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tv   Bloomberg Daybreak Europe  Bloomberg  July 8, 2022 1:00am-2:00am EDT

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dani: this is bloomberg daybreak: europe, i'm dani burger in london and these are
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the stories etc. agenda. the former japanese prime minister was unresponsive after being shot during a political event. police have arrested a suspect. we are in tokyo to bring you the latest. boris johnson facing pressure to speed his exit after resigning. we will get payrolls data later today. we continue to monitor the tragedy in japan. let's get straight to breaking that former japanese prime minister abe is unresponsive. he was shot at a speech ahead of campaigning for elections. that's get to tokyo, what we know about the prime minister's condition? >> there is little that we know for certain. the government confirmed that shooting a little while ago but
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they have not given any information on his condition. it has been about an hour since these reports came out that indicated he was found without vital signs in a state of cardiopulmonary arrest. that is from the language used by police because only a doctor can pronounce someone did in japan -- dead in japan. he was airlifted to a hospital. we are waiting for the latest, prime minister kishida will speak in 30 minutes. dani: a man in his 40's has been arrested, described as a former member of the defense force of japan. this is extremely rare for japan, a country that has very strict gun laws and usually very subdued politics. what has been the reaction from the government? >> the reaction has been
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outrage. the reaction from the people is shock. like you say these kinds of events are extremely rare. the most recent related kind of incident i can think of was the 2007 shooting of the mayor of nagasaki, a yahoo! who is a related incident. for this -- yakuza related incident. in a country where the politics are quite staid, and there is not a lot of interest in what is going on sometimes, it is extraordinary. gun crime is extremely rare. certainly, very different to many other countries. dani: it is a question many would be asking, how did the -- get a gun? we have a fantastic blog to
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monitor the latest on this. in terms of politicians, what should we be watching? >> i think the next thing to watch is prime minister kishida, he will speak at 3:30 p.m. here, about 25 minutes from now. just to go back to your point about the gun, there are reports from the scene that indicate it might be a homemade weapon. reports saying multiple police indicate that might be a factor as well. guns are not prevalent here whatsoever but they are available with stringent checks. dani: thank you very much, you will be with us throughout the program to keep us up-to-date. former prime minister abe of japan has been shot, and is
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still unresponsive at this moment. we have a reporter covering the fallout from boris johnson staying on his caretaker p.m. after his resignation. mark cudmore will discuss the impact of today's payroll data. juliette saly will round up the latest asian markets news. boris johnson plans to remain as caretaker prime minister but is under pressure as the conservative party accelerates the contest to choose his successor by the end of the summer. lizzy burden is standing by, tim johnson last as caretaker p.m. until the conservatives find a new leader? lizzy: the wait is too long for some but the race is already on. campaigns are setting up in hotel rooms around me in this area, it is reported.
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the conservative party wants to whittle down the candidates to two by july 21, so they have one ready for the party conference in october. there is pressure for johnson to be replaced by a caretaker like dominic raab, the deputy p.m., including pressure from the former prime minister, john major. he says johnson's cabinet may not be able to restrain him, although he said after his speech that he would not make major policy changes in the interim. the opposition leader, the chances of him going for a confidence vote are slim to none because the tory party is unlikely to turn on itself, even if it has turned on the leader. what might apply more pressure though is if the business of government remains paralyzed because they cannot replace the vacancies after the mass resignations that led up to
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johnson quitting. dani: bloomberg's lizzy burden, thank you very much. two of the federal reserve's most hawkish policymakers back raising interest rates 75 basis points this month, while playing down fears the u.s. economy was headed toward recession. u.s. jobless claims last week to the highest level is january, suggesting strength in the labor market is moderating. let's bring in our mliv managing editor, mark, it feels like we are in this strange time where every tiny bit of data, you mentioned confidence surveys, are dictating the fed's mood. what is today's data mean for the fed to keep liking sunday five basis points? mark: the market is very jittery about every data point at the
