Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
Speaker 1: Along with my co host Lisa Abramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg p m L
Speaker 1: Podcast on Apple Podcasts, SoundCloud and Bloomberg dot com. Well,
Speaker 1: the story may be the same across the emerging markets,
Speaker 1: that debts are owed in dollars while revenue for a
Speaker 1: variety of companies is actually received in devalued emerging markets currencies.
Speaker 1: Here to tell us more about the situation and its
Speaker 1: potential ramifications is Bill Rhodes. He's the president and the
Speaker 1: chief executive of William R. Rhodes Global Advisors. He is
Speaker 1: also the author of Banker to the World, Leadership Lessons
Speaker 1: in Global Finance. Bill Rhodes, thank you very much for
Speaker 1: coming into the studio. This issue of debts odin dollars
Speaker 1: but companies earn in local currency. How bad is it
Speaker 1: going to get? Well? As you know, you have my
Speaker 1: oup ed that I did for Reuters on June twenty two,
Speaker 1: where I forecast the situation getting worse in Argentina, although
Speaker 1: people at that point we're optimistic because they had just
Speaker 1: gotten a loan from the I m F, a record
Speaker 1: loan of fifty billion dollars. And also predicted at that
Speaker 1: point because the election hadn't taken place yet in UH
Speaker 1: in Turkey that Van would win and it was going
Speaker 1: to be a disaster. I went into his interest rate
Speaker 1: policy because he thinks the best way to fight inflation
Speaker 1: is to drop interest rates. Its unique vision of the world,
Speaker 1: and he put his son in law in his Ministry
Speaker 1: of Treasury and Finance to implement his program. So what
Speaker 1: are we saying in the case of Turkey UH In
Speaker 1: addiction into the Argentine problem, UH, we see a country
Speaker 1: like Argentina who has tremendous indebtedness in dollars UH. And
Speaker 1: also the banking system in Turkey is having problems because
Speaker 1: of the build up in nonperforming because the companies in
Speaker 1: UH in Turkey have barred very heavily in dollars. And
Speaker 1: you have now a depreciation of the currency of some
Speaker 1: forty three percent since the beginning of the year, inflation
Speaker 1: reaching eighteen percent, and it's not clear what Turkey is
Speaker 1: going to do at least in the case of Argentina,
Speaker 1: they say they finally will get away from their gradual
Speaker 1: list program, which they call gradualismo UH and put in
Speaker 1: somewhat of a shock program. And the I m F
Speaker 1: says that they will be dispersing additional money from the
Speaker 1: fifty billions. So that's going on, but you have problems elsewhere.
Speaker 1: South Africa also has heavy borrowings in foreign currencies, both
Speaker 1: dollars and euros, and they're in the first recession in
Speaker 1: nine years UH, and their currency is also reaching record lows.
Speaker 1: And then we go back to Indonesia shades of the
Speaker 1: Asian financial crisis, and and the value of the ruby
Speaker 1: is UH has reached visa e the dollar, the lowest
Speaker 1: rates in the Asian financial crisis. So we see a
Speaker 1: lot of spreading problems. And then of course we have
Speaker 1: the big elections in Brazil UH, you know, which is
Speaker 1: the biggest economy of all the ones I've mentioned, And
Speaker 1: there you have an absolute mess as to who will
Speaker 1: emerge as a winner. The extreme right Bosonaro x army
Speaker 1: captain who says that he's really going to basically put
Speaker 1: the troops on the streets there permanently, or the extreme
Speaker 1: left UH, the successor to Lula and the People's Party
Speaker 1: and the Workers Party, and so it's very unclear what
Speaker 1: the situation is in Brazil. So you have all the
Speaker 1: elements of contagion. Now I'm not saying that we're looking
Speaker 1: at two thousand seven UH or we're looking at the
Speaker 1: Asian financial crisis, but I think we have to remember
Speaker 1: that emerging markets can drag developed markets into the tank.
Speaker 1: And I think the markets here in the United States,
Speaker 1: with all this liquidity still slashing around, have not taken
Speaker 1: into consideration that our friend Powell at the FED is
Speaker 1: going to raise interest rates two more times this year
Speaker 1: and we'll continue next year, and this of course puts
Speaker 1: more pressure on the currencies and the ability of these
Speaker 1: countries to pay. That was the origin of the eighty
Speaker 1: two Latin American debt crisis, the Asian financial crisis. And
Speaker 1: so I'm saying, we've seen this movie each time it's different,
Speaker 1: but we ought to take it seriously. At what point
Speaker 1: will it kind of hit a crucial point where there's
Speaker 1: sort of a denue mall of some of these pressures.
