1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:33,960 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. North 7 00:00:34,040 --> 00:00:38,120 Speaker 1: Korea is threatening to call off its summit with President Trump. 8 00:00:38,400 --> 00:00:42,640 Speaker 1: Iran is wondering about its future as the potential nuclear 9 00:00:42,720 --> 00:00:45,839 Speaker 1: deal unravels. Here to talk about what the implications of 10 00:00:45,880 --> 00:00:48,880 Speaker 1: all this is Eli Lake, a columnist with Bloomberg Opinion 11 00:00:48,880 --> 00:00:51,800 Speaker 1: based in Washington, d C. Eli, thank you so much, 12 00:00:52,080 --> 00:00:54,959 Speaker 1: as always for joining us. I want to start with 13 00:00:55,040 --> 00:00:57,120 Speaker 1: a column that you wrote yesterday that I thought was 14 00:00:57,160 --> 00:01:00,840 Speaker 1: really compelling, and the headline is Trump's cave to China's 15 00:01:00,960 --> 00:01:04,760 Speaker 1: z T E hurts his Iran strategy. Can you please 16 00:01:04,760 --> 00:01:09,119 Speaker 1: explain why? Sure, and thanks so much for having me um. 17 00:01:09,160 --> 00:01:13,399 Speaker 1: The issue is that you had a decision and a 18 00:01:14,520 --> 00:01:20,240 Speaker 1: fairly standard process for penalizing ZT after it had violated 19 00:01:20,280 --> 00:01:26,120 Speaker 1: American export control sanctions by selling, among other too countries, 20 00:01:26,640 --> 00:01:31,039 Speaker 1: US technology, and among them were Iran. But more importantly, 21 00:01:31,120 --> 00:01:34,800 Speaker 1: after the settlement, UM, it was you know, determined that 22 00:01:35,280 --> 00:01:39,240 Speaker 1: vt E had violated its terms by rewarding the employees 23 00:01:39,280 --> 00:01:43,200 Speaker 1: you're responsible for that violation. UM. So as a result, 24 00:01:43,400 --> 00:01:46,520 Speaker 1: the Commerce Department ruled that US companies could no longer 25 00:01:46,560 --> 00:01:50,040 Speaker 1: sell equipment to ZTE, which is a fairly tough penalty, 26 00:01:50,120 --> 00:01:52,640 Speaker 1: but it's coming at the end of a process. What 27 00:01:52,680 --> 00:01:56,040 Speaker 1: Trump did over the weekend was instruct the Commerce Department 28 00:01:56,160 --> 00:02:02,080 Speaker 1: to look into basically reversing that decision or um you know, 29 00:02:02,280 --> 00:02:05,360 Speaker 1: saving off those penalties. And the reason that that's important 30 00:02:05,440 --> 00:02:08,200 Speaker 1: is that in the context of this, it has been 31 00:02:08,200 --> 00:02:10,520 Speaker 1: reported he sort of said that this isn't the context 32 00:02:10,560 --> 00:02:15,079 Speaker 1: of my trade agotchass with China UM, which are usually 33 00:02:15,160 --> 00:02:20,360 Speaker 1: separated from national security related sanctions like this. And so 34 00:02:20,400 --> 00:02:24,280 Speaker 1: the question then becomes, you know, the Europeans, under um 35 00:02:24,360 --> 00:02:26,880 Speaker 1: Trump's decision last week to get out of the Iran deal, 36 00:02:26,919 --> 00:02:30,520 Speaker 1: would face secondary sanctions that they continued business with Iran's 37 00:02:30,560 --> 00:02:33,840 Speaker 1: economy for the most part. And then the whole point 38 00:02:33,880 --> 00:02:35,720 Speaker 1: is that you have to choose between doing business with 39 00:02:35,760 --> 00:02:40,200 Speaker 1: America or Iran. UM. If the Europeans wanted to play 40 00:02:40,240 --> 00:02:43,560 Speaker 1: China hardball. They could take a page from the Chinese 41 00:02:43,600 --> 00:02:47,760 Speaker 1: playbook and threatened terroriffs of their own against American exports 42 00:02:47,800 --> 00:02:51,520 Speaker 1: and the hopes of basically removing them in exchange for 43 00:02:51,800 --> 00:02:55,120 Speaker 1: leniency on the Iran sensions, which is the opposite of 44 00:02:55,240 --> 00:02:57,200 Speaker 1: the intended effect of the Iran policy was just to 45 00:02:57,240 --> 00:03:00,760 Speaker 1: isolate the Iranian economy at this point. So that's why 46 00:03:00,840 --> 00:03:04,160 Speaker 1: I think that, um, it's dangerous, because he's essentially kind 47 00:03:04,160 --> 00:03:07,480 Speaker 1: of crossing these streams. And since every you know, and 48 00:03:07,800 --> 00:03:09,640 Speaker 1: the Europeans can stead of look at this and say, 49 00:03:09,680 --> 00:03:12,240 Speaker 1: all right, well, maybe if we play hardball, um, we 50 00:03:12,280 --> 00:03:14,720 Speaker 1: will have a chance to get out of it as well. 51 00:03:16,160 --> 00:03:18,720 Speaker 1: Eli is it possible? And I could just play Devil's 52 00:03:18,720 --> 00:03:22,240 Speaker 1: advocate and say that what you perceive is inconsistency is 53 00:03:22,360 --> 00:03:26,240 Speaker 1: merely trade negotiations, and that as a result of this, 54 00:03:26,400 --> 00:03:31,640 Speaker 1: the President is in some way trying to uh balance 55 00:03:32,280 --> 00:03:35,600 Speaker 1: the interests of companies that sell to z t E 56 00:03:36,000 --> 00:03:40,160 Speaker 1: at the same time reward the Chinese for perhaps their 57 00:03:40,240 --> 00:03:43,840 Speaker 1: efforts on behalf of the United States. When it comes 58 00:03:43,880 --> 00:03:49,080 Speaker 1: to North Korea nuclear policy, well, I think certainly that 59 00:03:49,160 --> 00:03:51,640 Speaker 1: there's probably North Korea is lurking in the background and 60 00:03:51,680 --> 00:03:55,119 Speaker 1: the Chinese have been somewhat cooperative in at least trying 61 00:03:55,160 --> 00:03:58,200 Speaker 1: to get Kim Jong to the table. UM. But the 62 00:03:58,280 --> 00:04:01,760 Speaker 1: downside of that is that the pour of American sanctions 63 00:04:01,840 --> 00:04:03,640 Speaker 1: is not just the fact that we have the weld's 64 00:04:03,640 --> 00:04:08,040 Speaker 1: reserve currency and the largest economy. It's also the fact 65 00:04:08,080 --> 00:04:12,080 Speaker 1: that it's understood that you know, there are procedures, there 66 00:04:12,080 --> 00:04:14,000 Speaker 1: are rules that you have to follow, and if you 67 00:04:14,080 --> 00:04:17,440 Speaker 1: violate them, eventually you will be peen a lot. Now, 68 00:04:17,720 --> 00:04:21,440 Speaker 1: there is a parallel here in the mid The first 69 00:04:21,480 --> 00:04:25,760 Speaker 1: Iran sanctions were u introduced by Congress and signed into law, 70 00:04:26,200 --> 00:04:30,400 Speaker 1: but there was largely an intention for European companies UM, 71 00:04:30,480 --> 00:04:32,440 Speaker 1: in some part because it was worked out, but also 72 00:04:32,520 --> 00:04:36,239 Speaker 1: because there was no real enforcement of some of the 73 00:04:36,279 --> 00:04:39,440 Speaker 1: banking sings until the two thousands and once you started 74 00:04:39,440 --> 00:04:48,040 Speaker 1: seeing cases against major European banks UM. Then at that point, UM, 75 00:04:48,240 --> 00:04:51,839 Speaker 1: you you the sanctions really did have more of an effect. 