00:00Which side of the fence are you on this morning, Paul?
00:04Morning, Guy. Well, I've been saying it for a while, if in doubt, by the chip, you know. And lo and behold, again today, we have gains in the AI space right across the Asian complex.
00:16Some optimism there from the ASML earnings, from the TSMC earnings that we've just had as well, and the outlook there, all looking upbeat.
00:24And so that tech story continues to unwind. And the thing is, you know, these solid earnings are giving people confidence, even though the backdrop that we have with all of the trade angst and uncertainty continues to weigh on people's minds.
00:36I was thinking about it as I was waiting for the hit, thinking, how do I really think about what Besson said overnight?
00:42You know, the U.S. is hanging out the hope of some sort of negotiation. China obviously would prefer that as well. So we'll see.
00:50There's good mood music, but at the same time, there's that background of escalation if it does go wrong.
00:55So people, I think, are choosing to follow the easier narrative at the moment, which is look at tech, look at the fact the Fed is going to cut and follow your instincts.
01:04And, Paul, we've got also some traders seeing a jumbo Fed cut before the end of the year, maybe more than one.
01:10How seriously should we take those wages? What's driving them?
01:13Well, I think that what's driving them is the prospect of an extended shutdown from the U.S. government that not only muddies the data,
01:22but then starts to weigh on confidence in the economy if it really does go longer term.
01:27You know, what we heard from the Fed policymakers this week gave everybody confidence that they would go for two cuts at least, you know, sort of by the end of the year.
01:37And the idea that they could go more aggressively in December if needed is part of that sort of equation now.
01:44On the other hand, you know, these are cheap lottery ticket type bets.
01:47They're not kind of serious amounts of money going through, I don't think.
01:50And the idea is that, you know, you might get lucky or it could be a useful hedge for your portfolio to pick up these things.
01:57Nonetheless, that's just, you know, sort of like the confidence that the Fed is going to cut interest rates.
02:01It's weighing on the dollar a little bit, giving the rest of the global markets a little bit more of a boost as well.
02:07Paul, what do you think about the yen here?
02:09You know, we crossed the 153 handle on dollar yen just, you know, a week ago.
02:14We're now back at 151.
02:15What's the latest read on the politics situation?
02:19Yeah, great question.
02:21It's a little bit murky still, but it does seem like Takahichi is back in the driving seat here.
02:26All she needs is for one of the three sort of large competitive parties to either duck out of the vote and abstain or to back her.
02:34And it looks like Isshin is leaning in that direction.
02:37And then, you know, that should propel her to power, albeit without a very clear majority and still a shaky hold on power.
02:43But if you see that, then the market is minded to push Japanese stocks higher in the idea that she's going to be stimulated for the economy,
02:50but may also drag on the yen again and weaken it back lower as well as pushing government bonds.
02:56Well, you know, the up and down, it's a little bit more of a confusing one for that,
02:59depending on how much they actually decide that they need to spend.
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