This is The Asia Trade. The top stories this hour: Asian stocks set to extend a rally that sent the S&P 500 to its worst record close since August. Ten-year Treasury yields are retreating even with Brent oil still above $100.
Nvidia shares continuing their dance with the $6 trillion market cap, approaching $6 trillion. And in D.C., predicting years of high chip demand.
I'm in Singapore where executives, investors and policymakers are gathering to discuss geopolitical risk with the Canadian trade minister and talk investment strategy with David Steinback.
As we hit the midweight session, for the first time since August we're seeing a record high being pushed for the S&P 500. The record-breaking rally, we could see that set up to be quite nice for Asian markets as we revert that focus back to corporate earnings, even as we get this revival of elevated oil prices again, again threatening to keep inflation hot and interest rates higher for longer. Global bond yields higher for longer as well. If we look at the expectations when it comes to equities, we're looking like we could see a steady session, in particular gains across AI-related shares, and Nvidia market value approaching $6 trillion, and with the Korean and Taiwan sessions we're watching as well. And shipments of excellent chips still very much front and center.
And your trade crude still shy of $90 a barrel.
Mark Cranfield joins us from Singapore. And Anthony Stephens is in Hong Kong. Mark, let's start with you because as Haidi just mentioned, oil prices remain elevated. We got some relief when it comes to Treasury yields coming down from multi-decade highs, but stocks did manage another record. Where is the disconnect here?
There's not really a disconnect. It's all about the earnings power of these major companies, especially in the U.S. and some in Asia as well. The likes of Samsung and SK Hynix and TSMC as well. We've never been in a situation where the major companies are generating such enormous profitability which overwhelms the idea that a 5% interest rate has as much value as it did two decades ago. If we're trying to compare with effective interest rates, we will probably have to look for a much higher number because 5% is just not meaningful when you consider the kind of profitability that is expected. We just had a report overnight, Bloomberg Intelligence saying they expected a 25% jump in the current earnings period for major U.S. companies. That's pretty amazing when you consider where we are coming from. We are at a pretty high level already. You're talking about Nvidia going for a $6 trillion market cap. A report from the Financial Times is saying SpaceX is looking to buy another $40 billion worth of Nvidia chips. That will push the Nvidia stock price even higher, and their stock price doesn't come out for a few weeks yet. The picture is very much that people just want to grab hold of these major companies. A 5% yield is just not going to put them off.
That's the whole point, the fact that we're seeing all this rally among just a few companies. Whether it's in the U.S. or here across Asia as well, just a handful of companies are leading indices.
As George Soros used to say, it will trouble us when it troubles us. The market breadth issue is something we've been discussing for the last five years. There have been various periods during that time when the so-called Mag 7 stocks had too much weight. Now it's spreading out, there's a few other names you can include like AMD and Micron into the mix. Yet we are still worried about the fact that there are not too many companies participating, there's many left behind, and yet the S&P and Nasdaq continue to make record highs. Really the issue is not so much about the breadth, it's about can those companies sustain the profitability embedded in their price and the outlook. So far, they are doing it. The reporting numbers coming in recently from Micron are incredible. Expectations are very high, so as long as those huge companies deliver the results, we'll soon forget about the breadth. At some stage it will become a negative for the markets. When it does, very difficult to predict exactly.
We've been dancing around the same issues for years. Perhaps one thing that is much more new, especially with the Japanese market in the last couple of years, has been JGB yields continuing to rise. At least that gives the market some comfort that the ten-year auction went well because of how attractive it is now?
There's other things falling into the background as well. And investors are more optimistic on the role of the Bank of Japan. They have shortened the timeframe for raising interest rates. That's positive for the long end of the curve. The Bank of Japan is getting serious about doing something about getting on top of the inflation situation. It's not perfect but it's a huge improvement from where they were a couple of years ago. So we are looking for another rate hike in December which will mean three months between hikes. That's a quicker pace than we are used to. We are getting closer to the neutral level. On a relative basis, on the long end of the Japanese curve, they are not unattractive worldwide. For Japanese domestic investors, if you get 3% in the ten, that's pretty good. Especially by the standards of the past two decades. There is a trade-off. If you look at Japan compared to France, the U.K., the United States, it's not in such a bad situation as it was 10 years ago. At that time Japan stood out for being a weakling. It is no longer. When you compare it to its G10 peers, it's not in such a bad position. All of that is relatively positive for what you see in the Japanese bond market. It's positive for the equity market also.
