1
00:00:02,800 --> 00:00:09,080
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:09,160 --> 00:00:11,799
Speaker 2: In a bilateral meeting on the sidelines of the United

3
00:00:11,880 --> 00:00:15,920
Speaker 2: Nations General Assembly on Tuesday, President Donald Trump reiterated his

4
00:00:15,960 --> 00:00:19,000
Speaker 2: support for one of his most prominent international allies.

5
00:00:19,280 --> 00:00:21,360
Speaker 1: We're back in him one hundred percent. I think he's

6
00:00:21,400 --> 00:00:22,599
Speaker 1: done a fantastic job.

7
00:00:23,040 --> 00:00:25,000
Speaker 3: Argentina's President Javier Malay.

8
00:00:25,320 --> 00:00:29,240
Speaker 4: He, like us, inherited a mess, and what he's done

9
00:00:29,280 --> 00:00:32,000
Speaker 4: to fix it is good. And Scott is working with

10
00:00:32,080 --> 00:00:34,440
Speaker 4: their countries so that they can get good dead and

11
00:00:34,640 --> 00:00:37,520
Speaker 4: all of the things that you need to make Argentina

12
00:00:37,600 --> 00:00:38,200
Speaker 4: gread against.

13
00:00:38,640 --> 00:00:41,720
Speaker 2: Trump's remarks come at a time of financial and political

14
00:00:41,840 --> 00:00:45,600
Speaker 2: uncertainty in Argentina. Mulay, who's a libertarian known for his

15
00:00:45,720 --> 00:00:49,840
Speaker 2: radical spending cuts and dramatic use of a chainsaw at

16
00:00:49,840 --> 00:00:53,320
Speaker 2: political rallies, saw his party suffer a crushing defeat in

17
00:00:53,400 --> 00:00:57,120
Speaker 2: elections in the Buenos Aires province that triggered a sharp

18
00:00:57,200 --> 00:01:01,000
Speaker 2: drop in the value of the Argentine pesos, rattled investors

19
00:01:01,120 --> 00:01:04,360
Speaker 2: who have grown concerned about what that political development could

20
00:01:04,440 --> 00:01:06,320
Speaker 2: mean for midterm elections next month.

21
00:01:06,720 --> 00:01:09,679
Speaker 5: The Argentina dollar bonds plunge you the most in three years.

22
00:01:09,680 --> 00:01:10,680
Speaker 1: That's after a provincial.

23
00:01:10,720 --> 00:01:14,040
Speaker 2: The pesos freefall led to an unexpected move by US

24
00:01:14,080 --> 00:01:18,400
Speaker 2: Treasury Secretary Scott Bessant. This week, he surprised market watchers

25
00:01:18,400 --> 00:01:23,040
Speaker 2: by offering direct support to Argentina's economy. Everything he said

26
00:01:23,319 --> 00:01:25,600
Speaker 2: was on the table here he is speaking on Fox

27
00:01:25,640 --> 00:01:26,679
Speaker 2: Business on Wednesday.

28
00:01:27,000 --> 00:01:30,080
Speaker 6: We are not going to let a disequilibrium in the

29
00:01:30,120 --> 00:01:37,200
Speaker 6: market the cause his backup in his substantial economic reforms.

30
00:01:38,080 --> 00:01:41,040
Speaker 5: Secretary of Besson announced that the US was going to

31
00:01:41,080 --> 00:01:43,360
Speaker 5: sort of roll out the whole red carpet for our President.

32
00:01:43,440 --> 00:01:44,120
Speaker 1: Hagymulay.

33
00:01:44,680 --> 00:01:48,440
Speaker 2: Patrick Gillespie is the chief of Bloomberg's bureau in Buenos Aires.

34
00:01:48,640 --> 00:01:51,680
Speaker 5: He announced that the US is negotiating a twenty billion

35
00:01:51,760 --> 00:01:55,520
Speaker 5: dollar swap line between the United States and Argentina. He's

36
00:01:55,560 --> 00:01:58,960
Speaker 5: also said the Treasury is willing to buy Argentina's bonds

37
00:01:59,000 --> 00:02:01,320
Speaker 5: that are sold on Global Maark Mars, and he might

38
00:02:01,360 --> 00:02:05,240
Speaker 5: also provide a separate standby credit or loan through a

39
00:02:05,280 --> 00:02:08,200
Speaker 5: certain fund that the Treasury has at its will that

40
00:02:08,240 --> 00:02:10,240
Speaker 5: it doesn't need congressional approval.

41
00:02:09,840 --> 00:02:10,360
Speaker 1: To go through.

