1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,560 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:32,960 Speaker 1: Podcast on Apple Podcasts, SoundCloud and Bloomberg dot com. Well, 7 00:00:32,960 --> 00:00:35,879 Speaker 1: the story may be the same across the emerging markets, 8 00:00:35,920 --> 00:00:39,559 Speaker 1: that debts are owed in dollars while revenue for a 9 00:00:39,640 --> 00:00:46,040 Speaker 1: variety of companies is actually received in devalued emerging markets currencies. 10 00:00:46,320 --> 00:00:48,919 Speaker 1: Here to tell us more about the situation and its 11 00:00:48,960 --> 00:00:52,240 Speaker 1: potential ramifications is Bill Rhodes. He's the president and the 12 00:00:52,320 --> 00:00:57,120 Speaker 1: chief executive of William R. Rhodes Global Advisors. He is 13 00:00:57,280 --> 00:01:02,000 Speaker 1: also the author of Banker to the World, Leadership Lessons 14 00:01:02,040 --> 00:01:04,880 Speaker 1: in Global Finance. Bill Rhodes, thank you very much for 15 00:01:04,880 --> 00:01:10,240 Speaker 1: coming into the studio. This issue of debts odin dollars 16 00:01:10,240 --> 00:01:14,040 Speaker 1: but companies earn in local currency. How bad is it 17 00:01:14,080 --> 00:01:17,080 Speaker 1: going to get? Well? As you know, you have my 18 00:01:17,400 --> 00:01:21,120 Speaker 1: oup ed that I did for Reuters on June twenty two, 19 00:01:21,319 --> 00:01:27,000 Speaker 1: where I forecast the situation getting worse in Argentina, although 20 00:01:27,120 --> 00:01:29,240 Speaker 1: people at that point we're optimistic because they had just 21 00:01:29,319 --> 00:01:32,240 Speaker 1: gotten a loan from the I m F, a record 22 00:01:32,280 --> 00:01:35,600 Speaker 1: loan of fifty billion dollars. And also predicted at that 23 00:01:35,640 --> 00:01:38,080 Speaker 1: point because the election hadn't taken place yet in UH 24 00:01:38,600 --> 00:01:41,520 Speaker 1: in Turkey that Van would win and it was going 25 00:01:41,560 --> 00:01:43,880 Speaker 1: to be a disaster. I went into his interest rate 26 00:01:43,880 --> 00:01:47,400 Speaker 1: policy because he thinks the best way to fight inflation 27 00:01:47,760 --> 00:01:50,720 Speaker 1: is to drop interest rates. Its unique vision of the world, 28 00:01:50,720 --> 00:01:53,160 Speaker 1: and he put his son in law in his Ministry 29 00:01:53,160 --> 00:01:57,120 Speaker 1: of Treasury and Finance to implement his program. So what 30 00:01:57,120 --> 00:01:59,640 Speaker 1: are we saying in the case of Turkey UH In 31 00:01:59,640 --> 00:02:03,200 Speaker 1: addiction into the Argentine problem, UH, we see a country 32 00:02:03,280 --> 00:02:08,280 Speaker 1: like Argentina who has tremendous indebtedness in dollars UH. And 33 00:02:08,360 --> 00:02:12,680 Speaker 1: also the banking system in Turkey is having problems because 34 00:02:12,680 --> 00:02:17,160 Speaker 1: of the build up in nonperforming because the companies in 35 00:02:17,440 --> 00:02:21,120 Speaker 1: UH in Turkey have barred very heavily in dollars. And 36 00:02:21,200 --> 00:02:24,720 Speaker 1: you have now a depreciation of the currency of some 37 00:02:24,800 --> 00:02:28,360 Speaker 1: forty three percent since the beginning of the year, inflation 38 00:02:28,520 --> 00:02:32,880 Speaker 1: reaching eighteen percent, and it's not clear what Turkey is 39 00:02:32,880 --> 00:02:34,640 Speaker 1: going to do at least in the case of Argentina, 40 00:02:34,680 --> 00:02:37,040 Speaker 1: they say they finally will get away from their gradual 41 00:02:37,080 --> 00:02:41,640 Speaker 1: list program, which they call gradualismo UH and put in 42 00:02:41,720 --> 00:02:44,280 Speaker 1: somewhat of a shock program. And the I m F 43 00:02:44,919 --> 00:02:48,800 Speaker 1: says that they will be dispersing additional money from the 44 00:02:48,840 --> 00:02:51,440 Speaker 1: fifty billions. So that's going on, but you have problems elsewhere. 45 00:02:51,480 --> 00:02:56,000 Speaker 1: South Africa also has heavy borrowings in foreign currencies, both 46 00:02:56,040 --> 00:02:59,000 Speaker 1: dollars and euros, and they're in the first recession in 47 00:02:59,160 --> 00:03:04,120 Speaker 1: nine years UH, and their currency is also reaching record lows. 48 00:03:04,160 --> 00:03:06,680 Speaker 1: And then we go back to Indonesia shades of the 49 00:03:06,720 --> 00:03:10,280 Speaker 1: Asian financial crisis, and and the value of the ruby 50 00:03:10,440 --> 00:03:14,560 Speaker 1: is UH has reached visa e the dollar, the lowest 51 00:03:14,639 --> 00:03:17,640 Speaker 1: rates in the Asian financial crisis. So we see a 52 00:03:17,720 --> 00:03:20,000 Speaker 1: lot of spreading problems. And then of course we have 53 00:03:20,080 --> 00:03:23,959 Speaker 1: the big elections in Brazil UH, you know, which is 54 00:03:24,000 --> 00:03:26,560 Speaker 1: the biggest economy of all the ones I've mentioned, And 55 00:03:26,600 --> 00:03:30,399 Speaker 1: there you have an absolute mess as to who will 56 00:03:30,440 --> 00:03:34,600 Speaker 1: emerge as a winner. The extreme right Bosonaro x army 57 00:03:34,680 --> 00:03:38,680 Speaker 1: captain who says that he's really going to basically put 58 00:03:38,720 --> 00:03:42,280 Speaker 1: the troops on the streets there permanently, or the extreme 59 00:03:42,360 --> 00:03:46,960 Speaker 1: left UH, the successor to Lula and the People's Party 60 00:03:47,080 --> 00:03:50,840 Speaker 1: and the Workers Party, and so it's very unclear what 61 00:03:50,920 --> 00:03:54,280 Speaker 1: the situation is in Brazil. So you have all the 62 00:03:54,360 --> 00:03:57,120 Speaker 1: elements of contagion. Now I'm not saying that we're looking 63 00:03:57,160 --> 00:04:01,120 Speaker 1: at two thousand seven UH or we're looking at the 64 00:04:01,160 --> 00:04:04,680 Speaker 1: Asian financial crisis, but I think we have to remember 65 00:04:04,680 --> 00:04:08,040 Speaker 1: that emerging markets can drag developed markets into the tank. 66 00:04:08,720 --> 00:04:10,880 Speaker 1: And I think the markets here in