE BUSINESSES IN ANTICIPATION OF THE FEDERAL RESERVE STARTING TO GET MORE AGGRESSIVE WITH RATE HIKES. I THINK THE DOOR TO THAT REMAINS QUITE OPEN INTO THE SECOND HALF OF THE YEAR AND THE END OF THE YEAR. THE BIG QUESTION FOR US IS, ARE WE GOING TO GET A LITTLE CONFIDENCE THAT THE DOLLAR IS GOING TO PLATEAU OR POTENTIALLY WEAKEN ONCE AGAIN? THE DOLLAR AT THE MOMENT IS AT THE STRONGEST LEVEL IT HAS BEEN IN ABOUT A YEAR. I THINK IT STARTED TO PUT A LOT OF QUESTIONS FOR US ABOUT CARRY TRADES FUNDED WITH THE DOLLAR AND THAT INCLUDES HI KERRY CURRENCIES LIKE BRAZIL. TODAY'S DEVELOPMENT IS A DOMESTIC STORY, BUT FOR EM AS AN ASSET CLASS, WHAT REALLY MATTERS IS WHETHER THE FED WILL STEP BACK FROM HIKES AND UNDERPERFORM WHAT MARKETS ARE EXPECTING. FOR ME, I THINK IT IS A LITTLE BIT TOO EARLY. SHERY: AND WHAT WILL IT TAKE FOR THE DOLLAR TO CHANGE COURSE? THE BIG IMPACT WE SAW FROM THE WEAKER THAN EXPECTED PAYROLLS NUMBERS, THE TRAJECTORY OF THE FED AND THE EXPECTATIONS RIGHT NOW BY MARKETS. >> I THINK IT WILL TAKE A LOT MORE WEAKNESS IN THE ECONOMY OVERALL. I WOULD SAY AT THE MOMENT, U.S. GROWTH IS OUTPERFORMING EXPECTATIONS. THE LABOR MARKET APPEARS TO BE QUITE STABLE EVEN ONCE WE TAKE INTO ACCOUNT THE DATA LAST WEEK. INFLATION IS STILL A PRETTY UNCOMFORTABLE ZIP CODE. THE FED HAS HIKED IN SEPTEMBER. IT IS EXTRAORDINARILY RARE FOR THEM TO EXECUTE JUST ONE HIKE. I THINK WE WILL SEE A SEQUENCE. WHAT WE WILL NEED TO SEE IS THE ECONOMY STARTING TO RESPOND TO MONETARY POLICY TIGHTENING. SOME DEGREE OF SLOWDOWN IN DEMAND AND SOME DEGREE OF WEAKNESS IN THE LABOR MARKET, AND ULTIMATELY TIGHTENING OF FINANCIAL CONDITIONS WITH WIDER CREDIT SPREADS AND WEAKNESS IN EQUITIES AS A PRECONDITION FOR THE DOLLAR WEAKENING PERHAPS AT SOME POINT NEXT YEAR. SHERY: GIVEN THAT MOST OF THE TREASURY CURVE RIGHT NOW IN THE U.S. IS ABOVE THE 5% LEVEL, WHAT WILL IT MEAN FOR NOT ONLY THE VALUATION SIDE OF THINGS WHEN IT COMES TO U.S. MARKETS, BUT ALSO EMERGING MARKETS, AND THE FLOW OF CAPITAL FROM THERE ON? >> AT THE MOMENT, I THINK WE ARE IN THE EARLY DAYS OF THOSE HIGH INTEREST RATES WORKING THEIR WAY THROUGH RISK MARKETS. WE ARE AT THE START OF THEIR PROCESS WITH THE FED ADJUSTING POLICY RATES, THEY JUST HIKED IN SEPTEMBER. IT IS LIKELY THEY WILL CONTINUE. THOSE HIGHER INTEREST RATES PARTICULARLY INFLATION-ADJUSTED, REAL INTEREST