WEBVTT - Florida Is Delivering The Drama To Election Junkies 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.560 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:27.680 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. I 0:00:27.720 --> 0:00:32.479 want to introduce Al Hunt, Bloomberg opinion columnist and expert 0:00:32.520 --> 0:00:35.839 in all Things Washington, to tell us a little bit 0:00:35.840 --> 0:00:39.560 about what we should pay attention to on this election day. 0:00:39.640 --> 0:00:42.159 Al Hunt, always a pleasure, Thanks for being with us. 0:00:42.680 --> 0:00:44.440 I want you to just tell us a little bit 0:00:44.479 --> 0:00:47.239 about Katie Hill. Now, this is not a name that 0:00:47.280 --> 0:00:50.320 many people may be familiar with. She is running in 0:00:50.440 --> 0:00:55.680 California's twenty five and you've written about Katie Hill and 0:00:55.760 --> 0:00:58.880 why this is an election to watch. Tell us, Well, 0:00:58.920 --> 0:01:02.720 it's a it's basically a Republican leaning district gets represented 0:01:02.720 --> 0:01:04.800 by an incomment named Steve Knight, who was one of 0:01:04.800 --> 0:01:07.880 the stronger incomments running for reelection. It's a district, it's 0:01:08.120 --> 0:01:11.640 north of l A. It's Ventura Simi Valley, home of 0:01:11.680 --> 0:01:15.080 the Reagan Library and suddenly this thirty one year old 0:01:15.080 --> 0:01:18.639 woman who is the daughter of a cop and a nurse, 0:01:19.400 --> 0:01:22.880 ran a large homeless organization, didn't have a lot of 0:01:22.959 --> 0:01:26.480 connections or anything, has run this dazzling campaign and come 0:01:26.600 --> 0:01:29.319 from clearly behind to the point where she is at 0:01:29.400 --> 0:01:32.360 least an even bet. She raised in the last quarter 0:01:32.520 --> 0:01:35.480 three point eight million dollars. Let me repeat that, three 0:01:35.520 --> 0:01:38.720 point eight million dollars even in Bloomberg terms, that's pretty big. 0:01:39.200 --> 0:01:43.040 And she's got two thousand volunteers every last weekend at 0:01:43.080 --> 0:01:45.679 least fanning out. So it's really kind of exciting to 0:01:45.720 --> 0:01:48.840 see that kind of grassroots enthusiasms. So when you look 0:01:48.960 --> 0:01:53.040 at the race specific details right now and from what 0:01:53.120 --> 0:01:56.120 you're hearing with respect turnout, what are you expecting for 0:01:56.200 --> 0:02:00.400 today's results? A huge turnout to begin with, and huge 0:02:00.440 --> 0:02:05.920 turnout under conventional standards would be an advantage for Democrats, 0:02:06.040 --> 0:02:08.680 and think it still might be. But one doesn't know 0:02:08.760 --> 0:02:13.120 whether Trump rallied people with his what I consider racist 0:02:13.120 --> 0:02:15.880 demogo agree on the caravan and other issues the last 0:02:15.919 --> 0:02:18.680 couple of days, so it's a little bit uncertain. I 0:02:18.680 --> 0:02:21.400 think the big turnout in suburban areas is clearly going 0:02:21.480 --> 0:02:25.800 to advantage Democrats. If there's a huge turnout in red 0:02:26.000 --> 0:02:28.560 rural areas, that may help Republicans. On balance, I think 0:02:28.600 --> 0:02:31.160 it's going to help democrats more. Al Hunt, are you 0:02:31.160 --> 0:02:35.160 looking to the Indiana Senate race as well? Big first 0:02:35.160 --> 0:02:38.519 six o'clock post closed in Kentucky and Indiana, And there 0:02:38.520 --> 0:02:41.720 are two really really huge races, one in the House 0:02:41.760 --> 0:02:43.959 and one of the Senate Senate that you just mentioned. 0:02:44.040 --> 0:02:46.040 Joe Donnally is probably one of the three or four 0:02:46.080 --> 0:02:49.720 most endangered Democratic income with This is a really bad 0:02:49.800 --> 0:02:53.880 map for Democrats this year, and if Joe Donally survives, 0:02:54.360 --> 0:02:57.760 that means that Democrats, you know, have a shot taking 0:02:57.800 --> 0:03:00.480 control of the Senate. It's a long shot, but it's 0:03:00.520 --> 0:03:03.200 one of Republicans think they have to win. It's a 0:03:03.280 --> 0:03:06.360 very Republican stage. Joe donny is a one term senator. 