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00:00Come to Super Tuesday. We can't avoid it but I wanted to start off with this outlook cut by Moody's Investors Service today . Is it more symbolic than anything else. Well I think it comes at a good time because just before the NBC. Well exactly and it tells China that the third point that Moody's made was we are a bit worried about whether or not reforms will actually continue. And I think that's the most important point for the Chinese leadership at this point to make sure that the reform process does not stall to make sure that it is pushed ahead despite the turbulence and that they don't get sort of cold feet in the process of it. And my side reform when we see that. Well I think we're seeing it already. I think they're saying that supply side reform means you reform the production side of the economy. Right. So downsizing is a major supply side reform building back excess capacity is a major supply side reform. Cutting taxes cutting business costs. Those are major supply side reforms. I think we're seeing that. It just needs to be stepped up. The other supply side that needs to be stepped up is the markets themselves. The markets have to become deeper. China has a stock market that is dodgy without any question about it. There is not enough institutional depth in those markets to really work properly. Even more important and the greatest opportunity at the same time for investors is China does not have a deep debt market. And that's where the whole thing really has to go . Imagine the United States without a mortgage backed securities market. I think it has far more I think they would have got themselves into the mess in 2008 to see the kind of global exposure which is what a lot of people are saying. If China melts down the global contagion may not be as great as we say . That's that's also true. There is the actual links between China and the rest of the world through capital markets are limited. And you know in order for those links to be built out you need to have a situation where these markets are better developed their ise product has to be developed on the debt side . Right now Chinese debt just chases around in the interbank market. Ninety five percent of all of it. OK. There is no significant secondary market and there has to be product developed whether it's M.B.A. or a B.S. or you know anything else. I mean a reliable rating system on the corporate debt side. All of that is still to be done. So there's a huge reform agenda just in the financial markets alone from the supply side step. Do you see any opportunity in Chinese bonds though to buy potentially I mean we see the returns seem to be higher than U.S. Treasuries. I mean we see negative rates in Japan. Well look if you you know the Chinese stock market melted down in August at that point in time you had decided to completely switch asset classes and switch into bonds. You'd be rich now. Now the question is When are you going to time getting out of debt. Yeah. So you know that is another issue but I think there's no question that there have been great opportunities in that it's a debt market that is basically on the same size as Japan. So it's huge. It's about half the US that market. But it's all sort of chasing its own tail in the interbank market. It's not really reaching the investing public . But FTSE come out of it. What else do I see out of it. It's very difficult to say. I think the probably on the energy side there's going to be a lot of interesting developments. I think China will step up its nonconventional or non-polluting so nuclear of solar and wind and the the actual amount of investment in that is going to continue on a significant scale . China is already the biggest investor in wind power and solar power globally and is now becoming by far the largest investor in nuclear. So I hope that continues because it's the right direction to go to the market gains we're seeing today pretty big. Hey what's going on. I don't know. The oil price went up. That's what we saw. Do you think the other day. That's exactly right . I just don't try. That oil price. No I mean look the thing is the the oil price has no business actually being correlated with market moves except in certain particular you know energy counters. Right. So why does it behave that way. Because it's become something of a proxy war what people think is happening in the global economy. I think the US PMI was a little bit better than expected. There's you know some hope that the U.S. economy will stabilize instead of not growing it actually grew. Lo and behold by 1 percent. You know if that were in European terms that would mean zero point two percent because the U.S. is very interesting you as always reports and you analyze growth Lobel you know the reporting is on a quarterly basis so you always have the feeling that weight growth going on in the United States divide by four . Optimistic about you're not so optimistic that the jobs either but you're not convinced by those numbers you are 80 percent of all jobs that have been created have been in the sort of small retail sector and in hospitals. So bedpans and hamburgers and I'm not going to be impressed by that no . Because health care is a growth sector. Fine. That's that's not. Nobody's saying it's not. But the point is that creating jobs on that low wage level in that sector is no great accomplishment. What you need in the United States is productivity and productivity has been declining massively and that's the problem. That last point it's being of course all about Super Tuesday today. You know if we do get these two front runners Hillary Clinton and Donald Trump I mean it certainly does. But all that market implications here. I don't know if their market implications at this point but honestly all I can say. My gut feeling is that I didn't like the Bushes and I don't like the Clintons anymore. So yes not all the best the Donald is not my favorite candidate but controversial if you like. But at the same time you don't become a billionaire just because you're stupid. So you know there's the man I wasn't exactly somebody who had to work his way to the top people to the fair. Legacy wasn't he. And what people say and I think is right built real estate during a time when the property markets were low in the US. So it may or may not now. And you also almost went bankrupt at one point. But you know it so So did three times in a long time but perhaps a cipher in what is going on broadly in the U.S. in terms of sentiment. Yes the volatility in markets as well . Right. Well I think it's clear that the people really really you know upset about what's going on in Washington for the last eight years or the last 12 years or whatever and want to see somebody who is really not an insider doesn't depend on outside better you know because you don't want to have somebody who is depending on somebody else's on lobbyist. You know the Clintons are the the epitome of an abolitionist establishment and the relationship with love years with no governmental nongovernmental organizations all of that strange net of stuff that makes gives me the creeps either way either way Wall Street will be definitely one of the issues Donald has to point if he becomes president he has to appoint a good economic team .

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Why Moody's Is Concerned About China's Economy

Uwe Parpart, Capital Link International chief economist, discusses Moody's cutting China's credit outlook to negative and the outlook for global markets with Bloomberg's Rishaad Salamat, Angie Lau, Yvonne Man and Rosalind Chin on "Asia Edge." (Source: Bloomberg)

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