1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you 2 00:00:05,360 --> 00:00:07,760 Speaker 1: along with my co host Lisa Brahmas. Each day we 3 00:00:07,880 --> 00:00:10,440 Speaker 1: bring you the most noteworthy and useful interviews for you 4 00:00:10,520 --> 00:00:12,640 Speaker 1: and your money, whether at the grocery store or the 5 00:00:12,640 --> 00:00:15,960 Speaker 1: trading floor. Find a Bloomberg Penl podcast on Apple podcast 6 00:00:16,120 --> 00:00:18,040 Speaker 1: or wherever you listen to podcasts, as well as at 7 00:00:18,040 --> 00:00:25,040 Speaker 1: Bloomberg dot com. Argentina had an election with a surprise 8 00:00:25,079 --> 00:00:27,440 Speaker 1: outcome that is sending the assets tumbling to pay so 9 00:00:27,520 --> 00:00:31,479 Speaker 1: currently the weakest on record record versus the dollar. You 10 00:00:31,520 --> 00:00:35,040 Speaker 1: have a hundred year bonds also absolutely falling out of bed. 11 00:00:35,080 --> 00:00:37,760 Speaker 1: Joining us now Damien sass Our, chief Emerging markets credit 12 00:00:37,800 --> 00:00:41,800 Speaker 1: strategist for Bloomberg Intelligence and Damien, how big of a 13 00:00:41,920 --> 00:00:46,000 Speaker 1: potential negative is this for the Argentina economy and frankly 14 00:00:46,560 --> 00:00:49,320 Speaker 1: for its access to international markets at this point? Well, 15 00:00:49,360 --> 00:00:51,280 Speaker 1: I'll start with the ladder there um, because that's an 16 00:00:51,320 --> 00:00:54,120 Speaker 1: easy one. This is bad from an external perspective. I mean, 17 00:00:54,160 --> 00:00:57,120 Speaker 1: if you're an investor that technical view, yeah, I mean 18 00:00:57,160 --> 00:00:58,960 Speaker 1: if you're a dollar investor and you're looking at the 19 00:00:59,040 --> 00:01:01,640 Speaker 1: prince this morning, I mean in just about every um 20 00:01:01,800 --> 00:01:04,480 Speaker 1: dollar denominated a d R that's attached to you know, 21 00:01:04,640 --> 00:01:07,240 Speaker 1: an Argentina a st B at YPF or POMP or 22 00:01:07,280 --> 00:01:09,080 Speaker 1: even the global x ms C I E t F, 23 00:01:09,160 --> 00:01:11,960 Speaker 1: which is the largest DTF that focuses on Argentine equities. 24 00:01:12,200 --> 00:01:15,120 Speaker 1: They're all off today, which is in line with with 25 00:01:15,240 --> 00:01:18,640 Speaker 1: the dollar RG cross rate, which is now at sixty, 26 00:01:18,720 --> 00:01:21,760 Speaker 1: which is yes, quite high and quite painful for a 27 00:01:21,800 --> 00:01:24,440 Speaker 1: lot of investors who have who have investments. They're just 28 00:01:24,480 --> 00:01:26,520 Speaker 1: taking a step back. I mean, what happened overnight. We 29 00:01:26,560 --> 00:01:30,080 Speaker 1: saw that the Argentine primaries UM basically handed a much 30 00:01:30,080 --> 00:01:34,280 Speaker 1: bigger victory to Fernandez, who is um as Kirshner, the 31 00:01:34,319 --> 00:01:38,200 Speaker 1: former president, as his running mate, and um you know, 32 00:01:38,240 --> 00:01:40,319 Speaker 1: the market's perception of that is quite negative, you know, 33 00:01:40,400 --> 00:01:43,280 Speaker 1: to return to currency and capital controls. I mean, Fernandez 34 00:01:43,360 --> 00:01:45,240 Speaker 1: is already on the tape is saying he might not 35 00:01:45,400 --> 00:01:48,400 Speaker 1: pay uh interest on all the leak te bows that 36 00:01:48,440 --> 00:01:51,440 Speaker 1: offer creditors now own. And so look, as the fifth 37 00:01:51,560 --> 00:01:55,520 Speaker 1: largest issuer of UM of US dollar denominated sovereign debt, 38 00:01:55,600 --> 00:01:57,840 Speaker 1: Argentine is a pretty big position and a lot of 39 00:01:57,960 --> 00:02:01,280 Speaker 1: emerging market investor portfolios, and so there's some pain here 40 00:02:01,360 --> 00:02:03,040 Speaker 1: and I'm sure we're going to be seeing that before 41 00:02:03,080 --> 00:02:05,240 Speaker 1: the end of today. I wonder what the application is 42 00:02:05,280 --> 00:02:09,160 Speaker 1: for companies in Argentina that have borrowed debt externally, because 43 00:02:09,240 --> 00:02:12,880 Speaker 1: the depreciation in the PASO is killer for them. I 44 00:02:13,000 --> 00:02:15,080 Speaker 1: think it's a great point. I mean, SMP actually just 45 00:02:15,120 --> 00:02:17,560 Speaker 1: came out last week on the tape and said they 46 00:02:17,560 --> 00:02:21,440 Speaker 1: don't see real refight pressure on those uh issuers and 47 00:02:21,800 --> 00:02:25,440 Speaker 1: of of externally denominat external debt. Okay, wait and slow downs. 48 00:02:25,440 --> 00:02:27,640 Speaker 1: In other words, these companies that have borrowed money in 49 00:02:27,720 --> 00:02:31,000 Speaker 1: dollars or euros, they've pushed out the maturity so far 50 00:02:31,080 --> 00:02:33,360 Speaker 1: that they won't have to necessarily refinance or pay it 51 00:02:33,400 --> 00:02:36,320 Speaker 1: back any time in the near future, so that relieves 52 00:02:36,320 --> 00:02:38,920 Speaker 1: some of the pressure. Not the near future. One was 53 00:02:38,960 --> 00:02:40,600 Speaker 1: the years, so they bought themselves about a year and 54 00:02:40,639 --> 00:02:42,400 Speaker 1: a half to two years, let's call it, according to 55 00:02:42,520 --> 00:02:45,400 Speaker 1: S ANDPS calculations. So it's still the net in the 56 00:02:45,440 --> 00:02:48,760 Speaker 1: next week. Yeah, right, exactly. So it's not that far out, 57 00:02:48,880 --> 00:02:50,600 Speaker 1: is the point. And you know, look, I mean you've 58 00:02:50,600 --> 00:02:53,240 Speaker 1: got a car account deficit that's narrowed, albeit on the 59 00:02:53,240 --> 00:02:55,160 Speaker 1: back of r g PA so weakness, so it's four 60 00:02:55,160 --> 00:02:57,880 Speaker 1: point six percent of GDP. This is an economy now 61 00:02:58,160 --> 00:03:00,959 Speaker 1: in the longest recession and at least fifteen years. We're 62 00:03:01,000 --> 00:03:02,959 Speaker 1: hoping to get a positive print for the second corner. 