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moment. they risk losing credibility. the last few months, their message has been they are very focused on inflation, more so than on recession risk. they will probably lose credibility if they don't do 75 in july. if we get a dramatic deterioration in the data from the u.s., we could see a shift but we have not seen a deterioration. the labor market is still exceptionally strong. it is pulling back from the highs, but there is still slack to give the back. the jobs market data today is important but unless it really disappoints, we will have 75 basis points july. if the jobs data is strong you have a more sensitive reaction in terms of yields. dani: in that case, what do you make of a market that is very
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willing to price in a fed pause, especially in equity markets that are happy to rally as commodity markets ratchet lower. mark: i think that is why we have the asymmetric reaction function today. a month ago, but market was bearish u.s. bonds. now in the space we have become much more focused on recession and yields have come lower. bond shorts have been pared, and a lot of short-term players have gotten long bonds. the market was expecting the tactical rally in bonds. some people think we have seen the yield speak, but -- peak, but even those who are long-term bonds think there is a tactical rally. therefore the market is positioned not for a strong job sprint, and that is why there will be a stronger reaction if we get one today. dani: mark cudmore there, markets live managing editor
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reporting from singapore. we will be back in an hour's time for the europe market show. the yen is pushing higher. jules is standing by in singapore. it is often tough to talk about markets at a time like this but certainly seeing some reaction. juliette: as you say, it is tough when you hear such devastating news. the yen is up about .4% against the dollar, that blows through -- flows through into the market impact on europe. abe is more well-known than kishida overseas. he had been very supportive of the boj's ultra-loose monetary policy, so looking for a shift in that, too standard chartered saying this is not the raining premier -- reigning premiere.
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the nikkei is parenting earlier gains of more than one and a half percent as traders digest this terrible news out of japan. let's look more broadly at the asian session because prior to this had been a variant risk on session following the momentum from wall street. and you are finally getting support in terms of tangible moves from china's authorities, $220 billion of bonds potentially hitting the market from local government facilities. the csi is only up .2%, copper in shanghai has been rising and weakness in the offshore currency. the regional benchmark with that weekly gain of 2.5%. dani: juliette saly reporting from singapore. let's take a look at the broader markets beyond asia. you have a strong rally
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yesterday in u.s. stocks, the session ended 1.5% higher. a lot of unknowns be it from tragedy occurring throughout the world, political instability in the u.k. and the u.s. jobs report later today, difficult to find areas where you want to jump into this market and take strong convictions ahead of the weekend. s&p 500 futures down .3%. some bid toward havens, some buying in the 10 year. we continue to see parts of this yield curve that are inverted. if those recession fears which did seem to take a break yesterday as the markets seemed happy as we were discussing to price in a lower terminal rate. the euro continuing to get slammed down again with a 1.01 handle, these are non-linear moves taking us toward euro parity as we look at record
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energy prices in the european complex, be it energy in germany or otherwise. and at a time that fed is committing to raise rates 75 basis points. bitcoin was about $22,000 earlier this morning, now just dipping below that, but this is the best rally since october. perhaps there is a tinge of risk appetite left in this market. a lot of things to look out for today. on :00 a.m. u.k. time we get italian industrial production data, also production data out of greece and cpi as well at 10:00 a.m. u.k. time. brazil will be giving inflation at 1 p.m. u.k. time. with the fears of recession in focus, we get the big data point today, u.s. labor market nonfarm payrolls, unemployment, how
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strong or weak will it be? will it change that fed's trajectory? waller and bullard push for 75 basis points in july. japan's former prime minister shinzo abe, he is unconscious after being shot in nara. it was a campaign event. he was taken to the hospital by helicopter. we will bring the latest updates on his condition as we get them. this is bloomberg. ♪
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>> we need to move to a much more restrictive setting in terms of interest rates and policy and we need to do it as quickly as possible. i am in support of another 75
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basis point fight in july, probably 50 in september and then we can debate whether to go back to 25, or if inflation does not come down, we have to do more. >> we have a good chance of a soft landing going forward. there are always risks of a shock we can't even think about that will hit us, and that could happen, but i think the base case is for a soft landing at this point. dani: two fed hawks both backing another jumbo hike in july. they stressed the need for restrictive policy. we also have u.s. nonfarm payrolls due later today, that follows jobless claims which rose to the highest since january.