RATES I THINK WE'LL SUCK SOME CAPITAL BACK TO THE U.S. TO THE EXTENT YOU ARE TAKING RISK GOING INTO EMERGING MARKET FIXED INCOME AND EQUITIES, I THINK THE SAFE INTEREST RATES IN THE U.S. WILL START TO LOOK A LOT MORE ATTRACTIVE. THAT'S THE PURPOSE OF THE TIGHTENING PROCESS. I THINK THAT'S ONE OF THE LATEST MONETARY POLICY TRANSMITS TO MARKETS. THE FED WILL BE LOOKING FOR THAT. THE FED WILL LOOK FOR SOME WEAKNESS IN RISK ASSETS TO GET A SENSE OF HOW EFFECTIVE TIGHTENING HAS BEEN. IF IT DOESN'T HAPPEN, THEY ARE MUCH MORE LIKELY TO CONTINUE TO HIKED AT SOME POINT LATER THIS YEAR AND AGAIN NEXT YEAR. SHERY: GOOD TO HAVE YOU WITH THE SPIRIT GLOBAL RATES STRATEGIST AT COLUMBIA THREADNEEDLE. WE TAKE YOU TO LIVE PICTURES OF THE PRESIDENT OF BRAZIL LULA DA SILVA RIGHT NOW GIVING A SPEECH, IN SÃO PAULO LIVE RIGHT NOW AFTER THEIR BRAZIL ELECTIONS JUST CLOSED, WE GOT THE VOTE COUNT AND ACTUALLY HIS RIVAL, FLÁVIO BOLSONARO, FINISHING AHEAD OF THE PRESIDENT HIMSELF. BOLSONARO EARNING MORE THAN 47% AND LULA AROUND 44%. WE KNOW BOTH OF THEM DID NOT SECURE MAJORITY SO THE RUNOFF WILL FOLLOW ON OCTOBER 25. OF COURSE THIS WAS A FISCAL CREDIBILITY EVENT FOR MARKETS. NEITHER LULA NOR BOLSONARO HAVE GIVEN EXACTLY WHAT THE ECONOMIC PICTURE WILL LOOK LIKE FOR BRAZIL, BUT IT HAS BEEN ABOUT FISCAL CREDIBILITY. THE MARKETS PREFERRING BOLSONARO WITH INVESTORS ASSOCIATING IT WITH A HIGHER PROBABILITY OF ADMINISTRATIVE REFORM, STATE ASSET SALES AND A STRONG FISCAL ADJUSTMENT. BLOOMBERG ECONOMICS NOW SAYING ALSO NARROW WINNING THE ELECTION OUTRIGHT ESPECIALLY WHEN WE GO TO THE RUNOFF ON OCTOBER 25, THAT COULD LOWER 10 YEAR YIELDS BY AROUND 78 BASIS POINTS AND STRENGTHEN THE BRAZILIAN REAL ALMOST 3%. WHAT A CERTAIN RIGHT NOW IS WE COULD BE SEEING BRAZIL SWINGING MORE TO THE RIGHT AND WHAT THAT MEANS FOR PRESIDENT TRUMPS INFLUENCE ON THAT COUNTRY WILL ALSO BE MEANINGFUL. RIGHT NOW PRESIDENT LULA SPEAKING LIVE IN SÃO PAULO SAYING THAT THEY'VE JUST HAD A LESSON IN DEMOCRACY. WE ARE ALSO HEARING FROM FLÁVIO BOLSONARO, SAYING THAT HE IS NOW SAYING HE'S VERY HAPPY WITH THE RESULT HE JUST SAW. OF COURSE THESE RESULTS AGAIN, THAT BOLSONARO FINISHED AHEAD OF PRESIDENT LULA IN THE FIRST ROUND, A LITTLE BIT SURPRISING GIVEN SOME POLLS HAVE PUT THE FORMER -- THE SON OF THE FORMER PRESIDENT AS A HEAD THE INCUMBENT PRESIDENT, BUT