WEBVTT - Das: Most emerging markets will benefit from stimulus

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<v Speaker 1>This is Bloomberg Surveillance. Oil market benefits from thousands, maybe

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<v Speaker 1>not a billion, people investing in oil who are not

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<v Speaker 1>involved in the industry. There are more fault lines in

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<v Speaker 1>the Middle East than there aren't any other geologic formation.

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<v Speaker 1>And but not, I mean these are political fault lines.

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<v Speaker 1>World growth has been too slow for too long, and

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<v Speaker 1>there's more trouble lying ahead. Time to do something about

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<v Speaker 1>it with other policies than monetary policies. Bloomberg Surveillance your

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<v Speaker 1>link to the world of economics, finance, and investment on

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<v Speaker 1>Bloomberg Radio. Good morning, Michael McKee along with Tom Keene.

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<v Speaker 1>It is seven am on All Street, seven am in Buffalo.

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<v Speaker 1>At all points between the two primary election day in

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<v Speaker 1>New York. We will look at the state of the

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<v Speaker 1>presidential campaign today. Yeah, we have to. Unfortunately investors so

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<v Speaker 1>far today ignoring it insteady he is oil on their minds,

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<v Speaker 1>never mind the failure of those Doha talks. Prices higher

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<v Speaker 1>today West Texas Intermediate at forty five of one point

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<v Speaker 1>four percent. Brent crude sixty seven is one point eight

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<v Speaker 1>percent higher, and that rise in oil prices has touched

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<v Speaker 1>off a global rally. Now Tokyo was up almost four percent,

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<v Speaker 1>but of course some of that expectations for increased fiscal

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<v Speaker 1>spending after the earthquake. There the end, he is weaker

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<v Speaker 1>today one oh nine thirty five, but there is optimism

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<v Speaker 1>in Europe and the US as well. The stock six

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<v Speaker 1>hundred in Europe is up four points one point three percent,

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<v Speaker 1>the docks in Germany two hundred and thirty points higher

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<v Speaker 1>two point three percent. The Euro at the moment is

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<v Speaker 1>trading weaker one thirteen thirty two. In the U S

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<v Speaker 1>SMP features are up ten points about half a percent.

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<v Speaker 1>Dal Evening features up fifty four three tenths and Nattack

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<v Speaker 1>evening features thirty two points higher seven tenths of eight percent.

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<v Speaker 1>In the bond market, ten your NOE yield is going

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<v Speaker 1>for one point seven nine percent one point to five

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<v Speaker 1>for your five year and the two year note yield

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<v Speaker 1>at a seventy six basis points. The dollar indexes at

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<v Speaker 1>ninety four point three to touch weaker today. We are

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<v Speaker 1>also seeing a rally in emerging markets. Today. The m

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<v Speaker 1>s c I Emerging Markets Index is up eight tenths

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<v Speaker 1>of eight per cent. An Abdas is head of Emerging

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<v Speaker 1>Markets Macro at Investco. Today, oil is driving the markets.

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<v Speaker 1>But I'm coming out of the I m F meetings

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<v Speaker 1>in Washington last weekend, the message was clear, central banks

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<v Speaker 1>are driving what is happening. Are we at a point

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<v Speaker 1>where emerging markets have their policies in the right place

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<v Speaker 1>to deal with more or less stimulus in the US

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<v Speaker 1>and around the world. Well, I think most emerging markets

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<v Speaker 1>UM and and even developed markets would benefit from from

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<v Speaker 1>stimulus and reflation. And I think that's part of what's

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<v Speaker 1>a major part of what's driving this risk on rally UM.

