WEBVTT - Things Are Really Bad Today In Argentina: BI's Sassower 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penl Podcast. I'm Paul swing you 0:00:05.360 --> 0:00:07.760 along with my co host Lisa Brahmas. Each day we 0:00:07.880 --> 0:00:10.440 bring you the most noteworthy and useful interviews for you 0:00:10.520 --> 0:00:12.640 and your money, whether at the grocery store or the 0:00:12.640 --> 0:00:15.960 trading floor. Find a Bloomberg Penl podcast on Apple podcast 0:00:16.120 --> 0:00:18.040 or wherever you listen to podcasts, as well as at 0:00:18.040 --> 0:00:25.040 Bloomberg dot com. Argentina had an election with a surprise 0:00:25.079 --> 0:00:27.440 outcome that is sending the assets tumbling to pay so 0:00:27.520 --> 0:00:31.479 currently the weakest on record record versus the dollar. You 0:00:31.520 --> 0:00:35.040 have a hundred year bonds also absolutely falling out of bed. 0:00:35.080 --> 0:00:37.760 Joining us now Damien sass Our, chief Emerging markets credit 0:00:37.800 --> 0:00:41.800 strategist for Bloomberg Intelligence and Damien, how big of a 0:00:41.920 --> 0:00:46.000 potential negative is this for the Argentina economy and frankly 0:00:46.560 --> 0:00:49.320 for its access to international markets at this point? Well, 0:00:49.360 --> 0:00:51.280 I'll start with the ladder there um, because that's an 0:00:51.320 --> 0:00:54.120 easy one. This is bad from an external perspective. I mean, 0:00:54.160 --> 0:00:57.120 if you're an investor that technical view, yeah, I mean 0:00:57.160 --> 0:00:58.960 if you're a dollar investor and you're looking at the 0:00:59.040 --> 0:01:01.640 prince this morning, I mean in just about every um 0:01:01.800 --> 0:01:04.480 dollar denominated a d R that's attached to you know, 0:01:04.640 --> 0:01:07.240 an Argentina a st B at YPF or POMP or 0:01:07.280 --> 0:01:09.080 even the global x ms C I E t F, 0:01:09.160 --> 0:01:11.960 which is the largest DTF that focuses on Argentine equities. 0:01:12.200 --> 0:01:15.120 They're all off today, which is in line with with 0:01:15.240 --> 0:01:18.640 the dollar RG cross rate, which is now at sixty, 0:01:18.720 --> 0:01:21.760 which is yes, quite high and quite painful for a 0:01:21.800 --> 0:01:24.440 lot of investors who have who have investments. They're just 0:01:24.480 --> 0:01:26.520 taking a step back. I mean, what happened overnight. We 0:01:26.560 --> 0:01:30.080 saw that the Argentine primaries UM basically handed a much 0:01:30.080 --> 0:01:34.280 bigger victory to Fernandez, who is um as Kirshner, the 0:01:34.319 --> 0:01:38.200 former president, as his running mate, and um you know, 0:01:38.240 --> 0:01:40.319 the market's perception of that is quite negative, you know, 0:01:40.400 --> 0:01:43.280 to return to currency and capital controls. I mean, Fernandez 0:01:43.360 --> 0:01:45.240 is already on the tape is saying he might not 0:01:45.400 --> 0:01:48.400 pay uh interest on all the leak te bows that 0:01:48.440 --> 0:01:51.440 offer creditors now own. And so look, as the fifth 0:01:51.560 --> 0:01:55.520 largest issuer of UM of US dollar denominated sovereign debt, 0:01:55.600 --> 0:01:57.840 Argentine is a pretty big position and a lot of 0:01:57.960 --> 0:02:01.280 emerging market investor portfolios, and so there's some pain here 0:02:01.360 --> 0:02:03.040 and I'm sure we're going to be seeing that before 0:02:03.080 --> 0:02:05.240 the end of today. I wonder what the application is 0:02:05.280 --> 0:02:09.160 for companies in Argentina that have borrowed debt externally, because 0:02:09.240 --> 0:02:12.880 the depreciation in the PASO is killer for them. I 0:02:13.000 --> 0:02:15.080 think it's a great point. I mean, SMP actually just 0:02:15.120 --> 0:02:17.560 came out last week on the tape and said they 0:02:17.560 --> 0:02:21.440 don't see real refight pressure on those uh issuers and 0:02:21.800 --> 0:02:25.440 of of externally denominat external debt. Okay, wait and slow downs. 