# Daybreak Weekend: Fed Meeting, Europe Central Bank Decisions, Takaichi-Trump Meeting

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 13 Mar 2026, 39 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/d15648c4-cee0-4e99-a5ca-af80014d921d/b9146578-2af7-440d-8294-b40c01334aab/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

Bloomberg Daybreak Weekend with Host Nathan Hager take a look at some of the stories we'll be tracking in the coming week. • In the US – a look ahead to next week’s monetary policy decision from the Federal Reserve and a focus on 3 stocks for the week ahead. • In the UK – a look ahead to the Bank of England and European Central Bank decisions. • In Asia – a look ahead to Japanese Prime Minister Sanae Takaichi’s meeting with President Donald Trump in Washington. See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
[0:10] Speaker 2: This is Bloomberg day Break Weekend, our global look at
[0:13] Speaker 2: the top stories in the coming week from our Daybreak
[0:15] Speaker 2: anchors all around the world. Straight Ahead on the program,
[0:18] Speaker 2: we look to the next policy decision from the Fed.
[0:21] Speaker 2: I'm Nathan Hager in Washington.
[0:23] Speaker 3: I'm Carolin Hep getting on to where we discussed how
[0:25] Speaker 3: Europe's inflation battle may not be over just yet.
[0:29] Speaker 4: I'm Doug Prisner looking ahead to the meeting between President
[0:32] Speaker 4: Trump and Japanese Prime Minister son of A takea Ichi.
[0:38] Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
[0:42] Speaker 1: eleven three zero, New York, Bloomberg ninety nine to one, Washington, DC,
[0:46] Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syria
[0:51] Speaker 1: XM one twenty one, and around the world on Bloomberg Radio,
[0:55] Speaker 1: dot Com and the Bloomberg Business App.
[1:02] Speaker 2: Good day to you. I'm Nathan Hager. We begin today's
[1:05] Speaker 2: program with the Federal Reserve. The Central Bank begins its
[1:08] Speaker 2: March policy meeting on Tuesday and issues its decision on
[1:12] Speaker 2: interest rates Wednesday. For more on what to expect, we're
[1:16] Speaker 2: joined by Anna Wong chief US economist for Bloomberg Economics
[1:20] Speaker 2: and Anna just looking at expectations in the market, seems
[1:23] Speaker 2: like investors are thinking a whole lot of nothing. But
[1:26] Speaker 2: what are you expecting under the surface.
[1:29] Speaker 5: I'm expecting the Fed to sharply revise up the PCE
[1:34] Speaker 5: inflation forecast, So in the December sep it was in
[1:41] Speaker 5: the mid twues. I think that given where oil price
[1:45] Speaker 5: is right now, and it looks like it's quite likely
[1:49] Speaker 5: oil price would stay elevated at around eighty dollars at
[1:53] Speaker 5: least on average for the rest of this year, and
[1:55] Speaker 5: that would mean that headline PCE should be going all
[1:58] Speaker 5: the way up to three ish, So that would be
[2:02] Speaker 5: quite a sharp upward revision.
[2:04] Speaker 2: Is that the kind of revision that would cause you
[2:08] Speaker 2: to revise upward your expectations for interest rates? Are you
[2:12] Speaker 2: thinking that there could be a chance we see an
[2:14] Speaker 2: interest rate hike? Maybe not at this meeting, but sometime
[2:17] Speaker 2: this year.
[2:17] Speaker 5: A hike is not in my baseline. We're still expecting
[2:20] Speaker 5: multiple rate cuts, although the chance of a large one
[2:24] Speaker 5: hundred bis rate cut this year in total, that has
[2:28] Speaker 5: decreased the chances for that. Nonetheless, I still think that
[2:33] Speaker 5: on the whole the FED would be easy because an
[2:36] Speaker 5: oil shock tend to boost headline inflation, but it tends
[2:39] Speaker 5: to lower core PC inflation. Our estimate is that eighty
[2:44] Speaker 5: dollars oil would add six hundred and fifty dollars on
[2:48] Speaker 5: average for the household this year, and so that's six
[2:52] Speaker 5: hundred and fifty dollars less that they could spend on
[2:55] Speaker 5: other core goods and services. It's very similar to the
[2:59] Speaker 5: tariff shock with SAW last year. Recall that when Trump
[3:02] Speaker 5: announced the Liberation Day tariffs, the stock market plummeted and
[3:07] Speaker 5: all the services inflation went down Because tariffs are at
[3:10] Speaker 5: income shock, a contractionary income shock. An oil shock is
[3:14] Speaker 5: very similar. It's also a constructionary income shock. They have
[3:19] Speaker 5: less money to spend on movie theaters, on sports admission tickets.
[3:23] Speaker 5: The stock market is going to respond by falling, and
[3:27] Speaker 5: all that is going to shave off some a couple
[3:30] Speaker 5: bits from core PC inflation. So the only time when
[3:34] Speaker 5: the FEED should be responding to the higher headline but
[3:37] Speaker 5: not the lower core measure is if they fear that
[3:41] Speaker 5: inflation expectations are unanchoring, and so far I think the
[3:47] Speaker 5: majority of THEMC members don't think that's happening. Even the
[3:51] Speaker 5: most hawkish FOMC member, Beth Hemmick, in her latest speech
[3:56] Speaker 5: at the Monetary Policy Forum last Friday, for which I was,
[4:00] Speaker 5: she also talked about how our rates could stay on
[4:03] Speaker 5: hold for a while. So even the most hawkish member
[4:06] Speaker 5: is not talking about a hike as in a baseline.
[4:09] Speaker 5: So I think on the whole, the median FMC member
[4:13] Speaker 5: would write in one rate cut for this year.
[4:16] Speaker 2: But even the markets are dialing back their expectations for
[4:19] Speaker 2: any rate cuts this year. What is the market getting
[4:22] Speaker 2: wrong and what do you see that's informing your expectation
[4:26] Speaker 2: that we could still see multiple cuts this year.
