Trump Can't Use 'Emergency' To Fund Wall: Feldman (Podcast)

at nine pm Eastern Time this evening. Bloomberg, of course, will cover the cover the president's speech as well as the democratic response to the President's remarks. Now, this is decided to be a focus of the national emergency that he wants wants to declare over the border security, and the President has said in recent days that he might employ the emergency funding for the border wall if Congress

doesn't approve it. Well, can he do so? Noah Feldman is professor of law Harvard University also a Bloomberg opinion columnist. He can be followed on Twitter at Noah are Feldman. Noah, can the President declare a national emergency to build a wall? No, he can't. There's no provision in the Constitution that says that the president can declare an emergency and then spend money that hasn't been appropriated to him, and Donald Trump

can invent one for the occasion. There are provisions in law statutes that allow the president to declare an emergency and do certain things, but as far as I know, none of those provisions says that whence he's declared an emergency, the president can spend money on something that Congress has made it completely clear that it doesn't want him to spend money on, such as the wall, which has now

been denied him by two Congresses in a row. Well, Provisor Felman, though there is a significant constituency within Congress who do support the wall, is there enough data that we have to make that assertion that definitely Congress does not want this. Yes, the previous Congress was asked to provide appropriation and funding for this and declined, and the current Congress has been asked to do so by the

president and has declined. It never gets more explicit than that Congress has to be seen as a single body speaking with a single voice, and it says yes or no when it does it by a vote. In this instance, it's it said no, and it's it said no, twice. There's also president in Supreme Court precedent for thinking of Congress's refusal to authorize something as an explicit statement to the president that he that he can't do that thing.

That goes all the way back to the famous steel seizure case when Harry Truman tried to seize the steel mills, and the Supreme Court said, this is a situation where Congress has not authorized the president to do this. And their proof was that there were other pieces of legislation that had authorized the presidents to do other sorts of things, but there was no legislation saying the president could seize

in that way. And so the court said that was evidence that Congress did not intend to give the president this authority. Now, well, what does that National Emergencies Act outline as the specific powers of the president to declare an emergency. Well, one thing that's very frustrating about the National Emergencies Act is that it's kind of an empty shell. It says that the president may declare a state of emergency, and it says that when he does that, Congress could

choose to overrule it. And it says that once he's done that, he has whatever authority comes from one of four hundred and seventies separate laws scattered all over the statute books, each of which confers some special authority on the president in an emergency. So then you have to figure out which one of those fourigers and the seventy plus laws is in play, and you have to see if there's any authority under those laws that actually would let the president do the thing in question. And in

this instance, nobody has put forward to my knowledge. I've looked high and low some of our party that says that when the president there's a state of emergency, he can use uh, he can take money that hasn't been appropriated to do something that Congress doesn't want him to do. So, Professor Velevan, let's say President Trump says, you know what, I'm going to give this a try. Anyway, I'm going

to go ahead and declare national emergency. Just take them, take the money, and it goes to the Supreme Court. Do you think that they would rule against him given the composition currently? I do. Even the conservative justices are real believers in the separation of powers, and there's probably no clearer violation of the separation of powers than the president deciding that he gets to spend money when it

hasn't been appropriated by the Congress. You know, the fundamental power of Congress in the US constitutional system, The most basic thing they can do is the power of the purse. And if the president can get around the power of the purse, then we don't really need Congress anymore. And that can't possibly be the design that the Framers put in place. And the Conservatives on the Court our originalists, and they believe in what the Founders designed, and they're

not interested in abolishing Congress. Noah Feldon, does the International Emergency Economic Powers Act? Does that offer the president away in which to use the legal apparatus of the government in order to change the direction or flow of financial transactions. Well, this is not an instance where financial transactions would be

in play. I mean, there are emergency powers like the one that you mentioned, which say, for example, you know, if we're suddenly in a war with another country, or if, um, you know, our assets are seized another country, that the president could take unilateral steps, again authorized by Congress two, as you say, reverse the flow of transactions or freeze assets or things like that. But this is not what

we're talking about. This is about the President actually taking money from the U. S. Treasury that has to be by law appropriated by Congress and putting it to a purpose that Congress has said you can't use it for. And that's that's not covered by any of the emergency powers accident I'm aware of. I have to wonder what's the potential liability to President Trump should he go ahead

and declare the emergency powers to seize this cash. I mean, let's say he says, look politically it looks good for me. I don't care if it's legal. If it gets shot down, so be it. Will there be any consequences from that?

