This is Bloomberg day Break Weekend, our global look at the top stories in the coming week from our day Break anchors all around the world, and straight ahead on the program. After the Fed's big rate cut, we look ahead to a fresh reading on the Central banks preferred measure of inflation PCE plus. Could the uneven housing market see a boost with lower lending rates. I'm Tom Busby in New York.
I'm callin heatgre in London, where we're looking ahead to one of the most pivotal periods on the UK's political calendar.
I'm Brian Curtis in Hong Kong. A wide open race in the upcoming LDP election in Japan narrows.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleve on three OW, New York, BLOOMBERGEN ninety nine to one, Washington, d C, Bloombergen ninety two to nine, Boston, Bloomberg nine sixty, San Francisco, DAB Digital Radio, London, Syris XM one twenty one, and around the world on Bloomberg Radio dot com and via the Bloomberg Business App.
I'm Tom Busby. We begin today's program with the Federal reserve and inflation. Now, the FED cutting its benchmark lending rate by fifty basis points this past Wednesday and hinting it's not done yet, lowering rates two more FOMC meetings this year. So what does the FED see in its dot plot and is inflation really in check? For more we turned out a Bloomberg economist, Stuart Paul, So start, after that aggressive rate cut fifty basis points, what is the FED thinking now?
The Fed was thinking that it was a bit behind the curve and it was necessary to do a catch up rate cut. The FED had been focusing on inflation almost exclusively for a couple of years now, but the balance of risks is now improved now. That's to say that the risk of a surge in inflation in the near term is pretty muted, but risk of deterioration in the labor market is more at the forefront now, So it is more important to do that catch up cut,
get the fifty basis points out of the way. But looking ahead, it's like going to go at a slower cadence. We're likely to see just two more modest twenty five basis point cuts this year, in November and December, early November and December.
And we're likely to see just four.
Twenty five basis point cuts next year, probably at a quarterly cadence.
And does all this mean a soft landing.
Well, it depends exactly what you mean by a soft landing, right, Oh, you tell me so. If we're expecting inflation to quickly get back to the two percent target target without any sort of a deterioration the labor market from here, not likely. If we're expecting sort of that long last mile, but nothing crazy in either the growth or labor market landscape, but a tolerable but slow move back to the two
percent target. I think that's entirely possible. The things that keep in mind, though, is that the labor market has been cooling, so there is that upside risk to the unemployment rate, and things just haven't been as good in the labor market as some of the headline figures have been suggesting for well over a year. The pace of payrolls has not actually been as strong as the headline figures have been saying each month, and they will be
revised down in due time. So it's more like a soft ish landing, but we're not as likely to enter a recession, That recession risk isn't nearly as potent as it once was.
I mean, we're still adding jobs every month, just not as many as we've seen in past months.
Correct, we're adding We're still adding jobs, we're adding them at a slower pace, and we're probably not adding them at a pace that's fast enough to keep the unemployment rate totally steady.
But you've seen this focus now for the FED away from inflation more toward the labor market. I mean, does that tell you that they feel we are on the right path for inflation, that it is in check in a way. It's not at the two percent target, but it's certainly heading that way. But the real threat rent now, the real risk maybe the labor market.
That's right, So the real risk is the labor market. Inflation has been in check. Most of the things that have been supporting or undergirding inflation at this point are things like shelter, so a critical a critical necessity for consumers and something that's pretty sticky. Prices are pretty sticky for shelter and some items services in particular that have catch up inflation, things like auto insurance and homeowners insurance.
When the price of your car and the price of your home go up, and the replacement cost of those things go up, so too will the insurance premiums for those items, and so we have that stickier inflation. Now, that's why we're likely to see core inflation of zero point two percent just to touch under zero point two percent for the month of August. When we look at the core PCE Price Index that's the FEDS preferred measure.
But again, because of some of those sticky items in the core and because of unfavorable base effects over the last year, we'll probably see an uptick in the annual measure of core inflation when we get the August reading, an uptick ti about two point seven percent from two point six But again because of those sticky items, because of the unfavorable base effects, the FED will probably fade that reading.
