think the boj, mays not that the boj -- it reduce the 2% goal and it may change it to the long-term goal. i think, i believe that the current inflation could be withstent with the -- the japanese economy. i think the boj could be more flexible in the future. the economy is a strong and the boj could start to reduce policy in the future. so i think that the boj's policy could, how do you say, change to more normal with their approach with the policy such as other monetary policies. ramy: in terms of at least one minor tool they could he is, there has been talk about possibly readdressing the consumption tax roll out in 2019, do you see this as a possible avenue to push ahead? i think it depends on the economy. isthe economy is too low, it likely that the government may postpone the tax hike again. case i thinkis that the boj can adopt a normalcy -- normalization policy in the second half of the year. we are not falling into a recession, but because of weakness, the government may postpone the tax hike in october year 2019. i think it is possible the boj may start to increase the short-ter

it is a challenge for the boj. expected to dig in his heels and fight back against all these things making his job so hard. he has made it so clear his commitment to maintaining stimulus until they get to that 2% target has not wavered. clearly, his reappointment for a second term was done with that firmly in mind. he does keep saying, the labor market is getting bigger. this is due to inflation. a longtimeesting, economic advisor to prime minister abe did an interview with reuters. he said, buying foreign bonds. the boj, the japanese government, cannot buy bonds to affect currencies. but, they could buy bonds to affect their monetary aggregate. that is his argument. that is something nobody else is talking about. the reflation us and one of the at the boj,overnors will there be more measures considered or talked about? say there isomists nothing you can do but wait for inflation to gradually rise. more measures will not do the job. yvonne: will those be worth it , as well.a what does this mean as we see surging yi

that likehis idea is past boj governor's, he may stay in place until the boj is ready to make the shift away from stimulus, start exiting because they have reached close to the inflation target. important?y is this people say this will signal to the markets that the boj will keep stimulus in place even if the federal reserve starts raising rates. our bloomberg economic team says it is also important to show the markets that with all this market volatility going on, you have a tested head of the bank of japan in place. when i was there somebody people i talked to about this said you got to a point -- the boj have to appoint new governors w 19thterms expire on arts -- march 19. presumably the official announcement is on the way. haidi: clearly the market focus essentially is on the kuroda appointments come about how important are these appointments or reappointments for the deputy governor? kathleen: who is picked as deputy governor is very important in terms of support for these policies. willdea has been that they be a career boj official in one of the seats and someone who is a true re

there is very little the boj can do. appoint governor kuroda for another five years, insuring a continuity of policy, and with that make a difference? is it to get out of this deflationary spiral they need more time? >> hike guess so. the boj is running into a lot of constraints. if the economy recovers further in the short run, although it has had little success in getting inflation expectations higher, and that is the key to getting inflation permanently higher. that could happen if inflation except. constraints would have to intensify further for inflation to approach the 2% target. this: i think i asked you 3-4 years ago when we started talking about abenomics, but structural reforms, the missing air row, do you anticipate that will come into play? and is that what is needed to get inflation and wage growth into play again? i think reforming the labor market could make a difference. one of the reasons why wages are not picking up his regular workers are not changing jobs, do regulatione the of the markets would lift

how much more can the boj actually do? are they the only bank left with the fire power to continue descending what it a correct level for them? julia: the boj has gone from being the timid bank that never wanted to do enough, to the bank that is more willing than any other to put its money where its mouth is. how far can they go? they are sort of defying the trend and challenging the market. they are standing there ground. they seem to have quite a bit of resolve for now. francine: they certainly do. depending one whether governor kuroda stays or not? julia: yes, obviously right now there is a very special situation in japan that looks like it will continue, and the sense that the fiscal and monetary policy authorities are very much aligned. we will see if there is a transition and what it brings, but i do not see that changing in the near term. tom: it is spectacular to have both of you on the set. elegantlynado speaks about the japanese, desperate to do something. we have a quantitative easing experiment. david rubenstei

up,inda: also coming a once from japan say corroded to stay on at the boj. this is "bloomberg markets:

the boj offering to buy an unlimited amount of bonds for the first time since july. they are not capping yields at 3%. these guys are not capping yields at 50 basis points, and the boj is capping yields at 0.1%. is this craziness? lisa: you couldn't have said it better than that. jonathan: it feels like the japanese are trying to nationalize the bond market. when you think about it that way, the path of least resistance of the yields is indeed higher, but how much higher if the bank of japan is going to keep a lid on every thing that happens there? lisa: that is a fair point but one of the biggest distortions resulting because of bank of japan purchases because of the ecb is because of purchases is in credit markets rather than an -- eating treasuries. guessing tremendous amounts of overseas buying, 45% of the u.s. corporate market today is overseas versus 25% 10 years ago. we have seen -- the distortions are coming through risk assets i think more so at this point than three rate markets -- through rates markets. kevin: i think it is a great point that she is making

then the boj would get concerned. haslinda: so in terms of range, would they be more comfortable or --5 >> i think so. i think they will be conscious but if they start down the path of verbal intervention, they know that it some point the market will expect action to follow the words. has become market quite aggressive or assertive in terms of challenging central banks who wants to verbally intervene, but do not necessarily follow up with action. haslinda: ok, eric, will be joining us for the next 10 minutes. standard chartered bank head of global markets chatterjee and research. -- global markets strategies and research. if you are a bloomberg member, with ourheck in interactive function, tv at bloomberg. ♪ ♪ haslinda: this is i am haslinda amin. david: and i am david english. this is "bloomberg markets: asia," we are joined by head of global markets strategy at standard chatter, -- standard chartered eric robertson. we are now looking ahead to the out march 1. is is there a number of that you think might sp

eric: we talked about the boj before and they are capping the 10 year at 10 basis points. one of our favorite trades is shorting the 30 year part of the jgb curve, basically where they don't control in a free market part of the japanese bond market curve. jonathan: eric, is that not the widow maker again or is it , different this time around? eric: i do think it is somewhat different because as you said before, the yield control policy is suppressing yields throughout the curve up to 10 years effectively. but that part is more freely floating. in addition, the economy in japan is growing. there is real good corporate governance reform stories going on. there is not a lot of inflation, but a little inflation. so i think that given the pressure on global yields and the strength of the japanese economy, i think being short of jgb30 year part of the curve is a good place to be. jonathan: you had to be short somewhere, would it be jgb or bunds? kevin: it would be bunds. one of the greatest monetary failures seems to be japan not b curve is a good place to be. jonathan: you had

how do you see the boj operating in a market that is clearly pushing against it? twos: i would highlight facts from a broader macroeconomic perspective. data has been somewhat week in japan, but we have to put that into context. the most recent quarter was the first time since 1989 you see eight consecutive quarters of gdp growth in the country. it is best we are looking at an underlying stronger economic story. that key question at this stage is the negotiations we are likely to see in the course of the next couple of months, concluding in march. if those go through as expected, we have two 25 basis point rate hikes in the cards in the second half. it depends on the level of wage hikes we see in the negotiations. yousef: we put this up on a chart for additional context. in terms of what is happening with the yen, what citi is saying about that, perhaps the 1.05 handle is not enough for the shorts to cry ago -- to cry uncle. shows shorting the but it iss crowded, unlikely some of the subsequent moves sending out. the shift may also suggest confidence the boj can c

katabe comes from outside the boj, and academic background. he is extremely dovish, very philosophically a reflationist. you also have an old hand at the boj, less philosophically inclined as a reflationist, but has worked with governor kuroda to craft current policy and will certainly continue to back him. ists livee reflation to fight another day. thank you for being with us, henry hoenig in tokyo. there is a moving, reassessment of risk and one of those markets is where you are seeing the drawdown of $3.6 billion, the u.s. junk bonds market over the past week. the second biggest amount ever. he says you have concern about equity markets, could the volatility spread? the fifth consecutive week of outflows bringing a total of $15 .illion let's put some of these things together. we have a chief economist with us. start with japan, because we have these breaking headlines. the question for markets is, they wanted kuroda, they've got kuroda. dialsn't even pushed the on dollar-yen. where are you with the bank of japan staying the course, continui

