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>> This is Bloomberg Business Week Daily

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Week Daily podcast with Carol Masser and

Tim Stenc on Bloomberg Radio.

>> Ian King is Bloomberg News US

semiconductor. He joins us.

Semiconductor reporter. He joins us from

>> He's not our semiconductor. He's our

semiconductor reporter. Uh not yet, Ian.

>> Although he thinks just as quickly. He

thinks just as quickly.

>> Maybe one day soon they will they will

make a robot Ian King. But today we are

glad to have the real human being Ian

King. Ian, we're glad to have you

because you have such great experience

not just covering different

semiconductor cycles, but also living in

Korea earlier in your career and just

seeing what's going on in the Korean

market right now with memory chip

stocks. I mean, what is what is your

reaction here? Have you ever seen

anything like this in your career?

>> To the extent that they've gone up,

absolutely not. We've certainly seen

booms and busts for these companies uh

along the way. I was there when he was

actually created as a force merger by

the government. This was, you know, two

companies, LG Semiconductor and Hyundai

Electronics that were sort of on their

way out of business. Things were that

bad. And now in combination owned by the

SK Group, it's uh worth more than a

trillion dollars. This was not something

that anybody would have believed um even

a few short years ago.

>> Do you think that growth is sustainable?

And there are more people, more

whispers. There's still whispers talking

about bubbles, not just in AI, but in

these chip manufacturers. I mean,

there's uh thank you to Bloomberg, who's

now adapted my algorithm online to feed

me finance memes. Uh and there's one

going around talking about all these

trillion dollar valuations and how that

is worth more than all the farmable land

in Australia and they go, "It's fine.

It's fine. We're making money. We're

making money. Just buy." Are there real

concerns here about these valuations and

how big they're getting?

>> I mean, there there absolutely have has

to be. I mean, we've seen an enor amount

of money come flowing in, but that's

very much for the market to decide. And

if you look at some of the other

metrics, these companies are actually

cheap. What a trillion dollar company

that's cheap. But look at the the

forward pees for these companies. We've

got one, I think Micron's about 15. You

know, he is less than 10, which means

that Wall Street analysis believes that

these companies fundamentally have a

massive earnings growth spurt ahead of

them and that investors haven't actually

caught up. Who knows? Obviously, we

don't know. And we, as I've said, we've

seen massive boom and busts in this

industry in the past. It wasn't what, 3

years ago, and they're actually losing

money. So, who knows? But, um, you know,

there is certainly a ground swell of

opinion that believes this time is

different. Arguably the most dangerous

words anybody can ever say, right?

>> That's what people believe.

>> I'm glad you couched it with that, Ian.

Hey, um I I do want to know a little bit

just about sort of the chip ecosystem

when we're talking about these memory

names. We had uh Eric Weiner join us a

little earlier along with Sarah Hunt

over at Alpine Sax and Woods who who

covers markets. And you know, we kind of

had this exchange where they talked

about, yeah, higher memory prices,

they're a good thing for, you know,

SKHEX and and Micron and a handful of

other companies, but not necessarily a

good thing for the companies that are

are the customers. talk a little bit

about the way that it's affected those

companies because we have seen some

companies such as Apple, you know,

they're able to navigate this, but but

who who are the losers when memory gets

this expensive?

>> Yeah. I mean, 85% gross margins at these

companies tells you all you need to know

about their pricing power. So

>> amazing.

>> Yeah.

>> And that's for hardware. Like that's

crazy.

>> Those are like software,

that's that's insane. uh and the these

companies own manufacturing facilities

as well. They're not just designing

these chips and outsourcing. They

actually own these multi-billion dollar

plants and they are running them uh at

that kind of level. So, this is

obviously a great market for them right

now. But to answer your question, um PC

market, we're going to see HP report

today, Dell I believe tomorrow. So,

these guys the prices of of what their

their components has gone up massively.

Obviously, we've seen the influence on

the smartphone market. Companies like

Qualcomm have had to rein back their

outlook for the number of devices that

get built because we've seen this

massive shift of production into the

higher value, higher margin sort of high

bandwidth memory that's going into these

massive data centers. So that's, you

know, supply and demand is elastic.