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let's discuss all of that with lale akoner, investment strategist at bny mellon. as long as we are hearing from fed officials saying that we will continue to get 75 basis point types? -- hikes? lale: we are cautious. we think that market volatility is likely to continue and unless we see a material cooling down in the job market, we will get that 75 basis point rate hike. that cautiousness will continue until we see a material downturn in inflation expectations coming from these surveys. dani: you talk about market volatility, bond volatility has moved to the highest since the pandemic, fx, the dollar and
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sterling have all been volatile but it has been subdued in the equity market. what will be the mechanism to have that volatility spill over an equity market which has been punished but still sees overall subdued moves? lale: in the equity market, the technicals are showing very weak signs. to the point that the market starts to question even a 75 basis point fight, if it will be enough, that will drive more volatility. the main indicator of that will be inflation, whether it shows any signs of cooling down, especially for those sensitive areas, [indiscernible] which is at multi-year highs at
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the moment. if you see higher prices in housing, you have to have higher rates coming into the picture. the fact that the fed is not going to be able to deliver in a quick fashion is going to drive more market volatility in the future. dani: what's going on, seeing these rallies from equities? we have tax rallying yesterday 2%, are these just dip buyers living in lala land? lale: a lot of this comes from the retail side. they are still buying the dip in the sense that we see long-term changes in trends such as the end of ecb money -- easy money. we are much more cautious. we think that any market strength at the moment is actually a good opportunity to decrease exposure in areas that
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are unlikely to emerge on the other side. dani: what do you say to folks who want to remain fully invested, where they go? lale: you need to be again, cautious and defensive, stay away from high beta. we are saying that energy is going to be performing well, given the fact that prices are coming down, but they are going to be elevated for some time. utilities and consumer staples, all of these sectors are places where we also see margins that are relatively healthy. consumer businesses are able to translate higher input prices to their consumers. dani: and there are very lofty expectations still for c orporates' ability to do that.
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are we about to see a stark repricing in terms of corp orates' ability to weather the inflation environment? lale: the analysts are still not showing a meaningful deceleration. i think the next 12 to 18 months show that they will come down in a very rapid fashion. hence my comment that you need to be exposed to those places where earnings will be outperforming other sectors, such as energy, consumer staples and utilities. dani: lale akoner, investment strategist at bny mellon, who remains cautious and defensive. japan's former prime minister shinzo abe has been shot. we continue to monitor the unfolding tragedy. he was unconscious, taken to a
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hospital by helicopter. the shooter has been apprehended, he was a former self-defense member as well. we will bring the latest on shinzo abe's condition. ♪
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dani: welcome back to bloomberg daybreak: europe, i'm dani burger in london. with the first word news is juliette saly in singapore. simone: the japanese government has confirmed that former prime minister shinzo abe has been shot in the western city of nara. the chief cabinet secretary says he is not aware of abe's condition. a broadcasters says the 67-year-old was taken to the hospital unconscious and
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unresponsive. prime minister kishida is returning to tokyo and will hold a news conference on arrival. president biden has a meeting with advisors set for friday. sources tell us it is not clear if you will decide on a path forward. he is weighing a decision to remove tariffs to curb inflation. china's ministry of finance is considering allowing local governments to sell 1.5 trillion yuan of special bonds in the second half. the bond sales will be brought forward from next year's quota. china is accelerating infrastructure spending to shore up the economy. boris johnson is facing pressure to speed up his exit after agreeing to quit as prime minister following days of political chaos. his team suggested he stay on as caretaker until october while
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the conservative party chooses its next leader. possible candidates include foreign secretary liz truss and former chancellor rishi sunak. a timetable will be revealed next week. binance mr. -- germany's finance minister says germany and its peers must scale back deficit spending. sources el bloomberg big consensus on debt may be shipping. the foreign ministers of china and australia will hold talks for the first time in three years. we will meet at that --they will meet at the g20 meeting in bali. australia's penny wong says it is in both interests for ties to be stabilized.
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global news, 24 hours a day, on air, and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. dani: juliette saly in singapore, thank you so much. we continue to monitor the tragic news. the former prime minister of japan shinzo abe shot at a campaign event in the western province city of ara. he has been take n to a hospital. white house officials say they are shocked to hear about the violent attack. this is a country where it is very difficult psst. girl. you can do better. ok. wow. i'm right here. and you can do better, too. at least with your big name wireless carrier. with xfinity mobile, you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year on your wireless bill, over t-mobile, at&t and verizon. wow. i can do better. yes, you can. i can do better, too.
