WEBVTT - What Trump's Tax Proposal Means for Retirement Plans 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. 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 --> 0:00:31.200 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Well, 0:00:31.240 --> 0:00:34.000 I was reading a report from HSBC this morning that 0:00:34.120 --> 0:00:37.560 showed that millennials expect to retire at age fifty nine, 0:00:37.600 --> 0:00:40.120 which is two years younger than the working age average 0:00:40.479 --> 0:00:43.640 of six one and seems rather remarkable in an era 0:00:43.720 --> 0:00:47.239 of incredibly low benchmark yields. I want to bring in 0:00:47.280 --> 0:00:49.879 Peter Fendler for some perspective. Peter Fendler is a principal 0:00:49.880 --> 0:00:53.760 at Hub International New England LLLC, based in Portland, Maine, 0:00:53.800 --> 0:00:58.320 who focuses on retirement accounts and advising people. And how 0:00:58.360 --> 0:01:00.960 likely do you think it is that this current generation 0:01:01.360 --> 0:01:03.560 of upcoming workers will be able to retire at age 0:01:03.600 --> 0:01:07.319 fifty I think it's really unlikely, given the fact that 0:01:07.360 --> 0:01:10.160 we're living longer and we're saving less than we ever have. 0:01:10.360 --> 0:01:14.399 What's more realistic, I think seventy is the new the 0:01:14.400 --> 0:01:18.400 new sixty five and UM, you know, we're sitting with 0:01:18.959 --> 0:01:21.520 UH participants in retirement plans and looking at their average 0:01:21.520 --> 0:01:24.600 account balance and trying to project forward what they should 0:01:24.600 --> 0:01:27.440 be able to retire on. There's a pretty large disconnect 0:01:27.680 --> 0:01:31.479 between what they have, what they need, and what they 0:01:31.520 --> 0:01:34.160 think they need. You know, Peter, I wonder if you 0:01:34.240 --> 0:01:36.520 could just offer people a little bit of an insight 0:01:36.600 --> 0:01:40.120 into your business and also the changes that you have 0:01:40.280 --> 0:01:44.199 seen in your business. I mean you UH were independent 0:01:44.280 --> 0:01:47.760 and now you're part of Commonwealth, you know, family of 0:01:48.440 --> 0:01:55.120 Advisers and UM and HUB International is of course made 0:01:55.160 --> 0:01:57.800 the acquisition. What if you could just describe your role 0:01:57.800 --> 0:02:00.040 on how it has changed over the last couple of 0:02:00.120 --> 0:02:04.440 years and what's foremost in your mind. UM. I think 0:02:04.480 --> 0:02:06.680 there's a lot of consolidation going on and there's going 0:02:06.720 --> 0:02:10.680 to be a narrowing of of what we do as 0:02:10.760 --> 0:02:14.800 retirement plan advisors under the new realm of the fiduciary 0:02:14.840 --> 0:02:20.000 rule that's been promulgated recently. UM still in its finalization, 0:02:20.080 --> 0:02:23.480 but assuming it it maintains its current form, there are 0:02:23.520 --> 0:02:26.760 going to be a lot of advisors that UM make 0:02:26.800 --> 0:02:28.920 the election to get out of this business because of 0:02:28.919 --> 0:02:33.960 the risk. UM, I think there's going to be Uh, 0:02:34.040 --> 0:02:37.040 we've got a conflict of interests that's inherent in the 0:02:37.080 --> 0:02:40.799 way that our retirement plan advisory work happens right now, 0:02:40.840 --> 0:02:46.440 where there's commission based resources and conversation formulas as well 0:02:46.480 --> 0:02:51.280 as fee based, and the fiduciary rule really attacks the 0:02:51.280 --> 0:02:55.840 commission based variable pay element of what's going on, and 0:02:56.000 --> 0:02:59.040 it puts a premium on being a fee based advisor 0:02:59.160 --> 0:03:02.400 such as ourselves. UM So to that extent, I think 0:03:02.680 --> 0:03:08.480 with that increased liability under a commission based relationship with compensation, 0:03:08.880 --> 0:03:10.720 you're going to see those advisors that don't want to 0:03:10.720 --> 0:03:12.440 move to a fee base, or are not prepared to 0:03:12.919 --> 0:03:16.080 or don't have the infrastructure to go to that direction. UM, 0:03:16.120 --> 0:03:19.880 perhaps exit the market. Well let's let's ask a question 0:03:19.880 --> 0:03:25.400 that might seem basic, but are so many advisors for retirement? 