63 00:03:03,040 --> 00:03:05,840 Speaker 1: We very well made yet that. But I mean, my goodness, 64 00:03:05,880 --> 00:03:07,840 Speaker 1: in the first quarter GDP was off five point eight 65 00:03:07,840 --> 00:03:10,680 Speaker 1: percent year over year, and consensus is calling for negative 66 00:03:10,680 --> 00:03:13,160 Speaker 1: one point four for this full year. So things are 67 00:03:13,200 --> 00:03:15,560 Speaker 1: bad on the ground in Argentina. And look, I mean, 68 00:03:15,600 --> 00:03:18,640 Speaker 1: despite the fact that they had an absolutely wonderful harvest, 69 00:03:18,680 --> 00:03:21,840 Speaker 1: certainly relative to last year. Just for full disclosure, Argentina 70 00:03:21,880 --> 00:03:25,639 Speaker 1: is a very big exporter of soybeans and agricultural products globally, 71 00:03:25,919 --> 00:03:27,600 Speaker 1: and so one would have thought that might have been 72 00:03:27,600 --> 00:03:30,000 Speaker 1: a bullish uh you know, would have been good for 73 00:03:30,040 --> 00:03:32,880 Speaker 1: the economy. But my goodness, things are really, really really 74 00:03:32,919 --> 00:03:35,440 Speaker 1: bad today. And um, you know, if this um, if 75 00:03:35,480 --> 00:03:37,480 Speaker 1: this is any indication of how the elections go on 76 00:03:37,520 --> 00:03:42,240 Speaker 1: the October UM. Yeah, returned to the Pernis Kushner ways 77 00:03:42,240 --> 00:03:43,920 Speaker 1: would not be good from the perspective of an off 78 00:03:43,920 --> 00:03:47,120 Speaker 1: shore investor. So aside from Argentina, which is defaulted on 79 00:03:47,200 --> 00:03:49,640 Speaker 1: its debt what five times in the past hundred years, 80 00:03:49,640 --> 00:03:52,600 Speaker 1: serial defaulter, yes, serial defaulter. Yet they still were able 81 00:03:52,600 --> 00:03:54,520 Speaker 1: to borrow money for a hundred years and the people 82 00:03:54,520 --> 00:03:56,920 Speaker 1: who bought that debt really regretting it today with those 83 00:03:56,960 --> 00:04:01,200 Speaker 1: prices on those bonds in free fall. Aside from our Argentina, 84 00:04:01,400 --> 00:04:03,840 Speaker 1: how idiots and credit I know Jonathan Farroll hates his word, 85 00:04:03,880 --> 00:04:08,680 Speaker 1: but how specific to Argentina are these issues versus endemic 86 00:04:08,760 --> 00:04:11,640 Speaker 1: within the emerging market space? Yeah? So, I mean I think, 87 00:04:11,840 --> 00:04:13,320 Speaker 1: you know, I mean, to that point, we have to 88 00:04:13,360 --> 00:04:15,440 Speaker 1: take a step back because it's all about us China. 89 00:04:15,560 --> 00:04:16,839 Speaker 1: And you know, if you just look at some of 90 00:04:16,839 --> 00:04:18,760 Speaker 1: the data that came out of China overnight. I mean 91 00:04:18,760 --> 00:04:21,240 Speaker 1: they released their total social financing data, which is all 92 00:04:21,240 --> 00:04:24,360 Speaker 1: about credit extension that they kind of injected into their economy, 93 00:04:24,480 --> 00:04:27,400 Speaker 1: and it was bad. I mean, given the word of 94 00:04:27,440 --> 00:04:31,200 Speaker 1: the day, by the way, bad, it was bad. I mean, 95 00:04:31,279 --> 00:04:33,920 Speaker 1: we basically were expecting something on the order of one 96 00:04:33,960 --> 00:04:37,159 Speaker 1: point six trillion of credit being extended I'm talking in 97 00:04:37,240 --> 00:04:40,160 Speaker 1: you on terms into the local China economy. It was 98 00:04:40,200 --> 00:04:42,760 Speaker 1: only one trillion un which is way less than expected 99 00:04:42,800 --> 00:04:44,839 Speaker 1: and certainly less than the two point three trillion we 100 00:04:44,880 --> 00:04:47,280 Speaker 1: saw in June. And really what this is is new 101 00:04:47,320 --> 00:04:50,719 Speaker 1: loans are down, tighter, property market financing. You know, as 102 00:04:50,760 --> 00:04:52,840 Speaker 1: we know in China, the real estate markets a very 103 00:04:52,839 --> 00:04:55,280 Speaker 1: big portion of about economy. And with credit growth weak, 104 00:04:55,480 --> 00:04:58,280 Speaker 1: especially in light of US trade for US China trade 105 00:04:58,320 --> 00:05:01,680 Speaker 1: friction escalating, it's just not gonna It just means that 106 00:05:01,720 --> 00:05:03,680 Speaker 1: things are gonna get much worse. Oh and by the way, 107 00:05:03,760 --> 00:05:05,760 Speaker 1: the protests in Hong Kong, and we see I P 108 00:05:05,880 --> 00:05:08,760 Speaker 1: and retail sales coming on Wednesday, which is also expected 109 00:05:08,800 --> 00:05:10,560 Speaker 1: to be weak. It's just not gonna be a good 110 00:05:10,560 --> 00:05:12,760 Speaker 1: week for emerging markets. So Jamian, here's the weird thing. 111 00:05:12,960 --> 00:05:15,400 Speaker 1: All that sounds so bad. I'm looking at the ms 112 00:05:15,440 --> 00:05:19,000 Speaker 1: c I Emerging Markets f X index. It's the lowest 113 00:05:19,080 --> 00:05:22,120 Speaker 1: levels of the year, all really bad. I'm looking at 114 00:05:22,160 --> 00:05:26,400 Speaker 1: emerging markets funds not doing badly. They're not seeing big withdrawals, 115 00:05:26,640 --> 00:05:30,320 Speaker 1: and emerging markets debt is actually outperforming US credit. So 116 00:05:30,320 --> 00:05:32,359 Speaker 1: what gives? Okay, So, well, you know E M dollar 117 00:05:32,440 --> 00:05:36,040 Speaker 1: debt tends to be driven by the U. S. Treasury 118 00:05:36,040 --> 00:05:38,640 Speaker 1: market effectively, and spreads within the U S. Treasury market, 119 00:05:38,680 --> 00:05:41,159 Speaker 1: all of which yields have been coming down. Spreads are 120 00:05:41,160 --> 00:05:43,080 Speaker 1: still tight around the year, or maybe they're about break 121 00:05:43,120 --> 00:05:45,880 Speaker 1: even but all of that has been fueling the roughly 122 00:05:45,920 --> 00:05:48,880 Speaker 1: double digit gains we've seen an e M dollar debt. Know, hey, 123 00:05:48,880 --> 00:05:50,320 Speaker 1: by the way, you make a really good point, because 124 00:05:50,320 --> 00:05:52,880 Speaker 1: I just looked at the constituent breakdown in e M 125 00:05:52,920 --> 00:05:56,160 Speaker 1: B which is the largest um um emerging market dollar 126 00:05:56,200 --> 00:05:57,680 Speaker 1: bond e t F. It's the largest e M e 127 00:05:57,720 --> 00:06:00,760 Speaker 1: t F you know, in existence, and Argentine is really 128 00:06:00,760 --> 00:06:02,640 Speaker 1: only a small portion of that, despite the fact that 129 00:06:02,680 --> 00:06:05,560 Speaker 1: it's five five percent of most benchmark industry, it's only 130 00:06:05,560 --> 00:06:07,880 Speaker 1: two percent of that e t F. So you know, 131 00:06:08,040 --> 00:06:10,000 Speaker 1: by hook or by crook, you know, maybe that's got 132 00:06:10,000 --> 00:06:12,400 Speaker 1: a little bit of a positive overlay too. But yeah, no, 133 00:06:12,560 --> 00:06:14,919 Speaker 1: I M. Dollward jets done well, will continue to do 134 00:06:14,960 --> 00:06:17,320 Speaker 1: well so long as US treasure yields are declining and 135 00:06:17,360 --> 00:06:21,120 Speaker 1: spreads remain benign, if that's if that's true. So yeah, 136 00:06:21,160 --> 00:06:23,359 Speaker 1: that's kind of what we're looking at. I mean, you know, 137 00:06:23,440 --> 00:06:25,880 Speaker 1: I mean, look, Mexico, Russia, Brazil, it's all been doing 138 00:06:25,880 --> 00:06:29,039 Speaker 1: pretty well. Yeah, the emerging market conundrum, lots of bad 139 00:06:29,040 --> 00:06:31,839 Speaker 1: news you can hook into, and yet and yet the 140 00:06:31,880 --> 00:06:34,960 Speaker 1: FED keeps cutting rates and that's typically a technical positive. 