0:03:06.840 --> 0:03:09.480 Uh he voted against bred Cavanall and they have really 0:03:09.880 --> 0:03:12.360 I think I think Obama's excuse me, I think that 0:03:12.360 --> 0:03:16.520 Trump has been there four times. Kentucky. Amy McGrath, Marine 0:03:16.639 --> 0:03:21.639 combat pilot Amy McGrath is running against Republican income in 0:03:21.720 --> 0:03:25.040 Andy Barr in a district it's about plus ten GOP 0:03:25.360 --> 0:03:27.359 and I think she's got a real chance to win. 0:03:27.480 --> 0:03:29.360 It's a very exciting race, and that will be an 0:03:29.360 --> 0:03:33.880 indication of a of a wave of interesting candidates winning 0:03:33.919 --> 0:03:36.600 this year, a lot of them women and a disproportionate 0:03:36.680 --> 0:03:39.600 number of them veterans young. Do you think that Ted 0:03:39.680 --> 0:03:41.840 Cruz will no longer be part of the Senate? Come? 0:03:42.280 --> 0:03:48.920 I guess well, no, I'm I I'm not saying I'm 0:03:48.920 --> 0:03:50.720 not weighing in a one way or another. Better artist 0:03:50.760 --> 0:03:54.240 certainly know you're being there, I'm not, but but better 0:03:54.320 --> 0:03:57.840 rockers certainly run a competitive campaign, and it seems like 0:03:57.880 --> 0:04:01.040 there is some uncertainty there though the leaning towards Ted Cruz, right, 0:04:01.320 --> 0:04:05.080 he's a rock star two thousand and eighteen. Uh, not 0:04:05.200 --> 0:04:08.160 not Ted Cruise, but better ur it's a it's a 0:04:08.200 --> 0:04:10.440 really tough state. It's a really really tough state to 0:04:10.480 --> 0:04:14.480 Wednesday wide. If you're a Democrat, it's probably moving that way, 0:04:14.480 --> 0:04:18.960 but slowly. I think the only the only reason Democrats 0:04:18.960 --> 0:04:21.400 think they may be an upset is because there is 0:04:21.440 --> 0:04:24.800 a massive surge of early voting there. And the question 0:04:24.920 --> 0:04:28.080 is do the polls and them and the modeling are 0:04:28.120 --> 0:04:30.320 they able to reflect that? Because they all show Cruise 0:04:30.360 --> 0:04:31.960 winning by about three or four. I don't know the 0:04:32.000 --> 0:04:34.040 answer that question, but it will be exciting to watch 0:04:34.240 --> 0:04:36.960 poles closed in Texas at eight, So stay tuned for 0:04:37.040 --> 0:04:40.240 then next door, you said that Better Rourke is the 0:04:40.360 --> 0:04:43.440 rock star of this election cycle. So you know, one 0:04:43.600 --> 0:04:47.160 sort of speculation is if he wins, he'll be considered 0:04:47.160 --> 0:04:51.240 a candidate for the presidency at some point, perhaps even 0:04:51.320 --> 0:04:55.440 as soon as Do you think that that's feasible? And 0:04:55.440 --> 0:04:57.839 do you think it's feasible even if he doesn't win? Well, 0:04:57.880 --> 0:05:00.279 I think all the standards change when Donald Trump one. 0:05:00.760 --> 0:05:03.560 Uh So therefore, you know, experience and gravitas and all 0:05:03.600 --> 0:05:05.119 that kind of stuff that used to count for something 0:05:05.160 --> 0:05:08.279 doesn't count much anymore. But I think that would be early. 0:05:08.720 --> 0:05:12.480 Uh Barack Obama they said was early, but Barack Obama 0:05:12.520 --> 0:05:15.320 has spent you know what, eight years in the state legislature, 0:05:15.400 --> 0:05:19.920 four years in the Senate. I think more of a 0:05:20.000 --> 0:05:22.680 you know, more ready say than Better would be in 0:05:22.720 --> 0:05:25.279 twenty But I'll tell you there's an awful lot of 0:05:25.279 --> 0:05:29.920 of of really movement Democrats who would put their hand 0:05:29.960 --> 0:05:32.719 to fire for better or work. Al Hunt tell us 0:05:32.800 --> 0:05:35.920 about the races in Florida, And I don't just mean 0:05:35.960 --> 0:05:41.640 the Senate race between Bill Nelson and it's it's it's 0:05:41.960 --> 0:05:45.599 really you know, if you if you're looking for a 0:05:46.160 --> 0:05:49.520 operations central tonight, it's Florida because it's the one state 0:05:49.600 --> 0:05:52.680 that has everything. Huge Senate race, which you just mentioned, 0:05:53.200 --> 0:05:57.400 Bill Nelson running against an incumbent Governor Rick Scott, I mean, 0:05:57.640 --> 0:06:01.640 and and the amount of money spent is has been colossal. 