76 00:04:51,880 --> 00:04:54,080 Speaker 1: And and it's sort of culminated in two thousand and 77 00:04:54,080 --> 00:04:57,560 Speaker 1: ten and two thousand eleven when Congress you know, sort 78 00:04:57,560 --> 00:05:00,400 Speaker 1: of forced obamas or imposed where known as the crippling 79 00:05:00,400 --> 00:05:03,640 Speaker 1: stenctions on Iran's oil sector, and those have been credited 80 00:05:03,640 --> 00:05:07,039 Speaker 1: with bringing the Iranians at least to negotiations. So the 81 00:05:07,120 --> 00:05:10,120 Speaker 1: point here is that when you undermine something like this, 82 00:05:10,240 --> 00:05:15,640 Speaker 1: particularly after DT had violated its settlement with the US government, 83 00:05:15,680 --> 00:05:18,919 Speaker 1: that's the key point here. Then it's almost saying that, 84 00:05:19,000 --> 00:05:22,880 Speaker 1: you know, there is everything is always negotiable. It's certainly 85 00:05:22,920 --> 00:05:26,800 Speaker 1: within Trump's constitutional authorities to do whatever he wants in 86 00:05:26,839 --> 00:05:29,440 Speaker 1: this realm, the president, the chief executive in our in 87 00:05:29,440 --> 00:05:32,120 Speaker 1: our system, has a lot of power. But I think 88 00:05:32,200 --> 00:05:34,840 Speaker 1: it sends a really bad message and creates a kind 89 00:05:34,839 --> 00:05:36,719 Speaker 1: of moral hazard down the road, and it weakens the 90 00:05:36,760 --> 00:05:40,560 Speaker 1: efficacy of these kinds of national security stations at a 91 00:05:40,640 --> 00:05:43,479 Speaker 1: moment when the US is relying on stuff like this 92 00:05:43,760 --> 00:05:46,920 Speaker 1: more and more with you know, kind of rogue states, 93 00:05:46,960 --> 00:05:52,240 Speaker 1: whether it's Venezuela, whether it's Iran, Sudan, etcetera. Well, is 94 00:05:52,240 --> 00:05:54,479 Speaker 1: there may just ask, I mean, is there is there 95 00:05:54,520 --> 00:06:01,120 Speaker 1: any historical president president for a U S president basically 96 00:06:02,240 --> 00:06:07,320 Speaker 1: creating these kind of ad hoc situations and deals in 97 00:06:07,360 --> 00:06:12,120 Speaker 1: which basically it is at the discretion of the president 98 00:06:12,200 --> 00:06:17,320 Speaker 1: to tell everybody, yes, and uh see what happens. I mean, 99 00:06:17,360 --> 00:06:20,640 Speaker 1: I think you know, historically you've not to conflate that 100 00:06:20,680 --> 00:06:23,000 Speaker 1: too necessarily. But you know, there's a lot of history 101 00:06:23,000 --> 00:06:26,400 Speaker 1: about President Roosevelt during the Second World War making these 102 00:06:26,480 --> 00:06:33,680 Speaker 1: kinds of agreements in which they were contradictory on the surface. Sure, 103 00:06:33,720 --> 00:06:35,320 Speaker 1: in a time of war. I mean, it's hard to 104 00:06:35,320 --> 00:06:38,080 Speaker 1: say because in Roosevelt day we really didn't have the 105 00:06:38,160 --> 00:06:40,440 Speaker 1: kind of thanks since receiving approach that we do now. 106 00:06:41,120 --> 00:06:43,840 Speaker 1: Um But I mean, yeah, the president can kind of 107 00:06:43,880 --> 00:06:48,000 Speaker 1: make deals like this, but deals to what end. And 108 00:06:48,160 --> 00:06:50,320 Speaker 1: the point is that if he really wants to try 109 00:06:50,400 --> 00:06:53,920 Speaker 1: to um pressure the Iranians, the strategy is best and 110 00:06:54,040 --> 00:06:56,039 Speaker 1: I can tell and what the administration is said is 111 00:06:56,080 --> 00:06:59,560 Speaker 1: to hit them with crippling thinkings yet again, which would 112 00:06:59,600 --> 00:07:02,840 Speaker 1: mean that would you would wind down European investments in Iran, which, 113 00:07:02,880 --> 00:07:05,680 Speaker 1: by the way, we're not going that's far anyway for 114 00:07:05,680 --> 00:07:07,880 Speaker 1: a lot of other reasons. But if that's what you 115 00:07:07,920 --> 00:07:11,000 Speaker 1: wanted to do in order to get better terms on 116 00:07:11,040 --> 00:07:14,960 Speaker 1: a nuclear agreement, then you know, you should make it 117 00:07:15,080 --> 00:07:17,640 Speaker 1: very clear that we mean what we say when we 118 00:07:17,800 --> 00:07:22,440 Speaker 1: penalized companies for violating our expert controls lines who are investigators. 119 00:07:22,440 --> 00:07:24,320 Speaker 1: And the top of all of this, I should add 120 00:07:24,720 --> 00:07:27,960 Speaker 1: that in the case of VTE in another Chinese selicom, Huawei. 121 00:07:28,320 --> 00:07:31,400 Speaker 1: He was intelligence community for years has been saying that 122 00:07:31,480 --> 00:07:34,640 Speaker 1: these are um that the equipment that is sold by 123 00:07:34,640 --> 00:07:37,720 Speaker 1: these companies have a back door for Chinese intelligence to 124 00:07:37,800 --> 00:07:41,800 Speaker 1: basically eavesdrop on UH and have a kind of you know, 125 00:07:42,240 --> 00:07:45,040 Speaker 1: n s A like capability in countries where they are 126 00:07:45,120 --> 00:07:48,360 Speaker 1: part of the UM you know, wireless infrastructure. So that's 127 00:07:48,360 --> 00:07:51,720 Speaker 1: another factor in all of this as well. But you know, 128 00:07:51,800 --> 00:07:55,000 Speaker 1: I'm just saying that if it's important that the message 129 00:07:55,000 --> 00:07:57,360 Speaker 1: is sent, and you know, it doesn't matter friend or 130 00:07:57,360 --> 00:07:59,360 Speaker 1: foe when you when you get on the wrong side 131 00:07:59,360 --> 00:08:01,880 Speaker 1: of us on these sorts of things, particularly after we 132 00:08:01,960 --> 00:08:04,240 Speaker 1: try to, you know, make it possible for you to 133 00:08:04,240 --> 00:08:06,960 Speaker 1: continue to do business. You know, there are going to 134 00:08:07,040 --> 00:08:10,160 Speaker 1: be consequences, and those consequences are final. I want to 135 00:08:10,200 --> 00:08:13,000 Speaker 1: thank you very much, Eli Lake. He is a columnist 136 00:08:13,080 --> 00:08:17,680 Speaker 1: for Bloomberg Opinion. You can follow Eli on Twitter at 137 00:08:17,840 --> 00:08:23,440 Speaker 1: Eli Lake and interesting columns. The Trump's cave to China 138 00:08:23,600 --> 00:08:26,960 Speaker 1: z t E hurts his Iran strategy as well as 139 00:08:27,000 --> 00:08:30,440 Speaker 1: the West should beware of the Korean peace trap. Yeah, 140 00:08:30,480 --> 00:08:32,760 Speaker 1: you know, it's it's such an interesting time and it's 141 00:08:32,800 --> 00:08:38,040 Speaker 1: so difficult to parse out posturing versus policy, versus consistency 142 00:08:38,600 --> 00:08:41,240 Speaker 1: versus uh, you know, actual threat. And this seems to 143 00:08:41,240 --> 00:08:44,280 Speaker 1: be what's facing the markets that are incredibly blase today 144 00:08:44,360 --> 00:08:46,600 Speaker 1: about all of these risks. Indeed, I want to thank 145 00:08:46,600 --> 00:08:50,360 Speaker 1: you very much, Eli Lake, once again our Bloomberg Opinion calumnist. 146 00:09:04,360 --> 00:09:09,239 Speaker 1: When President Donald Trump presented his drug pricing of proposal 147 00:09:09,760 --> 00:09:13,760 Speaker 1: at the White House Press Conference last week, he spoke 148 00:09:13,920 --> 00:09:19,560 Speaker 1: about competition between pharmaceutical companies, bringing generic drugs to consumers 149 00:09:19,600 --> 00:09:25,320 Speaker 1: more quickly, and also trying to reduce the discrepancy between 150 00:09:25,360 --> 00:09:28,320 Speaker 1: drug prices in the United States and those of our 151 00:09:28,360 --> 00:09:31,280 Speaker 1: trading partners. Here to tell us more about the proposal 152 00:09:31,280 --> 00:09:33,760 Speaker 1: at about the state of healthcare in the United States 153 00:09:33,880 --> 00:09:37,040 Speaker 1: is Jeff smid Root. He is the co founder of 154 00:09:37,160 --> 00:09:39,840 Speaker 1: healthcare dot com and also the founder and the chief 155 00:09:39,840 --> 00:09:43,200 Speaker 1: executive of Pivot health dot Com. Jeff, thank you very 156 00:09:43,280 --> 00:09:46,560 Speaker 1: much for being you know, one of the things I 157 00:09:46,600 --> 00:09:49,480 Speaker 1: wanted to sort of just maybe let you offer people 158 00:09:49,480 --> 00:09:51,600 Speaker 1: as a little bit of your background, because you're an 159 00:09:51,600 --> 00:09:54,720 Speaker 1: expert in the world of health insurance. You understand things 160 00:09:54,800 --> 00:09:59,360 Speaker 1: like risk pools, fixed indemnity plans. Give people a little background, 161 00:09:59,720 --> 00:10:02,080 Speaker 1: so they understand where you're coming from. Well, I've been 162 00:10:02,120 --> 00:10:05,440 Speaker 1: in the health insurance business and the consumer directed business 163 00:10:05,800 --> 00:10:08,120 Speaker 1: most of my life, most of my career. Actually my 164 00:10:08,200 --> 00:10:11,719 Speaker 1: father was in that business as well, So I understand 165 00:10:11,760 --> 00:10:17,120 Speaker 1: what consumers think about, how they react to what's important 166 00:10:17,160 --> 00:10:19,320 Speaker 1: to them and and some of the issues that they 167 00:10:19,360 --> 00:10:21,480 Speaker 1: have to deal with. And the most important thing to 168 00:10:21,480 --> 00:10:23,880 Speaker 1: remember is they have a budget. They have to live 169 00:10:23,960 --> 00:10:27,880 Speaker 1: within that budget, and we have now a healthcare system 170 00:10:27,920 --> 00:10:32,560 Speaker 1: that is increasingly uh straining those budgets, and that leads 171 00:10:32,600 --> 00:10:36,720 Speaker 1: to some very difficult choices. Well, so, given your background 172 00:10:36,840 --> 00:10:39,760 Speaker 1: with the health insurance business, can you give us a 173 00:10:39,800 --> 00:10:42,520 Speaker 1: sense when you were listening to President Trump uh talk 174 00:10:42,600 --> 00:10:46,840 Speaker 1: about his healthcare blueprint to reduce pharmaceutical prices, what stood 175 00:10:46,840 --> 00:10:51,120 Speaker 1: out to you the most as potentially the most transformative 176 00:10:51,160 --> 00:10:54,480 Speaker 1: or most effective. Well, I I think the most transformative 177 00:10:54,679 --> 00:10:59,560 Speaker 1: aspect of it is it's finally addressing that big pharma 178 00:10:59,679 --> 00:11:02,400 Speaker 1: needs to make some changes, and I think part of 179 00:11:02,400 --> 00:11:05,720 Speaker 1: the process of doing that is to really push very 180 00:11:05,720 --> 00:11:10,120 Speaker 1: hard for transparency, really push very hard for something consumers 181 00:11:10,120 --> 00:11:12,640 Speaker 1: can find and see and search for that helps them 182 00:11:13,480 --> 00:11:16,200 Speaker 1: understand what their choices are and what the facy of 183 00:11:16,360 --> 00:11:20,880 Speaker 1: certain types of drugs will be let's I want to 184 00:11:20,880 --> 00:11:23,439 Speaker 1: get your thoughts on something called a risk pool. If 185 00:11:23,440 --> 00:11:25,600 Speaker 1: you don't mind, What is a risk pool and how 186 00:11:25,720 --> 00:11:28,800 Speaker 1: do people what do people really need to know about 187 00:11:28,800 --> 00:11:33,760 Speaker 1: how they operate well. Risk pools allow insurance companies or 188 00:11:34,160 --> 00:11:38,439 Speaker 1: other entities to pool the very sickest and most expensive 189 00:11:38,480 --> 00:11:41,600 Speaker 1: claims into a larger and larger pool. There's been a 190 00:11:41,600 --> 00:11:44,800 Speaker 1: lot of debate in the last year about what is 191 00:11:44,840 --> 00:11:47,040 Speaker 1: the role of government in doing that, what is the 192 00:11:47,120 --> 00:11:51,480 Speaker 1: role of providers in doing that? But it's difficult for 193 00:11:52,080 --> 00:11:56,640 Speaker 1: any one insurance company to deal with claims that are 194 00:11:56,720 --> 00:11:59,600 Speaker 1: ten million, fifteen million dollars, and there needs to be 195 00:11:59,679 --> 00:12:03,480 Speaker 1: some mechanism to pool all of that so that the 196 00:12:03,559 --> 00:12:06,600 Speaker 1: rest of us can have a more affordable insurance option. 