Let me start with you, Brian, because,
of course, the latest that we've heard is as we continue to watch for any
intervention coming from authorities that we might potentially see that we
have already seen a new currency chief, and that would be Atsushi Uemura.
Tell us a little bit about him. Well, let me just say.
Okay, first of all, Cherie, I mean, this is obviously a very dramatic time to be
making a change at that position, but it's part of normal rotations.
And the one thing you can bet on is we will see continuity.
The scripts that that the MOF officials deliver are always meticulously
prepared. And you'll notice on days when we have
Suzuki and kind of speaking on the same day, they always convey the exact same
amount of urgency, whether it's something simple, like we are watching
currency markets regularly or more dramatic, more urgent, we are ready to
take steps as necessary so that won't change.
The one thing that does change is there is communication involved with the media
and having seen dozens of vice finance ministers come and go in my time.
I mean, I can say they're all the cream of the crop.
They're all fantastic. They're all they've got great English.
They know everything about the world and the financial markets.
But charisma is a thing, and Condon had a degree of charisma that reminds me of
something we haven't really seen since the days of A.K.
Sakakibara. I mean, a real Mr.
Yen and a power over. You know, the timing is always
exquisite, the way they deliver their their communications.
So that's something to watch. We'll have to see just what Mr.
Neumeier, it looks like when he starts really talking with the press on a
regular basis. I got to say that despite the charisma,
I mean, that hasn't really necessarily worked in the last few months.
We saw what happened last week as well. He was talking about intervening for 24
hours and then the yen just didn't budge.
But Taro, that's led to some different dynamics across the Japanese economy,
including prices now continuing to rise. Right.
Absolutely. So BOJ's stance was they they don't care
about the levels of the input like chip, like the yen.
This kept in that weakness so high that like, you know, that would be something
that will be something that the bulls can't ignore.
And I think the weaker yen is may make their cards up about inflation
overshooting and obviously the Tokyo CPI Friday suggests that inflation is going
in the BOJ direction. So I think those readings are kind of
opening the gates for the BOJ a for it's another hike in July in my reading here.
So why hasn't the government intervened so far, Brian?
Because we have seen, of course, as Taro says, very weak levels.
Is it the gradual decline that's really keeping authorities at bay?
Yeah, I mean, part of it's the pace of the move.
So that's definitely something they were watching closely.
And and it's also I mean, they're looking at, you know, everything the
macro environment and they can't fight the Fed.
The main the main factor that's pushing the dollar up and it's up not just
against the yen, but up against all the other currencies as well is that
interest rates. So Japan has the kind of time.
Time it's time to move and really, you know, make the most of its efforts,
efforts. It doesn't want to intervene at a time
when it's just going to be pushing against a string, so to speak.
So we're still on standby any time. And we're watching closely.
And I think it's just a matter of seeing how the market is positioned on any day.
Tara, what's your outlook for the yen as we head into a new quarter?
Because part of the moves and that weakness is seen in the Japanese yen
have also been attributed to funding needs for the dollar, the quarter end
rebalancing of portfolios, especially given the US PC rating on Friday.
Do you see that pressure being eased a little bit in the coming couple of
weeks? It's really hard to say because the
recent week weekend is mostly about the speculative pressure.
People say carry trade is about fundamentals, but to my eyes the carry
trade is also mostly speculative because they try to retain not only the rate
differentials, but also it actually targets the capital gains.
So therefore, as long as those capital speculative pressure goes on the dollar
and could blow it anyway. That said, the I think the Japanese
investors are saying the time for repatriation, that will not be a strong
game changer but somehow support a supportive factor for the and I think
that's how we have the Japan Tankan business sentiment survey coming out
within the hour. It's been interesting talking to these
CEOs because even exporters who benefit from a weaker yen are feeling a bit more
cautious when it comes to this much weakness.
Right. Absolutely.
Obviously, like even the importers, even the exporters procure buy imports
because like Japan is lack of resources generally.
So that's why I think that message is kind of the weakness of the yen probably
went over that that sort of a threshold for that for the profit and also
obviously for, let's say, for the carmakers, you know, if the consumer
confidence is declining, that makes worse for their domestic businesses as
well. So that's why I think there are alerts
into the weekend for for the tank. I think the inflation related causes are
must watch whether the particularly the service providers are still willing to
raise prices and also the corporates inflation expectations are the most.
One of the most important goals is for the BOJ to watch the inflation
expectations. If it's kept around 2%, it's like
another goal for a boj's hike in July. Brian, what are your expectations as
well for that survey and the type of confidence we're expecting to see from
businesses? Well, I mean, we're prepared for for all
possibilities, but we expect to see the Tom Keene sentiment broadly holding
steady across all sectors. You'll remember that the services sector
and we were at a at the highest in decades before, So we'll be watching
that closely to see if that is maintained.
We expect manufacturers to kind of come in about where they were, which is, as
Tara said, I mean, it's broadly should be supportive for the BOJ to certainly
consider and possibly execute a rate hike at the end of this month.
We'll also be looking at CapEx. We expect CapEx figures for this next
fiscal year to be revised up into the double digits somewhere around the 13
12% range. That'll be a big sign of a positive sign
for the BOJ in terms of the virtuous economic cycle that it's been pursuing.