the United States, 67 00:04:10,880 --> 00:04:13,840 Speaker 1: with all this liquidity still slashing around, have not taken 68 00:04:13,840 --> 00:04:18,479 Speaker 1: into consideration that our friend Powell at the FED is 69 00:04:18,480 --> 00:04:20,640 Speaker 1: going to raise interest rates two more times this year 70 00:04:21,040 --> 00:04:23,719 Speaker 1: and we'll continue next year, and this of course puts 71 00:04:23,839 --> 00:04:26,760 Speaker 1: more pressure on the currencies and the ability of these 72 00:04:26,760 --> 00:04:29,400 Speaker 1: countries to pay. That was the origin of the eighty 73 00:04:29,440 --> 00:04:33,560 Speaker 1: two Latin American debt crisis, the Asian financial crisis. And 74 00:04:33,640 --> 00:04:37,400 Speaker 1: so I'm saying, we've seen this movie each time it's different, 75 00:04:37,880 --> 00:04:41,159 Speaker 1: but we ought to take it seriously. At what point 76 00:04:41,240 --> 00:04:44,920 Speaker 1: will it kind of hit a crucial point where there's 77 00:04:44,920 --> 00:04:47,359 Speaker 1: sort of a denue mall of some of these pressures. 78 00:04:48,680 --> 00:04:53,880 Speaker 1: I think that as you see the FED raising interest 79 00:04:53,960 --> 00:04:58,599 Speaker 1: rates and remember the running down your quantitative easing uh 80 00:04:58,680 --> 00:05:03,520 Speaker 1: in uh in your up. Uh. Droggy is restated he's 81 00:05:03,520 --> 00:05:05,479 Speaker 1: going to stop the quantitative easing by the end of 82 00:05:05,480 --> 00:05:09,120 Speaker 1: the year. So I think that people will start reflecting 83 00:05:09,160 --> 00:05:11,320 Speaker 1: that we're nine years going into ten years since the 84 00:05:11,360 --> 00:05:15,200 Speaker 1: Great Recession, and I think that maybe you might see 85 00:05:15,320 --> 00:05:18,279 Speaker 1: people starting to pull back somewhat by the end of 86 00:05:18,320 --> 00:05:22,800 Speaker 1: the year. Now. Uh. You know, the Trump administration says 87 00:05:22,800 --> 00:05:26,560 Speaker 1: Fagett about that we're onto nirvana for the next four 88 00:05:26,680 --> 00:05:29,720 Speaker 1: at least till two thousand twenty when the presidential election 89 00:05:29,760 --> 00:05:32,359 Speaker 1: will go on. But they're not taking into account some 90 00:05:32,440 --> 00:05:36,320 Speaker 1: of the the the the events and actions which I'm 91 00:05:36,360 --> 00:05:41,320 Speaker 1: talking about. So people are still out there buying stocks, 92 00:05:41,320 --> 00:05:45,640 Speaker 1: a record high of the doo, the dollars, a record high. 93 00:05:45,800 --> 00:05:49,320 Speaker 1: Unemployments a record low, could go lower. But we have 94 00:05:49,400 --> 00:05:51,640 Speaker 1: to remember that that was a similar situation at the 95 00:05:51,680 --> 00:05:54,359 Speaker 1: time of the Asian financial crisis, and it was a 96 00:05:54,360 --> 00:05:57,440 Speaker 1: similar situation. Of course, we had runaway inflation of the 97 00:05:57,520 --> 00:06:00,880 Speaker 1: in the Latin American debt crisis and were inflation so 98 00:06:00,920 --> 00:06:03,320 Speaker 1: far is very very tame. But I don't think that 99 00:06:03,360 --> 00:06:07,400 Speaker 1: the Powell Chairman Powell is going to take into consideration 100 00:06:07,520 --> 00:06:10,120 Speaker 1: what's going on in the emerging markets because his primary 101 00:06:10,160 --> 00:06:12,880 Speaker 1: responsibilities the United States of America. Yeah, this could be 102 00:06:12,920 --> 00:06:15,320 Speaker 1: a warning shot that we have much more with Bill 103 00:06:15,400 --> 00:06:18,080 Speaker 1: Rhodes coming up. Stick with us. Bill Rhodes, President, chief 104 00:06:18,120 --> 00:06:22,039 Speaker 1: executive of William R. Rhodes Global Advisors, author of the 105 00:06:22,040 --> 00:06:24,400 Speaker 1: book Banker to the World. It's a wonderful read. I 106 00:06:24,480 --> 00:06:27,320 Speaker 1: recommend you get it. He has a former senior advisor 107 00:06:28,040 --> 00:06:32,240 Speaker 1: for City Current and he helped restructure the debt of 108 00:06:32,240 --> 00:06:37,200 Speaker 1: a number of sovereign entities over the years. So fantastic insight. 109 00:06:37,279 --> 00:06:40,279 Speaker 1: We're gonna head to China next. We're waiting, uh, the 110 00:06:40,279 --> 00:06:57,440 Speaker 1: potential tariffs that could come out this week. It is 111 00:06:57,480 --> 00:07:00,680 Speaker 1: the opinion piece heard around the worlds in New York 112 00:07:00,720 --> 00:07:03,480 Speaker 1: Times op ed that was penned by an anonymous author 113 00:07:03,960 --> 00:07:08,320 Speaker 1: titled I Am part of the Resistance inside the Trump Administration. 114 00:07:08,640 --> 00:07:10,960 Speaker 1: Here to talk about the potential fallout from this is 115 00:07:11,000 --> 00:07:14,840 Speaker 1: Al Hunt, columnist with Bloomberg Opinion. Well, thank you so 116 00:07:14,920 --> 00:07:18,680 Speaker 1: much for being with us. You know, this is seemingly 117 00:07:19,040 --> 00:07:23,400 Speaker 1: a bombshell in terms of the potential effects and the 118 00:07:23,440 --> 00:07:26,360 Speaker 1: potential crisis within the White House, in terms of being 119 00:07:26,400 --> 00:07:30,440 Speaker 1: able to trust one another. What's your big takeaway, And 120 00:07:30,480 --> 00:07:32,480 Speaker 1: do you think that we're going to find out who 121 00:07:32,680 --> 00:07:37,360 Speaker 1: authored this piece? I think here's a bombshell almost every hour, Lisa, 122 00:07:37,480 --> 00:07:41,960 Speaker 1: So we've almost debased the term. But you're right, it's huge. 123 00:07:42,000 --> 00:07:44,800 Speaker 1: I've never I've been in Washington, I will confess to 124 00:07:44,840 --> 00:07:47,880 Speaker 1: you for almost half a century, I've never seen anything 125 00:07:48,120 --> 00:07:51,800 Speaker 1: quite like this these last couple of weeks. I think 126 00:07:51,920 --> 00:07:56,080 Speaker 1: it was an extraordinary column. One can argue about whether 127 00:07:56,600 --> 00:07:59,040 Speaker 1: it should have been written or not, but