# TikTok Seals US Deal, Japan's Takaichi Tax Plan

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 23 Jan 2026, 22 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/58e85be7-dbb5-4043-afed-af80014dc0b3/8db0bd4b-6af9-447f-b7af-b3db002b2ce2/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

TikTok and its Chinese parent ByteDance Ltd. have closed a long-awaited deal to transfer parts of their US operations to American investors, securing the popular video app's future in the US and avoiding a nationwide ban. Bloomberg's Annabelle Droulers explains. In Asia - tech stocks are in focus. Alibaba Group is preparing an IPO of its chipmaking unit -- T-Head. The unit develops chips for computing and storage. And it's become a strong contender domestically thanks to sustained investment from Alibaba. For more on the AI rally, we heard from Ivy Ng, Chief APAC investment officer at DWS. She spoke to Bloomberg's David Ingles and Yvonne Man. Plus - Japanese Prime Minister Sanae Takaichi's plan to temporarily cut the consumption tax on food to zero is undoubtedly a bad idea, and a rather nakedly political one. Bloomberg Opinion Columnist Gearoid Reidy writes that Takaichi's plan is likely to be less effective than more targeted measures to help lower-income households struggling with inflation, and temporary tax cuts have a habit of becoming sticky. Reidy joins us to explain. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Daybreak
[0:11] Speaker 1: Asia podcast. I'm deg Prisner. TikTok and it's Chinese parent
[0:15] Speaker 1: have closed a deal to transfer part of TikTok's US
[0:18] Speaker 1: operations to American investors. Here's Bloomberg's Anabel Droolers.
[0:23] Speaker 2: What we know is that TikToker is in the US.
[0:25] Speaker 2: Can probably just breathe a sigh of relief. Of course,
[0:27] Speaker 2: there's been a lot of questions marks on this or
[0:29] Speaker 2: over this, and it's certainly been a many months long
[0:32] Speaker 2: saga essentially, but the framework and the terms of the
[0:35] Speaker 2: dealer really mapping or conjuring what we've already heard from
[0:39] Speaker 2: the Trump administration what was announced US back a few
[0:42] Speaker 2: months ago. But essentially we've got TikTok and buy Dance
[0:45] Speaker 2: that have established that JV to transfer parts of TikTok's
[0:49] Speaker 2: US business to non Chinese owners. And so as part
[0:52] Speaker 2: of that deal, you're going to get essentially a newly
[0:55] Speaker 2: created US entity. And we've actually already been hearing that
[0:58] Speaker 2: the staff within the US had all been starting to
[1:00] Speaker 2: be split into these teams just in the last few weeks,
[1:03] Speaker 2: so essentially just creating a bit of a firewall around
[1:06] Speaker 2: what happens in the States. But in terms of who's
[1:08] Speaker 2: going to be overseeing this, where you've got the three
[1:11] Speaker 2: managing investors, there's Oracle, there's silver Lake Management as well,
[1:15] Speaker 2: and then there's the Ibuderby based investment company MGX. So
[1:18] Speaker 2: they were already the names that we've been reporting on
[1:21] Speaker 2: as well. But as we said, it really does conclude
[1:24] Speaker 2: what's been a very long geopolitical cyber and lots of
[1:27] Speaker 2: concerns around national security in particular, that.
[1:31] Speaker 1: Was Bloomberg's Annabelle droolers. Ali Baba Group is preparing for
[1:35] Speaker 1: an IPO of its chip making unit Tea head. Now,
[1:37] Speaker 1: this unit develops chips for computing and storage, and it's
[1:41] Speaker 1: become a strong contender domestically thanks to sustained investment from
[1:45] Speaker 1: Ali Baba. In the Asian session today, tech stocks are
[1:48] Speaker 1: in focus, and we got some perspective from ivy Ning,
[1:52] Speaker 1: chief APAC investment officer at DWS. She spoke with Bloomberg
[1:56] Speaker 1: TV host David Nglase and Devon Mann.
