Latest / Merryn Talks Money / What Japan’s Angry Voters Mean for Your Money and Falling Fertility

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What Japan’s Angry Voters Mean for Your Money and Falling Fertility · Merryn Talks Money

• 0:03
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Welcome to the Merin
• 0:21
  Speaker 1: Talks Money Weekly round up, our debrief on the biggest
• 0:24
  Speaker 1: stories in markets and economics. I'm Merin Sumset.
• 0:27
  Speaker 2: Web and I'm joined Steadic, senior reporter and author of
• 0:30
  Speaker 2: the Money Distilled newsletter.
• 0:32
  Speaker 1: Great, look, you actually remembered your queue. He's learning, We're
• 0:36
  Speaker 1: learning together anyway. We are both in the studio today.
• 0:39
  Speaker 1: Sometimes I'm in one place, John's in another place, but
• 0:41
  Speaker 1: we are both here today, which is exciting because when
• 0:44
  Speaker 1: we finished recording this, we're going to hang out and
• 0:45
  Speaker 1: talk about the budget, aren't we, John.
• 0:47
  Speaker 2: Yes, we are.
• 0:49
  Speaker 1: We are recording this and you're going to hear it
• 0:51
  Speaker 1: before the budget. But the next time you hear from
• 0:52
  Speaker 1: us will be after the budget, and we'll have lots
• 0:55
  Speaker 1: to talk about. But obviously we're going to talk about
• 0:56
  Speaker 1: nothing but that until it begins. But until then, oh,
• 1:00
  Speaker 1: you know, we we can invite people on, can't we, John?
• 1:02
  Speaker 1: What can we invite people to?
• 1:04
  Speaker 2: We can invite people to Thursday morning, seven thirty the
• 1:09
  Speaker 2: bloomberd Building. Marrin will be talking to you me Stephanie
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  Speaker 2: Flanders rather more actual celebritycom selerity economy and Andy King,
• 1:22
  Speaker 2: who is formerly of the allbr.
• 1:25
  Speaker 1: Actually know something exactly.
• 1:27
  Speaker 2: And you may also like, let's let's reserve judge.
• 1:32
  Speaker 1: But come join us there. I think there will be
• 1:34
  Speaker 1: a registration link in the show notes. There are a
• 1:36
  Speaker 1: few places left, so do sign up there. We'll be
• 1:38
  Speaker 1: excited to see you, and obviously we'll be very excited
• 1:41
  Speaker 1: to talk about the budget because we think it's going
• 1:42
  Speaker 1: to be absolutely great, fantastic. I see growth ahead of us,
• 1:48
  Speaker 1: optimistic years to come. However, until then, the style is
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  Speaker 1: on ice. Absolutely we're not going to talk about that anymore.
• 1:56
  Speaker 1: We're going to talk about a few other things. In fact,
• 1:59
  Speaker 1: we're going to start by talking Japan. I'm very interested
• 2:01
  Speaker 1: in Japan, and because I'm interested in Japan, I've somehow
• 2:04
  Speaker 1: over the last twenty years managed to make John interested
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  Speaker 1: in Japan. There was an election there recently a couple
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  Speaker 1: days ago, which had an unexpected result, no clear winner
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  Speaker 1: for the first time since the nineteen nineties. Although I
• 2:15
  Speaker 1: say it was unexpected, I think was only unexpected for
• 2:18
  Speaker 1: the poling companies. In fact, I was in Japan a
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  Speaker 1: few weeks ago and pretty much everybody expected something like
• 2:23
  Speaker 1: this to happen. Everyone said, you know, is she decigned.
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  Speaker 1: He's not right popular and we don't really expect him
• 2:27
  Speaker 1: to be a clear winner. So what does it mean
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  Speaker 1: for the Japanese market? John, you wrote on this send
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  Speaker 1: Money Distilled a few days ago, you're the expert.
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  Speaker 2: Well, well, I mean, there's only one person in this
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  Speaker 2: room I believe who speaks Japanese and it's not me.