0:02:25.440 --> 0:02:27.640 In other words, these companies that have borrowed money in 0:02:27.720 --> 0:02:31.000 dollars or euros, they've pushed out the maturity so far 0:02:31.080 --> 0:02:33.360 that they won't have to necessarily refinance or pay it 0:02:33.400 --> 0:02:36.320 back any time in the near future, so that relieves 0:02:36.320 --> 0:02:38.920 some of the pressure. Not the near future. One was 0:02:38.960 --> 0:02:40.600 the years, so they bought themselves about a year and 0:02:40.639 --> 0:02:42.400 a half to two years, let's call it, according to 0:02:42.520 --> 0:02:45.400 S ANDPS calculations. So it's still the net in the 0:02:45.440 --> 0:02:48.760 next week. Yeah, right, exactly. So it's not that far out, 0:02:48.880 --> 0:02:50.600 is the point. And you know, look, I mean you've 0:02:50.600 --> 0:02:53.240 got a car account deficit that's narrowed, albeit on the 0:02:53.240 --> 0:02:55.160 back of r g PA so weakness, so it's four 0:02:55.160 --> 0:02:57.880 point six percent of GDP. This is an economy now 0:02:58.160 --> 0:03:00.959 in the longest recession and at least fifteen years. We're 0:03:01.000 --> 0:03:02.959 hoping to get a positive print for the second corner. 0:03:03.040 --> 0:03:05.840 We very well made yet that. But I mean, my goodness, 0:03:05.880 --> 0:03:07.840 in the first quarter GDP was off five point eight 0:03:07.840 --> 0:03:10.680 percent year over year, and consensus is calling for negative 0:03:10.680 --> 0:03:13.160 one point four for this full year. So things are 0:03:13.200 --> 0:03:15.560 bad on the ground in Argentina. And look, I mean, 0:03:15.600 --> 0:03:18.640 despite the fact that they had an absolutely wonderful harvest, 0:03:18.680 --> 0:03:21.840 certainly relative to last year. Just for full disclosure, Argentina 0:03:21.880 --> 0:03:25.639 is a very big exporter of soybeans and agricultural products globally, 0:03:25.919 --> 0:03:27.600 and so one would have thought that might have been 0:03:27.600 --> 0:03:30.000 a bullish uh you know, would have been good for 0:03:30.040 --> 0:03:32.880 the economy. But my goodness, things are really, really really 0:03:32.919 --> 0:03:35.440 bad today. And um, you know, if this um, if 0:03:35.480 --> 0:03:37.480 this is any indication of how the elections go on 0:03:37.520 --> 0:03:42.240 the October UM. Yeah, returned to the Pernis Kushner ways 0:03:42.240 --> 0:03:43.920 would not be good from the perspective of an off 0:03:43.920 --> 0:03:47.120 shore investor. So aside from Argentina, which is defaulted on 0:03:47.200 --> 0:03:49.640 its debt what five times in the past hundred years, 0:03:49.640 --> 0:03:52.600 serial defaulter, yes, serial defaulter. Yet they still were able 0:03:52.600 --> 0:03:54.520 to borrow money for a hundred years and the people 0:03:54.520 --> 0:03:56.920 who bought that debt really regretting it today with those 0:03:56.960 --> 0:04:01.200 prices on those bonds in free fall. Aside from our Argentina, 0:04:01.400 --> 0:04:03.840 how idiots and credit I know Jonathan Farroll hates his word, 0:04:03.880 --> 0:04:08.680 but how specific to Argentina are these issues versus endemic 0:04:08.760 --> 0:04:11.640 within the emerging market space? Yeah? So, I mean I think, 0:04:11.840 --> 0:04:13.320 you know, I mean, to that point, we have to 0:04:13.360 --> 0:04:15.440 take a step back because it's all about us China. 0:04:15.560 --> 0:04:16.839 And you know, if you just look at some of 0:04:16.839 --> 0:04:18.760 the data that came out of China overnight. I mean 0:04:18.760 --> 0:04:21.240 they released their total social financing data, which is all 0:04:21.240 --> 0:04:24.360 about credit extension that they kind of injected into their economy, 0:04:24.480 --> 0:04:27.400 and it was bad. I mean, given the word of 0:04:27.440 --> 0:04:31.200 the day, by the way, bad, it was bad. I mean, 0:04:31.279 --> 0:04:33.920 we basically were expecting something on the order of one 0:04:33.960 --> 0:04:37.159 point six trillion of credit being extended I'm talking in 0:04:37.240 --> 0:04:40.160 you on terms into the local China economy. It was 0:04:40.200 --> 0:04:42.760 only one trillion un which is way less than expected 0:04:42.800 --> 0:04:44.839 and certainly less than the two point three trillion we 0:04:44.880 --> 0:04:47.280 saw in June. And really what this is is new 0:04:47.320 --> 