WEBVTT - Trump Can't Use 'Emergency' To Fund Wall: Feldman (Podcast) 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:33.720 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. President 0:00:33.760 --> 0:00:37.000 Donald Trump will address the nation from the Oval Office 0:00:37.080 --> 0:00:41.360 at nine pm Eastern Time this evening. Bloomberg, of course, 0:00:41.400 --> 0:00:45.200 will cover the cover the president's speech as well as 0:00:45.240 --> 0:00:49.279 the democratic response to the President's remarks. Now, this is 0:00:49.520 --> 0:00:53.320 decided to be a focus of the national emergency that 0:00:53.400 --> 0:00:56.720 he wants wants to declare over the border security, and 0:00:56.800 --> 0:00:58.920 the President has said in recent days that he might 0:00:59.000 --> 0:01:04.560 employ the emergency funding for the border wall if Congress 0:01:04.640 --> 0:01:07.840 doesn't approve it. Well, can he do so? Noah Feldman 0:01:07.959 --> 0:01:12.280 is professor of law Harvard University also a Bloomberg opinion columnist. 0:01:12.560 --> 0:01:16.800 He can be followed on Twitter at Noah are Feldman. Noah, 0:01:17.200 --> 0:01:22.000 can the President declare a national emergency to build a wall? No, 0:01:22.200 --> 0:01:25.840 he can't. There's no provision in the Constitution that says 0:01:26.280 --> 0:01:29.199 that the president can declare an emergency and then spend 0:01:29.280 --> 0:01:32.680 money that hasn't been appropriated to him, and Donald Trump 0:01:32.720 --> 0:01:36.000 can invent one for the occasion. There are provisions in 0:01:36.080 --> 0:01:39.440 law statutes that allow the president to declare an emergency 0:01:39.440 --> 0:01:41.240 and do certain things, but as far as I know, 0:01:41.720 --> 0:01:45.160 none of those provisions says that whence he's declared an emergency, 0:01:45.240 --> 0:01:48.120 the president can spend money on something that Congress has 0:01:48.120 --> 0:01:50.920 made it completely clear that it doesn't want him to 0:01:50.960 --> 0:01:53.040 spend money on, such as the wall, which has now 0:01:53.120 --> 0:01:55.640 been denied him by two Congresses in a row. Well, 0:01:55.760 --> 0:02:00.520 Provisor Felman, though there is a significant constituency within Congress 0:02:00.720 --> 0:02:03.960 who do support the wall, is there enough data that 0:02:04.000 --> 0:02:07.800 we have to make that assertion that definitely Congress does 0:02:07.840 --> 0:02:12.080 not want this. Yes, the previous Congress was asked to 0:02:12.120 --> 0:02:15.360 provide appropriation and funding for this and declined, and the 0:02:15.400 --> 0:02:18.120 current Congress has been asked to do so by the 0:02:18.160 --> 0:02:21.600 president and has declined. It never gets more explicit than 0:02:21.800 --> 0:02:24.079 that Congress has to be seen as a single body 0:02:24.120 --> 0:02:25.920 speaking with a single voice, and it says yes or 0:02:25.919 --> 0:02:28.320 no when it does it by a vote. In this instance, 0:02:28.720 --> 0:02:30.840 it's it said no, and it's it said no, twice. 0:02:31.240 --> 0:02:35.320 There's also president in Supreme Court precedent for thinking of 0:02:35.480 --> 0:02:40.000 Congress's refusal to authorize something as an explicit statement to 0:02:40.040 --> 0:02:42.839 the president that he that he can't do that thing. 0:02:43.280 --> 0:02:45.440 That goes all the way back to the famous steel 0:02:45.440 --> 0:02:49.480 seizure case when Harry Truman tried to seize the steel mills, 0:02:49.480 --> 0:02:52.200 and the Supreme Court said, this is a situation where 0:02:52.639 --> 0:02:55.239 Congress has not authorized the president to do this. And 0:02:55.320 --> 0:02:57.799 their proof was that there were other pieces of legislation 0:02:57.840 --> 0:03:00.000 that had authorized the presidents to do other sorts of things, 0:03:00.320 --> 0:03:02.640 but there was no legislation saying the president could seize 0:03:02.639 --> 0:03:04.560 in that way. And so the court said that was 0:03:04.600 --> 0:03:07.680 evidence that Congress did not intend to give the president 0:03:07.760 --> 0:03:11.800 this authority. Now, well, what does that National Emergencies Act 0:03:11.919 --> 0:03:15.360 outline as the specific powers of the president to declare 0:03:15.360 --> 0:03:18.560 an emergency. Well, one thing that's very frustrating about the 0:03:18.600 --> 0:03:21.120 National Emergencies Act is that it's kind of an empty shell. 