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  Speaker 2: So yes, japan politics basically they didn't when and no
• 2:51
  Speaker 2: means that Japan has got a pedeid of political uncertainty.
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  Speaker 2: As far as I'm concerned, that point doesn't mean partiticarly
• 2:59
  Speaker 2: for Japanese markets. The one and only area that I
• 3:03
  Speaker 2: think is interesting from the point of view of investors
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  Speaker 2: is Japanese monetary policy, because that's probably the area where
• 3:12
  Speaker 2: it slightly have the Well, anything that happens in Japan
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  Speaker 2: is likely to have an impact on global markets, and
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  Speaker 2: for now, the sort of general consensus is that if
• 3:23
  Speaker 2: Japan goes into a period of political, you know, instability,
• 3:28
  Speaker 2: then that's likely to mean that Japanese interest rates sort
• 3:31
  Speaker 2: of remain roughly where they are. I'm not really convinced
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  Speaker 2: by that. I'm not saying I don't have strong conviction
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  Speaker 2: on it, but it sort of feels like another of
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  Speaker 2: these Japanese exceptionalism arguments.
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  Speaker 1: Different.
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  Speaker 2: Well, yeah, and it's not.
• 3:51
  Speaker 1: It's not. And of course, so the reasons why there's
• 3:53
  Speaker 1: been this little mini upset in the selection for all
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  Speaker 1: the same things that have happened to the rest of
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  Speaker 1: the world, a little bit of inflation which is not
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  Speaker 1: keeping up with inflection and etcetera, etcetera. All the same things,
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  Speaker 1: except for one difference in Japan now housing no housing crisis.
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  Speaker 1: There will come, We'll come onto that. But with a
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  Speaker 1: falling population, you tend to not have a housing crisis.
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  Speaker 2: It's quite helpful soon.
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  Speaker 1: But one thing, I mean when we look at the
• 4:14
  Speaker 1: Japanese market. You know, I have been bulleted on the
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  Speaker 1: Japanese market for a while and we always say one
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  Speaker 1: of the reasons, well, the main reason we like it
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  Speaker 1: is because it's cheap. There's lots of very, very high
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  Speaker 1: quality companies in Japan. They are benefiting as well from
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  Speaker 1: people shifting from China into Japan. But the key things
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  Speaker 1: going on there at the moment is that everybody else
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  Speaker 1: has noticed the Japanese market is cheap. So if you
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  Speaker 1: go to Japan now hang out in Tokyo for a
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  Speaker 1: little while, you're going to see almost nothing but private
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  Speaker 1: equity bros. They are all over the place, the private
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  Speaker 1: equity guys coming in and there's a wall of money
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  Speaker 1: there looking for things to buy in Japan. So that
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  Speaker 1: sets a flaw underneath equity pricess that flows in there.
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  Speaker 1: So you know, I'm very loath to join in this
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  Speaker 1: discussion about how because Japan is no longer obviously politically stable.
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  Speaker 1: Although I'd say this is not pretty stable stuff, we're
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  Speaker 1: not really talking about it. Bizarre happening here. Was just
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  Speaker 1: talking about a slightly different kind of coalition, not that
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  Speaker 1: big a deal. I'm very loath to join in the
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  Speaker 1: idea that because there's a mildly less stability in Japan
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  Speaker 1: than there was, that means that there's stock market trouble ahead.
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  Speaker 1: I might easily be wrong, of course, but it seems unlikely.
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  Speaker 1: I mean, you know, if the political and stability and
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  Speaker 1: having leaders in charge who absolutely everybody dislikes with the thing,
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  Speaker 1: then the UK start market would have collapsed by now,
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  Speaker 1: woudn't it.
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  Speaker 2: Yeah, And I mean, obviously of period.
