July 17, 2025 • 17 mins
Asian stocks made a modest gain at the open Friday as a global equity rally gained fresh vigor on strong economic data that eased concerns about the US economy. The MSCI Asia Pacific Index rose 0.2% at the open. Equity-index futures for US gained after the S&P 500 and Nasdaq 100 set closing highs Thursday. Tech stocks rose as a bullish outlook from Taiwan Semiconductor Manufacturing Co. bolstered confidence in artificial-intelligence spending. Netflix Inc. also reported strong earnings and raised its forecast. We get market insights from Brian Vendig, Chief Investment Officer at MJP Wealth Advisors.
Plus - Japan's key price measure cooled a tad more than expected while remaining well above the Bank of Japan's target, keeping pressure on Prime Minister Shigeru Ishiba to mollify voters as he heads into Sunday's national election. Consumer prices excluding fresh food rose 3.3% from a year earlier in June, slowing from a 3.7% gain - a two-year high - in the previous month, the Ministry of Internal Affairs and Communications reported Friday. We get reaction from former BOJ board member Sayuri Shirai, now Professor of Economics at Keio University. She speaks with Bloomberg's Shery Ahn and Haidi Stroud-Watts on The Asia Trade.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia Podcast. I'm deg Chrisner.
So the appetite for risk gained some fresh vigor today
thanks to data showing the American economy is holding up
despite those concerns over the harm the tariffs may inflict.
Also today, some reaction to the latest print on consumer
prices out of Japan. In a moment, we'll hear from
Soyuri Sharai, professor of economics at Kyo University in Tokyo.
(00:34):
But we begin here in the States. Joining me now
is Brian Vendigg. He is the chief investment officer at
MJP Wealth Advisors. Brian is on the line from Westport, Connecticut.
Good of you to make time to chat with me.
So pretty impressive strength and equities today We had records
for both the S and P and the NASDAC comp
How did you make sense of the price section today?
What did you learn?
Speaker 3 (00:55):
Thanks DOEG.
Speaker 4 (00:56):
I think investors are reacting to retail sales numbers coming
in higher than expected, rebounding off of the decline of May.
Retail sales growing about point six percent month over month,
which was higher than expectation of about point two, and
I think it gave signs to investors that the consumer
is still healthy and that spending is still incurring, even
(01:20):
though there's this concern of price increases from tariffs. Now
under the hood, we have seen increases in price evidenced
by these numbers in both the electronics and furniture and
other type of capital goods areas. So it's definitely something
to keep a watchful eye on. But with earnings starting
to come in a little bit above expectations at a
(01:41):
healthy consumer, I think investors are still looking ahead and
thinking about where the economy can go and that profits
can take us a little bit higher.
Speaker 2 (01:51):
We heard earlier today from Mike Wilson over at Morgan Stanley,
and he said that he still sees this bull market
building in US equities. However, first the S and P
five hundred may have to take a hit in his view,
anywhere between five to ten percent. How does that sit
with you.
Speaker 4 (02:08):
I think in this type of market, with the conflicting variables,
it's really hard to quantify what that downside might be.
Because I think a lot of people have been calling
for a pullback over the last couple of months, as
we ripped off of those April lows, and.
Speaker 3 (02:22):
The timing and the sequence has been off.
Speaker 4 (02:24):
I would say this though, when I look back academically
with markets coming back and we're like sixty five plus
trading days since those lows, DOUG you usually see a
consolidation in the first month after you get such an
aggressive bounce back, But when you look out the next
three and six months, market returns have actually been quite favorable.
Speaker 3 (02:45):
So when I think about.
Speaker 4 (02:46):
The summer months, we're still going through a transition, a
digestion period around policy uncertainty with tariffs, that back and
forth about rate cuts from the FED and what policy
might be there. But at the end of the day,
are coming back to earnings, and I think if the
job market's stable earnings out looks hold, we'll get through
this pullback and then we should see, hopefully a good
(03:09):
investor start looking ahead to twenty twenty six, and that's
where I see the earnings forecast improving.