0:03:21.560 --> 0:03:24.640 It says that the president may declare a state of emergency, 0:03:24.800 --> 0:03:27.600 and it says that when he does that, Congress could 0:03:27.960 --> 0:03:31.239 choose to overrule it. And it says that once he's 0:03:31.280 --> 0:03:34.840 done that, he has whatever authority comes from one of 0:03:34.920 --> 0:03:38.640 four hundred and seventies separate laws scattered all over the 0:03:38.680 --> 0:03:42.480 statute books, each of which confers some special authority on 0:03:42.520 --> 0:03:44.960 the president in an emergency. So then you have to 0:03:44.960 --> 0:03:47.040 figure out which one of those fourigers and the seventy 0:03:47.080 --> 0:03:49.680 plus laws is in play, and you have to see 0:03:49.720 --> 0:03:52.200 if there's any authority under those laws that actually would 0:03:52.240 --> 0:03:54.600 let the president do the thing in question. And in 0:03:54.600 --> 0:03:58.240 this instance, nobody has put forward to my knowledge. I've 0:03:58.240 --> 0:04:00.680 looked high and low some of our party that says 0:04:00.920 --> 0:04:02.920 that when the president there's a state of emergency, he 0:04:02.960 --> 0:04:06.080 can use uh, he can take money that hasn't been 0:04:06.080 --> 0:04:09.040 appropriated to do something that Congress doesn't want him to do. So, 0:04:09.160 --> 0:04:12.560 Professor Velevan, let's say President Trump says, you know what, 0:04:12.840 --> 0:04:14.720 I'm going to give this a try. Anyway, I'm going 0:04:14.800 --> 0:04:18.200 to go ahead and declare national emergency. Just take them, 0:04:18.320 --> 0:04:21.480 take the money, and it goes to the Supreme Court. 0:04:22.200 --> 0:04:25.080 Do you think that they would rule against him given 0:04:25.080 --> 0:04:30.320 the composition currently? I do. Even the conservative justices are 0:04:30.360 --> 0:04:34.240 real believers in the separation of powers, and there's probably 0:04:34.279 --> 0:04:37.800 no clearer violation of the separation of powers than the 0:04:37.880 --> 0:04:41.680 president deciding that he gets to spend money when it 0:04:41.680 --> 0:04:45.039 hasn't been appropriated by the Congress. You know, the fundamental 0:04:45.120 --> 0:04:47.760 power of Congress in the US constitutional system, The most 0:04:47.760 --> 0:04:50.520 basic thing they can do is the power of the purse. 0:04:51.040 --> 0:04:52.960 And if the president can get around the power of 0:04:52.960 --> 0:04:56.240 the purse, then we don't really need Congress anymore. And 0:04:56.400 --> 0:04:59.160 that can't possibly be the design that the Framers put 0:04:59.240 --> 0:05:02.720 in place. And the Conservatives on the Court our originalists, 0:05:02.760 --> 0:05:06.039 and they believe in what the Founders designed, and they're 0:05:06.080 --> 0:05:11.599 not interested in abolishing Congress. Noah Feldon, does the International 0:05:11.600 --> 0:05:17.560 Emergency Economic Powers Act? Does that offer the president away 0:05:17.600 --> 0:05:23.200 in which to use the legal apparatus of the government 0:05:23.320 --> 0:05:29.720 in order to change the direction or flow of financial transactions. Well, 0:05:30.279 --> 0:05:33.440 this is not an instance where financial transactions would be 0:05:33.440 --> 0:05:35.240 in play. I mean, there are emergency powers like the 0:05:35.240 --> 0:05:38.280 one that you mentioned, which say, for example, you know, 0:05:38.360 --> 0:05:43.120 if we're suddenly in a war with another country, or if, um, 0:05:43.160 --> 0:05:45.440 you know, our assets are seized another country, that the 0:05:45.480 --> 0:05:49.840 president could take unilateral steps, again authorized by Congress two, 0:05:50.680 --> 0:05:53.320 as you say, reverse the flow of transactions or freeze 0:05:53.360 --> 0:05:55.080 assets or things like that. But this