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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along

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Speaker 1: with my co host of Bonnie Quinn. Every business day

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Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,

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Speaker 1: along with essential market moving news. Kind the Bloomberg Market

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Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,

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Speaker 1: and on Bloomberg dot com. It is time now for

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Speaker 1: Bloomberg Opinion. Last night, around six pm, The New York

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Speaker 1: Times released a whole cornucopia of stories that detailed as

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Speaker 1: much as we know now and even a little bit

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Speaker 1: more about President Donald Tomp's tax returns. Tim O'Brien, senior

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Speaker 1: columnist for Bloomberg Opinion, writes today that these taxes show

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Speaker 1: he's a national security threat. I'm quoting. At best, he's

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Speaker 1: a haphazard businessman, human billboard and serial bankruptcy artist who

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Speaker 1: gorgees on debt he may have a hard time repaying.

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Speaker 1: And I won't say what he is at worst. What

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Speaker 1: is he at worst? Him? Well, it works funny, he's

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Speaker 1: you know, he's he's a con artist and a grifter

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Speaker 1: who I think is purple traded a number of public

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Speaker 1: policy frauds on on both his voters in the American

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Speaker 1: public during his tenure, because what the tax returns reveal

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Speaker 1: is that the person who was a signature force behind

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Speaker 1: a major tax overhaul that ben benefited the most affluent

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Speaker 1: members of our society, um himself. He paid next to

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Speaker 1: no taxes in just seven and fifty dollars and many

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Speaker 1: years he paid no taxes at all. Um. I think

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Speaker 1: the other thing that's that is substantiated in the Times

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Speaker 1: report has been something that's been known about Trump for

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Speaker 1: a long time is that, um, he has hundreds of

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Speaker 1: millions of dollars in debt. I think he's gotten north

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Speaker 1: of a billion, frankly, and uh he may have a

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Speaker 1: hard time paying that debt down if his creditors come calling.

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Speaker 1: He is his assets are certainly, you know, well in

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Speaker 1: excess of his current debts. But the problem is his

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Speaker 1: assets aren't liquid and uh so his biggest holdings are

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Speaker 1: actually controlled by other people. So he's going to enter

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Speaker 1: into a phase right now where he may be financially squeezed.

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Speaker 1: It makes him a national security risk because if he

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Speaker 1: can't sell his assets to pay back his loans, he's

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Speaker 1: gonna go looking for a handout, and that makes him

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Speaker 1: vulnerable to foreign influence. So, Tim, you know, when he

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Speaker 1: talked about real estate investors and so on, the there's

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Speaker 1: so much UM tax sheltering that those types of owners

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Speaker 1: and investors can avail themselves to, whether it's depreciating the

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Speaker 1: value of a building and accelerating that depreciation, so on

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Speaker 1: and so forth, that oftentimes you do see these big

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Speaker 1: earners with little to no tax burden. How unusual do

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Speaker 1: you think President Trump is here with his returns versus

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Speaker 1: some of his peers. That's a good question, paul I.

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Speaker 1: You know, Um, over the last two decades, Trump has

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Speaker 1: underpaid UH taxes by about four million dollars relative to

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Speaker 1: his peers based on the Times data. UM. You know,

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Speaker 1: the wealthiest taxpayers in the United States carry the biggest burden.

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Speaker 1: They're the most affluent members of society, pay more in

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Speaker 1: terms of total dollar amounts UH in taxes than anyone else. Um.

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Speaker 1: But when you compare Donald Trump to his peers, he's

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Speaker 1: well below them. When you compare Donald Trump to an

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Speaker 1: average American family, say a family making about seventy five

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Speaker 1: THO dollars a year, they're going to play somewhere in

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Speaker 1: the neighborhood of fourteen thousand dollars in taxes in the

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Speaker 1: year that Donald Trump paid seven hundred and fifty dollars.

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Speaker 1: No one looking at that would say that that's equitable.

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Speaker 1: So even if the taxes he pays comport with what

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Speaker 1: real estate fallowers are allowed to do and has not

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Speaker 1: run a file of the tax code, there's a lot

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Speaker 1: of inequity built into this. Now, obviously we have to

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Speaker 1: remember that this is his self portrayal. Right, these are

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Speaker 1: his taxes that were presumibly VET advice accountants and so on.