[1:58] Speaker 3: So the airal, should I look at it as something
[2:01] Speaker 3: that's speculation or do you think there is actually some
[2:03] Speaker 3: earnings that is kind of leading to this sort of optimism.
[2:07] Speaker 4: Now we think definitely the earning part is the main
[2:10] Speaker 4: focus for us. And then we have seen that like
[2:12] Speaker 4: particularly when you look at regionally like on Taiwan career
[2:15] Speaker 4: or even like some of the China tech company, you
[2:18] Speaker 4: may not see the earning immediately delfifering for the China one,
[2:21] Speaker 4: but for the career for the Taiwan one, you continue
[2:23] Speaker 4: to see like the earning driver is a key like
[2:25] Speaker 4: a focus for the company. That's why every time when
[2:28] Speaker 4: the results coming up, people all watching out for the
[2:30] Speaker 4: management guidance regarding their growth rates, and like the big
[2:34] Speaker 4: tech company in Taiwan has been like a continuously like
[2:38] Speaker 4: surprise market with the upside. So that's why from our
[2:41] Speaker 4: point of view, is definitely the earning driver. But haven't
[2:43] Speaker 4: say that. We also were cantious about like how about
[2:46] Speaker 4: the valuation is a valuation CONDI support and you bring
[2:49] Speaker 4: up a very good point where like what is the
[2:51] Speaker 4: like return on equity was the ROI and all? But
[2:55] Speaker 4: I guess like if you look at from a China perspective,
[2:57] Speaker 4: and if from a China tech perspective, they do have
[3:01] Speaker 4: some comparative advantage, like the cost is Voldy be lower
[3:04] Speaker 4: no matter like when you look at the labor costs,
[3:06] Speaker 4: when even you look at the like number of engineer
[3:10] Speaker 4: engineer to China produce like is much higher than other country.
[3:13] Speaker 4: And then the other key thing is the electricity costs
[3:17] Speaker 4: in China is also like we're low. So all these
[3:20] Speaker 4: things kind of supporting the oval like type value in
[3:22] Speaker 4: the market.
[3:24] Speaker 5: People keep pointing to valuations as a reason for the
[3:27] Speaker 5: market to correct, but so far they've only pointed to it.
[3:30] Speaker 5: We haven't seen a correction. And I wonder people talk
[3:34] Speaker 5: about this as a generational opportunity, and you know, companies
[3:39] Speaker 5: keep saying they just can't produce enough of it capecks,
[3:41] Speaker 5: they need to raise so much money to put the
[3:43] Speaker 5: capecs in. And wonder is it useful to use one
[3:47] Speaker 5: year earnings? It is my question as a gauge of valuations,
[3:51] Speaker 5: given that you know, who knows what this looks like
[3:54] Speaker 5: in a year? We don't know, But what it looks
[3:55] Speaker 5: like in three year is probably much much more.
[3:57] Speaker 4: I think it's always better to look at multiple year
[4:00] Speaker 4: like we generately, like when we look at that, let's
[4:02] Speaker 4: say the US earning, we always say that like even
[4:04] Speaker 4: until twenty thirty, we still see a kind of like
[4:07] Speaker 4: double digit earning growth in the US market. We don't
[4:09] Speaker 4: look ahead, but the thing is like, okay, market also
[4:12] Speaker 4: focusing on the short term and especially when the expectation
[4:15] Speaker 4: is really high the next one year earnings is kind
[4:17] Speaker 4: of like the key driver, not only just the earning.