42
00:02:10,600 --> 00:02:15,000
Speaker 2: President Malay thanked Secretary Besson and President Trump for that commitment,

43
00:02:15,240 --> 00:02:19,240
Speaker 2: which investors cheered. We saw the Argentine peso strengthen against

44
00:02:19,240 --> 00:02:20,000
Speaker 2: the US dollar.

45
00:02:20,560 --> 00:02:23,720
Speaker 5: There's always been the rumor of would a US government

46
00:02:23,800 --> 00:02:26,640
Speaker 5: bail out or help rescue a Argentine government.

47
00:02:26,840 --> 00:02:27,880
Speaker 1: It's never come to fruition.

48
00:02:27,919 --> 00:02:29,960
Speaker 5: It's kind of an urban legend here, so it is

49
00:02:30,040 --> 00:02:32,960
Speaker 5: really shocking to actually see it happen in real time.

50
00:02:34,440 --> 00:02:36,240
Speaker 2: I'm David Gera and this is the big take from

51
00:02:36,240 --> 00:02:39,639
Speaker 2: Bloomberg News Today. On the show, why the Trump administration

52
00:02:39,880 --> 00:02:43,919
Speaker 2: is putting money and political capital behind Argentina and itself

53
00:02:43,919 --> 00:02:47,959
Speaker 2: described a narco capitalist president, and how what happens next

54
00:02:48,120 --> 00:02:50,800
Speaker 2: could be make or break for one of Trump's closest

55
00:02:50,919 --> 00:03:01,160
Speaker 2: international allies. Argentina has faced deep economic difficult for decades.

56
00:03:01,600 --> 00:03:04,600
Speaker 2: When Javier Malay was elected in twenty twenty three, the

57
00:03:04,639 --> 00:03:07,760
Speaker 2: country's annual rate of inflation was around one hundred and

58
00:03:07,919 --> 00:03:11,440
Speaker 2: forty percent. For almost two years, he's been trying to

59
00:03:11,480 --> 00:03:15,080
Speaker 2: get inflation under control while contending with a skittish market

60
00:03:15,240 --> 00:03:19,720
Speaker 2: and some disappointing political developments domestically. Bloomberg Buenos Aires Bureau

61
00:03:19,800 --> 00:03:22,919
Speaker 2: chief Patrick Gillespie says that when Treasury Secretary Scott Best

62
00:03:23,080 --> 00:03:26,560
Speaker 2: signaled US support this week, it was a surprise. In

63
00:03:26,639 --> 00:03:29,239
Speaker 2: part because one of the methods of support the Secretary

64
00:03:29,280 --> 00:03:32,400
Speaker 2: said was up for consideration is a twenty billion dollars

65
00:03:32,480 --> 00:03:34,320
Speaker 2: swap line.

66
00:03:34,440 --> 00:03:39,240
Speaker 5: The Central Bank of Argentina would open up an account

67
00:03:39,520 --> 00:03:42,160
Speaker 5: in the United States either at the US Treasury at

68
00:03:42,200 --> 00:03:45,480
Speaker 5: the US Federal Reserve, and deposit an equal amount of

69
00:03:45,560 --> 00:03:49,040
Speaker 5: twenty billion dollars in Argentine pesos in the United States,

70
00:03:49,080 --> 00:03:52,000
Speaker 5: while the US opens an account at the Argentine Central

71
00:03:52,040 --> 00:03:53,360
Speaker 5: Bank of Buenos Sorries.

72
00:03:53,000 --> 00:03:54,680
Speaker 1: And deposits twenty billion dollars.

73
00:03:54,680 --> 00:03:59,160
Speaker 5: So it acts on paper as nobody actually giving someone

74
00:03:59,160 --> 00:04:02,360
Speaker 5: else money, but in practice, since the Argentine paso is

75
00:04:02,400 --> 00:04:05,080
Speaker 5: so much weaker than the US dollar, it acts as

76
00:04:05,200 --> 00:04:08,240
Speaker 5: sort of a buffer for the Argentine peso, at least

77
00:04:08,240 --> 00:04:11,400
Speaker 5: in the near turn. That's the thinking behind it. But

78
00:04:11,760 --> 00:04:14,480
Speaker 5: usually these are loans that are done between the Federal

79
00:04:14,520 --> 00:04:18,040
Speaker 5: Reserve and central banks around the world. It's very unusual

80
00:04:18,160 --> 00:04:20,880
Speaker 5: that the loan is directly from the Treasury to a

81
00:04:20,920 --> 00:04:21,599
Speaker 5: central bank.

82
00:04:23,080 --> 00:04:26,400
Speaker 2: You mentioned this exchange Stabilization Fund that the Treasury has.