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Speaker 1: But tim, if you represent yourself as being able to

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Speaker 1: pay a loan off and you're not able to pay

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Speaker 1: that loan off, is that a climb? Well, if you

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Speaker 1: misrepresent two investors or two banks the value of your

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Speaker 1: assets um, and you knowingly are making false statements as

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Speaker 1: a form of fraud, Uh, there's you know, it's on

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Speaker 1: the banks and investors to do their own due diligence,

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Speaker 1: But no one is allowed to go around and create

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Speaker 1: valuations out of whole cloth. Uh and and and try

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Speaker 1: to get funding based on that. Uh. Trump. Trump is

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Speaker 1: being investigated currently for that very thing VANNI by the

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Speaker 1: Manhattan District Attorney's Office. This issue that Michael Cohen raised

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Speaker 1: during his his congressional testimony, things that I've raised decades

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Speaker 1: ago about how he accounts for his his assets. UH.

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Speaker 1: You know, Michael Cohen said that Trump routinely and knowingly

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Speaker 1: inflated valuations in order to get loans and in esters,

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Speaker 1: and that could be putting him in I think legal

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Speaker 1: peril in the in the upcoming year. So Tim, it's

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Speaker 1: just an update on what some of those external investigations

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Speaker 1: are of the presidents as perhaps it relates to his finances.

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Speaker 1: I guess the Southern District of New York. Yeah, the

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Speaker 1: southern reside of New York has been looking at at Trump.

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Speaker 1: The status of that is unknown. It's complex there because

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Speaker 1: the Southern District, which is the U. S. Attorney's office

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Speaker 1: there is federal UH. They are under the Attorney General's

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Speaker 1: UH guidance from the Attorney generalist, someone who's routinely run

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Speaker 1: interference for Trump. UM. The state Attorney general in New

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Speaker 1: York is looking at UH has looked at Trump's foundations

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Speaker 1: and his charitable activities. In the past, he and his

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Speaker 1: children were tossed out of the philanthropic world for um

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Speaker 1: defrauding their own charity. I think UM, the A G

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Speaker 1: and New York is also looking at Trump's taxes, but

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Speaker 1: I think the investigation in the District Attorney's office in

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Speaker 1: New York that is looking at Trump's payment of hush

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Speaker 1: money to UM women who have alleged to have sexual

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Speaker 1: encounters with him, as well as possible accounting UH irregularities

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Speaker 1: or and or fraud UM at the Trump organization is

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Speaker 1: the one that's the most perilous for him. He's got

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Speaker 1: no federal sway over that investigation. It's something that's going

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Speaker 1: to be waiting for him if he doesn't get reelected

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Speaker 1: in November. And I think it's something that's really animated

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Speaker 1: a lot of his agitation around these issues because he

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Speaker 1: knows he's gonna be facing that next year. Tim, This

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Speaker 1: isn't a flip question, but I would like you to

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Speaker 1: consider it. So about two hundred million came from the Apprentice,

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Speaker 1: a big, big sum. He was getting something like the

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Speaker 1: royalties or the the fees for that. Given that it's

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Speaker 1: clear he's a money losing businessman. Could the Apprentice or

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Speaker 1: Mark Burnett, or you know, somebody on behalf of Consumers

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Speaker 1: or view where is sue him for falls advertising? Well,

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Speaker 1: I don't you know. I think I think, um, probably

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Speaker 1: Mark Burnett could have gotten Donald Trump more cheaply than

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Speaker 1: he did. That's one of those things we've realized. And

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Speaker 1: all the money he made from that show. Um, you know,

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Speaker 1: I don't think, um, I don't see a false advertising

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Speaker 1: shoe rising with The Apprentice. I think the usue around

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Speaker 1: The Apprentice has always been that Donald Trump was sitting

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Speaker 1: in a fake boardroom in these phony scenarios with aspiring entrepreneurs,

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Speaker 1: doling out his wisdom as he tried and true dealmaker

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Speaker 1: and and in fact, that persona is what helped lifted

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Speaker 1: him into the White House. White House. And what we've

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Speaker 1: seen time and again is that reality shows that he's

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Speaker 1: never been a gifted dealmaker or businessman. That he's been

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Speaker 1: uh a routine Um, he's had routine bankruptcies. Another problems

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Speaker 1: the tax returns drives home even further. Hey, Tim, thanks

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Speaker 1: so much for joining us. Who really appreciate me. You're

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Speaker 1: busy today Tim O'Brien, senior columnist for Bloomberg Opinion, giving

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Speaker 1: us his thoughts on this explosive story from The New

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Speaker 1: York Times over the weekend. Of course, you know, Tim

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Speaker 1: wrote in authorized biography of Trump years ago, was sued

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Speaker 1: by Trump for that before he was president. Tim won

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Speaker 1: that lawsuit, so he's had a lot of experience with

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Speaker 1: then real estate investor Donald Trump. Let's bring back Bill Rhodes,

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Speaker 1: advisor to the world really and banker to the world.