Speaker 1: I think that as you see the FED raising interest
Speaker 1: rates and remember the running down your quantitative easing uh
Speaker 1: in uh in your up. Uh. Droggy is restated he's
Speaker 1: going to stop the quantitative easing by the end of
Speaker 1: the year. So I think that people will start reflecting
Speaker 1: that we're nine years going into ten years since the
Speaker 1: Great Recession, and I think that maybe you might see
Speaker 1: people starting to pull back somewhat by the end of
Speaker 1: the year. Now. Uh. You know, the Trump administration says
Speaker 1: Fagett about that we're onto nirvana for the next four
Speaker 1: at least till two thousand twenty when the presidential election
Speaker 1: will go on. But they're not taking into account some
Speaker 1: of the the the the events and actions which I'm
Speaker 1: talking about. So people are still out there buying stocks,
Speaker 1: a record high of the doo, the dollars, a record high.
Speaker 1: Unemployments a record low, could go lower. But we have
Speaker 1: to remember that that was a similar situation at the
Speaker 1: time of the Asian financial crisis, and it was a
Speaker 1: similar situation. Of course, we had runaway inflation of the
Speaker 1: in the Latin American debt crisis and were inflation so
Speaker 1: far is very very tame. But I don't think that
Speaker 1: the Powell Chairman Powell is going to take into consideration
Speaker 1: what's going on in the emerging markets because his primary
Speaker 1: responsibilities the United States of America. Yeah, this could be
Speaker 1: a warning shot that we have much more with Bill
Speaker 1: Rhodes coming up. Stick with us. Bill Rhodes, President, chief
Speaker 1: executive of William R. Rhodes Global Advisors, author of the
Speaker 1: book Banker to the World. It's a wonderful read. I
Speaker 1: recommend you get it. He has a former senior advisor
Speaker 1: for City Current and he helped restructure the debt of
Speaker 1: a number of sovereign entities over the years. So fantastic insight.
Speaker 1: We're gonna head to China next. We're waiting, uh, the
Speaker 1: potential tariffs that could come out this week. It is
Speaker 1: the opinion piece heard around the worlds in New York
Speaker 1: Times op ed that was penned by an anonymous author
Speaker 1: titled I Am part of the Resistance inside the Trump Administration.
Speaker 1: Here to talk about the potential fallout from this is
Speaker 1: Al Hunt, columnist with Bloomberg Opinion. Well, thank you so
Speaker 1: much for being with us. You know, this is seemingly
Speaker 1: a bombshell in terms of the potential effects and the
Speaker 1: potential crisis within the White House, in terms of being
Speaker 1: able to trust one another. What's your big takeaway, And
Speaker 1: do you think that we're going to find out who
Speaker 1: authored this piece? I think here's a bombshell almost every hour, Lisa,
Speaker 1: So we've almost debased the term. But you're right, it's huge.
Speaker 1: I've never I've been in Washington, I will confess to
Speaker 1: you for almost half a century, I've never seen anything
Speaker 1: quite like this these last couple of weeks. I think
Speaker 1: it was an extraordinary column. One can argue about whether
Speaker 1: it should have been written or not, but I have
Speaker 1: no doubt in the New York Times editorial page editor
Speaker 1: that it was. It was modified, But it's also not surprising. Uh.