Let's talk more about prospects for equities. Asia isn't clear with its idiosyncratic issues with Hynix.
That was a very interesting U.S. session coming into Asia because it did not leave us with much upset. The first thing to note about the U.S. session was how domestically driven the AI story was. It was very much led by U.S. hyperscalers and especially the energy buildout in the U.S. We had that big deal with Google that pushed Constellation Energy very high. Also we had other players in the U.S. rally, so the domestic consensus that the AI buildout is going to be a key growth driver for the U.S. domestic market is catching eyes and maybe attracting attention away from Asia. While there were plenty of tech stocks in the U.S. that were strong, of course the hyperscalers had strong guidance, and we also had unhelpful news from the U.S. chip space. Micron will impact Korea and has been down for three days straight. And Intel will affect the Taiwan story. We saw TSMC and Hynix also pull off. Hynix's ADR will be a pivotal pricing decision in the coming days.
In terms of some of the drivers across energy, is that where the shift in interest is starting to go in the U.S.? I'm wondering if there's any takeaways for Asia?
The focus on nuclear is potentially exciting for Korea and Japan, countries that have a lot of engineering expertise in that space. These are two countries that have put their weight behind the technology. Also India and China have an aggressive nuclear buildout target. So it's coalescing as one of the ways to power the AI buildout. The energy mix at a time of incredible stress in the bond market is moving to something definitely that people are watching. There's a lot of interest in the U.S. about making nuclear easier to build.
Let's talk about the particular Hynix issue. Is that going to be heading for Korea?
The Hynix ADR is trading at a 20% premium to the local. Given that the ADR hasn't moved all that much, you will get some kind of block or potentially nothing at all. But the speculation is that there will be an unwinding event and the hedging and pre-positioning for that event because a lot of news in the U.S. could have contributed to the Micron drop. And Korean futures are standing up coming into today.
Our markets reporter Anthony Stephens. Despite that record high for the S&P 500, we could see fewer incentives for higher trade in Asia. Coming up next, looking at Apple making a bigger push into smart homes with new LG-developed devices. Whether doorbells can deepen the ecosystem beyond the iPhone. Plus the former Canadian trade minister joins us to discuss navigating an increasingly fragmented global economy. Much more ahead. This is Bloomberg.
You can't borrow and spend endlessly. It's been going on for a long time. The buildup of debt around the world. America has gone from 50% of GDP to 100%. Countries around the world are borrowing money. There will be a point where the market will ask for more and more and more.
Jamie Dimon speaking exclusively with Bloomberg. Take a look at the bond yields story as we continue to see that resurgence in oil prices feeding through to potentially harder global inflation, feeding through to higher rates for longer as well. We look across our sleeves, Kiwi bonds are still in focus as well. And some internal recent RBA documents talking about the potential AI stocks slump that could be something else we see weighing across our striking assets, in particular bonds. Joining us is the chief investment strategist for fixed income. Good to have you in town with us. Wish we had a better day for you here in Sydney. Talk to us about the opportunities you're seeing at the moment across bond markets. For some people this could be the best chance in decades.
Chief Investment Strategist
13:17 ↗
Yields are certainly elevated. From a value perspective it is a great chance. Yields are high, real yields are high, most importantly. Meaning the bit you get after inflation is pretty generous. 500 basis points above inflationary rates, fixed income is sort of the value trade, if you will. When we look at bonds, it's more an opportunity for bond investors. It's a great time to be a lender. I think that's very much true because you just heard Jamie Dimon talking about the U.S. government. We can talk about governments all around the world, we can talk about corporations, but the demand for borrowed funds is very high, which is why yields are high. As a lender, we can pick our spots. We can figure out where we need to be and want to be and where the best value is and set up those coupons to really allow your portfolio to compound at a very generous rate over the next 5, 10, or even longer in terms of years.
We are at a time when we are seeing Nvidia near the $6 trillion market cap. There's a lot of circular financing and funding mechanisms going on with a lot of exuberance. How is the AI trade, what's going on broader equities as well as the private markets impacting potentially and dislocating the cost of financing?
