Japan’s next move

Katie Martin (0:00)

You can join me, Katie Martin, with Chris Giles and Claire Jones, my colleagues from the FT, but also with former Fed Vice Chair, Lyle Brainard and Fidelity International's Salman Ahmed, on October the 23rd for a subscriber event. All the details for you to register and ask questions in advance are available on ft.com/edge. Pushkin. There was a bit of political argy-bargy there for a bit, but Japan has a new prime minister after all in the form of Sanae Takaichi, the first woman ever to hold the role. And one of her first moves, appoint the country's first ever female finance minister. Markets have sat up and taken notice. We've got a new record high in stocks, and that's all good fun, of course, but investors are also bugged by the idea that the new prime minister might lean on the Bank of Japan not to raise interest rates, despite unusually high levels of inflation. That points to a drop in Japanese government bonds, which have already had a tough start to the year. So today on the show, we're asking, is the Takaichi trade on? And is this mix sustainable? This is Unhedged, the markets and finance podcast from Financial Times and Pushkin. I'm Katie Martin, a columnist at FT, desperately trying to make sense of markets in London. And I'm joined by the magic of the internet today by a special guest, one of my favourite colleagues, our man in Tokyo, Leo Lewis. Now listeners, it is midnight in Tokyo as we sit down to record. This poor man has been on the go for hours. Leo, you are very good police. Thank you for coming on the show.

Leo Lewis (1:51)

Thank you for having me.

Katie Martin (1:52)

You must be kind of reeling, right? You've been our man in Tokyo for a really long time. This is the biggest outbreak of political drama for a very long time, right?

Leo Lewis (2:03)

Yeah, absolutely it is. And there was a quiet pride here that Japan has its first female leader before the Americans got theirs. So that's been very exciting. There was the drama that you mentioned earlier, whether it would actually happen. There was a sort of slight wrinkle towards the end.

And whether the opposition would be able to sort of gang up and make it not happen. But today it did. And it happened pretty straightforwardly in the end. And I've just come from the press conference. It's her first press conference as prime minister.

Katie Martin (2:38)

And how did she seem? You know, prime ministerial, ready for business, ready for action?

Leo Lewis (2:43)

100% ready for business. It was a very impressive performance. And what was interesting about it was, I think the point about her is that she's self-made. And unlike a lot of people in Japanese politics who have come from grand families of politicians, she made it on her own. And she made it on her own in an environment that was not set up for people like her to make it on their own. And she has finally succeeded. And she made this kind of mention at the beginning. She said, you know, I've tried several times, I've failed several times, I kept trying. And it was just this kind of moment of, look, whatever we make of her going forward about what her politics are like and so on. This was a very important moment for Japan. It was a very important moment for her. And I think it was a very important moment for the idea that things have changed quite substantially in the whole kind of setup. You know, it was a great moment.

Katie Martin (3:37)

And as you say, she's a self-made woman. Am I right in thinking she used to be a TV presenter?

Leo Lewis (3:41)

Yeah, and of course, that is part of the skill set, actually, that she is a very, very fine presenter of her ideas and her thoughts. So it just came across very strong. By contrast with her predecessor, Ishiba, who had been a politician for a long time, is a smart guy, but just never managed to convey any of that. And it was just a slick performance. And a lot's been said about she's sort of ultra conservative, that she's this big nationalist. All of that could be true, but she certainly presents in a very charismatic way, actually.

Katie Martin (4:18)

And so what are her priorities? I'm thinking like mainly in terms of the economy. You know, she's described as a hardliner. She's described as kind of, you know, a capitalist through and through. She models herself on Margaret Thatcher, as you say. But she's also made some quite weird noises about what she wants the central bank to do and not do. So, let's start with what markets have done in response to her coming in. We've had a big rally in Japanese stocks pretty much all year. We're up, what, 25 percent?