Speaker 1: It conforms with what Bob Woodward has written, has come
Speaker 1: out this week. It conforms that what's been reported by
Speaker 1: major news organization. It conforms that what we know about
Speaker 1: Donald Trump. And the other point I would make me
Speaker 1: say is it's hard to imagine these series of inside
Speaker 1: revelations from any other president. For a simple reason, they
Speaker 1: commanded some loyalty. Trump commands no loyalty. For a very
Speaker 1: simple reason. He gives no loyalty. Al Hunt. All right,
Speaker 1: you've been at it for, as you said, almost half
Speaker 1: a century. I was going to ask you what it
Speaker 1: was like to cover the administration of Woodrow Wilson. Uh. Well,
Speaker 1: the McKinley years were the best, Yeah, weren't they. The
Speaker 1: reason I bring up Woodrow Wilson is because the substance
Speaker 1: of the op ED makes it clear that there's a
Speaker 1: cadre of officials who are working behind the scenes in
Speaker 1: order to restrain the president or guide the president, whoever
Speaker 1: you want to describe it. But we've had situations like
Speaker 1: this before, haven't we. Yeah, we have. When Wilson was incapacitated,
Speaker 1: that was the case. Um. But but that was in
Speaker 1: nineteen nineteen twenty. It was before the nuclear age. It
Speaker 1: was easier to do that in those times. There was
Speaker 1: a sense that the people that we're doing it were
Speaker 1: generally reflecting Wilson's policies wishes. He also was very much
Speaker 1: of a of a lame duck president. He couldn't get
Speaker 1: the Liga Nations through or any of that. I think
Speaker 1: this is different and it's more serious because I think
Speaker 1: you have you know a man who is um I
Speaker 1: want to say, psychologically unsuited for the job. That's not
Speaker 1: my expertise, but certainly he is substantially in temperamentally and
Speaker 1: emotionally unfit for the job, and that makes him dangerous
Speaker 1: and I think people around him know that. And secondly,
Speaker 1: with a couple exceptions, and I would point out Jim
Speaker 1: Mattis certainly as one. There aren't a whole lot of
Speaker 1: really good people around me, So I have to wonder.
Speaker 1: I mean, markets have treated what you're describing. Uh, They've
Speaker 1: simply shrugged it off. And any turmoil seen in the
Speaker 1: White House hasn't necessarily bled out into the markets at all.
Speaker 1: That might change when it comes to the mid term elections,
Speaker 1: and that is where the focus is right now, and
Speaker 1: especially as we see these contentious hearings going on in
Speaker 1: the Senate right now with Brett kavanaught to become the
Speaker 1: next Supreme Court member. Do you think that pieces like
Speaker 1: what we saw in the New York Times weaken Republican
Speaker 1: power more generally or just go after President Trump himself
Speaker 1: and his leadership. Well, I think it's hard to divorce
Speaker 1: the popularity in the standing of a present from that
Speaker 1: of his party in the mid term elections. There are
Speaker 1: other factors, but I would be I would be stunned
Speaker 1: if the Democrats don't have a pretty big night in November.
Speaker 1: I think they'll take back the half. Probably not the Senate,
Speaker 1: but the Republicans won't make the kind of games they
Speaker 1: once expected in the Senate. Democrats probably win. I don't
Speaker 1: know seven eight ten governorships, including some big ones. I
Speaker 1: don't know how the market will react to that. I
Speaker 1: do have a feeling that Trump won't react well to
Speaker 1: that al hunt. We've been monitoring the hearings that are
Speaker 1: currently taking place before the Senate Judiciary Committee. The hearings
Speaker 1: to speak to an illicit information from Judge Brett Kavanaugh,
Speaker 1: appointed to the U. S. Supreme Court. The senators that
Speaker 1: are on the committee, they've been in the Senate a
Speaker 1: long time. So does the argument that O G. It
Speaker 1: used to be collegial in the past, does that really
Speaker 1: hold any water. It's exaggerated. I think it's worse today,
Speaker 1: but it's exaggerated. Don't forget the board hearings. Uh, you know,
Speaker 1: don't forget that there was a time back in the
Speaker 1: sixties where Republicans were trying to impeach a Supreme Court
Speaker 1: Justice William O. Douglas. So the idea that it was
Speaker 1: all these come by I moments before and now it's
Speaker 1: really nasty and ugly is exaggerated, but it certainly there
Speaker 1: was more comedy. Uh, there was more collegiality than there
Speaker 1: was less, less bitterness than there was before. I think
Speaker 1: there really the Democrats know they're almost certainly going to
Speaker 1: lose this one. I think what really embitters them though,
Speaker 1: is how really unconsciably h Merrick Garland was treated in
Speaker 1: two thousand sixteen by Mitch McConnell and the Republicans. He
Speaker 1: should said, the should have been a vote on Judge Garland,
Speaker 1: just as there should be a vote on Judge Kavanall.