[4:28] Speaker 5: I mean I would be hesitant to say the markets
[4:31] Speaker 5: was wrong. I mean, the markets oftentimes is very sharp
[4:34] Speaker 5: on this. But I think where I differ from the
[4:36] Speaker 5: market is that I still think that core PC inflation
[4:41] Speaker 5: will go down. I mean, recall last year when again
[4:45] Speaker 5: a tariff announcement. I keep referring to tariffs because tariffs
[4:49] Speaker 5: and oil shocks are very similar. They are both supply shocks,
[4:53] Speaker 5: and they're both transitory if inflation expectations are anchored. Just
[4:58] Speaker 5: like last year, last year with the mark markets was
[5:00] Speaker 5: also thinking that the tariffs are going to boost core
[5:03] Speaker 5: PC inflation, and it didn't happen because it is an
[5:07] Speaker 5: income shock and it actually lowers core PC inflation. Same
[5:12] Speaker 5: for core here. Even the Fed's own model, so the
[5:14] Speaker 5: FED has a workhorse model called the Furbus. It's a
[5:18] Speaker 5: general equilibrium model. A ten dollars shock on oil tends
[5:23] Speaker 5: to boost headline PCE by point three percentage point. So
[5:28] Speaker 5: this is why thirty dollars shock with the point nine
[5:31] Speaker 5: percentage point on the headline. However, that model also see
[5:36] Speaker 5: that core PCE should be decreasing, It should be deflationary
[5:40] Speaker 5: on core PC, and the FED should be actually easing,
[5:43] Speaker 5: not hiking.
[5:44] Speaker 2: So are you thinking that the bigger risk to the
[5:47] Speaker 2: Fed's dual mandate is on the labor market side as
[5:50] Speaker 2: opposed to the inflation side, particularly after that surprise drop
[5:54] Speaker 2: in non farm payrolls that we saw for February.
[5:57] Speaker 5: Absolutely, So I think about, you know, as a aster,
[6:00] Speaker 5: I think about what the FED will do, not the
[6:03] Speaker 5: FED should do. I just told you that I think
[6:05] Speaker 5: the FED should be thinking about easing rather than hiking.
[6:08] Speaker 5: But I think what they would do is that, first
[6:10] Speaker 5: of all, the Hawks have the upper hand right now,
[6:14] Speaker 5: and so they are not going to be pushing for
[6:16] Speaker 5: any cuts in the first half of this year, and
[6:19] Speaker 5: what likely will happen is that the labor market will
[6:22] Speaker 5: deteriorate rather rapidly in the spring and going into the summer,
[6:28] Speaker 5: we are likely to see the unemployment rate climbing very
[6:31] Speaker 5: much like the last two years. And so by June
[6:35] Speaker 5: when they have seen that the worst of the oil
[6:37] Speaker 5: shock should have happened. Also by June, because the oil
[6:41] Speaker 5: price should show up in CPI in March, in April,
[6:44] Speaker 5: and then by June it should be already kind of
[6:46] Speaker 5: coming down. So by June they would be more concerned.
[6:50] Speaker 5: The focus should be shifting to labor market as the
[6:53] Speaker 5: unemployment rate climbs.
[6:54] Speaker 2: Thanks Sanna, great having you on with us. That's Anna Wong,
[6:57] Speaker 2: chief US economist for Bloomberg Economic. Ahead of the Fed's
[7:00] Speaker 2: March rate decision this Wednesday and Powell news conference, we
[7:04] Speaker 2: will have full coverage for you on Bloomberg Radio. Let's
[7:07] Speaker 2: take a look now, it's some stocks making news in
[7:09] Speaker 2: the week ahead. I'm Nathan Hager, joined by Bloomberg News
[7:12] Speaker 2: cross asset reporter Denisa Sikova. Earnings. Denisa, let's start with
[7:17] Speaker 2: the one that's coming on Thursday, a pretty big bell
[7:19] Speaker 2: weather on economic activity. What are we expecting from FedEx?
[7:24] Speaker 6: FedEx definitely a big one. We actually had a great
[7:28] Speaker 6: story this week on the terminal. FedEx has eclipsed their
[7:32] Speaker 6: rival ups and it has become the largest US parcel
[7:36] Speaker 6: carrio by market value for the first time. Definitely an
[7:39] Speaker 6: interesting thing going into the earnings. What we're seeing for
[7:43] Speaker 6: this earning season is that the company raised the low
[7:46] Speaker 6: end of its full year adjusted EPs, so now currently
[7:49] Speaker 6: is about seventeen dollars and eighty cents, but it increased
[7:53] Speaker 6: the full year revenue growth range to five six percent,
[7:57] Speaker 6: so definitely some optimism there. The company is actually up
[8:01] Speaker 6: twenty four percent this year. The ticker, of course, is
[8:05] Speaker 6: FDx for FedEx. This has been the latest sign that
[8:09] Speaker 6: the company's management has won investors over with plans to
[8:12] Speaker 6: trim costs, boost margins, and spin off its freight business.
[8:16] Speaker 6: I'm sure investors will be looking for all that. Another
[8:18] Speaker 6: interesting metric analyst we're expecting is FedEx is expected to
[8:23] Speaker 6: face approximately six hundred million headwinds in the second half
[8:27] Speaker 6: of the year. About two hundred and sixty five million
[8:29] Speaker 6: are attributed to higher variable compensation, so That's one interesting
[8:33] Speaker 6: number that could perhaps way on the super positive outlook
[8:37] Speaker 6: going into the earning season.
[8:38] Speaker 2: Yeah, to your point, I mean the outlook has been strong,
[8:41] Speaker 2: and this stock has been on a tear as well.
[8:44] Speaker 2: Does that set the bar even higher for FedEx to outperform?
[8:48] Speaker 6: For sure? And obviously we're in very high market volativity
[8:52] Speaker 6: reporting even just a basic earnings reports in the current
[8:55] Speaker 6: market environment, it's hard. Obviously, we talked about ups and
[8:58] Speaker 6: the FedEx competition, and investors have been reacting way more
[9:02] Speaker 6: positively to FedEx and have been quite punishing to EPs.
[9:05] Speaker 6: So I'm sure those tides could turn quickly. But for now,
[9:08] Speaker 6: you know, up more than twenty percent.
[9:10] Speaker 2: This year, Yeah, on a tear, like we say, and
[9:12] Speaker 2: a day before FedEx. We're going to get results from
[9:14] Speaker 2: Macy's on Wednesday. Of course, we saw this stock drop
[9:18] Speaker 2: after Coals reported its results this past week, So what
[9:21] Speaker 2: should we expect from Macy's this week?
[9:23] Speaker 6: Quite the opposite story on Macy's. The company is down
[9:27] Speaker 6: twenty two percent this year. Of course, the ticker is
[9:30] Speaker 6: the last time reported they reported earning shares declined rapidly
[9:34] Speaker 6: their forecasts. Their profit forecast for the quarter was disappointing,
[9:38] Speaker 6: even though the earnings reports was pretty solid. What we
[9:42] Speaker 6: expected this time is net sales are projected to be
[9:46] Speaker 6: around seven point five billion. Comparable sales are expected to
[9:49] Speaker 6: increase about one or two percent, but potentially exceeding the consensus.