141 00:06:35,120 --> 00:06:38,520 Speaker 1: Damian SASA are Chief Emerging Markets Credit Strategies for Bloomberg Intelligence, 142 00:06:38,560 --> 00:06:55,919 Speaker 1: joining us here in our interactive broker studios. Behind the 143 00:06:56,000 --> 00:06:58,960 Speaker 1: wall of worry that we have today in markets is 144 00:06:59,040 --> 00:07:02,159 Speaker 1: what is happening between the US and China, and just 145 00:07:02,480 --> 00:07:04,599 Speaker 1: not only what is happening between them when it comes 146 00:07:04,640 --> 00:07:06,560 Speaker 1: to trade, but what is happening in each of the 147 00:07:06,600 --> 00:07:10,080 Speaker 1: economy is when it comes to growth. We're so lucky 148 00:07:10,120 --> 00:07:12,720 Speaker 1: to have Leland Miller here with us who tracks all 149 00:07:12,840 --> 00:07:15,840 Speaker 1: of the economic data coming out of China. He's a 150 00:07:15,880 --> 00:07:18,760 Speaker 1: chief executive officer of China beige Book International. Joining us 151 00:07:18,760 --> 00:07:21,640 Speaker 1: here in our interactive broker Studios. Leland, it really struck 152 00:07:21,720 --> 00:07:25,440 Speaker 1: me that there was data showing slowing credit growth UH 153 00:07:25,600 --> 00:07:28,960 Speaker 1: for the month of June overnight. This was interesting because 154 00:07:28,960 --> 00:07:33,280 Speaker 1: it doesn't necessarily stem from a crackdown on leverage ratios. 155 00:07:33,280 --> 00:07:36,840 Speaker 1: Does this indicate a slowdown in growth to you? Not yet, 156 00:07:36,960 --> 00:07:39,560 Speaker 1: So there's a lot to be figured out over the 157 00:07:39,600 --> 00:07:41,480 Speaker 1: next several weeks. The first thing to know is that 158 00:07:41,720 --> 00:07:44,239 Speaker 1: the first quarter, our first month out of every quarter, 159 00:07:44,280 --> 00:07:47,160 Speaker 1: we typically see less lending, So you get the narrative 160 00:07:47,360 --> 00:07:49,600 Speaker 1: things are slowing down. The end of the quarter, they 161 00:07:49,640 --> 00:07:51,880 Speaker 1: pump more stuff in, so we'll have to see this 162 00:07:51,920 --> 00:07:54,320 Speaker 1: over the course of several months. But the second thing 163 00:07:54,400 --> 00:07:58,119 Speaker 1: is you've got these new tariffs hanging over, uh, hanging 164 00:07:58,120 --> 00:08:02,120 Speaker 1: over the Chinese economy. But you've also ut the party's 165 00:08:02,400 --> 00:08:06,040 Speaker 1: seventih anniversary in the PRC seventith anniversary in October, so 166 00:08:06,040 --> 00:08:07,880 Speaker 1: the Chinese are gonna want to boost the economy for that. 167 00:08:07,920 --> 00:08:09,640 Speaker 1: So a lot of this is timing. When are they 168 00:08:09,640 --> 00:08:11,320 Speaker 1: going to start pumping things in When do they want 169 00:08:11,320 --> 00:08:15,720 Speaker 1: to improve uh, the optics around the economy. So I 170 00:08:15,800 --> 00:08:17,720 Speaker 1: think it's too early to say that things are slowing 171 00:08:17,760 --> 00:08:21,200 Speaker 1: down quite yet. Okay, so right now, where are we 172 00:08:21,240 --> 00:08:24,040 Speaker 1: when it comes to the trade war and the ammunition 173 00:08:24,080 --> 00:08:27,200 Speaker 1: that both sides have to deploy? Well, this this was 174 00:08:27,240 --> 00:08:30,080 Speaker 1: really interesting what happened in August because you know, as 175 00:08:30,120 --> 00:08:33,120 Speaker 1: we've said for a long time, when you leave Osaka 176 00:08:33,480 --> 00:08:36,240 Speaker 1: and you basically say we are have a deadline at 177 00:08:36,240 --> 00:08:38,000 Speaker 1: the end of the year, so six months and of 178 00:08:38,000 --> 00:08:39,640 Speaker 1: the year you don't even announce. If you imply that 179 00:08:39,679 --> 00:08:41,080 Speaker 1: you're not doing anything until the end of the year, 180 00:08:41,200 --> 00:08:43,439 Speaker 1: it's very hard to get the parties focused on doing 181 00:08:43,440 --> 00:08:45,839 Speaker 1: anything substitutive. The Chinese don't want to talk about the text. 182 00:08:46,320 --> 00:08:48,760 Speaker 1: They want to talk about how to get to November 183 00:08:48,800 --> 00:08:52,240 Speaker 1: when they can restart discussions. So all the discussion lately 184 00:08:52,440 --> 00:08:55,560 Speaker 1: had been over Huawei on the U S side and 185 00:08:55,720 --> 00:08:58,320 Speaker 1: agricultural buys on the Chinese side. And the Chinese got 186 00:08:58,360 --> 00:09:01,720 Speaker 1: through the last media and thought they had done promised 187 00:09:01,720 --> 00:09:03,679 Speaker 1: just enough to get what they wanted and have sort 188 00:09:03,679 --> 00:09:05,880 Speaker 1: of a smooth fall. And the President didn't like that, 189 00:09:05,920 --> 00:09:08,960 Speaker 1: and he ratchet up tensions. And then the Chinese did 190 00:09:09,000 --> 00:09:11,560 Speaker 1: what they did with the yuan, which was overdue but 191 00:09:11,720 --> 00:09:13,600 Speaker 1: seen as a poke in the eye. And now we're 192 00:09:13,640 --> 00:09:16,720 Speaker 1: at this position where we could see anything. We could 193 00:09:16,720 --> 00:09:20,240 Speaker 1: see this coming week. We could see tensions relaxed because 194 00:09:20,280 --> 00:09:22,600 Speaker 1: of the Huawei General License is extended, or some sort 195 00:09:22,600 --> 00:09:24,720 Speaker 1: of concessions are done in Huawei, or we could see 196 00:09:24,760 --> 00:09:27,400 Speaker 1: the exact opposite. The President does nothing in Huawei. You 197 00:09:27,480 --> 00:09:32,040 Speaker 1: see tariffs go up to ten percent or even September one, 198 00:09:32,120 --> 00:09:34,920 Speaker 1: and this thing's um, you know, breaking down quite quickly. 