is not what 0:05:55.120 --> 0:05:58.440 we're talking about. This is about the President actually taking 0:05:58.520 --> 0:06:01.560 money from the U. S. Treasury that has to be 0:06:01.680 --> 0:06:05.120 by law appropriated by Congress and putting it to a 0:06:05.160 --> 0:06:08.760 purpose that Congress has said you can't use it for. 0:06:09.120 --> 0:06:12.159 And that's that's not covered by any of the emergency 0:06:12.200 --> 0:06:14.840 powers accident I'm aware of. I have to wonder what's 0:06:14.880 --> 0:06:17.600 the potential liability to President Trump should he go ahead 0:06:17.760 --> 0:06:21.200 and declare the emergency powers to seize this cash. I mean, 0:06:21.279 --> 0:06:23.919 let's say he says, look politically it looks good for me. 0:06:24.080 --> 0:06:26.280 I don't care if it's legal. If it gets shot down, 0:06:26.440 --> 0:06:29.960 so be it. Will there be any consequences from that? 0:06:29.960 --> 0:06:32.840 That's really the deep question. You know. President Trump, as 0:06:32.880 --> 0:06:36.279 you know, has been avoiding the Constitution where he can, 0:06:36.440 --> 0:06:39.720 pushing it where possible, and breaking it where he thinks 0:06:39.720 --> 0:06:43.120 there's a political advantage to him, and repeatedly the courts 0:06:43.120 --> 0:06:46.960 have struck down his actions, and to all intents and purposes, 0:06:47.000 --> 0:06:49.400 it seems like he doesn't care, and he may judge 0:06:49.400 --> 0:06:51.680 in this instance too, why not just break the Constitution 0:06:51.680 --> 0:06:53.920 and then blame the courts and maybe that gives him 0:06:53.960 --> 0:06:57.520 some some cover. And you know, at one time I 0:06:57.560 --> 0:06:59.920 would have said, we lived in a country where repeated 0:07:00.080 --> 0:07:03.279 violations of the Constitution by the president would have effects, 0:07:03.279 --> 0:07:05.920 would have blowback, would eventually lead the public to give 0:07:06.000 --> 0:07:08.039 up on the president, or would eventually leave Congress to 0:07:08.040 --> 0:07:11.640 think about impeaching him. That hasn't happened yet, and so 0:07:12.640 --> 0:07:14.280 you know, I'm not gonna sit here and say that 0:07:14.320 --> 0:07:16.640 I'm certain that that's going to happen. But I do 0:07:16.760 --> 0:07:23.080 believe still that slow, gradual, incremental steps towards realizing that 0:07:23.120 --> 0:07:26.120 this is a president who have ignores the Constitution will 0:07:26.160 --> 0:07:29.040 have a long term negative effect on the presidency, and 0:07:29.080 --> 0:07:34.280 they each one incrementally increases the odds of impeachment. What 0:07:34.320 --> 0:07:38.480 do you believe the Democrats can do. Well, the first 0:07:38.520 --> 0:07:40.920 thing they can do is let it, you know, let 0:07:40.920 --> 0:07:43.960 the word ring out loud and clear that this is 0:07:44.000 --> 0:07:48.200 not just outside the president's statutory powers, but this violates 0:07:48.240 --> 0:07:52.080 the separation of powers. Every American has been through Civics 0:07:52.080 --> 0:07:54.200 class and knows that we have the separation of powers 0:07:54.280 --> 0:07:56.440 and knows that Congress has the power of the person. 0:07:56.480 --> 0:07:59.040 If you take that away, we don't have a democracy anymore. 0:07:59.080 --> 0:08:00.840 We don't have a constitutional system anymore. And I think 0:08:00.840 --> 0:08:03.400 the Democrats should really beat that point as hard as 0:08:03.440 --> 0:08:05.720 they can. I think Americans still believe in the Constitution. 0:08:05.960 --> 0:08:08.240 We still believe there should be a Congress, and frankly, 0:08:08.280 --> 0:08:10.120 if the president can just allocate my on his own, 0:08:10.280 --> 0:08:12.080 it's as though we don't have a Congress, and that's 0:08:12.120 --> 0:08:15.000 just not the system that Americans want. So that's the 0:08:15.000 --> 0:08:17.520 first thing that Democrats can do, and I think the 0:08:17.560 --> 0:08:19.560 second thing they can do is remind the public that 0:08:19.640 --> 0:08:23.040 this is a president who's flouting the rule of law 0:08:23.360 --> 0:08:26.240 and he's doing it on a daily basis. And last, 0:08:26.240 --> 0:08:28.120 but not least, the Democrats will probably have to go 0:08:28.160 --> 0:08:31.480 to court to block this. Professor Noah Feldman, thank you 0:08:31.520 --> 0:08:33.320 so much for being with us and for your insights. 