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  Speaker 1: It had a pretty good year so far, despite the
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  Speaker 1: new government's popularity ratings plummeting by the second. Yeah, absolutely,
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  Speaker 1: that seem to make any difference in the market. And
• 5:34
  Speaker 1: even with this budget coming up. I know we were't
• 5:36
  Speaker 1: going to talk about the budget, but it doesn't sound
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  Speaker 1: like it's going to be particularly good for markets. But
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  Speaker 1: nothing has happened to the market so far except him.
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  Speaker 1: By the way, of course, we'll come back to that
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  Speaker 1: after the budget.
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  Speaker 2: I mean, no agree. And also I do think it's
• 5:50
  Speaker 2: interesting because people in the immediate after matter this, people
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  Speaker 2: kept talking about to Pine being politically stable. But I
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  Speaker 2: I'm sufficiently old enough to remember the after Koizumi, who
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  Speaker 2: was the chap who worked away a bit like Elvis
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  Speaker 2: and quite a glamorous prime minister, there was a period
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  Speaker 2: of like what there was, there was basically at least
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  Speaker 2: one Japanese prime minister a year between him and Abby
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  Speaker 2: taking over in twenty twelve. So it really is it's
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  Speaker 2: hardly any time that it has been, you know, relatively stable.
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  Speaker 2: And you know, I mean goodness, you know, poor Abby
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  Speaker 2: was assassinated like recently. I mean, it's it's hardly a
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  Speaker 2: hotbed of stability, do you know what I mean? When
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  Speaker 2: you think about it, you know, it's just because nobody
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  Speaker 2: pays attention because we're over here and there over there,
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  Speaker 2: and you know, Japan, for being such a big country,
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  Speaker 2: doesn't draw that much attention to itself on the global stage.
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  Speaker 2: But it's not. I mean, can you imagine if a
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  Speaker 2: ex prime minister had been assassinated recently here, what the
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  Speaker 2: kind of town would be?
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  Speaker 1: No one would be talking about as being pritically stable. Anyway,
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  Speaker 1: I suppose if we're going to talk about the Japanese election,
• 6:56
  Speaker 1: we should bad we talk about the US election and
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  Speaker 1: the extent to which that ro matters. We can't say
• 7:00
  Speaker 1: Japanese election doesn't matter American election, might I When I
• 7:04
  Speaker 1: look at that again, I think it seems these these
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  Speaker 1: two candidates are so far apart in their campaigning, but
• 7:10
  Speaker 1: when it actually comes to it, you know, there's probably
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  Speaker 1: going to be pretty much everyone has forgotten name regardless
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  Speaker 1: who wins. A kind of political gridlock. And in the
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  Speaker 1: main we have found, haven't we historically that markets love
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  Speaker 1: political gridlock because markets love consistency and no change. You've
• 7:24
  Speaker 1: got a good bit of gridlock, nothing really happens. Everything's time.
• 7:27
  Speaker 1: Of course, there was a clean, sweet Harris one, and
• 7:29
  Speaker 1: I think that would be mildly bearers or maybe very
• 7:32
  Speaker 1: very BEARERUS corporate taxes et cetera, et cetera, And if
• 7:36
  Speaker 1: Trump would win, maybe that would be more bullish, and
• 7:38
  Speaker 1: particularly of course for bitcoin.
• 7:41
  Speaker 2: Yeah, for bat coin, I mean yeah. I think the
• 7:45
  Speaker 2: plombarial actions is that they never have the umpire that
• 7:49
  Speaker 2: you expect. I think often that one of those things where,
• 7:53
  Speaker 2: even if you knew the results, you would probably have
• 7:56
  Speaker 2: a real difficulty place in a proper bit before. I
• 8:00
  Speaker 2: mean the classic example of that is when Trump won.
• 8:04
  Speaker 2: I remember that really specifically because actually I've seen I'm
• 8:07
  Speaker 2: sure I've told this story before, but I've seen Breggs
• 8:10
  Speaker 2: it happened.
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  Speaker 1: Was very tolerant.
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  Speaker 2: That's true.
• 8:13
  Speaker 1: That's true.