0:04:50.719 loans are down, tighter, property market financing. You know, as 0:04:50.760 --> 0:04:52.840 we know in China, the real estate markets a very 0:04:52.839 --> 0:04:55.280 big portion of about economy. And with credit growth weak, 0:04:55.480 --> 0:04:58.280 especially in light of US trade for US China trade 0:04:58.320 --> 0:05:01.680 friction escalating, it's just not gonna It just means that 0:05:01.720 --> 0:05:03.680 things are gonna get much worse. Oh and by the way, 0:05:03.760 --> 0:05:05.760 the protests in Hong Kong, and we see I P 0:05:05.880 --> 0:05:08.760 and retail sales coming on Wednesday, which is also expected 0:05:08.800 --> 0:05:10.560 to be weak. It's just not gonna be a good 0:05:10.560 --> 0:05:12.760 week for emerging markets. So Jamian, here's the weird thing. 0:05:12.960 --> 0:05:15.400 All that sounds so bad. I'm looking at the ms 0:05:15.440 --> 0:05:19.000 c I Emerging Markets f X index. It's the lowest 0:05:19.080 --> 0:05:22.120 levels of the year, all really bad. I'm looking at 0:05:22.160 --> 0:05:26.400 emerging markets funds not doing badly. They're not seeing big withdrawals, 0:05:26.640 --> 0:05:30.320 and emerging markets debt is actually outperforming US credit. So 0:05:30.320 --> 0:05:32.359 what gives? Okay, So, well, you know E M dollar 0:05:32.440 --> 0:05:36.040 debt tends to be driven by the U. S. Treasury 0:05:36.040 --> 0:05:38.640 market effectively, and spreads within the U S. Treasury market, 0:05:38.680 --> 0:05:41.159 all of which yields have been coming down. Spreads are 0:05:41.160 --> 0:05:43.080 still tight around the year, or maybe they're about break 0:05:43.120 --> 0:05:45.880 even but all of that has been fueling the roughly 0:05:45.920 --> 0:05:48.880 double digit gains we've seen an e M dollar debt. Know, hey, 0:05:48.880 --> 0:05:50.320 by the way, you make a really good point, because 0:05:50.320 --> 0:05:52.880 I just looked at the constituent breakdown in e M 0:05:52.920 --> 0:05:56.160 B which is the largest um um emerging market dollar 0:05:56.200 --> 0:05:57.680 bond e t F. It's the largest e M e 0:05:57.720 --> 0:06:00.760 t F you know, in existence, and Argentine is really 0:06:00.760 --> 0:06:02.640 only a small portion of that, despite the fact that 0:06:02.680 --> 0:06:05.560 it's five five percent of most benchmark industry, it's only 0:06:05.560 --> 0:06:07.880 two percent of that e t F. So you know, 0:06:08.040 --> 0:06:10.000 by hook or by crook, you know, maybe that's got 0:06:10.000 --> 0:06:12.400 a little bit of a positive overlay too. But yeah, no, 0:06:12.560 --> 0:06:14.919 I M. Dollward jets done well, will continue to do 0:06:14.960 --> 0:06:17.320 well so long as US treasure yields are declining and 0:06:17.360 --> 0:06:21.120 spreads remain benign, if that's if that's true. So yeah, 0:06:21.160 --> 0:06:23.359 that's kind of what we're looking at. I mean, you know, 0:06:23.440 --> 0:06:25.880 I mean, look, Mexico, Russia, Brazil, it's all been doing 0:06:25.880 --> 0:06:29.039 pretty well. Yeah, the emerging market conundrum, lots of bad 0:06:29.040 --> 0:06:31.839 news you can hook into, and yet and yet the 0:06:31.880 --> 0:06:34.960 FED keeps cutting rates and that's typically a technical positive. 0:06:35.120 --> 0:06:38.520 Damian SASA are Chief Emerging Markets Credit Strategies for Bloomberg Intelligence, 0:06:38.560 --> 0:06:55.919 joining us here in our interactive broker studios. Behind the 0:06:56.000 --> 0:06:58.960 wall of worry that we have today in markets is 0:06:59.040 --> 0:07:02.159 what is happening between the US and China, and just 0:07:02.480 --> 0:07:04.599 not only what is happening between them when it comes 0:07:04.640 --> 0:07:06.560 to trade, but what is happening in each of the 0:07:06.600 --> 0:07:10.080 economy is when it comes to growth. We're so lucky 0:07:10.120 --> 0:07:12.720 to have Leland Miller here with us who tracks all 0:07:12.840 --> 0:07:15.840 of the economic data coming out of China. He's a 0:07:15.880 --> 0:07:18.760 chief executive officer of China beige Book International. Joining us 0:07:18.760 --> 0:07:21.640 here in our interactive broker Studios. Leland, it really struck 0:07:21.720 --> 0:07:25.440 me that there was data showing slowing credit growth UH 0:07:25.600 --> 0:07:28.960 for the month of June overnight. This was interesting because 0:07:28.960 --> 0:07:33.280 it doesn't necessarily stem from a crackdown on leverage ratios. 