[9:54] Speaker 6: We're obviously coming into this earning season with pretty bearish
[9:58] Speaker 6: pricing of the company. Dooming Dels is expected to be
[10:01] Speaker 6: a strong performance. Sales are projected to rise approximately seven percent.
[10:05] Speaker 6: Everyone will looking for the earningsco It's expected to focus
[10:09] Speaker 6: on the progress of its makeover, and one thing we've
[10:12] Speaker 6: been talking a lot about is the potential sex store acquisition,
[10:15] Speaker 6: so I'm sure everyone will be listening about that as well.
[10:17] Speaker 2: Oh definitely, that's one to scoop up after their bankruptcy
[10:22] Speaker 2: for sure, and before both those names report deny. So
[10:25] Speaker 2: we're going to hear from Lulu Lemon on Tuesday. Talk
[10:29] Speaker 2: about struggles. This company seems to exemplify it.
[10:33] Speaker 6: Yeah, the company has really suffered a lot, anything from
[10:36] Speaker 6: just so many scandals about different leggings and whether they're
[10:39] Speaker 6: transparent or not, to just kind of broader challenges. Lul
[10:43] Speaker 6: Lemon stocks are down almost seventy percent since the start
[10:48] Speaker 6: of twenty twenty four, activist investor Elliott Investment Management has
[10:51] Speaker 6: amassed a more than one billion stake in the company.
[10:54] Speaker 6: We had the company founder, Chip Wilson stepping up his
[10:58] Speaker 6: campaign against the company's board in the midst of search
[11:01] Speaker 6: of a new CEO, so we have all this tension
[11:04] Speaker 6: going into the earning season. Of course, the ticker is
[11:09] Speaker 6: lul Lemon updated guidance in January indicating that net revenue
[11:13] Speaker 6: and diluted earnings per share for the fourth quarter will
[11:16] Speaker 6: be towards the higher end, so definitely some optimism there.
[11:20] Speaker 6: They expect between three point five billion and a little
[11:22] Speaker 6: bit higher than this tariff risks, which what everyone has
[11:26] Speaker 6: been looking at. Unless we're saying that tariff risks have
[11:30] Speaker 6: been reduced, so that could support the company. But we
[11:33] Speaker 6: have that CEO search, we have all those candles this year,
[11:35] Speaker 6: so it's a high bar for investors to be impressed.
[11:40] Speaker 2: Yeah, you know, for all these companies, DEANIZI, you might
[11:42] Speaker 2: think that there's a risk around tariffs as well as
[11:45] Speaker 2: you know, some of the geopolitical risk that we're seeing
[11:48] Speaker 2: on the war in the Middle East as well. I mean,
[11:50] Speaker 2: how could all that play out into some of these
[11:52] Speaker 2: earnings that we're expecting this way.
[11:54] Speaker 6: For sure, that's adding a lot of tension. I feel
[11:56] Speaker 6: so now tariffs has taken a step back, and everyone's
[11:59] Speaker 6: worth about others things. Consumers are not doing so well.
[12:02] Speaker 6: For example, Macy's in their last reports, it was all
[12:05] Speaker 6: about the consumer. They said that those low income consumers
[12:08] Speaker 6: are stepping back, but still they're seeing a lot of
[12:11] Speaker 6: support from their middle income to high income consumer. And
[12:14] Speaker 6: I'm sure a lot of those brands and companies we
[12:16] Speaker 6: talked about are dealing with the same thing. Are our
[12:19] Speaker 6: low income customers coming back, our middle income and high
[12:23] Speaker 6: income customers spending enough to compensate for that laws of
[12:28] Speaker 6: low income spending.
[12:29] Speaker 2: Yeah, a lot of reason to keep attention on the
[12:32] Speaker 2: earnings this week. Thank you for this, toditsa really great
[12:34] Speaker 2: having you on with us. That's Dnitza Sikova, cross asset
[12:37] Speaker 2: reporter for Bloomberg News, and coming up on Bloomberg day
[12:40] Speaker 2: Break weekend, we'll discuss how Europe's inflation battle may not
[12:44] Speaker 2: be over just yet. I'm Nathan Hager, and this is
[12:48] Speaker 2: Bloomberg's Bloomberg Daybreak Weekend, our global look ahead at the
[13:02] Speaker 2: top stories for investors in the coming week. I'm Nathan
[13:05] Speaker 2: Hager in Washington. Up later in the program, we'll discuss
[13:08] Speaker 2: what to expect when Japan's Prime minister meets with President
[13:11] Speaker 2: Donald Trump in Washington. But first, Europe's inflation battle may
[13:16] Speaker 2: not be over just yet. After months of progress, central
[13:19] Speaker 2: bankers have begun to signal the worst of the price
[13:21] Speaker 2: shock was behind them, but a renewed surgeon oil prices
[13:24] Speaker 2: driven by conflict in the Middle East is complicating that narrative.
[13:28] Speaker 2: Next week, the Bank of England and the European Central
[13:30] Speaker 2: Bank both set interest rates, facing fresh questions about whether
[13:34] Speaker 2: they've really done enough to tame inflation, especially with the
[13:37] Speaker 2: memories of the last inflation shock still fresh. Let's get
[13:40] Speaker 2: more from Bloomberg Daybreak. Europanker Caroline Hebger in London, Nathan.
[13:44] Speaker 3: At the beginning of this year, the focus had been
[13:47] Speaker 3: on the euro rivaling the dollar and whether Europe would
[13:51] Speaker 3: try to la pen prove institutions, including the ECB, but
[13:55] Speaker 3: those issues have been overtaken by worries about an inflation
[13:59] Speaker 3: shock that could Europe harder than elsewhere. The Bank of
[14:03] Speaker 3: England and the European Central Bank go into next week's
[14:06] Speaker 3: meetings facing different domestic backdrops, but the same global uncertainty.
[14:12] Speaker 3: Earlier this week, we asked Paul Markham, investment director and
[14:15] Speaker 3: head of Global Equities at GAM, about what separates the two.
[14:20] Speaker 7: Generally, the Eurozone inflationary environment is much more benign than
[14:24] Speaker 7: the UK. The UK historically has always been quite a
[14:28] Speaker 7: cyclical economy actually, and one where you know, the potential
[14:32] Speaker 7: for inflation has always been a little bit higher. And
[14:35] Speaker 7: of course because of certain labor policies that we now
[14:39] Speaker 7: have you know around you know, the minimum wage and
[14:42] Speaker 7: that kind of thing, and you know the impacts that
[14:44] Speaker 7: that has. I think that's exacerbated the problem business costs
[14:48] Speaker 7: of risen as well. And then you know, we had
[14:50] Speaker 7: never really completely squeezed out the inflationary impacts that came
[14:54] Speaker 7: around as a result of COVID, and the bangling had
[14:56] Speaker 7: never really quite gone on top of that. So I think, yes,
[14:58] Speaker 7: it does have another problem there, and I think that
[15:00] Speaker 7: the expected rate cuts that were due to come through
[15:03] Speaker 7: this year are much less likely to do so now
[15:06] Speaker 7: as a result of this despike an energy prices.