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Speaker 1: We were talking a little bit about China in our

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Speaker 1: last block, and now we want to move to Latin America.

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Speaker 1: We'd just begun on that Bill. There is some very

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Speaker 1: you know, specific cases in Latin America. Obviously Venezuela is

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Speaker 1: one of them. But the countries that had been sort

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Speaker 1: of skirting the worst of you know, of the fallout

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Speaker 1: from the coronavirus now seemed to be right bang in

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Speaker 1: the center of it. So Mexico, for example, and some

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Speaker 1: of the other countries. How bad will it get over

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Speaker 1: the next two to three order is for Latin America. Well,

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Speaker 1: I think Latin America is facing the greatest challenge it

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Speaker 1: has an over a century. Uh. First of all, you

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Speaker 1: have the COVID UH nineteen situation, a pandemic which has

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Speaker 1: really hit uh Latin America harder than anywhere else. Um.

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Speaker 1: The latest figures that I've seen show that of the

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Speaker 1: COVID deaths UH so far in the world, and these

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Speaker 1: are figures as of June. I haven't seen anything since

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Speaker 1: coming from Latin America with only eight percent of the population,

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Speaker 1: So they are getting hit big time. And the latest

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Speaker 1: predictions that you find from the various banks, Bank of

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Speaker 1: America elsewhere is that this year there will be a

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Speaker 1: decline of over eight percent eight point two percent, although

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Speaker 1: the World Bank and the i m F in June

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Speaker 1: had talked about possibility of ten percent. Allow it Alo,

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Speaker 1: We'll just have to see. But it is hitting Latin

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Speaker 1: America much worse in the Middle East, Africa or Emerging Asia. Uh.

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Speaker 1: And as you pointed out, I think Mexico Brazil have

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Speaker 1: been hit particularly hard. Mexico is on the way, according

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Speaker 1: to the day's statistics put out by the Central Bank,

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Speaker 1: the Bank of Mexico, to a drop of GDP of

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Speaker 1: between eight and uh eight percent and twelve percent uh

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Speaker 1: and it's only being helped keep the float by the

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Speaker 1: flow of remittances from the United States. Um. That's number one,

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Speaker 1: you know, is the COVID thing. Second of all, a

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Speaker 1: lot of these countries, as you point out, had already

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Speaker 1: been in trouble before. Argentina Ecuador, Venezuela had all been

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Speaker 1: in recession, some of them pretty steep before COVID hit.

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Speaker 1: And the third thing, which is most people forget but

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Speaker 1: we've we've discussed it here on your program, is the

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Speaker 1: greatest refugee problem America's ever faced in its history. Over

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Speaker 1: five million venezue oilans circulating around Latin South America, and

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Speaker 1: the country that's been hit the most with him is

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Speaker 1: Columbia with a million and a half. But these are like,

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Speaker 1: you know, uh, three horsemen. Of course, there were four

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Speaker 1: horsemen of the apocalypse, but I would say if you

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Speaker 1: had one less horse, it would be three horses of

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Speaker 1: the apocalypse hitting Latin America all at one time. So, Bill,

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Speaker 1: it just seems overwhelming the challenges in Latin America because

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Speaker 1: so many of the issues that you highlighted are deep seated.

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Speaker 1: We're there before the pandemic. Now they're just being exacerbated

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Speaker 1: by the effects of the pandemic. What are some possible solutions,

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Speaker 1: um for this part of the world. Well, going back

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Speaker 1: to China, um there's an expression in Chinese Mandarin called

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Speaker 1: wai ti, which means crisis opportunity, and um luis Alberto Moreno,

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Speaker 1: who ran the Inter American Development Bank predicted ten years

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Speaker 1: ago that this is going to be the decade for

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Speaker 1: Latin America because they were going to institute UH reforms,

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Speaker 1: which they didn't do. So this is an opportunity, I

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Speaker 1: think for them to institute major reforms in the area

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Speaker 1: of education, health care services, the rule of law, and

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Speaker 1: also to build up their institutions so that they can

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Speaker 1: come out of this with some sort of a base

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Speaker 1: going forward. Also, there's an opportunity on the trade side

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Speaker 1: because you have two major trading blocks in Latin America

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Speaker 1: Mircos serp which is Brazil, Argentina, Paraguay, Uruguay, and then

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Speaker 1: you have the Pacific Alliance, which are all those countries

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Speaker 1: in South America from Chilean up through Mexico, which formed,

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Speaker 1: as I said, to Pacific Alliance. And there's been talk

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Speaker 1: about merging the two of those so that you would have,

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Speaker 1: you know, one of the largest trading blocks in the world.