0:07:33.280 --> 0:07:36.840 Does this indicate a slowdown in growth to you? Not yet, 0:07:36.960 --> 0:07:39.560 So there's a lot to be figured out over the 0:07:39.600 --> 0:07:41.480 next several weeks. The first thing to know is that 0:07:41.720 --> 0:07:44.239 the first quarter, our first month out of every quarter, 0:07:44.280 --> 0:07:47.160 we typically see less lending, So you get the narrative 0:07:47.360 --> 0:07:49.600 things are slowing down. The end of the quarter, they 0:07:49.640 --> 0:07:51.880 pump more stuff in, so we'll have to see this 0:07:51.920 --> 0:07:54.320 over the course of several months. But the second thing 0:07:54.400 --> 0:07:58.119 is you've got these new tariffs hanging over, uh, hanging 0:07:58.120 --> 0:08:02.120 over the Chinese economy. But you've also ut the party's 0:08:02.400 --> 0:08:06.040 seventih anniversary in the PRC seventith anniversary in October, so 0:08:06.040 --> 0:08:07.880 the Chinese are gonna want to boost the economy for that. 0:08:07.920 --> 0:08:09.640 So a lot of this is timing. When are they 0:08:09.640 --> 0:08:11.320 going to start pumping things in When do they want 0:08:11.320 --> 0:08:15.720 to improve uh, the optics around the economy. So I 0:08:15.800 --> 0:08:17.720 think it's too early to say that things are slowing 0:08:17.760 --> 0:08:21.200 down quite yet. Okay, so right now, where are we 0:08:21.240 --> 0:08:24.040 when it comes to the trade war and the ammunition 0:08:24.080 --> 0:08:27.200 that both sides have to deploy? Well, this this was 0:08:27.240 --> 0:08:30.080 really interesting what happened in August because you know, as 0:08:30.120 --> 0:08:33.120 we've said for a long time, when you leave Osaka 0:08:33.480 --> 0:08:36.240 and you basically say we are have a deadline at 0:08:36.240 --> 0:08:38.000 the end of the year, so six months and of 0:08:38.000 --> 0:08:39.640 the year you don't even announce. If you imply that 0:08:39.679 --> 0:08:41.080 you're not doing anything until the end of the year, 0:08:41.200 --> 0:08:43.439 it's very hard to get the parties focused on doing 0:08:43.440 --> 0:08:45.839 anything substitutive. The Chinese don't want to talk about the text. 0:08:46.320 --> 0:08:48.760 They want to talk about how to get to November 0:08:48.800 --> 0:08:52.240 when they can restart discussions. So all the discussion lately 0:08:52.440 --> 0:08:55.560 had been over Huawei on the U S side and 0:08:55.720 --> 0:08:58.320 agricultural buys on the Chinese side. And the Chinese got 0:08:58.360 --> 0:09:01.720 through the last media and thought they had done promised 0:09:01.720 --> 0:09:03.679 just enough to get what they wanted and have sort 0:09:03.679 --> 0:09:05.880 of a smooth fall. And the President didn't like that, 0:09:05.920 --> 0:09:08.960 and he ratchet up tensions. And then the Chinese did 0:09:09.000 --> 0:09:11.560 what they did with the yuan, which was overdue but 0:09:11.720 --> 0:09:13.600 seen as a poke in the eye. And now we're 0:09:13.640 --> 0:09:16.720 at this position where we could see anything. We could 0:09:16.720 --> 0:09:20.240 see this coming week. We could see tensions relaxed because 0:09:20.280 --> 0:09:22.600 of the Huawei General License is extended, or some sort 0:09:22.600 --> 0:09:24.720 of concessions are done in Huawei, or we could see 0:09:24.760 --> 0:09:27.400 the exact opposite. The President does nothing in Huawei. You 0:09:27.480 --> 0:09:32.040 see tariffs go up to ten percent or even September one, 0:09:32.120 --> 0:09:34.920 and this thing's um, you know, breaking down quite quickly. 0:09:35.240 --> 0:09:38.200 What about on the Chinese side, aside from the yuan 0:09:38.440 --> 0:09:41.160 peg And it's not necessarily a depreciation as much as 0:09:41.200 --> 0:09:45.560 allowing the currency to weaken perhaps to its market it's 0:09:45.640 --> 0:09:49.080 actual market weight Aside from that, are you expecting China 0:09:49.160 --> 0:09:53.000 to go after US companies that are doing business in China? 