you can actually see in the blue we prompted the boj. i don't think it was a big surprise to be honest. i think overall, there is a global growth. this is driving yields higher. i think the important thing is whether we are going to see an overshooting in yields. so far, i would not be too worried. chinese growth is doing fairly ok. the eurozone is definitely in a strong state. it is a balancing act between rising yields and global growth. ityields go up too fast, will start presenting problems, but we are not there yet. it is the december 2018-2019 euro-dollar spread. you talk about the trajectory of the speed of rate hikes. only 35 basis points tightening in their. -- there. prepared the how market is for a more aggressive tightening cycle. >> i go back to my previous comment. i don't think the bond market driven by the fact that the market is having second thoughts about tightening. i think the market is currently pricing in what should be priced in, and the market is also anticipating that due to the maturity of the u.s. business cyc

number out of china, and yield control being the watchwords of the boj. let's get over to sophie checking the pulse of the market. we had disappointing retail sales and factory output data from japan. jerome powell front and center. we have data to chew on today, but not lifting the mood across equity markets. asian stocks set to snap a 13 month rally. tods mostly sliding come up check out the tumble in indonesian debt. hong kong bonds catching a bid as the hong kong dollar moves closer to a 2007 low. when it comes to the equity space, china and hong kong bearing the brunt of losses as investors turned cautious with earnings season about to start. h-shareings for the index have turned wild, making the benchmark the world's most volatile. in the commodities space -- currency space, the korean won holding on to gains. 392malaysian ringgit at before inflation data. the yen gaining ground after the boj tightened its longer-term jgb buying. some stocks in the region, harvey norman shares sinking the most since 1994 as early second-half sales slow. yahoo japan

the more things change, the more they stay the same, for the boj. especially with kuroda staying in the job. >> looking at the yen, it is at its strongest level near the dollar. it is now 106.12. what do you make of this? kuroda has been the favorite to continue on the board for a long time. his name was leaked on friday that he was being reappointed. surprise for people. unless there had been a massive surprise, i do not think this is going to have the huge effect on the currency markets. this is big didn't. what is happening with the yen is a bigger story than what happens with the leadership of the boj. >> we will look ahead to see what happens there when it goes to parliament. james in tokyo, thank you. youran watch us live on interactive tv function or dive into securities are bloomberg functions we talk about. this is for bloomberg subscribers only. this is bloomberg. ♪ david: what would you say are the greatest pleasures you have received? or what you are most proud of? >> ok. this is good. thank you. this is good. [laughter] david: i watch

whether or not that becomes a problem for the boj is another matter. not going to talk about this -- 33 -- 6933 is -- 69 the chart i want to bring up. part of this a survey is an assumption from a large manufacturers of where they think the exchange rate will be. consumption, planning, those kinds of things. as you can see, the exchange rate is below where consumption is. drag on earnings, especially for large multinationals, if it stays below the blue line. something to watch here, 6933. back on the inflation, interest from bank of america. you have two fiscal deficits, that will weigh on the dollar. 1%, it does not seem to matter, yen strength, whether that will hold. sign-up -- china is already shut. lots more to talk about within the hours ahead. let's get more on the yen. we are joined by mark cranfield. i am in our terminal. is the focalg 106 point. 9 to the yen..5 it isas david was saying, not looking good. it has quite a bit further to go. one of my colleagues yesterday drew a long-term picture and suggested dollar-yen may as go as far as 90, o

the boj says no, but markets disagree. it is learned local investors overseeing local debt and back to the market, watch operations towards tolerance of higher yields given the bank has an outstanding limited it to cap at 0.11%, and that seems to be the ceiling for now. the boj made an announcement yesterday and will tell you about that in a few minutes. chinesecoming up, leaders expected to shakeup and the implications from university of hong kong professor. david: and market reaction from fundamental equities. this is bloomberg. ♪ retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ david: very good morning to viewers just joining us. it is 8