[4:20] Speaker 4: Actually management comment is also a key part. And what
[4:23] Speaker 4: you're right, we have been saying about like evaluation expensive
[4:26] Speaker 4: and expensive, but you have seen that, like there is
[4:29] Speaker 4: also some change in the market while the AI stocks
[4:31] Speaker 4: start picking up, but regionally you look at the property
[4:35] Speaker 4: names actually doing pretty well, like surprisingly property you can
[4:38] Speaker 4: say it's more a value name than anything related to AI. Right,
[4:42] Speaker 4: So market has been shifting and farm manager has also
[4:45] Speaker 4: been reallocating some of the money. But for the AI
[4:48] Speaker 4: one feel like it's a key focus. But they have
[4:50] Speaker 4: been like diversifying.
[4:53] Speaker 3: Is there still need to be defensive in this market?
[4:55] Speaker 3: I just take a look at what's been going on
[4:57] Speaker 3: with your politics here and it kind of feel this
[5:00] Speaker 3: whole debasement sort of debate of diversification away from the
[5:03] Speaker 3: dollar dollar assets to maybe precious metals for example. Do
[5:06] Speaker 3: you see still a case for that given we've seen
[5:09] Speaker 3: a massive rally and goal prices already do.
[5:11] Speaker 4: Yes, I think it's also understandable. Of course, like go
[5:14] Speaker 4: price at this level is a little bit expensive. I
[5:17] Speaker 4: think everyone would agree that. But the thing is like
[5:19] Speaker 4: whenever it's pull back for like ten percent, let's say,
[5:21] Speaker 4: for the whole geopolitic tension come down for a little bit,
[5:24] Speaker 4: then you see like maybe GOI pull back. But while
[5:28] Speaker 4: we are living in the current world, actually is a
[5:30] Speaker 4: rising geopolitical tension everywhere you can mention. So that's why
[5:34] Speaker 4: like for goal price and or for goal particularly in
[5:36] Speaker 4: the portfolio, we still see its value in a multi
[5:39] Speaker 4: asset portfolio. It's the way important.
[5:41] Speaker 5: Okay, you mentioned property. I'm curious about that because that
[5:44] Speaker 5: started to really come alive. Yes, what do you think
[5:47] Speaker 5: that is? And is that simply just rotation out of
[5:49] Speaker 5: the big winners? What's going on there?
[5:51] Speaker 4: I think they are like two parts, right, It's a
[5:53] Speaker 4: key part. As I mentioned, market has been looking for
[5:55] Speaker 4: like some value stock. Where is the way of change?
[5:58] Speaker 4: And this is the key part. I thinks we're driving
[6:01] Speaker 4: the property names. If you look at Hong Kong, Hong
[6:03] Speaker 4: Kong has went for a very tough period of time
[6:06] Speaker 4: be a residential office and retail whatever you can name.
[6:09] Speaker 4: But let's pick on the commercial setter first. When you
[6:11] Speaker 4: look at like particularly on the Hong Kong office, if
[6:14] Speaker 4: you look at four kills the central win, it's actually
[6:16] Speaker 4: the first quarter of a quarter pick up in terms
[6:18] Speaker 4: of the central win after multiple years like that. So
[6:21] Speaker 4: this is a positive sign. We're seeing the office on
[6:24] Speaker 4: top of all the transactions we can names last year
[6:26] Speaker 4: with the central office, with the Costway Bay office, so
[6:29] Speaker 4: office was where like we see the positive momentum we
[6:32] Speaker 4: tell in terms of the WNS like I know that
[6:34] Speaker 4: like the wental version part is still kind of like
[6:37] Speaker 4: under pressure, but we can see that like with the
[6:40] Speaker 4: tourists five slowly picking up. We still haven't back to
[6:43] Speaker 4: the heyday of twenty eighteen, don't get me wrong, but
[6:46] Speaker 4: like at least for what we have seen the worst,
[6:48] Speaker 4: like and residential where you see like the st price
[6:51] Speaker 4: have been picking up. I think the key part for
[6:53] Speaker 4: a lot of like invessad is when you look at
[6:56] Speaker 4: last year our residential price of five percent, are i
[7:00] Speaker 4: mean our secondary volume all picking up by double digits.