0:03:25.440 --> 0:03:27.520 Are they necessary? Is it is? It is a certain 0:03:27.560 --> 0:03:30.760 consolidation important, right, I think there is, I thinks a 0:03:30.800 --> 0:03:33.119 great question. I think there are a lot of advisors 0:03:33.160 --> 0:03:35.360 that have two or three plans that aren't really expert 0:03:35.400 --> 0:03:38.280 in the retirement plan space. But um, they have a 0:03:38.320 --> 0:03:40.720 friend that has a company and they become the advisor 0:03:41.120 --> 0:03:45.840 just through kind of convenience and in relationship. But um, 0:03:46.120 --> 0:03:48.040 with the fiduciary standards that are coming out now and 0:03:48.040 --> 0:03:51.920 the attention on fiduciary capability, UM, it's it's going to 0:03:51.920 --> 0:03:54.120 be one of those things where it gets rolled up 0:03:54.120 --> 0:03:56.160 to people that are expert in that space. So how 0:03:56.400 --> 0:03:58.360 small do you expect this interest try to become? In 0:03:58.400 --> 0:03:59.760 other words, can you give us some perspective and how 0:03:59.760 --> 0:04:01.680 big is now and how small you expect it to become? 0:04:02.040 --> 0:04:03.840 That's a good question. I don't I really don't know 0:04:03.880 --> 0:04:07.800 how large the advisor community is, but I think it's 0:04:07.840 --> 0:04:10.880 reasonable to expect that there's strinkage in the in the 0:04:10.920 --> 0:04:15.360 realm of twenty to thirty maybe that's a lot. Yeah, 0:04:15.360 --> 0:04:19.039 I think, well, where are those assets go? I think 0:04:19.040 --> 0:04:22.200 they will remain with advisors, but with advisors that do 0:04:22.360 --> 0:04:24.520 a lot more of the work that are specialized in 0:04:24.600 --> 0:04:28.240 the retirement plan space. So where is the area. Is 0:04:28.240 --> 0:04:33.360 there a specific specialized territory where advisors are really necessary? 0:04:33.480 --> 0:04:37.800 Uh with respect to people crafting retirement plans? I don't 0:04:37.800 --> 0:04:39.800 think so. I think it's up and down the market. 0:04:39.920 --> 0:04:43.720 So it's it's not specific to a certain industry. It's 0:04:43.720 --> 0:04:47.800 not specific to a size of a company. Um, if 0:04:47.960 --> 0:04:51.000 you are an employer and you are launching a four 0:04:51.080 --> 0:04:52.960 one K plan or or four or three B plan 0:04:53.000 --> 0:04:57.400 in the nonprofit space, it's a complex world and it's 0:04:57.440 --> 0:04:58.839 not one of those things that you really want to 0:04:58.839 --> 0:05:02.479 do for yourself. End employers or fiduciaries and they're looking 0:05:02.520 --> 0:05:08.240 to offset that fiduciary responsibility by hiring a co fiduciary 0:05:08.320 --> 0:05:12.560 through eight relationships which we are actually providing on the 0:05:12.560 --> 0:05:15.960 three twenty one level. That sounds expensive. Is it getting 0:05:15.960 --> 0:05:19.600 more expensive? Actually it's getting less expensive. Um, how much 0:05:19.640 --> 0:05:25.240 does it cost? So that that's a really good question 0:05:25.360 --> 0:05:28.000 and it's a complex answer. What's happening is there so 0:05:28.080 --> 0:05:31.880 much attention on fees that that there's been a continual 0:05:31.920 --> 0:05:36.240 compression of costs and what we're doing and within our 0:05:36.320 --> 0:05:40.280 organization is saying, look, here is our baseline UH set 0:05:40.279 --> 0:05:44.440 of services that where we're acting as a fiduciary at 0:05:44.440 --> 0:05:48.640 the plan level, helping you with plan design, with fund selection, 0:05:48.720 --> 0:05:54.279 fund monitoring, and and educational fiduciary standards those things. That's 0:05:54.400 --> 0:05:57.839 one fee set and it's based upon our liability as 0:05:57.880 --> 0:06:02.080 advisor UH and the side as a plan. The other is, 0:06:02.560 --> 0:06:04.240 do you want us to act as a fiduciary for 0:06:04.279 --> 0:06:07.480 your employees helping them with education, investment