FLÁVIO COMING OUT AND SAYING THE RESULT SHOWS THAT BRAZIL WANTS TO CHANGE. WHILE PRESIDENT LULA SPEAKING AT THE SAME TIME IN SÃO PAULO IS SAYING THE RESULTS ARE OFTEN UNEXPECTED. AS WE ARE WATCHING LIVE FOOTAGE OUT OF SÃO PAULO, WE HAVE FLÁVIO BOLSONARO SPEAKING IN BRAZIL RIGHT NOW SAYING THAT THE RESULT SHOWS THAT BRAZIL WANTS A CHANGE. WE HAVE MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. [APPLAUSE] SHERY: TAKE A LOOK AT HOW ASIAN ASSETS ARE TRADING. WE HAVE SOUTH KOREA CLOSED ON HOLIDAYS BUT THE NIKKEI GAINING MORE THAN 2% AT THE MOMENT. WE HAVE SEEN A LITTLE MORE FIRMNESS ON THE JAPANESE YEN HEADING TOWARD THE 157 LEVEL AFTER PRIME MINISTER TAKAICHI SAID PRESIDENT TRUMP IS RAISING THE WEEKEND TRADING PROBLEM IN A MEETING IN NEW YORK. WE ARE ALSO WATCHING THE HOTTER TOKYO INFLATION NUMBERS AND THE WEAKER U.S. PAYROLLS HAVING AN IMPACT ON JAPANESE ASSETS. THE BOJ DEPUTY GOVERNOR SAYING IT'S UNCLEAR TO WHAT EXTENT AI COULD BE AFFECTING THE POLICY FRAMEWORK. THIS IS EXCERPTS FROM HIS SPEECH LATER TODAY. HE IS SAYING THAT THEY ARE IS A DEMAND SHOCK AND ARTIFICIAL INTELLIGENCE COULD AFFECT THE R-STAR. LET'S STAY WITH AI AND JAPAN. ONE OF THE BIGGEST GLOBAL AI INVESTORS, SOFTBANK CHIEF MASAYOSHI SON, SAYING HE'S WORRIED ABOUT RISKS AS MACHINES GAIN MORE ABILITIES. SPEAKING AT A TECH FORUM IN KYOTO, HE CALLED FOR GLOBAL COOPERATION ON AI GUARDRAILS. >> I THINK WE DON'T HAVE ANY MORE LUXURY OF HAVING HUMAN FIGHT AGAINST HUMANS. THERE WILL BE A BIGGER ISSUE OF HUMANS AGAINST SUPER INTELLIGENCE, THAT IF THE SUPER INTELLIGENCE BECOMES SO SMART, AND IF BAD USAGE BY BAD HUMANS USE THE WRONG USAGE, THIS CAN BECOME SUPER DANGEROUS. SHERY: LET'S BRING IN BLOOMBERG TECH EDITOR MAYUMI. MASAYOSHI SON ADDING TO THE GLOBAL CHORUS OF PEOPLE WARNING ABOUT THE SAFETY OF ARTIFICIAL INTELLIGENCE BUT STILL BULLISH WHEN IT COMES TO THE TECHNOLOGY ITSELF. REPORTER: THAT'S CORRECT. HE SAID AGAIN THAT HE THINKS AI INTELLIGENT MACHINES COULD EVENTUALLY ACCOUNT FOR AT LEAST 20% OF GLOBAL GDP BY AROUND 2040 AND THAT COMES TO HE ESTIMATES AROUND $46 TRILLION. HE WAS EVEN TELLING PEOPLE IN THE ROOM THAT WE ALL HAVE A CHANCE TO MAKE 50 X OUR INVESTMENT IN AI AT AROUND 15 YEARS IF HE IS RIGHT. WHAT WAS SURPRISING IS TO HEAR THE STRONG A NOTE OF CAUTION, FROM SOMEONE WHO HAS BEEN A TECH OPTIMIST THROUGH AND THROUGH FOR