0:08:33.440 --> 0:08:37.319 Professor Noah Feldman of Harvard University is also a Bloomberg 0:08:37.320 --> 0:08:42.400 Opinion columnist, coming to us from Boston talking about President 0:08:42.440 --> 0:08:46.600 Trump's efforts to get the appropriations to build the one. 0:09:01.320 --> 0:09:03.800 The U. S And China are talking and markets like 0:09:03.960 --> 0:09:06.600 that they are discussing a trade deal and trying to 0:09:06.600 --> 0:09:08.880 get it done within the next few months. Joining us 0:09:08.880 --> 0:09:11.280 now to talk about the feasibility if that is. Leland Miller, 0:09:11.520 --> 0:09:15.199 chief executive of China beige Book International, joining us here 0:09:15.280 --> 0:09:18.040 in our Bloomberg in our active broker studios in New York, 0:09:18.320 --> 0:09:21.679 so Leland. Do you think it is likely that the 0:09:21.720 --> 0:09:24.000 two sides here will come to some kind of meeting 0:09:24.000 --> 0:09:25.640 of minds, And if so, what does that look like? 0:09:26.080 --> 0:09:27.960 I do? I think that there are going to have 0:09:28.000 --> 0:09:29.880 a trade deal at the end of this ninety days. 0:09:30.160 --> 0:09:31.640 I think the way this looks there's that there will 0:09:31.679 --> 0:09:34.800 be a framework that's set up um that they'll call 0:09:34.840 --> 0:09:36.880 a deal, and then there'll be a hundred eighty days 0:09:36.960 --> 0:09:42.760 or so implementation period where the Chinese, where the Chinese 0:09:43.320 --> 0:09:45.040 do all the things that they're supposed to do, and 0:09:45.080 --> 0:09:46.959 the U S evaluates where the Chinese have done what 0:09:46.960 --> 0:09:51.839 they're supposed to do. And will that conclude the arrangement 0:09:52.000 --> 0:09:56.480 or will it just bring more contradiction and more debate. 0:09:57.120 --> 0:10:00.760 The idea is it'll solve it. For so what President 0:10:00.760 --> 0:10:03.120 Trump would like to do is get this issue out 0:10:03.120 --> 0:10:06.360 of his hair, move on to some other trade issues, 0:10:06.880 --> 0:10:10.360 and solve this up until brings it back. So when 0:10:10.440 --> 0:10:13.040 during the campaign season you're going to see China being 0:10:13.280 --> 0:10:16.640 a major issue, the Democrats are going to bring him up, 0:10:16.760 --> 0:10:19.800 bring it up his trade deals, his z T E. Tweets, 0:10:20.040 --> 0:10:23.520 So is going to be the year that this comes back. 0:10:24.080 --> 0:10:26.559 But twenty nineteen, he'd like to take it off the agenda, 0:10:26.600 --> 0:10:28.280 and that's the goal of getting a deal by by 0:10:28.320 --> 0:10:32.559 by March one. So basically, no escalating trade, tariff threats, etcetera, 0:10:32.800 --> 0:10:35.080 come to some kind of peace move forward. Have it 0:10:35.080 --> 0:10:37.439 not be part of the equation, which raises the question, 0:10:37.679 --> 0:10:41.520 can we keep blaming the trade tensions for weakness that 0:10:41.520 --> 0:10:44.400 we're seeing in China because that is what some people 0:10:44.440 --> 0:10:47.120 are trying to do. What is your view on that? Yeah, 0:10:47.160 --> 0:10:49.480 that's not accurated. There are definitely parts of the economy 0:10:49.480 --> 0:10:51.839 that have been suffering quite dramatically. I mean, you look 0:10:51.880 --> 0:10:56.160 at our manufacturing data. Public data showed export orders weakening. 