199 00:09:35,240 --> 00:09:38,200 Speaker 1: What about on the Chinese side, aside from the yuan 200 00:09:38,440 --> 00:09:41,160 Speaker 1: peg And it's not necessarily a depreciation as much as 201 00:09:41,200 --> 00:09:45,560 Speaker 1: allowing the currency to weaken perhaps to its market it's 202 00:09:45,640 --> 00:09:49,080 Speaker 1: actual market weight Aside from that, are you expecting China 203 00:09:49,160 --> 00:09:53,000 Speaker 1: to go after US companies that are doing business in China? 204 00:09:53,280 --> 00:09:55,720 Speaker 1: Not yet. Uh, it doesn't mean that they're not being 205 00:09:56,040 --> 00:10:00,040 Speaker 1: uh messed with on the margins. But right now, I 206 00:10:00,040 --> 00:10:03,319 Speaker 1: think that China's goal is to just stop the nightmare 207 00:10:03,400 --> 00:10:06,680 Speaker 1: scenario from occurring. So they don't want tariffs on all 208 00:10:06,720 --> 00:10:09,760 Speaker 1: their goods. They don't want Trump to come even harder 209 00:10:09,760 --> 00:10:12,120 Speaker 1: at Huawei and the other tech companies, some of whom 210 00:10:12,160 --> 00:10:14,120 Speaker 1: are on lists that have not been announced yet and 211 00:10:14,360 --> 00:10:17,199 Speaker 1: would be if things really broke down. Uh. She is 212 00:10:17,200 --> 00:10:19,560 Speaker 1: obviously very happy the President. Trump hasn't said much about 213 00:10:19,559 --> 00:10:22,040 Speaker 1: Hong Kong to the extent he said anything, it's almost 214 00:10:22,040 --> 00:10:24,840 Speaker 1: been encouraging. You've got South China. See, you've got Taiwan 215 00:10:24,920 --> 00:10:27,600 Speaker 1: arms sales. So things aren't good right now, but the 216 00:10:27,679 --> 00:10:32,240 Speaker 1: Chinese are very motivated not to let them fall apart. Meanwhile, 217 00:10:32,360 --> 00:10:34,160 Speaker 1: I was reading an article over the weekend that I 218 00:10:34,160 --> 00:10:37,560 Speaker 1: thought was really interesting about Jiji and Ping's challenge right now, 219 00:10:37,960 --> 00:10:41,920 Speaker 1: and that he faces this really difficult move in trying 220 00:10:41,960 --> 00:10:45,600 Speaker 1: to take this very quickly growing economy and shift it 221 00:10:45,640 --> 00:10:49,080 Speaker 1: to a more middle class, lower growth, but more stable 222 00:10:49,160 --> 00:10:53,080 Speaker 1: developed market of sorts, and I'm wondering where it is 223 00:10:53,559 --> 00:10:56,280 Speaker 1: on that progression, how far along has it gotten, and 224 00:10:56,600 --> 00:10:58,640 Speaker 1: sort of whether you view this as sort of the 225 00:10:58,679 --> 00:11:02,120 Speaker 1: albatross that Jim Pig needs to cross. Well, he has 226 00:11:02,120 --> 00:11:03,800 Speaker 1: a lot of he has a he has a lot 227 00:11:03,840 --> 00:11:05,559 Speaker 1: of challenges coming up. I'm not sure which one I 228 00:11:05,559 --> 00:11:08,160 Speaker 1: would take, you know, the I think that if you 229 00:11:08,200 --> 00:11:10,600 Speaker 1: if we take it back up to fet what what 230 00:11:10,679 --> 00:11:14,719 Speaker 1: we're seeing since was a lot of progress on certain things, 231 00:11:14,800 --> 00:11:17,440 Speaker 1: like they cracked down on shadow finance. They didn't do 232 00:11:17,480 --> 00:11:19,319 Speaker 1: as much on leveraging as they claimed, but they did 233 00:11:19,320 --> 00:11:22,800 Speaker 1: a little bit. There was some restructuring about to go on, 234 00:11:22,960 --> 00:11:24,679 Speaker 1: and then they saw the Trump trade war hit in 235 00:11:24,720 --> 00:11:27,680 Speaker 1: twenty eighteen, and everything they started they began to reverse. 236 00:11:27,960 --> 00:11:31,640 Speaker 1: And now it's totally reversed. So this hasn't hit official 237 00:11:31,720 --> 00:11:33,559 Speaker 1: day yet, so it's not believed by a lot of people. 238 00:11:33,600 --> 00:11:37,480 Speaker 1: But we saw a major resurgence in shadow banking in 239 00:11:37,480 --> 00:11:40,000 Speaker 1: the second quarter, so it's back. You know, they said 240 00:11:40,040 --> 00:11:41,160 Speaker 1: that they were going to deal with it. No that 241 00:11:41,200 --> 00:11:43,200 Speaker 1: got scared about what was happening in the trade war, 242 00:11:43,520 --> 00:11:47,800 Speaker 1: and they brought shadow banking back. You're not seeing restructuring, 243 00:11:47,800 --> 00:11:51,080 Speaker 1: and I seeing reform. We're not seeing evidence of rebalancing 244 00:11:51,080 --> 00:11:53,720 Speaker 1: in our numbers, and so I think what the Chinese 245 00:11:53,720 --> 00:11:56,160 Speaker 1: have done once again is reverted to the short term 246 00:11:56,200 --> 00:11:58,840 Speaker 1: to deal with their short term problems and said, you know, 247 00:11:58,840 --> 00:12:01,160 Speaker 1: we're gonna kick the can down road, as everyone seems 248 00:12:01,200 --> 00:12:04,640 Speaker 1: to do these days, and deal with the problems next 249 00:12:04,720 --> 00:12:07,079 Speaker 1: year or the year after that. So what's the consequence 250 00:12:07,120 --> 00:12:09,520 Speaker 1: of that, Well, what it means is they can they 251 00:12:09,520 --> 00:12:12,600 Speaker 1: can defy expectations of a more dramatic slowdown in the 252 00:12:12,600 --> 00:12:15,880 Speaker 1: short term by by using their various levers to boost growth, 253 00:12:16,080 --> 00:12:17,840 Speaker 1: but it means the medium term and the long term 254 00:12:17,880 --> 00:12:20,240 Speaker 1: are gonna be much more difficult. The Chinese have an 255 00:12:20,280 --> 00:12:22,840 Speaker 1: advantage in that they have a non commercial financial system. 256 00:12:22,960 --> 00:12:24,960 Speaker 1: It's one of the reasons things that haven't fallen apart 257 00:12:25,040 --> 00:12:27,439 Speaker 1: the way they did in the US with Lehman and 258 00:12:27,600 --> 00:12:30,520 Speaker 1: and and in Europe as well. Chinese can just swish 259 00:12:30,760 --> 00:12:33,199 Speaker 1: huge amounts of capital from one side of the systems 260 00:12:33,200 --> 00:12:37,160 Speaker 1: the other, plugging holes, fixing problems. But that means they're 261 00:12:37,240 --> 00:12:40,559 Speaker 1: essentially chasing good money after bad and it's gonna hit, 262 00:12:40,679 --> 00:12:42,880 Speaker 1: it's gonna stagnate the economy over time. It's gonna it's 263 00:12:42,920 --> 00:12:45,520 Speaker 1: gonna hit their return on investment because they're constantly pumping 264 00:12:45,760 --> 00:12:48,520 Speaker 1: new money into bad projects, so it'll have a long 265 00:12:48,640 --> 00:12:51,080 Speaker 1: term hit when and a long term slowdown is basically 266 00:12:51,480 --> 00:12:53,680 Speaker 1: in the cards. So just to sort of put a 267 00:12:53,679 --> 00:12:56,120 Speaker 1: bow on all of this, this is a really important point. 