[15:09] Speaker 3: That was Gamm's pull mark him speaking to Bloomberg Radio.
[15:12] Speaker 3: Well I enjoined now by Bloomberg's chief UK economist, Dan
[15:15] Speaker 3: Hanson and Janna Randau, who runs our coverage of the
[15:18] Speaker 3: Western European economy. Thank you to both of you for
[15:21] Speaker 3: being with me. Yana, can I start with you? Firstly? Really,
[15:25] Speaker 3: how is the war in Iran now affecting the Eurozone economy?
[15:31] Speaker 3: How are people thinking about it?
[15:33] Speaker 8: Confidence of course is down everywhere across the Eurozone, across
[15:37] Speaker 8: the wider continent, which is bad for consumption, for investment,
[15:41] Speaker 8: and those of course are the drivers of growth that
[15:44] Speaker 8: the ECB had been counting on to drive the recovery.
[15:47] Speaker 8: Much will depend on how long the conflict lasts, but
[15:51] Speaker 8: it's probably fair to say that because of higher old prices,
[15:55] Speaker 8: higher gas prices, that energy rely on countries and sectors
[15:58] Speaker 8: are more effect than others. And you can add one
[16:02] Speaker 8: and one and that puts the spotlight on the German economy.
[16:05] Speaker 8: Yet again, we've seen some terrible data recently about January,
[16:11] Speaker 8: and I really wouldn't hold my breath that things will
[16:13] Speaker 8: bounce back quickly after what we've seen in the Middle East.
[16:17] Speaker 8: But more importantly, I want to talk quickly about inflation
[16:20] Speaker 8: because the memories of the last inflation shock twenty twenty two,
[16:24] Speaker 8: they haven't really faded. So the threshold for businesses to
[16:27] Speaker 8: pass on higher costs, for consumers to ask for wage
[16:30] Speaker 8: increases that is much lower now. And of course those
[16:35] Speaker 8: are the famous second round effects that turn an external
[16:38] Speaker 8: shock into very domestic problems for the central Bank. Yeah.
[16:43] Speaker 3: Indeed, of course what's happening in the Middle East is
[16:47] Speaker 3: hugely disturbing and distressing to so many people on human level,
[16:50] Speaker 3: but we also have to think about it economically too.
[16:54] Speaker 3: And this major shock, as you say, Yanna, where do
[16:57] Speaker 3: you think it will leave the Europeans and bank and
[17:00] Speaker 3: therefore the outlook for interest rates really as leaders around
[17:05] Speaker 3: the world kind of grapple with this huge wall.
[17:09] Speaker 8: So the ECB was essentially done with rate cuts. It
[17:13] Speaker 8: had been on hold for a couple of months, and
[17:16] Speaker 8: while some people left the door open to another move down,
[17:21] Speaker 8: I think it's fair to say that now rate cuts
[17:23] Speaker 8: are off the table. And the president herself, Christine la
[17:26] Speaker 8: Guard was among those saying that the ECB won't allow
[17:29] Speaker 8: inflation to take hold. Now you could say that's her job,
[17:32] Speaker 8: but in the current situation that contains a very clear
[17:36] Speaker 8: policy message. The upcoming meeting is probably too soon for
[17:41] Speaker 8: specific decisions. But it's very fair to say that hike's
[17:45] Speaker 8: rate increases are moving onto the agenda. And now it's
[17:48] Speaker 8: difficult to say when how many. If we've looked at
[17:52] Speaker 8: market pricing over the past couple of days, traders price
[17:55] Speaker 8: between not quite one and two. It moves around, you know,
[18:00] Speaker 8: almost on an hourly basis, so it's very difficult to project.
[18:03] Speaker 8: But I had a chance to speak to Pita Kashimir,
[18:06] Speaker 8: the head of the Slovak Central Bank, just before the
[18:09] Speaker 8: black O period starts, before the ECB meeting, and he
[18:14] Speaker 8: was saying a rate hike is potentially closer than many
[18:18] Speaker 8: people think. And that is of course a very different
[18:21] Speaker 8: language than just a couple of days and weeks ago,
[18:25] Speaker 8: when it was very much about we're in a good place,
[18:27] Speaker 8: we'll need to see the data. So a lot of
[18:30] Speaker 8: people worry. Kashmir is not alone. We've heard similar, similar
[18:34] Speaker 8: language from other policy makers. So an interesting meeting we
[18:38] Speaker 8: will learn a lot, even though we will probably not
[18:41] Speaker 8: see action at that point. But yeah, rate hikes is
[18:44] Speaker 8: where the ECB is headed.
[18:46] Speaker 3: Okay, so quite a big rethink. As you say, then
[18:49] Speaker 3: for Europe, where does that leave the UK? Then in
[18:53] Speaker 3: the Bank of England, Dan, turning to you, the main
[18:56] Speaker 3: focus of the Bank of England had been the strength
[18:59] Speaker 3: of the lack of in the UK economy. How has
[19:02] Speaker 3: that changed since the start of the conflict?
[19:05] Speaker 9: So, I mean, if you go back to February, you
[19:07] Speaker 9: had a Bank of England that was I think more
[19:10] Speaker 9: dubbish than almost everyone expected. You had a much tighter
[19:14] Speaker 9: vote split around whether or not to cut interest rates,
[19:17] Speaker 9: and you essentially had a central bank calling victory on
[19:20] Speaker 9: inflation and signaling that there were probably one, maybe two
[19:23] Speaker 9: more rate cuts coming over the course of the year
[19:26] Speaker 9: and getting down to a neutral level. Now, of course
[19:28] Speaker 9: that means that the Bank of England has started from
[19:30] Speaker 9: a different place to the ECB coming into this. The
[19:33] Speaker 9: ECB arguably as had got itself to a neutral policy setting.