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<v Speaker 1>And I think on oil itself, UM, the Doha talks

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<v Speaker 1>might have been a disappointment, but the real issue is

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<v Speaker 1>that China is reflating through credit growth and the set

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<v Speaker 1>has become a bit more dubbish and has served to

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<v Speaker 1>weaken the dollar a bit. And that of course is

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<v Speaker 1>supportive for most emerging markets, starting with China. UM. And

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<v Speaker 1>that flows through to commodity prices, particularly oil. And here

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<v Speaker 1>we are in a rally. Well how much how important

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<v Speaker 1>is a week or dollar to emerging markets? I think

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<v Speaker 1>it's UM. I think it's extremely important UM. You know,

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<v Speaker 1>for for two reasons. Most of the major emerging market

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<v Speaker 1>countries are um our producers of commodities, including oil. There

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<v Speaker 1>are a few such as China and India, which are

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<v Speaker 1>major net importers of commodities and oil, but by and

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<v Speaker 1>large UM the market is a receiver of dollarized commodity

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<v Speaker 1>export prices, and many have dollarized liabilities. So when the

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<v Speaker 1>dollar strengthens, global financial conditions tighten, commodity prices tend to

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<v Speaker 1>go down, and credit spreads and baring costs tend to

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<v Speaker 1>go up, which is not good for the majority of

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<v Speaker 1>the e M countries. I think in this stance UM,

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<v Speaker 1>even the commodity prices are going up a bit. The

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<v Speaker 1>bigger picture is that financial conditions are loosening book inside

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<v Speaker 1>the United States and outside the United States UM, and

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<v Speaker 1>we're starting to see some accumulating evidence of financial conditions

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<v Speaker 1>loosening within e M countries as well, most importantly China.

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<v Speaker 1>I think that financial loosening is what we've been seeing

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<v Speaker 1>UM feed trough in the last couple of months. Dr

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<v Speaker 1>Dawst helped me with the stability of debt within the

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<v Speaker 1>emerging market. You uniquely qualified with this your workout of Princeton,

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<v Speaker 1>and let's see, I was really taken by the Malaysia

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<v Speaker 1>Abu Dhabi articles of the last twelve hours, and they

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<v Speaker 1>understand it's a spat and it's about Malaysia struggling with debt.

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<v Speaker 1>Is that systemic or is that just about Kuala lumpur Um.

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<v Speaker 1>I think it's it's a very widespread problem. And I

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<v Speaker 1>think that is the longer term challenge. And I think

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<v Speaker 1>you know, these these reprieves that we're getting are very

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<v Speaker 1>good so far as they go, but I think they

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<v Speaker 1>really underlike the important underlying question is who is going

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<v Speaker 1>to be able to bring themselves into emerging markets as

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<v Speaker 1>to adjust and deal with the debt problem or just

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<v Speaker 1>go back to business as usual. Okay, that's fine, except

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<v Speaker 1>you and I have a collective history of remembering not

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<v Speaker 1>but the years before that where there was this thing

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<v Speaker 1>and that thing I mentioned earlier, the Tequila crisis, the

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<v Speaker 1>Pastel crisis. I mean, are we getting in that position

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<v Speaker 1>again of little surprises like Malaysia UM. I think we're

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<v Speaker 1>we're getting into something UM that is a little bit different,

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<v Speaker 1>which is that there's a serious domestic debt burden problem. UM.

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<v Speaker 1>Back in the Tequila crisis, TOM and other such crises,

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<v Speaker 1>including including UM in Asia and Russia, most of the

0:05:51.480 --> 0:05:54.680
<v Speaker 1>debt was external this time. There's a lot of external

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<v Speaker 1>debt for sure, but there's much more of a domestic

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<v Speaker 1>debt problem. And so for us, this know, the problem

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<v Speaker 1>is that this represents a threat to UM, to potential growth.

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<v Speaker 1>And I think you know what we what we'll see

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<v Speaker 1>coming out of this cycle is a much longer workout

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<v Speaker 1>process of this excessive debt and a much slower growth

0:06:14.240 --> 0:06:17.279
<v Speaker 1>cycle in emerging market countries. Of course, you know that's

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<v Speaker 1>bad news so far as it goes. It doesn't mean

0:06:19.200 --> 0:06:21.720
<v Speaker 1>that you can't be um UH in a position to

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<v Speaker 1>make money as some of these these changes work through

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<v Speaker 1>in the e M space. And of course the world

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<v Speaker 1>we live in developed and emerging UM is comprised of

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<v Speaker 1>really high debt burdens. And and so we've seen that

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<v Speaker 1>since the global financial crisis in the West as well UM,

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<v Speaker 1>as we have since the Japanese crisis, that this overhang

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<v Speaker 1>of debt, it's a problem of low growth and low flation.