These companies there aren't really new

players coming into the market because

you can't because of the the high

barriers to entry. So that's that's what

the market dynamics are right now. If

you're a device maker, then you know

times are tough, right? Your margins are

getting squeezed.

>> And we've also seen the impact some of

these uh companies have had on the South

Korean economy and even the Cosby, which

overtook the UK and then overtook

Canada's stock exchange and is now I

think the seventh largest in the world.

Talk to us about what that does for the

economy overall in South Korea. And

there is also this concern that if the

straight of hormone stays closed, this

this energy crunch is going to be

acutely felt in Asia first. Any chance

that that's going to impact these uh

these huge growths that we've seen in

some of these companies?

>> I mean the company that we've not

mentioned is Samsung Electronics which

is actually a larger memory manufacturer

than both of these guys and obviously

that's a South Korean company as well.

So the combination of SKHEX and

Samsung's success has clearly had a

massive impact. Samsung has always been

central to the Korean economy and the

Korean story. This is, you know, the

first arguably their first worldclass

company that proved that, you know, the

the export economy could work for Korea

and and helped with their success and

we've seen that filter into other areas

of their economy. On the flip side, yes,

South Korea is an energy importer. Um,

it has nuclear power, but it'll is is

still heavily dependent on outside

sources of of energy.

That's going to be, you know, cost and

and

negative for these companies, but, you

know, it's not going to hold back

production of memory chips at Samsung or

SKH Heinix. You know, they're going to

go full ahead of that. We've seen them

even get over their historic kind of

tension with the labor unions there. You

know, we've found a way and and you

know, everything's moving forward.

That's an economy that's very focused on

this success story.

>> You know, Thomas Thordon over at Hedge

Fund Telemetry, he's he joined us last

week and he just sent me a an IB on the

terminal. He said that SKH Highix and

Samsung now are 55%

of the total Korean market last Yeah.

this right now. I mean what what was the

Korean market like when you were when

you were covering these stocks, you

know, earlier in your career?

>> No, I mean that's a very good question.

Sam Samsung

was went from being a very important

company to being 20% of the market. So

Samsung's kind of position in the

spotlight has kind of ebed and flowed

over the years, but it's always pretty

much been there. Uh SK Hinx was kind of

the the the sort of weakling younger

brother that you kind of hoped would

survive, but kind of flirted with going

out of business for a long time. It's,

you know, time in the spotlight is very

very recent and and very very immediate

based upon this uh this recent

phenomenon, this AI surge. So a lot of

what is happening in that South Korean

market is dependent arguably more than

any other market on whether this AI

story pans out or whether as you

mentioned earlier this is all a bubble

and we're all going to go back down

again soon.

>> Oh, we got to end it there. Ian, I'm

just kidding. We're not going to end it

on the bubble comment. But but one final

question on a potential bubble. Just we

have 20 seconds left. Given that you've

covered different cycles, what would you

say about where we are right now? The

extent of how far it's gone up exceeds

all prior cycles and that creates

obviously downside risk to an extent

that we've never seen before as well in

this particular area.

>> Yian King, he covers semiconductors for

Bloomberg News. Intel, AMD, Texas

Instruments, Qualcomm, Applied

Materials, but we made him go outside of

the US and we made him go to memory chip

companies, too. And he does it all. Ian

is out there in our Bloomberg bureau in

San Francisco.

Stay with us. More from Bloomberg

Business Week Daily coming up after

this.

You're listening to the Bloomberg

Business Week Daily podcast. Catch us

live weekday afternoons from 2 to 5:00

p.m. Eastern. Listen on Apple CarPlay

and Android Auto with the Bloomberg

Business App

>> or watch us live on YouTube.

>> All right, Tim, I have a question for

you. Were you a mall rat?