[19:36] Speaker 9: The Bank of England, I think the majority on the
[19:39] Speaker 9: committee would argue that policy was still somewhat restrictive. As
[19:42] Speaker 9: you say, things have changed dramatically and in a similar
[19:45] Speaker 9: way to the trade off facing the ECB. Inflation all
[19:49] Speaker 9: else equal, if we look at market pricing, inflation is
[19:51] Speaker 9: going to be quite a bit higher than the Bank
[19:53] Speaker 9: of England thought we had. The Bank of England thought
[19:55] Speaker 9: inflation would get to two percent in the spring and
[19:58] Speaker 9: stay there essentially for the whole of its forecast period.
[20:01] Speaker 9: If you take market pricing now, you're looking at around
[20:04] Speaker 9: a percentage point somewhere between half and a percentage point higher,
[20:08] Speaker 9: depending on when you take a snapshot of the market
[20:11] Speaker 9: prices for oil and importantly gas as well. So that's
[20:14] Speaker 9: a much different picture to the one we had in February.
[20:18] Speaker 9: We haven't really heard from any policy makers as around
[20:22] Speaker 9: you know what this may or may not mean for
[20:23] Speaker 9: the outlook, But I would just echo one thing that
[20:26] Speaker 9: Yanna said there is that the jobs market in the
[20:29] Speaker 9: UK is in a very different place, and that means
[20:32] Speaker 9: what the Bank of England is facing now is very
[20:34] Speaker 9: very different to what it faced a few years ago,
[20:37] Speaker 9: where you had I think it's not an exaggeration to
[20:39] Speaker 9: say a red hot jobs market and inflation going much
[20:43] Speaker 9: much higher. So the trade off is different, and so
[20:45] Speaker 9: the policy response is likely to be different as well.
[20:48] Speaker 9: I think, you know, given where the Bank's policy rate
[20:51] Speaker 9: is starting, you know, it's much easier to see the
[20:53] Speaker 9: bank staying on hold. I think the bar to hiking
[20:57] Speaker 9: rates is pretty high at the moment.
[21:00] Speaker 3: There's a great deal of uncertainty about how the war
[21:02] Speaker 3: plays out and what it means in terms of the
[21:05] Speaker 3: strait of hormus and energy supplies. But we know that
[21:09] Speaker 3: the UK is perhaps more exposed to an energy shock
[21:13] Speaker 3: than Europe it is, how would you kind of contextualize that?
[21:17] Speaker 3: I mean, we know this this war is an exogenous shock.
[21:21] Speaker 3: How much could it affect inflation through energy?
[21:24] Speaker 9: And it's really important to you know, you draw the
[21:27] Speaker 9: path of the natural gas price. The increase we've had
[21:30] Speaker 9: has been tiny compared to what happened in twenty twenty two.
[21:33] Speaker 9: We're not in the same Those comparisons are just not fair. Nonetheless,
[21:38] Speaker 9: you know, the central Bank's job, or a Bank of
[21:40] Speaker 9: England's job. Its mandate is two percent inflation. So if
[21:43] Speaker 9: inflation is going to end the year closer to three
[21:44] Speaker 9: percent rather than two percent, you know it requires it
[21:48] Speaker 9: to change course somewhat, so you know you're going to
[21:51] Speaker 9: The inflation impact is at least the first order inflation
[21:55] Speaker 9: impact is pretty easy to measure on the assumption that
[21:58] Speaker 9: you get the path of the orb and gas price correct.
[22:00] Speaker 9: Of course, that's quite a bit of uncertainty around that.
[22:03] Speaker 9: The thing that the bank will be really worried about
[22:06] Speaker 9: is whether this spills into wage settlements, because that's what
[22:09] Speaker 9: drove and has been driving, I should say, the inflation
[22:12] Speaker 9: process in the UK and why it's been so persistent.
[22:15] Speaker 9: I'm going back to what I said in the first question,
[22:17] Speaker 9: why might we think that's different now to twenty twenty two.
[22:21] Speaker 9: The jobs market is a lot looser, so yes, there
[22:24] Speaker 9: is going to be this. I think there's going to
[22:26] Speaker 9: be this reaction on the NPC where they worry that
[22:29] Speaker 9: they're going to make a mistake, a similar mistake to
[22:32] Speaker 9: the one they made in twenty twenty two, where they
[22:34] Speaker 9: didn't recognize what was going to happen and didn't react
[22:36] Speaker 9: quickly enough. The thing with all central banks, though, is
[22:39] Speaker 9: that they always run the risk of fighting the last war,
[22:41] Speaker 9: and every shock is different, and this one, I think
[22:44] Speaker 9: there are reasons to argue that, yes, it's an inflation
[22:46] Speaker 9: shock again, but the risks to it spiraling like it
[22:50] Speaker 9: did before are somewhat lower, and I think that's an
[22:52] Speaker 9: important distinction.
[22:54] Speaker 3: Just briefly, then, in the next few days at the
[22:56] Speaker 3: March Bank of Rate decision of what are you expecting?
[23:00] Speaker 9: Ignored in February that a cut was coming either in
[23:03] Speaker 9: March or in April. We thought prior to the start
[23:07] Speaker 9: of the war that they would move in March, that
[23:09] Speaker 9: the labor market data has been a bit weaker than
[23:11] Speaker 9: they'd expected. Now, I think the level of uncertainty speaks
[23:16] Speaker 9: to them staying on hold. I mean, the given how
[23:18] Speaker 9: close they are to neutral, they've got time on their side.
[23:21] Speaker 9: They can assess the situation. So I think a hold
[23:24] Speaker 9: and just sending the message that they're going to keep
[23:27] Speaker 9: an eye on things and rates. I still think rates
[23:30] Speaker 9: will fall. It's just as you said, what matters is
[23:33] Speaker 9: how long the war lasts, and then they can sort
[23:35] Speaker 9: of get the all clear in terms of the inflation
[23:38] Speaker 9: picture and think about their next move.
[23:41] Speaker 3: Janna, I want to bring you back in then with
[23:43] Speaker 3: a final thought really on the European Central Bank. You know,
[23:46] Speaker 3: we're thinking about leadership. Just before the war broke out,
[23:49] Speaker 3: there was a lot of discussion and questions to ECB
[23:53] Speaker 3: President Christine Lagarde about how long she would stay on
[23:57] Speaker 3: in that role, and she was insistent that she, you know,
[24:00] Speaker 3: complete her mandate. But I suppose that is still in
[24:04] Speaker 3: the background.
[24:06] Speaker 8: It is, And in fact, it's interesting that you said
[24:09] Speaker 8: she was insistent because I wasn't so convinced. She used
[24:12] Speaker 8: the phrase, you know, it's her baseline to stay, and
[24:16] Speaker 8: being among economists, we all know that baseline is just
[24:20] Speaker 8: the baseline, is just one scenario. So those rumors are
[24:24] Speaker 8: still holding on. I wouldn't say they're dominant anymore, but
[24:28] Speaker 8: they're still there. She's probably still going to face questions
[24:31] Speaker 8: on whether she will stay or whether she will leave early.
