00:00Paul, we have to start with the geopolitics here because there's a lot of them, as we were just speaking to Piotr about.
00:05Does the shutdown risk trump all of that, pun not intended?
00:11I don't think it matters really very much at all from what we're seeing so far, Kritsy.
00:16If you look at global equity markets, they just continue that much higher.
00:20It's really all about this AI trade and AI enthusiasm, and we're feeling that particularly strongly in Asia this week.
00:26We've had Sam Altman from OpenAI kind of moving around the region. He went to Japan.
00:31He's like a wizard with a magic wand, touches a few companies. We get some rallies. Hitachi today.
00:36Before that, he was in South Korea, same sort of thing.
00:39You know, there's all of these little tie-ups and deals that we're seeing.
00:43There was another one in Japan today, Fujitsu, with Nvidia as well.
00:47You know, giving the market that kind of continual sense of optimism that is getting excited about the AI.
00:52And on the infrastructure side, we've got a $40 billion deal going on as well today.
00:57You know, all of this is continuing to push up those chip stocks, the tech stocks, and continuing to perpetuate that rally.
01:04And I really think the market's more focused on that than they are worried about the geopolitics just at this moment.
01:09Just give me a – it's amazing, the offset that AI is providing in terms of the momentum, plus also the kind of the passive flows that we're seeing around all of that.
01:19Paul, just give me a sense of what is happening with Japan at the moment.
01:23I saw Ueda's comments a little bit earlier on about what's happening with the hard data.
01:25Can't wait for the hard data. Need to get on with it.
01:28You've also got the LDP election coming up over the weekend.
01:30How much potential is there for volatility in Japanese assets as a result of some of this?
01:38I think that the market and hedge funds in particular are quite interested in what's going to happen with the leadership vote for the LDP
01:44because there's quite a big difference between the potential candidates who could win here.
01:50If we have Takaiichi, she may be more favorable for the equities market, but the view is that she's a little bit like a list trust kind of a figure.
02:00You know, more spending. We'd prefer the central bank to be more on the dovish side, so it might be not so good for Japanese government bonds,
02:06even though it might weigh also on the currency. Whereas, you know, if we have – if we have somebody else coming through,
02:13they may be kind of more of an opposite view of that.
02:15And then we have Hayashi, who's like the third person in the race at the moment.
02:19But because of the complicated way that the votes work, it partly depends on party membership, partly depends on the lawmakers who are in power.
02:25There is that path that we've seen before where the person who's the most centrist is the one that actually comes through.
02:30In which case, you know, markets might breathe a little bit of a sigh of relief, and that might damp some of that volatility.
02:37All right, Paul. Walk us through then what the next, I want to say, seven days looks like.
02:42As we see more of these geopolitical headlines, more of the defense headlines, a prolonged government shutdown,
02:48is that a positive or negative for U.S. assets from where you are?
02:53I think that, you know, the longer the shutdown goes on, the more of a negative it's going to be for U.S. assets.
02:59That's the thing that people are going to have to be worried about.
03:01So keep paying attention to when we get signs of a deal being done.
Be the first to comment