268 00:12:56,480 --> 00:13:00,440 Speaker 1: If China has demonstrated it is willing to sacrifice the 269 00:13:00,520 --> 00:13:03,199 Speaker 1: longer term for the short term boost that it can 270 00:13:03,240 --> 00:13:06,199 Speaker 1: get by reversing some of the de leveraging, etcetera measures 271 00:13:06,240 --> 00:13:10,280 Speaker 1: from earlier, then how is the trade war pressuring them? 272 00:13:10,360 --> 00:13:12,760 Speaker 1: Because they're showing that they are willing to use this 273 00:13:12,840 --> 00:13:16,800 Speaker 1: ammunition now regardless of the longer term consequences. I think 274 00:13:16,800 --> 00:13:18,199 Speaker 1: that's the problem if you're in the White House. The 275 00:13:18,280 --> 00:13:20,240 Speaker 1: Chinese have the ability because they don't have to worry 276 00:13:20,280 --> 00:13:22,960 Speaker 1: about the politics the way that a democracy would, and 277 00:13:22,960 --> 00:13:26,120 Speaker 1: they don't have to worry about a Congress that doesn't 278 00:13:26,160 --> 00:13:28,520 Speaker 1: like certain things. They are just going to fix problems 279 00:13:28,840 --> 00:13:31,000 Speaker 1: that clear the way for the party in the short term. 280 00:13:31,080 --> 00:13:33,400 Speaker 1: That's what they've always done and that's what they'll continue 281 00:13:33,400 --> 00:13:35,800 Speaker 1: to do. And so the difficulty in causing problems for 282 00:13:35,880 --> 00:13:40,080 Speaker 1: China is that they always have a quicker response mechanism 283 00:13:40,120 --> 00:13:42,160 Speaker 1: and a more effective one because they don't have to 284 00:13:42,160 --> 00:13:45,520 Speaker 1: answer to anyone. Real quick, here, what year will the 285 00:13:45,679 --> 00:13:48,280 Speaker 1: slow down in China be felt? The slowdown that will 286 00:13:48,360 --> 00:13:52,240 Speaker 1: necessarily come despite the stimulus that the PBOC is willing 287 00:13:52,280 --> 00:13:55,320 Speaker 1: to put in. Look, I would think that within five 288 00:13:55,400 --> 00:13:58,360 Speaker 1: years you're gonna start seeing much slower growth, the questions 289 00:13:58,360 --> 00:14:00,040 Speaker 1: of the Chinese gonna admit it. I mean, if you 290 00:14:00,040 --> 00:14:02,760 Speaker 1: you're already seeing slower growth and people were predicting a 291 00:14:02,800 --> 00:14:04,680 Speaker 1: few years ago, it just hasn't been enough to to 292 00:14:04,720 --> 00:14:07,320 Speaker 1: really shake the shape markets. I think over the next 293 00:14:07,360 --> 00:14:10,439 Speaker 1: five years, you're gonna start seeing a more precipitous decline 294 00:14:11,040 --> 00:14:12,440 Speaker 1: that they're not gonna be able to do much about. 295 00:14:13,000 --> 00:14:16,080 Speaker 1: Leland Miller so wonderful to get your perspective. As always, 296 00:14:16,160 --> 00:14:19,360 Speaker 1: thank you for being here. Uh And honestly, Leland, you 297 00:14:19,400 --> 00:14:22,320 Speaker 1: guys have data that is really spectacular because it shows 298 00:14:22,360 --> 00:14:24,640 Speaker 1: what's actually going on, and there's so much question around 299 00:14:24,840 --> 00:14:28,479 Speaker 1: the credibility of the official data. To get other measures 300 00:14:28,520 --> 00:14:30,000 Speaker 1: to get a sense of what's going on on the 301 00:14:30,040 --> 00:14:32,640 Speaker 1: ground is really important. Leland Miller is chief executive officer 302 00:14:32,680 --> 00:14:37,320 Speaker 1: of China beige Book International, weighing in on both sides here. 303 00:14:54,120 --> 00:14:57,480 Speaker 1: Jeffrey Epstein, the financier who was accused of sex trafficking, 304 00:14:57,600 --> 00:15:00,760 Speaker 1: was found dead in his jail cell over the weekend. Now, 305 00:15:01,000 --> 00:15:03,600 Speaker 1: there are many questions around the circumstances of his death. 306 00:15:03,600 --> 00:15:06,920 Speaker 1: It has been established as a suicide. Questions though about 307 00:15:07,200 --> 00:15:10,800 Speaker 1: how he was surveiled by the jail staff. Joining us 308 00:15:10,800 --> 00:15:13,720 Speaker 1: now is Chris Dolmets. He's a Bloomberg legal reporter joining 309 00:15:13,760 --> 00:15:16,320 Speaker 1: us from the courthouse. Chris, We're now getting word from 310 00:15:16,360 --> 00:15:19,800 Speaker 1: Attorney General Bill Barr that there were some serious irregularities 311 00:15:20,040 --> 00:15:22,800 Speaker 1: with the manner in which Jeffrey Epstein was held. Can 312 00:15:22,800 --> 00:15:26,200 Speaker 1: you elaborate, Do we know anything more? No, that's just 313 00:15:26,360 --> 00:15:29,400 Speaker 1: recently come out. He's he said, you know, they're serious 314 00:15:29,600 --> 00:15:32,520 Speaker 1: regularities over the weekend. He has vowed to investigate, get 315 00:15:32,560 --> 00:15:35,280 Speaker 1: to the bottom of what happened. Um. You know, it's 316 00:15:35,320 --> 00:15:37,880 Speaker 1: a pretty secure facility and a lot of people are 317 00:15:37,880 --> 00:15:41,400 Speaker 1: asking questions as to how this could happen, um in 318 00:15:41,440 --> 00:15:44,480 Speaker 1: a federal prison that's held you know el Chapo for 319 00:15:44,480 --> 00:15:48,800 Speaker 1: for example. So what is the concern here, Because if 320 00:15:48,880 --> 00:15:51,760 Speaker 1: I understand correctly, it has been established as a suicide, 321 00:15:51,760 --> 00:15:53,840 Speaker 1: even though there have been a number of conspiracy theories 322 00:15:53,840 --> 00:15:55,840 Speaker 1: that it was murder. I mean, has it been established 323 00:15:55,840 --> 00:15:59,440 Speaker 1: a suicide? So? UM, you know, the only thing we've 324 00:15:59,440 --> 00:16:02,080 Speaker 1: been told, um by the Bureau Prisons that he was 325 00:16:02,120 --> 00:16:06,200 Speaker 1: found unresponsive, jail staff tried to revive him, someone emergency 326 00:16:06,280 --> 00:16:09,080 Speaker 1: medical personnel, and that he was pronounced dead UM at 327 00:16:09,080 --> 00:16:12,880 Speaker 