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dani: this is bloomberg daybreak: europe. i'm dani burger in london.
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former japanese prime minister shinzo abe was unresponsive after being shot at a political event. police have arrested a suspect. boris johnson facing pressure to speed his exit from downing street after resigning as prime minister. waller and bullard back another 75 basis point rate hike this month, we get payrolls data later today. we will continue to monitor the tragedy. breaking that former prime minister of japan shinzo abe is unresponsive after being shot at a political rally ahead of elections on sunday. let's get to our reporter in tokyo, what do we know so far? >> it's been a while since we had an update on abe's condition . he was shot at a political speech in nara, not far from
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osaka. he is reported to have injuries to his body and neck. we do not know his condition. the government declined to give an update when we spoke an hour ago. reports indicated that he was unresponsive and did not have vital signs. he was airlifted to hospital and we are waiting to see what his condition is. one man has been arrested on suspicion of a crime. i believe prime minister ki shida is scheduled to speak right about now. dani: any moment, we will bring that to you. nhk is reporting that kishida has arrived at the prime minister's residence in tokyo. campaigning has stopped for the day as well. we are learning details from local outlets about who might have done this. someone has been arrested, what
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we know about that? >> a man has been arrested, he is 41 years of age. reports before i joined you indicated he may have been a former member of the country's self-defense forces, which is an unusual turn of events. reports are indicating the weapon he used in the attack may have been homemade, which would also be another extremely unusual move. as for his motivation, we haven't heard anything at this point. dani: thank you so much, gearoid reidy bringing us the latest on this. we are waiting for prime minister kishida to speak. he has arrived in tokyo. he is in the official residence. it looks like a podium might
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have been brought out. we are waiting for him to make a statement, as we hear from other world leaders. the french embassy has done the same. looking for the latest, we will keep you updated on abe's condition and the response from government. in the meantime, let's turn to the u.s. according to wells fargo, there might not be any need to worry about the timing of a u.s. recession, that's because we are already in one. wells fargo saying the u.s. is entering a recession in the second half surprise, is now. in other words, this is already here and real. let's get more from lena komileva, that g plus economics chief economist. are you in the camp that we are already in recession? lena: i think in the 24 hours of extraordinary political
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volatility we have had, there is more risks that the markets have to quantify. the risk of recession is very real and present. when it comes to political activity, there is a risk that we tend to extrapolate, so perhaps there is a sense of complacency. having been through that sugar high of the reopening from the pandemic, it is quite possible the rate momentum will happen through negative gdp readings. but it is worth noting that a correction will signify that the policy has been successful in terms of slowing demand momentum that is contributing to the fears of a persistent inflation shock. a recession may be the necessary people that has to happen at
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this -- evil that has to happen at this point. dani: you mentioned volatility, whether it be in japan now, concerns in the u.s. and the prospects of war, it is a lot to digest. it is difficult to extrapolate to the economy but it is a process we have to do, what is this period of violative of the -- volatility, how does this translate into the economy? lena: we are living through extraordinary structural destruction to be economy. a number of megatrends are converging. we have had a global pandemic, and the global response that plugged directly into the balance sheets of the real
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economy and consumer without going through the credit cycle. so that has produced unprecedented shock in terms of global inflation pressures. we had a double digit in global output, we did not have that lasting contraction in global demand the last two years, that was hailed as a great success because we did not have a global depression. we had self-fulfilling demand, higher employment, and weaker consumer confidence. that has resulted in the historical inflation volatility, and that in turn has led to that unprecedented level of concerted local policy volatility. it is amplifying the effect of central bank tightening, but they cannot control the supply chain driven by the fragmentation we have in
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geopolitics. dani: adam pozen at the peterson institute was talking about all the risks being amplified in the echo chamber that is the u.k., his words not mine. it is a smaller economy with a smaller labor force post-brexit, and political turmoil as well. as we look to the formation of a new government in the government, and the boe having to deal with that, what policies do they need to put in place to limit damage? lena: the u.k. economy is a small, open economy that has been buffeted by extraordinary global headwinds. we have the shock of a sharply slowing european economy, the war in ukraine, structural headwind of disrupted energy supplies, the shock of brexit, another structural shock which is translating through collapse