>> I mean, everyone in the '90s was a mall

rat. We had

>> there wasn't that much to do in the 90s

and then go did you

>> Southern California 1990s

>> yeah skateboarding

>> did you have a puka necklace

>> I for a very brief time I did and there

might be uh pictures to prove it very

brief yeah

>> all right we're going to I'm a little

sad we don't have this I should have dug

this in advance

>> sixth grade seventh grade

>> we all make questionable fashion

decisions in middle school I mean listen

they were the thing and one of the it

brands when we were in high school of

course was Pack Sun's

gone through a lot of changes they filed

for bankruptcy in 2016 but now It's

back. It's rebranded and it's thriving.

And it's capitalizing on a couple

things, including this wave of

millennial nostalgia and a new

generation of shoppers who are more

socially aware, but no less fashionable

than we were uh when we were their age.

Uh Paxon CEO, Brienne Olsen, joins us

now. Her book Co-created, here we go. We

got right here, talks about the

turnaround of the company and how much

to my joy. She says, "Bick and mortar

stores are not dead. They just need to

reinvent themselves." Thank you so much

for coming on. You were telling us at

the break, you've been at the company a

long time and in your time I think you

said 17 18 years. In that time, how has

the company evolved into what it is now?

Yeah, I've been at the company almost

two decades. And when I joined, we were

a surf skate legacy retailer. And today,

after a transformation of almost two

decades and a real focus on the power of

co-creation, we have successfully moved

from being a retailer where Pacson's

brand was just on the outside of the

store to an actual brand that young

people today love. And so 50% of what we

sell in a Paxon store today now carries

the Paxon label.

>> How does that work in a world where, and

look, I'm going to totally age myself

here.

>> Oh, we've already we're both there.

>> You know, when I when I when I drop my

kids off at school, they're they're

young. They're three and seven, but when

I drop them off at school, I walk by a

middle school. And at the middle school,

these kids literally are dressing like

we used to dress when we were in middle

school. It is crazy. It's like the

widelegg jeans, like the same oversized

sweatshirts, like it's

>> the platform chunky sandals.

>> Here's the difference though. They are

all glued to iPhones and we didn't have

that. No.

>> And we didn't have that till relatively

recently. Again, not to date myself. Um,

how do you reach a consumer that is

glued to their phone?

>> So, as a brand centered at the youth, I

actually think all of these touch points

from a digital standpoint offer us a

real advantage. If you lean in and meet

the customer where they are. Pakistan

has two million followers on Tik Tok.

We're on Reddit. We're on Discord, on

IG. There's so many different ways to

engage with the consumer today. YouTube

Shorts. And so I talk about it as this

constant listening loop and listening

feedback. If you want to know something

in live time, you can just engage with

the consumer. And so the premise of my

book, Co-created, is really about

treating the consumer not like an

audience. We're not marketing to them.

We're not building product to then

market to them. Instead, on the reverse,

we're building with them. So, we've

brought the consumer in and we are

actually co-creating the future of our

brand with these young people. How does

that work in the creator economy? We've

seen so many brands kind of fumble those

opportunities. Is there a specific

strategy to taking advantage of people

who are exciting about the brand and

bringing them in in a way that feels not

exploitive but um you know communal and

productive?

>> Yeah, I think we've had tremendous

success in the creator economy and

really the brand has to shift the notion

of control. So you have to relinquish

and

>> but that's really hard because you get

paid to have control.

>> We have to relinquish some of the

control and build what I call brand and

community trust. And so by empowering

these young people to be your

storyteller, you are in essence enabling

them not only to create economic ability

for themselves, but also to storytell

and amplify in a way that is otherwise

impossible. And in 2023, a Pacon fan and

customer, Llaya Bixs, based in

Nashville, Tennessee, who had just

amassed 5,000 followers on Tik Tok, went

to her local Nashville store, bought a

pair of jeans, created a video in her

bedroom. She has 5,000 followers. She

sold 11,000 pairs of jeans in the next

36 hours. And so, it's the power of the

algorithm. It's the power of authentic

storytelling and really allowing to lean

into your into your community and

empower them.