do you navigate the boj story and what does that do to your position? got a target roughly for 10 years where they are now. we are expecting more qe. most disappointing is the wage growth is not coming through, but what is good and positive about japan is last year we had positive earnings upgrades. for an investors were sellers of the market for the first three .uarters of 2017 i don't think anyone from a global equity perspective can appreciate the balance sheets have improved. the corporate governance is improving and has been seen in the return of equity. more specific, there is lots of alpha we can generate in japan, of the market is a question quality. financials look interesting as rates go up generally. it is quite selective. yousef: right. yep. i want to run one more thing by you. the market has not had the possibility to digest the removal of the two-term limit for president xi jinping in china. they say perhaps most worrisome to createbe inclined external threats to maintain his unpopularity. you have some thoughts. what are your concerns? >>

japanthe boj has enabled to take advantage of that economy? james: it has enabled the currency to stay largely week, but that has not always been the case, and it will not always be the case. people are looking further down , theyne, as investors do look at a central bank that starts to change the way they look at the world. if the boj is not able to make changes to its policy in a hawkish direction and this sort of environment, then we start asking ourselves the question, when exactly what they be able to tighten policy? if this sort of environment cannot allow them, then nothing can. yes,: the other aspect is inflation is still have to level that they promised even though this policy has been an active session and acted -- policy has been enacted. anna: let's talk about what's coming up. and and we diggs look -- zuma digs in. we're live in capetown for the next set of headlines regarding zuma. ♪ ♪ anna: this is "bloomberg daybreak: europe." .4% msci asia-pacific up by 0 weighed down by the japanese stocks. let's check in on the markets.

we are the protest getting from the boj at the moment. jeremy: one always has to make sure that you do not preempt the change. i think in the context of the fundamental story, it will be baby steps at first. allowing a slack in terms of the control targets. allowing the 10 year yield levels to start to rise. those are the baby steps. i think the boj will have less necessity to be quite so expansive through the course of his second term. the market has been complacent. there was an assumption that when we had abe reelected, the success of abenomics was expected. anna: the yen strength is a bit of a headache. jeremy: it is a headache if it comes through to quickly. quickly. ining strength in a currency itself is not worrisome as long as it is slow and progressive. when happens to quickly, the moves are one-sided, that is when the officials become more concerned. anna: it is the size of the move and the speed. jeremy stretch will stay with us. up next, we bring you an exclusive interview with the egyptian oil minister. that is coming up next

what does more of the same mean for the boj, for the yen? joinging us now, henry, give us the details here. henry: well, what it means in the nearterm is we can expect the boj to stay the course. it's been on cruise control for more than a year now. governor kuroda has said repeatedly, every opportunity, that they will charge forward with what they have been doing. it was not that long ago, a few weeks ago, that people were speculating about the first step towards policy normalization. the yen now has gained more than 6% since the start of the year. the conversation has actually turned to, is the boj going to be forced to do something about it? it is a quick reversal there, but for now, we can expect them to keep going with what they have been doing. mark: is today's news evidence that the government, henry, is becoming uncomfortable with the yen's strength, the highest level against the dollar since 2016? economists, some were saying it is likely governor abe was finally convinced by the recent market turbulence and the surging yen to go wi

we see the boj as the most accommodative among major central banks. yousef: you don't see some tweaking to the yield curve control program, perhaps a chance to go short on dollar-yen aggressively? be surprised if they raised interest rates a little bit given the fact of the federal reserve is likely to hike more than expected. u.s. long bond yields are headed north. i would not be some rise. i don't see them having room to do anything dramatic because inflation numbers in japan are low relative to other developed markets. they still have to adopt fairly accommodative monetary policy to help the inflation numbers pickup. ftcsef: you look at ct , iitioning on dollar-yen want to go to your wider views on the asian space given market cautiousness. what are you recommending clients right now? >> essentially we see u.s. dollar weakness across the board , except against the japanese yen, but we don't see the yen falling off a cliff either. dollar-yen 112 over the next 12 against major currencies, the dollar basically weakening. we think what the fed is doing

