00:00Let's talk about the deal-making environment. It's obviously a phenomenal first half.
00:03It looks like, at least so far in July and August, things also were holding up pretty well.
00:09Are you anticipating that this sort of record run we have continues through the end of the year and into
00:14next?
00:14Most likely. I think, as you just reported, volumes are very high, I think the highest ever.
00:22Having said that, I think there's been a lot of big deals that have contributed to that,
00:26so maybe their breadth is a little bit less, but still a very healthy environment.
00:31What's been, I think, more interesting for us is what we're seeing cross-border,
00:37particularly with respect to Japan and the interest we're seeing both inward and outward.
00:42Well, before we get to Japan, I am just curious about when you talk about the deals that we've seen.
00:46Obviously, there are some really large deals that are skewing the numbers just a bit.
00:50But are you seeing maybe a structural change in just the appetite for, A, for corporations to actually make deals,
00:57but more importantly for investors to actually embrace the financing on that,
01:00given the current regulatory environment and some of the other issues going on right now?
01:04Yeah, I mean, no doubt it's a very favorable regulatory environment.
01:08Companies are generating a lot of revenue.
01:11And likewise, I think the outlook for the U.S. economy is still pretty strong,
01:18so I think the incentives are still there to invest.
01:21How do you think about the impact of the midterm elections?
01:24Are you seeing companies want to be on the offensive footing ahead of what could be a pretty contentious election?
01:29I have not heard that. I have not heard that.
01:32Are there areas that you expect to continue to see ripe for deals,
01:35whether it's cross-border, you mentioned Japan, or are we all seeing kind of certain green shoots?
01:41I don't have a specific view on what industry will be most ripe,
01:47but what I mentioned earlier was what we're seeing on the cross-border side is perhaps the most interesting to
01:53us.
01:53Well, let's talk about the cross-border side.
01:55Obviously, a lot of that has to do with the changing nature.
01:57We talk about Japan specifically with the changing nature of the Japanese economy,
02:01Japanese fiscal policy, and for that matter, Japanese monetary policy.
02:05When you take a look at monetary policy and fiscal policy over there,
02:09is it in conflict with each other to the point where it would have an impact on the types of
02:13deals that get done?
02:15I don't think so. I think the environment in Japan actually is very favorable right now.
02:20I think there's a lot of reason for that.
02:23I think money supply, if you look at that over the last four or five years, has gone up quite
02:27a bit.
02:27But also there's been intervention by the Tokyo Stock Exchange challenging companies to be more shareholder aware.
02:35I think the current government has identified 17 sectors that are critically important to the Japan economy,
02:43and I think has targeted close to $2.5 trillion of investment, both private and public, over the next 14
02:48years.
02:48So I think those are creating a lot of momentum for the Japanese economy, and hence interest in investing in
02:55Japan,
02:55but also corporates in Japan looking outside.
02:58Well, that's what I'm curious about, about the Japanese money itself,
03:02because the narrative for so many years was that money always sort of left Japan,
03:06looked for investment opportunities elsewhere.
03:09There's obviously a lot more incentive now, financial incentive, to maybe keep that money at home.
03:14But at the same time, you're seeing U.S. corporations now go there, particularly with some of these AI companies,
03:20and look to sort of maybe take advantage of some of this yen borrowing.
03:22What's the balance between the two?
03:24Well, I mean, in terms of looking into Japan for investment,
03:28I mean, households in Japan have about half of their financial assets in cash.
03:36So think about $16 trillion, approximately, household assets,
03:40maybe $7, $7.5 trillion sitting in cash.
03:44Corporates have close to $2.5 trillion in cash.
03:49By the same token, U.S. corporates are maybe close to $3 trillion.
03:52So there's lots of opportunity, and given the new initiatives from this administration in Japan,
03:59and also, I think, a different mindset.
04:02You know, you've had deflation for a long time.
04:06You know, deflation of about 0.5%, I think, for the last 25 years.
04:10The economy's only grown about 30%.
04:13Yeah.
04:14I'm just curious, though, on that point, because those numbers are pretty dramatic.
04:17And I am wondering that now that we're seeing Japanese yields rise over 1%,
04:21which, you know, doesn't seem like much from outside Japan, but there, that's pretty meaningful.
04:26Is that sort of the threshold where we start to see even more, not only the money that's there,
04:30but even maybe greater repatriation of money back into Japan?
04:34You could see that, for sure.
04:36I mean, you know, you haven't had 10-year rates at 3% in a long time.