[24:36] Speaker 8: But I also judge her as a person that recognizes
[24:40] Speaker 8: that now leadership is in demand, and leaving in the
[24:43] Speaker 8: middle of a crisis that would be extremely bad form.
[24:46] Speaker 8: I don't take her as a person that would do
[24:48] Speaker 8: such a thing. So for now, as long as the
[24:51] Speaker 8: crisis lasts, as the challenges last, and the situation is
[24:54] Speaker 8: what it is, I would expect her to be there
[24:58] Speaker 8: to lead. For me. The question i've her departing before
[25:01] Speaker 8: October next year, that continues to linger in the background,
[25:05] Speaker 8: and it might well pop up again. I mean, this
[25:07] Speaker 8: also wasn't the first time that we had those. It'll
[25:11] Speaker 8: remain interesting, yeah, indeed.
[25:13] Speaker 3: And it is always about you know, passing what people
[25:16] Speaker 3: say very carefully, you know, the subtle as well as
[25:18] Speaker 3: these sort of over things that they happen to say, Yana,
[25:21] Speaker 3: I trust you to do that. Thank you so much
[25:23] Speaker 3: for being with me, Yana Randa, who runs our coverage
[25:27] Speaker 3: of the Western europe economy, talking us through what to
[25:30] Speaker 3: expect from the European Central Bank. And my thanks also
[25:33] Speaker 3: to our chief UK economist, Dan Hanson on the Bank
[25:36] Speaker 3: of England. I'm Caline Hepga and you can catch us
[25:39] Speaker 3: every weekday morning here for Bloomberg Daybreak Europe, beginning at
[25:42] Speaker 3: six am in London. That's two am on Wall Street.
[25:46] Speaker 2: Nathan, Thanks Caroline, and coming up on Bloomberg day Break Weekend,
[25:49] Speaker 2: we'll look at what to expect when US and Japanese
[25:52] Speaker 2: leaders meet in Washington. I'm Nathan Hager, and this is Bloomberg.
[26:08] Speaker 2: This is Bloomberg Daybreak Weekend, our global look ahead of
[26:11] Speaker 2: the top stories for investors in the coming week. I'm
[26:13] Speaker 2: Nathan Hager in Washington. One of the top stories this
[26:16] Speaker 2: week will be Japanese Prime Minister sana E Takaichi's meeting
[26:20] Speaker 2: with President Donald Trump in Washington. For a closer look,
[26:23] Speaker 2: let's get to Bloomberg's Doug Krisner, host of the Daybreak
[26:26] Speaker 2: Asia podcast.
[26:27] Speaker 4: Thanks Nathan. Japan is now in a tough position given
[26:30] Speaker 4: the strikes on Iran from both the US and Israel,
[26:34] Speaker 4: and Prime Minister Takeichi will attempt to balance Tokyo's strong
[26:37] Speaker 4: support for the rules based global order on one hand,
[26:41] Speaker 4: with its need to maintain a robust alliance with Washington
[26:44] Speaker 4: on the other. And to help me preview this meeting,
[26:47] Speaker 4: I'm joined by Bloomberg's Alistair. Gail Alistair is the Ekogov
[26:51] Speaker 4: reporter for Japan. He also covers security in Asia. Alistair,
[26:55] Speaker 4: thank you so much for being here. I'd like to
[26:57] Speaker 4: begin by having you give me a sense of what
[27:00] Speaker 4: the reaction has been like in Japan to what's unfolding
[27:03] Speaker 4: in the Middle East.
[27:04] Speaker 10: Well, the reaction has been obviously surprised at the scale
[27:08] Speaker 10: of what's been happening in the Middle East and concerned
[27:11] Speaker 10: that this may drag on. Japan's priority in all of
[27:15] Speaker 10: this is really energy supplies, because it imports almost all
[27:19] Speaker 10: of its oil and gas, and much of its oil
[27:22] Speaker 10: comes from the Middle East and goes through the Strait
[27:23] Speaker 10: of Hormuz. So that's an issue that has been top
[27:27] Speaker 10: of mind, and we've seen Prime Minister Takeichi already come
[27:30] Speaker 10: out ahead of the international community and say Japan's going
[27:34] Speaker 10: to release its own oil reserves to deal with potential
[27:38] Speaker 10: spikes in oil prices. So that's really the priority here.
[27:42] Speaker 4: And to that point, crude oil prices have jumped since
[27:45] Speaker 4: the war to about the highest level in forty two months. Obviously,
[27:48] Speaker 4: this has inflationary implications. Even before the war though, Japan
[27:53] Speaker 4: was facing very high inflation, and I'm curious, alister, as
[27:56] Speaker 4: to how Prime Minister taki Ichi will address this situation.
[28:00] Speaker 10: So, I mean, this is really the top of the
[28:02] Speaker 10: agenda in terms of economic policy. Now, inflation is kind
[28:05] Speaker 10: of rare for Japan. There's been a few decades of
[28:09] Speaker 10: falling prices and over the last few years that's changed
[28:12] Speaker 10: to inflation, which has been the thing that voters have
[28:16] Speaker 10: been most concerned about. So as you would expect, the
[28:19] Speaker 10: Prime Minister has focused on that. You know, she's already
[28:22] Speaker 10: talked about other steps that she's going to take to
[28:24] Speaker 10: rain in high prices, you know, helping consumers perhaps with
[28:29] Speaker 10: cash houndouts and things. But you know, this potential oil
[28:32] Speaker 10: shock and an increase to oil prices is something that
[28:35] Speaker 10: they really didn't want. Is in a way, it's kind
[28:37] Speaker 10: of the worst timing as she's trying to show that
[28:40] Speaker 10: she's able to keep control of inflation, so I think
[28:42] Speaker 10: that's why she's moved quickly on this.
[28:44] Speaker 4: And speaking of timing, it was just in the last
[28:47] Speaker 4: week that we had a solid upward revision in Japan's
[28:50] Speaker 4: fourth quarter GDP figure. So it seems as though Japan
[28:54] Speaker 4: is growing above its potential rate, despite the fact that
[28:58] Speaker 4: the country has had to deal with those US tariffs
[29:01] Speaker 4: and we've had a few rate hikes from the Bank
[29:03] Speaker 4: of Japan. Is there still a fair amount of optimism
[29:06] Speaker 4: or is the potential oil shock really kind of put
[29:10] Speaker 4: most everyone on the back foot so to speak.