[7:03] Speaker 4: So that's where people getting positive. But don't get me wrong,
[7:06] Speaker 4: I'm not saying about like the earning will be like
[7:08] Speaker 4: stood up in the coming march, like it will still
[7:11] Speaker 4: be like the earning still be under stress for some
[7:14] Speaker 4: of the names. But the thing is like for market
[7:17] Speaker 4: is where's the bottom and that is where they see
[7:20] Speaker 4: the value right before the whole value coming like a
[7:23] Speaker 4: lot of puppety name. But the Hong Kong pubby name
[7:25] Speaker 4: was actually training as like a kind of minus one
[7:27] Speaker 4: said division discount of our navy. Of course the price
[7:30] Speaker 4: has pick up value I should pick up, but I
[7:32] Speaker 4: wouldn't see that it's like super expensive now probably more
[7:35] Speaker 4: at a fair value kind of range right now for
[7:37] Speaker 4: the Hong kongore py names.
[7:38] Speaker 5: Has the environment funding conditions specifically improved enough that some
[7:43] Speaker 5: of the distress names have been pulled so far away
[7:46] Speaker 5: from the edge that they're no longer distressed. I'll just
[7:49] Speaker 5: mention New World for example. We don't have to talk
[7:50] Speaker 5: about New World, but bonds. Some of the bonds are
[7:53] Speaker 5: up two hundred percent. It's been in the news this week,
[7:55] Speaker 5: and have things shifted enough that you know the solvency
[8:01] Speaker 5: issue should not be an issue anymore.
[8:02] Speaker 4: Okay, we've not touching a specific name, but over a market,
[8:06] Speaker 4: we can see how high balls moving last year. Of course,
[8:08] Speaker 4: the second half eaching a little bit like higher compared
[8:11] Speaker 4: with the low point we see in the year, but
[8:13] Speaker 4: when you look at a full year basis, it's still
[8:15] Speaker 4: pretty healthy and relatively low level. So you have seen
[8:18] Speaker 4: that in their results or in the coming result for
[8:22] Speaker 4: the developer or leno, the interest cost pressure will be less.
[8:26] Speaker 4: So that's why I would say the fund the environments
[8:28] Speaker 4: is getting more favorable. I would see there is still
[8:30] Speaker 4: some problem, but as I mentioned about for the fundamental
[8:33] Speaker 4: it's the same thing like for the worst time poppy
[8:36] Speaker 4: has passed.
[8:36] Speaker 1: That is Ivanning, chief APEC Investment Officer at DWS, speaking
[8:41] Speaker 1: to Bloomberg TV host of von Man and David and
[8:43] Speaker 1: Glaze here on the Daybreak Asia podcast. Welcome back to
[8:53] Speaker 1: the Debreak Asia podcast. I'm Derek Kristner. Today in Japan,
[8:57] Speaker 1: the government reported inflation slowed into December for the first
[9:00] Speaker 1: time in four months. Government subsidies for gasoline and diesel
[9:05] Speaker 1: fuel helped to lower those prices, and that was reflected
[9:08] Speaker 1: in the CPI. Consumer prices excluding fresh food rose at
[9:13] Speaker 1: an annual rate of two point four percent. But if
[9:16] Speaker 1: you remove the impact of energy, the so called core
[9:19] Speaker 1: core CPI rose at an annual rate of two point
[9:22] Speaker 1: nine percent, and that shows that underlying inflationary pressure in
[9:26] Speaker 1: Japan remains robust. The daily cost of living has become
[9:31] Speaker 1: a major concern. Indeed, Prime Minister Takeiichi has proposed a
[9:34] Speaker 1: temporary tax cut on food, but the notion of less
[9:38] Speaker 1: tax revenue put a spotlight this week on Japan's fiscal picture,
[9:43] Speaker 1: and we had a revolt in the bond market. Now,
[9:45] Speaker 1: the daily cost of living has become a major concern.