Chief Investment Strategist
14:50 ↗
The surge in borrowing demand for the buildout of AI is as if we have minted a new top-10 government in the world. Given the magnitude, the order of magnitude that the borrowing has required, the financing required to build out the infrastructure. So we have another competitive borrower in the system which does put pressure on others. But what it has done most recently is effectively set the borrowing rate for non-government borrowers. So I have a choice: I could lend to one of the hyperscalers at six-plus percent, or I could lend to the government at 5.38, or I could lend to a high-quality corporate at 5.5%. These are all in U.S. dollar terms, but it has set the bar, if you will. They are willing to borrow at a certain rate and that does start to crowd out others. We are in an environment where that competitive borrowing is real and it is getting bigger, not smaller. A good time to be a lender, not the best time to be a borrower. It's why companies like SoftBank had to borrow at 9.5% last week. Huge borrowing costs for a company that is pretty good from a credit quality standpoint, but a lot of this simply has to do with the demand for funding.
That's surely only going to worsen as you see more tightening from central global banks.
Chief Investment Strategist
16:26 ↗
It certainly puts upward pressure on yields. As a bond investor, there are certain things we would look for that are bond-friendly. Proactive central bank helps tremendously, kind of helping to try to contain inflation as we move through time. There's always the bet: will they get there fast enough, are they able to do it? The reality is when the central banks raise rates, in the near term it pushes up yields, but over a slightly longer time period, they are tightening up credit conditions which will help contain inflation and possibly slow growth. It's good for bondholders, not great for equityholders or other parts of the market, but from a selfish standpoint it's good for bond investors. Also higher yields has a similar effect. The combination of higher front-end yields, higher longer-end yields, flatter yield curve, all that tightens things up a bit. In the near term, not great. If I look out over two or three years, the lag effect of those tighter financing conditions becomes very bond-positive. In our portfolios right now we are adding duration, global duration. Different markets around the world look attractive. Very proactive central banks, elevated cost of financing. Today is not constraining much, but we think it will going forward. The extra duration you have in your portfolio can work nicely for you over the coming months and years.
Are Aussie bonds compelling for you?
Chief Investment Strategist
18:15 ↗
Two things. One, Australia's fiscal position is stronger than countries like the U.S., lower debt to GDP, better financing, better current fiscal conditions. And the RBA has been more proactive and has been raising rates this year rather than just starting to raise rates. Bond yields have gone up in Australia but at a much slower pace versus the U.S. and even versus Europe and in some spots along the Japanese yield curve as well. Australia, from a bondholder's perspective, actually looks very attractive. The fundamentals look good. The value is starting to get a little rich relative to others because of the outperformance. But if we just focus on fundamentals, it's still a good story.
The 10-year JGB auction was probably a sigh of relief across the markets. How worried are you about France?
Chief Investment Strategist
19:09 ↗
I would say we are concerned. There's a couple of factors. With heavily indebted countries, what is the catalyst for improvement? Can they constrain spending? We've seen it in Brazil most recently. We can see that in France. With the upcoming election, what are the policies that will be proposed and is there a willingness to implement a slower trajectory of growth? Whether it's the U.S., France, or other heavily indebted countries, the ability to project a slowdown, even just a modest slowdown in spending, would be very well rewarded by bond markets. The country of France has the capacity today, that's not the question. It's really the trajectory of spending, the constraints they need to abide by to be part of the European Union, and kind of how much is the population willing to finance that. Interest costs get pretty expensive as you move through time. There are some opportunities there as we see the two-year yield go up. We've taken some tactical opportunities. A little further out the curve we've been a little bit more cautious because this has not run its course yet. So there's still a lot of technical pressure. But slower spending and more constrained budgets would be a strong positive for bond investors.
Great to have you with us. We appreciate your time. Later today, Insights with Haslinda Amin will discuss the global growth and trade tensions. More ahead here on The Asia Trade. This is Bloomberg.
Jamie Dimon says cybersecurity remains the biggest concern as artificial intelligence creates new risks and vulnerabilities. Speaking exclusively to Bloomberg, he also weighed in on the growing tensions surrounding data center expansion.
Half the new ones are in Texas and Virginia and you're not going to win. A lot of states have access to power and any big company has to be a good community citizen. They are helping the community get the rights, it's just things like that. And AI has huge positive effects. I think it will cure a lot of diseases and make life unbelievable for people. The downside is obviously when you read about Mythos and all these things, it's a legitimate concern. I'm not getting hysterical over is it existential or not. The banks have always had a system in place where we help each other. Starting with 50 companies, it started in the U.S., it's across six industries: tech, financial services, water, transport. Eventually it should extend to healthcare, pharma, agriculture. Every industry is critical and we need to help the smaller companies too. You have vendors with different needs. There's a lot of work and we simply have to do it. AI created vulnerabilities that we didn't know about.