I have 128 00:07:59,160 --> 00:08:01,880 Speaker 1: no doubt in the New York Times editorial page editor 129 00:08:01,920 --> 00:08:06,400 Speaker 1: that it was. It was modified, But it's also not surprising. Uh. 130 00:08:06,880 --> 00:08:09,640 Speaker 1: It conforms with what Bob Woodward has written, has come 131 00:08:09,640 --> 00:08:11,960 Speaker 1: out this week. It conforms that what's been reported by 132 00:08:12,000 --> 00:08:15,040 Speaker 1: major news organization. It conforms that what we know about 133 00:08:15,120 --> 00:08:17,600 Speaker 1: Donald Trump. And the other point I would make me 134 00:08:17,680 --> 00:08:21,440 Speaker 1: say is it's hard to imagine these series of inside 135 00:08:21,480 --> 00:08:25,760 Speaker 1: revelations from any other president. For a simple reason, they 136 00:08:25,800 --> 00:08:30,080 Speaker 1: commanded some loyalty. Trump commands no loyalty. For a very 137 00:08:30,080 --> 00:08:34,800 Speaker 1: simple reason. He gives no loyalty. Al Hunt. All right, 138 00:08:34,840 --> 00:08:38,040 Speaker 1: you've been at it for, as you said, almost half 139 00:08:38,080 --> 00:08:39,920 Speaker 1: a century. I was going to ask you what it 140 00:08:40,000 --> 00:08:43,560 Speaker 1: was like to cover the administration of Woodrow Wilson. Uh. Well, 141 00:08:43,559 --> 00:08:46,720 Speaker 1: the McKinley years were the best, Yeah, weren't they. The 142 00:08:46,800 --> 00:08:50,000 Speaker 1: reason I bring up Woodrow Wilson is because the substance 143 00:08:50,520 --> 00:08:54,040 Speaker 1: of the op ED makes it clear that there's a 144 00:08:54,120 --> 00:08:58,160 Speaker 1: cadre of officials who are working behind the scenes in 145 00:08:58,320 --> 00:09:03,000 Speaker 1: order to restrain the president or guide the president, whoever 146 00:09:03,040 --> 00:09:06,160 Speaker 1: you want to describe it. But we've had situations like 147 00:09:06,280 --> 00:09:10,080 Speaker 1: this before, haven't we. Yeah, we have. When Wilson was incapacitated, 148 00:09:10,160 --> 00:09:14,120 Speaker 1: that was the case. Um. But but that was in 149 00:09:14,200 --> 00:09:19,280 Speaker 1: nineteen nineteen twenty. It was before the nuclear age. It 150 00:09:19,360 --> 00:09:22,280 Speaker 1: was easier to do that in those times. There was 151 00:09:22,320 --> 00:09:25,479 Speaker 1: a sense that the people that we're doing it were 152 00:09:25,720 --> 00:09:30,800 Speaker 1: generally reflecting Wilson's policies wishes. He also was very much 153 00:09:30,840 --> 00:09:33,160 Speaker 1: of a of a lame duck president. He couldn't get 154 00:09:33,200 --> 00:09:35,439 Speaker 1: the Liga Nations through or any of that. I think 155 00:09:35,559 --> 00:09:38,960 Speaker 1: this is different and it's more serious because I think 156 00:09:39,040 --> 00:09:44,000 Speaker 1: you have you know a man who is um I 157 00:09:44,040 --> 00:09:46,720 Speaker 1: want to say, psychologically unsuited for the job. That's not 158 00:09:46,760 --> 00:09:50,840 Speaker 1: my expertise, but certainly he is substantially in temperamentally and 159 00:09:50,880 --> 00:09:53,880 Speaker 1: emotionally unfit for the job, and that makes him dangerous 160 00:09:54,000 --> 00:09:57,000 Speaker 1: and I think people around him know that. And secondly, 161 00:09:57,080 --> 00:09:58,959 Speaker 1: with a couple exceptions, and I would point out Jim 162 00:09:58,960 --> 00:10:01,040 Speaker 1: Mattis certainly as one. There aren't a whole lot of 163 00:10:01,080 --> 00:10:04,240 Speaker 1: really good people around me, So I have to wonder. 164 00:10:04,360 --> 00:10:09,920 Speaker 1: I mean, markets have treated what you're describing. Uh, They've 165 00:10:09,920 --> 00:10:12,920 Speaker 1: simply shrugged it off. And any turmoil seen in the 166 00:10:12,920 --> 00:10:16,120 Speaker 1: White House hasn't necessarily bled out into the markets at all. 167 00:10:17,160 --> 00:10:20,360 Speaker 1: That might change when it comes to the mid term elections, 168 00:10:20,600 --> 00:10:23,560 Speaker 1: and that is where the focus is right now, and 169 00:10:23,679 --> 00:10:26,280 Speaker 1: especially as we see these contentious hearings going on in 170 00:10:26,280 --> 00:10:28,720 Speaker 1: the Senate right now with Brett kavanaught to become the 171 00:10:28,800 --> 00:10:33,880 Speaker 1: next Supreme Court member. Do you think that pieces like 172 00:10:33,920 --> 00:10:36,720 Speaker 1: what we saw in the New York Times weaken Republican 173 00:10:36,760 --> 00:10:40,960 Speaker 1: power more generally or just go after President Trump himself 174 00:10:41,000 --> 00:10:44,600 Speaker 1: and his leadership. Well, I think it's hard to divorce 175 00:10:45,080 --> 00:10:47,880 Speaker 1: the popularity in the standing of a present from that 176 00:10:48,040 --> 00:10:50,240 Speaker 1: of his party in the mid term elections. There are 177 00:10:50,240 --> 00:10:53,680 Speaker 1: other factors, but I would be I would be stunned 178 00:10:53,679 --> 00:10:56,920 Speaker 1: if the Democrats don't have a pretty big night in November. 179 00:10:57,520 --> 00:11:00,480 Speaker 1: I think they'll take back the half. Probably not the Senate, 180 00:11:00,520 --> 00:11:02,560 Speaker 1: but the Republicans won't make the kind of games they 181 00:11:02,600 --> 00:11:05,800 Speaker 1: once expected in the Senate. Democrats probably win. I don't 182 00:11:05,800 --> 00:11:09,840 Speaker 1: know seven eight ten governorships, including some big ones. I 183 00:11:09,880 --> 00:11:12,760 Speaker 1: don't know how the market will react to that. I 184 00:11:12,840 --> 00:11:15,120 Speaker 1: do have a feeling that Trump won't react well to 185 00:11:15,200 --> 00:11:19,240 Speaker 1: that al hunt. We've been monitoring the hearings that are 186 00:11:19,240 --> 00:11:24,080 Speaker 1: currently taking place before the Senate Judiciary Committee. The hearings 187 00:11:24,240 --> 00:11:28,960 Speaker 1: to speak to an illicit information from Judge Brett Kavanaugh, 188 00:11:29,120 --> 00:11:34,040 Speaker 1: appointed to