[9:49] Speaker 1: One reason Prime Minister Takeiichi proposed a temporary tax cut
[9:53] Speaker 1: on food, but the notion of less tax revenue put
[9:56] Speaker 1: the spotlight this week on Japan's fiscal picture, and the
[9:59] Speaker 1: bond mark get revolted. Joining me now for a closer
[10:02] Speaker 1: look is Bloomberg opinion columnist Garode Ready. Garod joins from Tokyo.
[10:07] Speaker 1: Thank you for being here. So we had this sell
[10:09] Speaker 1: off on Tuesday in the Japanese bond market and long
[10:13] Speaker 1: term JGB yield spike to record highs. At the time,
[10:17] Speaker 1: it seemed like maybe a hair on fire moment, But
[10:21] Speaker 1: you call it an overreaction. Explain that to me, yeah.
[10:25] Speaker 6: And I think you know the subsequent moves that we've
[10:28] Speaker 6: seen in the markets kind of you know, play that out.
[10:33] Speaker 6: There was a there was a hairy moment on Tuesday
[10:35] Speaker 6: when super long eels rose to record highs. Now, also
[10:40] Speaker 6: the fact that the record highs, you know, doesn't necessarily
[10:43] Speaker 6: tell the whole story, because both the thirty and the
[10:45] Speaker 6: fourty year bonds are relatively new nineteen ninety nine first
[10:50] Speaker 6: issued in nineteenninety nine, two thousand and seven, if I
[10:53] Speaker 6: recall correctly, and you know, during most of the time
[10:57] Speaker 6: that those bonds have existed, Japan's either been in deflation
[11:01] Speaker 6: or yields have been suppressed due to the vj's yield
[11:06] Speaker 6: curve control. Now what you're seeing is you're seeing, you know,
[11:09] Speaker 6: normalization of policy, and you're going to see a couple
[11:12] Speaker 6: of bumps along the way. And I think that's what
[11:15] Speaker 6: we saw on Tuesday. And I think once people got
[11:18] Speaker 6: used to that and saw that it wasn't you know,
[11:21] Speaker 6: Liz trust moment or a physical crisis, I think, you know,
[11:24] Speaker 6: things calm down a little bit.
[11:26] Speaker 1: That said, this week at the World Economic Forum, we
[11:29] Speaker 1: heard from Ken Griffin and he said the heavy selling
[11:32] Speaker 1: in the Japanese bond market that we saw on Tuesday
[11:35] Speaker 1: should serve as an explicit warning. Maybe he was focused
[11:39] Speaker 1: more on the situation in the United States, But I'm
[11:42] Speaker 1: wondering whether what Griffin had to say applies equally to
[11:46] Speaker 1: lawmakers in Japan.
[11:48] Speaker 6: It's certainly worth Tatichi Prime, mister Takaichi in particular, having
[11:54] Speaker 6: a little bit more caution about what she says. This
[11:58] Speaker 6: isn't just limited actually to markets. I would say she
[12:02] Speaker 6: has a little bit of a tendency to kind of
[12:06] Speaker 6: speak off the cuff a little bit. Perhaps we saw
[12:10] Speaker 6: that with the flare up with China last year, and
[12:14] Speaker 6: maybe this is another warning that she should just be
[12:16] Speaker 6: a little bit careful about some of the stuff that
[12:19] Speaker 6: she says. She was very bullish on spending in her
[12:26] Speaker 6: speech on Monday evening. That's kind of like the you know,
[12:29] Speaker 6: the closest thing before the flare up in bonds on Tuesday.