selection, one on 0:06:07.480 --> 0:06:11.040 one advice, um, And the fee for that is really 0:06:11.080 --> 0:06:14.239 time sensitive. How much are we doing, how how often 0:06:14.240 --> 0:06:17.599 are we sitting with your employees? It sounds like, but 0:06:17.640 --> 0:06:21.640 it sounds like at least that that the latter scenario 0:06:22.160 --> 0:06:25.240 um is Uh. It is, you know, part of the 0:06:25.279 --> 0:06:28.520 whole education process and is considered to be a positive 0:06:28.560 --> 0:06:30.480 if you can afford it. It is And I think 0:06:30.520 --> 0:06:33.760 employers needed time to change it from a fee space 0:06:33.920 --> 0:06:37.359 to an investment space because what's happening in the United 0:06:37.360 --> 0:06:41.240 States going back to Lisa's original question, is that Americans 0:06:41.240 --> 0:06:45.240 are underfunded for retirement. We're woefully underfunded and um, we're 0:06:45.320 --> 0:06:48.320 kind of going along going forward, and if we stay 0:06:48.320 --> 0:06:51.120 that way and don't have enough money to retire, we won't, 0:06:51.279 --> 0:06:54.479 which has the upstream of higher costs for employees and 0:06:54.480 --> 0:06:58.800 employers by employees not retiring on time. Well, we'd all 0:06:58.800 --> 0:07:00.680 like to retire on and I want to thank you 0:07:00.760 --> 0:07:02.920 very much for helping us. Peter Findler, he is a 0:07:03.000 --> 0:07:06.719 principal Hub International, New England. We're broadcasting live and the 0:07:06.720 --> 0:07:25.360 Commonwealth Financial Networks twenty seventeen Retirement Symposium in Boston. Well 0:07:25.400 --> 0:07:28.480 Oil has been on a wild ride of late. Just 0:07:28.600 --> 0:07:30.600 days ago it was above fift dealers of barrel. Now 0:07:30.640 --> 0:07:33.560 it's down to forty seven dollars a barrel. Despite news 0:07:33.800 --> 0:07:37.640 that Saudi Arabia is tightening the screws on Qatar as 0:07:37.640 --> 0:07:40.360 punishment for its ties to Iran. And I want to 0:07:40.360 --> 0:07:43.000 bring in Javier blast who's our chief energy correspondent for 0:07:43.120 --> 0:07:46.880 Bloomberg Intelligence talking to us. Come just set the stage 0:07:46.920 --> 0:07:50.280 for us. Why did Saudi Arabia take these measures against Quaitar? 0:07:50.480 --> 0:07:55.480 What exactly are the exact parameters of these measures? Well 0:07:55.800 --> 0:07:59.600 over the last few years that the relations between Saudia, 0:07:59.600 --> 0:08:03.400 Abbia and Catar has been strained for a number of reasons, 0:08:03.440 --> 0:08:06.480 in part because Catar support the Muslim brother could a 0:08:06.560 --> 0:08:11.520 movement that Saudi Arabia does not, in part because Qatar 0:08:11.680 --> 0:08:16.840 has been trying to add some mediator between the conservative 0:08:16.880 --> 0:08:19.880 countries in the uh in the in the goal for 0:08:19.960 --> 0:08:22.600 the Arab conservative countries in the golf by Saudi Arabia 0:08:22.800 --> 0:08:25.360 and on the other side Iran. And also because of 0:08:25.360 --> 0:08:31.400 all Jasira, the Doja Base television station that Qatar controls 0:08:31.640 --> 0:08:35.839 has been quite critical of the Saudi regime. Those disagreements 0:08:35.840 --> 0:08:38.520 have been in crescendo over the last few months, and 0:08:38.559 --> 0:08:43.720 they erupted into a crisis last week. And now it's 0:08:44.080 --> 0:08:47.920 Saudi Arabia is retinally eighteen and getting several other countries 0:08:47.960 --> 0:08:53.480 behind it, several relations between itself and and and Doha. 0:08:53.640 --> 0:08:59.200 That is something unprecedented because Saudi Arabian and Qatar in 0:08:59.320 --> 0:09:05.079 theory on the same side uh in the Gulf Corporation Council, 0:09:05.360 --> 0:09:09.640 and also because both both countries are close allies of Washington. 