That's really the deep question. You know. President Trump, as you know, has been avoiding the Constitution where he can, pushing it where possible, and breaking it where he thinks there's a political advantage to him, and repeatedly the courts have struck down his actions, and to all intents and purposes, it seems like he doesn't care, and he may judge in this instance too, why not just break the Constitution and then blame the courts and maybe that gives him

some some cover. And you know, at one time I would have said, we lived in a country where repeated violations of the Constitution by the president would have effects, would have blowback, would eventually lead the public to give up on the president, or would eventually leave Congress to think about impeaching him. That hasn't happened yet, and so you know, I'm not gonna sit here and say that

I'm certain that that's going to happen. But I do believe still that slow, gradual, incremental steps towards realizing that this is a president who have ignores the Constitution will have a long term negative effect on the presidency, and they each one incrementally increases the odds of impeachment. What

do you believe the Democrats can do. Well, the first thing they can do is let it, you know, let the word ring out loud and clear that this is not just outside the president's statutory powers, but this violates the separation of powers. Every American has been through Civics class and knows that we have the separation of powers and knows that Congress has the power of the person. If you take that away, we don't have a democracy anymore.

We don't have a constitutional system anymore. And I think the Democrats should really beat that point as hard as they can. I think Americans still believe in the Constitution. We still believe there should be a Congress, and frankly, if the president can just allocate my on his own, it's as though we don't have a Congress, and that's

just not the system that Americans want. So that's the first thing that Democrats can do, and I think the second thing they can do is remind the public that this is a president who's flouting the rule of law and he's doing it on a daily basis. And last, but not least, the Democrats will probably have to go to court to block this. Professor Noah Feldman, thank you so much for being with us and for your insights.

Professor Noah Feldman of Harvard University is also a Bloomberg Opinion columnist, coming to us from Boston talking about President Trump's efforts to get the appropriations to build the one. The U. S And China are talking and markets like that they are discussing a trade deal and trying to get it done within the next few months. Joining us

now to talk about the feasibility if that is. Leland Miller, chief executive of China beige Book International, joining us here in our Bloomberg in our active broker studios in New York, so Leland. Do you think it is likely that the two sides here will come to some kind of meeting of minds, And if so, what does that look like? I do? I think that there are going to have a trade deal at the end of this ninety days.

I think the way this looks there's that there will be a framework that's set up um that they'll call a deal, and then there'll be a hundred eighty days or so implementation period where the Chinese, where the Chinese do all the things that they're supposed to do, and the U S evaluates where the Chinese have done what they're supposed to do. And will that conclude the arrangement or will it just bring more contradiction and more debate.

The idea is it'll solve it. For so what President Trump would like to do is get this issue out of his hair, move on to some other trade issues, and solve this up until brings it back. So when during the campaign season you're going to see China being a major issue, the Democrats are going to bring him up, bring it up his trade deals, his z T E. Tweets, So is going to be the year that this comes back.

But twenty nineteen, he'd like to take it off the agenda, and that's the goal of getting a deal by by by March one. So basically, no escalating trade, tariff threats, etcetera, come to some kind of peace move forward. Have it not be part of the equation, which raises the question, can we keep blaming the trade tensions for weakness that we're seeing in China because that is what some people are trying to do. What is your view on that? Yeah,

that's not accurated. There are definitely parts of the economy that have been suffering quite dramatically. I mean, you look at our manufacturing data. Public data showed export orders weakening. I think it was early October, maybe late September, Yeah, in China August, you know, we we were we were showing this in in August, and so we have seen a dramatic hit to manufacturing for the last several months,

no question about that. But overall, the economy was gonna weaken no matter what was done on the trade side, and we had seen in seventeen A lot of people thought this was organic momentum that was pushing us UM into beyond with this was beautiful Chinese growth was actually happening, is it? By mid seventeen, private firms were already getting skeptical of of the rally and we're borrowing less and

hiring less and investing less. But state firms, under orders from Beijing, of course, just kept going right straight through, straight through the Party congress Ineen. So you saw this particularly manufacturing and property and commodities, which were the you know, the old economy sectors. So there was an overheating that had to be dealt with and it it was gonna result

in the slowdown no matter what. Um. What you had in early eighteen was no doubt, some frontloading of orders in order to get to to to beat the tariffs. So what that meant was things earlier in the year were probably a little bit better here than they would have been otherwise, and it's just pushed the trouble farther into the year. And that's where we are now, and our our que for data is the worst that we've seen since the first quarter of sixteen, when we when

we when when China markets were in a panic. We almost the last time you were physically in China it's been it's been um earlier this year. UM, but I haven't spent a lot of time there at all recently. Okay, but you know, there's there's some questions, you know, it's it's a different environment there right now. Well, that's why I wanted you to go, is maybe just expand on that. What are your concerns, what are your personal perspective and experiences tell you. I don't think there's a risk for