[29:13] Speaker 10: Well, people have long memories here of the oil shock
[29:15] Speaker 10: in the nineteen seventies, which was really devastating for Japan.
[29:18] Speaker 10: We saw, you know, a big blow to the economy there.
[29:21] Speaker 10: We saw people hoarding even things like toilet paper because
[29:24] Speaker 10: they were concerned about supplies of basic goods because of
[29:28] Speaker 10: the problems with the oil supply. So there's this kind
[29:32] Speaker 10: of fear that we're going to see a reprisal of that,
[29:35] Speaker 10: and I think that's why she's moved quickly, and that's why,
[29:39] Speaker 10: you know, this is the thing that is leading all
[29:41] Speaker 10: the newspapers. It's what she's talking about in Parliament every day,
[29:45] Speaker 10: and it's really top of mind for you know, average
[29:47] Speaker 10: Japanese people.
[29:48] Speaker 4: So when it comes to the Prime minister's conversation with
[29:51] Speaker 4: President Trump, give me a sense of how taka Ichi
[29:55] Speaker 4: is going to have to thread the needle here.
[29:58] Speaker 10: This will be her first trip to the w House
[30:00] Speaker 10: as Prime minister. Trump was here in November last year.
[30:04] Speaker 10: They got off on a very strong footing. You know,
[30:07] Speaker 10: they seem to have personal chemistry. It's important for her
[30:10] Speaker 10: to go to the White House. Most Japanese Prime ministers
[30:12] Speaker 10: go early in their terms. She's just won this big mandate.
[30:17] Speaker 10: We had an election here in February, which we won
[30:19] Speaker 10: by a landslide, so she's well placed politically to go there,
[30:23] Speaker 10: you know, with confidence. But for her, it's important really
[30:26] Speaker 10: to make sure that the alliance that Japan has with
[30:29] Speaker 10: the US stays strong. As you mentioned, you know, the
[30:32] Speaker 10: trade issue is a is a thorny one for Japan
[30:35] Speaker 10: because it's been hit by taris like everyone else. It's
[30:38] Speaker 10: trying to find a way through that with this commitment
[30:41] Speaker 10: to invest five hundred and fifty billion US dollars in
[30:44] Speaker 10: the in the US. We've seen three initial projects which
[30:47] Speaker 10: have been announced by Japan on that front. So I'm
[30:50] Speaker 10: sure that when she's talking to the President, you know,
[30:53] Speaker 10: they'll be going over this and you know, she may
[30:56] Speaker 10: have some new things that she wants to provide that
[31:00] Speaker 10: that Japan is still committed to investing in the US
[31:03] Speaker 10: because the relationship is really important. You know, the US
[31:06] Speaker 10: is Japan's only security ally. You know, there's large military
[31:10] Speaker 10: bases US bases here in Japan, and of course the
[31:13] Speaker 10: US is a major training partner for Japan. So it's
[31:16] Speaker 10: important really to make sure that she has continues that good,
[31:19] Speaker 10: strong start to the relationship and tries to find a
[31:22] Speaker 10: way to navigate through this trade issue. And also Iran,
[31:26] Speaker 10: because you know, Japan has not come out and said
[31:30] Speaker 10: it supports what the US is doing. It's tried to
[31:33] Speaker 10: kind of avoid giving a clear position on this. So
[31:36] Speaker 10: that's something that you know is going to be hanging
[31:38] Speaker 10: over the meeting with President Trump as well.
[31:40] Speaker 4: So if in Iran has really put the spotlight on
[31:44] Speaker 4: geopolitical risk and not just in the Mid East but
[31:46] Speaker 4: on other areas of the globe. I'm recalling that Prime
[31:50] Speaker 4: Minister Takichi wanted to increase defense spending. Give me your
[31:54] Speaker 4: sense of what's going on right now and the geopolitical
[31:58] Speaker 4: risk side of the equation across the apecific and how
[32:01] Speaker 4: Japan is dealing with it.
[32:03] Speaker 10: So she has a background in national security. She has
[32:07] Speaker 10: strong views on building up Japan's military, ensuring that Japan
[32:12] Speaker 10: has stronger economic security, which of course is related to
[32:16] Speaker 10: energy supplies. So she's basically now said that Japan is
[32:21] Speaker 10: going to move faster on defense spending. There is a
[32:24] Speaker 10: target of reaching two percent of GDP on defense spending,
[32:27] Speaker 10: which she's moved up by two years, and the government
[32:31] Speaker 10: is now committed to spending that about this fiscal year.
[32:35] Speaker 10: She's talked about a new plan that's now under discussion.
[32:39] Speaker 10: I think we can expect that, you know, spending is
[32:41] Speaker 10: going to go up. So she wants Japan to have
[32:44] Speaker 10: a more robust military. She wants it to be equipped
[32:47] Speaker 10: with all, you know, the modern equipment. She wants it
[32:50] Speaker 10: to be a contributor to regional security. Obviously, the big
[32:54] Speaker 10: concern here in Japan is what might happen over Taiwan.
[32:58] Speaker 10: She sees Japan as being part of the deterrence to
[33:02] Speaker 10: you know, deter China from making moves such as you
[33:06] Speaker 10: know on Taiwan. And so you know, that's really something
[33:11] Speaker 10: that she takes a deep personal interest on. She also
[33:14] Speaker 10: wants to have, you know, the the US military presence
[33:18] Speaker 10: to remain strong here we've seen in the US National
[33:21] Speaker 10: Security strategy there has been a commitment to having a
[33:25] Speaker 10: strong focus on East Asia as well, of of course,
[33:28] Speaker 10: you know, as the Western Hemisphere. So I guess you know,
[33:32] Speaker 10: in some sense, you know, what's happening in the Middle
[33:34] Speaker 10: East maybe something of a concern because we're seeing the
[33:37] Speaker 10: focus of obviously US military power now is very much
[33:40] Speaker 10: around Iran. So she I think she'll be seeking some
[33:43] Speaker 10: reassurances that the US is still strongly committed to East Asia.
[33:47] Speaker 10: But that's something that you know, she enjoys talking about,
[33:51] Speaker 10: and you know, she is really putting her money where
[33:53] Speaker 10: her mouth is in terms of what Japan is doing.
[33:56] Speaker 4: So to what extent with that increase in military spending
[34:00] Speaker 4: benefit the US defense contractors or are there enough players
[34:05] Speaker 4: in the Japanese market for defense that she could be
[34:09] Speaker 4: a little bit more reliant on domestic companies or is
[34:11] Speaker 4: it necessarily the case that you have to be partnered
[34:14] Speaker 4: with the US if you're looking to build up more hardware.