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  Speaker 2: They must be, mustn't they. We've seen breggsit happening. And
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  Speaker 2: I thought, well, okay, if Trump happens, because the polls
• 8:20
  Speaker 2: didn't expect trumping happens, I thought, I'm going to put
• 8:22
  Speaker 2: a wee bet on here that if he wins, then
• 8:25
  Speaker 2: you know, the stock market down and the goal price
• 8:28
  Speaker 2: will go up. So I woke up the next morning
• 8:31
  Speaker 2: five is for some reason, I checked my kind of
• 8:33
  Speaker 2: you know, account, and the goal price had shot up,
• 8:36
  Speaker 2: and I was like, oh, fantastic Trump's one. I made
• 8:38
  Speaker 2: a few bob off the back of that. By the
• 8:40
  Speaker 2: time I got out of bed, my bet was back
• 8:43
  Speaker 2: down almost zero and I just missed to make like
• 8:45
  Speaker 2: a ten or something like that.
• 8:47
  Speaker 1: Okay, I just want to interrupt. To be clear, John
• 8:50
  Speaker 1: does not regularly gamble, and he does not usually get
• 8:53
  Speaker 1: out of bed at five in the morning to check
• 8:55
  Speaker 1: his spreadbts.
• 8:56
  Speaker 2: No, right, no, definitely not.
• 8:58
  Speaker 1: Just be after here, not something that we are recommending.
• 9:02
  Speaker 2: To be clear, that was a whine off, and that
• 9:04
  Speaker 2: was genuinely because I saw what happened me breit, and
• 9:06
  Speaker 2: I thought, actually, you'll put your money where Maria is
• 9:10
  Speaker 2: see what happens. And yeah, the best online experience from
• 9:14
  Speaker 2: it was actually, you know what you expect to harpen
• 9:17
  Speaker 2: doesn't always happen.
• 9:19
  Speaker 1: Yeah. Well, if anyone didn't hear our podcast with liz
• 9:22
  Speaker 1: Ane Saunders when we talked a lot about the US election,
• 9:25
  Speaker 1: that can then go back to that, because that's kind
• 9:27
  Speaker 1: of interesting and why you really really shouldn't trade around elections.
• 9:31
  Speaker 1: This is this is pointless. Of course, I'm assuming that
• 9:33
  Speaker 1: you are long goal some other way.
• 9:34
  Speaker 2: John, Oh yeah, yeah, I mean that's that's that's portfolio
• 9:39
  Speaker 2: ensured and sensible asset allocation there's apposed to.
• 9:43
  Speaker 1: And I'm sure you'd say the same for your junior
• 9:45
  Speaker 1: gold miners. And jud.
• 9:49
  Speaker 2: Don't shame my portfolio.
• 9:51
  Speaker 1: No portfolio shaming on this podcast. Okay, right back to Japan.
• 9:55
  Speaker 1: Back to Japan their lack of a housing crisis, which
• 9:57
  Speaker 1: is almost entirely based around the fact that they have
• 9:59
  Speaker 1: not had a very fast rising population and that the
• 10:02
  Speaker 1: population is now actually falling. I think we talked about
• 10:05
  Speaker 1: this the other day, didn't We said, the population is
• 10:07
  Speaker 1: Do we talk about this on the podcast? Do we
• 10:08
  Speaker 1: talk about this? Mine? We never know? You know, I'm sorry, listeners.