0:06:02.000 --> 0:06:05.480 Same time, you have a fantastic governor's race with a 0:06:05.520 --> 0:06:09.760 Trump supporting right wing Republican Congresman Rohn de Stantus running 0:06:09.760 --> 0:06:14.200 against uh. The African American mayor of Tallahassee, Andrew Gillham, 0:06:14.520 --> 0:06:18.040 has really been a It's been a very tough race. 0:06:18.120 --> 0:06:20.640 I was down there a couple of weeks ago, and 0:06:20.680 --> 0:06:23.599 I think, to the surprise of some Democrats in Washington least, 0:06:23.640 --> 0:06:26.159 Gillham is just one heck of a candidate, and I 0:06:26.200 --> 0:06:29.000 think the odds now favor him, and that would be 0:06:29.080 --> 0:06:31.480 huge because it would be the first time the Democrats 0:06:31.560 --> 0:06:35.560 control the state House in eight years. It affects redistricting 0:06:35.600 --> 0:06:38.039 after the two thousand and twenty cents and those two 0:06:38.120 --> 0:06:40.400 races at the top of Democrats win those by three 0:06:40.440 --> 0:06:42.560 or four or five points. And some think they will. 0:06:42.880 --> 0:06:45.120 That's that's going to affect the number of House seats 0:06:45.120 --> 0:06:47.520 two I think there right now Democrats think they're going 0:06:47.600 --> 0:06:49.320 to pick up two House seats in Florida. They have 0:06:49.320 --> 0:06:50.919 a chance to pick up as many as four or 0:06:50.920 --> 0:06:52.880 five if they have any kind of a blue wave night. 0:06:53.560 --> 0:06:56.000 So we're talking a lot about a potential blue waver 0:06:56.040 --> 0:06:59.600 of Democrats picking up seats. But there is the alternative here, 0:06:59.640 --> 0:07:04.160 which is that Republicans pick up both they win, they 0:07:04.279 --> 0:07:07.400 keep control over both houses, both the House for Presentatives 0:07:07.400 --> 0:07:09.800 as well as the Senate. And what's the likelihood of 0:07:09.840 --> 0:07:12.320 that and what would that do for President Trump? Well, 0:07:12.320 --> 0:07:14.600 the likelihood of that I think is probably you know, 0:07:14.640 --> 0:07:18.840 in the fifteen, you know, seventeen percent range. I think, 0:07:19.000 --> 0:07:21.880 you know, far greater than they'll keep controlling the Senate. 0:07:22.320 --> 0:07:25.720 But but our reach and the half. But if they do, uh, 0:07:25.760 --> 0:07:28.800 it's uh, you know, it's a free license for Donald Trump. 0:07:28.880 --> 0:07:30.920 Donald Trump can do anything he wants to. It will 0:07:30.960 --> 0:07:35.680 be the end of the Affordable Healthcare Act. He can 0:07:35.720 --> 0:07:38.920 really get done almost anything he wants. He dominates his party, 0:07:38.920 --> 0:07:42.560 and his party will dominate Washington. Al Hunt, thank you 0:07:42.560 --> 0:07:44.000 so much for being with us. All Hunt is a 0:07:44.000 --> 0:07:51.360 columnist with Bloomberg Opinion talking about the midterm elections. There 0:07:51.480 --> 0:07:55.600 certainly has been a lot of hype around financial technology 0:07:55.720 --> 0:08:00.000 fintech firms. A number of startups have version to the surface, 0:08:00.000 --> 0:08:02.480 so over the number of years, there is a question though, 0:08:03.160 --> 0:08:05.760 how much more room is there for startups at a 0:08:05.840 --> 0:08:08.120 time when the big banks are all trying to plow 0:08:08.280 --> 0:08:11.880 into financial technology fintech Joining us now to talk about 0:08:11.880 --> 0:08:14.120 that it should work such a volo. He is a 0:08:14.200 --> 0:08:17.680 general partner at Trinity Ventures in San Francisco. Shu Work, 0:08:17.840 --> 0:08:19.840 thank you so much for being with us. So let's 0:08:19.880 --> 0:08:21.920 just start there. I mean, do you see a lot 0:08:21.960 --> 0:08:25.680 of good potential opportunities out there with respect to fintech 0:08:25.760 --> 0:08:29.640 firms that you are interested investing in? Absolutely. I think 0:08:29.960 --> 0:08:33.640 fintech's uh is a pretty broad category. There's a lot 0:08:33.679 --> 0:08:37.840 of different kinds of opportunities up and down the financial 