[12:37] Speaker 6: And of course the main thing that got people going
[12:40] Speaker 6: was her plan to eliminate the temporarily, shall we say,
[12:46] Speaker 6: cut to zero, the sales tax on food, which is
[12:48] Speaker 6: eight percent of the moment that would cost about a
[12:50] Speaker 6: plan that would cost about five trillion yen. Now I
[12:54] Speaker 6: think this is a bad plan. I would not. If
[12:58] Speaker 6: Japan has five trillion yen to spend, I think they
[13:00] Speaker 6: could get much better results on doing it elsewhere, and
[13:05] Speaker 6: I think it will also not have the impact on
[13:08] Speaker 6: low income households that are suffering with inflation that Takaichi
[13:12] Speaker 6: wants it to have. However, in the grand scheme of things,
[13:15] Speaker 6: it's not a huge amount of money, you know, it's
[13:17] Speaker 6: one percent of GDP in Japan's tax revenue has been
[13:21] Speaker 6: going up in general a lot. But Takeichi needs to
[13:26] Speaker 6: make that case, you know, more forcefully. She didn't really
[13:29] Speaker 6: you know, make that She just kind of talks about
[13:31] Speaker 6: handing out money. And so from from that perspective, yeah,
[13:35] Speaker 6: she does need to be a little bit more cautious
[13:37] Speaker 6: about how she handles things and maybe think a little
[13:40] Speaker 6: bit more about how the market will react.
[13:42] Speaker 1: So, right after we saw the ructions in the Japanese
[13:45] Speaker 1: bond market, Japanese Finance Minister Katayama was on the sidelines
[13:49] Speaker 1: at Davos asking market participants to calm down. Is there
[13:54] Speaker 1: the risk that we see a return of this type
[13:57] Speaker 1: of market behavior, that that Japan is basically viewed as
[14:01] Speaker 1: a major exporter of bond market volatility, And.
[14:05] Speaker 6: I certainly think it's I certainly think it's a risk.
[14:08] Speaker 6: I think, you know, we're in a situation now where
[14:11] Speaker 6: you have a lot of people who are in the
[14:14] Speaker 6: Japanese bond market who maybe were not in it before
[14:17] Speaker 6: because you know, for many years it was not a
[14:19] Speaker 6: very interesting market. So now you're maybe seeing people who
[14:23] Speaker 6: are you maybe overreacting a little bit to to you know,
[14:29] Speaker 6: to two events, and you know you're you're you're also seeing,
[14:35] Speaker 6: you know, a situation where Japan is going through us
[14:39] Speaker 6: you know, as I was saying, is it's going through
[14:40] Speaker 6: this long normalization. You know, it's only two years or
[14:43] Speaker 6: it's less than two years since the BOJ ended yield
[14:48] Speaker 6: curve control. Japan itself is becoming you know, is getting
[14:54] Speaker 6: used to the idea that inflation is here to stay.
[14:58] Speaker 6: You know, if you had said that five years ago,
[15:01] Speaker 6: no one would have believed you. Now there's the sense
[15:04] Speaker 6: that inflation is is going to be here, that it
[15:07] Speaker 6: is sticky, and you're seeing things, you know, being repriced
[15:11] Speaker 6: in order to take that into account to that extent,
[15:14] Speaker 6: you know, some of this is is is quite healthy,
[15:16] Speaker 6: you know the normalization of the market, and I think
[15:18] Speaker 6: to Finance Minister's Finance Minister Katama's comments. You know, she
[15:23] Speaker 6: was kind of making that point as well, that you know,
[15:26] Speaker 6: policymakers here are are are well aware that you know,
[15:30] Speaker 6: they're well aware of, you know, some of the changes
[15:32] Speaker 6: that are happening, and indeed, like a lot of these
[15:34] Speaker 6: changes are intensible. You know, the boj gave up the
[15:38] Speaker 6: clort of control on purpose, not because you know they
[15:40] Speaker 6: couldn't they couldn't sustain it anymore. But you will certainly
[15:43] Speaker 6: see I think, you know, more bumps along the road.
[15:45] Speaker 6: This isn't the first one that we've seen in this
[15:47] Speaker 6: normalization process. There was there was a similar moment you know,
[15:51] Speaker 6: last year in May. If I recall correctly, and I
[15:54] Speaker 6: do think you will, you will see this and it's important,
[15:56] Speaker 6: I think for policymakers to come out and make make comments, admit,
[16:00] Speaker 6: you know, telegraph there you know they're thinking a little
[16:05] Speaker 6: bit better.