• 10:12
  Speaker 1: We have lots of conversations before we start recording, conversations
• 10:14
  Speaker 1: after we start recording it. Sometimes we don't remember what
• 10:16
  Speaker 1: we actually talked about. But we were talking at some
• 10:18
  Speaker 1: point about the Japanese population, which everyone's been talking about
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  Speaker 1: falling for ages because it doesn't actually fallen into all
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  Speaker 1: relatively recently, and it is now on a gentle declining path,
• 10:28
  Speaker 1: which ours would be as well. Ex Our fertility to
• 10:32
  Speaker 1: rator new numbers out this week saying that our fertility
• 10:34
  Speaker 1: rate is one point four to four, which is extraordinary,
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  Speaker 1: so far below replacement rate, and without mass immigration are
• 10:40
  Speaker 1: are a population would also be falling slightly. Of course
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  Speaker 1: it isn't. We still have a rising population, and that
• 10:45
  Speaker 1: puts gives us the housing to degree, gives us the
• 10:47
  Speaker 1: housing crisis and the pressure on our infrastructure, etc. Which
• 10:50
  Speaker 1: Japan doesn't have, which is leading me up to talking
• 10:54
  Speaker 1: about falling fertility everywhere. You know, one of the things
• 10:57
  Speaker 1: that you and I have written about quite a lot
• 10:59
  Speaker 1: over the year is it's this idea of peak population
• 11:02
  Speaker 1: coming way earlier than most people expect. And if you
• 11:06
  Speaker 1: look at I'm actually looking at a chart today which
• 11:08
  Speaker 1: is of which is a twenty twenty chart looking at
• 11:12
  Speaker 1: where populations of different countries are expected to get to
• 11:15
  Speaker 1: by twenty one hundred, and if you look at it today,
• 11:19
  Speaker 1: a mayre four years later, it looks outrageously out of date,
• 11:24
  Speaker 1: because fertility rates in nearly all the country is listed
• 11:27
  Speaker 1: is having very fast growing populations have already come off,
• 11:30
  Speaker 1: have already come off. So all this time we've been
• 11:33
  Speaker 1: worrying for decades, haven't we about it about overpopulation and
• 11:37
  Speaker 1: also talk about we've got to find a way to
• 11:38
  Speaker 1: control population. But of course it happens all by itself.
• 11:40
  Speaker 1: It happens all by yourself. Maybe we should start being
• 11:43
  Speaker 1: less worried about very fast growing population and thinking more
• 11:46
  Speaker 1: about why it is that women, particularly in developed countries,
• 11:50
  Speaker 1: only want to have one child.
• 11:51
  Speaker 2: I mean, I think that they says starting there is
• 11:54
  Speaker 2: a lot of conversation. I mean, I know that there's
• 11:58
  Speaker 2: a sort of stubborn mentality that we've still got too
• 12:02
  Speaker 2: many people. But I think you're actually you've seen that
• 12:05
  Speaker 2: swing in the last i would say eighteen months or so,
• 12:08
  Speaker 2: people actually starting to question this and the things. But
• 12:12
  Speaker 2: I mean, it's one of those things. I mean, we've
• 12:14
  Speaker 2: talked about about it before. My view, or the sort
• 12:18
  Speaker 2: of logical view, to my mind, is something they do
• 12:22
  Speaker 2: with milestones kind of being hit. Basically, if you spend
• 12:27
  Speaker 2: longer on education, you're probably going to have your kids later,
• 12:31
  Speaker 2: and by the time you have your kids, then you
• 12:33
  Speaker 2: probably get less time to have as many as perhaps
• 12:37
  Speaker 2: you would. And then on top of that, obviously you've
• 12:39
  Speaker 2: got the economic stuff, hard household formation being difficult because
• 12:44
  Speaker 2: house prices are so high, all of that sort of thing.
• 12:47
  Speaker 1: And a sense of how much space we need a
• 12:49
  Speaker 1: child as well.
• 12:50
  Speaker 2: Yeah, and also you know, and obviously things like I mean,
• 12:54
  Speaker 2: contraception obviously is a huge thing, and that you know,
• 12:57
  Speaker 2: the big drop off in people having babies, you know
• 13:02
  Speaker 2: in Britain happened and in the sixties and seventies, and
• 13:07
  Speaker 2: so obviously that that kind of matters. And I also
• 13:09
  Speaker 2: think that the religious taboos or in using contraception in Catholicism,
• 13:16
  Speaker 2: for example, I'm important too, But I think the main
• 13:22
  Speaker 2: things are kind.