>> So on that, if you look at the Paxon

website right now, there's, you know, a

dozen vertical videos that uh talk about

it says Pax Unstyled by you. Are are

these coming from how does this work?

Like are these are these collaborations

that you have with like actually actual

normal people or are these like thought

up in a marketing department and they're

like made to look like they'd see

vertical video? Like are these actually

like co like co-creators?

>> The majority of the videos you would see

on our site are actually co-creations.

So then we seek permission from those

creators and folks will tag you and then

you reach out.

>> Absolutely. And on Tik Tok with the open

creator platform, we actually don't

select any of the people who are then

advocating or promoting the brand. They

are selecting and we say everyone is

welcome. And there's a real magic and

synergy that happens in that. We're

speaking with Brienne Olsson, the CEO of

PAX Sun. She's the author of the new

book Co-created: The Cultural Strategy

That Redefined Pac.

Christina's got

>> Wait, I'm looking at the wrong camera

again. Sorry, it's not my usual studio.

There it is. There it is. Talk to us

about how you manage a brand turnaround

because the company did file for

bankruptcy in 2016. Um,

>> and you were there. You were there

pre-bankruptcy and post

>> and retail turnarounds are hard. Um,

partially because you do have a legacy

that can either a good or a bad thing.

reinvention can be really difficult when

customers have a certain way they think

about your brand. How do you do that?

How did you manage that and how do you

think it's been successful? So I've been

in the CEO role just over three years

now and I've been with the brand 18 plus

years and so the turnaround I would say

was absolutely a team effort and as

you'll see in the book co-created the

fingerprints and the stories of so many

different people brands creators and you

know leaders within our organization and

our brand associates are a part of this

beautiful story of co-creation but the

real honest truth is you have to do the

inside work first and we had to do a lot

of res-crubbing of our structure, our

internal organization, our operating

system, how quickly we were getting

product to market, the silos that had

existed in our organization for a long

time. And we did that by leading with

purpose. And I think a purpose-led brand

can perform better. And our results have

followed from the moment we established

our purpose, which is to inspire the

next generation of youth and create

community at the intersection of

fashion, sport, art, and music. we have

really been able to rally both our

internal teams and our external

constituents which include our community

brands creators all of the stakeholders.

>> I want to talk about some of those

stakeholders just that you just

mentioned the brands specifically if if

50% of what you're selling is packs

unlabeled and then then how do you

ensure the brands that they're going to

be given um you know both virtually and

physically shelf space that has

prominence. Yeah, I think listening to

the consumer, leveraging data,

leveraging our youth advisory council,

leveraging our Pakistan youth report

which surveys 6,000 young people. These

are ways that we can listen in a more

efficient way and then ensuring that

we're being true to our purpose and our

pillars. So, we have a long-standing

relationship with the Metropolitan

Museum of Art. The misconception is that

young people don't care about the arts.

But what we've been able to prove year

after year is that actually young people

do care about arts and they care about

the fine arts and they care about

self-expression. And so we were very

confident that this collaboration and

co-creation would work similar to

Formula 1. It's hot now, but we started

working with Formula 1 almost four and a

half, five years ago. So I think really

ensuring that we're staying at the pace

of culture and we're moving at the speed

of culture ensures that we stay that one

step ahead and ensures relevancy for the

products and brands that we curate and

bring into our store.

>> You said you have a annual youth report.

What are some of the surprising

takeaways when you read that report each

year? What are the some of the things

that stand out that surprised you even

though you've been in this business?

Yeah. So last year in the youth report

surveying 6,000 young people, Gen Alpha

and Gen C, one of the things that came

out was that music is the most important

piece of their life in terms of

self-expression and fashion. And so it

ranks higher than fashion. And so I

think music is this throughine for

people to express themselves and it's

variable and fluid, right? So I think

that was a big um kind of unlock.

Another unlock was mental health. And

mental health was both the largest

challenge but also opportunity when you

spoke to young people above physical

health and academia. But if you really

look at it, I think it actually shows

true optimism because these younger

generations are willing to lean in.