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Speaker 1: And if that could ever tie itself up to the

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Speaker 1: modern version of NAFTA, which was the idea that George

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Speaker 1: Bush Sr. And Bill Clinton had of a trade zone

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Speaker 1: of the Americas. So sometimes when you get in the

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Speaker 1: depth of despair, Uh, you can build on it. And

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Speaker 1: the question is, uh, is there the will on the

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Speaker 1: part of governments to do so? And will there be

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Speaker 1: the financial backing from international financial institutions and the private

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Speaker 1: sector to do so? And that will depend on the

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Speaker 1: governments in these individual countries uh taking the steps they

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Speaker 1: need to reform the economies and to try and and

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Speaker 1: uh get away from some of the corrupt practices that

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Speaker 1: we've seen over the last few years. Well, it sounds

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Speaker 1: like a big asks me and and and and a long, long, long,

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Speaker 1: long process. Um. You know, how hopeful are you that

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Speaker 1: we we see some kind of reform in the next

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Speaker 1: ten years. Well, you know, I'm an optimist in the

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Speaker 1: sense that I saw Latin America to come out of

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Speaker 1: the decade, the so called outlook, the decade of the

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Speaker 1: eighties and reformed itself, but they never continued on with it.

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Speaker 1: And so I think this time they really have to

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Speaker 1: move themselves, that they're going to fall away behind uh

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Speaker 1: Emerging Asia, even Africa, uh, you know, which is taking

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Speaker 1: steps on COVID. So my hope here is that the

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Speaker 1: governments will respond. The I m F, the World Bank,

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Speaker 1: inter American Development Bank will provide help but very important

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Speaker 1: here and maybe we end on this point I don't

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Speaker 1: know in timing, is the local private sectors have to

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Speaker 1: be uh willing, uh and optimistic about investing in their

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Speaker 1: own country because so often in Latin America the local

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Speaker 1: private sector moves its money out, and you can't expect

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Speaker 1: foreign investment to come in if they see the local

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Speaker 1: private sector moving their money out. So I think there's

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Speaker 1: there's work here for governments, the private sector, and the

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Speaker 1: international financial institutions to try and take advantage of this

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Speaker 1: terrible situation to put in reforms that they've been holding

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Speaker 1: off on doing for some time. Bill, thanks once again

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Speaker 1: for joining us. We we we appreciate it always. Bill Rhodes,

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Speaker 1: president and CEO of the William R. Rhodes Global Advisor's

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Speaker 1: former chairman at City Bank. A tour the Forced Vannie

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Speaker 1: of all things global markets from China all the way

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Speaker 1: to Latin American and his Bill points out why the

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Speaker 1: challenges in front of that region of the world in

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Speaker 1: Latin America just seems so so steep. I'm not sure

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Speaker 1: who can lead them out of those challenges well, and

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Speaker 1: particularly now during coronavirus which is ravaging this house as well.

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Speaker 1: You sort of get the impression that everyone would just

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Speaker 1: listen to Bill everything would be okay. He has so

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Speaker 1: much experience in all of this, but unfortunately and sometimes

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Speaker 1: governments have their own opinions on things. Yeah, but hopefully

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Speaker 1: this can be a catalyst for these countries to come together.