So we've seen housing and you talked about insurance, but energy prices at the gas pump, we've seen, you know, a real dip just even in the past month, the steady decline, but a real dip. Also volatile prices for food they have stabilized, they haven't gotten any worse. So could that mean, you know, could that show up in the headline reading a lot better than expected, or you're still saying all these other factors housing rents, you know, are really going to keep things in check.
That's a good point. I think that you're right. I think that the headline is going to be quite a bit better. I think that on our best estimate is that monthly headline pce inflation. So adding back in food and energy, we expect the monthly headline inflation reading to register to zero point one percent, so a bit slower inflation for the headline than for the core. And we also expect the annual measure to improve to about two point two percent from two point five percent previously, So
headline's going to be a little bit better. Something to keep in mind, though, is that the decline in gasoline prices, which has been good for folks when they drive around and see prices at the pump, it might actually support sentiment a little bit. That's downstream of declining global energy prices, and that's a consequence of expectations for slower global growth.
So again it just speaks to the FED being at the at the right point in the rate cutting cycle, getting started with that jumbo cut to try to support global growth going forward.
Now, also out this week, August personal income and personal spending data. Are people still spending? That is the question. Are we going to see that in the personal incomes and spending?
People are still spending, but they're quite a bit more selective in what they're spending on. So we're still going to see that increase in spending on housing, on healthcare. But when we look more closely at goods in particular, when we look at things like autos, look at things like appliances and other home durables, things that are more interest sensitive, consumers are getting a bit more selective. They're also searching for bargains online as opposed to shopping more
frivolously just walking down Rodeo Drive. So we are again seeing spending rising, but spending more so on necessities than on discretionary categories.
All right, Well, the August PCE the Price Index out this Friday are thanks to Stuart Paull of Bloomberg Economics. While we turn now from inflation data to housing data. With the interest rate cut from the Fed this past week, will the uneven housing market get a boost through lower lending rates, which have already been trending lower or are rising home prices and a dearth of homes on the market, squeezing too many would be buyers out of the marketplace.
For more, we're joined by Bloomberg Intelligence home builder analyst Drew Reading. Now Drew Banks lenders they've been lowering the rates for weeks. They're now at a two year low averaging six point one five percent. But with this move from the Fed last week, are they now poised to edge even lower? And how long will it take before we see those pre pandemic rates of three and a half percent or so.
So, as you mentioned, mortgage rates have already been moving down. They've really been coming down since late April when they kind of peaked this year at seven and a half percent, and then there's another move lower in July. So the tenure yield and mortgage rates kind of anticipated what was going to happen with the Fed. So I wouldn't expect a whole lot more movement on the rate front in the near term. In terms of when we think that's going to start to impact the market, I think we
already have. You know, there hasn't been a massive shift in demand to this point, but we have seen a market that continues the trend in the right direction, and we saw a pickup in mortgage purchase applications. We saw a little bit better data on housing starts, so I think we are starting to see the benefit from those lower rates.
Yeah, those green shoots. What is behind that jump though, when housing starts, I mean that was a pretty significant leap from August.
Of it had to do with the bounce back from weather in the prior month, so that's certainly part of it. The other thing to remember is that builders have really been trying to align their production so starts, with what they're seeing in the demand environment. So as demand has started to pick up after kind of a lull in the summer, I think you're starting to see the corresponding increase in housing activity.
Now. Builder confidence had also been moving higher. They must be through the roof right now after this rate cut, and you know, all these these indications that things are picking up.
Yeah, I mean, expectations pretty much across the board or that in the next several months we should see demand perk up even further. What's interesting for the builders, as we've discussed in the past, is they've had a lot of success even when the market was slow by buying
down mortgage rates. So they've been doing pretty well over the last several months, and we think that with rates starting to come back down, they may have an opportunity to kind of dial back their use of sales incentives, which if you think bigger pictures for the public come builders, that could be a benefit to the margin side.
Now in the week ahead, there's a lot more housing data coming out new home sales, pending home sales for August, also home prices for July. Are you expecting to see any more positive trends in all that data?
Yeah. With the new home sales, I expect to see a market that continues to trend in the right direction. As they said earlier, we got some purchase applications specific to the new home market not too long ago, and what that showed us is that demand in August was actually the strongest for this time of the year since twenty twenty, So that's a real positive indication for the market.