[34:18] Speaker 10: That's a really interesting question because Japan does spend a
[34:21] Speaker 10: lot of money on US defense equipment, and I think
[34:24] Speaker 10: we'll continue to do so. But one of her goals
[34:27] Speaker 10: is to increase the scale of the defense industrial sector
[34:32] Speaker 10: here in Japan, which is relatively small, which is a
[34:35] Speaker 10: legacy of World War Two where Japan has not really
[34:38] Speaker 10: focused on investment in defense business businesses. There are some
[34:44] Speaker 10: companies here which obviously make equipment for the Japanese military,
[34:48] Speaker 10: but it tends to be a peripheral part of their
[34:51] Speaker 10: business portfolio. They mainly focused on other things. So what
[34:55] Speaker 10: she wants to do. She's talked about government investment in
[34:58] Speaker 10: the defense sector, providing government money to encourage companies to
[35:03] Speaker 10: build up their capacity and do more R and D
[35:06] Speaker 10: and sort of you know, get into things like AI
[35:09] Speaker 10: and all the you know, all the modern developments in
[35:12] Speaker 10: terms of military technology. But Japan is starting from a
[35:15] Speaker 10: relatively low base, so she will, you know, no doubt
[35:19] Speaker 10: Japan will continue to spend a lot of money on
[35:21] Speaker 10: American equipment, but the long term goal is for japan
[35:24] Speaker 10: companies to be having a bigger slice of that pie.
[35:28] Speaker 4: I'm wondering as I'm listening to where the BOJ fits
[35:31] Speaker 4: into all of this. I mean, we started the conversation
[35:34] Speaker 4: by addressing higher oil prices and the inflationary impact of that.
[35:38] Speaker 4: Now Japan has been well above the boj's inflation target
[35:41] Speaker 4: for it feels like many years now. Do you have
[35:44] Speaker 4: a sense of giving everything that we're describing where the
[35:48] Speaker 4: BOJ may go from here?
[35:50] Speaker 7: Right?
[35:51] Speaker 10: So, the BOJ has a meeting on March nineteenth. They
[35:54] Speaker 10: are of course on a policy normalization course, which you
[35:59] Speaker 10: know is an the way of saying raising interest rates
[36:02] Speaker 10: because they have been very low for a long time
[36:04] Speaker 10: and it is looking for an opportunity to raise rates again.
[36:08] Speaker 10: But there's essentially a consensus that it will hold off
[36:12] Speaker 10: in March. You know, the obviously the developments in the
[36:15] Speaker 10: Middle East and the impact on oil prices and what
[36:18] Speaker 10: that might mean for inflation. You know, you would think
[36:21] Speaker 10: it would be an incentive to raise interest rates, you know,
[36:24] Speaker 10: to deal with rises in prices, but the BOJ has
[36:29] Speaker 10: made mistakes in the past where it's raised interest rates
[36:33] Speaker 10: too quickly and the economy has contracted as a result.
[36:36] Speaker 10: So it's being it's signaling that it's you know, it's
[36:39] Speaker 10: going to pay close attention to the situation. You know,
[36:44] Speaker 10: around prices and in the Middle East. But the expectations
[36:47] Speaker 10: amongst economists is for the next meeting in March nineteenth
[36:50] Speaker 10: it will hold off, and people are really looking to
[36:53] Speaker 10: perhaps the following meeting in April, when we'll have a
[36:56] Speaker 10: better sense of what the you know, the feedthrough of
[37:00] Speaker 10: the you know, the all price is going to be
[37:02] Speaker 10: and the overall inflation in picture. The BOJ will have
[37:05] Speaker 10: obviously have a lot more data on you know, the
[37:07] Speaker 10: overall economy. So we're looking at you know, the months
[37:11] Speaker 10: ahead really for the next moves to the BOJ.
[37:14] Speaker 4: And we know that takei Ichi had great success in
[37:16] Speaker 4: the recent snap election. I'm wondering about the level of
[37:20] Speaker 4: public support that she enjoys right now. Are her approval
[37:23] Speaker 4: ratings at a high level.
[37:24] Speaker 10: They are, They've come down from the you know, the
[37:27] Speaker 10: peaks around election time that was now over a month ago,
[37:31] Speaker 10: so some of the excitement around her during the election
[37:36] Speaker 10: campaign has worn off, I think, but she still has, yeah,
[37:38] Speaker 10: a very strong hand in terms of public support, you know,
[37:42] Speaker 10: and I think you know, with this huge majority that
[37:46] Speaker 10: she has in Parliament, you know, that gives her a
[37:48] Speaker 10: lot of bandwidth to push through her policy objectives. She's
[37:52] Speaker 10: talked about lots of you know, spending that's been some
[37:55] Speaker 10: of something of a concern, particularly to the bond market.
[37:58] Speaker 10: But she now has a very strong hand to do
[38:01] Speaker 10: what she wants to do, and I think going back
[38:03] Speaker 10: to her meeting with President Trump, the expectations may be
[38:07] Speaker 10: higher on the US side for her to do more,
[38:09] Speaker 10: certainly in terms of defense spending and being ambitious about
[38:13] Speaker 10: Japana having a larger regional role, because of course, you know,
[38:17] Speaker 10: that's a message that President Trump has given to its
[38:20] Speaker 10: allies that you know, we want you to do more
[38:22] Speaker 10: of the heavy lifting around the world. So I think,
[38:25] Speaker 10: you know, he will have high expectations of her doing
[38:29] Speaker 10: things along those lines, but she does have the mandate
[38:31] Speaker 10: to do that now.
[38:32] Speaker 4: Alistair will leave it there. Thank you for helping us
[38:34] Speaker 4: look ahead to the meeting between President Trump and Prime
[38:37] Speaker 4: Minister take Ichi. That's Bloomberg's Alistair Gail ikogv reporter for Japan.
[38:42] Speaker 4: He also covers security in Asia. I'm Doug Prisner. You
[38:45] Speaker 4: can catch us weekdays for the Daybreak Asia podcast. It's
[38:48] Speaker 4: available wherever you get your podcast. Nathan.
[38:51] Speaker 2: Thanks Doug Man. That does it for this edition of
[38:54] Speaker 2: Bloomberg Daybreak weekend. Join us again Monday morning at five
[38:57] Speaker 2: am Wall Street Time for the latest don market, overseas,
[39:00] Speaker 2: and the news you need to start your day. I'm
[39:03] Speaker 2: Nathan Hager. Stay with US. Top stories and global business
[39:06] Speaker 2: headlines are coming up right now.

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