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<v Speaker 1>And I think that's where we are headed in emerging

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<v Speaker 1>markets as well. It gets us back to the dollar.

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<v Speaker 1>How much of the debt is dollar denominating UM? Well,

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<v Speaker 1>you know, indirectly, UM, there's there's a good deal of

0:06:58.200 --> 0:07:01.080
<v Speaker 1>dollar exposure UM there. Some of it is UM is

0:07:01.200 --> 0:07:05.200
<v Speaker 1>explicit UM through actual hard currency corporate debt in China

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<v Speaker 1>and other countries. Some of it is UM implicit if

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<v Speaker 1>you if you like, because you know, you have a

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<v Speaker 1>lot of carry trades UM that had been put on

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<v Speaker 1>that are still in the process of being unwound in

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<v Speaker 1>various places or maybe put back on UH in these

0:07:17.920 --> 0:07:21.440
<v Speaker 1>risk risk on episodes UM. And of course a big

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<v Speaker 1>part of that is dollar funded. Although with negative interest

0:07:24.880 --> 0:07:28.000
<v Speaker 1>rates in Europe and in Japan, you know, the dollar

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<v Speaker 1>is not the only funding game in town anymore, m

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<v Speaker 1>as as people all know. So there is a good

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<v Speaker 1>deal of dollar exposure UM still there. And I think

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<v Speaker 1>that you know, that's a raised very important point that

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<v Speaker 1>if you have significant upside surprises, sustained upside surprises in

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<v Speaker 1>the US, it's going to be more difficult for the

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<v Speaker 1>said to remain davish UM. So I think you know,

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<v Speaker 1>there are there are medium term challenges to this UM,

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<v Speaker 1>this risk on environment, but for the short term it

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<v Speaker 1>looks pretty good. Where where are you on a dollar

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<v Speaker 1>basis on investing in equities and emerging markets? To me,

0:08:05.320 --> 0:08:10.600
<v Speaker 1>it's a there's like three emerging markets, how many are there. Sorry,

0:08:10.600 --> 0:08:13.000
<v Speaker 1>there's three emerging markets and there's just there's there's an

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<v Speaker 1>OPEC commodities emerging market, there's non OPEC non commodities emerging markets,

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<v Speaker 1>and then maybe there's the emerging markets of Eastern Europe

0:08:21.520 --> 0:08:24.000
<v Speaker 1>as well. I mean to me, there's a set of

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<v Speaker 1>separate sets of countries, and we don't know what to

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<v Speaker 1>do with all the news flow and distortions from central banks.

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<v Speaker 1>What is what is investors recommendation on what to do

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<v Speaker 1>within emerging markets? UM? Well, like I say, are you know,

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<v Speaker 1>our our current view is UM is relatively optimistic about

0:08:46.640 --> 0:08:49.839
<v Speaker 1>the about the immediate future and the next few months.

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<v Speaker 1>There are still important risks out there that may become systematic,

0:08:54.000 --> 0:08:56.160
<v Speaker 1>you know, like Brexit and so forth, and we can

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<v Speaker 1>talk about those if you want, UM. But in an

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<v Speaker 1>environment like I say, where UM all the largest economies

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<v Speaker 1>in the world, developed and emerging are UM, most of

0:09:06.840 --> 0:09:11.079
<v Speaker 1>them are reflating and trying to boost domestic demand UM.