We had some data on existing home sales which was a little soft, but what you have to remember is that represents closings, so that likely reflects deals that were signed in June and July when rates were still in that seven percent range.
Now that existing home sales that was last Thursday are is it still a problem that people are not putting the houses up for sale, you know, because of the rates are down. Six point five percent is great, but it's still double if you had your mortgage ten years ago, you know. I mean, are people still you know, not putting their homes up for sale afraid to buy a new one at those high rates.
Yeah, it's a great question, and there's a lot of disincentive for kurrent homeowner who doesn't need to move to put their house on the market and taking a higher rate. If you look at kind of the composition of outstanding mortgages, more than eighty percent have a rate below five percent and sixty five percent or below four percent. So I think that that lock and rate, you know, is still
a factor. I think it will start start to loosen up as we get through the year and into next year because people have been transacting at these higher rates. So it's definitely a concern, but I do think that it starts to ease a little bit as we get into next year.
Now, speaking of next year, you've reported that home sales typically move higher after a presidential election. Why is that and are you expecting to see that no matter who wins the White House in November?
Yes, So when we looked at what happens typically in an election year, you know, there's not a whole heck of a lot of impact on home sales. I know, you know, there could be an impact on confidence, maybe that impact that kind of the lull we saw in the summer, But really the point was to show that regardless of what party ends up winning, home sales have had success in the following year. And I think, you know, there's other factors at play, certainly what's happening with the
broader economy and what's happening with rates. And I think, you know, if we do kind of get this soft landing that we're talking about and rates, you know, remain in the low six percent range, even fall into the five percent range, I think home sales should do pretty well next year.
Well, a lot to look forward to, Bloomberg Intelligence home builder analyst Drew Redding, thanks for joining us and coming up on Bloomberg Day Break weekend, we look ahead to one of the most pivotable periods on the UK's political calendar. I'm Tom Busby and This is Bloomberg. This is Bloomberg Daybreak weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in
New York. Up later in our program we head to Asia and preview the race to become Japan's next Prime minister. But first in the coming days, the UK's most powerful politicians will vacate the Palace of Westminster for their party conferences all around the country. It's a pivotal time for the ruling Labor Party as it prepares for its first budget, and as the Conservative Party licks its wounds and crowns a new leader.
For more.
Let's go to London and bring in Bloomberg Daybreak europe Banker Caroline Hepker Tom.
After the summer's general election and landslide Labor victory, UK politics is settling into its back to school rhythm, with a new party and a new prime minister at the helm. A staple of the autumnal political calendar is, of course, party conference season, where members gather to regroup and reflect on the year ahead. Traditionally the health in historic seaside resorts like Blackpool and Brighton, the gatherings can often give rise to a gender, setting events and turn young talent
into rising stars. This year conference season falls at a critical time for the two biggest parties in Parliament. Dust is settling on the Labour Party's emphatic July election victory, as jubilation turns to expectation and the economic reality facing
the government. On economic decisions, Kirs Starmer has already faced fervent opposition to what his party has called difficult decisions to means test the winter fuel allowance that is granted to pensioners, and also to maintain the cap on benefits for families to a maximum of two children. The first test four Starmer's administration will come in the government's inaugural budget on the thirtieth of October, but first he must
convince his party that he has a plan. Meanwhile, the Conservatives will face a different question altogether at their gathering in Birmingham, the future direction of the party, as Tory members consider who to anoint their next leader. For the Liberal Democrats, who have already concluded their conference in Bournemouth, the issue has been where now after the party secured and historic seventy two seats in the vote in July.
It's something that I have been discussing on the Bloomberg UK Partics podcast with the former lib Dem leader, so Vince Cable.