Speaker 2 (03:14):
So you mentioned the FED there. We heard from Mary
Daily today, she's the head of the San Francisco FED.
She was speaking at the Rocky Mountain Economic Summit, and
she told us that the FED should not wait too
long before moving ostensibly to lower interest rates, because if
it were to wait until inflation is around two percent,
maybe you could see some injury to the economy in
(03:35):
a way that was maybe unnecessary. And also today late
in the day, we heard from FED Governor Chris Waller. Now,
to be fair, he is campaigning to be the next
FED chair. That said, he went on to say that
the FED should probably cut rates to support the labor market,
which is showing some signs of weakness. Now he said
that on a day when weekly jobless claims were down
(03:58):
for a fifth straight week to the lower level since
mid April. So I'm struggling to make sense of that remark.
But how do you make sense of what we're hearing
from FED officials.
Speaker 4 (04:08):
Well, I think it's clear that FED officials are starting
to become more and more divided between the growth debate
of the economy exemplified by the jobs market, or the
inflation debate around tariffs, and what really is the flow
through and the impact. And I think from the comments
that we got today late in the day from Waller,
(04:30):
he was speaking more to the point that he saw
the price increased from tariffs as a temporary tax, a
one time impact, which then we'll kind of flow through
the system. And I think as comments were also more
geared of let's take action now just to be preventative,
and if we see that there isn't this slowdown, or
we're supporting the economy inflation's not spiking, then he would
(04:54):
actually say let's do the second cut a little bit
later on. I think right now, because of the conflicting
very of all the economic data and also dug a
lot of things being so distorted this year with the
pull forward of demand with the economy, I think it's
very hard to make that call on these data points
that they keep contradicting themselves month over month, kind of
(05:16):
like retail sales. So I think I think the I
think the FED is making the right decision or pals
comments the other the other day, and other voting members
is saying let's let's play the wait and see in September.
Speaker 3 (05:27):
But it's pretty clear the derivatives.
Speaker 4 (05:29):
Markets are also looking the same same way, so that
we're really not expecting a rate cut this month and
probably more to follow from September on.
Speaker 2 (05:38):
Yeah, it's particularly interesting because two separate FED reports in
the recent week. These are numbers for early July kind
of show intensifying price pressure. I'm thinking of the Philly
FED Manufacturing report. It showed that input prices are on
the rise. That was a number that we got today,
and then earlier in the week we heard from the
New York Fed the Empire report show future expectations for
(06:01):
higher prices. That's been building and I'm wondering whether or
not to your point about there being a divide at
the FED really argues for just a wait and see
for a while longer, maybe until after the first of
the year. Is that saying too much.
Speaker 4 (06:16):
I think waiting until the first of the year probably
would be detrimental to the economy if you start to
see a slowdown in consumer aggregate demand due to price,
because the offset of that is it could cause companies
wanting to protect margins with jobs. And I think in America,
you know, people feel good about spending when they feel
confident about their job. And I think the shift that
(06:38):
I agree with you, Doug, that you know we are
seeing capital good prices go up and it's coming at
a cost to some spending in the services area of
the marketplace, which has also increased in price month over
a month recently when we looked at the most recent
inflation report. So I think that mix is the issue
that our country is dealing with economically, and that's why
(07:00):
I think if you wait too long and you see
the prices increase, but if demand comes down on the
services side, that's the way we're thinking about it, and
that might smooth out the concern of runaway inflation, and
thus then you need to be supportive of the economy.
And that's why we're in the camp that some cuts,
one or two cuts in the fourth quarter probably would
(07:22):
make sense so that the FED doesn't get too far
behind the rear view mirror that we all know that
they're looking at, because they've decided to be data dependent
and not provide those forwardlooking expectations as they did erroneously
in the past, and they're just going to fall back
and see how the data plays out over the summer.
Speaker 2 (07:41):
How do you evaluate the risk that these trade tensions
will drag on past August?
Speaker 3 (07:48):
First, Well, I think that's a great question.
Speaker 4 (07:51):
We've accepted that the US effective terriffrey will probably be
somewhere between fifteen to sixteen percent on an overall basis,
which is significantly up from where we ended the year
last year two and a half percent for the country.