need tohen does the boj act? i say that from the context of one of the reasons why the yen is not strengthening. just market participant talking about tightening their policy. do they need to act soon? you think it will stem the strength? kay: i do not think so. we saw the statement that it is not a concern. it is always level and magnitude and the move to that level. .hey can get into 3% grinding out first is a certain move. i think we need to be closer towards 100 before i would start to get concerned. this is what happens in the economic data fund. haslinda: we have seen a rebound from the dollar. is moment them on the downside? list seems to help the dollar. kay: i agree. the dollar has faced strategically, long-term is done. it is not the only game in town when it started to rally in 2014 and 2015. now you have another central banks that are rallying. get some bounces. if we were to have a lot of liquidity, it does seem to favor the dollar. haslinda: what assumptions are you making about whether the fed will

reinforce the yen weakness when boj policy began to become very aggressive. we are in a situation now where there is very obvious policy goingn boj forward. recordincides with account surpluses in place in japan. we have seen a huge swing back to what is more normal. spread, from a historical perspective for japanese investors, it is still quite narrow. ares rising because the fed raising rates, but historically, the spread is still not what japanese investors are used to. that means there is still more hedging going on or hedging costs rise. there has been less portfolio outflow, and that has helped to support the yen. just quickly, and's or your question about right now, a lot of the move until now has been a dollar story. if you look at the nominal boj aade index, it has reached load ports the end of last year, beginning of this year. it is only this latest move that the yen has started to outperform and the trade weighted index has started to move higher. we are still in or around the one your average, below the two your average and below the five-year av

from japan say boj governor will be given a second serve. they both say prime minister shinzo abe will have him for another five years when his current term ends this april 8. that would indicate the prime minister wants to continue with the boj's stimulus program, which has weakened the yen, boosted exporters and stoked corporate earnings. over to the continent. angela merkel says she is determined to serving you full term in august or chicken under attack after agreeing a new coalition with the social democrats and members said it is time for a change. she said she campaign on a four-year term and stands by that. confirm the to coalition, but the former leader has been drying his bid to be former minister. harvey weinstein is being sued by the city of new york for creating a hostile work environment at his company. the attorney general suit may complicate weinstein's attempt to sell his studio and a $500 million deal. it seeks financial penalties from weinstein, his brother and the company. restitution for the victims and court jurisdictio

yields at are capping 50 basis points, and the boj is capping points at 0.1%, is this craziness? >> you couldn't have said it better than that. >> when you think about it that way, past resistance of the yields is indeed higher, but how much higher is the back of japan going to keep a lid on every thing that happens there? >> that is a fair point but one of the biggest distortions is because of purchases and credit markets rather than an treasuries. guessing tremendous amounts of overseas buying, 45% of the u.s. corporate market today is overseas versus 25% 10 years ago. distortions are coming through risk assets more so at this point that through rate markets. >> i think it is a great point that she is making, it is the best trade in the sovereign marketplace for a while now, buying treasuries. will that trade still be good now that italy is facing inflationary pressures? does it make it a value back to other sovereign debt? that is something we will watch closely, but it is the best strategy on the board. we talked about the boj before and the are capping the yield -- one of ou

>> we just talked about the boj before we are happy with the control policy, they have their 10 year basis point. one of the traits is shorting curve,year part of the basically what they don't, the japanese government on market. jonathan: the little maker trying to make sure this time around? >> i think it is somewhat different. the yield curve, they are yields yields throughout the curve of the 10, effectively more freely flowing. in addition, the cop -- the economy in japan is growing. not a lot of inflation, little inflation. given the pressure and the strength of the japanese economy, i think the short-term it is a good place to be. jonathan: would it be booms? >> it white. the greatest monetary failures is the bank of japan's ability to raise inflation rates. he continues to be a 30 year or 40 year issue. think we are about to see higher rates in germany in particular. jonathan: lisa is sticking with us. been a rough week for risk assets. we will it to the auction block. elon musk taking it. that conversation is next. we continue to cover. this is "bloomberg real yield." ♪ rea