0:09:53.280 --> 0:09:55.720 Not yet. Uh, it doesn't mean that they're not being 0:09:56.040 --> 0:10:00.040 uh messed with on the margins. But right now, I 0:10:00.040 --> 0:10:03.319 think that China's goal is to just stop the nightmare 0:10:03.400 --> 0:10:06.680 scenario from occurring. So they don't want tariffs on all 0:10:06.720 --> 0:10:09.760 their goods. They don't want Trump to come even harder 0:10:09.760 --> 0:10:12.120 at Huawei and the other tech companies, some of whom 0:10:12.160 --> 0:10:14.120 are on lists that have not been announced yet and 0:10:14.360 --> 0:10:17.199 would be if things really broke down. Uh. She is 0:10:17.200 --> 0:10:19.560 obviously very happy the President. Trump hasn't said much about 0:10:19.559 --> 0:10:22.040 Hong Kong to the extent he said anything, it's almost 0:10:22.040 --> 0:10:24.840 been encouraging. You've got South China. See, you've got Taiwan 0:10:24.920 --> 0:10:27.600 arms sales. So things aren't good right now, but the 0:10:27.679 --> 0:10:32.240 Chinese are very motivated not to let them fall apart. Meanwhile, 0:10:32.360 --> 0:10:34.160 I was reading an article over the weekend that I 0:10:34.160 --> 0:10:37.560 thought was really interesting about Jiji and Ping's challenge right now, 0:10:37.960 --> 0:10:41.920 and that he faces this really difficult move in trying 0:10:41.960 --> 0:10:45.600 to take this very quickly growing economy and shift it 0:10:45.640 --> 0:10:49.080 to a more middle class, lower growth, but more stable 0:10:49.160 --> 0:10:53.080 developed market of sorts, and I'm wondering where it is 0:10:53.559 --> 0:10:56.280 on that progression, how far along has it gotten, and 0:10:56.600 --> 0:10:58.640 sort of whether you view this as sort of the 0:10:58.679 --> 0:11:02.120 albatross that Jim Pig needs to cross. Well, he has 0:11:02.120 --> 0:11:03.800 a lot of he has a he has a lot 0:11:03.840 --> 0:11:05.559 of challenges coming up. I'm not sure which one I 0:11:05.559 --> 0:11:08.160 would take, you know, the I think that if you 0:11:08.200 --> 0:11:10.600 if we take it back up to fet what what 0:11:10.679 --> 0:11:14.719 we're seeing since was a lot of progress on certain things, 0:11:14.800 --> 0:11:17.440 like they cracked down on shadow finance. They didn't do 0:11:17.480 --> 0:11:19.319 as much on leveraging as they claimed, but they did 0:11:19.320 --> 0:11:22.800 a little bit. There was some restructuring about to go on, 0:11:22.960 --> 0:11:24.679 and then they saw the Trump trade war hit in 0:11:24.720 --> 0:11:27.680 twenty eighteen, and everything they started they began to reverse. 0:11:27.960 --> 0:11:31.640 And now it's totally reversed. So this hasn't hit official 0:11:31.720 --> 0:11:33.559 day yet, so it's not believed by a lot of people. 0:11:33.600 --> 0:11:37.480 But we saw a major resurgence in shadow banking in 0:11:37.480 --> 0:11:40.000 the second quarter, so it's back. You know, they said 0:11:40.040 --> 0:11:41.160 that they were going to deal with it. No that 0:11:41.200 --> 0:11:43.200 got scared about what was happening in the trade war, 0:11:43.520 --> 0:11:47.800 and they brought shadow banking back. You're not seeing restructuring, 0:11:47.800 --> 0:11:51.080 and I seeing reform. We're not seeing evidence of rebalancing 0:11:51.080 --> 0:11:53.720 in our numbers, and so I think what the Chinese 0:11:53.720 --> 0:11:56.160 have done once again is reverted to the short term 0:11:56.200 --> 0:11:58.840 to deal with their short term problems and said, you know, 0:11:58.840 --> 0:12:01.160 we're gonna kick the can down road, as everyone seems 0:12:01.200 --> 0:12:04.640 to do these days, and deal with the problems next 0:12:04.720 --> 0:12:07.079 year or the year after that. So what's the consequence 0:12:07.120 --> 0:12:09.520 of that, Well, what it means is they can they 0:12:09.520 --> 0:12:12.600 can defy expectations of a more dramatic slowdown in the 0:12:12.600 --> 0:12:15.880 short term by by using their various levers to boost growth, 0:12:16.080 --> 0:12:17.840 but it means the medium term and the long term 0:12:17.880 --> 0:12:20.240 are gonna be much more difficult. The Chinese have an 0:12:20.280 --> 0:12:22.840 advantage in that they have a non commercial financial system. 