Americans right now, but the environment is changing. Is the economy slows and we're certainly reporting that the economy slowing, and there's significant tensions over Huawei. The Canadians are seeing that. It's just, you know, I think that you're you're most at risk if you're a big tech CEO in a Canadian tex EO. But I think that it's it just factors into your into your thinking now, whereas last year, past years, no matter whether things were good or bad,

you just didn't think about it. So you said that the fourth quarter data was the worst that you've seen since the beginning of Of course, China engaged in a massive stimulus that year, expanded its debtload dramatically in order to prop up the economy cannot do that again. If it absolutely had to, it would go back to the well. But I think what people are making making two mistakes on stimulus. The first is the idea that China is not easing right now and they'll they'll start doing it soon.

But if you look at China age book data, we've seen three straight quarters where borrowing numbers have been elevated

from sixteen. Firms are borrowing, And what we saw originally was that shadow banking was being shut down, So so firms are being pushed for more on balance sheet lending at banks, but then deleveraging to the extent it ever started uh ended quickly, and now you're seeing the shadow banks lending again, you're seeing banks barring or so there is a lot of clandestine easying going on right now. All our credit indicators in Q four while we're pointed up,

the problem is it wasn't resulting in more investment. It was not resulting in boosting growth because firms were overwhelmingly taking that capital and they were battening down the hatches. They were dealing with the cash flow problems and they were really troubled by the uncertainty. So that's something that needs to change if China wants to swing back upwards. If you are a Chinese investor, are you looking to figure out a way to get your money out of China.

I think Chinese investors have been trying to do that for years and years, and you're still trying because you know, even if you were convinced the Chinese economy is a wonderful medium term or long term bet, you have to diversify, and the problem that Chinese investors have in the Chinese the problem the Chinese firms have is that they don't have enough options for diverse diversification, which is why they're constantly being shoved into the equities markets, the bond markets,

the commodity markets, or property because those are the only places in China you can put your money legally. We were speaking earlier with Victor she, professor of you See San Diego, and he was talking about how they've sort of reached a point of diminishing returns where the more that China borrows, the more of the interest expenses, and they're borrowing to just cover their maintenance payments. Do you agree with that assessment. Yeah, I think Victor's work is

is I can't comment on the exact numbers. We don't do that type of of deep diving the debt, but the the idea that China's debt is bigger um than than than people think. I think that's right, and I think that there is causing stresses in the system that aren't immediately apparent and certainly aren't reflected in the public data. So you have a problem. You know. One of the reasons that Lelho and other Chinese policymakers are so against another trip back to the well for more big time

monetary stimulus is that they've seen what's happened. They saw what happened in the excesses of UH, They've seen the problems that came from, and they don't think they could do it again. And if they had to do it again, they think it's it's a lot more problems problematic and a lot less bang for the book. What did you make of the recent comments regarding Taiwan from the Chinese leadership.

That's interesting. Usually you can expect before Taiwanese election that the Chinese leader will pull out the old Chinese playbook

and talk about unification. It is interesting, though, I mean President she is under siege for his handling of trade and the weakening economy, and there are reasons to think that if if if he looks at the United States and he thinks that there's not resolved to defend Taiwan or to defend other US allies, that could be a place where he pushes back UH in order to you know, use the nationalism card back home. It's a worry more now that I would think it's been in the past.

Thanks very much for being with us always enlightening. Leland Miller is the chief executive of the China Beije Book International. You can of course follow them as we do on Twitter at China Beije Book. Emerging markets debt has been rallying dramatically in the past two trading sessions along with all risk assets. Enjoining us now to talk about whether this can last is Damian Sasaur, chief Emerging markets credit strategist for Bloomberg Intelligence, joining us here in our interactive

Burger Studios. So, Damien, what's your feeling do you feel like this incredible rally, which by on spreads measure, has been the best two day rally, is it sustainable? Well? First of all, happy New Year, and secondly, it's really nice to be here when I'm not talking about emerging markets melting down, So this is something new for me. But um, yeah, no, I mean just in terms of the debt load, the two maturing debt this year, um,

coming out of emerging markets dollar debt that is. Yeah. No, I mean, look, we see sovereign issuance improving in the beginning of this year. We see the Philippines and Israel happy markets. Um, that's certainly a changed since the fourth court of last year when really no issuer could come to market. And and look, I mean just given where yields are now and and and and certainly where yields are in China, which we've all discussed. And I know you had a guest on yesterday who was talking to this.