DECADES. HE'S BEEN VERY CONSISTENT ABOUT HOW TECHNOLOGY AND AI HAVE THE POWER TO COMBAT DESPAIR, TURN DESPAIR INTO HOPE AND CONTRIBUTE TO HAPPINESS FOR PEOPLE AROUND THE WORLD. IT'S WHY SOFTBANK HAS ALREADY COMMITTED ROUGHLY 65 BILLION DOLLARS TO OPENAI. SO HE HAS NOT LOST FAITH AT ALL THAT HE IS STRESSING THAT AI IS BECOMING POWERFUL, EXTREMELY QUICKLY AND THE RISKS ARE BECOMING MUCH MORE SERIOUS. IT WAS A SLIGHT SHIFT IN THE ARGUMENT THAT HE IS PRESENTING. SHERY: TELL US A LITTLE BIT ABOUT THOSE INVESTMENTS, YOU MENTIONED THE ONES IN OPENAI, BILLIONS AND BILLIONS OF DOLLARS. WE HAVE SEEN A LOT OF CONCERN ABOUT THE FEASIBILITY OF THESE INVESTMENTS AND THE PRESSURE THAT IS ADDING TO HIS OWN COMPANY, SOFTBANK. REPORTER: THAT'S TRUE. SOFTBANK IS TAKING ON A LOT MORE DEBT. IT IS -- BORROWING COSTS ARE CLIMBING. THERE'S A CIRCULAR REASONING BEHIND THIS. HE'S ABLE TO FINANCE HIS BIG BETS PRECISELY BECAUSE THE VALUATIONS OF COMPANIES THEY'VE INVESTED LIKE OPENAI AND ARM, THOSE HAVE BEEN CLIMBING AND THAT IN TURN ALLOWS HIM TO BORROW MORE, TO SPEND MORE. SO IF HE'S RIGHT, HE'S VERY VERY RIGHT. IF HE IS WRONG, HE'S VERY WRONG. THAT SAID, THERE ARE SOME VERY VERY TRUE AND REAL ASSETS INSIDE SOFTBANK LIKE ITS TOLL, OPERATIONS. THERE'S A LOT OF STRONG DEMAND INSIDE JAPAN, AND HUNGER TO ADOPT AI AND SOFTBANK IS IN A VERY GOOD POSITION RIGHT NOW TO GO AFTER THAT. SHERY: TO BE FAIR, THOSE BIG GAMBLES ARE AT THE CORE OF HIS INVESTING PHILOSOPHY. REALLY GOOD TO HAVE YOU WITH US, BLOOMBERG TECH EDITOR WITH THE LATEST ON SOFTBANK. PLENTY MORE. YOU ARE WATCHING BLOOMBERG. ♪ PAUL: GEOPOLITICAL UNCERTAINTY AND TECHNOLOGICAL DISRUPTION ARE KEY CONCERNS FOR GLOBAL ASSET MANAGERS. BLOOMBERG SPOKE TO SOME OF SINGAPORE'S MOST SUCCESSFUL FINANCIAL COMPANIES AT THE S G SUMMIT ABOUT HOW THEY ARE POSITIONING FOR THE RISKS POSED BY AI AND OTHER MAJOR CHALLENGES. >> WE HAVE NOT SEEN COST EFFICIENCY GAINS AS YET. IF ANYTHING, OUR INVESTMENTS INTO AI TECHNOLOGY AND THE PEOPLE IN THE LAST TWO YEARS HAS PROBABLY ADDED 20% TO OUR OVERALL COST. BUT AT THE SAME TIME, I THINK THE ABILITY FOR US TO COME TO CONCLUSIONS TO STRATEGIZE AND ANALYZE SITUATIONS, FRANKLY ALSO TO LOOK FOR NEW OPPORTUNITIES, AND TO ALSO STUDY HOW SOME OF OUR LARGER GLOBAL COMPETITORS ARE NAVIGATING THE WORLD. THE TOOLS THAT ARE AVAILABLE AND THE DEMOCRATIZATION