They're vulnerable. They're having the

conversations and they want to have the

conversation also in the workplace. And

so I think it's giving us an opportunity

as brands and corporations to really

rethink our social responsibility and

how does that tie into our corporate

responsibility. And so I think the youth

report from a data standpoint and deeply

understanding the emotive reasons that

consumers are shifting their buying

pattern, shifting consumption patterns

was absolutely important to kind of

strategizing our path forward.

>> We're going to talk more. We're going to

do some news and then we'll we'll come

back and and talk more with you. Uh

before we do that though, I want to talk

and we'll talk retail. Before we do that

though, I just want to go back to

marketing and and hear from you about

the mix of organic marketing versus

paid. Can you just give us like what

percentage goes is organic, what

percentage is paid?

>> We're at a pretty even 50/50 split.

Okay. And we did bring all of our paid

teams inhouse. So we're not leveraging

any agency. And that is a big pivot and

has proven to have significant results

because the people working on the team

are living and breathing the brand and

listening to our consumers. So I think

that's the biggest fundamental shift

that we've made.

>> And then what are they doing on on

social media to find those those

reliable voices, those people you want

to partner with?

>> I think first the first level of

partnership is looking at who's already

talking about your brand because they

are the authentic storytellers. So that

is usually our first step in identifying

a collaborator or co-creator.

>> Okay, we got a few more minutes with

you. I want to talk retail. I want to

talk about the future of the company.

Let's start with with retail. Uh unlike

some other companies in the last few

years who have decreased their retail

footprint, uh bricks and mortar

footprint, I should say. You guys are

actually opening stores. You opened 10

last year, you're opening 10 this year.

What is what is the way to get consumers

into the store? How do you do it? I

think first of all we open in areas and

malls where we already have a high

demand. So we look at the data we cross

>> there are fewer malls now. So like

there's so many malls that don't exist

anymore. There are empty malls.

>> I think there's about 450 really great

malls in the US and we're only in 305 of

them. So when I look at the white space

for expansion where there's real

customer demand for Pacon, there's still

quite a bit of runway there for us. And

we saw last year our store traffic in

our malls at Pacon was up 17%.

And so clearly consumers are voting for

Pacon. They want us to open stores and

they're looking for experiential retail.

So whether that's us showing up

trackside at Formula 1 in Austin or in

Miami where it's unexpected, Pacon has a

pop-up store at the track or it's what

we're doing with get ready with me the

night before New Year's Eve and getting

our consumers ready. We're bringing them

in and meeting them where they are in

their lives at that moment.

>> When did the name change from Paxon or

from Pacific Sun to Paxon?

>> About 15 years ago.

>> All right. So that's how that's how long

>> I mean I always called it Paxon. Did you

call it the whole thing?

>> Yeah. I mean, that's what it was called.

>> There's a fun on that actually.

>> Oh, there is.

>> Yeah. There's a nostalgic throwback and

younger people think it's really fun

that we used to be called Pacific

Sunware. So, we've brought it back

through capsules and it's been great.

>> When you look at appealing to this youth

customer, you were talking about in your

survey how they do care about the source

of things. They do care about arts. They

do care about ethics. I feel like that

runs into a couple other market trends,

including this love of like fast

fashion. So how do you how do you have

those two competing wins? How do you

make sure that you are keeping that

genuiness and that ingenuity and the

uniqueness and then also providing the

number of items and the churn that these

customers want? I think first of all we

have to acknowledge that the consumer is

under some price pressures and cost

pressures and I think by acknowledging

that you also acknowledge that they

might at some point shop at a brand that

might be considered fast fashion but

that at Pacon is not what we stand for.

We stand for quality first and foremost,

creating real exclusive product that

means something to them and will last in

their closet and giving it to them at

the best value that we can. And so we

recognize that fast, you know, the fast

fashion shopping might be a part of that

ecosystem, but we don't play into that

lane.

>> Pacon, before we go, we got to talk

business. Pacon was a publicly traded

company in the 1990s. It it IPOed. it

went private and then filed for

bankruptcy back in in 2016. Are you on

the path right now to become a public

company again?