You know, China's got a lot of debt out there, and the fact that now they can bring that debt back home into local currency and potentially lower their cost of funds is is actually a bullish thing. So yeah, we're we're we're looking at all of that, and and things are looking a bit rosier than last year. So Damian, this one point to trillion that's gonna be rolled over in China they're gonna find buyers for that, you know, I don't know, you know, I had trouble reconciling that number.

Um And you make a great point, you know, how deep and what's the breath of those local markets? You know that hasn't yet been tested, certainly not on that scale. But you know, if you just look at you know, all of the dead outstanding out of China, and I'm talking debt benchmark eligible debt, not just credit because if you kind of look at the there, I guess the big number that the b I S comes out with is that China Credit Global of China GDP. I mean,

that's a huge number. They don't need to refinance all of that, and while a lot of that is short term, you know, it's pretty easy to roll it over. Specifically on local currency, we don't see that being a really big issue. I think the real issue are going to be in pockets of that market, specifically in property and specifically in high yield, where a lot of you know, issuers who have poor fundamentals have been able to issue in dollars, have been able to issue locally, and they're

gonna have a lot of trouble rolling that debt over all. Right, Well, you were talking about just the general feeling and emerging markets and you're talking about the amount of debt coming. Do that you think we'll have an easier time getting rolled over now that there's a more constructive tone. And I'm just wondering, can you square the idea of a dramatically slowing Chinese economy with ongoing strength in emerging markets?

Are these two ideas incompatible? Ah? Yeah, that's that's the question. Right when China catch is called e M sneezes um. Look, you you make a great point, you know. I mean, China has definitely got its issues. Growth is slowing, and I am hard pressed to find a way that they're ever going to get growth, real growth up to a point without really, uh taking on more leverage. And I think there was a real willingness on the part of President she and on the government to really you know,

to really focus on the de levering program. But right now, you know, things are tough, there is pain on the ground, and they need to basically grow their economy and they're gonna try and grow the we're out of it using leverage. I think that goes without saying whether or not the market has the stomach to take on that leverage. Whether

their buyers for it remains to be seen. But at this stage there's still a lot of you know, um viable assets that are trading at much more attractive levels right now than they were at this time last year, and I think that remains to be seen. You know, you really get some value today where you weren't getting any last year, and I think that's the real change.

Is there a dollar squeeze going on? I think there was, you know, and I I I mean my big risk I mean going into you know, the beginning of this year was that you know, liquidity would not return to the US capital markets and that was going to kind of weigh on you know, the emerging markets. But you know, since Chair Power kind of came out and said, you know, the feed is um you know, you know, they had been dismissed on the impact of balance sheet unwind and

now they're saying that FET is not on autopilot. You know. I mean, the markets have read patients for a pause, and you know it's and if you're right, and growth is the big concern, that's bullish for bonds. So you may see some bond buyers returning, and you see may see some bond buyers moving out along the curve, taking more duration into the portfolios. You see Goldman saying U S yields of peak. You know, as there's a lot of reason to be bullish this morning, which resions do

you think will have the biggest rallies? Okay? So you know it depends. So if we see a deal here in US China on trade, I happen to think the Indian credits are severely undervalued. I'm talking Peru and Chile. I think there's no question about it in global um asset markets. I mean, I can't think of a better way to play a China U S trade deal there.

And then if you do believe that the e c B bond buying program is now done finished, some of your safe having credits such as Poland, Hungary and and and the Czech Republic are no longer going to be safe anymore right there, They're gonna be at risk. So so you've got little pockets and little things that are changing around us. And so those are the kind of things that we're looking at. And just finally, just to go back to China for a second, you believe that

they're financial I guess you might call it expansion. It's gonna work. You think that they're easing of credit is going to work. So yeah, you know you can offer to lend money, but if no one shows up, yeah, no, no, it's a great point. But you know the reality is people are showing up. You've seen I think they had China Bond just came out with their numbers today. They had the second biggest offshore purchases of local remnimbic denominated

debt um last month. And and look, if they are indeed easing rates, you know that is bullish for off shoreholders of of of of one denominated debt. And so yeah, you are seeing dollars flowing in, and so whether or not those dollars gonna be able to flow out remains to be seen though, Thanks very much, Damian sass Our, Chief Emerging market credit strategist for Bloomberg Intelligents. The topic is cannabis. Canada's cannabis shortage could last as long as