0:09:10.000 --> 0:09:14.000 Is a very unusual situation in the Middle East. Well, 0:09:14.000 --> 0:09:15.880 I was just looking at some of the headlines of 0:09:15.920 --> 0:09:19.400 the newspapers in the Middle East tier and the United 0:09:19.400 --> 0:09:25.360 aramids quitar armed terror to spread chaos. Uh Iran is 0:09:25.559 --> 0:09:29.800 encouraging Qatar to leave the sixth Nation Gulf Cooperation Council 0:09:29.840 --> 0:09:32.959 and so on. And then you have also the same 0:09:33.080 --> 0:09:35.640 kind of thing in Saudi Arabia, and the response of 0:09:35.760 --> 0:09:39.559 the in Qatar is bark as you wish Qatar won't 0:09:39.600 --> 0:09:44.320 change its principles. Uh isn't the United States have a 0:09:44.400 --> 0:09:48.760 huge military presence just outside of Doha. It does and 0:09:48.760 --> 0:09:51.160 you're absolutely right, and that's what I was emphasizing. It 0:09:51.240 --> 0:09:53.800 is a very unusual situation in wh when you see 0:09:53.840 --> 0:09:58.080 two Middle East nations or or one one group of 0:09:58.080 --> 0:10:00.640 Middle East nations led by Saudia, we in the United 0:10:00.679 --> 0:10:03.960 Arab Emidates and on one side and the other side Qatar. 0:10:04.120 --> 0:10:08.960 Because the both sides of these confrontations have close links 0:10:09.000 --> 0:10:13.880 with the United States. Washington has a huge military operation, 0:10:14.080 --> 0:10:17.240 a military air base used on the Outskirs of Doga, 0:10:17.679 --> 0:10:21.080 the Central Command that oversees all the operations in the 0:10:21.080 --> 0:10:25.920 Middle East, and also in Afghani style, ten thousand more 0:10:25.960 --> 0:10:29.160 than ten tho troops. Yes, they's ten thousand troops, are 0:10:29.280 --> 0:10:32.920 huge air base and and the central Command that oversees 0:10:33.000 --> 0:10:35.920 all the operations in the Middle East and Afghanistan, all 0:10:35.960 --> 0:10:40.080 of that is based in Qatar. Yeah. Well, you know, 0:10:40.200 --> 0:10:43.199 let's let's put this in perspective. Saud Saudi Arabia, Bahrain, 0:10:43.360 --> 0:10:46.000 and the United Arab Emirates and Egypt that they will 0:10:46.040 --> 0:10:49.520 all suspend air and sea travel to and from Qatar. 0:10:50.320 --> 0:10:53.840 What prompted this action? Now, I mean, did did President 0:10:53.840 --> 0:10:55.720 Trump's visit to the Middle East have anything to do 0:10:55.760 --> 0:11:01.080 with us? Was in part that UM. Probably there was 0:11:01.280 --> 0:11:03.400 there was a bit of a link or that, because 0:11:03.440 --> 0:11:07.640 I think that the Saudia authorities have felt more UH 0:11:07.679 --> 0:11:10.200 in a stronger position of the after the Trump bus 0:11:10.320 --> 0:11:14.079 it UH to take a more um aggressive for or 0:11:14.320 --> 0:11:18.280 or or a more confrontational stanza towards towards Catar. There 0:11:18.320 --> 0:11:22.439 were also some comments carry by Katari stay home media 0:11:22.559 --> 0:11:27.760 and attributed to the mere Um criticizing the Saudist authorities 0:11:27.840 --> 0:11:31.319 during the Trump bus. It very quickly those comments were 0:11:31.360 --> 0:11:34.920 deleted from Catari media and and the catarists they said 0:11:34.960 --> 0:11:37.680 that those those were not real comments, that they were 0:11:38.000 --> 0:11:42.840 the work of a hacker, but very few people believed 0:11:42.880 --> 0:11:46.040 that explanation in Saudi Arabia. So really a couple of 0:11:46.120 --> 0:11:49.720 events after the Saudi the Trump busy to to Saudi 0:11:49.760 --> 0:11:53.280 Arabia really triggered this crisis. So let's talk about the 0:11:53.320 --> 0:11:56.760 market effects here, because the initial effect was the crude 0:11:56.840 --> 0:12:00.719 values rose as sensibly from the expectation the Catard be 0:12:00.840 --> 0:12:04.120 unable to ship as much crude and therefore that it 0:12:04.120 --> 0:12:07.360 would cramp supply to some degree, that gain has been 0:12:07.400 --> 0:12:11.080 absolutely raised. And then some what's going on here? Well, uh, 0:12:11.120 --> 0:12:14.600 it's it's a very classic um spike in the oil 0:12:14.640 --> 0:12:18.400 market when we have some kind of geopolitical noise um 0:12:18.480 --> 0:12:22.160 during trading hours in Asia, the media reaction is used 0:12:22.200 --> 0:12:26.120 to buy by futures using case something really goes really