the U. S. Supreme Court. The senators that 189 00:11:34,080 --> 00:11:36,679 Speaker 1: are on the committee, they've been in the Senate a 190 00:11:36,720 --> 00:11:39,760 Speaker 1: long time. So does the argument that O G. It 191 00:11:39,880 --> 00:11:42,760 Speaker 1: used to be collegial in the past, does that really 192 00:11:42,760 --> 00:11:46,199 Speaker 1: hold any water. It's exaggerated. I think it's worse today, 193 00:11:46,240 --> 00:11:50,480 Speaker 1: but it's exaggerated. Don't forget the board hearings. Uh, you know, 194 00:11:50,600 --> 00:11:53,080 Speaker 1: don't forget that there was a time back in the 195 00:11:53,160 --> 00:11:56,280 Speaker 1: sixties where Republicans were trying to impeach a Supreme Court 196 00:11:56,400 --> 00:11:59,480 Speaker 1: Justice William O. Douglas. So the idea that it was 197 00:11:59,520 --> 00:12:02,280 Speaker 1: all these come by I moments before and now it's 198 00:12:02,280 --> 00:12:05,280 Speaker 1: really nasty and ugly is exaggerated, but it certainly there 199 00:12:05,360 --> 00:12:08,760 Speaker 1: was more comedy. Uh, there was more collegiality than there 200 00:12:08,840 --> 00:12:11,520 Speaker 1: was less, less bitterness than there was before. I think 201 00:12:11,600 --> 00:12:14,920 Speaker 1: there really the Democrats know they're almost certainly going to 202 00:12:15,040 --> 00:12:18,000 Speaker 1: lose this one. I think what really embitters them though, 203 00:12:18,160 --> 00:12:23,800 Speaker 1: is how really unconsciably h Merrick Garland was treated in 204 00:12:23,800 --> 00:12:26,439 Speaker 1: two thousand sixteen by Mitch McConnell and the Republicans. He 205 00:12:26,440 --> 00:12:28,600 Speaker 1: should said, the should have been a vote on Judge Garland, 206 00:12:28,920 --> 00:12:30,800 Speaker 1: just as there should be a vote on Judge Kavanall. 207 00:12:31,120 --> 00:12:34,120 Speaker 1: I think that bitterness is carried over and they're fighting 208 00:12:34,160 --> 00:12:38,080 Speaker 1: a losing battle, but they really feel aggrieved. Do you 209 00:12:38,160 --> 00:12:41,319 Speaker 1: think that there will be any blowback when Mitch McConnell 210 00:12:42,240 --> 00:12:47,920 Speaker 1: maybe takes the Senate floor, if indeed the Democrats are 211 00:12:47,920 --> 00:12:50,560 Speaker 1: in the majority in the House after the midterm elections, 212 00:12:50,559 --> 00:12:53,599 Speaker 1: as you describe, well, he's got a he's got a 213 00:12:53,679 --> 00:12:56,880 Speaker 1: very difficult act because he's going to have to deal 214 00:12:56,920 --> 00:12:59,199 Speaker 1: with Trump, he's going to have to deal with his caucuss, 215 00:12:59,200 --> 00:13:01,240 Speaker 1: and he's gonna have to deal with the likelihood of 216 00:13:01,240 --> 00:13:05,160 Speaker 1: a Democratic speaker and majority leader. And he's up for 217 00:13:05,240 --> 00:13:08,440 Speaker 1: reelection in two thousand and twenty. And as we say, 218 00:13:08,480 --> 00:13:10,920 Speaker 1: he ain't a spring chicken, so he's got he You know, 219 00:13:10,920 --> 00:13:13,040 Speaker 1: Mitch McConnell is going to have a lot of conflicts 220 00:13:13,080 --> 00:13:16,160 Speaker 1: come next January. All right, we're gonna leave it there, 221 00:13:16,160 --> 00:13:20,120 Speaker 1: but thanks very much. Bloomberg opinion columnist Al Hunt on 222 00:13:20,240 --> 00:13:24,800 Speaker 1: the ins and outs and ups and downs in Washington, 223 00:13:24,960 --> 00:13:45,240 Speaker 1: d C. Ostensibly the tech hearings on Capitol Hill this week, 224 00:13:45,480 --> 00:13:49,160 Speaker 1: or to assess the national security concerns, especially given the 225 00:13:49,280 --> 00:13:55,040 Speaker 1: foreign interference in domestic elections. What we got wasn't necessarily 226 00:13:55,080 --> 00:13:57,160 Speaker 1: that joining us now to talk about what that means 227 00:13:57,200 --> 00:14:00,720 Speaker 1: going forward in terms of oversight and NASH security. As 228 00:14:00,720 --> 00:14:04,239 Speaker 1: Clint Watts, Senior Fellow at the Foreign Policy Research Institute, 229 00:14:04,240 --> 00:14:06,280 Speaker 1: also a Senior Fellow at the Center for Cyber and 230 00:14:06,320 --> 00:14:09,800 Speaker 1: Homeland Security at the George Washington University, UH he has 231 00:14:09,840 --> 00:14:12,440 Speaker 1: served in the U. S. Army, the FBI, the Joint 232 00:14:12,520 --> 00:14:15,839 Speaker 1: Terrorism Task Force, as well as a number of other agencies. Clint, 233 00:14:15,880 --> 00:14:18,640 Speaker 1: thank you so much for being with us. So what's 234 00:14:18,640 --> 00:14:21,200 Speaker 1: the big takeaway from these hearings. The big takeaway, I 235 00:14:21,200 --> 00:14:24,040 Speaker 1: think is that social media is in trouble, but it's 236 00:14:24,040 --> 00:14:27,160 Speaker 1: not necessarily with the government meaning that. I think what 237 00:14:27,200 --> 00:14:29,440 Speaker 1: we saw in the Senate yesterday was the social media 238 00:14:29,440 --> 00:14:33,360 Speaker 1: companies have moved faster than the regulators. I'll give you 239 00:14:33,400 --> 00:14:36,280 Speaker 1: one example, the Honest Ads Act, which was essentially the 240 00:14:36,320 --> 00:14:40,280 Speaker 1: way we have political advertising on print, radio, and television 241 00:14:40,280 --> 00:14:42,920 Speaker 1: should be in social media as well. Social media companies 242 00:14:42,920 --> 00:14:44,880 Speaker 1: have already kind of done that on their own, you know, 243 00:14:44,920 --> 00:14:47,840 Speaker 1: they've moved to match these and yet Congress hasn't passed 244 00:14:47,840 --> 00:14:50,560 Speaker 1: these very simple laws from two years ago. At the 245 00:14:50,560 --> 00:14:52,040 Speaker 1: same point, when we saw in the House as this 246 00:14:52,080 --> 00:14:55,040 Speaker 1: sort of bickering around politics, it was like a politics show, 247 00:14:55,360 --> 00:14:57,400 Speaker 1: and the social media companies were there. It was rather 248 00:14:57,520 --> 00:15:01,480 Speaker 1: silly to watch. So I I think the