And I think what we're searching for is the fact
that the companies that can you know, you know, eat
(08:15):
some of that cost now, but recognizing they're going to
pass them on to the consumer, I think is going
to be evident. I think that's going to happen. But
at the same point in time, as long as we
still see I think a stable labor market, that's the
tipping point to say the economy has a tolerance for that,
because wages are still up year over year, spending is
(08:38):
still happening with the upper income bracket in the United States,
and so I think this all kind of comes together
to say that, look, profits, can they work through and
get through this environment with a higher price environment.
Speaker 3 (08:53):
The answer is yes, but it takes several years.
Speaker 4 (08:56):
For supply chains to adjust, and I think that's something
that businesses are trying to adjust to, depending on if
you're a capital's good business or if you're in the
service space.
Speaker 2 (09:05):
We heard from Netflix after the bell very impressive forecast
for full year sales and profit margins, and a lot
of this is being driven by markets offshore. The international
market for Netflix. How do you feel about the story
in Netflix or whether it's still something that's interesting. Do
you see it being fully intact.
Speaker 4 (09:25):
Still, Yeah, I think the story for Netflix is really interesting,
and I'll make one comment or two about the quality
of earnings as well. I mean, I think the transformation
point about the platform I think moving forward is how
consumers are going to think about TV and when you
think about YouTube or Netflix, these are platforms that can
continue to evolve to add content, whether it's in sports
(09:48):
or entertainment, or purchasing other broadcast companies and integrating that
on that international basis, and their quality of earnings definitely
was impacted by currency translation with a weaker dollar coming back,
which helped, but I think analysts were a little bit
disappointed Doug on the outlook, and they were probably hedging
(10:10):
a little bit about that international growth story, subscriber based story.
But I really still see them being innovative and pushing
out on what TV or content management is going to
be in the future.
Speaker 3 (10:23):
And also just to remember, a big part.
Speaker 4 (10:26):
Of their growth is also ad business and growing that
through their platform, and so as the platform continues to
grow and diversify, I think there's an opportunity as well.
But don't get me wrong. For price earnings ratio, it
was pretty high over forty in this environment. And going
back to our earlier comments, I think when you think
about equities in this environment, if you're looking for an
(10:46):
opportunity to jump into some of these higher growth names
that might be around the corner. But I think Netflix
story is still there from a longer term perspective.
Speaker 2 (10:55):
Okay, Brian, we'll leave it there. Good stuff, Thank you
so much for being with us. Brian Vendiggie is Chief
Investment off sir at MJP Wealth Advisors. He's on the
line from Westport, Connecticut here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm dek Chrisner.
(11:16):
We got some key inflation data for Japan this morning.
CPI cool to TAD more than expected in June, although
it's still well above the boj's two percent target. Consumer
prices excluding fresh food rose by three point three percent
from last year, and that in turn is keeping pressure
on Prime Minister Shigudu Ishiba to play kate voters ahead
(11:37):
of this week's national election. For more on the inflation story,
we heard from former BOJ board member, so Yuri Sharai,
now professor of economics at Kyo University. She spoke with
Bloomberg's Heidi Stroud, Watts and Cherry.
Speaker 1 (11:50):
On Always great to get your insights, say, youty So,
tell us a little bit about first your reaction to
the CPI numbers, because it was decelerating from the previous
Also course IPI coming in below estimates. Could it be
a sustained down trend or is this one off?
Speaker 5 (12:06):
I think this is all you know related to the
energy inflation desideration. It's partly because of the sub subsidy
or energy studied again and made data. It was a
base effect, so inflation looked much bigger than it's.
Speaker 6 (12:22):
Supposed to be.
Speaker 5 (12:23):
So once you exclude all that, inflation still remain high.
So it doesn't mean information is desilerating. But over time
important information prices started to come down. So I think
over time inflation starts.
Speaker 6 (12:34):
To come down. What's going on with rice though?