bad, 0:12:26.480 --> 0:12:30.080 but immediately has become very clear today that the oil 0:12:30.160 --> 0:12:34.160 is continuing flowing from Qatar as our six hundred excuse me, 0:12:34.280 --> 0:12:37.080 six hundred thousand barrels a day UM, and the same 0:12:37.200 --> 0:12:39.040 with the l n G, which is a much much 0:12:39.080 --> 0:12:42.760 more significant proportion of global supplies. So at the moment, 0:12:42.800 --> 0:12:46.440 I don't see any significant impact in the oil market 0:12:46.520 --> 0:12:50.400 unless this crisis really escalates, We're gonna leave it there, 0:12:50.400 --> 0:12:52.600 but boy, this is going to be a story that continues. 0:12:53.040 --> 0:12:55.760 And also you have the issues of whether the Opeque 0:12:55.840 --> 0:12:59.480 nations are mindful and stick to their limits in terms 0:12:59.480 --> 0:13:01.920 of production, and because that was something that also is 0:13:01.960 --> 0:13:04.280 looking to be renewed well, and this also crazes the 0:13:04.360 --> 0:13:06.880 question what are the standards for some of these Middle 0:13:06.920 --> 0:13:09.280 Eastern nations to sanction each other or not. I mean, 0:13:09.320 --> 0:13:11.600 it sort of seems a little bit out of the blue. 0:13:12.480 --> 0:13:16.320 Um cutting ties with a country that hosts an air 0:13:16.320 --> 0:13:19.640 base that has more than ten tho U s personnel, 0:13:20.280 --> 0:13:34.719 what can you say, I want to now bring in 0:13:34.920 --> 0:13:38.520 George Ferguson, our aerospace defense expert when it comes to 0:13:38.520 --> 0:13:42.199 Bloomberg Intelligence. Uh, Georgia wanted you to give us just 0:13:42.280 --> 0:13:45.319 perhaps a preview of what you understand the President may 0:13:45.320 --> 0:13:47.720 be speaking about in just a few moments having to 0:13:47.760 --> 0:13:52.679 do with privatization of the air traffic control system. Hey m, 0:13:52.800 --> 0:13:55.800 good morning. Yeah, we had we expect the President to 0:13:55.880 --> 0:14:00.280 announce something of a privatization of air traffic control, a 0:14:00.320 --> 0:14:04.680 structure that's going to look pretty similar to nav Canada. 0:14:04.840 --> 0:14:08.480 And essentially what it would do is, um create a 0:14:08.520 --> 0:14:11.960 separate entity that's probably gonna that's supposed to be removed 0:14:12.000 --> 0:14:16.160 from government bureaucracy to oversee both the day to day 0:14:16.160 --> 0:14:19.760 air traffic control as well as long term investment in 0:14:19.840 --> 0:14:25.560 that in the systems that support air traffic control. So, um, 0:14:26.040 --> 0:14:28.240 you know, we've we've heard that President Trump is laying 0:14:28.280 --> 0:14:31.160 at his vision, but it's going to include a separation 0:14:31.160 --> 0:14:34.200 of air traffic control operations from the Federal Aviation Administration. 0:14:34.400 --> 0:14:39.000 What's the biggest opposition to this? You know, I think 0:14:39.080 --> 0:14:41.960 that um, I don't know that there's a huge amount 0:14:42.000 --> 0:14:45.360 of opposition here. I think that there is a bunch 0:14:45.400 --> 0:14:49.160 of jockeying between the interested parties about who's going to 0:14:49.320 --> 0:14:52.800 pay in the future. Um. And for the interested parties, 0:14:52.840 --> 0:14:54.600 let's get a sense of of sort of who's on 0:14:54.640 --> 0:14:57.680 what side here? Sure, so interest party is going to 0:14:57.720 --> 0:15:00.280 be airlines, of course, would be the most interesting party 0:15:00.280 --> 0:15:03.800 because they're most affected by air traffic control, But other 0:15:03.920 --> 0:15:06.200 users of airspace are going to be business aviation and 0:15:06.280 --> 0:15:09.520 general aviation, and so I think those three parties are 0:15:09.520 --> 0:15:12.400 trying to figure out who's going to pay. I think 0:15:12.440 --> 0:15:15.880 they all would probably agree that they want this air 0:15:15.880 --> 0:15:18.440 traffic control system out of the federal government because they're 0:15:18.920 --> 0:15:21.280 their modernization efforts that I think all of them would 