197 00:12:07,080 --> 00:12:11,320 Speaker 1: You know, Jeff, I guess um. Transparency is is good 198 00:12:11,360 --> 00:12:13,120 Speaker 1: and is important, and you've been trying to do that 199 00:12:13,200 --> 00:12:15,920 Speaker 1: with your with your site which tries to offer people 200 00:12:15,960 --> 00:12:19,240 Speaker 1: a way of comparing healthcare plans. I just want to 201 00:12:19,280 --> 00:12:21,600 Speaker 1: push back a little bit because a lot of people 202 00:12:21,640 --> 00:12:24,520 Speaker 1: in the market, we're saying that the health care plan 203 00:12:24,640 --> 00:12:28,000 Speaker 1: that President Trump outlined was pretty much toothless and the 204 00:12:28,040 --> 00:12:31,480 Speaker 1: pharmaceutical company shares rallied in the wake of this, not 205 00:12:31,520 --> 00:12:35,320 Speaker 1: only that, but also the pharmacy benefit Managers and PBMs. UM. 206 00:12:35,360 --> 00:12:38,520 Speaker 1: I'm struck by my colleague Max Neisson's column that he 207 00:12:38,559 --> 00:12:41,599 Speaker 1: put out Bloomberg Opinion writers saying, Look, nothing's going to 208 00:12:41,760 --> 00:12:44,560 Speaker 1: change until people are willing to say, uh that the 209 00:12:44,600 --> 00:12:48,000 Speaker 1: government won't cover certain medications that are just too expensive. Uh, 210 00:12:48,120 --> 00:12:50,000 Speaker 1: and use that as a bargaining tool. What's your take 211 00:12:50,040 --> 00:12:51,839 Speaker 1: on this? What will it take actually change this? I 212 00:12:52,320 --> 00:12:55,560 Speaker 1: think consumers have to be empowered, consumers need to take 213 00:12:55,679 --> 00:13:00,400 Speaker 1: more action, consumers need to be more vocal. Uh, and 214 00:13:00,960 --> 00:13:04,280 Speaker 1: there needs to be more transparency. Uh. But if consumers 215 00:13:04,320 --> 00:13:06,840 Speaker 1: push back, and how do they push back if a 216 00:13:06,840 --> 00:13:09,880 Speaker 1: lot of this is covered by insurance companies, Well, they 217 00:13:09,880 --> 00:13:15,560 Speaker 1: can push back by understanding what lower cost options might exist. Uh. 218 00:13:15,600 --> 00:13:19,640 Speaker 1: They can push back because increasingly first ten thousand dollars 219 00:13:19,640 --> 00:13:22,680 Speaker 1: of expenses are not being covered by the insurance company 220 00:13:22,760 --> 00:13:25,560 Speaker 1: is being covered by them. So there's a lot of 221 00:13:25,600 --> 00:13:29,480 Speaker 1: incentives to push back and to look at different alternatives. 222 00:13:30,600 --> 00:13:31,960 Speaker 1: Do you believe that we're going to end up with 223 00:13:31,960 --> 00:13:35,640 Speaker 1: a single payer system. No? I I don't think we 224 00:13:35,679 --> 00:13:38,320 Speaker 1: will end up there. I think where we need to 225 00:13:38,360 --> 00:13:42,880 Speaker 1: go is to in a system that rewards consumers for 226 00:13:43,520 --> 00:13:48,000 Speaker 1: taking steps to improve their health, rewards consumers for being 227 00:13:48,040 --> 00:13:52,680 Speaker 1: smart about shopping about healthcare and recognizes that they have 228 00:13:52,760 --> 00:13:55,880 Speaker 1: some responsibility to bear in that, and if they're rewarded 229 00:13:55,880 --> 00:13:59,600 Speaker 1: economically for that, I think healthcare begins to change in 230 00:13:59,640 --> 00:14:02,480 Speaker 1: a way for the better. I'm curious, given the fact 231 00:14:02,520 --> 00:14:06,520 Speaker 1: that you're really focused on transparency, um, how much divergence 232 00:14:06,760 --> 00:14:10,160 Speaker 1: is there between healthcare plans and the value they provide, 233 00:14:10,160 --> 00:14:12,520 Speaker 1: because that is really at the heart of what your 234 00:14:12,559 --> 00:14:16,600 Speaker 1: site does. Correct there there can be significant amount of 235 00:14:16,960 --> 00:14:21,320 Speaker 1: divergence if you look at all of the options and alternatives. 236 00:14:21,560 --> 00:14:24,080 Speaker 1: If you are only looking at plans available as a 237 00:14:24,120 --> 00:14:29,040 Speaker 1: result of the Affordable Care Act, there are basically standardization. 238 00:14:29,400 --> 00:14:31,600 Speaker 1: But if you look at plans that are not part 239 00:14:31,640 --> 00:14:35,400 Speaker 1: of the Affordable Care Act, non Obamacare plans, short term 240 00:14:35,400 --> 00:14:38,720 Speaker 1: medical plans, fixed indemnity plans, there are a lot of 241 00:14:38,720 --> 00:14:42,040 Speaker 1: ways that consumers can tailor plans to meet their needs, 242 00:14:42,120 --> 00:14:44,960 Speaker 1: and you're seeing more of that. Do you think that 243 00:14:45,120 --> 00:14:48,960 Speaker 1: Obamacare was a bad thing? I mean, are you glad 244 00:14:49,000 --> 00:14:51,400 Speaker 1: to see the rollback of aspects of it? I'm not 245 00:14:51,520 --> 00:14:54,240 Speaker 1: happy to see that it didn't work. I would like 246 00:14:54,360 --> 00:14:56,880 Speaker 1: to have seen it work better than it did. But 247 00:14:57,520 --> 00:14:59,520 Speaker 1: one of the things that we've learned from this is 248 00:14:59,560 --> 00:15:02,360 Speaker 1: that one size doesn't fit all that we have to 249 00:15:02,400 --> 00:15:05,720 Speaker 1: allow consumers to tailor plans. We have to recognize that 250 00:15:05,880 --> 00:15:09,160 Speaker 1: they have budgets. And the other change that's happening were 251 00:15:09,200 --> 00:15:13,200 Speaker 1: increasingly a gig economy. We have fifty three million Americans 252 00:15:13,200 --> 00:15:16,720 Speaker 1: that are working at a variety of temporary jobs. So 253 00:15:17,160 --> 00:15:21,160 Speaker 1: the notion of gig insurance is kind of coming along 254 00:15:21,160 --> 00:15:24,040 Speaker 1: with that. The the the idea of health insurance was 255 00:15:24,080 --> 00:15:28,920 Speaker 1: built for a workforce that largely doesn't exist anymore. Uh, 256 00:15:29,080 --> 00:15:33,680 Speaker 1: people had permanent jobs. Now everything is temporary, everything is moving, 257 00:15:33,680 --> 00:15:36,240 Speaker 1: everything is gig and you're gonna have to see health 258 00:15:36,240 --> 00:15:41,320 Speaker 1: insurance adapt to that. Would a fixed indemnity type of 259 00:15:41,320 --> 00:15:46,320 