Nick great to see it. Let's just kick things off with the. You know they didn't do anything but you know art is having it could
corrode sclerotic to the point of dogma. Was it just simply no need to do anything.
Yeah I mean obviously there was that feeling of all of a sudden like a bolt from the blue nothing and you sort of feel is this
part of work from a group that decided that stop. They've got a whole stack of these these press announcements for each of the
months until until he walks out the door in in April next year and he just sort of photocopies and changes the date on the top
of it. I think that's probably not completely illogical is what he's saying is look. What do you expect Crawler to do. Do you
expect him to say sorry about the four and a half trillion dollars. We've changed our mind. It doesn't work. Do you expect
him to do a George Bush kind of speech of saying mission accomplished. Well it isn't accomplished. The rest of the
world's got plenty of war inflation. But Japan is temporarily up about two and a half percent. But take out fresh food and
energy and we're at zero point eight percent. So there's no particular reason for him to changes its policies. Now when we
change over to the new governor that may well be completely different. But I think for the time being. What did you expect
out of him. That's entirely as as you would expect from his game plan.
But I mean the situation has changed quite radically since their last meeting especially of course the fortunes of the currency.
Is it a situation where perhaps it's better to wait and see. They must welcome the currency being weak too. It does a bit of
the heavy lifting for him. Absolutely. So of course they're always going to be people who
don't like a weak currency and people who don't like a strong currency. But net net for her for Japan a weaker yen is better.
And you don't even have to be an exporter for that as long as you have a market which is a
free market. And therefore if you raise your prices too much the way the product flows in from overseas then all you're seeing is
well you've got a sea or an oil refinery for example. You buy 100 you sell at 200 120 you've got costs of 15. So you make a
five dollar profit but then the yen weakens from a hundred and fifteen to two hundred and thirty five. Your costs just shrunk
by 15 percent. Annual profit just increased by 44 percent. Happy days. So there are a lot of industries in exactly that kind of
situation you say. Thanks very much. Now of course the consumer will on the face of it say yeah but some of the things like my
energy costs are going up. So yes they are. Logically the companies ought to be ought to be paying more as a result. After
all they're making more more money but they happen to. My wages have been flat for for a very long time. And if you look at
corporate profits so you can see within the the domestic companies employee pay has gone absolutely sideways for 25
years. But corporate profits have tripled over that time. So now is the time for the. The Oliver Twist statement as a pleaser. I
want some more NIKKEI. Of course the BMJ did say in mice continue to watch
ethics movement. I wonder you the code. It is necessary to pay due attention to developments in financial and foreign exchange
market and the impact on Japan's economic activity and prices. What's the worst case scenario and how are you assessing the
risk of a run on the yen. Well surely the the end is a function at the moment it's running
with the US Japan new differential and with the Japanese yield at the moment locked. That means it's a straight function for US
rates but US rates really are a function of of global growth expectations. Now for the time being that the 10 years right the
way up there. But ultimately as we go towards a slowdown globally possibly recession you would have thought
that to hurt us rates will come off a little bit. And the result would be that the that the end might strengthen a little bit. So
from the start of the year I've said Japan is going to be a great market to be in. Why wouldn't it be a great market. It's
got a lot of stimulus going through. And certainly that's been the case. So in current
in local market terms topics is only off 8 percent and the S&P was off. It was at 23 percent. But of course we've had the the
currency weakening. I said at the start of the year you're going to have to hedge that. And that's precisely the right thing to
do. I said from the start of the year we'll go to 125. It's gone through that. Ultimately I think overall it will come back a
little bit in the opposite direction. I'm curious. I mean the DOJ says it will keep buying and zero
point to five percent every business day. Well it continue to be successful in putting a lid putting a cap on on yields. What's
your take. The central banks ability to continue to drive up bond prices by
buying them is almost unlimited. Now there are some people on the other side of the trade who've decided to take the widow
make a trade of shorting the bond market and a lot of people have been carried out. So I think that they will leave had held
high and feet held still higher. But as a as a person shorting a stock your your potential losses are unlimited. Who's going to
win between the two of those. I think that the central bank is going to continue to to buy at least until they change governors
in April of next year. NIKKEI Matt Miller Basel II isn't it. Did it mean beyond I guess
that it will seriously here where you know there must be a line in the sand surely. I guess maybe that line in the sand is time
where the new governor coming in in April. But are they likely to pick somebody as adventurous as how did he CAC. And I speak
that I say that in relative terms. Sure. Obviously for the first time very long time we've got a
governor who's from the Ministry of Finance. Now the B OJ has historically been a lot more cautious on what they do in
monetary terms because they look back at the problems of the early postwar years and the the interview is just the 1930s. So
they've got a lot of experience of hyper inflation and they're worried about it. So I would have thought that the the two main
candidates for the governor of the Bank of Japan Nakasone da Matt Miller both of them dyed in the wool bio j guys. Both of
them have made comments about the impact of QE infinity on the financial system.
And so I think the chances are that the maximum. And of course you've also got to look at the politics and there was that
killed all poll recently saying 59 percent of people who think that cruel does not super suitable for the governor or Bank of
Japan. I'll take that with a bit of a pinch of salt. But there are definitely comments out there saying this week a yen is
causing inflation. We've got upper house elections on the 10th of July. Of course what we're going to get is pressure to say
let's pick a new central bank governor who's not quite as extreme as Karroubi has been. And I would've thought either of
those two people Knuckles or Amamiya would be would be just fine in that regard.