83
00:04:26,640 --> 00:04:29,040
Speaker 2: Is that something that Treasury relies on a lot. The

84
00:04:29,080 --> 00:04:32,760
Speaker 2: Exchange Stabilization Fund started back in the nineteen thirties. It

85
00:04:32,800 --> 00:04:35,719
Speaker 2: actually originates from the Gold Act I believe of nineteen

86
00:04:35,800 --> 00:04:39,120
Speaker 2: thirty four, and it's been used over one hundred times

87
00:04:39,240 --> 00:04:42,840
Speaker 2: by the United States for different operations. It was tapped

88
00:04:42,839 --> 00:04:45,200
Speaker 2: in nineteen ninety five to give a twenty billion dollars

89
00:04:45,279 --> 00:04:47,359
Speaker 2: loan to the Mexican government during what was called the

90
00:04:47,360 --> 00:04:50,120
Speaker 2: Tequila Crisis back then when their currency was in the

91
00:04:50,160 --> 00:04:53,159
Speaker 2: sell off. But this is a very unusual sign of

92
00:04:53,200 --> 00:04:56,120
Speaker 2: support in a much different context. It hasn't been used

93
00:04:56,120 --> 00:04:59,159
Speaker 2: in recent years, at least in Latin America, and it

94
00:04:59,279 --> 00:05:02,320
Speaker 2: certainly hasn't been used to this extent between the United

95
00:05:02,360 --> 00:05:06,000
Speaker 2: States in Argentina. The United States has supported several IMF

96
00:05:06,080 --> 00:05:09,360
Speaker 2: programs of Argentina, and it should be important to note,

97
00:05:09,440 --> 00:05:12,920
Speaker 2: David that this twenty billion dollar potential loan from the

98
00:05:13,000 --> 00:05:16,560
Speaker 2: United States to Argentina is coming after Trump supported Argentina

99
00:05:16,600 --> 00:05:19,840
Speaker 2: securing a separate twenty billion dollar loan from the International

100
00:05:19,880 --> 00:05:23,480
Speaker 2: Monetary Fund just back in April, and that obviously hasn't

101
00:05:23,480 --> 00:05:26,240
Speaker 2: been enough to calm markets and assure people that Mele

102
00:05:26,320 --> 00:05:30,240
Speaker 2: has the firepower he needs to weather the market volatility

103
00:05:30,279 --> 00:05:34,640
Speaker 2: in the election volatility. As I think about the uniqueness

104
00:05:34,680 --> 00:05:37,279
Speaker 2: of this, the kind of unilateral nature of it stands

105
00:05:37,279 --> 00:05:39,760
Speaker 2: out to me. So you mentioned the IMF having done

106
00:05:40,200 --> 00:05:43,240
Speaker 2: I guess close to two dozen of these bailouts for Argentina.

107
00:05:43,760 --> 00:05:45,360
Speaker 3: That's a multilateral institution.

108
00:05:46,360 --> 00:05:48,479
Speaker 2: How rare or how extraordinary is that the US is

109
00:05:48,480 --> 00:05:49,800
Speaker 2: proposing doing this on its own.

110
00:05:50,040 --> 00:05:51,360
Speaker 1: It's extremely rare, David.

111
00:05:51,680 --> 00:05:54,960
Speaker 5: It also remains to be seen if this is truly

112
00:05:55,240 --> 00:05:59,200
Speaker 5: a loan or if this is a grand theatrical act

113
00:05:59,200 --> 00:06:02,280
Speaker 5: of support from the Trump administration. They actually have not

114
00:06:02,400 --> 00:06:05,640
Speaker 5: bought Argentine bonds, they have not loan twenty billion dollars.

115
00:06:05,920 --> 00:06:08,760
Speaker 5: They've only said that they're negotiating working on this. And

116
00:06:08,920 --> 00:06:11,600
Speaker 5: Scott Besson himself said that this is supposed to be

117
00:06:11,680 --> 00:06:15,720
Speaker 5: a bridge to Argentina's midterm elections on October twenty sixth.

118
00:06:16,200 --> 00:06:18,560
Speaker 3: Here's Best on Fox Business on Wednesday.

119
00:06:18,839 --> 00:06:22,880
Speaker 6: The plan is as long as President la continues with

120
00:06:23,000 --> 00:06:26,640
Speaker 6: his strong economic policies to help him to bridge him

121
00:06:26,800 --> 00:06:27,520
Speaker 6: to the election.

122
00:06:27,640 --> 00:06:31,839
Speaker 5: So even the people advocating for this rescue package for

123
00:06:32,000 --> 00:06:35,880
Speaker 5: povery Malay's government are framing this as sort of a

124
00:06:35,880 --> 00:06:38,080
Speaker 5: patchwork to get through for the next four weeks. So

125
00:06:38,120 --> 00:06:40,960
Speaker 5: it remains unclear if this is a long term US

126
00:06:41,040 --> 00:06:44,279
Speaker 5: investment in Argentina or just trying to support an ally

127
00:06:44,320 --> 00:06:46,360
Speaker 5: while he's facing some political volatility.