First priority will be to consolidate the base that's already built up. And you know these are relatively high income South of England, suburban rural. I mean, it's a very clear constituency, it's not undifferentiated, but that this is not, as it were, not natural center left territory. But what Libdems are very good at is digging in doing extremely
good local camper in constituency work. And I would think that unless there's some terrible misfortune, that they should be able to hold on to the overwhelming bulk of these by the next election. But the libdems fortunes in large part, I think depend on what happens to the other the two major parties. I mean, the Conservative Party, if they make a bad choice of leaders, if they continue to behave the way they have in recent years, is going
to continue to flounder. They lose support to us in their heartlands, and they could make no progress on the other front because reform is gobbling up the populist nationalist vote, and that the Tory Party could find itself in a kind of existential crisis. I mean, we don't know, but that could well happen. Then in terms of labor. They are clearly already losing support, and they're going to lose support in the four hundred plus seats that they won
at the last election. But the question then is where will it go? I mean, will it go to reform if they get better organized. Nigel Farage is a good TV personality but clearly not an organizational junius. Or could it go to the dissident left, the reborn Corby Knights or the Green Party.
Okay, okay, but hang on a second. Let's cut through this a little bit and say is there appetite in the Liberal Democrats for leadership? Because there was a glimmer of it in the election campaign? Is there now?
Oh?
I think so. I mean, I think the mantra which is a good mantra. It's a constructive opposition. I don't think we just want to go around you cashing in on every drift in the public mood. I want to play a show that we can be a force in Parliament and building on the base that we've already got.
That was the former Liberal Democrat leader and former Business Secretary Vince Cable speaking to me ant Ewan on the Bloomberg UK Politics podcast. So what is in store for the UK's most powerful politicians then when they gather in the coming days, I've been asking Bloomberg's associate editor Alva Ray. We started by discussing where Keir Starmer is heading into his party's event.
He's having, i'd say, at a rocky time at the moment, his party is being slightly rocked by allegations of cronyism, a lot of scrutiny of gifts and freebies that the Prime Minister has received, and scrutiny of a wonder owner in particular Wahidali, who we have profiled on Bloomberg and revealed some things about in stories in the past few weeks.
But there's sort of other challenges for Keir Starmer that there's a lot of tension among his top advisors and so his chief of staff, Sue Gray, has been named in a BBC story. The story itself is less import than the fact that she has been targeted by colleagues for quite a an aggressive briefing. So he's dealing with quite a lot of discontent and sort of difficult stories so soon into his premiership.
I mean he only won the election in July.
But then also they're quite quite substantial fiscal difficulties, so I'm sure we'll come on to talk about.
Yeah, and this idea of factionalism, of divisions within the labor parties. You say, very recently elected, do you think that that will mean there'll be a big focus on party unity? I mean also there has already been in the actual parliamentary session. There's been rebellion already over policy. So do you think there'll be a sort of focus on trying to I mean, a surely celebrate the recent victory at the party conference, but then also try to unify the party.
It's not so much factionalism in the way that we would have seen under perhaps Ermie Corbyn's leadership. It's more sort of just tension, tensions on an individual level between individual people.
But as you say, there has been.
A bit of tension already, and there's been a rebellion over this issue of the Winter Fuel Alliance, which is a sort of benefit given to pensioners to pay for their heating bills in the winter. Rachel reeves the incoming chancellor has decided to means test that she announced that before the summer and was clearly not expecting the backlash that she received. So even though they have passed that now and that will that will go ahead.
Lots of labor MPs abstained.
Some cabinet ministers anonymously told news outlets that they were nervous about the decision. And essentially this decision has has expended a lot of political capital very early on, and it makes all the all the decisions that are coming quite difficult. Because Rachel Riefs still has to deliver a very difficult budget. She's been speaking about twenty two billion black hole in the public finances. She's asking cabinet ministers
to look for cuts in their departments. We'll see a lot of conference probably of individual cabinet ministers hinting that they want more money for ailing public services, for prisons, for the health service, for transport. I think there will be a lot of tension and kind of bartering for goodies.
In the budget.
But I think because it is so early on, the party is still feeling united behind Keir Starmer and Rachel Reeves, even though I think they feel like they've been put through the ring aer a bit in recent weeks.
Yeah, absolutely, and I suppose that the money and that, as you say, the winter fuel allowance issue, which is money given to pension or was You know that contrast with the story around Kars Darmer's advisors to great and her salary that has been kind of one of the threads in recent days, hasn't it, So you know how much people are being paid, and that kind of contrast has been something that's been focused on a lot. Look,
I also want to talk a bit about business. What business will be looking to hear from the Labor Party conference because of of course, we spent a lot of time reporting about what Labor was saying to businesses and investors here in the UK before they came into power. There'll be the budget after the party conference, So what do you think we will hear from Labor at conference? On business?