0:15:21.320 --> 0:15:24.560 agree should have happened by now are going too slowly 0:15:24.720 --> 0:15:27.240 or risk of not occurring the way they thought they 0:15:27.240 --> 0:15:30.600 would occur. Um. So again, I think what we have 0:15:30.840 --> 0:15:34.000 is a discussion about, Okay, what's the right fee for 0:15:34.160 --> 0:15:37.600 the business aviation community do you pay? What's the right 0:15:37.640 --> 0:15:40.400 fee level for the airlines to pay? And then g 0:15:40.560 --> 0:15:43.440 a sort of general aviation is in the mix too, 0:15:43.440 --> 0:15:46.000 but much less of a user. George, I want to 0:15:46.000 --> 0:15:48.600 know is is the air traffic control system in the 0:15:48.680 --> 0:15:54.760 United States? Is it considered world class. No, not now. 0:15:54.840 --> 0:15:56.760 So if you talk to some people, you know, talk 0:15:56.840 --> 0:16:01.840 to some people at different groups indeed see that advocacy groups, 0:16:01.840 --> 0:16:03.800 and they'll tell you that, you know, they're still using 0:16:03.840 --> 0:16:07.760 paper strips with airplane numbers on it, uh, you know, 0:16:07.800 --> 0:16:11.880 to line up airplanes for approach and departure at major airports. Um. 0:16:12.280 --> 0:16:15.760 Some of the computing systems are fifty years old. UM. 0:16:16.000 --> 0:16:19.360 So that's clearly not state of the art. And meanwhile 0:16:19.400 --> 0:16:22.600 technology is evolved so that we can get a lot 0:16:22.720 --> 0:16:27.680 better information on each individual airplane. Instead of using radar, 0:16:27.720 --> 0:16:30.840 which we use now, we can have them uh collect 0:16:30.920 --> 0:16:34.400 information on their speed and their exact location from GPS 0:16:34.480 --> 0:16:37.760 signals and then shoot that down to ground stations or 0:16:37.800 --> 0:16:41.200 even back up to satellites and provide air traffic controls 0:16:41.200 --> 0:16:45.840 of the much better picture of uh, the air traffic environment. 0:16:45.920 --> 0:16:49.760 And they can use that to space airplanes much closer 0:16:49.840 --> 0:16:53.400 and make make the system a lot more efficient. UM 0:16:53.480 --> 0:16:55.880 So that's sort of where we want to go. We're 0:16:55.880 --> 0:16:57.880 not there yet. We're still using radar and fifty year 0:16:57.920 --> 0:17:01.920 old technology computing technology. George do a sense of how 0:17:02.000 --> 0:17:05.800 much it would cost to bring the US aviation system 0:17:05.880 --> 0:17:10.240 up to speed. Um. So, look, I think nobody really 0:17:10.280 --> 0:17:12.880 knows this number correctly. I'll tell you that the f 0:17:12.920 --> 0:17:16.000 a A says it's a thirty billion dollar number, and 0:17:16.040 --> 0:17:19.359 they think that roughly thirty million. They think fifteen billion 0:17:19.400 --> 0:17:21.720 of that is it is something the f a A 0:17:21.880 --> 0:17:25.119 has to spend. Any other fifteen billion of that would 0:17:25.119 --> 0:17:27.400 be equipment in the airplane to the airplanes need this 0:17:27.800 --> 0:17:31.080 equipment to shootout the signal that tells their direction, their speed, 0:17:31.119 --> 0:17:35.919 their exact location, things like that and the Sorry, now 0:17:35.960 --> 0:17:38.160 I'm struck by the idea that it probably could save 0:17:38.240 --> 0:17:41.600 airlines money. No. I mean, basically, if things were more streamlined, 0:17:41.640 --> 0:17:43.560 they wouldn't have the delays, they wouldn't have to do 0:17:43.600 --> 0:17:47.480 the vouchers as much to compensate people who have gotten 0:17:47.520 --> 0:17:50.240 bumped in, uh you know, off of really crowded planes 0:17:50.280 --> 0:17:52.400 because of delays. I mean, it seems like it would 0:17:52.400 --> 0:17:55.240 actually save money and there could be some way of 0:17:55.840 --> 0:18:00.280 you know, expediting this money saving aspect it. And so 0:18:00.400 --> 0:18:03.120 the airlines are they're the ones that have absolutely showed 0:18:03.119 --> 0:18:06.959 their cards. They're absolutely in favor of this privatization. If 0:18:06.960 --> 0:18:09.600 you look at some of their