0:08:37.880 --> 0:08:42.760 services spectrum. Um. I do think the the levels of 0:08:42.800 --> 0:08:46.920 innovation in fact are just getting started. You had mentioned 0:08:47.400 --> 0:08:50.200 the big banks flowing in more. If anything, I think 0:08:50.240 --> 0:08:53.480 that actually creates a whole bunch of new opportunity because 0:08:53.520 --> 0:08:56.800 as these big banks effectively try to create new products 0:08:56.800 --> 0:08:59.720 and services there's a whole bunch of new technology platforms 0:08:59.720 --> 0:09:01.280 and so of us is that will be necessary in 0:09:01.360 --> 0:09:04.679 order to deliver them. A lot of opportunity there, and 0:09:05.080 --> 0:09:06.960 part of the reason why a lot of the large 0:09:07.040 --> 0:09:10.520 national institutions are getting more aggressive is because there's a 0:09:10.520 --> 0:09:14.560 whole bunch of new upstarts are effectively pushing the boundary 0:09:14.559 --> 0:09:17.559 and kind of forcing a lot more innovation faster. So 0:09:17.679 --> 0:09:19.760 all in all, I think there's still a lot of 0:09:19.800 --> 0:09:24.120 opportunity across the spectrum for fintech innovation. Now, you yourself 0:09:24.160 --> 0:09:28.640 are a serial entrepreneur in the world of fintech. You've 0:09:28.679 --> 0:09:32.040 created companies that have then been acquired by master Card, 0:09:32.120 --> 0:09:36.600 for example. How is it possible that on the consumer level, 0:09:36.640 --> 0:09:41.200 you're able to take an uber or to transact business 0:09:41.360 --> 0:09:45.560 completely on your phone instantly, without any friction, you can 0:09:45.600 --> 0:09:48.760 pay for things. But when it comes to the world 0:09:48.800 --> 0:09:54.000 of wholesale banking banks moving large amounts of money, why 0:09:54.160 --> 0:09:57.560 is that still a challenge and why is it still expensive? 0:09:59.160 --> 0:10:01.640 It's an excellent quite chin, and I think the simple 0:10:01.679 --> 0:10:04.920 answer is that the stakes are higher and and the 0:10:04.960 --> 0:10:08.800 infrastructure that is necessary to be built up in order 0:10:08.840 --> 0:10:12.600 to plane those spaces is higher simply because the regulatory 0:10:12.880 --> 0:10:17.240 um requirements that are required to play those spaces are 0:10:17.320 --> 0:10:22.880 substantially more um stringent, So you have a larger number 0:10:22.920 --> 0:10:26.120 of regulations that control, you know, things like k y 0:10:26.240 --> 0:10:30.480 C and m L that all are multiple three letter 0:10:30.559 --> 0:10:33.480 words that effectively are things that need to be done. 0:10:34.000 --> 0:10:38.400 To make sure that the consumer and all the participating 0:10:38.400 --> 0:10:41.680 parties in a transaction are protected and to make sure 0:10:41.720 --> 0:10:43.360 that all of those things are done is a much 0:10:43.440 --> 0:10:46.840 higher bar and a lot of cases actually quite boring stuff. 0:10:46.920 --> 0:10:50.680 So when you think about financial innovation, UH innovation first 0:10:50.720 --> 0:10:53.319 starts with the easier things, things that are easier to 0:10:53.360 --> 0:10:57.800 get done. But we've recently invested in a company that's 0:10:57.800 --> 0:11:01.920 actually making that a lot easier do um, a company 0:11:01.960 --> 0:11:05.280 called Synapse i f I that's actually creating a p 0:11:05.480 --> 0:11:08.920 I S to almost make access to wholesale banking almost 0:11:08.960 --> 0:11:13.080 as easy as Stripe has made payment services to be 0:11:13.120 --> 0:11:15.760 integrated into an over order left for example. And just 0:11:15.840 --> 0:11:19.839 to do the acronym definition, k y C means know 0:11:20.240 --> 0:11:23.320 your Customer and a m L for those in the 0:11:23.400 --> 0:11:29.240 financial world, no, it means anti money laundering rules. Sorry, no, no, 0:11:29.240 --> 0:11:31.280 no worries. It's good to point that out, because these 0:11:31.320 --> 0:11:34.560 acronyms do have purposes for for the regulators and for 0:11:34.600 --> 0:11:37.320 the banks. But Schwork, I'm wondering you mentioned payments and 0:11:37.320 --> 0:11:39.400 that was an area that you have expertise in yourself. 