• 13:22
  Speaker 1: Of I'm pretty sure you're very off topic here.
• 13:25
  Speaker 2: Oh no, I don't think so, I just know. But
• 13:27
  Speaker 2: this is the problem because the people who write about
• 13:29
  Speaker 2: this stuff tend to not have religious backgrounds. But there's
• 13:32
  Speaker 2: lots of people in the real world, including in Britain,
• 13:37
  Speaker 2: you know, especially you know, maybe my parents' generation or
• 13:40
  Speaker 2: certainly their parents generation, actually had.
• 13:43
  Speaker 1: Strict, strongly strong convictions other beliefs. But the other part
• 13:47
  Speaker 1: of it is going to be chi And one of
• 13:49
  Speaker 1: the things that comes up over and over and over
• 13:51
  Speaker 1: again is the ratio between cared child and UK nurseres
• 13:54
  Speaker 1: and it's the highest in the world or the lowest
• 13:56
  Speaker 1: in the world for four kids per adult, and the
• 13:59
  Speaker 1: next next to long I can't remember where it is.
• 14:01
  Speaker 1: Another European country is six and so and that's not
• 14:04
  Speaker 1: considered to be very many. So you know, we have
• 14:06
  Speaker 1: this incredibly low ratio means because because of that, it
• 14:09
  Speaker 1: means that childcare workers are very underpaid. We're expensive, We've
• 14:12
  Speaker 1: gonna have lots of them per kid, and the more
• 14:15
  Speaker 1: expensive child care is, the harder it is for women
• 14:17
  Speaker 1: to have more than one kid. Two kids.
• 14:19
  Speaker 2: Yeah, absolutely.
• 14:21
  Speaker 1: Anyway, key point is that this is underway, that UK
• 14:23
  Speaker 1: fatiliteration is continuing before and that does have huge impacts.
• 14:27
  Speaker 1: That has impacts for the way people voted, as impacts
• 14:30
  Speaker 1: for the way the country has run, impacts for our
• 14:31
  Speaker 1: fiscal situation from et cetera. So if you're going to
• 14:33
  Speaker 1: watch one number over the next ten years, make it
• 14:36
  Speaker 1: the global fidelity rate.
• 14:38
  Speaker 2: Definitely the one more important number. Job not at all.
• 14:42
  Speaker 2: But the one thing and one on the book is
• 14:43
  Speaker 2: whether that will be eventually a post COVID slate bones.
• 14:49
  Speaker 2: I can't help but think that at least part of
• 14:51
  Speaker 2: the can I cataclasmic drop off from the last couple
• 14:54
  Speaker 2: of years specifically has been driven by people not people
• 14:59
  Speaker 2: deal having kids even further, but I mean the long
• 15:03
  Speaker 2: term trained is pretty clear and less of.
• 15:06
  Speaker 1: Course unless, of course, contrary opinion. What if what if
• 15:10
  Speaker 1: the Great Productivity Revolution occurs GDP ahead goes up massively,
• 15:16
  Speaker 1: you no longer required two working parents per household. This
• 15:20
  Speaker 1: could happen.
• 15:21
  Speaker 2: Oh yeah, I was.
• 15:22
  Speaker 1: And then suddenly suddenly everyone will have four kids in
• 15:24
  Speaker 1: their twenties again.
• 15:25
  Speaker 2: And maybe if you know host places, you know, maybe
• 15:28
  Speaker 2: if we sorted those kinds of things, that would be
• 15:30
  Speaker 2: at least take the edge off it.
• 15:32
  Speaker 1: Yeah, and not long now, all this stuff will be
• 15:34
  Speaker 1: sorted out in a budget mere matter of hours from
• 15:37
  Speaker 1: when you listen to this. More on that later in
• 15:40
  Speaker 1: the week, and do sign up to come and listen
• 15:42
  Speaker 1: to us talk if you have time. We would like
• 15:44
  Speaker 1: that very much. Thanks for listening to this week's Maren
• 15:51
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