Speaker 1: I think that bitterness is carried over and they're fighting
Speaker 1: a losing battle, but they really feel aggrieved. Do you
Speaker 1: think that there will be any blowback when Mitch McConnell
Speaker 1: maybe takes the Senate floor, if indeed the Democrats are
Speaker 1: in the majority in the House after the midterm elections,
Speaker 1: as you describe, well, he's got a he's got a
Speaker 1: very difficult act because he's going to have to deal
Speaker 1: with Trump, he's going to have to deal with his caucuss,
Speaker 1: and he's gonna have to deal with the likelihood of
Speaker 1: a Democratic speaker and majority leader. And he's up for
Speaker 1: reelection in two thousand and twenty. And as we say,
Speaker 1: he ain't a spring chicken, so he's got he You know,
Speaker 1: Mitch McConnell is going to have a lot of conflicts
Speaker 1: come next January. All right, we're gonna leave it there,
Speaker 1: but thanks very much. Bloomberg opinion columnist Al Hunt on
Speaker 1: the ins and outs and ups and downs in Washington,
Speaker 1: d C. Ostensibly the tech hearings on Capitol Hill this week,
Speaker 1: or to assess the national security concerns, especially given the
Speaker 1: foreign interference in domestic elections. What we got wasn't necessarily
Speaker 1: that joining us now to talk about what that means
Speaker 1: going forward in terms of oversight and NASH security. As
Speaker 1: Clint Watts, Senior Fellow at the Foreign Policy Research Institute,
Speaker 1: also a Senior Fellow at the Center for Cyber and
Speaker 1: Homeland Security at the George Washington University, UH he has
Speaker 1: served in the U. S. Army, the FBI, the Joint
Speaker 1: Terrorism Task Force, as well as a number of other agencies. Clint,
Speaker 1: thank you so much for being with us. So what's
Speaker 1: the big takeaway from these hearings. The big takeaway, I
Speaker 1: think is that social media is in trouble, but it's
Speaker 1: not necessarily with the government meaning that. I think what
Speaker 1: we saw in the Senate yesterday was the social media
Speaker 1: companies have moved faster than the regulators. I'll give you
Speaker 1: one example, the Honest Ads Act, which was essentially the
Speaker 1: way we have political advertising on print, radio, and television
Speaker 1: should be in social media as well. Social media companies
Speaker 1: have already kind of done that on their own, you know,
Speaker 1: they've moved to match these and yet Congress hasn't passed
Speaker 1: these very simple laws from two years ago. At the
Speaker 1: same point, when we saw in the House as this
Speaker 1: sort of bickering around politics, it was like a politics show,
Speaker 1: and the social media companies were there. It was rather
Speaker 1: silly to watch. So I I think the regulation is
Speaker 1: not going to come from the US. With the social
Speaker 1: media company sphere is the EU. They have moved much
Speaker 1: more aggressively about data privacy, and I think there was
Speaker 1: a pure research report that talked about how young people
Speaker 1: have marched away from Facebook, you know, deleting the app,
Speaker 1: not willing to be on the platform anymore. That is
Speaker 1: the big fear I think for social media. It's going
Speaker 1: to come from outside the government. Now do we all
Speaker 1: need to go and rewatch the movie with Scarlett Johansson
Speaker 1: and Joaquin Phoenix called her and which she has he
Speaker 1: has a relationship with what is ostensibly an artificially intelligence
Speaker 1: powered personality. Yeah, I I worry about three audiences for
Speaker 1: different reasons. In foreign influence, I'm most worried about the
Speaker 1: Third world countries that are coming online. They've never really
Speaker 1: been on newspapers. Their first experience with the Internet is
Speaker 1: through a social media app. They don't say let's Google something,
Speaker 1: they say let's Facebook something. You are in a bubble.
Speaker 1: The second one is actually the older generation in America.
Speaker 1: If you look at the people that have stayed on
Speaker 1: the plant forms it, they are inexperience with it. They
Speaker 1: don't know when they're getting duped. They're not used to
Speaker 1: these digital communications, and they're the most aggressive about their
Speaker 1: political views and kind of corrodes the environment. The third
Speaker 1: one is young people who are marching away in some
Speaker 1: respects from social media and moving to what you talked about,
Speaker 1: these apps or artificial intelligence. And I like to say,
Speaker 1: were we were worried about the matrix overtaking our young
Speaker 1: people are young people will enlist in the matrix, They
Speaker 1: will love it. They want to be in the matrix
Speaker 1: because it's more satisfying than the real world. That's what
Speaker 1: I'm really concerned about for the next generation that moves up. So, Clint,
Speaker 1: given what we saw from the Senate yesterday and given
Speaker 1: the fact that we didn't get a lot of hard
Speaker 1: questioning on the actual national security aspects of this, what's
Speaker 1: your feeling about how we're going to address this, especially
Speaker 1: in light of the discord that we're seeing in the
Speaker 1: White House right now. I mean, is this concerning to you? Yeah?