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<v Speaker 1>That is an environment in which you know, most people

0:09:14.360 --> 0:09:18.280
<v Speaker 1>will want to be UM, will want emerging markets, exposure

0:09:18.280 --> 0:09:20.679
<v Speaker 1>to currencies that are going to benefit from that reflation,

0:09:21.400 --> 0:09:24.200
<v Speaker 1>UM to yield curves that are that are relatively steep

0:09:24.240 --> 0:09:27.240
<v Speaker 1>that are going to tend to flatten because inflation is

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<v Speaker 1>low and capital flows are returning. UM. And indeed equity

0:09:31.440 --> 0:09:36.559
<v Speaker 1>markets as well. UM. You know, whether whether their commodity importers,

0:09:36.679 --> 0:09:41.360
<v Speaker 1>commodity exporters, or more exposed to the Eurozone than everything else. Um.

0:09:41.640 --> 0:09:45.360
<v Speaker 1>The reality is that this reflation um is in is

0:09:45.440 --> 0:09:49.520
<v Speaker 1>in Europe because the e c B is UM is stimulating.

0:09:50.000 --> 0:09:53.280
<v Speaker 1>Bank of Japan needs to stimulate. The FED is on hold,

0:09:53.360 --> 0:09:58.400
<v Speaker 1>albeit perhaps with a moderately tightening bias, but perhaps heading

0:09:58.440 --> 0:10:02.600
<v Speaker 1>towards more devilshness. And China, of course is reflating. India

0:10:02.880 --> 0:10:07.920
<v Speaker 1>is easing, Indonesia is easing. UM. You know, people hope

0:10:07.920 --> 0:10:09.880
<v Speaker 1>for Brazil and Russia to ease. There are a few

0:10:09.920 --> 0:10:13.080
<v Speaker 1>places South Africa has some challenges that may need the Titan,

0:10:13.120 --> 0:10:16.280
<v Speaker 1>but by and large we're in a stimulative environment again

0:10:16.440 --> 0:10:19.240
<v Speaker 1>for the for the next couple of months with us

0:10:19.320 --> 0:10:22.120
<v Speaker 1>with Investco, and we'll come back and speak to him

0:10:22.200 --> 0:10:25.960
<v Speaker 1>in a moment. Futures up ten DOWT futures up sixty

0:10:26.120 --> 0:10:29.040
<v Speaker 1>tenure yield one point seven percent across the board, risk

0:10:29.120 --> 0:10:33.880
<v Speaker 1>on the VIX closing at thirteen point zero nine and

0:10:33.880 --> 0:10:36.640
<v Speaker 1>it is a good negative point to six points. That's

0:10:36.720 --> 0:10:39.599
<v Speaker 1>something that's uh, that's I believe you'd call that a

0:10:39.640 --> 0:10:42.880
<v Speaker 1>bull market with a doubt closing eighteen thousand four, You've

0:10:42.920 --> 0:10:44.439
<v Speaker 1>got to believe in the futures where they are that

0:10:44.520 --> 0:10:53.000
<v Speaker 1>will open with a twelve handle on a VIX seven

0:10:53.040 --> 0:10:55.120
<v Speaker 1>ten on Wall Street. This hour of Surveillance brought to

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<v Speaker 1>you by Volvo Cars, White Planes. Visit Valvo Cars, White

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<v Speaker 1>Plains dot Com. Here's Michael bar at News headlines, Mike Tom,

0:11:01.280 --> 0:11:03.959
<v Speaker 1>thank you very much. Democrat Murnie Sanders is still holding

0:11:04.000 --> 0:11:06.040
<v Speaker 1>out hope for a close vote in the New York

0:11:06.120 --> 0:11:10.080
<v Speaker 1>presidential primary today, despite Hillary Clinton's lead in the polls.