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Speaker 1: Despite the volatility and financial markets stemming large part from

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Speaker 1: the pandemic, one area of the financial markets has seen

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Speaker 1: extraordinary robust new issuance, and that is corporate credit investment

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Speaker 1: great credit. Just record months we've seen as companies take

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Speaker 1: advantage of historically low interest rates. Together some more color

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Speaker 1: on that, we welcome Steve Kellner. He's head of Corporates

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Speaker 1: for p JIM Fixed Income. They have over eight hundred

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Speaker 1: billion firm wide and fixed income assets, so they know

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Speaker 1: what they're talking about. Steve, Thanks so much for joining

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Speaker 1: us here. We've seen so much new issuance in the

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Speaker 1: corporate credit market. My question is is this company has

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Speaker 1: taken on additional debt to fuel growth or is it

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Speaker 1: simply refinancing their existing debt and is trying to take

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Speaker 1: advantage here of these historically low rates. First off, thanks

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Speaker 1: for having me. This morning's pleasure to be here. I'd

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Speaker 1: say it's probably UM. It's probably both that companies in

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Speaker 1: the short term are increasing their leverage through the increase

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Speaker 1: in in gross debt UM. But at the same time,

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Speaker 1: companies have been refinancing a lot about standing debt and

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Speaker 1: a lot of this has been built around increasing liquidity.

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Speaker 1: And we think as we move into two thousand and

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Speaker 1: twenty one, a lot of those companies are going to

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Speaker 1: start buying back their debt or paying off maturing debt,

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Speaker 1: especially in the triple bespect So what kinds of decisions

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Speaker 1: do you have to make on a daily basis, UM,

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Speaker 1: I think we want to actually look at say macro

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Speaker 1: type of indicators. Um, you know, which way is the

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Speaker 1: economy going, certainly which ways interest rates and the FED

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Speaker 1: going to go in here, and then from there it's

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Speaker 1: a lot of bottoms up analysis and working at different

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Speaker 1: industries and different companies, ripping apart their balance sheets and

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Speaker 1: income statements, and then actually seeing what their use of

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Speaker 1: their free cash flow as they start to generate it

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Speaker 1: is going to be, and which companies out there will

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Speaker 1: be improving their credit profile going forward. So I'd say

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Speaker 1: it's it's a combination of a top down um macro

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Speaker 1: view of the economy and with different industries that are

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Speaker 1: affected and are going to be affected in the future,

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Speaker 1: coupled with a lot of in depth analysis of the

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Speaker 1: companies in the industries themselves. Hey, sty what are you

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Speaker 1: and your team seeing in terms of credit quality? Out

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Speaker 1: there were six seven months into this pandemic. There's really

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Speaker 1: some concern here that the economic damage is going to

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Speaker 1: be widespread, continued to be widespread, and perhaps last for longer.

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Speaker 1: What are you seeing in terms of credit quality? Yeah,

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Speaker 1: it's probably more of a k type of environment where

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Speaker 1: you've got the companies that are actually in the sweet

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Speaker 1: spot and benefiting from the work at home and other

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Speaker 1: technology oriented or consumer oriented um effects, and then you've

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Speaker 1: got the companies that got caught in the headminds of

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Speaker 1: covid um, and those companies themselves is probably where the

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Speaker 1: opportunity is as you look forward, in the sense that

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Speaker 1: those managements now are really really focusing on cutting expenses.

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Speaker 1: They've actually stopped their share buybacks in most cases, have

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Speaker 1: stopped their dividends. They're focusing on improving their cash flow

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Speaker 1: and using that cash flow to shore up their balance sheets.

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Speaker 1: So this is one of the rare times in the

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Speaker 1: economic cycle that the manager's behavior are closely aligned with

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Speaker 1: bond holders. And again that's probably more in the industries

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Speaker 1: that have been caught UM in the down draft of COVID,

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Speaker 1: and again most of those would be in the trip

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Speaker 1: will be ratings category. What would your advice be for

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Speaker 1: non sophisticated investors, because obviously, you know there are different

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Speaker 1: levels of investors, and there are certain of those who

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Speaker 1: don't want to be in the stock market right now.

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Speaker 1: Is there any way they could play in your market

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Speaker 1: the our market themselves. Since we tend to deal in

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Speaker 1: corporate bonds and it's taxable, it really lends itself much

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Speaker 1: more to institutional investing and pension plans where the where

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Speaker 1: they're non taxable or the taxes are deferred UM. But

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Speaker 1: the way to actually do would be through mutual funds

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Speaker 1: and some of the more perhaps UM core plus or

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Speaker 1: broad market strategy funds which look to take advantage of

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Speaker 1: corporates but also selective high yield and selective emerging markets,

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Speaker 1: and those are typically referred to as total return bond funds,

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Speaker 1: and that's probably the best vehicle that way an investor

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Speaker 1: can get active management as well as diversification. Steve, how

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Speaker 1: are you guys from the corporate credit perspective, handicapping the

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Speaker 1: upcoming elections, both the presidential election as well as Senate. Yeah,

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Speaker 1: I think this is a pretty gamy time right now. Um.