Speaker 5 (12:37):
Yeah, still one hundred percent increase in last years. You know,
like video said, you know agricultural farmers they need higher prices,
but you know one hundred percent increases, you know beyond
you know all these factors, so it must be something
to do with distribution, and a lot of people think
this is something to do with agricultural cooperatives, you know,
(12:58):
sort of controlling prices. So I think when prices is
very high, leg chase, you know, plemister Sida does not
want to change import prices, so I think this frust
rate a lot of people in a Tokyo area.
Speaker 1 (13:10):
Right, which could have implications for the Upper House elections.
What are the economic implications for Japan if Prime Minister
Issueva loses the majority in.
Speaker 5 (13:19):
The Upper House, So it means a lot of consumption
tax cuts will happen. Because the only doing parties was
suggesting just the provision at one.
Speaker 6 (13:28):
Time for all small increase in.
Speaker 5 (13:30):
Cash transfers or about the one hundred and thirty daras
it's just so tiny, but all opposition parties talking about
consumption tax cuts, you know, zero percent consumption tax rate
on the food or income tax cuts, so of course
everybody wanted. But in terms of physical consideration, it's quite
a big impact. So it might lead to the higher
(13:50):
you know, it's a high in a thirty for the
year yield, so that could create difficulty.
Speaker 1 (13:58):
What are you saying when it comes to the gap
between real household wealth, real wage growth and increasing inflation.
Is that something that still has to be closed, particularly
if it's going to increase household and consumer confidence.
Speaker 5 (14:12):
Yeah, so, you know, everybody remember the Spring wage negotiation,
you know, besout it very successfully, like five percent, but
once we include small medium enterprises, you know, wages are
not growing that much. So May data is very bad,
just a one percent increase in wages, so real wages
you know, dropping by two percent and so so a
(14:33):
lot of people do not feel wages are picking up,
you know, despite the Spring successful negotiation, So people are
really suffering and then wage not growing.
Speaker 6 (14:43):
So consumption in May.
Speaker 5 (14:45):
Data on household looked good, but it must be temporary.
I think people still have a very feel uncomfortable with
this lising costs.
Speaker 1 (14:54):
How much risk can and also support the satisfaction is
there over the state of play when it comes to
trade negotiations and TIA risks.
Speaker 6 (15:03):
Yeah, this is very unfortunate.
Speaker 5 (15:05):
The Japanese government made a seventh negotiations in addition to that,
lots of telephone call and conferences, right, but nothing really happening.
I think because over forty years the Japan already did
a lot of concession to the US and so there
are not much to do for negotiations, so only the
one thing left is rise but that lies the Japanese
(15:27):
government want to support with minimum import quota, so that is.
Speaker 6 (15:34):
On the area as an area.
Speaker 5 (15:35):
You know, most of them are kind of liberal rized,
and it's very difficult for Japan to increase US cars.
It doesn't fit into Japanese road so it's not much
negotiation left.
Speaker 6 (15:47):
So that's why it's very difficult.
Speaker 5 (15:48):
And of course Japan want to get to rid of
this twenty five percent tariff on cars and fifty percent
tariff on the steal and you know, they want to
get to rid of it.
Speaker 6 (15:59):
So it's very challenged.
Speaker 1 (16:00):
But I guess the calculation could completely change for the
Bank of Japan if you're do in fact get some
sort of tariff deal. I mean, because the economy has
been pretty resilient, why aren't they normalizing policy quicker?
Speaker 6 (16:12):
Right?
Speaker 1 (16:12):
And it's all of them over tariffs.
Speaker 5 (16:14):
Okay, so right now export dropping productions are dropping because
of the tariff, right, But if you know they can
deal come up with still these things might change.
Speaker 6 (16:24):
But at this moment, when Japan.
Speaker 5 (16:26):
Doesn't have a room as a tax increase is not
really doing well.
Speaker 1 (16:31):
Especially when we're looking at for example, JGB yields as
well continuing to run right because of the balance reductions
from the BOG How does that also sort of restrict
the movements of what the Bank of Japan can do.