1: the hospital. UM, ABC and others you know reported that 328 00:16:12,960 --> 00:16:15,960 Speaker 1: he that he hung himself, and there has been an 329 00:16:15,960 --> 00:16:20,640 Speaker 1: autopsy performed. That medical examiner verified that, but hasn't officially 330 00:16:20,680 --> 00:16:23,840 Speaker 1: determined the cause of debt. UM. There has been a 331 00:16:23,840 --> 00:16:26,480 Speaker 1: city official that told the New York Times that UM, 332 00:16:26,840 --> 00:16:30,760 Speaker 1: that the medical examiner is pretty confident that it is suicide, UM, 333 00:16:30,800 --> 00:16:33,360 Speaker 1: but needs you know, to complete the autopsy to make 334 00:16:33,400 --> 00:16:35,960 Speaker 1: that determination. So what's the key question here when it 335 00:16:36,000 --> 00:16:39,160 Speaker 1: comes to the serious irregularities that Attorney General bar was 336 00:16:39,160 --> 00:16:44,120 Speaker 1: talking about. Well, there's you know, there's questions about um, 337 00:16:44,160 --> 00:16:49,240 Speaker 1: you know, staff overtime, whether staff were overworked, UM, you know, 338 00:16:49,560 --> 00:16:52,360 Speaker 1: what the conditions that the prison were like. UM, whether 339 00:16:52,440 --> 00:16:54,400 Speaker 1: or not he was on a suicide watch. We've been 340 00:16:54,400 --> 00:16:56,840 Speaker 1: told that he was not, even though he was recently 341 00:16:56,960 --> 00:17:02,000 Speaker 1: on one after previous attempts apparently to kill himself. UM, 342 00:17:02,040 --> 00:17:04,080 Speaker 1: so some of the you know, the investigation is going 343 00:17:04,119 --> 00:17:07,200 Speaker 1: to revolve around that who was watching him, um when 344 00:17:07,240 --> 00:17:11,119 Speaker 1: they were supposed to um be checking on him. Uh, 345 00:17:11,280 --> 00:17:12,920 Speaker 1: what was in his cell, how he was able to 346 00:17:12,960 --> 00:17:16,080 Speaker 1: get something that allowed him to hang himself. UM, it's 347 00:17:16,080 --> 00:17:19,080 Speaker 1: going to be a pretty comprehensive investigation, and that's kind 348 00:17:19,080 --> 00:17:22,280 Speaker 1: of launched every time there is a suicide in a 349 00:17:22,320 --> 00:17:25,960 Speaker 1: federal prison. Chris, I'm wondering what his death means for 350 00:17:26,080 --> 00:17:29,480 Speaker 1: the prosecution and for the investigation into the nature of 351 00:17:29,520 --> 00:17:33,240 Speaker 1: some of the crimes, which included trafficking young girls who 352 00:17:33,240 --> 00:17:36,600 Speaker 1: were under the legal age of consent. Sure, that's so 353 00:17:36,720 --> 00:17:40,320 Speaker 1: this ends the criminal prosecution as because he's dead, the 354 00:17:40,320 --> 00:17:43,000 Speaker 1: case just ends, and that kind of ends the attempts 355 00:17:43,040 --> 00:17:46,560 Speaker 1: by prosecutors to kind of seize his assets, um to 356 00:17:46,640 --> 00:17:50,520 Speaker 1: compensate his victims through criminal proceedings. But that doesn't mean 357 00:17:50,560 --> 00:17:54,119 Speaker 1: that they can't go um in civil proceedings to seize 358 00:17:54,119 --> 00:17:58,000 Speaker 1: individual assets, including his mansion, UM, his playing other things 359 00:17:58,040 --> 00:18:01,080 Speaker 1: to attempt to compensate victims. Obviously, there's going to be 360 00:18:01,080 --> 00:18:05,960 Speaker 1: a pretty complicated um state scenario that comes out after 361 00:18:06,080 --> 00:18:08,800 Speaker 1: his autopsy has finished, and UM, you know, we we 362 00:18:08,840 --> 00:18:11,080 Speaker 1: don't know whether he has a will. You know, we 363 00:18:11,080 --> 00:18:14,080 Speaker 1: we would assume with somebody with his number of assets 364 00:18:14,160 --> 00:18:16,359 Speaker 1: would have a will. Um. So it's a question of 365 00:18:16,359 --> 00:18:19,600 Speaker 1: who would the executor would be, where it might be filed. 366 00:18:19,680 --> 00:18:22,000 Speaker 1: I mean, he has homes in New York, in the 367 00:18:22,040 --> 00:18:26,280 Speaker 1: Virgin Islands, in New Mexico. Uh So any of those 368 00:18:26,320 --> 00:18:29,560 Speaker 1: places are potential for him to have his will filed 369 00:18:29,560 --> 00:18:33,600 Speaker 1: and as a state divvied up there though certainly states 370 00:18:33,800 --> 00:18:35,840 Speaker 1: and you know, we'll want to get a piece of 371 00:18:35,880 --> 00:18:39,280 Speaker 1: the tax bill. So there's a question about the assets. 372 00:18:39,280 --> 00:18:42,159 Speaker 1: There's also a question about the tentacles of this case 373 00:18:42,280 --> 00:18:46,240 Speaker 1: that had ensnared at least in the court documents, very 374 00:18:46,320 --> 00:18:50,040 Speaker 1: high profile individuals who are friends with him, from the 375 00:18:50,040 --> 00:18:53,159 Speaker 1: political to the legal to the business world. What is 376 00:18:53,200 --> 00:18:55,520 Speaker 1: going on with that? I mean, are those kinds of 377 00:18:56,119 --> 00:18:59,399 Speaker 1: reaches of the investigation going to be shot at this 378 00:18:59,480 --> 00:19:03,359 Speaker 1: point or going to be ongoing? No, so, other prosecutors 379 00:19:03,359 --> 00:19:05,880 Speaker 1: have told me that the prosecutors here in Manhattan will 380 00:19:05,880 --> 00:19:09,960 Speaker 1: almost certainly continue their investigation with the evidence they've gathered. Obviously, 381 00:19:10,000 --> 00:19:13,960 Speaker 1: there's a conspiracy count here which implicates other people, um, 382 00:19:14,000 --> 00:19:16,720 Speaker 1: and there should certainly could be other charges brought against 383 00:19:16,840 --> 00:19:20,560 Speaker 1: UM other members of that conspiracy. UM, we wouldn't doubt 384 00:19:20,560 --> 00:19:23,160 Speaker 1: that they were. That they're indeed doing that right now. 385 00:19:23,520 --> 00:19:27,000 Speaker 1: So this could definitely ensnare other people UM as it 386 00:19:27,080 --> 00:19:30,400 Speaker 1: moves forward, UM, which will probably take a little while 387 00:19:30,560 --> 00:19:34,000 Speaker 1: as they go through the evidence. So is there any 388 00:19:34,000 --> 00:19:37,600 Speaker 1: concerned Chris about finding all of Jeffrey Epstein's assets considering 389 00:19:37,720 --> 00:19:40,399 Speaker 1: the rather secretive nature in which they were all kept. 390 00:19:40,920 --> 00:19:43,360 Speaker 1: I'd say there's definitely a concern through that. I mean, 391 00:19:43,560 --> 00:19:46,560 Speaker 1: even the prosecutors have been unable to determine exactly where 392 00:19:46,560 --> 00:19:50,040 Speaker 1: all his assets are, and UM says they've been secured 393 00:19:50,040 --> 00:19:52,800 Speaker 1: away in trust, and you know that there's several layers 394 00:19:52,800 --> 00:19:55,919 Speaker 1: of secrecy that have to be gone through before we 395 00:19:55,960 --> 00:19:59,360 Speaker 1: can they can determine exactly what he has. Crystal Match, 396 00:19:59,480 --> 00:20:00,879 Speaker 1: thank you so much much for being with us. He's 397 00:20:00,880 --> 00:20:03,920 Speaker 1: a Bloomberg legal reporter joining us from the courthouse. The 398 00:20:04,000 --> 00:20:06,879 Speaker 1: latest being Attorney General William Barr coming out and saying 399 00:20:07,560 --> 00:20:12,440 Speaker 1: that the prison where Jeffrey Epstein died has quote serious irregularities. 