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Speaker 1: And and you know, it's it's not as much probably

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Speaker 1: about who wins the presidency as much as it is

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Speaker 1: about how how long it takes to determine who the

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Speaker 1: who that winner is um in here. But we do

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Speaker 1: think that, you know, we are an environment where the

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Speaker 1: markets are going to stay very volatile until we actually

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Speaker 1: get to the election. And it looks like as though

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Speaker 1: we've actually been able to figure out who that winner

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Speaker 1: is going to be if you look forward to next here, um.

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Speaker 1: Obviously the Democrats are talking about raising taxes. Um. Those

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Speaker 1: tax increases for corporate America, if they occur, should be

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Speaker 1: pretty modest, perhaps one to something like maybe on the

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Speaker 1: tax rate. But remember, even if the Democrats get in,

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Speaker 1: their primary focus next year is probably going to be

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Speaker 1: to continue to fix the economy. Um. And that's going

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Speaker 1: to be difficult to do if you start increasing taxes

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Speaker 1: on corporations. Just briefly, how much in fallen angels are

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Speaker 1: you expecting in the next you know, six twelve months. Yeah,

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Speaker 1: the we've had, we've had a drop off in the

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Speaker 1: rate of fallen angels recently. There's only been a few

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Speaker 1: in the last few months. UM. The rating agencies, while

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Speaker 1: they have a lot of these companies negative outlook, they're

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Speaker 1: giving them time, um to get the benefit of the

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Speaker 1: turn in the economy when when the economy fully reopens,

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Speaker 1: um and I think that we think that the fallen

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Speaker 1: angels are going to be relatively modished over the next

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Speaker 1: twelve months. We've had we had about a hundred and

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Speaker 1: sixty billion so far this year, and we would expect

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Speaker 1: to be well under that over the next twelve month. Steve,

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Speaker 1: thank you so much for all the details. Steve Kellner

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Speaker 1: is head of Corporates at p JIM Fixed Income and

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Speaker 1: what an interesting job it must be these days with

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Speaker 1: practically every corporate and the market at the moment, it's

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Speaker 1: really just such a fascinating market. It is time now

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Speaker 1: to talk healthcare. Huge, huge policy and market driver these

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Speaker 1: next few weeks. Let's bring in Brian Rye, senior healthcare

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Speaker 1: policy analyst for Bloomberg Intelligence. Brian, obviously we have the

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Speaker 1: Scotus nominee and the potential outcome there. We have Democrats

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Speaker 1: saying that, you know, if Amy Coney Barrett is confirmed,

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Speaker 1: that there's the great potential of us strikedown of the

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Speaker 1: A C A in its entirety, and there are many

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Speaker 1: other things to discuss as well. Let's start there, though,

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Speaker 1: if Amy Coney Barrett, as we assume does get is

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Speaker 1: nominated now and does get confirmed, is that automatically a

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Speaker 1: strikedown of the C A. Well, Hi, Vanni, thanks for

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Speaker 1: having me, And I would start by saying that, no,

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Speaker 1: I don't think it's a certainty that the A C

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Speaker 1: A and its entirety um would be rendered on constitutionally

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Speaker 1: struck down. I think what's probably more likely to happen

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Speaker 1: is that you would see the so called individual mandate

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Speaker 1: probably struck down. That's not a huge deal because, frankly,

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Speaker 1: because the tax law that Republicans passed zero and out

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Speaker 1: the penalty for that, so in all effects, the mandates

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Speaker 1: already been rendered um noll and void. I think what

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Speaker 1: could happen is some uncertainty about, okay, if you strike

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Speaker 1: down the mandate, are there other previsions of the A

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Speaker 1: C A, such as community rating guaranteed issue the so

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Speaker 1: called pre existing conditions concerned them you've we've heard a

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Speaker 1: lot of a lot of talk about maybe that could

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Speaker 1: be struck down as well. Um, certainly could create some

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Speaker 1: chaos for the new Congress in one as to Okay, well,

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Speaker 1: and then how do you fix that at that point?