0:10:56.160 --> 0:10:59.040 I think it was early October, maybe late September, Yeah, 0:10:59.040 --> 0:11:01.480 in China August, you know, we we were we were 0:11:01.520 --> 0:11:04.000 showing this in in August, and so we have seen 0:11:04.160 --> 0:11:07.920 a dramatic hit to manufacturing for the last several months, 0:11:07.920 --> 0:11:10.800 no question about that. But overall, the economy was gonna 0:11:10.800 --> 0:11:12.880 weaken no matter what was done on the trade side, 0:11:13.240 --> 0:11:16.640 and we had seen in seventeen A lot of people 0:11:16.679 --> 0:11:20.160 thought this was organic momentum that was pushing us UM 0:11:20.200 --> 0:11:23.840 into beyond with this was beautiful Chinese growth was actually happening, 0:11:23.880 --> 0:11:27.360 is it? By mid seventeen, private firms were already getting 0:11:27.400 --> 0:11:30.319 skeptical of of the rally and we're borrowing less and 0:11:30.400 --> 0:11:33.560 hiring less and investing less. But state firms, under orders 0:11:33.559 --> 0:11:36.480 from Beijing, of course, just kept going right straight through, 0:11:36.600 --> 0:11:40.080 straight through the Party congress Ineen. So you saw this 0:11:40.120 --> 0:11:43.480 particularly manufacturing and property and commodities, which were the you know, 0:11:43.520 --> 0:11:46.400 the old economy sectors. So there was an overheating that 0:11:46.440 --> 0:11:47.839 had to be dealt with and it it was gonna result 0:11:47.840 --> 0:11:50.880 in the slowdown no matter what. Um. What you had 0:11:50.880 --> 0:11:53.720 in early eighteen was no doubt, some frontloading of orders 0:11:53.760 --> 0:11:56.240 in order to get to to to beat the tariffs. 0:11:56.559 --> 0:11:59.040 So what that meant was things earlier in the year 0:11:59.040 --> 0:12:00.520 were probably a little bit better here than they would 0:12:00.520 --> 0:12:02.920 have been otherwise, and it's just pushed the trouble farther 0:12:02.920 --> 0:12:04.520 into the year. And that's where we are now, and 0:12:04.559 --> 0:12:06.600 our our que for data is the worst that we've 0:12:06.640 --> 0:12:10.680 seen since the first quarter of sixteen, when we when 0:12:10.720 --> 0:12:14.480 we when when China markets were in a panic. We 0:12:14.480 --> 0:12:18.360 almost the last time you were physically in China it's 0:12:18.360 --> 0:12:24.520 been it's been um earlier this year. UM, but I 0:12:24.559 --> 0:12:29.680 haven't spent a lot of time there at all recently. Okay, 0:12:29.960 --> 0:12:33.040 but you know, there's there's some questions, you know, it's 0:12:33.040 --> 0:12:34.720 it's a different environment there right now. Well, that's why 0:12:34.800 --> 0:12:37.360 I wanted you to go, is maybe just expand on that. 0:12:37.640 --> 0:12:41.800 What are your concerns, what are your personal perspective and 0:12:41.840 --> 0:12:45.080 experiences tell you. I don't think there's a risk for 0:12:45.120 --> 0:12:47.880 Americans right now, but the environment is changing. Is the 0:12:47.880 --> 0:12:50.720 economy slows and we're certainly reporting that the economy slowing, 0:12:51.280 --> 0:12:55.040 and there's significant tensions over Huawei. The Canadians are seeing that. 0:12:55.559 --> 0:12:57.760 It's just, you know, I think that you're you're most 0:12:57.800 --> 0:13:00.520 at risk if you're a big tech CEO in a 0:13:00.559 --> 0:13:03.840 Canadian tex EO. But I think that it's it just 0:13:03.920 --> 0:13:07.680 factors into your into your thinking now, whereas last year, 0:13:07.880 --> 0:13:10.080 past years, no matter whether things were good or bad, 0:13:10.120 --> 0:13:11.960 you just didn't think about it. So you said that 0:13:11.960 --> 0:13:14.320 the fourth quarter data was the worst that you've seen 0:13:14.360 --> 0:13:18.040 since the beginning of Of course, China engaged in a 0:13:18.120 --> 0:13:21.640 massive stimulus that year, expanded its debtload dramatically in order 0:13:21.640 --> 0:13:25.600 to prop up the economy cannot do that again. If 0:13:25.640 --> 0:13:28.000 it absolutely had to, it would go back to the well. 0:13:28.160 --> 0:13:30.520 But I think what people are making making two mistakes 0:13:30.520 --> 0:13:33.199 on stimulus. The first is the idea that China is 0:13:33.240 --> 0:13:35.800 not easing right now and they'll they'll start doing it soon. 0:13:36.200 --> 0:13:38.120 But if you look at China age book data, we've 0:13:38.120 --> 0:13:41.280 seen three straight quarters where borrowing numbers have been elevated 0:13:41.280 --> 0:13:45.600 from sixteen. Firms are borrowing, And what we saw originally 0:13:45.640 --> 0:13:48.600 was that shadow