regulation is 249 00:15:01,480 --> 00:15:03,040 Speaker 1: not going to come from the US. With the social 250 00:15:03,040 --> 00:15:05,560 Speaker 1: media company sphere is the EU. They have moved much 251 00:15:05,560 --> 00:15:09,280 Speaker 1: more aggressively about data privacy, and I think there was 252 00:15:09,320 --> 00:15:12,280 Speaker 1: a pure research report that talked about how young people 253 00:15:12,280 --> 00:15:14,920 Speaker 1: have marched away from Facebook, you know, deleting the app, 254 00:15:15,560 --> 00:15:17,760 Speaker 1: not willing to be on the platform anymore. That is 255 00:15:17,800 --> 00:15:19,640 Speaker 1: the big fear I think for social media. It's going 256 00:15:19,680 --> 00:15:22,760 Speaker 1: to come from outside the government. Now do we all 257 00:15:22,800 --> 00:15:26,040 Speaker 1: need to go and rewatch the movie with Scarlett Johansson 258 00:15:26,240 --> 00:15:29,800 Speaker 1: and Joaquin Phoenix called her and which she has he 259 00:15:29,880 --> 00:15:34,320 Speaker 1: has a relationship with what is ostensibly an artificially intelligence 260 00:15:34,880 --> 00:15:39,520 Speaker 1: powered personality. Yeah, I I worry about three audiences for 261 00:15:39,640 --> 00:15:44,040 Speaker 1: different reasons. In foreign influence, I'm most worried about the 262 00:15:44,120 --> 00:15:46,800 Speaker 1: Third world countries that are coming online. They've never really 263 00:15:46,800 --> 00:15:49,480 Speaker 1: been on newspapers. Their first experience with the Internet is 264 00:15:49,520 --> 00:15:52,480 Speaker 1: through a social media app. They don't say let's Google something, 265 00:15:52,520 --> 00:15:55,040 Speaker 1: they say let's Facebook something. You are in a bubble. 266 00:15:55,440 --> 00:15:58,160 Speaker 1: The second one is actually the older generation in America. 267 00:15:58,160 --> 00:15:59,640 Speaker 1: If you look at the people that have stayed on 268 00:15:59,680 --> 00:16:02,720 Speaker 1: the plant forms it, they are inexperience with it. They 269 00:16:02,760 --> 00:16:05,040 Speaker 1: don't know when they're getting duped. They're not used to 270 00:16:05,040 --> 00:16:07,760 Speaker 1: these digital communications, and they're the most aggressive about their 271 00:16:07,760 --> 00:16:10,760 Speaker 1: political views and kind of corrodes the environment. The third 272 00:16:10,760 --> 00:16:13,480 Speaker 1: one is young people who are marching away in some 273 00:16:13,560 --> 00:16:16,400 Speaker 1: respects from social media and moving to what you talked about, 274 00:16:16,440 --> 00:16:20,120 Speaker 1: these apps or artificial intelligence. And I like to say, 275 00:16:20,200 --> 00:16:22,840 Speaker 1: were we were worried about the matrix overtaking our young 276 00:16:22,880 --> 00:16:26,080 Speaker 1: people are young people will enlist in the matrix, They 277 00:16:26,120 --> 00:16:28,000 Speaker 1: will love it. They want to be in the matrix 278 00:16:28,000 --> 00:16:30,240 Speaker 1: because it's more satisfying than the real world. That's what 279 00:16:30,280 --> 00:16:33,920 Speaker 1: I'm really concerned about for the next generation that moves up. So, Clint, 280 00:16:34,040 --> 00:16:37,960 Speaker 1: given what we saw from the Senate yesterday and given 281 00:16:38,000 --> 00:16:39,280 Speaker 1: the fact that we didn't get a lot of hard 282 00:16:39,360 --> 00:16:44,240 Speaker 1: questioning on the actual national security aspects of this, what's 283 00:16:44,240 --> 00:16:47,800 Speaker 1: your feeling about how we're going to address this, especially 284 00:16:47,800 --> 00:16:50,960 Speaker 1: in light of the discord that we're seeing in the 285 00:16:50,960 --> 00:16:53,400 Speaker 1: White House right now. I mean, is this concerning to you? Yeah? 286 00:16:53,440 --> 00:16:55,880 Speaker 1: I think Well, we'll see over time as a fragmentation 287 00:16:56,080 --> 00:16:58,520 Speaker 1: of social media into apps that is similar to the 288 00:16:58,600 --> 00:17:00,800 Speaker 1: way we saw a television sort of breakdown in cable 289 00:17:00,840 --> 00:17:03,600 Speaker 1: TV news, meaning that people will start to move to 290 00:17:03,800 --> 00:17:07,040 Speaker 1: platforms based on whether they satisfy their political views, and 291 00:17:07,040 --> 00:17:10,120 Speaker 1: this will harden us into I call them preference bubbles. 292 00:17:10,119 --> 00:17:12,280 Speaker 1: It's part the algorithm which feeds you things you want 293 00:17:12,520 --> 00:17:14,760 Speaker 1: and part your own choices. You continue to choose things 294 00:17:14,840 --> 00:17:16,199 Speaker 1: you like and you get more of what you like. 295 00:17:16,400 --> 00:17:20,600 Speaker 1: And so this sort of breakdown is troubling for democracy 296 00:17:20,640 --> 00:17:23,320 Speaker 1: because if you don't agree on facts, which is critical 297 00:17:23,359 --> 00:17:26,360 Speaker 1: you can have in foreign policy debate, you get gridlock 298 00:17:26,400 --> 00:17:29,240 Speaker 1: in Congress, much like we've already seen. You see sort 299 00:17:29,240 --> 00:17:32,000 Speaker 1: of see flip flopping back and forth between political parties 300 00:17:32,040 --> 00:17:34,840 Speaker 1: around the world, in democracies where it's right then left, 301 00:17:34,880 --> 00:17:38,040 Speaker 1: and right and left and you really can't secure the country. 