I think this will be really interesting because it actually goes to the heart of some of the big questions that Rachel Reeves is grappling with right now as she finalizes her budget, which is happening in October.
I think that we've.
Already seen mattering from the business community that they have been finding her rhetoric around this twenty two billion black hole to be not terribly inspiring of confidence. And there's a bit of a tension between all this emphasis on the need for cuts and fiscal prudence and the difficult inheritance, and then on the other hand, the fact that this is the same Labor Party has spoken about the need to go for growth and to invest and Rachel Reeves
describing the value of capital investment. So I think that a lot of people from the business community, particularly on the Monday of conference next Monday, which is Business Day, I think that business figures will be looking for a bit of clarity from Rachel Reeves on whether that capital
investment is coming. There are all these new vehicles established by the Labor Party that they're still getting set up, like gb Energy, a state owned energy company, the National Wealth Fund, various sort of vehicles to leverage private investment. So the state will put in a bit and then
they're hoping that the private sector will come in. But I think that business is feeling that my they're getting mixed messages at the moment, as I think probably the whole of the Labor Party and the political community feels as well. So I think that's kind of the key thing that she's grappling with, whether they'll get answers and whether she's decided which one she's prioritizing, I think is a different matter.
Yeah, absolutely. I mean, for example, you've got the Resolution Foundation, you know, wanting to know more about economic growth and the plans of the government from the Labor Party. Just briefly, a question on the Conservative leadership race though, because they will also be holding their party conference, how will the
different candidates be approaching conference. What do you think confidence is going to be like this year for the Tories, of course, after an absolutely terrible general election result.
Well, I think that so you would expect them to be licking their wounds and for conferences to be a quite brutal crash landing because, as you can imagine, Caroline, the sort of business and money goes where power is. So the Conservatives have been quite used to having lots of business representation sponsored events, like a lot of money at their conferences for the past fourteen years, and I think they will discover this year that that has dried up.
I think we've already seen reports that they were.
Struggling to attract sufficient sponsorship or enough attendees for their business events, so I think it will feel very different just because it's our first conference in opposition.
That was Boomberg's associate editor al Va ray My thanks to her.
Well.
Party conference season is always a good moment to understand more about the policies to come. I'm Caroline Hepkee here in London and you can catch us every weekday morning for Bloomberg Daybreak you at beginning at six am in London. That's one am on Wall Street.
Tom, Thanks Caroline, and coming up on Bloomberg day Break weekend, we take a look at the wide open race to become the next Prime Minister of Japan. I'm Tom Busby, and this is Bloomberg. I'm Tom Busby in New York with your global look ahead at the top stories for investors in the coming week. We're just a week away from the election for leadership of Japan's ruling Liberal Democratic Party. Let's turn to Bloomberg Daybreak Asia hosts Brian Curtis and Doug Krisner for more.
A record nine candidates are in the race to lead the LDP. The election on September twenty seventh is all but as sure to dictate Japan's next Prime minister. Because of the party's dominance in parliament.
Whoever is chosen will take over for Fumio Keishia, the current Prime minister. Back in August, Kishita made a surprise announcement that he would not run in the election.
Earlier, Brian and I spoke with Gerode Reedy, Bloomberg opinion columnist. The question is about the stakes for the future of the party right now.
It's really important that they choose someone who's going to restore public trust in the party. You know, the parties standing you know with Japanese people is probably close to an all time low right now. There's been a series of scandals, most recently a funding scandal involving unreported political donations that has really damaged the party standing with the public. At the same time as this election is going on for the leader of the LDP, there's also another election.
It's less talked about and less reported, but the opposition is also choosing a new leader and that is going to maybe give a bit of win to their sales. There needs to be an election held within basically within the next year, and the LDP is pretty vulnerable right now, so it is important that they give themselves a bit of a facelift and you know, go to the Japanese people and show that they that they have changed.