Speaker 5 (16:43):
Yeah, so right now satil is very very high, you know,
exceptionally high. So I think BOJ is very careful. You know,
that's that's the one of the reason why they started
to slow down QT. Right, So I think, you know,
that's another reason why BOJ be careful in terms of
you know, laisy into interested. Although they may want to normalize,
but at the stage economy is not doing well and
(17:05):
study and studies what the eel is going up, So
it's very difficult.
Speaker 1 (17:09):
Yeah, sayo Rishi, I always good to have you with us,
professor of economics at Ko University. Of course, Heili will
be watching that Upper House election this weekend here in Japan.
Speaker 2 (17:20):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us on Apple, Spotify, The Bloomberg Podcast, YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
(17:43):
and Australia. I'm Doug Prisoner and this is Bloomberg
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia Podcast. I'm deg Chrisner.
So the appetite for risk gained some fresh vigor today
thanks to data showing the American economy is holding up
despite those concerns over the harm the tariffs may inflict.
Also today, some reaction to the latest print on consumer
prices out of Japan. In a moment, we'll hear from
Soyuri Sharai, professor of economics at Kyo University in Tokyo.
(00:34):
But we begin here in the States. Joining me now
is Brian Vendigg. He is the chief investment officer at
MJP Wealth Advisors. Brian is on the line from Westport, Connecticut.
Good of you to make time to chat with me.
So pretty impressive strength and equities today We had records
for both the S and P and the NASDAC comp
How did you make sense of the price section today?
What did you learn?
Speaker 3 (00:55):
Thanks DOEG.
Speaker 4 (00:56):
I think investors are reacting to retail sales numbers coming
in higher than expected, rebounding off of the decline of May.
Retail sales growing about point six percent month over month,
which was higher than expectation of about point two, and
I think it gave signs to investors that the consumer
is still healthy and that spending is still incurring, even
(01:20):
though there's this concern of price increases from tariffs. Now
under the hood, we have seen increases in price evidenced
by these numbers in both the electronics and furniture and
other type of capital goods areas. So it's definitely something
to keep a watchful eye on. But with earnings starting
to come in a little bit above expectations at a
(01:41):
healthy consumer, I think investors are still looking ahead and
thinking about where the economy can go and that profits
can take us a little bit higher.
Speaker 2 (01:51):
We heard earlier today from Mike Wilson over at Morgan Stanley,
and he said that he still sees this bull market
building in US equities. However, first the S and P
five hundred may have to take a hit in his view,
anywhere between five to ten percent. How does that sit
with you.
Speaker 4 (02:08):
I think in this type of market, with the conflicting variables,
it's really hard to quantify what that downside might be.
Because I think a lot of people have been calling
for a pullback over the last couple of months, as
we ripped off of those April lows, and.
Speaker 3 (02:22):
The timing and the sequence has been off.
Speaker 4 (02:24):
I would say this though, when I look back academically
with markets coming back and we're like sixty five plus
trading days since those lows, DOUG you usually see a
consolidation in the first month after you get such an
aggressive bounce back, But when you look out the next
three and six months, market returns have actually been quite favorable.
Speaker 3 (02:45):
So when I think about.
Speaker 4 (02:46):
The summer months, we're still going through a transition, a
digestion period around policy uncertainty with tariffs, that back and
forth about rate cuts from the FED and what policy
might be there. But at the end of the day,
are coming back to earnings, and I think if the
job market's stable earnings out looks hold, we'll get through
this pullback and then we should see, hopefully a good
(03:09):
investor start looking ahead to twenty twenty six, and that's
where I see the earnings forecast improving.
Speaker 2 (03:14):
So you mentioned the FED there. We heard from Mary
Daily today, she's the head of the San Francisco FED.
She was speaking at the Rocky Mountain Economic Summit, and
she told us that the FED should not wait too
long before moving ostensibly to lower interest rates, because if
it were to wait until inflation is around two percent,
maybe you could see some injury to the economy in
(03:35):
a way that was maybe unnecessary. And also today late
in the day, we heard from FED Governor Chris Waller. Now,
to be fair, he is campaigning to be the next
FED chair. That said, he went on to say that
the FED should probably cut rates to support the labor market,
which is showing some signs of weakness. Now he said
that on a day when weekly jobless claims were down
(03:58):
for a fifth straight week to the lower level since
mid April. So I'm struggling to make sense of that remark.