0:11:39.400 --> 0:11:41.880 I'm looking at squares shares, for example, and they're up 0:11:42.080 --> 0:11:44.880 more than a hundred and twenty percent so far year 0:11:44.960 --> 0:11:49.080 to date. Is the payment sector still ground zero when 0:11:49.080 --> 0:11:52.200 it comes to innovation in financial technology? What is the 0:11:52.280 --> 0:11:57.520 frontier for the next wave of innovation? Absolutely, I think 0:11:57.559 --> 0:12:01.000 it's definitely the early days square and of course is 0:12:01.040 --> 0:12:05.240 then innovating almost in and around the payment sectors, so 0:12:05.240 --> 0:12:08.120 they're actually kind of getting into things like lending and 0:12:08.160 --> 0:12:11.000 marketing and all the other kinds of services from payroll 0:12:11.040 --> 0:12:13.200 and so and so forth. So they the number of 0:12:13.200 --> 0:12:16.760 services they can offer their existing customer base um is 0:12:16.840 --> 0:12:19.280 still you know, they're still sketching the surface. I think 0:12:19.320 --> 0:12:21.480 there's a lot more upside there. And but if you 0:12:21.520 --> 0:12:24.920 look at broadly more fintech, I do think the the 0:12:24.960 --> 0:12:28.760 amount of innovation is almost poised to accelerate because one 0:12:28.800 --> 0:12:31.800 of the things that almost limits innovation and financial services 0:12:32.480 --> 0:12:36.720 is in fact regulatory um strength. If you may so, 0:12:36.760 --> 0:12:41.360 if the the regulators are are being very very cautious, 0:12:41.400 --> 0:12:45.240 then it almost limits innovation because people are scared to 0:12:45.320 --> 0:12:47.000 kind of push the boundary a little bit to kind 0:12:47.000 --> 0:12:48.959 of make sure figure out what it is that actually 0:12:49.080 --> 0:12:52.640 can be done. Um. But when the regulators tend to 0:12:52.640 --> 0:12:55.040 be a little bit more lax, then it tends to 0:12:55.040 --> 0:13:00.640 become a little bit more um encouraging of innovation. So lending, 0:13:00.679 --> 0:13:04.880 for example, has been innovated on many, many times over 0:13:04.920 --> 0:13:08.560 the last ten years because regulators were a little bit 0:13:08.600 --> 0:13:12.839 more friendly towards innovation in the lending space. So as 0:13:12.920 --> 0:13:17.640 regulators look favorably upon innovation in different areas, those actually 0:13:17.640 --> 0:13:21.160 tend to count alive with a lot more innovation. So 0:13:21.200 --> 0:13:24.520 I think lately, I think that regulators have been a 0:13:24.520 --> 0:13:27.800 little bit more encouraging our innovation. The occ is, for example, 0:13:28.120 --> 0:13:30.880 creating things like the Fintech Charter, so they're they're starting 0:13:30.920 --> 0:13:34.679 to think about innovation as part of the realm of 0:13:34.800 --> 0:13:38.400 the things that they want to encourage and push. And 0:13:38.440 --> 0:13:40.400 so as the regulators start to kind of look at 0:13:40.440 --> 0:13:42.880 this a little bit more favorably, I think innovation is 0:13:42.880 --> 0:13:45.560 only going to accelerate. Can you just tell us quickly 0:13:45.640 --> 0:13:48.960 about branch because we talked about the developed world, and 0:13:49.040 --> 0:13:52.480 Branch is a company that you've invested in that works 0:13:52.679 --> 0:13:57.160 in emerging markets. That's exactly right. I think if you 0:13:57.240 --> 0:14:00.319 really think about financial services, we tend it kind of 0:14:00.360 --> 0:14:03.360 almost always on fin techs especially, we tend to think 0:14:03.400 --> 0:14:06.560 about that as a very US phenomenon. But if you 0:14:06.559 --> 0:14:09.640 really look at the fintech innovation, it's actually happening across 0:14:09.679 --> 0:14:14.000 the world. In fact, because again regulation is a little 0:14:14.000 --> 0:14:17.040 bit more friendly innovation. In Europe, you actually find and 0:14:17.120 --> 0:14:20.080 DiNovo banks that have actually been created from scratch actually 0:14:20.160 --> 0:14:23.600 thriving in Europe, which is not quite played out almost 0:14:23.680 --> 0:14:26.800 the same way in the US yet. UM. But if 0:14:26.800 --> 