And speaking of a facelift, the economy minister Sanai's Takaichi has emerged as one of the front runners. It would be very interesting to see a woman prime minister in Japan. Is she kind of rising in the polls?
Now, that's right. Yet in the last week there there was nine candidates at the start of this and the nine candidates they're all still in it. But there's definitely three people who have pulled away as a sort of leading pack, with Shindio Koizumi, Shigheiro Lishiba and as you say, Sanai Takaichi. She is definitely I think surprising people with her being in that pack and her performance. She would
be the first female prime minister in Japan. She is also probably the most conservative person within those nine people, and indeed one of the most high profile conservative politicians in the country. It is a little bit of a surprise to see her doing so well. I don't know if everyone expected her to be doing so well at the start of this race. I think we've seen you know, cooison me had his moment in the sun, he's dipping a little bit in public opinion polls at the moment.
Takaichi seems to be has a bit of wind in her sales at the moment and is now as a result, she is getting attacked a little bit more by the other candidates, which you know could damage her as well. So still a little bit of a way to go.
Koison me is forty three years old. I think he's the youngest candidate, and he's promised to change what he's described as an old fashioned LDP. Do you think there's any runway for him here?
Absolutely there is. I mean, I would still say that he is probably the front runner, even though I think he has been attacked. I guess because he is the front runner, and also maybe some of the talking points he brought up, including sort of reform of the labor market and making it easier for companies to fire people, has put a bit of a target on his back.
There absolutely is room, however, for him to win this race, as I think getting one of those three right now, it's quite hard to say, you know, even even talking to the experts in this at this point in time, it's very hard to say who's going to you know, who has the best chance of winning, because it all depends on who makes it into the likely runoff election if no one candidate gets a majority of the votes.
He is Gerod Reedy speaking of to us earlier, and he is a Bloomberg opinion columnist.
And now joining us is Isabelle Reynolds, Bloomberg's Tokyo bureau chief. For more discussion. Isabelle, thank you for joining us. Is this an election that will be determined by almost entirely by domestic issues or will international issues.
Be at play?
Definitely, the economy is high on the agenda. People are not necessarily happy with how the economy is going. You know, Japan has touted how inflation has returned to the economy. With the many people in Japan, who has a very elderly population, unfixed incomes, inflation is not welcome, so people
are not necessarily feeling happy about their pocketbooks. On the other hand, we did see an und alarming incident in China where a young Japanese boy was stabbed and sadly found out to have died from his injuries, and that kind of thing it could inflame sort of public opinion about ties with China, and potentially I don't know this for sure, but it could potentially give a bit more sort of a boost to someone like Takeichi, who is a pretty conservative hardliner and would not be afraid to
sort of take a tough stance with China.
So do you think the economy right now in Japan is kind of at a turning point? Inflation returning for the first time in what about three decades, We've recently seen the first interest rate hike from the BOJ in about seventeen years. Is this a pivot point that is crucial?
Yes? I mean this year has seen a huge turning point for Japan. After decades of deflation, here comes inflation, prices a rising. People are not used to that. Some people welcome it with particularly young people in the job market are being paid more. They're feeling fine about it perhaps, But then if you look at the older, older generation, as I say that, it's not so comfortable for them.
But yes, it's definitely a turning point. The Bank of Japan is doing things it hasn't done for decades, and that's affecting everybody's lives across the board and the way companies are operating.
You mentioned Sannai Kintakeichi earlier, the Economic Security minister, and that she's leaning towards the right and might be a candidate that has kind of winn in the sales. It's funny because when we talked about a month or so ago, we talked about Yoko Kamikawa, the Foreign Minister, that she might be someone who could become the first woman prime minister in Japan. Let's talk a little bit about that. I think she's probably slipped a little in the polls, but is it possible that Sanai can win.
Possible, It's very possible. In some of the polls when you look at the figures for the supporters of the ruling LDP, Takeji has come out on top, So it is certainly possible. She's as good was saying earlier, she's one of those three who've pulled away from the rest of the pack. So it's highly likely that two of those three will be in a runoff and one of them,
one of the three, will will be the winner. I mean, it would be a bit of a surprise for all sorts of reasons, one of which being that she was very close to Prime Minister former Prime Minister Sans or Abbe, who was assassinated a couple of years ago after Marth of his assassination was one of these huge scandals that hit the LDP for its connections with a fringe religion, and so it would be in that sense a bit of a surprise for the LDP, who wants to present
a new phase to come up with someone who is so closely associated with former Prime Minister Abbe.