But how do you make sense of what we're hearing
from FED officials.
Speaker 4 (04:08):
Well, I think it's clear that FED officials are starting
to become more and more divided between the growth debate
of the economy exemplified by the jobs market, or the
inflation debate around tariffs, and what really is the flow
through and the impact. And I think from the comments
that we got today late in the day from Waller,
(04:30):
he was speaking more to the point that he saw
the price increased from tariffs as a temporary tax, a
one time impact, which then we'll kind of flow through
the system. And I think as comments were also more
geared of let's take action now just to be preventative,
and if we see that there isn't this slowdown, or
we're supporting the economy inflation's not spiking, then he would
(04:54):
actually say let's do the second cut a little bit
later on. I think right now, because of the conflicting
very of all the economic data and also dug a
lot of things being so distorted this year with the
pull forward of demand with the economy, I think it's
very hard to make that call on these data points
that they keep contradicting themselves month over month, kind of
(05:16):
like retail sales. So I think I think the I
think the FED is making the right decision or pals
comments the other the other day, and other voting members
is saying let's let's play the wait and see in September.
Speaker 3 (05:27):
But it's pretty clear the derivatives.
Speaker 4 (05:29):
Markets are also looking the same same way, so that
we're really not expecting a rate cut this month and
probably more to follow from September on.
Speaker 2 (05:38):
Yeah, it's particularly interesting because two separate FED reports in
the recent week. These are numbers for early July kind
of show intensifying price pressure. I'm thinking of the Philly
FED Manufacturing report. It showed that input prices are on
the rise. That was a number that we got today,
and then earlier in the week we heard from the
New York Fed the Empire report show future expectations for
(06:01):
higher prices. That's been building and I'm wondering whether or
not to your point about there being a divide at
the FED really argues for just a wait and see
for a while longer, maybe until after the first of
the year. Is that saying too much.
Speaker 4 (06:16):
I think waiting until the first of the year probably
would be detrimental to the economy if you start to
see a slowdown in consumer aggregate demand due to price,
because the offset of that is it could cause companies
wanting to protect margins with jobs. And I think in America,
you know, people feel good about spending when they feel
confident about their job. And I think the shift that
(06:38):
I agree with you, Doug, that you know we are
seeing capital good prices go up and it's coming at
a cost to some spending in the services area of
the marketplace, which has also increased in price month over
a month recently when we looked at the most recent
inflation report. So I think that mix is the issue
that our country is dealing with economically, and that's why
(07:00):
I think if you wait too long and you see
the prices increase, but if demand comes down on the
services side, that's the way we're thinking about it, and
that might smooth out the concern of runaway inflation, and
thus then you need to be supportive of the economy.
And that's why we're in the camp that some cuts,
one or two cuts in the fourth quarter probably would
(07:22):
make sense so that the FED doesn't get too far
behind the rear view mirror that we all know that
they're looking at, because they've decided to be data dependent
and not provide those forwardlooking expectations as they did erroneously
in the past, and they're just going to fall back
and see how the data plays out over the summer.
Speaker 2 (07:41):
How do you evaluate the risk that these trade tensions
will drag on past August?
Speaker 3 (07:48):
First, Well, I think that's a great question.
Speaker 4 (07:51):
We've accepted that the US effective terriffrey will probably be
somewhere between fifteen to sixteen percent on an overall basis,
which is significantly up from where we ended the year
last year two and a half percent for the country.
And I think what we're searching for is the fact
that the companies that can you know, you know, eat
(08:15):
some of that cost now, but recognizing they're going to
pass them on to the consumer, I think is going
to be evident. I think that's going to happen. But
at the same point in time, as long as we
still see I think a stable labor market, that's the
tipping point to say the economy has a tolerance for that,
because wages are still up year over year, spending is
(08:38):
still happening with the upper income bracket in the United States,
and so I think this all kind of comes together
to say that, look, profits, can they work through and
get through this environment with a higher price environment.
Speaker 3 (08:53):
The answer is yes, but it takes several years.