Speaker 1: I think Well, we'll see over time as a fragmentation
Speaker 1: of social media into apps that is similar to the
Speaker 1: way we saw a television sort of breakdown in cable
Speaker 1: TV news, meaning that people will start to move to
Speaker 1: platforms based on whether they satisfy their political views, and
Speaker 1: this will harden us into I call them preference bubbles.
Speaker 1: It's part the algorithm which feeds you things you want
Speaker 1: and part your own choices. You continue to choose things
Speaker 1: you like and you get more of what you like.
Speaker 1: And so this sort of breakdown is troubling for democracy
Speaker 1: because if you don't agree on facts, which is critical
Speaker 1: you can have in foreign policy debate, you get gridlock
Speaker 1: in Congress, much like we've already seen. You see sort
Speaker 1: of see flip flopping back and forth between political parties
Speaker 1: around the world, in democracies where it's right then left,
Speaker 1: and right and left and you really can't secure the country.
Speaker 1: It becomes uh for those that can manipulate the platforms,
Speaker 1: those that can manipulate people's minds. I really think we're
Speaker 1: entering an area where authoritarians have figured out, after open media,
Speaker 1: how to control it and and really how to dominate it.
Speaker 1: Messing with the enemy surviving in a social media world
Speaker 1: of hackers, terrorists, Russians and fake news. This is your
Speaker 1: latest book, What do you recommend people do? I think
Speaker 1: the big thing we can do is get back to
Speaker 1: picking good filters. We have gone through this era over
Speaker 1: the last thirty years that unfiltered is better and that
Speaker 1: goes for everything. If you remember movies, the unrated, the
Speaker 1: un conversion, and that we actually know what's good for
Speaker 1: no brokers, no middlemen, middle women, and this raw reporting,
Speaker 1: raw feeds. If I see the actual emails, I'll be
Speaker 1: able to know the context of everything. Actually is a
Speaker 1: true know when you're an expert, and know when you're not.
Speaker 1: We believe that if we have a connection to the Internet.
Speaker 1: We're just as smart as everybody else. And there's a
Speaker 1: guy named Tom Nichols. It talks about the death of expertise.
Speaker 1: We need to recognize when we are strong and when
Speaker 1: we're not, and when we're not what filters to gravitate towards.
Speaker 1: And I think ultimately moving back to having responsible journalism,
Speaker 1: responsible news outlets, going to information sources that have an
Speaker 1: editorial process is a good thing, not a bad thing,
Speaker 1: and that people need to realize sometimes they are misleading
Speaker 1: themselves and they have no one else to blame but
Speaker 1: themselves for doing that. Clint, we just have about a
Speaker 1: minute here, but I'd love to get your thoughts on
Speaker 1: the anonymous op ed that was published the New York Times.
Speaker 1: I We'm wondering, you know, President Trump said that this
Speaker 1: is a national security concern. Is it? I think he
Speaker 1: has a a small part of truth possibly in it,
Speaker 1: which is consistent with his rhetoric. But what if we
Speaker 1: have officials in the executive branch that aren't following orders,
Speaker 1: are not following procedures, are not following laws, and that
Speaker 1: is a soft revolt in some ways, it can be
Speaker 1: viewed that way. At the same point, we're seeing someone
Speaker 1: who's leading the White House in many ways, breaking political
Speaker 1: norms and testing things that our Constitution really did never
Speaker 1: think would happen. Right, We we have gaps in our
Speaker 1: laws essentially. So yeah, I'm concerned. You know, if everybody
Speaker 1: does their job and follows the constitution. I like to
Speaker 1: look at Rod Rosenstein. I think that's a great example
Speaker 1: over the last year. Someone who follows procedure, knows the
Speaker 1: roles in regardless of political parties, stands as the ground.