400 00:20:12,440 --> 00:20:16,040 Speaker 1: He vowed to pursue justice for the financiers victims. As 401 00:20:16,119 --> 00:20:19,240 Speaker 1: Chris was talking about, there is some question about seizing 402 00:20:19,520 --> 00:20:23,120 Speaker 1: the assets of Jeffrey Epstein and doling out the proceeds 403 00:20:23,400 --> 00:20:28,000 Speaker 1: to the victims, as might have happened under a successful prosecution, 404 00:20:28,040 --> 00:20:30,720 Speaker 1: But now that he's dead, raises some questions about whether 405 00:20:30,760 --> 00:20:45,080 Speaker 1: they can do that. Time to get us check on 406 00:20:45,240 --> 00:20:47,879 Speaker 1: what's going on with the price of oil, where it's headed, 407 00:20:47,920 --> 00:20:50,280 Speaker 1: and what it means for Saudi Arabia in particular. Joining 408 00:20:50,320 --> 00:20:54,000 Speaker 1: us now, Dr ellen Wald, president of Transversal Consulting and 409 00:20:54,160 --> 00:20:57,919 Speaker 1: a Bloomberg opinion contributor, Ellen thank you so much for 410 00:20:58,000 --> 00:21:00,320 Speaker 1: being with us. I want to start with Saudia. Amco 411 00:21:00,440 --> 00:21:03,879 Speaker 1: Is reported its earnings and there were a couple of 412 00:21:03,920 --> 00:21:07,680 Speaker 1: surprises there. Yes they did. They indicated a twelve drop 413 00:21:07,680 --> 00:21:10,840 Speaker 1: in revenues because of the decline in oil prices. But 414 00:21:10,960 --> 00:21:14,439 Speaker 1: was that what really caught your eye? Uh? No, I 415 00:21:14,480 --> 00:21:19,080 Speaker 1: think that the drop in revenue and in profit was expected. Uh. 416 00:21:19,119 --> 00:21:21,920 Speaker 1: And it's really not that bad, considering that oil prices 417 00:21:21,960 --> 00:21:25,200 Speaker 1: have been lower and also that a ram coast producing 418 00:21:25,320 --> 00:21:28,280 Speaker 1: less oil as a result of its agreements with OPEC. 419 00:21:28,600 --> 00:21:31,840 Speaker 1: But it's really interesting in Uh. The numbers that the 420 00:21:31,880 --> 00:21:34,840 Speaker 1: company did release are the dividends that it's giving to 421 00:21:34,880 --> 00:21:39,199 Speaker 1: the Saudi government. So even though revenue and net profit 422 00:21:39,280 --> 00:21:42,080 Speaker 1: is down, the dividends were really up. Uh and a 423 00:21:42,160 --> 00:21:44,520 Speaker 1: ram coast seems to divide this into two different kinds, 424 00:21:44,680 --> 00:21:48,440 Speaker 1: ordinary dividends and special dividends. And ordinary dividends were about 425 00:21:48,480 --> 00:21:52,280 Speaker 1: the same, but special dividends group by fourteen billion dollars. 426 00:21:52,359 --> 00:21:55,240 Speaker 1: And this is really an area that investors need to 427 00:21:55,280 --> 00:21:58,960 Speaker 1: keep an eye on, particularly if they're interested in uh 428 00:21:58,960 --> 00:22:02,440 Speaker 1: an a Ramco I e O, which is still forthcoming, 429 00:22:02,960 --> 00:22:06,040 Speaker 1: but it could be an area of concern. So just 430 00:22:06,080 --> 00:22:08,280 Speaker 1: to sort of flesh that out a little bit, because 431 00:22:08,280 --> 00:22:10,439 Speaker 1: I thought this was really interesting, and you pointed it 432 00:22:10,440 --> 00:22:13,080 Speaker 1: out in a note where you were talking about how 433 00:22:13,160 --> 00:22:16,680 Speaker 1: people are concerned. There is discretion at Saudi Aramco about 434 00:22:16,720 --> 00:22:19,200 Speaker 1: how much of their profits they give to the Saudi 435 00:22:19,240 --> 00:22:22,280 Speaker 1: Arabian government, and this becomes a problem for people who 436 00:22:22,320 --> 00:22:24,600 Speaker 1: might want to invest in the equity of this company 437 00:22:24,640 --> 00:22:27,320 Speaker 1: because they don't know how much they will be left with. 438 00:22:27,800 --> 00:22:30,640 Speaker 1: What does it indicate to you that that special dividend 439 00:22:30,880 --> 00:22:34,520 Speaker 1: increased at a time of declining profits and revenue. What 440 00:22:34,600 --> 00:22:37,400 Speaker 1: does it indicate about Saudi Aramco and the message they're 441 00:22:37,400 --> 00:22:41,320 Speaker 1: setting to shareholders or potential shareholders. To me, it indicates 442 00:22:41,520 --> 00:22:45,000 Speaker 1: that the government is still Saudi government says it wants 443 00:22:45,000 --> 00:22:47,840 Speaker 1: to wean itself off of oil revenue, of off of 444 00:22:47,880 --> 00:22:52,720 Speaker 1: its dependency on oil, and that's a very very good 445 00:22:52,760 --> 00:22:55,520 Speaker 1: goal for them to have, but it's still not there, 446 00:22:55,560 --> 00:22:58,760 Speaker 1: and in fact it's actually needing more and more. UH 447 00:22:58,800 --> 00:23:02,440 Speaker 1: they've really still find their relationship in terms of income 448 00:23:02,480 --> 00:23:05,959 Speaker 1: taxes and exactly how much they're going to be reimbursing 449 00:23:05,960 --> 00:23:08,680 Speaker 1: a ramco for the cost of fuel. But they still 450 00:23:08,760 --> 00:23:12,439 Speaker 1: have to really flesh out this dividend relationship because it 451 00:23:12,520 --> 00:23:15,600 Speaker 1: does mean that in the end, despite all of the 452 00:23:15,680 --> 00:23:18,480 Speaker 1: safeguards and the procedures that they've put it put in place, 453 00:23:18,680 --> 00:23:21,000 Speaker 1: it doesn't mean that in the end the government is 454 00:23:21,040 --> 00:23:24,199 Speaker 1: still still really holding the purse strings for a Ramco 455 