Speaker 1: offering be a useful adjunct or addition to the well 260 00:15:46,480 --> 00:15:51,880 Speaker 1: it's fixed indemnity can't. Plans can be useful. They aren't 261 00:15:51,880 --> 00:15:55,400 Speaker 1: a fit for everybody. But the idea of knowing exactly 262 00:15:55,440 --> 00:15:58,000 Speaker 1: how much you're going to be reimbursed for a certain 263 00:15:58,000 --> 00:16:01,960 Speaker 1: type of procedure a fixed amount allows the consumer to shop, 264 00:16:02,280 --> 00:16:05,680 Speaker 1: allows them to use different online services that says, this 265 00:16:05,760 --> 00:16:07,480 Speaker 1: is what an MRI I cost, this is what a 266 00:16:07,520 --> 00:16:11,240 Speaker 1: Kolonosky costs, um this is what x rays costs. And 267 00:16:11,320 --> 00:16:15,400 Speaker 1: find the provider and the resource that provides it within 268 00:16:15,480 --> 00:16:18,520 Speaker 1: that budget frame. And there is a lot of variants 269 00:16:18,520 --> 00:16:21,440 Speaker 1: in prices. Jeff Medrid, thank you so much for being 270 00:16:21,440 --> 00:16:24,240 Speaker 1: with us. Really interesting to hear your thoughts. Jeff Medrid 271 00:16:24,560 --> 00:16:27,320 Speaker 1: is co founder of Healthcare dot Com, also the founder 272 00:16:27,400 --> 00:16:31,840 Speaker 1: and chief executive at Pivot health dot com. Such an 273 00:16:31,840 --> 00:16:33,640 Speaker 1: important issue him. I was struck by a story that 274 00:16:33,680 --> 00:16:36,440 Speaker 1: I read in Bloomberg a couple of weeks ago talking 275 00:16:36,480 --> 00:16:40,200 Speaker 1: about how doctors themselves are sometimes going without insurance because 276 00:16:40,200 --> 00:16:44,600 Speaker 1: it's so expensive, not to mention families and many others 277 00:16:44,640 --> 00:16:46,440 Speaker 1: exactly as Jeff was talking about, who are part of 278 00:16:46,440 --> 00:16:49,360 Speaker 1: the gate economy and cannot afford the thousands of dollars 279 00:16:49,680 --> 00:17:08,159 Speaker 1: per month that it requires to cover a family. Uh, 280 00:17:08,880 --> 00:17:12,080 Speaker 1: let's talk about something kind of rare in the retail sector. 281 00:17:12,359 --> 00:17:15,520 Speaker 1: A winner. I'm talking about Macy's shows up almost ten 282 00:17:15,640 --> 00:17:20,320 Speaker 1: percent after reporting same sort store sales in the first quarter. 283 00:17:20,560 --> 00:17:23,120 Speaker 1: There were up three point nine percent over your earlier, 284 00:17:23,160 --> 00:17:27,480 Speaker 1: blowing past analysts expectations. Sarah, how's actoyees now she's a 285 00:17:27,480 --> 00:17:30,639 Speaker 1: Bloomberg Opinion retail columnist. Sarah, thank you so much for 286 00:17:30,720 --> 00:17:34,240 Speaker 1: joining us. What happened that was so right for Macy's 287 00:17:34,280 --> 00:17:37,280 Speaker 1: in this past quarter. It was a combination of things. So, 288 00:17:37,359 --> 00:17:40,600 Speaker 1: for one, they just benefited from a good Macro backdrop, right, 289 00:17:40,880 --> 00:17:43,520 Speaker 1: there's healthy consumer spending. And also one thing they called 290 00:17:43,520 --> 00:17:45,959 Speaker 1: out in their earnings call today was the international tourist 291 00:17:46,000 --> 00:17:48,639 Speaker 1: spending was really strong. It was up ten percent for 292 00:17:48,720 --> 00:17:52,280 Speaker 1: them over the same quarter a year earlier. So those 293 00:17:52,320 --> 00:17:54,159 Speaker 1: are big picture factors that help. And then some of 294 00:17:54,200 --> 00:17:57,080 Speaker 1: it just really did come down to better execution by Macy's. 295 00:17:57,560 --> 00:17:59,760 Speaker 1: One thing I think was particularly noteworthy was that their 296 00:18:00,000 --> 00:18:02,800 Speaker 1: rejunior retail was up to five, which means they did 297 00:18:02,800 --> 00:18:05,280 Speaker 1: a better job of selling stuff at full price instead 298 00:18:05,320 --> 00:18:08,600 Speaker 1: of having to bait you with a gazillion coupons. Now, Sarah, 299 00:18:09,040 --> 00:18:14,600 Speaker 1: also Macy's has acquired something called Story. They've also got 300 00:18:14,760 --> 00:18:19,200 Speaker 1: backstage shops as well as the expansion of the Blue 301 00:18:19,240 --> 00:18:22,160 Speaker 1: Mercury unit. Can you talk a little bit about how 302 00:18:22,240 --> 00:18:27,119 Speaker 1: Macy's is perhaps doing things organically that are benefiting the 303 00:18:27,160 --> 00:18:31,440 Speaker 1: bottom line. Yeah, I think that backstage is particularly interesting. 304 00:18:31,480 --> 00:18:35,040 Speaker 1: They're essentially creating an off price store within the Macy store. 305 00:18:35,359 --> 00:18:38,320 Speaker 1: And Um, the the idea is that the value proposition 306 00:18:38,400 --> 00:18:41,280 Speaker 1: is most of the off pricers TJ Max Marshalls have 307 00:18:41,359 --> 00:18:44,080 Speaker 1: been doing really well, but they're not located within malls, right, 308 00:18:44,080 --> 00:18:46,119 Speaker 1: They're usually in strip centers. And the idea is to 309 00:18:46,160 --> 00:18:48,800 Speaker 1: bring that concept to the mall and they seem to 310 00:18:48,800 --> 00:18:51,280 Speaker 1: be having some success with that. The stores that have 311 00:18:51,440 --> 00:18:54,719 Speaker 1: the backstage area are really seeing a whift in sales, 312 00:18:54,720 --> 00:18:57,160 Speaker 1: and I think Blue Mercury is a really interesting opportunity 313 00:18:57,200 --> 00:18:59,560 Speaker 1: for them too. What we've seen for years now is 314 00:18:59,600 --> 00:19:02,239 Speaker 1: the beauty businesses just booming. Here. We have women are 315 00:19:02,480 --> 00:19:05,280 Speaker 1: you know, scrimping on clothes, shopping at fast fashion players 316 00:19:05,359 --> 00:19:07,359 Speaker 1: like h and m rs are, but they're willing to 317 00:19:07,359 --> 00:19:09,880 Speaker 1: pay eighty five hours for face cream. Why. I don't know, 318 00:19:10,280 --> 00:19:14,520 Speaker 1: I do doo um. And it's a dynamic we've seen 319 00:19:14,600 --> 00:19:17,520 Speaker 1: for a long time. UM, and Blue Mercury is a 320 00:19:17,560 --> 00:19:20,919 Speaker 1: really good way to lean into that. So, Sarah, you know, 321 00:19:20,920 --> 00:19:23,480 Speaker 1: you were saying that a big aspect of this is 322 00:19:23,520 --> 