>> We're certainly exploring that option.

>> Uh are you profitable now?

>> We're profitable. We just came in near a

billion dollars last year. That was from

700 plus million three years prior. A

billion dollars. So really exciting to

see the growth. And the growth has been

nice and steady over the last three

years. And we're seeing the growth

across both genders and across a

multitude of great brands inclusive of

the Pacon brands.

>> Brienne Olsen, she's the CEO of Pacon.

She's the author of the new book

co-created the cultural strategy that

redefined Pacon joining us here in the

Bloomberg Interactive Broker Studio.

Congratulations on the book and thank

you for joining us.

>> Thank you so much. And if you want to

bring back the Puka Shell necklace, we

know you have a model right here ready

to go.

>> Stay with us. More from Bloomberg

Business Week Daily coming up after

this.

You're listening to the Bloomberg

Business Week daily podcast. Catch us

live weekday afternoons from 2 to 5:00

p.m. Eastern. Listen on Apple CarPlay

and Android Auto with the Bloomberg

Business App or watch us live on

YouTube. President Donald Trump wants

lower rates, but accelerating inflation

and resistance from hawks on the Apple

MC leave little room to ease policy. Or

so the story goes. In reality, Anna

writes, "The bond market may have done

much of the heavy lifting already with

the 10-year Treasury yield rising 50

basis points since the start of the Iran

war." We've got Kelsey Barrow with us,

global fixed income, currency, and

commodities portfolio manager over at JP

Morgan Asset Management. She joins us

here in the Bloomberg Interactive

Brokers Studio. Welcome. Welcome. How

are you?

>> I'm well. How are you doing?

>> We're doing pretty well. What do you

make of um what uh our chief economist

Anna Wong is saying that a lot of the

heavy lifting is being done in the bond

market for the Fed chair?

>> Yeah, I I think that's fair. And in

terms of that difficult job that chair

Worsh is going to have, it's not just

the hawks that have changed or spoken

more loudly. It's also the people who

were uh previously doves on the

committee like chair uh governor Waller

who spoke last week and and he mentioned

that even he who had previously

dissented in favor of cuts because he

was concerned about the labor market is

now less concerned about the labor

market and endorses uh removing the

formal easing bias from the statement

which is why we had three dissents at

the last meeting. So what I think is

actually really interesting is the fact

that I think the consensus around what

the Fed is going to do at the June

meeting has essentially already been

formed. It's kind of frontr run uh Chair

Wars's first meeting.

>> But you said you think the bars are is

still with all that notwithstanding

pretty high for a hike. Why is that?

>> Yeah, that is true. So there is a big

difference between the Fed staying on

hold for an extended period of time

versus seriously considering rate hikes.

And I think there are a number of things

that the Fed would need to see to feel

that rate hikes are appropriate. Um the

first thing is where is policy now? Is

it appropriate or not? And I'll go back

to what Waller described policy as which

is neutral to modestly restrictive. So

if we keep policy rates around here, um

you know, we generally feel like it's a

pretty good place. And what would get us

to feel like that's not a good place

anymore? Well, if we saw inflation

expectations start to rise a lot, that

would be of concern. If we started to

see the labor market shift for out of

balance, so right now the labor market

is really an incredible equilibrium

where you have one job opening for every

unemployed. You know, we went from two

job openings to every unemployed. Lots

of

>> It took us a long time to get here.

>> Yeah, it it has. And we're kind of in

this stable equilibrium. And the

question is, are we going to continue on

this path of a gradually cooling labor

market that keeps the Fed comfortable or

are we start going to start to see an

inflection higher?

>> Well, what what do you think the biggest

challenge will be for the for the for

the new Fed chair uh when it comes to

the dual mandate? Is is he going to have

to be more focused on inflation or on

maximum employment?

>> Well, I think for now he's going to have

to be more focused on inflation. I was

remember he said inflation's a choice.