What about the similarity between Snati's economic plan and what we used to call Abinomics.
Absolutely, I mean she was very much a fan of his policies in all sorts of senses, and that includes the central bank policy. So she's been in contrast to the other candidates in this race who have mostly been sort of in line with the government and the current Bank of Japan policy, she's been sort of fighting against the tide and saying, you know, interest rates hikes shouldn't go too far. We still need really easy policy. The inflation we do have is sort of imported from abroad.
It's down to the you know, the wars overseas that are bringing it, and it's not that the Japanese economy is sort of getting heating up.
And with her rise, the fact that she's getting support from the right wing in the party. Can we extrapolate from that and say that in Japanese society that the country is turning more nationalists and more to the right.
No, I don't think that's necessarily the case. I mean, she has certain views on women in society which are not the mainstream.
Now.
For example, there's this whole issue of whether women should be allowed to have separate surnames from their husbands, and she says no, they should not, whereas most people in Japan and most of the other candidates in this race say well, yeah, of course men and women should be allowed to have separate surnames if they wish. So she
is more conservative than the general trend. But this is all down to dynamics within the ruling LDP, and they are not Although they've been in power for so long, they are not always exactly in tune with the average Japanese voter.
I was reading that Ishibai is promising to push for gender equality and also measures to address not only the low birth rate but the declining population as well. What is happening right now in Japan demographically?
Oh well, I mean, Japan, as you know, is the oldest country in the world in terms of the number of the percentage of people over the age of sixty five. Current Prime Minister Kishida has referred to this as a national crisis and said we have only a few years to really deal with this, or things will get out of control and many areas of Japan could be find themselves struggling to deal that, you know, provide the basic services that people expect. They just simply won't have enough
young people to look after all the old people. Money's being thrown at the problem. There's a lot of support now, I think for young families in terms of finance and helping them during those early years when it's hard to be raising a family and working at the same time. But it's very questionable about whether they'll be able to turn the tide on this.
Is there anything in a nationalistic vein? I mean talking about Japan's standing or place on the global stage.
Oh well, that's very much the line that Takeichi, of course, would put forward as her basic policy. That's what she wants. That's the kind of rhetoric that abbe used to use for many years. How far that actually plays with the public, I don't really know. I'm not sure that the average voter is that key, you know, on this kind of issue of whether Japan's playing a huge role on the global stage. But on the other hand, this election doesn't
involve the average voter. It's all members of the LDP, and when it comes to the runoff, it's almost exclusively LDP lawmakers, so that rhetoric may play better than with them that it would with the public at large, who are concerned with more kind of bread and butter issues.
One of the things that Brian and I have noticed in covering the Japanese stock market the degree to which corporate reform has really made an impact in the performance of some of the stocks, let's say, in the Nike structural reform. Corporate reform, is that something that will continue to be.
Addressed it very much will I don't think that's something really that the various candidates can appeal to the public with, But certainly some of the candidates, including Cornell who's famous for his love of the idea of reform and Cooison me also have been looking into this issue and want to make Japan more of a sort of fluid and normal in inverted commas economy. Whether they'll be able to
do that is another question. I mean, they'll come into government, but they'll still be dealing with all the same issues that obviously everybody has been dealing with for the past couple of decades.
Isabelle, thank you so much for helping us set up the election for leadership of the ruling LDP party in Japan. Isabelle Reynolds, Bloomberg's Tokyo bureau chief. I'm Doug Prisner along with Brian Curtis. You can join us weekdays here for Bloomberg Daybreak Asia beginning at eight am in Hong Kong eight pm on Wall Street.
Tom thanks to Bloomberg day Break Asia host Doug Crisner and Brian Curtis. And that does it for this edition of Bloomberg day Break Weekend. Join us again Monday morning at five am Wall Street Time for the latest on markets overseas and the news you need to start your day. I'm Tom Busby. Stay with us. Top stories and global business headlines are coming up right now.