128
00:06:47,080 --> 00:06:48,599
Speaker 2: Let's play this out a bit, say, we get this

129
00:06:48,640 --> 00:06:50,960
Speaker 2: twenty billion dollar swap line, how are we going to

130
00:06:51,160 --> 00:06:53,840
Speaker 2: gauge whether or not it's had a positive effect on

131
00:06:54,080 --> 00:06:54,680
Speaker 2: the economy.

132
00:06:54,920 --> 00:06:57,279
Speaker 5: Well, I think the hope from the Trump administration and

133
00:06:57,400 --> 00:07:00,480
Speaker 5: Javier Malaise government is that it stabilizes the currency in

134
00:07:00,520 --> 00:07:03,440
Speaker 5: the near term. We were dealing with a currency sell

135
00:07:03,480 --> 00:07:05,680
Speaker 5: off in the past few days, and the hope is

136
00:07:05,680 --> 00:07:09,000
Speaker 5: that this is enough to show for the people selling

137
00:07:09,080 --> 00:07:13,040
Speaker 5: off on the pace. So Hey, Argentina on paper, in theory,

138
00:07:13,160 --> 00:07:16,840
Speaker 5: could have the firepower to support the currency and stabilize

139
00:07:16,840 --> 00:07:20,040
Speaker 5: inflation in the near term. I should say stabilize inflation

140
00:07:20,280 --> 00:07:24,720
Speaker 5: in the Argentina context. By any global standard, Argentina has

141
00:07:24,760 --> 00:07:28,920
Speaker 5: extremely high inflation, but here it's been getting relatively better,

142
00:07:29,160 --> 00:07:32,240
Speaker 5: but at a significant economic cost to people here in Argentina.

143
00:07:33,240 --> 00:07:35,600
Speaker 2: Patrick, in recent weeks, I know that Argentina itself has

144
00:07:35,600 --> 00:07:38,600
Speaker 2: taken some actions here to stem the crisis that's been

145
00:07:38,680 --> 00:07:40,880
Speaker 2: underway there. What is it done and how successful has

146
00:07:40,920 --> 00:07:41,200
Speaker 2: it been.

147
00:07:42,040 --> 00:07:45,360
Speaker 5: Argentina has not been very successful in stemming the currency

148
00:07:45,360 --> 00:07:48,720
Speaker 5: crisis of the past few weeks, mostly because this isn't

149
00:07:48,760 --> 00:07:51,560
Speaker 5: really a monetary issue. This is a political problem. This

150
00:07:51,680 --> 00:07:54,640
Speaker 5: election in October is a referendum on his presidency, like

151
00:07:54,680 --> 00:07:57,200
Speaker 5: it is for so many other world leaders and people

152
00:07:57,360 --> 00:08:00,000
Speaker 5: have sort of run out of patients with his own

153
00:08:00,040 --> 00:08:03,360
Speaker 5: austerity campaign. And at the same time, while you've had

154
00:08:03,360 --> 00:08:07,320
Speaker 5: these historic change in economic policies in Argentina, Malay has

155
00:08:07,360 --> 00:08:11,360
Speaker 5: ignored the political class, the political elites that may have

156
00:08:11,480 --> 00:08:15,200
Speaker 5: won him some praise and respect early on in his presidency,

157
00:08:15,400 --> 00:08:17,680
Speaker 5: but ultimately these are the people and the parties that

158
00:08:17,760 --> 00:08:20,000
Speaker 5: have the machinery to get the vote out, to make

159
00:08:20,040 --> 00:08:23,080
Speaker 5: sure people vote. He doesn't have good relationships with the

160
00:08:23,160 --> 00:08:26,280
Speaker 5: other center or center right parties in Argentina, he doesn't

161
00:08:26,280 --> 00:08:29,320
Speaker 5: have a relationship with governors in Argentina are very important,

162
00:08:29,640 --> 00:08:33,080
Speaker 5: and he's really vilified Congress. Congress is now starting to

163
00:08:33,160 --> 00:08:36,680
Speaker 5: overturn some of Malay's vetos and David around this time

164
00:08:36,720 --> 00:08:40,160
Speaker 5: that we're seeing Malay's political strategy sort of go off

165
00:08:40,160 --> 00:08:43,960
Speaker 5: the rails. His sister and his most important advisor, Karina Melay,

166
00:08:44,440 --> 00:08:48,199
Speaker 5: is facing bribery allegations. It's a pretty classic case where

167
00:08:48,280 --> 00:08:51,800
Speaker 5: a government agency gives a bloated contract to a company,

168
00:08:52,240 --> 00:08:57,120
Speaker 5: and there's WhatsApp audio messages where people have alleged the

169
00:08:57,200 --> 00:09:01,040
Speaker 5: Karina is taking kickbacks from these far pmaceutical companies.