0:11:10.520 --> 0:11:14.559
<v Speaker 1>Clinton's campaign says the delegate race is about over. Republican

0:11:14.640 --> 0:11:17.520
<v Speaker 1>Donald Trump is signing the ninety five available delegates as

0:11:17.600 --> 0:11:20.800
<v Speaker 1>he tries to clinch his party's nomination and avoid a

0:11:20.840 --> 0:11:24.760
<v Speaker 1>contested convention. Afghan authorities say at least twenty eight people

0:11:24.800 --> 0:11:27.480
<v Speaker 1>are dead and more than three hundred wounded during a

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<v Speaker 1>car bombing and assault by militants on the Key government

0:11:30.800 --> 0:11:35.240
<v Speaker 1>security agency and Cobble, but Taliban has claimed responsibility. Add

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<v Speaker 1>Pearl Jam to the list of musicians canceling concerts in

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<v Speaker 1>North Carolina. It's over the state's new law and LGBT rights.

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<v Speaker 1>Global News twenty four hours a day, powered by our

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<v Speaker 1>Features up chan Features up six just a terrific screen

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<v Speaker 1>as well. Coming up. Arnabdas on the Central Banker to

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<v Speaker 1>the World, Janet Yellen Arnabdas Invesco on'm je markets stay

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<v Speaker 1>This is a Bloomberg Business flash And I'm Kter in Moscow.

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<v Speaker 1>This update is brought to you by Sector Spider e

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0:12:43.679 --> 0:12:46.760
<v Speaker 1>t f U S stock index futures are higher with

0:12:46.880 --> 0:12:49.960
<v Speaker 1>oil and metals indicating the SNP five hundred will extend

0:12:50.040 --> 0:12:53.320
<v Speaker 1>gains after reaching its highest level since December. We checked

0:12:53.320 --> 0:12:55.800
<v Speaker 1>the markets every fifteen minutes throughout the trading day on

0:12:55.920 --> 0:12:58.640
<v Speaker 1>Bloomberg SNP even a future is up eight and a

0:12:58.679 --> 0:13:00.840
<v Speaker 1>half points, and now even a few tears up fifty

0:13:01.200 --> 0:13:04.000
<v Speaker 1>nasdac even the futures up thirty The decks in Germany's

0:13:04.080 --> 0:13:07.000
<v Speaker 1>up two point three percent ten, Your treasury down three

0:13:07.080 --> 0:13:09.840
<v Speaker 1>thirty seconds. The yield one point seven eight percent yield

0:13:09.880 --> 0:13:12.640
<v Speaker 1>on a two year point seven five percent. Now I'm

0:13:12.679 --> 0:13:14.679
<v Speaker 1>ex screwed. Oil up one point six per cent or

0:13:14.720 --> 0:13:17.280
<v Speaker 1>sixty three cents to forty dollars forty one cents of

0:13:17.320 --> 0:13:19.800
<v Speaker 1>barrel and called Mike schooldre is up seven tenths per

0:13:19.880 --> 0:13:22.600
<v Speaker 1>cent or eight dollars fifty cents to twelve forty three

0:13:22.720 --> 0:13:25.760
<v Speaker 1>sixty announced the euro at dollar thirteen thirty one, the

0:13:25.840 --> 0:13:28.520
<v Speaker 1>yen one oh nine point four five, and it is

0:13:28.559 --> 0:13:31.600
<v Speaker 1>a bity busy morning for earnings. Johnson and Johnson reported

0:13:31.640 --> 0:13:34.280
<v Speaker 1>earning set beat analysts estimates, and so did United Health.

0:13:34.720 --> 0:13:37.720
<v Speaker 1>That's a Bloomberg business flash. Tom and Mike Jurna, thanks

0:13:37.760 --> 0:13:39.760
<v Speaker 1>so much. Are not dust with this head of emerging

0:13:39.840 --> 0:13:44.280
<v Speaker 1>markets macro for fixed income with investco are not we're

0:13:44.400 --> 0:13:47.200
<v Speaker 1>real rates. I mean I I it's surreal. Now there's

0:13:47.240 --> 0:13:50.800
<v Speaker 1>one massive, great distortion. Are there negative rates in the

0:13:50.880 --> 0:13:55.280
<v Speaker 1>emerging markets? I've never asked a question. UM, Well, yeah,

0:13:55.360 --> 0:13:58.439
<v Speaker 1>that's an excellent question. UM. Indeed, there are negative real

0:13:58.559 --> 0:14:01.000
<v Speaker 1>rates in in various places, and in some places you

0:14:01.080 --> 0:14:04.439
<v Speaker 1>have extraordinarily high real rates UM. And that's part of

0:14:04.520 --> 0:14:09.120
<v Speaker 1>the argument for the attraction in domestic yield curves. UM.