[16:06] Speaker 1: I would say so in cases where maybe we see
[16:09] Speaker 1: another return to this type of volatility, maybe we get
[16:12] Speaker 1: a drop in bond prices. I'm wondering about the degree
[16:15] Speaker 1: to which that would be a big negative for banks
[16:18] Speaker 1: in Japan, particularly the larger regional banks.
[16:23] Speaker 6: Yeah, certainly the regional banks, you know, Jman's regional banking
[16:28] Speaker 6: sector is exposed to We see this, you know, every
[16:33] Speaker 6: time there is a little you know, above all kind
[16:36] Speaker 6: of anywhere in the world. We saw this with you know,
[16:39] Speaker 6: some of the private credit stuff that was going on
[16:42] Speaker 6: in the US last year. It always seems to be
[16:44] Speaker 6: some Japanese regional bank always turns up being involved in it.
[16:50] Speaker 6: I do think, I do think that is sort of
[16:52] Speaker 6: like a long term concern. But I also think, you know,
[16:56] Speaker 6: the authorities are aware of that, and they are keeping
[16:59] Speaker 6: an eye on that, are pressuring, you know, particularly the
[17:02] Speaker 6: regional banks. I think that you know, the megabanks are
[17:05] Speaker 6: are far better diversified, but the regional banks, you know
[17:08] Speaker 6: that they are keeping an eye on that, and you know,
[17:13] Speaker 6: I think authorities are broadly across that.
[17:15] Speaker 1: So what I'm hearing is that you're against this two
[17:17] Speaker 1: year consumption tax on food. But imagine a world in
[17:21] Speaker 1: which you're an advisor now to Prime Minister Takei Ichi,
[17:25] Speaker 1: and you can agree that the economy in Japan needs
[17:28] Speaker 1: some form of stimulus. What would you recommend the government do?
[17:33] Speaker 6: Well, I guess there are two things. One, you know,
[17:36] Speaker 6: the reason that that Takeichi is doing this this two
[17:38] Speaker 6: year cut or say they say she is only proposing it.
[17:43] Speaker 6: She she is saying that, you know, let's talk about it.
[17:46] Speaker 6: I think it's entirely possible that no conclusion is reached
[17:50] Speaker 6: within the LDP even after winning the election, and it
[17:54] Speaker 6: never actually comes to pass. So so that that's one thing.
[17:57] Speaker 6: But the reason that she is doing it is because
[17:59] Speaker 6: you know, there is very high, particularly food inflation in Japan,
[18:05] Speaker 6: and it's particularly a shock to Japan because Japan for
[18:08] Speaker 6: so long had you know, either static or falling prices,
[18:14] Speaker 6: and there are a lot of low income households that
[18:17] Speaker 6: are suffering with the price of food. The price of
[18:19] Speaker 6: rice was a big story last year. So you certainly
[18:22] Speaker 6: do have to do something for those for those households,
[18:25] Speaker 6: that's one thing. So you know, for that instead of
[18:28] Speaker 6: doing an across the board cut to the sales tax
[18:34] Speaker 6: on food, which benefits you know, rich households, well off
[18:38] Speaker 6: households as much as it does low income households. And also,
[18:42] Speaker 6: I would say almost certainly most of that will be
[18:45] Speaker 6: absorbed by distributors and producers and retailers who know that,
[18:50] Speaker 6: you know, we have clear price signals for how much
[18:53] Speaker 6: consumers are going to pay for specific goods, so I
[18:57] Speaker 6: also think it would be ineffective in and actually helping
[19:01] Speaker 6: consumers out. I would say have a more targeted either
[19:05] Speaker 6: you know, tax cut or particularly social security is quite
[19:10] Speaker 6: takes a lot out of net pay for low income,
[19:14] Speaker 6: you know, working households, So I would favor doing something
[19:17] Speaker 6: that that more specifically targets the you know, low income
[19:20] Speaker 6: households people who are struggling, rather than and across the
[19:24] Speaker 6: board cut that the benefits everyone. For something that's going
[19:27] Speaker 6: to benefit the economy, I do think there is a
[19:31] Speaker 6: lot that you know, Japan does need to be spending on.