170
00:09:01,360 --> 00:09:02,000
Speaker 1: This is at a.

171
00:09:01,960 --> 00:09:05,640
Speaker 5: Time when Malay has actually vetoed a bill that would

172
00:09:05,679 --> 00:09:09,200
Speaker 5: have increased spending for disability medications in Argentina. So the

173
00:09:09,240 --> 00:09:11,600
Speaker 5: optics are all types of bad for Javier and Malay

174
00:09:11,840 --> 00:09:12,280
Speaker 5: and Patrick.

175
00:09:12,280 --> 00:09:15,160
Speaker 2: We should note that Karina Malay has denied those allegations.

176
00:09:16,160 --> 00:09:17,719
Speaker 2: I want to dig a little bit more into the

177
00:09:17,800 --> 00:09:20,920
Speaker 2: rationale of this move by the US Treasury Secretary. He

178
00:09:21,080 --> 00:09:25,160
Speaker 2: called Argentina a systemically important US ally in Latin America.

179
00:09:25,920 --> 00:09:28,920
Speaker 2: Why Argentina and why now? Why is the Trump administration

180
00:09:29,080 --> 00:09:31,200
Speaker 2: so interested in getting involved in this way?

181
00:09:32,160 --> 00:09:35,120
Speaker 5: If you think about at least Latin America, Donald Trump

182
00:09:35,160 --> 00:09:39,760
Speaker 5: and Javier Malay are lonely leaders in this region without

183
00:09:39,800 --> 00:09:44,199
Speaker 5: each other. Javer Malay has brewed tensions with Lula and Brazil,

184
00:09:44,520 --> 00:09:48,480
Speaker 5: Petro in Colombia, Shinbaum in Mexico, and Trump has done

185
00:09:48,480 --> 00:09:52,280
Speaker 5: the same through different tactics such as trade tariffs. Malays

186
00:09:52,280 --> 00:09:56,439
Speaker 5: mostly just sent very nasty insults at those leaders who

187
00:09:56,520 --> 00:10:00,640
Speaker 5: have also traded insults back at him. Right, Malayan Trump

188
00:10:00,720 --> 00:10:03,680
Speaker 5: really don't have any friends besides themselves in the region.

189
00:10:04,080 --> 00:10:06,200
Speaker 5: And if you think beyond sort of the fact that

190
00:10:06,240 --> 00:10:10,320
Speaker 5: Malay is a big MAGA supporter and in the conservative

191
00:10:10,320 --> 00:10:12,960
Speaker 5: circles in the United States, Malay is very popular.

192
00:10:13,320 --> 00:10:14,840
Speaker 1: Why are they doing this now?

193
00:10:15,200 --> 00:10:17,880
Speaker 5: There's a few geopolitical reasons to think about this, David.

194
00:10:18,400 --> 00:10:21,880
Speaker 5: Argentina since two thousand and nine has had a swap

195
00:10:22,000 --> 00:10:25,480
Speaker 5: line of eighteen billion dollars with the Chinese Central Bank.

196
00:10:25,880 --> 00:10:28,880
Speaker 5: It remains to be unclear, but it would certainly make

197
00:10:28,920 --> 00:10:31,760
Speaker 5: sense if the US is trying to counter China's influence

198
00:10:31,800 --> 00:10:34,160
Speaker 5: in the region. If a condition that we don't know

199
00:10:34,200 --> 00:10:37,400
Speaker 5: about yet could be that Argentina has to get rid

200
00:10:37,440 --> 00:10:40,760
Speaker 5: of or reduce its exposure to China via that swap

201
00:10:40,760 --> 00:10:44,000
Speaker 5: line and sort of replace it with this one. The

202
00:10:44,040 --> 00:10:47,320
Speaker 5: other thing long term, when you think about Argentina, David,

203
00:10:47,400 --> 00:10:50,160
Speaker 5: is it is strategic when it comes to resources. Argentina

204
00:10:50,200 --> 00:10:53,160
Speaker 5: has some of the world's largest lithium resources, shale oil,

205
00:10:53,400 --> 00:10:56,880
Speaker 5: shale gas reserves. So to have a friendly ally at

206
00:10:56,920 --> 00:10:59,240
Speaker 5: a time when the US obviously has a very tentious

207
00:10:59,280 --> 00:11:02,719
Speaker 5: relationship with Venezuela, one of the countries.

208
00:11:02,240 --> 00:11:03,920
Speaker 1: With the world's largest oil reserves.