302 00:17:38,280 --> 00:17:41,720 Speaker 1: It becomes uh for those that can manipulate the platforms, 303 00:17:41,720 --> 00:17:44,400 Speaker 1: those that can manipulate people's minds. I really think we're 304 00:17:44,480 --> 00:17:49,080 Speaker 1: entering an area where authoritarians have figured out, after open media, 305 00:17:49,200 --> 00:17:51,600 Speaker 1: how to control it and and really how to dominate it. 306 00:17:52,600 --> 00:17:56,320 Speaker 1: Messing with the enemy surviving in a social media world 307 00:17:56,359 --> 00:18:00,479 Speaker 1: of hackers, terrorists, Russians and fake news. This is your 308 00:18:00,560 --> 00:18:05,960 Speaker 1: latest book, What do you recommend people do? I think 309 00:18:06,119 --> 00:18:08,480 Speaker 1: the big thing we can do is get back to 310 00:18:08,640 --> 00:18:12,040 Speaker 1: picking good filters. We have gone through this era over 311 00:18:12,080 --> 00:18:14,520 Speaker 1: the last thirty years that unfiltered is better and that 312 00:18:14,560 --> 00:18:17,439 Speaker 1: goes for everything. If you remember movies, the unrated, the 313 00:18:17,480 --> 00:18:20,480 Speaker 1: un conversion, and that we actually know what's good for 314 00:18:20,640 --> 00:18:24,679 Speaker 1: no brokers, no middlemen, middle women, and this raw reporting, 315 00:18:24,840 --> 00:18:28,399 Speaker 1: raw feeds. If I see the actual emails, I'll be 316 00:18:28,440 --> 00:18:31,440 Speaker 1: able to know the context of everything. Actually is a 317 00:18:31,520 --> 00:18:34,280 Speaker 1: true know when you're an expert, and know when you're not. 318 00:18:34,960 --> 00:18:37,240 Speaker 1: We believe that if we have a connection to the Internet. 319 00:18:37,240 --> 00:18:39,800 Speaker 1: We're just as smart as everybody else. And there's a 320 00:18:39,800 --> 00:18:42,280 Speaker 1: guy named Tom Nichols. It talks about the death of expertise. 321 00:18:42,720 --> 00:18:45,320 Speaker 1: We need to recognize when we are strong and when 322 00:18:45,320 --> 00:18:48,080 Speaker 1: we're not, and when we're not what filters to gravitate towards. 323 00:18:48,119 --> 00:18:51,879 Speaker 1: And I think ultimately moving back to having responsible journalism, 324 00:18:51,960 --> 00:18:56,560 Speaker 1: responsible news outlets, going to information sources that have an 325 00:18:56,640 --> 00:18:59,240 Speaker 1: editorial process is a good thing, not a bad thing, 326 00:18:59,320 --> 00:19:02,200 Speaker 1: and that people need to realize sometimes they are misleading 327 00:19:02,240 --> 00:19:04,119 Speaker 1: themselves and they have no one else to blame but 328 00:19:04,200 --> 00:19:06,320 Speaker 1: themselves for doing that. Clint, we just have about a 329 00:19:06,320 --> 00:19:08,200 Speaker 1: minute here, but I'd love to get your thoughts on 330 00:19:08,520 --> 00:19:11,280 Speaker 1: the anonymous op ed that was published the New York Times. 331 00:19:11,760 --> 00:19:14,199 Speaker 1: I We'm wondering, you know, President Trump said that this 332 00:19:14,320 --> 00:19:19,280 Speaker 1: is a national security concern. Is it? I think he 333 00:19:19,400 --> 00:19:22,679 Speaker 1: has a a small part of truth possibly in it, 334 00:19:22,680 --> 00:19:25,800 Speaker 1: which is consistent with his rhetoric. But what if we 335 00:19:25,880 --> 00:19:28,920 Speaker 1: have officials in the executive branch that aren't following orders, 336 00:19:28,960 --> 00:19:32,560 Speaker 1: are not following procedures, are not following laws, and that 337 00:19:32,680 --> 00:19:35,560 Speaker 1: is a soft revolt in some ways, it can be 338 00:19:35,840 --> 00:19:40,240 Speaker 1: viewed that way. At the same point, we're seeing someone 339 00:19:40,640 --> 00:19:43,240 Speaker 1: who's leading the White House in many ways, breaking political 340 00:19:43,280 --> 00:19:46,400 Speaker 1: norms and testing things that our Constitution really did never 341 00:19:46,480 --> 00:19:48,639 Speaker 1: think would happen. Right, We we have gaps in our 342 00:19:48,720 --> 00:19:53,160 Speaker 1: laws essentially. So yeah, I'm concerned. You know, if everybody 343 00:19:53,200 --> 00:19:55,399 Speaker 1: does their job and follows the constitution. I like to 344 00:19:55,400 --> 00:19:57,600 Speaker 1: look at Rod Rosenstein. I think that's a great example 345 00:19:57,600 --> 00:20:00,399 Speaker 1: over the last year. Someone who follows procedure, knows the 346 00:20:00,560 --> 00:20:03,440 Speaker 1: roles in regardless of political parties, stands as the ground. 347 00:20:03,440 --> 00:20:05,200 Speaker 1: If we have people like that, I think the country 348 00:20:05,280 --> 00:20:07,159 Speaker 1: is fine. But if we don't, if we start breaking 349 00:20:07,200 --> 00:20:10,399 Speaker 1: into this separate competing polls, then I'm going to get 350 00:20:10,480 --> 00:20:13,520 Speaker 1: a little bit concerned. Thanks very much for being with us. 351 00:20:13,600 --> 00:20:16,080 Speaker 1: Clint Watts is a senior Fellow at the Foreign Policy 352 00:20:16,200 --> 00:20:19,480 Speaker 1: Research Institute. He's also a senior Fellow at the Center 353 00:20:19,520 --> 00:20:23,280 Speaker 1: for Cyber and Homeland Security at the George Washington University. 354 00:20:23,520 --> 00:20:27,240 Speaker 1: You can follow him on Twitter at Selected Wisdom. His 355 00:20:27,359 --> 00:20:45,240 Speaker 1: new book, Messing with the Enemy. You know, so when 356 00:20:45,240 --> 00:20:49,800 Speaker 1: you think of biotechnology companies, you think of Cambridge, Massachusetts. 357 00:20:49,960 --> 00:20:54,760 Speaker 1: You think of Silicon Valley San Diego in California, of course, 358 00:20:54,960 --> 00:20:58,680 Speaker 1: but you don't necessarily think of China, and that is changing. 359 00:20:58,760 --> 00:21:03,000 Speaker 1: One of the reasons that's changing is that Chinese authorities, 360 00:21:03,000 --> 00:21:07,640 Speaker 1: the government there has actually stipulated that the biotechnology sector 361 00:21:08,000 --> 00:21:11,959 Speaker 1: should account for in excess of four percent of gross 362 00:21:11,960 --> 00:21:15,719 Speaker 1: domestic product by twenty twenty and that there should be 363 00:21:15,720 --> 00:21:19,480 Speaker 1: between ten to twenty life science parks that are dedicated 364 00:21:19,640 --> 00:21:22,800 Speaker 1: for bio medicine. And here to tell us more about 365 00:21:22,880 --> 00:21:26,520 Speaker 1: this particular aspect of the industry is Brad long Car. 366 00:21:26,640 --> 00:21:29,560 Speaker 1: He is the chief executive of Long Car Investments. They're 367 00:21:29,600 --> 00:21:33,800 Speaker 1: based in Lenexa, Kansas. He's also the index provider for 368 00:21:33,920 --> 00:21:35,960 Speaker 1: a new E t F. It is called the Long 369 00:21:36,000 --> 00:21:40,240 Speaker 1: Car China bio Pharma E t F. The symbolist C 370 00:21:40,680 --> 00:21:44,240 Speaker 1: H and A and he joins us here in studio. Brad, 371 00:21:44,280 --> 00:21:47,480 Speaker 1: thank you very much for being here. Did I describe 372 00:21:47,520 --> 00:21:51,280 Speaker 1: that correctly visa v. The Chinese government and what their 373 00:21:51,320 --> 00:21:54,920 Speaker 1: plans are for the biotech sector in China. Absolutely, thanks 374 00:21:54,920 --> 00:21:57,040 Speaker 1: for having me. You hit the nail right on the head. 375 00:21:57,080 --> 00:21:59,679 Speaker 1: There's four or five elements that are making this happen. 