0:12:22.960 --> 0:12:24.960 It's one of the reasons things that haven't fallen apart 0:12:25.040 --> 0:12:27.439 the way they did in the US with Lehman and 0:12:27.600 --> 0:12:30.520 and and in Europe as well. Chinese can just swish 0:12:30.760 --> 0:12:33.199 huge amounts of capital from one side of the systems 0:12:33.200 --> 0:12:37.160 the other, plugging holes, fixing problems. But that means they're 0:12:37.240 --> 0:12:40.559 essentially chasing good money after bad and it's gonna hit, 0:12:40.679 --> 0:12:42.880 it's gonna stagnate the economy over time. It's gonna it's 0:12:42.920 --> 0:12:45.520 gonna hit their return on investment because they're constantly pumping 0:12:45.760 --> 0:12:48.520 new money into bad projects, so it'll have a long 0:12:48.640 --> 0:12:51.080 term hit when and a long term slowdown is basically 0:12:51.480 --> 0:12:53.680 in the cards. So just to sort of put a 0:12:53.679 --> 0:12:56.120 bow on all of this, this is a really important point. 0:12:56.480 --> 0:13:00.440 If China has demonstrated it is willing to sacrifice the 0:13:00.520 --> 0:13:03.199 longer term for the short term boost that it can 0:13:03.240 --> 0:13:06.199 get by reversing some of the de leveraging, etcetera measures 0:13:06.240 --> 0:13:10.280 from earlier, then how is the trade war pressuring them? 0:13:10.360 --> 0:13:12.760 Because they're showing that they are willing to use this 0:13:12.840 --> 0:13:16.800 ammunition now regardless of the longer term consequences. I think 0:13:16.800 --> 0:13:18.199 that's the problem if you're in the White House. The 0:13:18.280 --> 0:13:20.240 Chinese have the ability because they don't have to worry 0:13:20.280 --> 0:13:22.960 about the politics the way that a democracy would, and 0:13:22.960 --> 0:13:26.120 they don't have to worry about a Congress that doesn't 0:13:26.160 --> 0:13:28.520 like certain things. They are just going to fix problems 0:13:28.840 --> 0:13:31.000 that clear the way for the party in the short term. 0:13:31.080 --> 0:13:33.400 That's what they've always done and that's what they'll continue 0:13:33.400 --> 0:13:35.800 to do. And so the difficulty in causing problems for 0:13:35.880 --> 0:13:40.080 China is that they always have a quicker response mechanism 0:13:40.120 --> 0:13:42.160 and a more effective one because they don't have to 0:13:42.160 --> 0:13:45.520 answer to anyone. Real quick, here, what year will the 0:13:45.679 --> 0:13:48.280 slow down in China be felt? The slowdown that will 0:13:48.360 --> 0:13:52.240 necessarily come despite the stimulus that the PBOC is willing 0:13:52.280 --> 0:13:55.320 to put in. Look, I would think that within five 0:13:55.400 --> 0:13:58.360 years you're gonna start seeing much slower growth, the questions 0:13:58.360 --> 0:14:00.040 of the Chinese gonna admit it. I mean, if you 0:14:00.040 --> 0:14:02.760 you're already seeing slower growth and people were predicting a 0:14:02.800 --> 0:14:04.680 few years ago, it just hasn't been enough to to 0:14:04.720 --> 0:14:07.320 really shake the shape markets. I think over the next 0:14:07.360 --> 0:14:10.439 five years, you're gonna start seeing a more precipitous decline 0:14:11.040 --> 0:14:12.440 that they're not gonna be able to do much about. 0:14:13.000 --> 0:14:16.080 Leland Miller so wonderful to get your perspective. As always, 0:14:16.160 --> 0:14:19.360 thank you for being here. Uh And honestly, Leland, you 0:14:19.400 --> 0:14:22.320 guys have data that is really spectacular because it shows 0:14:22.360 --> 0:14:24.640 what's actually going on, and there's so much question around 0:14:24.840 --> 0:14:28.479 the credibility of the official data. To get other measures 0:14:28.520 --> 0:14:30.000 to get a sense of what's going on on the 0:14:30.040 --> 0:14:32.640 ground is really important. Leland Miller is chief executive officer 0:14:32.680 --> 0:14:37.320 of China beige Book International, weighing in on both sides here. 0:14:54.120 --> 0:14:57.480 Jeffrey Epstein, the financier who was accused of sex trafficking, 0:14:57.600 --> 0:15:00.760 was found dead in his jail cell over the weekend. Now, 0:15:01.000 --> 0:15:03.600 there are many questions around the circumstances of his death. 