00:19:27,040 Speaker 1: a better backrocademic backdrop. You've got people spending more on 323 00:19:27,240 --> 00:19:31,160 Speaker 1: stuff and given that I'm surprised that retailer is more 324 00:19:31,200 --> 00:19:33,520 Speaker 1: broadly today aren't doing better. I'm looking at the SP 325 00:19:33,560 --> 00:19:36,879 Speaker 1: five hundred Retailing Industry Index and it's up half a 326 00:19:36,960 --> 00:19:41,280 Speaker 1: percentage point, which is surprisingly small given the positive kind 327 00:19:41,320 --> 00:19:44,520 Speaker 1: of read through on this report. Yeah, and I think 328 00:19:44,600 --> 00:19:47,760 Speaker 1: maybe what that reflects is that the retail industry has 329 00:19:47,840 --> 00:19:50,720 Speaker 1: really been proving itself to sort into winners and losers, 330 00:19:51,160 --> 00:19:53,840 Speaker 1: that these benefits are not necessarily the benefits of a 331 00:19:53,880 --> 00:19:57,080 Speaker 1: better consumer environment are not necessarily being shared by everyone. 332 00:19:57,240 --> 00:19:59,680 Speaker 1: And look, we we saw that in the holiday season two. 333 00:19:59,680 --> 00:20:03,080 Speaker 1: They were some really strong performers. Macy's had a good holiday, 334 00:20:03,200 --> 00:20:05,159 Speaker 1: j C. Penny had a good holiday, and then there 335 00:20:05,200 --> 00:20:07,600 Speaker 1: are others like Bonton that we're basically crushed by the 336 00:20:07,600 --> 00:20:10,600 Speaker 1: holiday season and forced into bankruptcy. So I think there's 337 00:20:10,600 --> 00:20:14,000 Speaker 1: a knowledge out there that, uh, the rising tide might 338 00:20:14,040 --> 00:20:16,520 Speaker 1: not lift all both. It might only lift the boats 339 00:20:16,520 --> 00:20:20,360 Speaker 1: that are executing well. Sarah, is there's still a conversation 340 00:20:20,400 --> 00:20:22,320 Speaker 1: do you believe that's going on about what to do 341 00:20:22,359 --> 00:20:26,919 Speaker 1: with the real estate. The Herald Square store estimated, i 342 00:20:26,920 --> 00:20:29,359 Speaker 1: believe by Starboard value at one point to be worth 343 00:20:29,359 --> 00:20:32,920 Speaker 1: about four billion dollars. YEP, it definitely seems we didn't 344 00:20:32,920 --> 00:20:35,679 Speaker 1: get any updates from them on real estate today, but 345 00:20:35,760 --> 00:20:38,240 Speaker 1: we know it is still an ongoing project for them 346 00:20:38,280 --> 00:20:41,360 Speaker 1: to spin off some of their crown jewels to free 347 00:20:41,400 --> 00:20:43,680 Speaker 1: up cash to either pay down debt or support their 348 00:20:43,680 --> 00:20:46,520 Speaker 1: e commerce transformation. And we know they're still interested in 349 00:20:46,600 --> 00:20:49,399 Speaker 1: doing these kinds of deals. The most recent one was 350 00:20:49,440 --> 00:20:52,240 Speaker 1: selling seven floors of their State Street store in Chicago. 351 00:20:52,280 --> 00:20:54,160 Speaker 1: I think they estimate they're going to get about thirty 352 00:20:54,200 --> 00:20:56,240 Speaker 1: million in proceeds from that um and so we have 353 00:20:56,280 --> 00:20:58,600 Speaker 1: every reason to believe they're continuing to look at opportunities 354 00:20:58,600 --> 00:21:02,040 Speaker 1: for Harold Square and other of their really flagship properties. 355 00:21:02,200 --> 00:21:05,960 Speaker 1: So Sarah is heating up with respect to retail earning 356 00:21:06,080 --> 00:21:07,679 Speaker 1: seas and the rest of it might be over, but 357 00:21:07,760 --> 00:21:10,320 Speaker 1: next week we're gonna get a whole sleve earnings reports. 358 00:21:10,400 --> 00:21:14,440 Speaker 1: Which one should we most watch for, sort of using 359 00:21:14,440 --> 00:21:17,760 Speaker 1: as a bellweather of the retail industry. I think Walmart 360 00:21:17,800 --> 00:21:20,480 Speaker 1: is going to be really important tomorrow, for one. I 361 00:21:20,480 --> 00:21:22,720 Speaker 1: think that's a good place where we can see. You know, 362 00:21:22,720 --> 00:21:24,919 Speaker 1: we've seen fuel prices creeping up in recent months, and 363 00:21:24,960 --> 00:21:27,840 Speaker 1: I think Walmart and Target both will provide good gages 364 00:21:27,960 --> 00:21:30,720 Speaker 1: of whether or not that matters as people are buying 365 00:21:30,760 --> 00:21:33,680 Speaker 1: their consumer staples. Um. And also, I think all eyes 366 00:21:33,720 --> 00:21:36,640 Speaker 1: are going to be on Walmart tomorrow because of their 367 00:21:36,680 --> 00:21:39,600 Speaker 1: e commerce growth. They clearly had this flip cart acquisition 368 00:21:39,960 --> 00:21:42,200 Speaker 1: on a couple of weeks ago that investors got a 369 00:21:42,240 --> 00:21:44,520 Speaker 1: little skittish about in their e commerce growth wasn't so 370 00:21:44,560 --> 00:21:47,200 Speaker 1: good in the fourth quarter. Um And I think tomorrow 371 00:21:47,200 --> 00:21:50,359 Speaker 1: will be a good indication of how well they're going 372 00:21:50,400 --> 00:21:52,000 Speaker 1: to be able to take it to Amazon in the future, 373 00:21:52,080 --> 00:21:53,879 Speaker 1: and how will any traditional retailer is going to be 374 00:21:53,880 --> 00:21:55,680 Speaker 1: able to take it to Amazon in the future. And 375 00:21:55,960 --> 00:21:59,160 Speaker 1: thank you for joining us. Sarah Halzack is Bloomberg Opinion 376 00:21:59,359 --> 00:22:03,320 Speaker 1: retail columnist giving us her views on Macy's and the 377 00:22:03,400 --> 00:22:07,000 Speaker 1: shares of Macy's are higher right now by nearly nine 378 00:22:07,400 --> 00:22:25,600 Speaker 1: and a half per cent. He's an expert in the 379 00:22:25,640 --> 00:22:29,560 Speaker 1: world of the Jedi. James Bach is our government analyst 380 00:22:29,640 --> 00:22:33,280 Speaker 1: for federal contracts for Bloomberg Intelligence. He joins us from 381 00:22:33,280 --> 00:22:37,919 Speaker 1: our studios in Washington. James Bach, thanks very much for 382 00:22:38,000 --> 00:22:41,880 Speaker 1: being here. Are I tell people what is Jedi? When 383 00:22:41,920 --> 00:22:45,360 Speaker 1: it comes to the Department of Defense and the companies 384 00:22:45,400 --> 00:22:50,040 Speaker 1: that may actually be involved in the JEDI program. Yes, So, 385 00:22:50,119 --> 00:22:53,199 Speaker 1: as part of efforts by