OF KNOWLEDGE THROUGH AI IS SOMETHING THAT WE AT THE FIRM HAVE GAINED TREMENDOUSLY FROM. HASLINDA: IT'S NOT JUST ABOUT AI, IT'S ALSO GEOPOLITICAL TENSIONS. HOW ARE YOU NAVIGATING AT DPS? WHAT ARE YOU POSITIONING FOR? >> SO IT IS TRADE, TRUMP, TARIFFS, AND TECHNOLOGY. AS A MANAGEMENT TEAM AT DBS, WE DO A LOT OF SCENARIO PLANNING. WE PLAN FOR WAR, SHORT WORK, LONG WAR, WHERE THE WORLD WILL BECOME A EUROPE, MIDDLE EAST, ASIA. WE PLAN FOR THE WEAPONIZATION OF EVERYTHING. WEAPONIZATION OF THE U.S. DOLLAR, WEAPONIZATION OF TRADE, WEAPONIZATION OF CHIPS, WEAPONIZATION OF PAYMENTS. WE ALSO SCENARIO PLAN FOR WHEN THINGS DON'T WORK. WHAT IF THE CABLES GET CUT? WHAT IF WE GET BOMBED AND WE CAN'T GET INTERNET ACCESS? WHAT IS OUR BACKUP PLAN? WHAT IS OUR DRAW STATEMENT? DO YOU HAVE FOR YOUR BUSINESS A STATEMENT TO PULL OUT EVERY DISASTER THAT HAPPENS? BECAUSE WHEN IT HAPPENS AND YOU DON'T HAVE IT, WE WILL BE PANICKING. HASLINDA: WHAT ARE YOU DOING NOW YOU DID NOT DO 12 OR 24 MONTHS AGO GIVEN THE CHANGING MICROENVIRONMENT? >> TAKING DIFFERENT POSITIONS WHICH GO A LONG AND SHORT AND ALLOW US TO PROFIT FROM DISSIDENTS IN THE MARKET. THE MARKETS MOVING IN DIFFERENT DIRECTIONS. WHICH MEANS IT DOESN'T MATTER IF MARKETS DO WELL OR NOT, WE HAVE A CHANCE TO PROFIT. I THINK THAT'S INCREDIBLY IMPORTANT IN THE MARKET TODAY AND HAS ALWAYS BEEN IMPORTANT TO HAVE THAT FLEXIBILITY. IN ADDITION, IT'S A LONG JOURNEY. WE ARE ALWAYS IMPROVING. THAT'S ONE ASPECT OF WHAT WE DO. IN TERMS OF TECHNOLOGY, AI, WE ARE ALSO LIKE EVERYBODY ELSE. WE HAVE HAD A LONG JOURNEY OF A LONG RELATIONSHIP WITH TECHNOLOGY. WHEN YOU THINK ABOUT QUANT INVESTING 20 YEARS AGO, NOT MANY PEOPLE WERE DOING THAT. WE HAVE BEEN FAMILIAR WITH USE OF TECHNOLOGY FOR TRADING AND INVESTING. I THINK WHEN AI ENTERED THE PICTURE, WE DID NOT HAVE TO REWRITE THEY WILL BOOK WE. DID NOT HAVE TO RETHINK OUR APPROACH. WE WANT TO EMBRACE TECHNOLOGY TO THE FULLEST ATTEMPT, IN THE MOST APPROPRIATE WAY, BUT ALWAYS CAUTIOUS. ALWAYS LOOKING FOR WHAT COULD GO WRONG. LOOKING AT THE RISKS AND MAKING SURE THAT AT THE END OF THE DAY, HUMANS ARE IN CHURCH -- CHARGE. HUMANS ARE NOT JUST IN THE LOOP BUT OVERSEEING THE PROCESS, AND ULTIMATELY WE TAKE RESPONSE ABILITY. PAUL: FINANCE MINISTERS -- LEADERS SPEAKING TO HASLINDA AMIN THAT'S IT FOR THE ASIA TRADE. THE CHINA SHOW IS NEXT.