00:23:24,320 --> 00:23:27,080 Speaker 1: and if it needs more money for whatever it is 456 00:23:27,119 --> 00:23:29,600 Speaker 1: that it's doing that year, it's going to take it 457 00:23:29,680 --> 00:23:33,840 Speaker 1: in a dividend. So the other interesting aspect of the 458 00:23:33,960 --> 00:23:37,959 Speaker 1: Saudi Aramco earnings was their announcement that they're planning by 459 00:23:37,960 --> 00:23:40,280 Speaker 1: a stake and they're finding a chemicals business of India's 460 00:23:40,359 --> 00:23:44,560 Speaker 1: Reliance Industries, which is UH chemicals business. It's not an 461 00:23:44,560 --> 00:23:47,760 Speaker 1: oil and gas business, and this is I assume, a 462 00:23:47,800 --> 00:23:51,840 Speaker 1: way for them to continue to diversify away from away 463 00:23:51,840 --> 00:23:55,760 Speaker 1: from crude. Correct. Yes, it's definitely part of their long 464 00:23:55,840 --> 00:24:01,200 Speaker 1: running strategy to increase their downstream capabilities to diversify away 465 00:24:01,200 --> 00:24:05,520 Speaker 1: from just upstream and crude productions. But there's there's something 466 00:24:05,600 --> 00:24:07,680 Speaker 1: very interesting here, which is that when a RAMCO goes 467 00:24:07,760 --> 00:24:11,960 Speaker 1: in to a foreign market, particularly in Asian market. UH 468 00:24:12,240 --> 00:24:14,960 Speaker 1: China and South Korea are really good examples of this, 469 00:24:15,520 --> 00:24:17,680 Speaker 1: but India, I think it's going to be one not 470 00:24:18,040 --> 00:24:22,399 Speaker 1: it doesn't just invest in chemicals or refinery business, but 471 00:24:22,520 --> 00:24:25,960 Speaker 1: it also secures an outlet for its own crude. And 472 00:24:26,320 --> 00:24:29,280 Speaker 1: what was kind of hidden in this deal, which by 473 00:24:29,280 --> 00:24:31,480 Speaker 1: the way, is still in its very early stages, is 474 00:24:31,520 --> 00:24:34,639 Speaker 1: the fact that Reliance agrees that it's going to double 475 00:24:35,200 --> 00:24:37,720 Speaker 1: its crude imports from a Ramco to bring that up 476 00:24:37,720 --> 00:24:41,200 Speaker 1: to I think five hundred thousand barrels per day. So 477 00:24:41,400 --> 00:24:44,399 Speaker 1: a RAMCO is not just investing in a company that 478 00:24:44,480 --> 00:24:47,240 Speaker 1: it thinks will do well, it's also securing an outlet 479 00:24:47,280 --> 00:24:49,639 Speaker 1: for its crude. I want to broaden out just a 480 00:24:49,680 --> 00:24:52,200 Speaker 1: little bit. The price of oil has been whipped around 481 00:24:52,359 --> 00:24:56,720 Speaker 1: in part due to Saudi Arabia or Saudi Arabia's attempts 482 00:24:56,760 --> 00:25:00,240 Speaker 1: to do whatever it can to support prices, or least 483 00:25:00,280 --> 00:25:02,960 Speaker 1: that's what they were. They were making noise about what 484 00:25:03,040 --> 00:25:06,520 Speaker 1: can Saudi Arabia do at this point further and what 485 00:25:06,560 --> 00:25:09,440 Speaker 1: are they likely to do to keep prices from going 486 00:25:09,480 --> 00:25:12,680 Speaker 1: down further? You know, this is the big question that's 487 00:25:12,760 --> 00:25:16,320 Speaker 1: on everyone who follows the market's mind because prices have 488 00:25:16,440 --> 00:25:20,879 Speaker 1: really seemed to be disconnected from supply and demand, or 489 00:25:20,880 --> 00:25:25,119 Speaker 1: particularly from supply, and there's really this focus on, uh, 490 00:25:25,160 --> 00:25:28,479 Speaker 1: the future of demand, so this focus on what demand 491 00:25:28,520 --> 00:25:33,240 Speaker 1: could be in the future based on forecasts about the economy. 492 00:25:33,560 --> 00:25:35,960 Speaker 1: And so Saudi Arabia is looking at this and they're saying, 493 00:25:36,400 --> 00:25:39,120 Speaker 1: the price of oil is going down, down, down, and 494 00:25:39,359 --> 00:25:41,560 Speaker 1: going all over the place. But there's no indication from 495 00:25:41,560 --> 00:25:44,320 Speaker 1: a supply perspective or even really from a current demand 496 00:25:44,359 --> 00:25:47,240 Speaker 1: perspective that this should be happening. So they admit this 497 00:25:47,359 --> 00:25:48,879 Speaker 1: and then they say, well, we're going to do what 498 00:25:48,920 --> 00:25:52,600 Speaker 1: we can. They had planned to increase production in September, 499 00:25:52,600 --> 00:25:54,520 Speaker 1: they've decided they're not going to do They're going to 500 00:25:54,600 --> 00:25:58,240 Speaker 1: hold off on that production increase, and but really, what 501 00:25:58,280 --> 00:26:00,320 Speaker 1: more can they do? It's a big question, and some 502 00:26:00,359 --> 00:26:03,200 Speaker 1: people are saying, well, OPEC is a whole quick cut 503 00:26:03,240 --> 00:26:06,000 Speaker 1: production by a million barrels a day, and that might 504 00:26:06,320 --> 00:26:09,640 Speaker 1: lift prices a bit. But when prices are so disconnected 505 00:26:09,680 --> 00:26:12,640 Speaker 1: from supply, it's really unclear that there's anything they can 506 00:26:12,680 --> 00:26:16,040 Speaker 1: do short of just writing it out. Dr ellen Wald, 507 00:26:16,080 --> 00:26:18,040 Speaker 1: thank you so much. It's always a pleasure speaking with you. 508 00:26:18,320 --> 00:26:21,760 Speaker 1: Dr ellen Wald is a Bloomberg Opinion contributor. She's president 509 00:26:21,800 --> 00:26:25,399 Speaker 1: of Transversal Consulting. You can read her columns on the 510 00:26:25,400 --> 00:26:28,760 Speaker 1: Bloomberg at O P I n go or Bloomberg dot 511 00:26:28,760 --> 00:26:32,560 Speaker 1: com slash Opinion on the internets if you will see 512 00:26:32,800 --> 00:26:35,399 Speaker 1: the really interesting perspective. She's also, by the way, a 513 00:26:35,440 --> 00:26:39,040 Speaker 1: nonresident Senior Fellow at the Atlantic Council's Global Energy Center. 514 00:26:41,200 --> 00:26:43,440 Speaker 1: Thanks for listening to the Bloomberg P and L podcast. 515 00:26:43,600 --> 00:26:46,200 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts 516 00:26:46,280 --> 00:26:49,359 Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on 517 00:26:49,400 --> 00:26:52,040 Speaker 1: Twitter at pt Sweeney. I'm Lisa bram Woyds. I'm on 518 00:26:52,080 --> 00:26:54,880 Speaker 1: Twitter at Lisa A. Bram Woyd's one before the podcast, 519 00:26:54,920 --> 00:26:57,520 Speaker 1: you can always catch us worldwide. I'm Bloomberg Radio