the boj had a limited amount of bonds at a fixed rate. cappingys are not yields at 50 basis points. at 58.1is capping percent. this is craziness isn't it? >> you could not say it any better than that. jonathan: how much higher if the bank of japan is going to keep a lid on everything that happens there? >> i think that is a fair point. but one of the biggest distortions of the ecb is markets.in credit about 45% of the u.s. corporate today is over saying for about 25% 10 years ago. we've seen that distortion more so at this point. great point she is making. it has been the best trade in the sovereign marketplace for a treasuries.uying will that trade still be good now that you are seeing pressures?y some of these european countries it seeing inflationary pressures, does it affect the value here in the u.s.? we will look at that closely, watch that. >> they are capping with their yields based control policy. one of our favorite trades is shorting the 30 year part, basically where they do not control. a free market part of the japanese bond market. jonathan: a set called the would a ma

another term was announced for the boj governor and we will discuss that outlook shortly. to singapore. get the minister says he can continue working and avoid fracturing the coalition government. there was a shocking error of liberal and the government met on the weekend to discuss differences. >> it was a good and constructive meeting. of course. absolutely. to apologizeing for. that they reserve the right to return aid and the commerce secretary said they may tariff on imports of aluminum and steel and the commerce department said that beijing will take the necessary measures. these survivors of florida's school shootings have called for control ands on gun focused anger on trump, calling divisive and trump and theed democrats fbi. >> people say it isn't time to talk about gun control and we respect that. march 24, we will march as students. this is about the adults. we feel neglected and you are either with us or against us. foundresa may may have common ground with the new. this allowed intelligence agencies to keep sharing information and the commissioner told a defe

waiting to hear commentary from the boj on that regard. haidi: we are still also waiting on commentary from governor kuroda, whether he will touch on fx. in terms of the dollar side of the story, what is ailing the u.s. dollar? we see this pickup in inflationary expectations and bond deals, but the dollar, the relentless selling continues. >> that's right. you could look at positioning as a huge part of this and the fact that it has been under pressure throughout the start of this year and people have been surprised by that. people have been adding those positions overnight. when we think about some of the reasons behind that, thinking in terms of fundamentals, maybe u.s. economic growth lagging, what we are seeing in other parts of the globe. it could be that has changed. potentially there is hope for the u.s. dollar. at the same time, it is difficult. another thing is the deficits and the way that has plagued the dollar in history. people are against that as well and suggesting as you get u.s. yields moving toward 3%, capital flows could

also, some comments about how boj policies weigh. crossing the bloomberg terminal, we are seeing this strengthening of the japanese yen. we will have the top stories in 30 minutes again. this is bloomberg. ♪ emily: this is "bloomberg technology." i am emily chang. applied materials reported first-quarter earnings yesterday. they beat the highest analyst estimates and get a sales forecast that shows the electronics industry remains bullish about future demands. earlier i spoke with applied materials ceo gary dickerson and asked how long the company's sales run can continue. take a listen. >> this is really the most exciting time in the history of electronics industry. technology is transforming major industries. transportation, health care, entertainment, retail, all those different areas. really it is the foundation of those major industry transformations that will generate trillions of dollars of economic value, materials innovation and applied materials. andsemiconductor business applied business, they are firing on all cylinders

i think one thing to look out for is the ecb and boj. i don't think the markets are pricing in the potential for those long-term yields to move can, if they change their communication to reflect what they are seeing in the data around gdp and unemployment. if they are becoming a little bit more hawkish, those bond yields will glow -- will go up in europe and japan. you might see a steeper yield curve, and i think that is good for the global economy. kathleen: what happens if inflation doesn't accelerate? yes, the overall wages went up 2.9% or 2.6% year over year, but if you are a line worker, you are flat at 2.4%. it seems like everybody is shooting first and watching for more data later. what if they are not signaling four rate hikes? do bonds stabilize -- stabalize? raymond: inflation is a key data point. i believe it was the highest wage growth since 2009. what we do need is continued data points in that direction. they need to establish a trend, and if they can do that, it will be reflected in interest rate expectations. if you look