0:15:03.600 --> 0:15:06.920 It has been established as a suicide. Questions though about 0:15:07.200 --> 0:15:10.800 how he was surveiled by the jail staff. Joining us 0:15:10.800 --> 0:15:13.720 now is Chris Dolmets. He's a Bloomberg legal reporter joining 0:15:13.760 --> 0:15:16.320 us from the courthouse. Chris, We're now getting word from 0:15:16.360 --> 0:15:19.800 Attorney General Bill Barr that there were some serious irregularities 0:15:20.040 --> 0:15:22.800 with the manner in which Jeffrey Epstein was held. Can 0:15:22.800 --> 0:15:26.200 you elaborate, Do we know anything more? No, that's just 0:15:26.360 --> 0:15:29.400 recently come out. He's he said, you know, they're serious 0:15:29.600 --> 0:15:32.520 regularities over the weekend. He has vowed to investigate, get 0:15:32.560 --> 0:15:35.280 to the bottom of what happened. Um. You know, it's 0:15:35.320 --> 0:15:37.880 a pretty secure facility and a lot of people are 0:15:37.880 --> 0:15:41.400 asking questions as to how this could happen, um in 0:15:41.440 --> 0:15:44.480 a federal prison that's held you know el Chapo for 0:15:44.480 --> 0:15:48.800 for example. So what is the concern here, Because if 0:15:48.880 --> 0:15:51.760 I understand correctly, it has been established as a suicide, 0:15:51.760 --> 0:15:53.840 even though there have been a number of conspiracy theories 0:15:53.840 --> 0:15:55.840 that it was murder. I mean, has it been established 0:15:55.840 --> 0:15:59.440 a suicide? So? UM, you know, the only thing we've 0:15:59.440 --> 0:16:02.080 been told, um by the Bureau Prisons that he was 0:16:02.120 --> 0:16:06.200 found unresponsive, jail staff tried to revive him, someone emergency 0:16:06.280 --> 0:16:09.080 medical personnel, and that he was pronounced dead UM at 0:16:09.080 --> 0:16:12.880 the hospital. UM, ABC and others you know reported that 0:16:12.960 --> 0:16:15.960 he that he hung himself, and there has been an 0:16:15.960 --> 0:16:20.640 autopsy performed. That medical examiner verified that, but hasn't officially 0:16:20.680 --> 0:16:23.840 determined the cause of debt. UM. There has been a 0:16:23.840 --> 0:16:26.480 city official that told the New York Times that UM, 0:16:26.840 --> 0:16:30.760 that the medical examiner is pretty confident that it is suicide, UM, 0:16:30.800 --> 0:16:33.360 but needs you know, to complete the autopsy to make 0:16:33.400 --> 0:16:35.960 that determination. So what's the key question here when it 0:16:36.000 --> 0:16:39.160 comes to the serious irregularities that Attorney General bar was 0:16:39.160 --> 0:16:44.120 talking about. Well, there's you know, there's questions about um, 0:16:44.160 --> 0:16:49.240 you know, staff overtime, whether staff were overworked, UM, you know, 0:16:49.560 --> 0:16:52.360 what the conditions that the prison were like. UM, whether 0:16:52.440 --> 0:16:54.400 or not he was on a suicide watch. We've been 0:16:54.400 --> 0:16:56.840 told that he was not, even though he was recently 0:16:56.960 --> 0:17:02.000 on one after previous attempts apparently to kill himself. UM, 0:17:02.040 --> 0:17:04.080 so some of the you know, the investigation is going 0:17:04.119 --> 0:17:07.200 to revolve around that who was watching him, um when 0:17:07.240 --> 0:17:11.119 they were supposed to um be checking on him. Uh, 0:17:11.280 --> 0:17:12.920 what was in his cell, how he was able to 0:17:12.960 --> 0:17:16.080 get something that allowed him to hang himself. UM, it's 0:17:16.080 --> 0:17:19.080 going to be a pretty comprehensive investigation, and that's kind 0:17:19.080 --> 0:17:22.280 of launched every time there is a suicide in a 0:17:22.320 --> 0:17:25.960 federal prison. Chris, I'm wondering what his death means for 0:17:26.080 --> 0:17:29.480 the prosecution and for the investigation into the nature of 0:17:29.520 --> 0:17:33.240 some of the crimes, which included trafficking young girls who 0:17:33.240 --> 0:17:36.600 