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in u.k. exports. we have the shocks of international trade deterioration, through the collapse of the sterling, the effective trade barriers, the effective disconnection between u.k. financial services and the continent, basically its biggest export market from the most competitive u.k. industry. all of that is combining with the fact that u.k. business confidence is being hit. after eight painful period of normalization from the uncertainty of the pandemic, we now have a period of policy incoherence. a lack of a coherent, concerted approach to bridge the difficult period of shock, cost-of-living standards, the business confidence hit, and also of
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course, foreign policy towards a more sustainable economic future. the intent of the johnson aramaeans the end of -- johnson era means the end of brexit populism. it will probably take the shape of higher taxes but weaker spending. what that means for the government agenda is in certain but we are heading for a painful adjustment in terms of real incomes, inflation, and central bank tightening. dani: given that, and the energy crisis in europe, and german electricity prices at a record, is there any reason to be bullish on the euro or sterling at this moment? lena: the fact that we are at historically extreme valuations does suggest that a lot of the
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negative views about the economy are priced in. i'm not necessarily bullish on those currencies at the moment but it is likely that next year we will see a transition in the global economic picture toward something that looks more like the new normal. we are in a period of painful adjustment that i think is unavoidable. global yields sharp, that is translating into recession fears and chipping away at inflation expectations but suggests that the policy medicine is working. a lot of the inflation is cost driven, the fear is -- central banks need to re-anchor
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expectations, so there is not a wage price spiral. it is still early days, but given wage and growth expectations, it looks like policy is working and that credibility is, i think, the most important thing central banks can exercise at this point. that way they will not over tighten into a deep and continued recession. dani: we will have to leave it there. lena komileva, chief economist at g plus economics. we are waiting for the prime minister of japan to speak. he has arrived at the prime minister's office. we are waiting for him. we will bring you any lines that come out of that. the former prime minister was shot at a political event, he was on the stump for elections that are set to take place,
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upper house elections on sunday. those campaigns have stopped since the tragedy occurred. the man who attacked abe has been arrested, he is a former self defense force member. this comes in a country that had zero cases of gun-related incidents last year. the current status, former prime minister abe is unresponsive and unconscious. we continue to wait for that press conference with prime minister kishida. u.k. conservatives are drawing up accelerated plans to choose boris johnson's successor. our next. -- more next. this is bloomberg. ♪
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dani: welcome back to bloomberg daybreak: europe. i'm dani burger in london. to the u.k., were boris johnson's plans to remain as caretaker prime minister are under increasing pressure. the conservative party will try to choose a successor by the end of the summer. let's get to westminster where our reporter is standing by. we know we the main contenders might be to replace johnson? lizzy: it's a wide-open race but the runners and leaders at the moment include ben wallace, the defense secretary. military credentials are prized when there is a war in ukraine going on. the same could be set for the former defense secretary, kenny marchant. there is also but cost-of-living
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crisis, which lends the spotlight to the former chancellor, rishi sunak who may have put enough distance with his resignation after the debacle with partygate and his wife's taxes. then there is not games we -- nadhim zahawi who is open to tax cuts that might appeal to the tory core. then there is liz truss. there are so many names. many up and know what do not stand a chance, and they are just doing it for profile, so they can hopefully get a seat in the cabinet of the victor. weber does win, is inheriting a country that is not just in domestic crisis, but also has really deep underlying structural issues like the broken housing market. dani: thank you very much,
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bloomberg's lizzy burden outside of westminster. i want to take us quickly to tokyo, prime minister kishida is speaking. after we learned that shinzo abe , former prime minister, was shot at a campaign event. kishida saying abe is in very grave condition. report saying he was unconscious as well as unresponsive. we will bring you that if we have the english translation. he is saying that medics are doing their best after shinzo abe was shot. police telling nhk that the suspect had intended to kill abe. the suspect, in his 40's, he has been arrested. kishida saying they hope abe will survive, quote sincerely
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hoping for his recovery and saying he is in grave condition. abe was on the campaign trail. there was set to be sunday elections for the upper houses, very common for former politicians to go on the stump ahead of those types of elections. that is where this all took place, he was rushed to a hospital via helicopter where he was described as being unresponsive. kishida saying there is little information on the reason for the attack. police telling the local news outlet that the shooter had intended to kill abe, kishida saying this shooting was absolutely unforgivable. again, expressing his hopes that abe will indeed survive this. there is not much we know currently about shinzo abe's condition. kishida also condemning the fact that the shooting was during