as it managers have the biggest bet on the yen since before kuroda was named the boj chief. the yen's recent rallies, that is seeing leverage scaling back further from really sharp positions and they could have kuroda again coming out as mr. reliable today. thank you for that. chances gears somewhat, are you have to look to the east -- you always have to look to the east -- mumbai is number one when it comes to foreign salaries. $200,000 an average of . you have to live in mumbai. you have to live with the smog, the traffic. you need to be well compensated. it's not surprising. david, take a look at how ex-pats are compensated in mumbai. david: yes, i guess if you could put a price on your lungs. tos a similar conversation what we had in beijing. case youl average, in were wondering is $100,000. also,anghai, jakarta, hong kong, but has, back to your point -- do we have a live shot of mumbai? just to underline the point has and i were making. if you live in conditions like this every morning -- and it actually does look like a better day this morning -- hopefully you are gett

i don't expect the boj to be coming anytime soon. apart from their formal press conferences, they don't comments on the day today market movement. it is going to be concern for them, just because it undercuts the inflation there trying to generate in the economy. as again gets stronger -- as the yen gets stronger, imports become cheaper. if the yen continues to strengthen it is a big concern for the government and bank of japan. manus: james, thank you very much. simon french from panmure gordon is here with us. since 1989,growth but private consumption and capital investment are not too bad. i know james points out the negative. it is hardly what you call it collaborative's moment -- call it a calamitous moment. simon: what is quite interesting is that as we head into the crucial wage negotiating round later, is the degree to which corporate earnings in japan, which has been incredible strong, 39% ahead of expectations, whether those profits start to feed through into pay settlements. it will hinge on the private consumption story a

the boj has made clear they are not happy with these moves. if it does go much further, a threat they may take action more than making statements. i am not sure we will see the yen weaken here. there is a lack of believe in that the boj can six -- significantly weaken the yen. faith that lost easing will do more even though kuroda has been reaffirmed as part of the boj and the fact they have recommitted themselves to be very aggressive to asian policy. no one cares in terms of wanting to sell the yen right now. guy: we have got lighter volume's today with a bunch of holidays to factor around the world. what will drive investors? are we sitting back today and watching the ball go by? what is going on? there is asure today lot of admin in a lot of markets. there are some big catalysts. there are two things to think about. the dynamic of where we came from, which is violent moves across assets. they have all had really big shifts in the last couple of weeks and people are wondering what is the next leg of from here? it is not obvious. people are

the boj says it plans to keep its buying in march. it is going to be interesting to see if there is a duration switch toward the front-end. dominating the dialogue at the moment. jerome powell opening the door for four hikes in his testimony. he sounded an upbeat note on the u.s. economy. european stocks seeing what they did. let's have a listen to what mr. powell had to say. my personal outlook for the economy has strengthened the my personal outlook for the economy has strengthened the since december. each member of the fomc is going to be writing down a new set of projections and appropriate monetary policy as we go into the march meeting. what we are seeing is incoming data that suggest the strengthening in the economy. we see strength in the labor market. we see data that in my case, will add confidence to my view that inflation is moving up to target. fiscal policy changes can have an effect. seen in the policy. the flattening of the yield ofves has been a precursor recessions, but largely because in prior recessions, that had t

do they choose from the boj governor. they have to speaking wish and read of a list of qualifications required. but does anybody really believe there are other candidates out there? something bloomberg has done previously, suggesting the market expectation is that credit gets another term. >> that remains the same. given the move in the market, the alternative is for a more dovish person than the last of his person. the bank of japan is probably the most dovish and it has the most credibility. anna: risk off events really do help, don't they? this chart shows that move higher in the japanese currency, it shows the japanese weighted currency for the end. it shows the rising in and the strength we have seen the currency. as we said during the break, this is not necessarily the case during the height of the equity sell. but what does that tell us? >> i don't know what it tells us. i was surprised that we thought x at 40. it keeps appreciating, slow and steady. i don't know what it tells us. i do think the policies in place h