organizations like airlines for America, 0:18:09.640 --> 0:18:13.000 which is the group organization that represents them. UM. They've 0:18:13.040 --> 0:18:15.560 got papers out where they're absolutely in favor of getting 0:18:15.920 --> 0:18:19.000 air traffic control out of the federal government and into 0:18:19.720 --> 0:18:24.520 sort of a semi private organization. George, is there any 0:18:24.600 --> 0:18:29.240 is there any precedent for doing this? Uh So, internationally, 0:18:29.320 --> 0:18:32.480 we do have some precedents for I think one of 0:18:32.520 --> 0:18:37.760 the more prominent ones is UM is NAV Canada. UH. 0:18:38.000 --> 0:18:39.720 You know, if a NAV Canada was spun out of 0:18:39.720 --> 0:18:45.399 the federal government UM airline. Actually, airspace users, including the 0:18:45.560 --> 0:18:49.280 majority funded by the airlines, pay the fees UH for 0:18:49.480 --> 0:18:53.080 air traffic control, and Canada they issue bonds to buy 0:18:53.320 --> 0:18:56.600 you know, UH, capital equipment for long term investment, and 0:18:56.600 --> 0:18:59.800 they pay those bonds off with excess user fees, and 0:19:00.000 --> 0:19:03.280 and they're in a situation now where they're actually lowering sees. 0:19:03.400 --> 0:19:07.320 So it seems like in Canada UM this type of 0:19:07.359 --> 0:19:09.920 system has been quite effective. I think the airlines are 0:19:09.960 --> 0:19:12.639 looking at that thinking they'd love to have that. You know, Georgia, 0:19:12.640 --> 0:19:16.080 I'm surprised that this is not already happening, and I'm wondering, 0:19:16.119 --> 0:19:18.520 you know, there's been a lot of discussion about the 0:19:18.560 --> 0:19:22.440 problem with air traffic control in the US. What's being 0:19:22.440 --> 0:19:25.320 done right now, if anything, to sort of bring it 0:19:25.960 --> 0:19:29.399 up to speed. Yeah, So the FAA is marching down 0:19:29.440 --> 0:19:33.960 a m marching down a road to modernized airspace. A 0:19:33.960 --> 0:19:36.159 lot of it is about this next gen air traffic 0:19:36.200 --> 0:19:39.639 control and these systems on airplanes that will shoot their 0:19:39.760 --> 0:19:44.280 um their coordinates to ground stations. UM. So it is 0:19:44.320 --> 0:19:48.680 being done. Airlines are critical that it's being done slowly. Uh. 0:19:48.720 --> 0:19:50.919 If you read some of the position papers, they're very 0:19:50.960 --> 0:19:56.280 concerned that there's not the maybe the project management skills 0:19:57.160 --> 0:20:00.760 that you might find in a more nim bull private 0:20:01.119 --> 0:20:05.280 organization inside the f A A. You know, there's concerns 0:20:05.320 --> 0:20:08.920 about how the FAA funds themselves. They have a they 0:20:08.920 --> 0:20:12.399 have a six billion dollar trust fund in them and 0:20:12.560 --> 0:20:14.600 Congress sort of dips into that trust fund to pay 0:20:14.640 --> 0:20:17.560 for operational costs every year. So maybe there's a lot 0:20:17.600 --> 0:20:19.080 of concerned again and met the skill set in f 0:20:19.200 --> 0:20:22.200 A A kind of about the funding, long term funding, 0:20:22.600 --> 0:20:24.240 and that's the reason people want to see it out 0:20:24.240 --> 0:20:25.920 of there. But they are marching down the road trying 0:20:25.960 --> 0:20:28.560 to try to implement modernization. I just want to follow 0:20:28.640 --> 0:20:31.800 up on the funding issue that what makes anybody think 0:20:31.800 --> 0:20:34.520 that the private corporation is going to be more ad 0:20:34.600 --> 0:20:38.160 child in terms of funding then the government. I thought 0:20:38.160 --> 0:20:41.320 the funding was at least some members of Congresses that 0:20:41.400 --> 0:20:43.920 the funding has been held up by Congress and it's 0:20:43.920 --> 0:20:46.200 been intermittent, so that that's one of the reasons why 0:20:46.240 --> 0:20:49.680 that big revamp of the air traffic control system has 0:20:49.720 --> 0:20:58.040 been so sort of caught up in a budgetary no turbulence. Yeah, 0:20:58.280 --> 0:21:00.919 the thought is to get it away from some of 0:21:00.920 --> 