376 00:21:59,760 --> 00:22:02,159 Speaker 1: In the government is a big one. They have a 377 00:22:02,200 --> 00:22:06,479 Speaker 1: program called Made in China and the goal behind that 378 00:22:06,520 --> 00:22:11,280 Speaker 1: program is to upgrade their economy to hire value sectors. 379 00:22:11,359 --> 00:22:15,280 Speaker 1: Everyone of course thinks of China is a manufacturing based economy. 380 00:22:15,320 --> 00:22:17,760 Speaker 1: They want to be leaders in tech and biotech, and 381 00:22:17,840 --> 00:22:20,320 Speaker 1: so they're putting a lot of effort behind that. But 382 00:22:20,840 --> 00:22:23,880 Speaker 1: that's really just one element. It's obviously an important one, 383 00:22:24,040 --> 00:22:27,879 Speaker 1: but you know, until today, China didn't really even have 384 00:22:28,040 --> 00:22:31,520 Speaker 1: a biotech sector. For example, the Hong Kong Stock Exchange 385 00:22:31,560 --> 00:22:34,720 Speaker 1: had a rule that said, if you don't earn revenue, 386 00:22:35,000 --> 00:22:37,480 Speaker 1: you can't list on our exchange. And so if you 387 00:22:37,520 --> 00:22:40,720 Speaker 1: think about it, most biotech companies are conducting science and 388 00:22:40,760 --> 00:22:44,560 Speaker 1: developing new things and don't earn revenue. And so the 389 00:22:44,600 --> 00:22:48,760 Speaker 1: exchange realized that innovation is what drives a global economy, 390 00:22:48,880 --> 00:22:52,480 Speaker 1: just like the government, and on April thirty, they instituted 391 00:22:52,520 --> 00:22:57,160 Speaker 1: a new rule specifically for biotech companies that allow biotech 392 00:22:57,160 --> 00:23:00,400 Speaker 1: companies to list there for the very first time. Already 393 00:23:00,480 --> 00:23:02,920 Speaker 1: ten have signed up to I p O and two 394 00:23:02,960 --> 00:23:06,400 Speaker 1: have happened, a company called ask Leidas and another one 395 00:23:06,440 --> 00:23:09,119 Speaker 1: by jen which already trades here on the NASTAC. And 396 00:23:09,720 --> 00:23:12,320 Speaker 1: we think there may be dozens and dozens over the 397 00:23:12,359 --> 00:23:15,400 Speaker 1: coming year, and so I think this is an exciting 398 00:23:15,440 --> 00:23:18,479 Speaker 1: moment because it may be just the very start of 399 00:23:18,520 --> 00:23:21,920 Speaker 1: their biotech sector. I'm struck by the concept of trying 400 00:23:21,960 --> 00:23:27,879 Speaker 1: to craft an index select stocks on Chinese indexes to 401 00:23:27,960 --> 00:23:30,800 Speaker 1: put into your e t F for the the index 402 00:23:30,840 --> 00:23:33,000 Speaker 1: that that sort of creates the benchmark for the e 403 00:23:33,119 --> 00:23:36,879 Speaker 1: t F. How concerned are you about transparency and a 404 00:23:37,000 --> 00:23:41,800 Speaker 1: lack of it that is traditionally endemic in China, especially 405 00:23:41,840 --> 00:23:46,760 Speaker 1: as it relates to the incredible, already volatile industry of biotechnology. Yeah, 406 00:23:46,840 --> 00:23:49,560 Speaker 1: that's an excellent question. So that's certainly an issue that 407 00:23:49,640 --> 00:23:52,359 Speaker 1: you have to be very aware of, and in terms 408 00:23:52,359 --> 00:23:56,200 Speaker 1: of our thinking on that, when we crafted the index, UM, 409 00:23:56,240 --> 00:23:58,960 Speaker 1: we only allow companies that are listed in Hong Kong 410 00:23:59,119 --> 00:24:01,679 Speaker 1: or here on naz back. We don't allow companies that 411 00:24:01,720 --> 00:24:05,200 Speaker 1: are only listed in mainly in China, and the reason 412 00:24:05,240 --> 00:24:08,520 Speaker 1: for that is those are global exchanges, and we're not 413 00:24:08,560 --> 00:24:11,119 Speaker 1: just looking for companies that want to be leaders in 414 00:24:11,400 --> 00:24:14,919 Speaker 1: China domestically. We're looking for Chinese companies that want to 415 00:24:14,920 --> 00:24:17,760 Speaker 1: be global leaders in this industry. And we think those 416 00:24:17,760 --> 00:24:21,560 Speaker 1: types of companies are signing up for those two exchanges 417 00:24:21,640 --> 00:24:25,159 Speaker 1: because they're outward facing and UM they have a higher 418 00:24:25,160 --> 00:24:29,600 Speaker 1: degree of investor sophistication and scrutiny, and in terms of 419 00:24:29,600 --> 00:24:33,160 Speaker 1: the actual selection, we're not picking our favorite stocks or anything. 420 00:24:33,200 --> 00:24:36,080 Speaker 1: We're just trying to represent the entire industry. So if 421 00:24:36,080 --> 00:24:39,360 Speaker 1: you're a true biotech or pharmaceutical company listed on those 422 00:24:39,359 --> 00:24:43,159 Speaker 1: two exchanges, you're included. And then we give extra waiting 423 00:24:43,200 --> 00:24:46,520 Speaker 1: for larger companies to give them credit for their size 424 00:24:46,560 --> 00:24:50,320 Speaker 1: and stability. Now you need to make the distinction between 425 00:24:50,520 --> 00:24:55,680 Speaker 1: companies that are offering biotechnology solutions in China and they 426 00:24:55,720 --> 00:24:59,919 Speaker 1: be foreign based as opposed to those that are domestically based. Correct, 427 00:25:00,240 --> 00:25:03,960 Speaker 1: that's right, that's right. We have two criteria. You either 428 00:25:04,040 --> 00:25:07,199 Speaker 1: have to have your headquarters in