Speaker 4 (08:56):
For supply chains to adjust, and I think that's something
that businesses are trying to adjust to, depending on if
you're a capital's good business or if you're in the
service space.
Speaker 2 (09:05):
We heard from Netflix after the bell very impressive forecast
for full year sales and profit margins, and a lot
of this is being driven by markets offshore. The international
market for Netflix. How do you feel about the story
in Netflix or whether it's still something that's interesting. Do
you see it being fully intact.
Speaker 4 (09:25):
Still, Yeah, I think the story for Netflix is really interesting,
and I'll make one comment or two about the quality
of earnings as well. I mean, I think the transformation
point about the platform I think moving forward is how
consumers are going to think about TV and when you
think about YouTube or Netflix, these are platforms that can
continue to evolve to add content, whether it's in sports
(09:48):
or entertainment, or purchasing other broadcast companies and integrating that
on that international basis, and their quality of earnings definitely
was impacted by currency translation with a weaker dollar coming back,
which helped, but I think analysts were a little bit
disappointed Doug on the outlook, and they were probably hedging
(10:10):
a little bit about that international growth story, subscriber based story.
But I really still see them being innovative and pushing
out on what TV or content management is going to
be in the future.
Speaker 3 (10:23):
And also just to remember, a big part.
Speaker 4 (10:26):
Of their growth is also ad business and growing that
through their platform, and so as the platform continues to
grow and diversify, I think there's an opportunity as well.
But don't get me wrong. For price earnings ratio, it
was pretty high over forty in this environment. And going
back to our earlier comments, I think when you think
about equities in this environment, if you're looking for an
(10:46):
opportunity to jump into some of these higher growth names
that might be around the corner. But I think Netflix
story is still there from a longer term perspective.
Speaker 2 (10:55):
Okay, Brian, we'll leave it there. Good stuff, Thank you
so much for being with us. Brian Vendiggie is Chief
Investment off sir at MJP Wealth Advisors. He's on the
line from Westport, Connecticut here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm dek Chrisner.
(11:16):
We got some key inflation data for Japan this morning.
CPI cool to TAD more than expected in June, although
it's still well above the boj's two percent target. Consumer
prices excluding fresh food rose by three point three percent
from last year, and that in turn is keeping pressure
on Prime Minister Shigudu Ishiba to play kate voters ahead
(11:37):
of this week's national election. For more on the inflation story,
we heard from former BOJ board member, so Yuri Sharai,
now professor of economics at Kyo University. She spoke with
Bloomberg's Heidi Stroud, Watts and Cherry.
Speaker 1 (11:50):
On Always great to get your insights, say, youty So,
tell us a little bit about first your reaction to
the CPI numbers, because it was decelerating from the previous
Also course IPI coming in below estimates. Could it be
a sustained down trend or is this one off?
Speaker 5 (12:06):
I think this is all you know related to the
energy inflation desideration. It's partly because of the sub subsidy
or energy studied again and made data. It was a
base effect, so inflation looked much bigger than it's.
Speaker 6 (12:22):
Supposed to be.
Speaker 5 (12:23):
So once you exclude all that, inflation still remain high.
So it doesn't mean information is desilerating. But over time
important information prices started to come down. So I think
over time inflation starts.
Speaker 6 (12:34):
To come down. What's going on with rice though?
Speaker 5 (12:37):
Yeah, still one hundred percent increase in last years. You know,
like video said, you know agricultural farmers they need higher prices,
but you know one hundred percent increases, you know beyond
you know all these factors, so it must be something
to do with distribution, and a lot of people think
this is something to do with agricultural cooperatives, you know,
(12:58):
sort of controlling prices. So I think when prices is
very high, leg chase, you know, plemister Sida does not
want to change import prices, so I think this frust
rate a lot of people in a Tokyo area.
Speaker 1 (13:10):
Right, which could have implications for the Upper House elections.
What are the economic implications for Japan if Prime Minister
Issueva loses the majority in.
Speaker 5 (13:19):
The Upper House, So it means a lot of consumption
tax cuts will happen. Because the only doing parties was
suggesting just the provision at one.