0:14:31.320 you really think about consumers and consumer demand, UM, financial 0:14:31.320 --> 0:14:33.560 services in the US is almost one of the most 0:14:33.640 --> 0:14:36.520 well developed sectors. But across the rest of the world, 0:14:36.600 --> 0:14:40.720 financial services has very very low penetration, so very few 0:14:41.200 --> 0:14:44.440 consumers actually even have access to financial services as a 0:14:44.440 --> 0:14:48.280 fraction of the entire population. And what Brand is trying 0:14:48.320 --> 0:14:52.040 to do is kind of taking the device that is 0:14:52.160 --> 0:14:55.200 that actually does have very high penetration, which is a 0:14:55.240 --> 0:14:59.120 smartphone UM, which is rapidly increasing in its penetration rates 0:14:59.120 --> 0:15:03.800 across and developing world and using the the access and 0:15:03.920 --> 0:15:06.840 information that a smartphone provides in order to be able 0:15:06.880 --> 0:15:09.760 to create underwriting decisions, in order to give access to 0:15:10.320 --> 0:15:14.840 both loans and going forward even savings products to consumers 0:15:15.440 --> 0:15:18.720 um directly off of their phone. So a branchless banking, 0:15:18.760 --> 0:15:23.120 if you may, delivered by a smartphone into the very 0:15:23.520 --> 0:15:29.720 um deepest parts of Africa, India and Mexico and a 0:15:29.720 --> 0:15:32.200 bunch of other countries as as they go along. Thank 0:15:32.240 --> 0:15:34.560 you very much for spending time with us and talking 0:15:34.600 --> 0:15:39.280 about financial technology and the challenges and the opportunities. Schwark 0:15:39.440 --> 0:15:43.680 Sayavolo is the general partner for Trinity Ventors. Joining us 0:15:43.800 --> 0:15:51.640 from San Francisco. The energy and pharmaceutical industries stand to 0:15:51.800 --> 0:15:55.600 potentially be disrupted depending on the outcome of today's midterm 0:15:55.640 --> 0:15:58.040 elections in the United States. Joining us now, Brian Rice 0:15:58.080 --> 0:16:01.120 in your healthcare policy analyst four Brick Intelligence coming to 0:16:01.240 --> 0:16:04.680 us from our nig n WIN studios in Washington, d C. Brian, 0:16:04.720 --> 0:16:07.320 thank you so much for joining us. Let's start with 0:16:07.440 --> 0:16:11.040 the pharmaceutical industry. What is the sort of range of 0:16:11.120 --> 0:16:15.520 outcomes from today's election that could potentially affect this industry? Sure, 0:16:15.640 --> 0:16:18.880 and I think the one that pharmaceutical industry would be 0:16:18.920 --> 0:16:21.680 most concerned with is if you have the true blue 0:16:21.680 --> 0:16:24.960 wave where Democrats control not only the House but also 0:16:25.040 --> 0:16:27.480 the Senate, and in that instance, they would have the 0:16:27.520 --> 0:16:29.800 ability to not only hold a lot of hearings that 0:16:29.840 --> 0:16:31.880 would create a lot of noise and headlines, but then 0:16:31.920 --> 0:16:35.400 also potentially send some legislation to President Trump's desk. And 0:16:35.440 --> 0:16:37.480 I think the concern for the industry is that if 0:16:37.520 --> 0:16:40.080 you've listened to President Trump over the past couple of years, 0:16:40.400 --> 0:16:43.160 you know his personal leanings from time to time appear 0:16:43.200 --> 0:16:45.760 to be more aligned with the Democrats on things like 0:16:45.920 --> 0:16:49.360 giving the federal government more direct influence over the prices 0:16:49.480 --> 0:16:52.720 of prescription drugs in the part deep program for example. Now, 0:16:53.080 --> 0:16:56.000 if it's just a split where our gridlock situation where 0:16:56.080 --> 0:16:58.960 Democrats maybe win control of the House, but Republicans retain 0:16:59.000 --> 0:17:01.840 control of the Senate, and I think those more draconian 0:17:01.920 --> 0:17:04.520 things are are taken off the table. But again, the 0:17:04.600 --> 0:17:07.720 Democrat controlled House would have the ability to dictate a 0:17:07.800 --> 0:17:10.760 number more hearings and things that would put pharmaceutical companies 0:17:11.200 --> 0:17:14.240 UM in more of a spotlight than they are are already. 