209
00:11:04,120 --> 00:11:07,440
Speaker 5: From a resources standpoint, allying with Mala makes a lot

210
00:11:07,480 --> 00:11:10,120
Speaker 5: of sense, and Melay is willing to be Trump's biggest

211
00:11:10,160 --> 00:11:13,040
Speaker 5: fan in Latin America at a time when he doesn't

212
00:11:13,040 --> 00:11:13,480
Speaker 5: have a lot.

213
00:11:13,360 --> 00:11:14,160
Speaker 1: Of friends.

214
00:11:15,920 --> 00:11:16,439
Speaker 3: Coming up.

215
00:11:16,600 --> 00:11:20,840
Speaker 2: How potentially extending a twenty billion dollar economic lifeline to

216
00:11:20,920 --> 00:11:25,320
Speaker 2: South America's second largest economy squares with President Trump's America

217
00:11:25,400 --> 00:11:40,480
Speaker 2: first foreign policy or dozen. Shortly after Scott Besson became

218
00:11:40,559 --> 00:11:43,480
Speaker 2: the seventy ninth US Treasury Secretary, one of the first

219
00:11:43,480 --> 00:11:47,599
Speaker 2: trips he took overseas was to Argentina. Bloomberg's Patrick Gillespie

220
00:11:47,640 --> 00:11:50,720
Speaker 2: says that was a surprise. It's certainly not a destination

221
00:11:50,800 --> 00:11:55,600
Speaker 2: Besson's predecessors prioritized in that way. Argentina isn't even Latin

222
00:11:55,600 --> 00:11:57,000
Speaker 2: America's number one economy.

223
00:11:57,679 --> 00:11:59,000
Speaker 3: Patrick, you look at the trade.

224
00:11:58,760 --> 00:12:01,680
Speaker 2: Relationship between the US and Brazil and I think that's

225
00:12:01,720 --> 00:12:05,480
Speaker 2: like ninety plus billion dollars. Argentine is a fraction of that.

226
00:12:05,600 --> 00:12:08,800
Speaker 2: Yet the US is treating Brazil in really a totally

227
00:12:08,840 --> 00:12:10,840
Speaker 2: different way that the tariffs that have been levied on

228
00:12:10,880 --> 00:12:12,600
Speaker 2: Brazil are huge by comparison.

229
00:12:13,000 --> 00:12:14,240
Speaker 3: What do you make of that contrast?

230
00:12:14,320 --> 00:12:16,640
Speaker 2: What does that tell us about this administration's approach to

231
00:12:16,920 --> 00:12:17,840
Speaker 2: Latin America.

232
00:12:17,960 --> 00:12:20,880
Speaker 5: To me, it says that Trump is playing friends and

233
00:12:21,000 --> 00:12:23,960
Speaker 5: it doesn't matter really what the size of your economy is.

234
00:12:24,200 --> 00:12:28,320
Speaker 5: Trump wants political allegiance, political loyalty. He wants his allies

235
00:12:28,320 --> 00:12:30,800
Speaker 5: in the region to kiss the ring and bend the knaate.

236
00:12:31,000 --> 00:12:35,319
Speaker 5: And what you're seeing is an emboldened Lula in Brazil,

237
00:12:35,360 --> 00:12:38,680
Speaker 5: the president of Brazil, who is now in his third

238
00:12:38,720 --> 00:12:42,199
Speaker 5: presidential term. This is effectively a golden egg for him

239
00:12:42,240 --> 00:12:46,960
Speaker 5: politically going into Brazil's election next year, where he can say,

240
00:12:47,000 --> 00:12:49,280
Speaker 5: look at the United States, they are meddling in our

241
00:12:49,360 --> 00:12:52,200
Speaker 5: domestic affairs. What Trump is saying is that I'm going

242
00:12:52,200 --> 00:12:55,319
Speaker 5: to apply a fifty percent terriff on some Brazilian goods

243
00:12:55,720 --> 00:12:59,720
Speaker 5: for the fact that Brazil's Supreme Court has a convicted

244
00:13:00,080 --> 00:13:03,280
Speaker 5: one of Trump's allies, Giota bol Sonado, the former president

245
00:13:03,320 --> 00:13:07,040
Speaker 5: of Brazil, of plotting a coup on Lula and leading an.

246
00:13:07,200 --> 00:13:08,720
Speaker 1: Insurrection a few years ago.

247
00:13:08,840 --> 00:13:11,720
Speaker 5: So when you think about the trade relationship, the economic

248
00:13:11,800 --> 00:13:14,319
Speaker 5: size of Brazil, Brazil is several times the size of

249
00:13:14,440 --> 00:13:18,360
Speaker 5: Argentina economically and from a population standpoint, and it's a

250
00:13:18,360 --> 00:13:21,880
Speaker 5: behemoth on the world stage, especially when it comes to commodities.