banking was being shut down, So so 0:13:48.679 --> 0:13:51.400 firms are being pushed for more on balance sheet lending 0:13:51.440 --> 0:13:54.080 at banks, but then deleveraging to the extent it ever 0:13:54.160 --> 0:13:57.320 started uh ended quickly, and now you're seeing the shadow 0:13:57.360 --> 0:14:00.600 banks lending again, you're seeing banks barring or so there 0:14:00.679 --> 0:14:04.080 is a lot of clandestine easying going on right now. 0:14:04.120 --> 0:14:07.319 All our credit indicators in Q four while we're pointed up, 0:14:07.679 --> 0:14:10.560 the problem is it wasn't resulting in more investment. It 0:14:10.640 --> 0:14:14.240 was not resulting in boosting growth because firms were overwhelmingly 0:14:14.240 --> 0:14:17.400 taking that capital and they were battening down the hatches. 0:14:17.720 --> 0:14:21.040 They were dealing with the cash flow problems and they 0:14:21.080 --> 0:14:24.120 were really troubled by the uncertainty. So that's something that 0:14:24.160 --> 0:14:26.240 needs to change if China wants to swing back upwards. 0:14:26.840 --> 0:14:31.600 If you are a Chinese investor, are you looking to 0:14:31.760 --> 0:14:34.800 figure out a way to get your money out of China. 0:14:35.120 --> 0:14:36.920 I think Chinese investors have been trying to do that 0:14:36.960 --> 0:14:39.200 for years and years, and you're still trying because you know, 0:14:39.440 --> 0:14:42.000 even if you were convinced the Chinese economy is a 0:14:42.080 --> 0:14:45.880 wonderful medium term or long term bet, you have to diversify, 0:14:45.960 --> 0:14:48.440 and the problem that Chinese investors have in the Chinese 0:14:48.520 --> 0:14:50.480 the problem the Chinese firms have is that they don't 0:14:50.480 --> 0:14:53.840 have enough options for diverse diversification, which is why they're 0:14:53.840 --> 0:14:56.600 constantly being shoved into the equities markets, the bond markets, 0:14:56.640 --> 0:14:59.600 the commodity markets, or property because those are the only 0:14:59.640 --> 0:15:02.360 places in China you can put your money legally. We 0:15:02.360 --> 0:15:06.320 were speaking earlier with Victor she, professor of you See 0:15:06.320 --> 0:15:08.960 San Diego, and he was talking about how they've sort 0:15:08.960 --> 0:15:11.520 of reached a point of diminishing returns where the more 0:15:11.560 --> 0:15:14.120 that China borrows, the more of the interest expenses, and 0:15:14.160 --> 0:15:18.040 they're borrowing to just cover their maintenance payments. Do you 0:15:18.160 --> 0:15:21.760 agree with that assessment. Yeah, I think Victor's work is 0:15:21.760 --> 0:15:24.280 is I can't comment on the exact numbers. We don't 0:15:24.320 --> 0:15:26.800 do that type of of deep diving the debt, but 0:15:26.920 --> 0:15:30.280 the the idea that China's debt is bigger um than 0:15:30.360 --> 0:15:32.640 than than people think. I think that's right, and I 0:15:32.680 --> 0:15:34.880 think that there is causing stresses in the system that 0:15:34.920 --> 0:15:38.200 aren't immediately apparent and certainly aren't reflected in the public data. 0:15:38.520 --> 0:15:40.440 So you have a problem. You know. One of the 0:15:40.480 --> 0:15:45.280 reasons that Lelho and other Chinese policymakers are so against 0:15:45.360 --> 0:15:48.880 another trip back to the well for more big time 0:15:48.960 --> 0:15:51.960 monetary stimulus is that they've seen what's happened. They saw 0:15:51.960 --> 0:15:56.120 what happened in the excesses of UH, They've seen the 0:15:56.200 --> 0:15:59.480 problems that came from, and they don't think they could 0:15:59.520 --> 0:16:01.240 do it again. And if they had to do it again, 0:16:01.280 --> 0:16:03.480 they think it's it's a lot more problems problematic and 0:16:03.520 --> 0:16:06.440 a lot less bang for the book. What did you 0:16:06.520 --> 0:16:10.520 make of the recent comments regarding Taiwan from the Chinese leadership. 