Speaker 1: If we have people like that, I think the country
Speaker 1: is fine. But if we don't, if we start breaking
Speaker 1: into this separate competing polls, then I'm going to get
Speaker 1: a little bit concerned. Thanks very much for being with us.
Speaker 1: Clint Watts is a senior Fellow at the Foreign Policy
Speaker 1: Research Institute. He's also a senior Fellow at the Center
Speaker 1: for Cyber and Homeland Security at the George Washington University.
Speaker 1: You can follow him on Twitter at Selected Wisdom. His
Speaker 1: new book, Messing with the Enemy. You know, so when
Speaker 1: you think of biotechnology companies, you think of Cambridge, Massachusetts.
Speaker 1: You think of Silicon Valley San Diego in California, of course,
Speaker 1: but you don't necessarily think of China, and that is changing.
Speaker 1: One of the reasons that's changing is that Chinese authorities,
Speaker 1: the government there has actually stipulated that the biotechnology sector
Speaker 1: should account for in excess of four percent of gross
Speaker 1: domestic product by twenty twenty and that there should be
Speaker 1: between ten to twenty life science parks that are dedicated
Speaker 1: for bio medicine. And here to tell us more about
Speaker 1: this particular aspect of the industry is Brad long Car.
Speaker 1: He is the chief executive of Long Car Investments. They're
Speaker 1: based in Lenexa, Kansas. He's also the index provider for
Speaker 1: a new E t F. It is called the Long
Speaker 1: Car China bio Pharma E t F. The symbolist C
Speaker 1: H and A and he joins us here in studio. Brad,
Speaker 1: thank you very much for being here. Did I describe
Speaker 1: that correctly visa v. The Chinese government and what their
Speaker 1: plans are for the biotech sector in China. Absolutely, thanks
Speaker 1: for having me. You hit the nail right on the head.
Speaker 1: There's four or five elements that are making this happen.
Speaker 1: In the government is a big one. They have a
Speaker 1: program called Made in China and the goal behind that
Speaker 1: program is to upgrade their economy to hire value sectors.
Speaker 1: Everyone of course thinks of China is a manufacturing based economy.
Speaker 1: They want to be leaders in tech and biotech, and
Speaker 1: so they're putting a lot of effort behind that. But
Speaker 1: that's really just one element. It's obviously an important one,
Speaker 1: but you know, until today, China didn't really even have
Speaker 1: a biotech sector. For example, the Hong Kong Stock Exchange
Speaker 1: had a rule that said, if you don't earn revenue,
Speaker 1: you can't list on our exchange. And so if you
Speaker 1: think about it, most biotech companies are conducting science and
Speaker 1: developing new things and don't earn revenue. And so the
Speaker 1: exchange realized that innovation is what drives a global economy,
Speaker 1: just like the government, and on April thirty, they instituted
Speaker 1: a new rule specifically for biotech companies that allow biotech
Speaker 1: companies to list there for the very first time. Already
Speaker 1: ten have signed up to I p O and two
Speaker 1: have happened, a company called ask Leidas and another one
Speaker 1: by jen which already trades here on the NASTAC. And
Speaker 1: we think there may be dozens and dozens over the
Speaker 1: coming year, and so I think this is an exciting
Speaker 1: moment because it may be just the very start of
Speaker 1: their biotech sector. I'm struck by the concept of trying
Speaker 1: to craft an index select stocks on Chinese indexes to
Speaker 1: put into your e t F for the the index
Speaker 1: that that sort of creates the benchmark for the e
Speaker 1: t F. How concerned are you about transparency and a
Speaker 1: lack of it that is traditionally endemic in China, especially
Speaker 1: as it relates to the incredible, already volatile industry of biotechnology. Yeah,
Speaker 1: that's an excellent question. So that's certainly an issue that
Speaker 1: you have to be very aware of, and in terms
Speaker 1: of our thinking on that, when we crafted the index, UM,
Speaker 1: we only allow companies that are listed in Hong Kong
Speaker 1: or here on naz back. We don't allow companies that
Speaker 1: are only listed in mainly in China, and the reason
Speaker 1: for that is those are global exchanges, and we're not
Speaker 1: just looking for companies that want to be leaders in
Speaker 1: China domestically. We're looking for Chinese companies that want to
Speaker 1: be global leaders in this industry. And we think those
Speaker 1: types of companies are signing up for those two exchanges
Speaker 1: because they're outward facing and UM they have a higher
Speaker 1: degree of investor sophistication and scrutiny, and in terms of
Speaker 1: the actual selection, we're not picking our favorite stocks or anything.