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Speaker 1: But I think in terms of the entire law being

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Speaker 1: struck down, I'm not sure we'd go that far just yet. So, Brian,

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Speaker 1: we also have a little bit of an election coming

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Speaker 1: up here. Uh, there is a speculation that perhaps the

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Speaker 1: Democrats can retake control of the Senate. If that were

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Speaker 1: to occur, what do you think some of the fallout

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Speaker 1: would be for the healthcare space? You know, that's a

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Speaker 1: great question, Paul, And you're right, I know this is

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Speaker 1: a meaningful election for a lot of different groups. I

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Speaker 1: would argue that pharma probably has more at stakes than

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Speaker 1: anyone else, you know, because you're right. If Democrats are

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Speaker 1: able to not only win the presidency but retake control

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Speaker 1: of the Senate, then a lot of the things that

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Speaker 1: they've liked that they would like to do are something

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Speaker 1: back on the table. I think the holy grail for them,

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Speaker 1: the most meaningful reform they'd like to pass is to

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Speaker 1: give the government the ability to negotiate Medicare drug prices

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Speaker 1: directly with manufacturers right now, that's that's prevented, that's prohibited

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Speaker 1: by federal law. Right now, those price negotiations are between

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Speaker 1: drug makers and the insurers or PBMs who participate in

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Speaker 1: the Medicare Part D program. Nancy Pelosi and the House

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Speaker 1: Democrats have passed Build a couple of different times in

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Speaker 1: the past nine months that would give the government that

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Speaker 1: ability that would repeal that's so called non interference clause. Um.

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Speaker 1: Those those bills have, you know, unsurprisingly died in the Senate,

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Speaker 1: and so that Republican Senate has been a firewall for

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Speaker 1: the industry. And as long as that remains in place,

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Speaker 1: I think you would see the status quo continue. But

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Speaker 1: you know, if Democrats were able to win a majority there,

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Speaker 1: then a lot of those things get back on the table.

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Speaker 1: The one word of caution though, for for those who

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Speaker 1: may think, well, that would be an automatic. As much

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Speaker 1: as we saw with Republican promises to repeal and replace

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Speaker 1: the A C A Obamacare heading into the election, we

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00:25:44,880 --> 00:25:47,040
Speaker 1: saw that they tried and failed to do that in

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00:25:47,520 --> 00:25:50,600
Speaker 1: seventeen Sometimes those votes that are easy to take, you know,

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00:25:50,640 --> 00:25:52,960
Speaker 1: they're not going to be enacted into law become a

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00:25:52,960 --> 00:25:55,040
Speaker 1: bit more difficult when the votes actually matter. So I

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00:25:55,080 --> 00:25:57,399
Speaker 1: think we could see something similar. If it's a slim

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Speaker 1: majority for the Democrats in the Senate, it's an hold

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00:26:01,000 --> 00:26:04,000
Speaker 1: onto the Senate, but the White House changes hands. Does

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00:26:04,040 --> 00:26:07,679
Speaker 1: that mean anything? You know? It means probably more on

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00:26:07,800 --> 00:26:10,400
Speaker 1: the administrative side. You know, I don't think it means

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00:26:10,480 --> 00:26:13,239
Speaker 1: as much because frankly, President Trump, when he speaks off

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00:26:13,280 --> 00:26:16,240
Speaker 1: the cups his own interests don't healthcare Someone aligned more

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00:26:16,280 --> 00:26:19,919
Speaker 1: with Democrats sometimes then with with Republicans, such as his

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00:26:20,000 --> 00:26:23,639
Speaker 1: international Pricing index and drug importation and other things that

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Speaker 1: most congressional Republicans opposed UM but that he personally sort

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Speaker 1: of is is in favor of. So I would think

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Speaker 1: you would see obviously new heads of the f D,

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Speaker 1: a new head CMS, new head of HHS, and so

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00:26:36,200 --> 00:26:40,000
Speaker 1: from an administrative standpoint, they will probably be more likely

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00:26:40,080 --> 00:26:42,760
Speaker 1: to roll back some of the changes to the A

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00:26:42,880 --> 00:26:44,920
Speaker 1: C A UM. You know, a lot of the things

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Speaker 1: that the Trump administration has done have been to roll

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Speaker 1: back some of those protections. UM like make it easier

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Speaker 1: for short term plans to gain a hold in some

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00:26:53,160 --> 00:26:56,160
Speaker 1: of the states, gives states a lot more flexibly, uh,

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00:26:56,240 --> 00:26:58,040
Speaker 1: for those who don't want to comply with a lot

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00:26:58,119 --> 00:27:00,159
Speaker 1: of the a c A mandates to do so, I

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00:27:00,160 --> 00:27:02,520
Speaker 1: think you would see that kind of roll back UM

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Speaker 1: as well as have maybe the CMS folks try and