were under the legal age of consent. Sure, that's so 0:17:36.720 --> 0:17:40.320 this ends the criminal prosecution as because he's dead, the 0:17:40.320 --> 0:17:43.000 case just ends, and that kind of ends the attempts 0:17:43.040 --> 0:17:46.560 by prosecutors to kind of seize his assets, um to 0:17:46.640 --> 0:17:50.520 compensate his victims through criminal proceedings. But that doesn't mean 0:17:50.560 --> 0:17:54.119 that they can't go um in civil proceedings to seize 0:17:54.119 --> 0:17:58.000 individual assets, including his mansion, UM, his playing other things 0:17:58.040 --> 0:18:01.080 to attempt to compensate victims. Obviously, there's going to be 0:18:01.080 --> 0:18:05.960 a pretty complicated um state scenario that comes out after 0:18:06.080 --> 0:18:08.800 his autopsy has finished, and UM, you know, we we 0:18:08.840 --> 0:18:11.080 don't know whether he has a will. You know, we 0:18:11.080 --> 0:18:14.080 we would assume with somebody with his number of assets 0:18:14.160 --> 0:18:16.359 would have a will. Um. So it's a question of 0:18:16.359 --> 0:18:19.600 who would the executor would be, where it might be filed. 0:18:19.680 --> 0:18:22.000 I mean, he has homes in New York, in the 0:18:22.040 --> 0:18:26.280 Virgin Islands, in New Mexico. Uh So any of those 0:18:26.320 --> 0:18:29.560 places are potential for him to have his will filed 0:18:29.560 --> 0:18:33.600 and as a state divvied up there though certainly states 0:18:33.800 --> 0:18:35.840 and you know, we'll want to get a piece of 0:18:35.880 --> 0:18:39.280 the tax bill. So there's a question about the assets. 0:18:39.280 --> 0:18:42.159 There's also a question about the tentacles of this case 0:18:42.280 --> 0:18:46.240 that had ensnared at least in the court documents, very 0:18:46.320 --> 0:18:50.040 high profile individuals who are friends with him, from the 0:18:50.040 --> 0:18:53.159 political to the legal to the business world. What is 0:18:53.200 --> 0:18:55.520 going on with that? I mean, are those kinds of 0:18:56.119 --> 0:18:59.399 reaches of the investigation going to be shot at this 0:18:59.480 --> 0:19:03.359 point or going to be ongoing? No, so, other prosecutors 0:19:03.359 --> 0:19:05.880 have told me that the prosecutors here in Manhattan will 0:19:05.880 --> 0:19:09.960 almost certainly continue their investigation with the evidence they've gathered. Obviously, 0:19:10.000 --> 0:19:13.960 there's a conspiracy count here which implicates other people, um, 0:19:14.000 --> 0:19:16.720 and there should certainly could be other charges brought against 0:19:16.840 --> 0:19:20.560 UM other members of that conspiracy. UM, we wouldn't doubt 0:19:20.560 --> 0:19:23.160 that they were. That they're indeed doing that right now. 0:19:23.520 --> 0:19:27.000 So this could definitely ensnare other people UM as it 0:19:27.080 --> 0:19:30.400 moves forward, UM, which will probably take a little while 0:19:30.560 --> 0:19:34.000 as they go through the evidence. So is there any 0:19:34.000 --> 0:19:37.600 concerned Chris about finding all of Jeffrey Epstein's assets considering 0:19:37.720 --> 0:19:40.399 the rather secretive nature in which they were all kept. 0:19:40.920 --> 0:19:43.360 I'd say there's definitely a concern through that. I mean, 0:19:43.560 --> 0:19:46.560 even the prosecutors have been unable to determine exactly where 0:19:46.560 --> 0:19:50.040 all his assets are, and UM says they've been secured 0:19:50.040 --> 0:19:52.800 away in trust, and you know that there's several layers 0:19:52.800 --> 0:19:55.919 of secrecy that have to be gone through before we 0:19:55.960 --> 0:19:59.360 can they can determine exactly what he has. Crystal Match, 0:19:59.480 --> 0:20:00.879 thank you so much much for being with us. He's 0:20:00.880 --> 0:20:03.920 a Bloomberg legal reporter joining us from the courthouse. The 0:20:04.000 --> 0:20:06.879 latest being Attorney General William Barr coming out and saying 0:20:07.560 --> 0:20:12.440 that the prison where Jeffrey Epstein died has quote serious irregularities. 0:20:12.440 --> 0:20:16.040 He vowed to pursue justice for the financiers victims. As 0:20:16.119 --> 0:20:19.240