And you have thought about cyber risks for a long time. Does AI make cyber systemic risks more likely?
Yes. That's what I'm saying. With those, whatever you thought it was before, I would say went up tenfold after Mythos.
Jamie Dimon with Bloomberg. The former Canadian trade minister joins us from the Milken Asia Summit, helping businesses navigate geopolitical challenges. This is Bloomberg.
We have breaking news here in Japan. We're getting the wage data: growth of 3.8% for the month of August coming in above economists' expectations, but still a slowdown from the previous month. A lot to do perhaps with the base coming from the month of July, where we had larger summer bonuses normalize. Real cash earnings coming in at 1.5% growth, a slowdown from the previous month, still in line with expectations. Right now we are still seeing, if you strip out the bonuses and those variables, you can actually see the wage trend is still staying pretty strong. Bloomberg Economics says this is keeping the BOJ on track for December rate hikes. Is that BOJ risk? What is affecting the bond space? We've seen multiyear highs for JGB yields and that yield at the 10-year past 3% now attracting buyers. So we had a solid 10-year auction just yesterday.
That provides some relief in terms of sentiment. Take a look at overseas sentiment when it comes to equities in Japan. It might be one of the markets across Asia that does get that nice follow-through from the U.S. session where we saw the first record high for the S&P 500 since August. Investors will be looking at the TOPIX as well, that high also being hit as well from the highs we saw for Japanese equities back in August as well. Pretty good positioning when it comes to traders at the moment. We could see some momentum play coming on board once we get the range for that market. In the meantime we have Australia trading about 0.1% higher over the last 30 minutes. S&P futures about 0.10%.
The Milken Institute Asia Summit is getting underway in Singapore with business leaders, policymakers and investors gathering to talk about the global economic outlook and the impact of AI. Avril Hong is standing by with our next guest.
That's right. Geopolitics continues to dominate conversation but countries have been diversifying. The senior fellow at the Milken Institute joins me. She previously served as the Canadian Minister of International Trade. Great to have you with us.
It's terrific to be here at the Milken Asia Summit and talk to Bloomberg, of course.
We've seen tit-for-tat tariffs, the U.S. moving in with the import bans as well. How are you viewing the Canadian trade relationship with the U.S. right now?
It's not where it should be, considering it is a relationship that has stood well for many decades with a very integrated economy. I do think Canada and the U.S. will have to find their way back to the table and find the right conditions to do that. I know, speaking as a Canadian, I think it's really important that you always have a deal that is a really good deal for the people and for the industries of Canada, and I know the Prime Minister and his team are hard at work at that. Canadians expect that out of him. At the same time, the U.S. is Canada's largest trading partner. It is a neighbor and ally. I do think that work has to continue and they will find the conditions to get back to the table.
What would a good trade deal for Canada look like?
I always say to the Americans, we are the biggest customer for you. Over 30 states count Canada as their top customer. Therefore not being able to work something out does not just affect Canada, it actually affects those 30 states and their workers and industries as well. But Canada can't have a trade deal that is going to see high tariffs on its sectors, so I think they will have to find some common ground. But those conditions will need to be there for Canadians before they get back to the table.
The Canadian administration seems to be quite determined to send a message to the U.S., even if it comes at an economic cost. What will it take them to return to the negotiating table?
I think they will both have to find common ground on a number of issues, particularly around the tariffs. Canada certainly is going to want to ensure that its sovereignty is protected, and those are just some of the issues they will have to find some common ground on before they get to the table.
Canada has been diversifying in terms of trade to Asia especially. How much quicker do you think we can see key sectors like critical minerals?
Canada has access to this part of Asia through the CPTPP. The last agreements I concluded as trade minister was with Indonesia. They are well on their way with negotiations to the Philippines and ASEAN as a whole. Canada has access to 1.5 billion customers. Prime Minister Carney sees an increase to 3 billion. There are negotiations underway with India and with South American countries. There is a lot of that work that is taking place, but last week the government announced a new LNG project that is really important because that is another modality to get Canadian energy into the Asian market, which our Asian colleagues and allies are looking for, whether it's Japan or Korea or Southeast Asia, or here in Singapore or Malaysia. That work is accelerating, so I think there is the ambition, the investments are keen on Canada, and there is a real will to do that. We have markets and we have something to sell. I feel like we are very much on the same page, Canada along with its customers here in Asia.