the boj and ecb react on risk markets. the boj is buying equities. theoretically, its unlimited cash on the sidelines. central banks have printing presses. elephant, ae was an bit of a selloff -- that didn't account for everything, though. where are the next breakpoints? >> we talked about the potential catalyst -- why such an exacerbated selloff? vonnie: why so isolated to those particular areas? >> the absence of currency vol is kind of shocking to me. there are large interventionists in the currency markets. the treasury visa be the fed -- vis-a-vis the fed, etc. called the newte leverage is called gamma. because yields have been so low, overwriting and underwriting of options has become a popular strategy to the tune of $2 trillion to $3 trillion. we saw it early in the year when call over writers were forced to buy more shares to keep their positions neutral. markets rallied early in the year for the right reasons initially. the rally was very convex. were forced to buy positions to keep neutral. can the same thing happened to the downside? that

the commitment to the yield control policy the boj has in place. at the start of the year a lot of people were raising questions about how committed the boj was. now we seem to have at least a short-term answer. viraj: the focus should be on the target level. the quantity will fluctuate month-to-month. put upward pressure on jgb yields. anna: it does test their commitment, doesn't it? testing and more march time, to have to ask themselves how committed they are. viraj: this is the big challenge. some point this year they will have to consider potentially raising the target. the idea would be what triggers that. we see it as an unrealistic probability. two conditions have to happen. it's a synchronized global growth story underpinning it, and it's a synchronized central-bank normalization story. that mitigates the yen effects on a trade weighted basis. i had a message from a viewer, they tracked 52 central banks come and they expect the hike to cut ratio to double in 2018. that takes us back to the fx story we had yesterday. japan and europe are los

where does that leave the boj? >> even with the conditions and the labor market as tight as it is, they are nowhere near their inflation target. areink all the indications that they will stick to the course. don't forget, we have the expected appointment of governor kuroda coming up, which is expected to serve as a double down, and no sign it will change materially anytime soon. >> shinzo abe nominated governor kuroda to beat the boj for another five-year term. abe also appointed to deputy covenanters. >> we should seek monetary stimulus continue aggressively for at least the next few months. inhave another meeting march. nobody expects any change. ofre will be a great deal interest in april with the first meeting with the new leadership in place with the two deputies alongside governor kuroda. perhaps moving into this new term will give him a chance to rethink, recalibrate, and we will be watching with a lot of interest, especially the april meeting. the cleveland fed president is said to be among the contenders f

the boj has been subdued when it comes to this craze in cryptocurrencies, but tell us about the boj's position at this point. >> regulations in japan happened -- have actually been quite forward-looking. japan was one of the first to actually adopt rules for the use of bitcoin, and even taxation rules, back last year, but this will most likely make authorities take another hard look at whether those rules are actually going to work. >> cryptocurrencies are plunging today along with many assets, but bloomberg reported u.s. regulators are scrutinizing a virtual currency venue and a company that issues a widely traded coin. when it comes to tether, this is a company that issues a widely traded coin pegged to the u.s. dollar, so what are the concerns surrounding tether? >> as the peg in plies, for every tether created, there should be a dollar in the bank account controlled by the company. they have issued more than 2.3 billion tethers now, so there should be $2.3 billion in the bank account. they have not been willing to let their books be audited and there is concern that they are print

slowly nudging closer towards 2% they have to be careful how they communicate, but how close is the boj to qt? >> that would be the unexpected development. that probably makes it the most likely development you're right that the japanese economy is picking up pace we are edging back to a sustainable inflation situation. so, yes, that's a possibility of course >> it's a risk that if they go a little bit too far in terms of messaging, given all the etfs underlying the nikkei and topix, and that that could cause an overshoot in the yen, that he have to be careful how they communicate. >> of course they do the japanese stock market has risen extremely strongly over the last year. i think that was reflected in the fact that overnight we had this 6% correction in the topix and the nikkei i think the risks are quite intense in japan >> tom, stay with us buy now or stay clear? some market watchers are viewing the pullback as a buying opportunity as others are being more cautious. logon to cnbc.com for a range of views on how to react. >>> volatility has spiked to its highest level since 2015 am