251
00:13:22,240 --> 00:13:24,199
Speaker 5: You would think that the United States and Brazil want

252
00:13:24,240 --> 00:13:27,319
Speaker 5: to have a relatively positive relationship as the two largest

253
00:13:27,320 --> 00:13:31,280
Speaker 5: economies in the Americas. But Trump is thinking about his

254
00:13:31,800 --> 00:13:34,319
Speaker 5: own priorities, and that priority right now is Javier and

255
00:13:34,360 --> 00:13:38,319
Speaker 5: Mela and making sure that his top MAGA ally in Latin.

256
00:13:38,040 --> 00:13:40,720
Speaker 1: America gets through at least for the next four weeks.

257
00:13:42,960 --> 00:13:46,520
Speaker 2: When I saw those posts by the treachery Secretary, you

258
00:13:46,520 --> 00:13:48,560
Speaker 2: can count me among a group of a lot of people,

259
00:13:48,600 --> 00:13:51,600
Speaker 2: I think who kind of wondered where this came from

260
00:13:52,000 --> 00:13:54,000
Speaker 2: and saw it is kind of out of step with

261
00:13:54,200 --> 00:13:57,040
Speaker 2: the kind of overarching ethos foreign policy ethos that we've

262
00:13:57,040 --> 00:13:59,720
Speaker 2: seen from this White House, which is of course America.

263
00:13:59,760 --> 00:14:03,840
Speaker 2: For there is something inherently counter to that in what

264
00:14:04,040 --> 00:14:07,480
Speaker 2: Scott Besant is proposing here, that is offering this kind

265
00:14:07,520 --> 00:14:10,079
Speaker 2: of economic outreach to a country of I guess you

266
00:14:10,120 --> 00:14:12,960
Speaker 2: could say debatable economic importance to the United States.

267
00:14:13,559 --> 00:14:17,160
Speaker 5: David of America first policy certainly didn't include buying other

268
00:14:17,200 --> 00:14:20,800
Speaker 5: countries bonds and sending out twenty billion dollar checks in

269
00:14:20,840 --> 00:14:23,640
Speaker 5: other countries. There's definitely a contradiction, and if you heard

270
00:14:23,680 --> 00:14:25,840
Speaker 5: Trump when he was meeting with me La, he said,

271
00:14:25,840 --> 00:14:27,800
Speaker 5: we're going to help him, but I don't think he

272
00:14:27,840 --> 00:14:28,600
Speaker 5: needs a bailout.

273
00:14:28,640 --> 00:14:30,440
Speaker 1: Well, we're going to help them. I don't think they

274
00:14:30,480 --> 00:14:33,160
Speaker 1: need a bailout. He's done a fantastic job.

275
00:14:33,680 --> 00:14:35,600
Speaker 5: So you can almost hear a bit of Trump's own

276
00:14:35,640 --> 00:14:39,320
Speaker 5: hesitancy to say that he's going to be sending a

277
00:14:39,400 --> 00:14:42,680
Speaker 5: check to Argentina while this is an administration that wants

278
00:14:42,720 --> 00:14:43,400
Speaker 5: to focus.

279
00:14:43,080 --> 00:14:44,000
Speaker 1: On bringing money in.

280
00:14:44,400 --> 00:14:47,360
Speaker 5: Winning to them is collecting money from tariffs, not from

281
00:14:47,480 --> 00:14:49,960
Speaker 5: bailing out other countries, or I should say, at least

282
00:14:49,960 --> 00:14:53,160
Speaker 5: politically bailing out other countries. Of Course, it remains to

283
00:14:53,200 --> 00:14:55,480
Speaker 5: be seen if this is smoking mirrors or if the

284
00:14:55,600 --> 00:14:58,160
Speaker 5: US is actually going to follow through on this. I think,

285
00:14:58,240 --> 00:15:00,840
Speaker 5: at least in the initial stage, they're hoping that just

286
00:15:00,920 --> 00:15:03,600
Speaker 5: these words from Bessett could help Malay in the near

287
00:15:03,680 --> 00:15:05,960
Speaker 5: term to stabilize the currency and the markets.

288
00:15:07,640 --> 00:15:10,120
Speaker 2: We are about a month out from that midterm election

289
00:15:10,200 --> 00:15:12,400
Speaker 2: you mentioned on October the twenty six. Of course, present

290
00:15:12,560 --> 00:15:15,120
Speaker 2: lay not on the ballot in those elections, But what

291
00:15:15,240 --> 00:15:17,560
Speaker 2: is that election going to tell us about his prospects

292
00:15:17,720 --> 00:15:20,560
Speaker 2: and the future of his approach to the Argentine economy.

293
00:15:20,560 --> 00:15:21,840
Speaker 3: More broadly, Malay is going.