0:14:09.920 --> 0:14:13.679
<v Speaker 1>So for example, in UM in Brazil you have UM

0:14:13.960 --> 0:14:17.640
<v Speaker 1>real interest rates and normal interest rates that are quite high. UM.

0:14:17.720 --> 0:14:21.640
<v Speaker 1>Of course, there are serious fiscal and political challenges there UM,

0:14:21.800 --> 0:14:24.400
<v Speaker 1>and there's a very deep multi year recession underway. But

0:14:24.560 --> 0:14:27.160
<v Speaker 1>the hope, of course in that particular country is that

0:14:27.240 --> 0:14:31.040
<v Speaker 1>there's about to be a turnaround. UM. If if indeed

0:14:31.080 --> 0:14:34.640
<v Speaker 1>the impeachment process goes forward, will still be challenging. UM.

0:14:34.720 --> 0:14:38.240
<v Speaker 1>There are other places where, particularly in Emerging Asia UM,

0:14:38.520 --> 0:14:41.880
<v Speaker 1>where real rates are are negative. Policy rates are negative

0:14:41.880 --> 0:14:45.240
<v Speaker 1>in real terms, UH, and parts of the yield are negative. Real.

0:14:45.480 --> 0:14:49.360
<v Speaker 1>Explain that decision. Explain If China has a high real

0:14:49.480 --> 0:14:54.040
<v Speaker 1>rate and somewhere else in Emerging Asia doesn't, what does invest,

0:14:54.080 --> 0:14:58.240
<v Speaker 1>go do which do you buy? UM? Well, you know

0:14:58.400 --> 0:15:02.560
<v Speaker 1>the Chinese UM domestic market is only partly accessible and

0:15:02.640 --> 0:15:04.800
<v Speaker 1>from the process of being opened up, so you know,

0:15:04.920 --> 0:15:07.920
<v Speaker 1>we we will have some exposures there and UM it's

0:15:08.560 --> 0:15:11.400
<v Speaker 1>you know, taking a step back from particular countries. It's

0:15:11.520 --> 0:15:14.280
<v Speaker 1>UM partly about the real rate for that country. It's

0:15:14.280 --> 0:15:17.080
<v Speaker 1>also partly about what we expect to happen to the currency,

0:15:17.600 --> 0:15:21.720
<v Speaker 1>and partly about what um the kind of general global

0:15:21.800 --> 0:15:24.160
<v Speaker 1>funding environment and the benchmarks. Right, so you have a

0:15:24.200 --> 0:15:27.160
<v Speaker 1>world where you have negative not just negative real but

0:15:27.360 --> 0:15:32.240
<v Speaker 1>negative nominal policy rates and negative yield uh in much

0:15:32.280 --> 0:15:35.400
<v Speaker 1>of the European bond market and in the Japanese bond market,

0:15:35.440 --> 0:15:38.360
<v Speaker 1>and you have very low real and nominal yields in

0:15:38.400 --> 0:15:40.720
<v Speaker 1>the developed world. And so of course a big part

0:15:40.800 --> 0:15:44.520
<v Speaker 1>of the attraction of emerging markets at various times has

0:15:44.600 --> 0:15:48.320
<v Speaker 1>been the higher growth and the higher inflation um in

0:15:48.560 --> 0:15:51.800
<v Speaker 1>in many countries, not all Right now, China is a

0:15:51.960 --> 0:15:54.840
<v Speaker 1>very special and very interesting case, of course, because they've

0:15:54.880 --> 0:15:59.760
<v Speaker 1>been having partial deflation for some time. Producer prices have

0:16:00.040 --> 0:16:03.480
<v Speaker 1>and growing in negative terms, although consumer prices have been