the Department of Defense to 386 00:22:53,359 --> 00:22:58,000 Speaker 1: find a host for its enterprise wide cloud infrastructure and 387 00:22:58,040 --> 00:23:02,160 Speaker 1: platform on they're starting who it should be sometime this week, 388 00:23:02,200 --> 00:23:05,639 Speaker 1: they're going to be looking at bids um for this hosting, 389 00:23:05,680 --> 00:23:07,800 Speaker 1: so we could be seeing you know, obviously the big 390 00:23:07,880 --> 00:23:11,879 Speaker 1: names like Amazon, Microsoft, UM and then IBM, Google or 391 00:23:12,000 --> 00:23:13,920 Speaker 1: called all these companies are probably gonna come forward with 392 00:23:13,960 --> 00:23:16,600 Speaker 1: bids to try to be the d O d s UM, 393 00:23:16,640 --> 00:23:19,240 Speaker 1: you know, go to cloud hoster for their enterprise wide 394 00:23:19,520 --> 00:23:22,199 Speaker 1: infrastruction platform. I thought you were going to save me 395 00:23:22,280 --> 00:23:24,639 Speaker 1: when I said JEDI and you were going to mention 396 00:23:24,680 --> 00:23:29,920 Speaker 1: that it stands for Joint Enterprise Defense infrastruct Apologize. No, No, 397 00:23:30,119 --> 00:23:33,760 Speaker 1: the d O you're you live. You live in the 398 00:23:33,800 --> 00:23:38,520 Speaker 1: world of acronyms, right, I mean the d D loves acronyms, right, yes, absolutely. Well, 399 00:23:38,560 --> 00:23:40,440 Speaker 1: you know, James, I want to talk a little bit 400 00:23:40,480 --> 00:23:42,600 Speaker 1: about the significance of the just before we get into 401 00:23:42,600 --> 00:23:44,760 Speaker 1: the political implications in the back and forth with President 402 00:23:44,760 --> 00:23:48,080 Speaker 1: Trump and Amazon's Jeff Bezos. I just want to get 403 00:23:48,080 --> 00:23:51,040 Speaker 1: a sense this is a ten billion dollar contract. You know, 404 00:23:51,240 --> 00:23:53,000 Speaker 1: how big of a deal is this? I mean, does 405 00:23:53,040 --> 00:23:56,200 Speaker 1: it lead to additional contracts? And could it make or 406 00:23:56,240 --> 00:23:58,360 Speaker 1: break a business? In the words yes, So if we're 407 00:23:58,359 --> 00:24:00,520 Speaker 1: looking at them, maybe the financial implication aations. If we 408 00:24:00,640 --> 00:24:02,920 Speaker 1: just look at say ten billion over ten years, which 409 00:24:02,920 --> 00:24:04,680 Speaker 1: are what some of the estimates are, we're looking at 410 00:24:04,840 --> 00:24:07,280 Speaker 1: at most let's say a billion a year UM, that's 411 00:24:07,320 --> 00:24:10,600 Speaker 1: not you know, financially significant necessarily for any of these 412 00:24:10,600 --> 00:24:13,720 Speaker 1: companies that are considering bids UM. But what it does 413 00:24:13,840 --> 00:24:16,320 Speaker 1: do UM for any company that wins this, it kind 414 00:24:16,359 --> 00:24:18,439 Speaker 1: of gives you the endorsement of the Department of Defense, 415 00:24:18,480 --> 00:24:22,159 Speaker 1: who has very rigorous security requirements UM as part of 416 00:24:22,200 --> 00:24:24,400 Speaker 1: their cloud hosting. So that kind of says a lot 417 00:24:24,440 --> 00:24:26,879 Speaker 1: about who how your cloud is doing in the market, 418 00:24:26,920 --> 00:24:30,119 Speaker 1: and that obviously will remeberate through private sector and public sector. 419 00:24:30,200 --> 00:24:32,480 Speaker 1: That's an excellent point in other words, basically saying, look, 420 00:24:32,520 --> 00:24:35,240 Speaker 1: if we're secure enough for the Pentagon, we can be 421 00:24:35,280 --> 00:24:38,920 Speaker 1: secure enough for your business. UM. So let's talk about Amazon, 422 00:24:39,040 --> 00:24:42,359 Speaker 1: it was the front runner for this contract, and then 423 00:24:42,760 --> 00:24:46,960 Speaker 1: Jeff Bezos meet President Trump. Please explain. Yeah, So when 424 00:24:46,960 --> 00:24:48,960 Speaker 1: I look at the political implications of this, obviously you 425 00:24:49,000 --> 00:24:51,680 Speaker 1: have to consider this sort of animosity that Trump has 426 00:24:51,720 --> 00:24:55,800 Speaker 1: towards Amazon and UM, Jeff Bezos. UM, I don't think 427 00:24:55,800 --> 00:24:59,800 Speaker 1: that Trump's uh, you know Trump. There's a big you know, 428 00:25:00,040 --> 00:25:03,760 Speaker 1: government bureaucracy and acquisition process that governs how this contract 429 00:25:03,760 --> 00:25:06,680 Speaker 1: gets awarded and it transcends anything. UM. As far as 430 00:25:06,720 --> 00:25:10,320 Speaker 1: Trump's views of Amazon or Jeff Bezos. What I think 431 00:25:10,400 --> 00:25:13,560 Speaker 1: is more of a UM. What's what's kind of making 432 00:25:13,600 --> 00:25:16,399 Speaker 1: this more of Amazon not being the front runner is 433 00:25:16,480 --> 00:25:19,320 Speaker 1: just the simple fact that they're not the only player 434 00:25:19,320 --> 00:25:21,639 Speaker 1: in the market anymore. It's not the same as when 435 00:25:21,640 --> 00:25:25,640 Speaker 1: the CIA awarded Amazon the contract for their cloud hosting. UM. 436 00:25:25,640 --> 00:25:27,760 Speaker 1: And I think that's probably the biggest threat to Amazon 437 00:25:27,840 --> 00:25:31,720 Speaker 1: more than say, you know, Trump versus Amazon. Why isn't 438 00:25:31,760 --> 00:25:36,160 Speaker 1: IBM or Google or Oracle front running? UM, Well, it's 439 00:25:36,200 --> 00:25:38,159 Speaker 1: a matter of where they kind of sit in the market. 