0:16:11.760 --> 0:16:15.600 That's interesting. Usually you can expect before Taiwanese election that 0:16:16.040 --> 0:16:19.320 the Chinese leader will pull out the old Chinese playbook 0:16:19.320 --> 0:16:22.280 and talk about unification. It is interesting, though, I mean 0:16:22.360 --> 0:16:25.440 President she is under siege for his handling of trade 0:16:25.480 --> 0:16:29.200 and the weakening economy, and there are reasons to think 0:16:29.240 --> 0:16:31.520 that if if if he looks at the United States 0:16:31.560 --> 0:16:35.040 and he thinks that there's not resolved to defend Taiwan 0:16:35.160 --> 0:16:37.680 or to defend other US allies, that could be a 0:16:37.680 --> 0:16:41.440 place where he pushes back UH in order to you know, 0:16:41.560 --> 0:16:44.440 use the nationalism card back home. It's a worry more 0:16:44.480 --> 0:16:46.480 now that I would think it's been in the past. 0:16:47.000 --> 0:16:49.560 Thanks very much for being with us always enlightening. Leland 0:16:49.600 --> 0:16:52.880 Miller is the chief executive of the China Beije Book International. 0:16:53.200 --> 0:16:55.200 You can of course follow them as we do on 0:16:55.240 --> 0:17:17.880 Twitter at China Beije Book. Emerging markets debt has been 0:17:18.080 --> 0:17:20.879 rallying dramatically in the past two trading sessions along with 0:17:21.000 --> 0:17:23.440 all risk assets. Enjoining us now to talk about whether 0:17:23.480 --> 0:17:27.399 this can last is Damian Sasaur, chief Emerging markets credit 0:17:27.480 --> 0:17:31.120 strategist for Bloomberg Intelligence, joining us here in our interactive 0:17:31.160 --> 0:17:34.520 Burger Studios. So, Damien, what's your feeling do you feel 0:17:34.560 --> 0:17:37.679 like this incredible rally, which by on spreads measure, has 0:17:37.680 --> 0:17:41.640 been the best two day rally, is it sustainable? Well? 0:17:41.640 --> 0:17:44.880 First of all, happy New Year, and secondly, it's really 0:17:44.960 --> 0:17:46.679 nice to be here when I'm not talking about emerging 0:17:46.720 --> 0:17:48.879 markets melting down, So this is something new for me. 0:17:49.000 --> 0:17:51.119 But um, yeah, no, I mean just in terms of 0:17:51.800 --> 0:17:55.919 the debt load, the two maturing debt this year, um, 0:17:56.160 --> 0:17:59.359 coming out of emerging markets dollar debt that is. Yeah. No, 0:17:59.480 --> 0:18:01.520 I mean, look, we see sovereign issuance improving in the 0:18:01.520 --> 0:18:03.359 beginning of this year. We see the Philippines and Israel 0:18:03.440 --> 0:18:06.720 happy markets. Um, that's certainly a changed since the fourth 0:18:06.760 --> 0:18:09.119 court of last year when really no issuer could come 0:18:09.160 --> 0:18:12.440 to market. And and look, I mean just given where 0:18:12.480 --> 0:18:14.600 yields are now and and and and certainly where yields 0:18:14.640 --> 0:18:16.520 are in China, which we've all discussed. And I know 0:18:16.560 --> 0:18:18.320 you had a guest on yesterday who was talking to this. 0:18:18.800 --> 0:18:20.400 You know, China's got a lot of debt out there, 0:18:20.480 --> 0:18:22.120 and the fact that now they can bring that debt 0:18:22.119 --> 0:18:24.840 back home into local currency and potentially lower their cost 0:18:24.880 --> 0:18:27.160 of funds is is actually a bullish thing. So yeah, 0:18:27.160 --> 0:18:29.239 we're we're we're looking at all of that, and and 0:18:29.280 --> 0:18:32.159 things are looking a bit rosier than last year. So Damian, 0:18:32.200 --> 0:18:34.800 this one point to trillion that's gonna be rolled over 0:18:34.840 --> 0:18:37.359 in China they're gonna find buyers for that, you know, 0:18:37.440 --> 0:18:40.520 I don't know, you know, I had trouble reconciling that number. 0:18:41.000 --> 0:18:42.760 Um And you make a great point, you know, how 0:18:42.880 --> 0:18:45.119 deep and what's the breath of those local markets? You 0:18:45.119 --> 0:18:47.760 know that hasn't yet been tested, certainly not on that scale. 