0:16:03.520 --> 0:16:08.120
<v Speaker 1>growing very slowly. Right, So now the reflation strategy holds

0:16:08.160 --> 0:16:11.080
<v Speaker 1>out the hope, at least for the short term, that

0:16:11.280 --> 0:16:15.480
<v Speaker 1>through faster credit growth and faster investment UM as well

0:16:15.520 --> 0:16:19.000
<v Speaker 1>as continued growth and consumption, that the economy will grow

0:16:19.080 --> 0:16:23.040
<v Speaker 1>more quickly UM than had been feared, and that will

0:16:23.160 --> 0:16:26.920
<v Speaker 1>raise the inflation rate in China through credit reflation, and

0:16:27.040 --> 0:16:29.440
<v Speaker 1>that will spread around the rest of the world. And

0:16:29.560 --> 0:16:31.880
<v Speaker 1>indeed that is starting to take place. And we have

0:16:32.040 --> 0:16:35.520
<v Speaker 1>longer term concerns about that policy strategy, but the reality

0:16:35.680 --> 0:16:37.840
<v Speaker 1>is that in a world in which we have been

0:16:37.960 --> 0:16:41.680
<v Speaker 1>fearing many of many people fearing a deflationary devaluation shock

0:16:41.760 --> 0:16:44.880
<v Speaker 1>from China, that seems off the table for the time being.

0:16:45.200 --> 0:16:48.240
<v Speaker 1>So it's a better world. Mike McKie. Another shout out

0:16:48.360 --> 0:16:51.600
<v Speaker 1>James Sweeney, a credit swee, was way out front on

0:16:52.160 --> 0:16:55.560
<v Speaker 1>this this tone said by Dr Dass, Well, we're not

0:16:55.640 --> 0:16:59.120
<v Speaker 1>going to see negative rates in Argentina. However, the fact

0:16:59.160 --> 0:17:02.560
<v Speaker 1>that there are going to be rates at all, it

0:17:02.800 --> 0:17:07.000
<v Speaker 1>is interesting news. The country coming back to the global

0:17:07.040 --> 0:17:11.480
<v Speaker 1>credit markets after fifteen years. How is this going to

0:17:11.560 --> 0:17:18.800
<v Speaker 1>be our job? Had three phones to um. Yeah, I

0:17:18.840 --> 0:17:22.280
<v Speaker 1>think Argentina, um, you know, is a very interesting, um,

0:17:22.920 --> 0:17:25.680
<v Speaker 1>very particular case, right, I mean, I think the great

0:17:25.760 --> 0:17:29.200
<v Speaker 1>news is that Argentina is coming back into the world

0:17:29.240 --> 0:17:32.639
<v Speaker 1>economy from um, you know, from isolation and from the cold.

0:17:33.480 --> 0:17:36.240
<v Speaker 1>Whereas you say, you couldn't really tell what interest rates

0:17:36.320 --> 0:17:40.440
<v Speaker 1>were because you couldn't really tell what inflation was, and

0:17:40.560 --> 0:17:43.080
<v Speaker 1>if anyone tried to tell under the previous regime what

0:17:43.200 --> 0:17:45.440
<v Speaker 1>the inflation rate actually was as opposed to what the

0:17:45.480 --> 0:17:48.880
<v Speaker 1>government was saying that the inflation rate was, they would

0:17:48.880 --> 0:17:52.600
<v Speaker 1>be stifled or even jail right. So we have UM

0:17:53.480 --> 0:17:58.800
<v Speaker 1>a very significant change in Argentina underway, being managed by

0:17:59.000 --> 0:18:01.560
<v Speaker 1>a president you can sort of understand where he's coming

0:18:01.640 --> 0:18:03.680
<v Speaker 1>from and what he says, and by an economic team

0:18:04.440 --> 0:18:06.800
<v Speaker 1>UM that is that is excellent. I know and have

0:18:06.960 --> 0:18:10.119
<v Speaker 1>worked with several of those people UM for years in