440 00:25:38,240 --> 00:25:40,960 Speaker 1: You have Amazon as the market leader, below that you 441 00:25:41,040 --> 00:25:44,760 Speaker 1: have Microsoft, and then there's kind of those three companies. UM, 442 00:25:44,800 --> 00:25:48,000 Speaker 1: IBM has this has some strength, and that they're in 443 00:25:48,040 --> 00:25:50,720 Speaker 1: this old school world of traditional data center i T, 444 00:25:51,119 --> 00:25:53,119 Speaker 1: which is something that would be an asset because the 445 00:25:53,119 --> 00:25:55,600 Speaker 1: Department of Defense is probably going to move to the 446 00:25:55,640 --> 00:25:58,359 Speaker 1: cloud and kind of a slower, more deliberate way given 447 00:25:58,400 --> 00:26:01,719 Speaker 1: all their national security work das UM, but they simply 448 00:26:01,760 --> 00:26:04,680 Speaker 1: just don't have the scale UM or maybe the capabilities 449 00:26:04,720 --> 00:26:07,399 Speaker 1: that Microsoft does. Microsoft is much stronger on that side. 450 00:26:07,680 --> 00:26:09,439 Speaker 1: Then you talk about Oracle, they're kind of in the 451 00:26:09,480 --> 00:26:12,880 Speaker 1: same boat, just smaller than IBM. And then Google, which 452 00:26:12,880 --> 00:26:16,879 Speaker 1: has definitely, you know, a large compelling offering around infrastructure UM. 453 00:26:16,960 --> 00:26:19,800 Speaker 1: They have this issue with UM. They're not really in 454 00:26:19,880 --> 00:26:23,160 Speaker 1: that old school world of ID. They're more on the 455 00:26:23,400 --> 00:26:25,960 Speaker 1: you know, cloud native companies like Snapchat and Spotify, not 456 00:26:26,080 --> 00:26:29,000 Speaker 1: really really you know, maybe philosophically aligned with how the 457 00:26:29,040 --> 00:26:32,200 Speaker 1: Department of Defense would look to do their UM cloud migration. 458 00:26:33,080 --> 00:26:35,840 Speaker 1: So UM one thing that instructs me about Amazon dot 459 00:26:35,840 --> 00:26:37,760 Speaker 1: Com It already has worked with the c I A. 460 00:26:38,200 --> 00:26:40,320 Speaker 1: I'm just wondering, I mean, how much have we learned 461 00:26:40,440 --> 00:26:43,439 Speaker 1: about the different sort of security levels of the different 462 00:26:43,440 --> 00:26:46,520 Speaker 1: cloud providers? And I mean, is there any difference between 463 00:26:46,560 --> 00:26:49,280 Speaker 1: them that's material or is there something else that's kind 464 00:26:49,320 --> 00:26:52,600 Speaker 1: of factoring into the bidding process. The CIA is a 465 00:26:52,640 --> 00:26:55,280 Speaker 1: good I guess um example or past perform, which is 466 00:26:55,280 --> 00:26:57,879 Speaker 1: always very important in government contracting. It does give the 467 00:26:57,960 --> 00:27:00,879 Speaker 1: d D something to look at as an example of 468 00:27:00,920 --> 00:27:03,560 Speaker 1: what they might want to try to replicate. Um if 469 00:27:03,600 --> 00:27:05,400 Speaker 1: trying to get into kind of a discussion of who 470 00:27:05,400 --> 00:27:08,040 Speaker 1: has the better security might be a little more difficult. UM, 471 00:27:08,080 --> 00:27:10,720 Speaker 1: I think that capably, I mean any of these companies 472 00:27:10,720 --> 00:27:14,000 Speaker 1: are probably could capably host the Microsoft I mean could 473 00:27:14,040 --> 00:27:17,400 Speaker 1: hold host the cloud, whether that be Microsoft or IBM. 474 00:27:17,440 --> 00:27:20,480 Speaker 1: It just really comes down to who was mostly aligned 475 00:27:20,480 --> 00:27:21,679 Speaker 1: with how the d o D wants to do this. 476 00:27:21,760 --> 00:27:26,240 Speaker 1: Migration James. Other companies that may end up with contracts 477 00:27:26,280 --> 00:27:32,800 Speaker 1: for consulting and the actual migration and application services related 478 00:27:32,840 --> 00:27:37,320 Speaker 1: to this contract include what Booze, Allen, c A, c I, Khaki, 479 00:27:37,680 --> 00:27:39,879 Speaker 1: General Dynamics, and so on. Yeah. Yeah, if you can 480 00:27:39,920 --> 00:27:41,320 Speaker 1: just kind of go down the line of all those 481 00:27:41,320 --> 00:27:43,920 Speaker 1: companies that are in this. Obviously, this past week there 482 00:27:43,960 --> 00:27:46,760 Speaker 1: was an investor day in New York with a new 483 00:27:46,760 --> 00:27:50,800 Speaker 1: company called Perspective, which is a spinoff and merger from 484 00:27:51,040 --> 00:27:53,719 Speaker 1: you know, HP's old government business. They're also probably going 485 00:27:53,760 --> 00:27:56,160 Speaker 1: to be involved in trying to find how they can 486 00:27:56,320 --> 00:27:59,720 Speaker 1: position for a you know, those cloud consulting contracts or 487 00:27:59,760 --> 00:28:03,680 Speaker 1: help migration or application rational Asian services. There's a lot 488 00:28:03,720 --> 00:28:05,439 Speaker 1: of work that will come as a follow into this, 489 00:28:05,800 --> 00:28:09,640 Speaker 1: as well as potential further contracts that maybe agencies will 490 00:28:09,760 --> 00:28:14,320 Speaker 1: be prompted to um, you know, bigger cloud migration initiatives 491 00:28:14,320 --> 00:28:15,920 Speaker 1: that could come out of this after you know, seeing 492 00:28:15,920 --> 00:28:17,560 Speaker 1: the d D do it. So there's a lot of 493 00:28:17,600 --> 00:28:20,200 Speaker 1: following work that could come in the services area outside 494 00:28:20,200 --> 00:28:23,760 Speaker 1: of just the pure commercial cloud hosting. James Boch, thank 495 00:28:23,800 --> 00:28:25,800 Speaker 1: you so much for being with us and for tracking this. 496 00:28:25,960 --> 00:28:28,719 Speaker 1: James Bock is a government analyst covering and focusing on 497 00:28:28,760 --> 00:28:32,199 Speaker 1: federal contracts for Bloomberg Intelligence coming to us from our 498 00:28:32,200 --> 00:28:36,679 Speaker 1: Bloomberg Councing one studios in Washington, d C. Really interesting 499 00:28:36,720 --> 00:28:38,560 Speaker 1: and important to put this into perspective. It's a ten 500 00:28:38,600 --> 00:28:43,440 Speaker 1: billion dollar Pentagon cloud contract, probably a pittance over ten 501 00:28:43,560 --> 00:28:46,400 Speaker 1: years for a lot of these massive tech companies. I know, 502 00:28:46,440 --> 00:28:49,080 Speaker 1: it's weird to call ten billion dollars of pittance um, 503 00:28:49,200 --> 00:28:52,720 Speaker 1: and yet the tentacles of this endorsement to have the 504 00:28:52,760 --> 00:28:57,080 Speaker 1: Pentagon endorser cloud computing services is quite powerful and there 505 00:28:57,080 --> 00:28:58,840 Speaker 1: are a lot of other government services that also could 506 00:28:58,880 --> 00:29:03,880 Speaker 1: come along with that. Thanks for listening to the Bloomberg 507 00:29:03,920 --> 00:29:06,600 Speaker 1: P and L podcast. You can subscribe and listen to 508 00:29:06,600 --> 00:29:11,120 Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 509 00:29:11,560 --> 00:29:15,120 Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm 510 00:29:15,160 --> 00:29:18,440 Speaker 1: on Twitter at Lisa Abramo. It's One before the Podcast. 511 00:29:18,480 --> 00:29:21,080 Speaker 1: You can always catch us worldwide on Bloomberg Radio