0:18:48.160 --> 0:18:49.800 But you know, if you just look at you know, 0:18:49.880 --> 0:18:51.760 all of the dead outstanding out of China, and I'm 0:18:51.800 --> 0:18:54.720 talking debt benchmark eligible debt, not just credit because if 0:18:54.760 --> 0:18:57.800 you kind of look at the there, I guess the 0:18:57.800 --> 0:18:59.280 big number that the b I S comes out with 0:18:59.359 --> 0:19:03.680 is that China Credit Global of China GDP. I mean, 0:19:03.680 --> 0:19:05.800 that's a huge number. They don't need to refinance all 0:19:05.840 --> 0:19:08.119 of that, and while a lot of that is short term, 0:19:08.160 --> 0:19:10.919 you know, it's pretty easy to roll it over. Specifically 0:19:10.920 --> 0:19:12.760 on local currency, we don't see that being a really 0:19:12.760 --> 0:19:14.440 big issue. I think the real issue are going to 0:19:14.480 --> 0:19:17.280 be in pockets of that market, specifically in property and 0:19:17.320 --> 0:19:20.080 specifically in high yield, where a lot of you know, 0:19:20.960 --> 0:19:24.240 issuers who have poor fundamentals have been able to issue 0:19:24.440 --> 0:19:26.760 in dollars, have been able to issue locally, and they're 0:19:26.760 --> 0:19:30.159 gonna have a lot of trouble rolling that debt over all. Right, Well, 0:19:30.240 --> 0:19:33.720 you were talking about just the general feeling and emerging 0:19:33.760 --> 0:19:35.879 markets and you're talking about the amount of debt coming. 0:19:35.920 --> 0:19:38.760 Do that you think we'll have an easier time getting 0:19:38.840 --> 0:19:41.439 rolled over now that there's a more constructive tone. And 0:19:41.480 --> 0:19:43.720 I'm just wondering, can you square the idea of a 0:19:43.840 --> 0:19:48.920 dramatically slowing Chinese economy with ongoing strength in emerging markets? 0:19:48.920 --> 0:19:53.560 Are these two ideas incompatible? Ah? Yeah, that's that's the question. 0:19:53.640 --> 0:19:56.960 Right when China catch is called e M sneezes um. Look, 0:19:57.000 --> 0:19:58.520 you you make a great point, you know. I mean, 0:19:58.600 --> 0:20:01.680 China has definitely got its issues. Growth is slowing, and 0:20:01.880 --> 0:20:03.600 I am hard pressed to find a way that they're 0:20:03.600 --> 0:20:05.840 ever going to get growth, real growth up to a 0:20:05.880 --> 0:20:09.639 point without really, uh taking on more leverage. And I 0:20:09.640 --> 0:20:11.320 think there was a real willingness on the part of 0:20:12.440 --> 0:20:14.800 President she and on the government to really you know, 0:20:14.880 --> 0:20:17.480 to really focus on the de levering program. But right now, 0:20:17.600 --> 0:20:19.800 you know, things are tough, there is pain on the ground, 0:20:19.920 --> 0:20:22.000 and they need to basically grow their economy and they're 0:20:22.000 --> 0:20:24.199 gonna try and grow the we're out of it using leverage. 0:20:24.400 --> 0:20:26.960 I think that goes without saying whether or not the 0:20:27.000 --> 0:20:29.200 market has the stomach to take on that leverage. Whether 0:20:29.240 --> 0:20:31.280 their buyers for it remains to be seen. But at 0:20:31.280 --> 0:20:33.960 this stage there's still a lot of you know, um 0:20:34.200 --> 0:20:37.440 viable assets that are trading at much more attractive levels 0:20:37.520 --> 0:20:39.200 right now than they were at this time last year, 0:20:39.240 --> 0:20:40.840 and I think that remains to be seen. You know, 0:20:41.280 --> 0:20:43.720 you really get some value today where you weren't getting 0:20:43.760 --> 0:20:45.720 any last year, and I think that's the real change. 0:20:46.200 --> 0:20:49.840 Is there a dollar squeeze going on? I think there was, 0:20:50.240 --> 0:20:52.560 you know, and I I I mean my big risk 0:20:52.640 --> 0:20:54.359 I mean going into you know, the beginning of this 0:20:54.440 --> 0:20:56.600 year was that you know, liquidity would not return to 0:20:56.640 --> 0:20:58.600 the US capital markets and that was going to kind 0:20:58.600 --> 0:21:00.840 of weigh on you know, the emerging markets. But you know, 0:21:01.480 --> 0:21:03.840 since Chair Power kind of came out and said, you know, 0:21:03.880 --> 0:21:06.040 the feed is um you know, you know, they had 0:21:06.040 --> 0:21:08.119 been dismissed on the impact of balance sheet unwind and 0:21:08.160 --> 0:21:11.080 now they're saying that FET is not on autopilot. You know. 0:21:11.400 --> 0:21:13.280 I mean, the markets have read patients for a pause, 0:21:13.320 --> 0:21:16.000