0:17:14.480 --> 0:17:16.440 Brian Ryan, I just want to let you know that 0:17:16.560 --> 0:17:20.080 we have a group of future voters of America joining 0:17:20.160 --> 0:17:23.520 us here in our Bloomberg Interactive Broker studios. We have 0:17:23.640 --> 0:17:27.359 all the members of a Girl Scout a troop nineteen 0:17:27.560 --> 0:17:32.080 fifty six from Edgemont in Scarsdale. So they're all listening 0:17:32.119 --> 0:17:35.280 to you because they want to understand how the midterm 0:17:35.320 --> 0:17:40.880 elections figure into not just this election cycle, but the cycle. 0:17:41.359 --> 0:17:43.800 Are these the same issues you believe are going to 0:17:43.920 --> 0:17:47.320 dominate the next election or is this something that is 0:17:47.359 --> 0:17:51.000 specific to this mid term because typically you think, oh, 0:17:51.000 --> 0:17:54.840 however the economy goes, that's how the vote goes. Well. 0:17:54.960 --> 0:17:57.040 First of all, I'm honored to be speaking in front 0:17:57.040 --> 0:18:00.840 of such a distinguished group. Welcome girls, and uh. Secondly, 0:18:01.160 --> 0:18:04.200 I think the healthcare UH situation is one that will 0:18:04.200 --> 0:18:08.120 continue to be of particular interest to voters, not only 0:18:08.160 --> 0:18:12.159 drug pricing, but then also starting tomorrow probably will cycle 0:18:12.240 --> 0:18:16.480 very quickly into the presidential campaign, in particular the intra 0:18:16.800 --> 0:18:19.840 Democratic party fight about how far left do you want 0:18:19.920 --> 0:18:22.760 to go? Are we going to nominate someone who believes 0:18:22.760 --> 0:18:26.080 in the Bernie Sanders Medicare for All perspective? Or is 0:18:26.119 --> 0:18:28.720 it maybe not quite that far down that stretch. So 0:18:29.040 --> 0:18:30.720 you know, I think twenty nineteen is going to be 0:18:30.760 --> 0:18:33.280 a very interesting year from a healthcare perspective, and that 0:18:33.320 --> 0:18:36.639 obviously sets up the battle versus President Trump in twenty 0:18:37.440 --> 0:18:40.960 depending on the outcome of these UH midterm elections tomorrow 0:18:41.280 --> 0:18:44.000 and what policies emanate from there, that will obviously drive 0:18:44.040 --> 0:18:47.320 a lot of the conversation UM UH in heading into 0:18:48.200 --> 0:18:50.440 and certainly, you know, healthcare, so one that I think 0:18:50.480 --> 0:18:53.439 both parties will be forced to talk about, even if 0:18:53.480 --> 0:18:56.000 they don't want to. Brian, one thing that I'm struck 0:18:56.040 --> 0:18:58.840 by is that no matter who wins, we're going to 0:18:58.960 --> 0:19:02.720 probably deepen US deficit right with spending, possibly either with 0:19:02.760 --> 0:19:06.959 infrastructure spending or a more permanent tax cut. Would you 0:19:07.000 --> 0:19:09.840 say that that's an accurate statement? And what are the 0:19:09.880 --> 0:19:13.360 most likely spending scenarios should we see a blue wave 0:19:13.440 --> 0:19:16.359 or a red wave? Yeah, I think in certainly history 0:19:16.440 --> 0:19:18.720 suggests that's a pretty safe bet no matter what the 0:19:18.960 --> 0:19:21.560 what the outcome of an election is, UM, certainly you 0:19:21.640 --> 0:19:25.040 have either a blue wave or a split Congress. UM. 0:19:25.119 --> 0:19:27.600 I think infrastructure is an area where the President has 0:19:27.600 --> 0:19:31.639 expressed a lot of interest and Democrats UM also would 0:19:31.640 --> 0:19:35.480 want to to maybe uh, provide more stimulus In that standpoint, 0:19:35.600 --> 0:19:38.080 I think the political question that the Democrats would then 0:19:38.119 --> 0:19:40.840 have to ask though, is do they want to hand 0:19:40.960 --> 0:19:43.320 the president a win? Do they want to be seen 0:19:43.359 --> 0:19:46.200 on stage at a bill stigning ceremony for example, where 0:19:46.200 --> 0:19:48.960 the president is getting something that he wants. And then 0:19:48.960 --> 0:19:51.320 for the president, would he be willing to to cave 0:19:51.359 --> 0:19:54.440 in on some Democratic demands? How much would he ask 0:19:54.520 --> 0:19:57.880 for in return, whether it's the wall or other infrastructure 0:19:57.880 --> 0:20:01.000 priorities that perhaps the Democrats, um, you know, aren't aligned with, 0:20:01.560 --> 0:20:03.959 but that I think is an area that investors are 0:20:03.960 --> 0:20:05.959 going to want to focus on. But that's certainly that's 0:20:06.000 --> 0:20:09.760 certainly not a deficit cutting program that we're going to see, Brian, 0:20:09.920 --> 0:20:12.880 there are a lot of ballot initiatives that voters are 0:20:12.920 --> 0:20:15.600 going to have to decide on. Tell us the ones 0:20:15.680 --> 0:20:20.200 that you believe are the most relevant. Well, a couple 0:20:20.359 --> 0:20:22.720 uh that that I think are in our various analysts 0:20:22.720 --> 0:20:25.760 are focused on here at Bloomberg Intelligence out in California. 0:20:26.280 --> 0:20:28.240 Prop eight I think has a lot of a lot 0:20:28.280 --> 0:20:31.960 of interest within the healthcare community, in particular dialysis providers, 0:20:32.080 --> 0:20:34.640 you know, Uh, Divita in particular has been very keen 0:20:34.720 --> 0:20:38.920 on on that one. UH, several ballot initiatives could could 0:20:39.080 --> 0:20:42.760 I guess further the trend towards cannabis legalization. I think 0:20:42.800 --> 0:20:45.440 Michigan is a state in particular that that our analysts 0:20:45.440 --> 0:20:49.159 are focused on, given the UH the potential market in 0:20:49.240 --> 0:20:51.520 that state. So those are a couple that across the 0:20:51.520 --> 0:20:53.880 country a number of ballot initiatives. This is much more 0:20:53.880 --> 0:20:56.760 than just the battle for control of Congress. Thank you 0:20:56.800 --> 0:20:58.439 so much for being with us, Brian, Ryan. I'm sure 0:20:58.480 --> 0:21:00.280 you've got a long night ahead of you, and we 0:21:00.280 --> 0:21:02.880 may not even know the results right come tomorrow morning, 0:21:02.920 --> 0:21:05.480 and there might be some pretty hairy races there. That's right, 0:21:05.480 --> 0:21:08.280 you know, ballot I guess the post closed around eleven 0:21:08.280 --> 0:21:10.960 o'clock tonight Eastern time in California. A number of those 0:21:11.000 --> 0:21:15.600 races could ultimately decide which way the no the Congress 0:21:15.640 --> 0:21:18.120 goes next year. Well, Brian, right, I have a wonderful 0:21:18.119 --> 0:21:21.000 time drinking coffee from now until tomorrow this time, Brian 0:21:21.080 --> 0:21:24.720 Ryce and your healthcare policy analyst for Bloomberg Intelligence coming 0:21:24.720 --> 0:21:27.879 to us from the Capital of the United States, Washington, 0:21:28.000 --> 0:21:34.600 d C. The creditors of Seers are asking the court 0:21:34.720 --> 0:21:40.200 to probe transactions that involve the bankrupt retailer's biggest shareholder, 0:21:40.840 --> 0:21:43.320 Eddie Lampert. And here to tell us about it is 0:21:43.400 --> 0:21:48.600 Noel Hebert, director of credit research for Bloomberg Intelligence. No 0:21:48.920 --> 0:21:53.240 just set out for us exactly what kinds of transactions 0:21:53.640 --> 0:21:56.840 do they want to investigate? It? Well, pretty much all 0:21:56.880 --> 0:21:59.919 of them. Uh. So mean, over the last several years 0:22:00.080 --> 0:22:03.280 is in order to keep Sears afloat at these done 0:22:03.280 --> 0:22:06.880 a number of things to basically inject capital into the business. 0:22:07.600 --> 0:22:10.840 The biggest one being the transaction where they spun out 0:22:10.880 --> 0:22:13.600 a bunch of real estate into what's called Siritage, which 0:22:13.640 --> 0:22:16.480 is a real estate investment trust that took on a 0:22:16.480 --> 0:22:18.880 bunch of the stores owned by Sears. But then more 0:22:18.880 --> 0:22:22.080 recently there's been a number of deals which were more 0:22:22.160 --> 0:22:25.720 direct lending, whereas Eddie Lampert through his E s L 0:22:25.920 --> 0:22:30.600 investment font would basically lend dollars secured by new real 0:22:30.720 --> 0:22:33.399 estate or intellectual property or some of the other assets 0:22:33.440 --> 0:22:36.199 of the company. So what's its stake here? I mean, 0:22:36.240 --> 0:22:39.119 could Eddie Lampert have to pay the credit or something 0:22:39.200 --> 0:22:42.920