three years. This according to industry executives, who say production estimates are to Rosie Well. Here to tell us more about the industry is Keith Merker, He is the chief executive of Weed m D and they are traded in Toronto. The symbol there is w m D. He joins us here in studio. Keith, thank you very much for being here. Just tell people exactly what is weed m D and a little bit about how you came to be such a big cultivator of cannabis. You bet, and thanks for

having me here today. It's wonderful being in this studio with you folks and chatting about Weed m D and of course the Canadian cannabis and of course the overall cannabis industry. Weed MD has been around since late We were one of the initial applicants under what was then

the brand new commercial cannabis industry in Canada. Unfortunately, at the time we were not one of the initial licensees due to a very difficult regime in place at the time, whereby in Canada was much different than what you've seen in the States. Uh the government was dragged really kicking and screaming into a commercial cannabis industry by court dictat

in Canada. Uh so came through the legal system versus in the States where you see it coming through either ballot measures or through legislatures on a state level, and so we actually pivoted to the US weed m D was one of the first multi state operators, which is one of the hot button buzzwords that you see out there around the US companies today operating in the cannabis space.

And so later in when the government started open up the door again to licenses in Canada, we made the decision at the time to sell off our US assets, moved back to Canada, get our facilities up and running, and we now have what will be one of the largest production platforms online in Canada by you know, later this quarter of twenty nineteen, so Keith Pam was talking about the acute shortage of marijuana that is predicted. Is this due to higher than expected medical demand or higher

than expected recreational demand in Canada. It's more so the latter.

So we've got a brand new industry that's just come into place on the adult side in Canada, and that's entailed developing a whole brand new supply chain, whereby we had to come up with new packaging, we had to come up with excise tax stamping on all the products that we deliver, and we're delivering now palettes full of cannabis that are packaged and ready for distribution in adult use market versus what was historically a simpler supply chain,

let's say, whereby we were shipping directly to patients and Canada from our facilities. So in other words, it results from the legalization of recreational use. Correct, Well, I'm just

wondering how much a price is going to go up. Well, the government was very clever in Canada and that what they did is they created a distribution model whereby the provincial typically the liquor agencies across the provinces, would be in charge of distribution and would stand in the middle as a wholesaler to what would then be retailers that would either be privately owned or publicly owned or some hybrid,

depending again on the province that they're working in. And so these middlemen were in a position where they could um dictate pricing to some degree and also control that supply chain from that that critical position that they took. And so you know, in an environment where we would be selling directly to a retailer, we could certainly be as a as a cultivator in a better position to command higher pricing. In the situation is today. Um, unfortunately

that's not quite the case. To some degree, there is some truth to it. But by and large, by dealing with a single buyer in each province and they're only being a few very large provinces as buyers, it changes that sort of supply demand dynamic. Not because of this current shortage. I understand that Alberta has temporarily stopped issuing licenses retail licenses, and Ontario said it will initially open just twenty five stores, and that's in the most populous

province of Canada. Yeah, and so we distribute as WEED m D to both of those provinces today, and they are two of the largest UH provinces by which we'll see demand coming from over time. And you know, in my conversations with both of them, they told me that they received roughly twenty of what they had asked for from the LPs in the early going. Now, not pointy fingers, uh. We MP has always taken a very rational approach to

the market. We you know, we're executors. So we've built and retrofitted and ramped up a facility in record time in Canada. As one example, you've got like a hundred and thirty six thousand square feet under cultivation we do today, We'll have five hundred and five fifty thousand plus online later this quarter. So we're furiously executing and retrofitting and working.

This is in a great hybrid greenhouse scenario where we're producing grade A product um And you know, we were very careful to make promises that we could keep when it came to dealing with the provincial agencies, which is stands US is in good stead going forward with those relationships that are critical. Unfortunately, many others were let's just say a little bit optimistic with respect to what they could deliver to the provinces on on, you know, as

as recreational cannabis rolled out in Canada. You know, I heard you're talking about Fannie Mae and Freddie mac prior to the break that maybe Canada needs to implement some kind of governmental agency to deal with the issue. You could call it Mary Jane. Keith Burker, CEO of Weed Empty with his proposal for Mary Jane a government agency. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts,

SoundCloud or whatever. Podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo wits one. Before the podcast, you can always catch us worldwide on Bloomberg Radio