What does it mean in terms of export growth, particularly for energy as well as critical minerals?
It bodes well for export growth. It means diversifying in the market and having a market like that here in Asia that is significant and large. It increases the volume of our energy products coming to this part of the world at prices that the customer is willing to pay, and that's good for the Canadian economy. In addition to energy or infrastructure and agriculture, Canada is a leader in technology, in AI, and I know I am seeing mid-market companies really accelerating their ambitions to grow in this market.
What about trade with China? We've been seeing a pragmatic reset. How far do you think Canada is willing to go?
It has been encouraging to see that the two countries are having a relationship where they are finding sort of alignment. It certainly is not good for Canada's agriculture sector to take on tariffs or actions of any sort. China is an important market, so it's good that the two countries are looking at each other and working to find those areas where there is alignment to be able to do things that are good for both economies.
We've seen recently the Canada Investment Summit drawing a lot of attention. What are you seeing in terms of the increase in capital that has been committed to the country?
We did that Milken Canada launch in Canada alongside the Prime Minister's Investment Summit. It was really encouraging to see the level of interest of global investors coming to Canada. The Prime Minister indicated he wanted to attract $2 trillion worth of capital. It has committed $500 billion as part of the summit. The Government of Canada put out a perspective, which is an investment deal book. We have put on the table a range of investments from energy to transportation to infrastructure to technology that has very investable projects in Canada. The Government of Canada also stands behind it. I'm seeing a lot of momentum and I'm seeing it through Milken and the Investment Summit. Being in Canada and also Asia, in the Middle East and Mexico and so forth allows us to do some of that. For me as a senior fellow it's wonderful because I get to do some of that follow-up from Canada right here into Asia and then beyond.
It's promising, but what are you hearing in terms of potential investors slightly holding them back? Some talk about how Canada needs to make things a bit more attractive in terms of more competitive tax policies, for example.
The Prime Minister has just spoken on that as well on the margins of the summit. He has created the right conditions. What they have done, whether it's the provinces and the federal government working together to remove some of the barriers that might exist, regulatory barriers, so these projects can get done at a speed that investors are looking at. That is terrific and you are seeing that happen in Canada as well. I think there's a lot of momentum that is created and a lot of investors have said we want to invest in Canada, but what do we invest in? Remember, Canada is a predictable, rules-based country and global investors are looking for one thing: predictability, rule of law. Any jurisdiction like Canada that can meet those needs. So I'm excited.
Searching for reliable partners. Great to chat with you, thank you so much for the time. The former Canadian Minister of International Trade.
Avril Hong there in Singapore. We have more ahead from the Milken Asia Summit. Next, how the global market turmoil is affecting real estate markets. Let's get you caught up with top global headlines we're following. President Trump says he will speak soon with the Russian President Vladimir Putin to discuss a suspected case of plague. International concerns are growing over the death of a worker at an infectious diseases center who died after developing severe pneumonia, with almost 200 contacts reportedly placed under observation. In New Delhi, police detained a leader during a protest. Opposition groups are calling on him to resign after more than 130 million names were removed from electoral rolls. It's the latest challenge for Narendra Modi's government after students forced the education minister to resign in July. More ahead here on The Asia Trade. This is Bloomberg.
Bloomberg has learned that Apple's upcoming push into smart home devices will include a doorbell, thermostat and other accessories developed through a new partnership with South Korea's LG Electronics. Let's get the details from our senior tech editor Nick Turner. Nick, how unusual is such a partnership for Apple to do it with a second party like LG, and what does it tell us about future strategy as well?
What they do with a second-party deal is similar to what they've done with Belkin before and some other companies. But it's fairly rare for them. It's a little closer than a third-party deal, where a company is just selling Apple accessories that work with Apple obviously, but they are not closely linked to the company. In this case they really worked with LG to develop these products. They will have the LG name on the products but they are sort of in the background. Apple had a bigger hand in developing them.
Of course we have more established home device players like Ring and Nest. How will these devices fit in there and how competitive will they be?