>> Yeah. No, I mean it it's part of his own

framework. I I think it's just right now

we're very much beholden still in the

rates market to energy. You look at the

movements in oil and you look at the

movements in yield in the US as well as

the rest of the world and they're still

very highly correlated. And I think if I

look back to where we were back in

March, you know, we thought there were

probably two likely outcomes. One is

that this war would be over by now. Oil

would have returned to where it was uh

pre-war and yields would be trading back

in line with the traditional growth and

inflation dynamics like they normally do

or you would get in a prolonged war

where oil actually went up to $150 and

we would have started to see demand

destruction. Yeah. What we actually have

end up is is in between those two

outcomes where oil is up enough that

central banks have to stay on hold. They

cannot credibly convince anyone that

they should be cutting rates right now.

But at the same time, oil isn't high

enough to really start to see companies

or consumers under stress. Talk to us a

little bit about the picture outside the

US. You know, we talked about these

factors that are true for our Federal

Reserve, but you know, I'm talking about

the more mixed picture you're seeing in

the UK, Canada, Australia, Euro zone.

like how does this play in?

>> So, this is really interesting. So, you

know, one of the reasons that we've had

some stability in the bond market over

the last few days, we've come come back

from some of these higher levels on the

10-year yield that we tested last week.

Part of that is oil. Part of that is

optimism around uh the straight being

real.

>> Yeah, don't get me started on that

optimism, but keep going. But some of it

is also because of stability in non US

uh bond markets and in other parts of

the world we actually are starting to

see economic data both inflation and

labor market data start to surprise to

the downside and actually constrain some

of the hawkishness of central banks. So

for example in Australia you've seen

weaker labor market data. They've been

very hawkish. They've been hiking. Now

they are under this question. Do we

really need to be hiking any further?

The ECB, they've signaled to us that

they're going to deliver a hike in June,

but will they be able to deliver any

more if the growth data continues to

look squishy? So, we are starting to see

and the US is a bit of anomaly right now

because the data has been so resilient.

But outside of the US, there probably is

already becoming a point for some

economies where the data is constraining

to a certain extent uh how hawkish

central banks can be in the face of

higher energy prices.

>> The what about the higher yield on the

longer end of the curve just in the last

couple of weeks? What we saw in happen

with the 30-year?

>> Yep. Yeah. So, we've been seeing a

little bit of uh a move higher in

yields. Uh I would say it's been

somewhat parallel. Um, if you look at

the 530s curve, for example, it's it's

actually been been flattening more

recently. And what we're hearing is that

this move higher in yields has actually

been met by more demand. And to me, this

is interesting because it does

differentiate this period from 2025. So,

we had a similar selloff to similar

yield levels a year ago, right? And at

that time, it was all on the back of

liberation day. And there was a lot of

narratives in the market about getting

rid of your US fixed income, right?

Getting rid of the dollar, sell America,

all of these themes. This time around,

as yields have moved higher, we've

actually seen demand and flows come to

match those higher yields, particularly

when you look outside of rates and you

look out into credit.

>> Okay.

>> All right. We've only got about 30

seconds, but talk to me quickly about

Japan. Is it stabilizing? Is it still

anchorless? I'm fascinated by this

story. what is going on there?

>> Yeah, I anchorless is a great descriptor

for the the Japanese bond market and I

think there's a couple challenges. One

is on the monetary policy side, which is

they've been very slow to hike rates.

Um, and the markets are kind of seeing

through that and as a result, you've

seen this really incredible convergence

of inflation break evens between uh

Japan and the US. That is an amazing

chart. You can pull up the 10-year

Japanese break even and the 10-year US

break even. they've converged and it's

all coming from actually higher

inflation expectations in Japan. So we

have that challenge. On the other hand,

we also have this challenge around uh

fiscal. You know, what are they going to

do? I do think that there is some room

for both the monetary policy and the

fiscal policy to kind of step in and

stabilize the market here. And you are

starting to see that.

>> Kelsey Barrow,

>> got to get you back soon. Not enough

time. Global Fixed Income Currency and

Commodities Portfolio Manager over at JP

Morgan Asset Management.

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