294
00:15:21,800 --> 00:15:24,920
Speaker 5: To have a really short honeymoon, if that at all,

295
00:15:25,080 --> 00:15:29,960
Speaker 5: after these midterm elections, because he needs to start making

296
00:15:29,960 --> 00:15:32,720
Speaker 5: some very difficult decisions after this election that are going

297
00:15:32,760 --> 00:15:35,520
Speaker 5: to be even more politically costly. It's pretty clear to

298
00:15:35,600 --> 00:15:40,080
Speaker 5: everyone that the currency is overvalue, the peso is too strong,

299
00:15:40,560 --> 00:15:43,080
Speaker 5: and Malay is going to have to loosen his grip

300
00:15:43,120 --> 00:15:44,880
Speaker 5: on the currency, which has been sort of a part

301
00:15:44,880 --> 00:15:48,720
Speaker 5: of his formula for bringing down inflation. And as inflation

302
00:15:48,760 --> 00:15:52,880
Speaker 5: has come down, his popularity had maintained relatively high considering

303
00:15:52,920 --> 00:15:54,400
Speaker 5: the austerity campaign.

304
00:15:54,440 --> 00:15:56,360
Speaker 1: He went into. He's going to keep going on the

305
00:15:56,400 --> 00:15:58,200
Speaker 1: austerity that doesn't seem to be changing.

306
00:15:58,400 --> 00:15:59,920
Speaker 5: But what's clear is that he needs to let the

307
00:16:00,080 --> 00:16:04,200
Speaker 5: peso really float and really trade freely like most currencies

308
00:16:04,200 --> 00:16:04,760
Speaker 5: in the world.

309
00:16:05,120 --> 00:16:06,520
Speaker 1: And inevitably that's a.

310
00:16:06,440 --> 00:16:08,080
Speaker 5: Good thing in the long term in the sense that

311
00:16:08,120 --> 00:16:10,840
Speaker 5: it would allow the central bank to rebuild its buffer

312
00:16:10,920 --> 00:16:15,200
Speaker 5: of cash foreign reserves, your rainy day stash of money

313
00:16:15,240 --> 00:16:18,880
Speaker 5: to prevent the next big crisis in markets. But in

314
00:16:18,920 --> 00:16:21,760
Speaker 5: the near term, if you're not if you're buying dollars

315
00:16:21,800 --> 00:16:24,480
Speaker 5: in the economy, that means you're pushing pesos in there

316
00:16:24,520 --> 00:16:28,080
Speaker 5: as well, and that soaks inflation. Malay has been saying

317
00:16:28,080 --> 00:16:31,640
Speaker 5: to voters, this is always worth it. Inflation is coming down,

318
00:16:31,640 --> 00:16:34,160
Speaker 5: and all of a sudden after this midterm election, inflation

319
00:16:34,240 --> 00:16:36,800
Speaker 5: starts going back up. Well, it certainly doesn't seem like

320
00:16:36,840 --> 00:16:40,800
Speaker 5: Melais is delivering on his promises to voters. So this

321
00:16:40,840 --> 00:16:45,080
Speaker 5: is a crucial vote for him, both from Argentine's society perspective,

322
00:16:45,120 --> 00:16:47,320
Speaker 5: whether they want to go back one hundred and eighty

323
00:16:47,360 --> 00:16:49,720
Speaker 5: degrees in the other direction just two years after they

324
00:16:50,000 --> 00:16:53,600
Speaker 5: gave Melay this mandate to change the course of the economy.

325
00:16:54,280 --> 00:16:56,600
Speaker 5: And it's also a big moment for foreign investors who

326
00:16:56,600 --> 00:16:59,880
Speaker 5: are focused on Argentina because malay Is just has an

327
00:17:00,000 --> 00:17:03,360
Speaker 5: even implemented most of his big economic reforms that he's

328
00:17:03,440 --> 00:17:06,639
Speaker 5: promised to deliver, and that would really reshape Argentina in

329
00:17:06,640 --> 00:17:07,760
Speaker 5: a more structural way.

330
00:17:07,880 --> 00:17:08,920
Speaker 3: Patrick, Thank you very much.

331
00:17:09,359 --> 00:17:10,000
Speaker 1: Thank you, David.

332
00:17:15,960 --> 00:17:18,440
Speaker 3: This is the Big Take from Bloomberg News. I'm David Gura.

333
00:17:18,680 --> 00:17:20,959
Speaker 2: To get more from the Big Take and unlimited access

334
00:17:21,000 --> 00:17:24,280
Speaker 2: to all of Bloomberg dot com, subscribe today at Bloomberg

335
00:17:24,320 --> 00:17:26,280
Speaker 2: dot Com Slash Podcast Offer.

336
00:17:26,720 --> 00:17:28,720
Speaker 3: Thanks for listening. We'll be back tomorrow