That's the big question. For Apple to push into the smart home is kind of a big bet for them. They've obviously had some products in this area before. They had the Apple TV set-top box, they have the HomePod which is similar to some of Amazon's Alexa-based and Google devices. But they haven't had a breakthrough in this market and if they really want to make a name for themselves here, they will have to have an ecosystem of devices and make products that Apple itself sells. In this case some are sold with the LG brand and maybe some that are more of a third-party arrangement that will work with Apple's platform. What you will see is later this month, Apple will release the crux of the whole push. If that is successful it will help lay the groundwork for being successful in this market overall.
How important is the smart home market? Is it just about a hardware push, or is it something more?
As with everything Apple does, you kind of want to sell hardware obviously, and I do think they hope to sell a lot of these smart home hubs which are basically like a square screen that you might hang on your wall or put on a desk. They essentially want to sell multiple of these per household. It could potentially be significant from hardware. There's also the services that surround it. This kind of virtuous cycle in the Apple ecosystem, maybe you're more likely to buy other products like an iPhone or whatever because you have Apple devices in your home. I think that is always in the back of their mind. But certainly getting Apple products in places that currently Amazon or Google products are residing is a big part of it.
Nick Turner there, as we're seeing LG Electronics stock this week see a lot of upside. Taking a look at Kospi futures, losing about 1%. We had seen a catch-up after coming back from the holidays. Right now we are giving up some of those gains at the moment. We will be watching SK Hynix, downside of more than 6% in the overnight session. A lot to do with Samsung and SK Hynix, both have lagged the U.S. tech rebound we've seen the past few weeks. We will have more catalysts this week. Samsung expected to report its largest ever quarterly profit on Thursday. Those numbers alone may not be enough to reassure investors about its long-term outlook. Our Asia stocks reporter joins us now. If record-breaking numbers don't do it for investors anymore, what will they be watching in these preliminary numbers?
Tomorrow investors are expecting record-high profits for the third quarter and Samsung just gives two figures: third-quarter profit estimate and third-quarter revenue. Much of it is expected to be from the chip division. We won't have the original breakdown tomorrow, but what investors are looking for is if they will have staying power carrying into next year. Last week we saw Micron giving a bullish forecast for next year's supply and demand conditions, but they did not move the Micron shares that much. Investors are looking for answers if the profit will have staying power. One investor I spoke to said it's more about the durability of the earnings rather than the magnitude of the earnings that investors care about. Investors are looking for reassurance that it is durable.
What about valuation? We continue to hear that these stocks are cheap compared to their U.S. peers. What can we expect in terms of that performance, as you said it has remained pretty lackluster so far?
The memory chipmakers have been lagging behind the U.S. chip rebound in recent quarters. With the boom-and-bust cycle for decades, whether such earnings momentum will carry into 2027 and 2028. Another key issue is the Samsung buyback. So the question is whether an investor will start buying Samsung again after this buyback when it finishes. That will be a key to the future of share performance for Samsung.
Our Asia stocks reporter there ahead of the South Korea open in about 10 minutes. We have more ahead on The Asia Trade. Stay with us on Bloomberg.
The Reserve Bank of Australia is warning that a correction in AI stocks could hit household spending and pose a risk to the broader economy. This is a calculation in terms of trying to figure out what Aussie households have in terms of that exposure to AI companies.
The document is sort of an internal one, but the estimate is 5.4% of households have exposure to AI shares and stocks and that sort of thing. 1.7% of that is actual households and the other 3.7 percentage points is through superannuation. But it is interesting that they are looking at the volatility of the sector and the potential for that to spill back. Part of this is tied up with the increasing popularity also of Australian investors to buy offshore. That's sort of saying if there was to be a correction in AI that it could cut consumption onshore by 0.7%. It could be as much as 2.4%, which is a serious amount of demand basically in the economy. So that is an interesting one.
You want to bring everything back to the property market which is going through what looks like an extended downturn. The RBA has already made references to what the wealth impact would be from the property market and this would just exacerbate that.
We do have documents that mention that as well. It has continued into October and Bloomberg Economics reckons it's a bit over half a trillion dollars Australian for the market. That will weigh on spending and there is a $50 billion headwind for consumption into the fourth quarter and early next year. If you bring those two things together it starts to become more worrying. It's curious, the RBA played down a little bit the impact of the housing downturn on consumption compared to what it has done in the past.