0:18:10.160 --> 0:18:12.560
<v Speaker 1>the past and have a great deal of confidence in

0:18:12.640 --> 0:18:15.800
<v Speaker 1>their ability to diagnose the problem and also to implement

0:18:15.840 --> 0:18:19.520
<v Speaker 1>a sensible solution. And it's quite impressive how rapidly that

0:18:19.800 --> 0:18:23.000
<v Speaker 1>the new government has moved to normalize a lot of

0:18:23.040 --> 0:18:25.560
<v Speaker 1>the distortions that the previous government had created. And so

0:18:25.920 --> 0:18:29.960
<v Speaker 1>they've unified multiple exchange rate regime, they're dismantling the capital

0:18:30.080 --> 0:18:34.760
<v Speaker 1>controls UM, they're starting to UM you know, bring bring

0:18:34.920 --> 0:18:38.080
<v Speaker 1>energy prices into line with with with the cost of

0:18:38.119 --> 0:18:42.200
<v Speaker 1>producing energy. So Argentina is a place where, unfortunately people

0:18:42.200 --> 0:18:44.640
<v Speaker 1>are going to have to suffer much higher energy prices

0:18:45.359 --> 0:18:48.000
<v Speaker 1>in a world where energy prices have collapsed. But the

0:18:48.119 --> 0:18:51.240
<v Speaker 1>argent Huntin people clearly understand that the regime that they

0:18:51.320 --> 0:18:55.159
<v Speaker 1>were operating under for the last several years was you know,

0:18:55.320 --> 0:18:58.280
<v Speaker 1>just just completely unsustainable because it had a lot of

0:18:58.680 --> 0:19:03.000
<v Speaker 1>prices and therefore you had shortages of lots of items

0:19:03.040 --> 0:19:06.840
<v Speaker 1>and and of energy. So Argentina is starting to normalize

0:19:06.920 --> 0:19:08.920
<v Speaker 1>and and the market is responding to that, and that's

0:19:08.920 --> 0:19:13.400
<v Speaker 1>why that debut bond has gone so well. Right, thank

0:19:13.400 --> 0:19:16.000
<v Speaker 1>you so much, Arndt was Investco greatly appreciate it. And

0:19:16.119 --> 0:19:19.640
<v Speaker 1>emerging Marcus Michael from where you said is Janet Yell

0:19:19.720 --> 0:19:23.359
<v Speaker 1>and central banker to the emerging markets. It's an interesting idea.

0:19:24.600 --> 0:19:29.480
<v Speaker 1>There's such a separateness between our vector of raids and

0:19:29.600 --> 0:19:34.680
<v Speaker 1>everybody else's. Yeah, well, I mean he's uh, she is

0:19:34.880 --> 0:19:37.800
<v Speaker 1>rather um the person who's going to influence the dollar,

0:19:37.840 --> 0:19:41.080
<v Speaker 1>and the dollar is going to influence the cost of borrowing,

0:19:41.440 --> 0:19:44.840
<v Speaker 1>costs of repayment for emerging markets, which just as is

0:19:44.840 --> 0:19:47.000
<v Speaker 1>a big deal and when you agree with me that

0:19:47.080 --> 0:19:49.600
<v Speaker 1>that was the heart and soul of Rogoff and Reynard's

0:19:49.640 --> 0:19:54.520
<v Speaker 1>book is the idea of summing domestics and exterior debt

0:19:54.560 --> 0:19:58.480
<v Speaker 1>as well to so many days countries um. The market

0:19:58.520 --> 0:20:02.440
<v Speaker 1>went up yesterday, the market is up this morning. Bloomberg surveillance.

0:20:05.960 --> 0:20:09.240
<v Speaker 1>Bloomberg Surveillance is brought to by National Realty Returns on

0:20:09.320 --> 0:20:11.960
<v Speaker 1>cash and rented real estate. Find them an n R

0:20:12.040 --> 0:20:13.399
<v Speaker 1>I A dot NEM