[19:34] Speaker 6: I think Takichi is right when she says that Japan
[19:37] Speaker 6: has been too conservative and too much in a sort
[19:42] Speaker 6: of austerity mood over the past several years, and you
[19:45] Speaker 6: see this in the lack of you know, capital investment.
[19:47] Speaker 6: Japan needs to invest a lot more in AI, in energy,
[19:53] Speaker 6: in many different sectors, in education, particularly in higher level education, researchers,
[19:58] Speaker 6: PhD s, stuff like this, semiconductor engineers. Japan has a
[20:01] Speaker 6: lot of stuff that it needs to invest in. That's
[20:03] Speaker 6: where I would say put that money in and that
[20:06] Speaker 6: will have returns further down the road rather than this
[20:09] Speaker 6: one time you know, essentially politically motivated.
[20:12] Speaker 1: Cut gerol before I let you go. We do have
[20:14] Speaker 1: the BOJ meeting at the end of the week, and
[20:16] Speaker 1: we're expecting a decision that essentially will not change policy.
[20:20] Speaker 1: But I'm wondering whether or not what we have seen
[20:23] Speaker 1: in the course of the last week would maybe unnerve
[20:26] Speaker 1: the Bank of Japan just a little bit.
[20:29] Speaker 6: You know, I think governmentwate that tends to be he
[20:32] Speaker 6: is a very sort of he's not moved by temporary
[20:37] Speaker 6: you know, volatility in the market very much. So I
[20:41] Speaker 6: think the LOOKAP is and especially now that we see
[20:45] Speaker 6: or you know, at least when I'm talking to you,
[20:47] Speaker 6: it was just one day indeed, sort of like one
[20:49] Speaker 6: half of a trading session where this was happening. So
[20:53] Speaker 6: I don't think they'll be particularly unnerved about it. You know,
[20:55] Speaker 6: we had yesterday, we had the boj's regular skateud'll purchase
[21:00] Speaker 6: of bonds. I think it's the BAJA wanted to signal anything.
[21:04] Speaker 6: They could have increased that amount as they you know,
[21:07] Speaker 6: they have a framework to do. They chose not to
[21:09] Speaker 6: do that, and I think that was probably the right
[21:11] Speaker 6: thing to do. So I suspect that Governor Leda will
[21:16] Speaker 6: essentially brush it off and say, you know something along
[21:19] Speaker 6: the lines of, you know, we're watching markets, and you
[21:21] Speaker 6: know we'll we'll when when action needs to take place
[21:25] Speaker 6: that they will, but they will take action.
[21:27] Speaker 1: OK, good stuff. We'll leave it there. Gerod Redi is
[21:30] Speaker 1: Bloomberg opinion columnists joining from Tokyo here on the Daybreak
[21:33] Speaker 1: Asia Podcast. Thanks for listening to today's episode of the
[21:38] Speaker 1: Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at
[21:43] Speaker 1: the story shaping markets, finance, and geopolitics in the Asia Pacific.
[21:47] Speaker 1: You can find us on Apple, Spotify, the Bloomberg Podcast
[21:51] Speaker 1: YouTube channel, or anywhere else you listen. Join us again
[21:54] Speaker 1: tomorrow for insight on the market moves from Hong Kong
[21:58] Speaker 1: to Singapore and Australia. I'm Doug Prisoner and this is
[22:02] Speaker 1: Bloomberg
[22:10] Speaker 5: M

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