Speaker 6 (13:28):
Time for all small increase in.
Speaker 5 (13:30):
Cash transfers or about the one hundred and thirty daras
it's just so tiny, but all opposition parties talking about
consumption tax cuts, you know, zero percent consumption tax rate
on the food or income tax cuts, so of course
everybody wanted. But in terms of physical consideration, it's quite
a big impact. So it might lead to the higher
(13:50):
you know, it's a high in a thirty for the
year yield, so that could create difficulty.
Speaker 1 (13:58):
What are you saying when it comes to the gap
between real household wealth, real wage growth and increasing inflation.
Is that something that still has to be closed, particularly
if it's going to increase household and consumer confidence.
Speaker 5 (14:12):
Yeah, so, you know, everybody remember the Spring wage negotiation,
you know, besout it very successfully, like five percent, but
once we include small medium enterprises, you know, wages are
not growing that much. So May data is very bad,
just a one percent increase in wages, so real wages
you know, dropping by two percent and so so a
(14:33):
lot of people do not feel wages are picking up,
you know, despite the Spring successful negotiation, So people are
really suffering and then wage not growing.
Speaker 6 (14:43):
So consumption in May.
Speaker 5 (14:45):
Data on household looked good, but it must be temporary.
I think people still have a very feel uncomfortable with
this lising costs.
Speaker 1 (14:54):
How much risk can and also support the satisfaction is
there over the state of play when it comes to
trade negotiations and TIA risks.
Speaker 6 (15:03):
Yeah, this is very unfortunate.
Speaker 5 (15:05):
The Japanese government made a seventh negotiations in addition to that,
lots of telephone call and conferences, right, but nothing really happening.
I think because over forty years the Japan already did
a lot of concession to the US and so there
are not much to do for negotiations, so only the
one thing left is rise but that lies the Japanese
(15:27):
government want to support with minimum import quota, so that is.
Speaker 6 (15:34):
On the area as an area.
Speaker 5 (15:35):
You know, most of them are kind of liberal rized,
and it's very difficult for Japan to increase US cars.
It doesn't fit into Japanese road so it's not much
negotiation left.
Speaker 6 (15:47):
So that's why it's very difficult.
Speaker 5 (15:48):
And of course Japan want to get to rid of
this twenty five percent tariff on cars and fifty percent
tariff on the steal and you know, they want to
get to rid of it.
Speaker 6 (15:59):
So it's very challenged.
Speaker 1 (16:00):
But I guess the calculation could completely change for the
Bank of Japan if you're do in fact get some
sort of tariff deal. I mean, because the economy has
been pretty resilient, why aren't they normalizing policy quicker?
Speaker 6 (16:12):
Right?
Speaker 1 (16:12):
And it's all of them over tariffs.
Speaker 5 (16:14):
Okay, so right now export dropping productions are dropping because
of the tariff, right, But if you know they can
deal come up with still these things might change.
Speaker 6 (16:24):
But at this moment, when Japan.
Speaker 5 (16:26):
Doesn't have a room as a tax increase is not
really doing well.
Speaker 1 (16:31):
Especially when we're looking at for example, JGB yields as
well continuing to run right because of the balance reductions
from the BOG How does that also sort of restrict
the movements of what the Bank of Japan can do.
Speaker 5 (16:43):
Yeah, so right now satil is very very high, you know,
exceptionally high. So I think BOJ is very careful. You know,
that's that's the one of the reason why they started
to slow down QT. Right, So I think, you know,
that's another reason why BOJ be careful in terms of
you know, laisy into interested. Although they may want to normalize,
but at the stage economy is not doing well and
(17:05):
study and studies what the eel is going up, So
it's very difficult.
Speaker 1 (17:09):
Yeah, sayo Rishi, I always good to have you with us,
professor of economics at Ko University. Of course, Heili will
be watching that Upper House election this weekend here in Japan.
Speaker 2 (17:20):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us on Apple, Spotify, The Bloomberg Podcast, YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
(17:43):
and Australia. I'm Doug Prisoner and this is Bloomberg
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