China or you have 429 00:25:07,320 --> 00:25:10,679 Speaker 1: to drive fifty one percent of either your revenue or 430 00:25:10,720 --> 00:25:13,440 Speaker 1: your pipeline value. So if it's just like the US 431 00:25:13,520 --> 00:25:17,480 Speaker 1: company that's dabbling in the region, it wouldn't be included 432 00:25:17,480 --> 00:25:20,600 Speaker 1: in this. We only want companies that are focused or 433 00:25:20,800 --> 00:25:24,199 Speaker 1: based in um in that geography. One thing that I'm 434 00:25:24,240 --> 00:25:28,280 Speaker 1: struck by is if you're targeting companies with global ambitions, 435 00:25:28,960 --> 00:25:31,840 Speaker 1: how do the recent trade tensions factor in, if at all? 436 00:25:31,920 --> 00:25:33,919 Speaker 1: Given the fact that the U S and China appear 437 00:25:33,960 --> 00:25:37,600 Speaker 1: to be in an escalating spat. It's affected the valuations 438 00:25:37,640 --> 00:25:40,760 Speaker 1: a lot. So, um the stocks are down about thirty 439 00:25:40,840 --> 00:25:44,000 Speaker 1: percent over the last two months for that reason. And 440 00:25:44,040 --> 00:25:47,640 Speaker 1: also there's a vaccine scandal issue that's going on there 441 00:25:47,720 --> 00:25:51,840 Speaker 1: right now. Um, so it's affected sentiment a lot. But 442 00:25:51,920 --> 00:25:55,040 Speaker 1: I actually don't think it will hurt this industry fundamentally. 443 00:25:55,160 --> 00:25:58,080 Speaker 1: I think both the United States and China see this 444 00:25:58,160 --> 00:26:01,040 Speaker 1: sector something that affects hugh and health and they don't 445 00:26:01,040 --> 00:26:03,600 Speaker 1: want to use that as a bartering tool. So, for example, 446 00:26:04,160 --> 00:26:07,000 Speaker 1: a couple of weeks before the trade war started, China 447 00:26:07,200 --> 00:26:12,119 Speaker 1: completely eliminated tariffs on cancer medicines to zero, and they 448 00:26:12,160 --> 00:26:14,119 Speaker 1: said they want to do that for other types of 449 00:26:14,160 --> 00:26:17,159 Speaker 1: innovative medicines. And I don't think the timing of that 450 00:26:17,280 --> 00:26:20,960 Speaker 1: was accidental. I think they did that as a message 451 00:26:21,000 --> 00:26:22,919 Speaker 1: to say, we don't really want to, you know, do 452 00:26:23,040 --> 00:26:25,120 Speaker 1: something that's going to affect the you know, the health 453 00:26:25,160 --> 00:26:28,840 Speaker 1: and well being of the citizens. And so it's affected 454 00:26:28,920 --> 00:26:32,359 Speaker 1: stocks from a sentiment standpoint, and will you know, while 455 00:26:32,400 --> 00:26:35,760 Speaker 1: this is still an issue, but fundamentally, at least I 456 00:26:35,800 --> 00:26:40,359 Speaker 1: hope it won't you know, affect actual investment or drug development. 457 00:26:41,040 --> 00:26:46,240 Speaker 1: Hutchinson China Meditech The company is listed both in London 458 00:26:46,359 --> 00:26:50,640 Speaker 1: and in New York. Tell us about this company and 459 00:26:50,760 --> 00:26:54,879 Speaker 1: how it helped China celebrate a landmark Yeah, so this 460 00:26:55,040 --> 00:26:58,920 Speaker 1: just happened yesterday. So this company, their executive offices are 461 00:26:58,920 --> 00:27:00,879 Speaker 1: based in Hong Kong and all their R and D 462 00:27:01,040 --> 00:27:04,679 Speaker 1: takes place in Shanghai. People might be familiar with a 463 00:27:04,720 --> 00:27:07,399 Speaker 1: billionaire named Lee Ka Shing. He's kind of the Warren 464 00:27:07,400 --> 00:27:11,160 Speaker 1: Buffet of that region. This company was founded, it's part 465 00:27:11,200 --> 00:27:14,560 Speaker 1: of the Hutchinson one POA group, and they developed a 466 00:27:14,600 --> 00:27:18,480 Speaker 1: correctal cancer drug called threw quittin eb um that was 467 00:27:18,520 --> 00:27:22,600 Speaker 1: approved yesterday, and we view it as a landmark watershed 468 00:27:22,680 --> 00:27:27,040 Speaker 1: event because it's the first innovative cancer medicine to be 469 00:27:27,440 --> 00:27:32,080 Speaker 1: entirely discovered and developed and approved within China. For example, 470 00:27:32,119 --> 00:27:35,359 Speaker 1: it succeeded in a large phase three trial and the 471 00:27:35,400 --> 00:27:37,880 Speaker 1: results of that were published in the Journal of American 472 00:27:37,920 --> 00:27:41,560 Speaker 1: Medical Association. That was the first um. So this is 473 00:27:41,560 --> 00:27:44,680 Speaker 1: as high quality as it gets. And that's the whole 474 00:27:44,720 --> 00:27:48,719 Speaker 1: idea here is that their companies there now conducting world 475 00:27:48,800 --> 00:27:53,040 Speaker 1: class science and developing drugs that are at the cutting edge, 476 00:27:53,160 --> 00:27:56,920 Speaker 1: and this was just the first of that happening. Specifically 477 00:27:57,000 --> 00:27:59,840 Speaker 1: in cancer, and we hope that you know it's gonna 478 00:28:00,080 --> 00:28:02,560 Speaker 1: be a recurring story over the coming years. There's more 479 00:28:02,640 --> 00:28:06,399 Speaker 1: companies like that developed drugs, not just for the China region. 480 00:28:06,480 --> 00:28:08,560 Speaker 1: You may see that drug here on the market in 481 00:28:08,600 --> 00:28:11,120 Speaker 1: the United States one day. It's in trials right now. 482 00:28:11,640 --> 00:28:13,680 Speaker 1: Brad Lon Card, thank you so much for being with us. 483 00:28:14,080 --> 00:28:18,920 Speaker 1: Brad Loncard, chief executive of Lon Car Investments, based in Lenexa, Kansas. 484 00:28:22,520 --> 00:28:25,040 Speaker 1: Thanks for listening to the Bloomberg P and L podcast. 485 00:28:25,400 --> 00:28:29,280 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 486 00:28:29,400 --> 00:28:32,880 Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm 487 00:28:32,920 --> 00:28:36,920 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. 488 00:28:37,040 --> 00:28:39,640 Speaker 1: It's one before the podcast. You can always catch us 489 00:28:39,680 --> 00:28:41,240 Speaker 1: worldwide on Bloomberg Radio.