Speaker 1: We're just trying to represent the entire industry. So if
Speaker 1: you're a true biotech or pharmaceutical company listed on those
Speaker 1: two exchanges, you're included. And then we give extra waiting
Speaker 1: for larger companies to give them credit for their size
Speaker 1: and stability. Now you need to make the distinction between
Speaker 1: companies that are offering biotechnology solutions in China and they
Speaker 1: be foreign based as opposed to those that are domestically based. Correct,
Speaker 1: that's right, that's right. We have two criteria. You either
Speaker 1: have to have your headquarters in China or you have
Speaker 1: to drive fifty one percent of either your revenue or
Speaker 1: your pipeline value. So if it's just like the US
Speaker 1: company that's dabbling in the region, it wouldn't be included
Speaker 1: in this. We only want companies that are focused or
Speaker 1: based in um in that geography. One thing that I'm
Speaker 1: struck by is if you're targeting companies with global ambitions,
Speaker 1: how do the recent trade tensions factor in, if at all?
Speaker 1: Given the fact that the U S and China appear
Speaker 1: to be in an escalating spat. It's affected the valuations
Speaker 1: a lot. So, um the stocks are down about thirty
Speaker 1: percent over the last two months for that reason. And
Speaker 1: also there's a vaccine scandal issue that's going on there
Speaker 1: right now. Um, so it's affected sentiment a lot. But
Speaker 1: I actually don't think it will hurt this industry fundamentally.
Speaker 1: I think both the United States and China see this
Speaker 1: sector something that affects hugh and health and they don't
Speaker 1: want to use that as a bartering tool. So, for example,
Speaker 1: a couple of weeks before the trade war started, China
Speaker 1: completely eliminated tariffs on cancer medicines to zero, and they
Speaker 1: said they want to do that for other types of
Speaker 1: innovative medicines. And I don't think the timing of that
Speaker 1: was accidental. I think they did that as a message
Speaker 1: to say, we don't really want to, you know, do
Speaker 1: something that's going to affect the you know, the health
Speaker 1: and well being of the citizens. And so it's affected
Speaker 1: stocks from a sentiment standpoint, and will you know, while
Speaker 1: this is still an issue, but fundamentally, at least I
Speaker 1: hope it won't you know, affect actual investment or drug development.
Speaker 1: Hutchinson China Meditech The company is listed both in London
Speaker 1: and in New York. Tell us about this company and
Speaker 1: how it helped China celebrate a landmark Yeah, so this
Speaker 1: just happened yesterday. So this company, their executive offices are
Speaker 1: based in Hong Kong and all their R and D
Speaker 1: takes place in Shanghai. People might be familiar with a
Speaker 1: billionaire named Lee Ka Shing. He's kind of the Warren
Speaker 1: Buffet of that region. This company was founded, it's part
Speaker 1: of the Hutchinson one POA group, and they developed a
Speaker 1: correctal cancer drug called threw quittin eb um that was
Speaker 1: approved yesterday, and we view it as a landmark watershed
Speaker 1: event because it's the first innovative cancer medicine to be
Speaker 1: entirely discovered and developed and approved within China. For example,
Speaker 1: it succeeded in a large phase three trial and the
Speaker 1: results of that were published in the Journal of American
Speaker 1: Medical Association. That was the first um. So this is
Speaker 1: as high quality as it gets. And that's the whole
Speaker 1: idea here is that their companies there now conducting world
Speaker 1: class science and developing drugs that are at the cutting edge,
Speaker 1: and this was just the first of that happening. Specifically
Speaker 1: in cancer, and we hope that you know it's gonna
Speaker 1: be a recurring story over the coming years. There's more
Speaker 1: companies like that developed drugs, not just for the China region.
Speaker 1: You may see that drug here on the market in
Speaker 1: the United States one day. It's in trials right now.
Speaker 1: Brad Lon Card, thank you so much for being with us.
Speaker 1: Brad Loncard, chief executive of Lon Car Investments, based in Lenexa, Kansas.
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm
Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
Speaker 1: It's one before the podcast. You can always catch us
Speaker 1: worldwide on Bloomberg Radio.