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campaigning. again, gun violence is extremely rare in japan. this is a country where it is very difficult to obtain any sort of firearm. some reports suggest that might have been homemade. there are still --there is still not a lot of certainty but this is an environment where this is very rare. kishida speaking at the prime minister's residence, saying he will not comment on the political impact of abe's shooting. this is ahead of elections on sunday. we don't know the mode about the shooter at the moment. we will not speculate on whether it is political or otherwise. the police saying he had intended to kill abe. let me recap some of the lines kishida has been saying, saying the medics are doing their best, he is in great condition, there
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is still little information on the reason for the attack, calling this absolutely unforgivable, and that he won't comment on the impact of abe's shooting. kishida taking some questions from those in attendance after expressing his deep concern about abe and his desire for him to recover, saying he is in a very grave condition. so, this took place about 3:30 a.m. u.k. time, the man who attacked abe has been arrested according to nhk, also reporting that he was a former member of the self defense force in japan. kishida saying nothing is decided on how this will impact the election. the upper house election was set to take place on sunday. that is why abe was giving a
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speech. someone came behind him and shot him twice. after the first shot was heard, abe continued to speak. he was shot in the chest and rushed to the hospital. this is kishida, who returned back to tokyo after the news, currently saying that nothing has been decided on how this will impact the election to take place on sunday. he has also condemned the fact that this took place during a campaign event. he was on the stump, abe was for the upcoming election. this took place in nara, a western city in japan. we don't know too much about his condition but he has been unconscious and unresponsive as well. again, we are looking at kishida speaking after this tragic shooting of former prime
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minister abe. he is currently taking questions at this moment. he has refrained on commenting how this would impact the scheduled election. he doesn't touch on whether it would be postponed or canceled. i want to remind our viewers that we have a live blog up and running on this, go on your terminal. kishida will gather officials in tokyo to discuss the incident. he has sniffled at times, emotional at times, wishing as many do that abe is able to survive this. he does look visibly shaken. let's get to our reporter i am tokyo -- in tokyo standing by. we are seeing a visibly upset prime minister at the moment. >> yeah, absolutely.
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kishida seems visibly upset by the news. he remained remarkably calm, but you can see that he was very upset by the news and said that he was praying for abe's recovery and that all steps were being taken to preserve his life. dani: and he did say a few words on his condition. not a lot we know there, but what is it that we do know so far? >> kishida described his condition as being grave, serious. right now we do not know too much about his condition. at the time he was shot, he was described as being in cardiopulmonary arrest, language that is used by police to describe someone without vital signs.
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we will have to see how that goes from there. he was taken to hospital, he was airlifted nearby. kishida said all steps are being taken to preserve his life and we will have to wait for updates throughout the day i think. dani: he is now saying he will confirm whether security measures were sufficient. for those who are unfamiliar with japan and the lack of gun violence, what is how -- walk us through how strange an unprecedented this is. >> gun killings are extremely rare in japan. any shooting of a gun would make headlines in japan, regardless of whether someone was injured or not. for this type of violence to be
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carried out just in general is unusual, and for it to be someone who is such a political giant domestically and internationally as shinzo abe is, to be a victim of something like this is extraordinary. and almost without precedent in recent times. dani: we did see kishida just wrap up that press conference. a somber press conference discussing looking into security measures. not been decided yet on how this will impact the election. what were the elections that were set to take place on sunday? what exactly was abe speaking about when this tragedy unfolded? >> in terms of the content of his speech, i'm not entirely sure. it is quite normal for politicians such as abe to give stump speeches to support
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whoever the local candidate might be. so the last couple days of the election, such a popular and well-known politician, he would have been the ideal person to give a stump speech. and to give up support, to rally support for local candidates. he had many such speeches scheduled all over the country in the days leading up to the election. dani: we did hear kishida revving up. we will keep you updated as the tragedy in japan unfolds. ♪
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mark: good morning, welcome to -- i'm tom mackenzie,.

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