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00:27:05,880 --> 00:27:08,359
Speaker 1: restore the the funding to the health insurers who participate

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00:27:08,520 --> 00:27:11,359
Speaker 1: as well. So Brian or investors just kind of staying

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00:27:11,400 --> 00:27:13,480
Speaker 1: away from the whole healthcare space until we had better

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00:27:14,000 --> 00:27:16,600
Speaker 1: view what's going to happen come November. Well, you know,

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00:27:17,040 --> 00:27:19,040
Speaker 1: it's one of many factors. Obviously, there's a lot of

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00:27:19,080 --> 00:27:20,879
Speaker 1: things going on in the industry right now, a lot

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00:27:20,880 --> 00:27:22,600
Speaker 1: of certainly a lot of interest in development of a

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00:27:22,680 --> 00:27:26,399
Speaker 1: vaccine for the COVID nineteen pandemic and other things. And

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00:27:26,400 --> 00:27:29,280
Speaker 1: in a strange sort of way, this interest in innovation

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00:27:29,920 --> 00:27:32,800
Speaker 1: and speed UM is perhaps giving the industry somewhat of

477
00:27:32,800 --> 00:27:35,800
Speaker 1: a decent argument against uh what they would turn price

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00:27:35,880 --> 00:27:38,480
Speaker 1: controls and other things that they would claim would stifle

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00:27:38,800 --> 00:27:41,399
Speaker 1: such innovation. And so a lot of moving parts are

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00:27:41,440 --> 00:27:44,440
Speaker 1: for the industry right now. You know, for better for worse, Paul,

481
00:27:44,440 --> 00:27:46,879
Speaker 1: people always get sick. And so no matter who's um,

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00:27:46,920 --> 00:27:48,560
Speaker 1: you know, who who's gonna win the election, I think

483
00:27:48,560 --> 00:27:50,639
Speaker 1: there will always be a need and an interest in

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00:27:50,720 --> 00:27:53,000
Speaker 1: what the health care sector is doing. But yeah, I

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00:27:53,080 --> 00:27:56,119
Speaker 1: think the as you alluded to earlier, it's not just

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00:27:56,200 --> 00:27:59,120
Speaker 1: the White House, but that control of the Senate, given

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00:27:59,160 --> 00:28:01,480
Speaker 1: how much the republic looking controlled Senate has been a

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00:28:01,800 --> 00:28:05,199
Speaker 1: firewall for the industry, particularly pharma. You know, if that

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Speaker 1: changes hands, then the calculus changes as well. Okay, Brian,

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Speaker 1: thanks so much for joining us. We will always appreciate

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Speaker 1: you helping us get through these healthcare issues which the

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Speaker 1: policy usues, which are just so dense for the average consumer.

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Speaker 1: Brian Rye, senior healthcare policy analysts for Bloomberg Intelligence. Again,

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Speaker 1: so Bavani's you point out we have, you know, a

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Speaker 1: increasingly conservative uh Supreme Court, We've got the elections coming up,

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Speaker 1: a lot of change from a regulatory perspective for a

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Speaker 1: lot of industries, none perhaps more so than healthcare. And

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Speaker 1: you know, another question is will coronavirus eventually be considered

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Speaker 1: a pre existing condition, you know, if you suffer from

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00:28:42,320 --> 00:28:44,479
Speaker 1: longer term consequences. So what does it mean for all

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00:28:44,480 --> 00:28:48,120
Speaker 1: those people getting sick right now too? Yeah, absolutely that

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00:28:48,120 --> 00:28:49,680
Speaker 1: it's going to be something to pay attention to the

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00:28:49,760 --> 00:28:55,320
Speaker 1: markets up significantly, the doubt of five hundred points. Thanks

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00:28:55,320 --> 00:28:58,640
Speaker 1: for listening to Bloomberg Markets podcast. You can subscribe and

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00:28:58,680 --> 00:29:01,480
Speaker 1: listen to interviews at Apple, Old Podcasts, or whatever a

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00:29:01,560 --> 00:29:04,920
Speaker 1: podcast platform you prefer. I'm Bonnie Quinn, I'm on Twitter

507
00:29:05,120 --> 00:29:07,480
Speaker 1: at Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter

508
00:29:07,520 --> 00:29:10,360
Speaker 1: at pt Sweeney. Before the podcast, you can always catch

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00:29:10,440 --> 00:29:12,000
Speaker 1: us worldwide at Bloomberg Radio