04:42So you've got, you know, short rates, you know, covering close to 1.5%.
04:46I think two-year rates around 2%.
04:48So you could very well see some of that.
04:50Well, within Japan, are you expecting more consolidation, having spent a good amount of time there?
04:54You have a number of automakers, which stands polar opposite of what we see here in the U.S.
04:59You have a number of companies.
05:00I know they're working to unwind kind of the, call it, cross-pollinization.
05:04Is that something that you expect to see rapidly change?
05:07It feels like kind of a slow burn.
05:10I mean, how rapidly things occur.
05:14Yeah.
05:15I mean, I think it's happening.
05:16I mean, it's been in progress for a while now.
05:20I think, you know, cross-shareholding reduction has been an initiative that I think most of the Japanese corporates are
05:27taking seriously.
05:29And we're starting to see it in the reported earnings.
05:32I am curious, though, just about some of the currency risk out there, particularly with some of the big jumbo
05:37deals, dollar-denominator jumbo deals coming into that space.
05:41Does that worry you at all?
05:42The currency moves?
05:44Yeah.
05:45I mean, you know, it wasn't too many years ago.
05:47I think 2022, 2023, we were sitting around, what, 110, 115 dollar yen.
05:52Now we've reached 161, you know, as high as 163 or so.
05:57I think it's a factor.
05:58I mean, of course, I think the weakening of the currency is certainly imported inflation, for sure.
06:04It's also helped export industries.
06:06So, you know, I think these things all manifest over time.
06:11Yeah.
06:12How do you think that that, coming back to manifesting over time, how quickly will you see kind of this
06:18change if the yen continues to stay where it's at or continues to weaken potentially further?
06:21And how does that impact some of this household savings that people have been hoping to be deployed, but it's
06:28been the story of Japan?
06:29I think the corporates are moving faster than households.
06:35So, you know, you've got a lot of asset management companies looking to go into Japan because of to try
06:42to harness some of this, this seven and a half trillion.
06:46And I think some of that will certainly be kept domestically, but certainly a fair share will will look outside
06:56Japan as well.
06:57Jerry, I do have to ask you just about just in general, some of the sort of international controls out
07:02there in the financial system.
07:05Right before we came on air, Bloomberg did report of the latest developments in the Radiant world story and some
07:12of the exposure that banks have.
07:14Mizuho Bank, obviously not unnecessarily under your purview, but Mizuho Bank listed as having exposure of about 100 or so
07:22to Radiant.
07:24I am curious about what you at all know or have learned from this episode of the Radiant world fallout.
07:32I don't have anything to say on that.
07:35Have you been involved in any of the discussions or not?
07:37No.
07:38Are there any issues with regards that as you grow and expand internationally, and for that matter, the rest of
07:45the financial world expands and grows internationally,
07:47that the controls that are in place right now are enough to protect investors?
07:52I have a lot of confidence in the controls in place at Mizuho Financial Group.
07:56Well, how do you think about with some of the deals that have kind of been unveiled or some of
08:00this exposure has come to light?
08:02Are there learnings where we sit here in 2026 versus decades past?
08:08Decades past?
08:10Sure.
08:10I mean, with the benefit of hindsight, you can learn a lot.
08:14Look, whenever we do a deal that doesn't go the way we expect, we sit down and think about what
08:20we could have done differently.
08:22But I think every business does the same thing.
08:25I don't think Japanese firms are any different than the U.S. firms.
08:29I do just kind of want to wrap this up, just with kind of the evolution of Mizuho Securities USA.
08:35Obviously, the Green Hill deal really sort of cemented your position in being more than just a financier of deals,
08:42but maybe potentially sort of a much bigger player in actually helping to craft those deals.
08:47I mean, what's next for you in terms of what you want to see for this business?
08:50Well, one thing I would say is Green Hill, it'll be three years in a couple months' time.
08:55Green Hill's been fantastic for us.
08:58I think this year will be the highest revenues ever from Mizuho Financial Group in terms of advisory.
09:06It will also be only surpassing last year.
09:10But, you know, it's not just about M&A for us.
09:13I mean, we've got a full-service firm.
09:16We're in 40 countries, Mizuho Financial Group.
09:18In the Americas, we're in debt capital markets, equity capital markets.
09:22We're in derivatives.
09:23We're in M&A.
09:24We're a top-10 investment-grade debt capital markets house.
09:28We're, I think, 12 or 13 in equities.
09:30So it's not just about M&A.
09:33That's an important part of what we do, but it's actually a relatively modest part of what we do.
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