0:21:04.640 the political influence of Congress, Right, So, uh, Congress sort 0:21:04.640 --> 0:21:09.160 of always always struggles with that challenge where somebody wants 0:21:09.200 --> 0:21:11.880 to build done and uh, you know, a congressman from 0:21:11.880 --> 0:21:16.040 this state of that state wants to improve their small airport, 0:21:16.080 --> 0:21:18.600 and they try to pull money out of some of 0:21:18.640 --> 0:21:21.719 these trust funds and such to fix their small problem, 0:21:21.720 --> 0:21:24.600 which might not be a big, you know, a big 0:21:24.640 --> 0:21:26.679 issue in the in the broader scheme of things. And 0:21:26.720 --> 0:21:29.359 so I think the challenge is to get it out 0:21:29.359 --> 0:21:33.280 of the political um arena so that funding can be 0:21:33.320 --> 0:21:39.240 set aside and and um and projects prioritized by necessity 0:21:39.359 --> 0:21:43.160 rather than the political influence. And again, Congress is using 0:21:43.200 --> 0:21:45.720 what you'd consider sort of long term funds trust fund 0:21:46.240 --> 0:21:50.760 kind of money to fund operations. Um, you know, you could, 0:21:50.800 --> 0:21:55.600 you could bring in consultants and perhaps optimize operations, improved 0:21:55.640 --> 0:22:00.320 computer systems and reduce the cost of operating it. Congress 0:22:00.320 --> 0:22:04.440 doesn't always have an incentive to do that either. So yeah, George, 0:22:04.440 --> 0:22:06.720 when you talk about political considerations, I think about what 0:22:06.800 --> 0:22:09.359 Chan and Pettapeece said just a few moments ago. Chan 0:22:09.440 --> 0:22:11.560 and Pettipeces our White House correspondent for Bloomberg, and she 0:22:11.640 --> 0:22:13.639 was talking about all the things that are going on 0:22:13.760 --> 0:22:16.160 right now, and we are awaiting the president right now. 0:22:16.240 --> 0:22:18.600 That's right, We are awaiting the president who is expected 0:22:18.640 --> 0:22:21.840 to make remarks on this air traffic control reform initiative 0:22:21.840 --> 0:22:25.520 that we're talking about with George Ferguson. George, why is 0:22:25.560 --> 0:22:28.840 President Trump coming out today with everything going on with 0:22:28.960 --> 0:22:31.199 infrastructure spending? Although I suppose this could be part of 0:22:31.200 --> 0:22:34.239 infrastructure spending, uh, you know, with everything that's going on 0:22:34.359 --> 0:22:40.160 with his travel ban, etcetera, with tax reform, um, why 0:22:40.240 --> 0:22:42.920 why now is there something in particular that he is addressing. 0:22:44.480 --> 0:22:46.320 I mean, I think this is just part of his 0:22:46.359 --> 0:22:49.840 broader agenda. You know, maybe he said if a structure 0:22:49.880 --> 0:22:51.600 was going to be an important part. You know what 0:22:51.680 --> 0:22:55.320 we heard. I heard airline executives talking about this um 0:22:55.720 --> 0:22:58.640 right after the election, and even before he had made 0:22:58.640 --> 0:23:00.119 it to the White House. You know, he that she 0:23:00.240 --> 0:23:05.160 got installed as president about this being a priority. So, uh, 0:23:05.200 --> 0:23:07.000 it's been on his agenda. I think he's bringing it 0:23:07.359 --> 0:23:10.560 forward now. I mean, whether there's some timing around other 0:23:10.640 --> 0:23:12.719 news in the world that he's trying to distract from. 0:23:13.800 --> 0:23:16.000 I'll let Shannon sort of answer those questions. But I 0:23:16.040 --> 0:23:17.879 think that there's always been part of his agenda, and 0:23:17.960 --> 0:23:22.480 so maybe he also thinks this is a bit uh costless, 0:23:22.480 --> 0:23:25.399 you can get it done quicker um and sort of 0:23:25.440 --> 0:23:27.919 get his agenda and moving that way. But maybe some 0:23:28.000 --> 0:23:31.600 of that sort of thought process there too. George. While 0:23:31.640 --> 0:23:33.240 we have you, though, I want to ask you something 0:23:33.240 --> 0:23:34.959 about the industry, because I know you put out some 0:23:35.000 --> 0:23:37.159 original research today and I wonder if you could tell 0:23:37.240 --> 0:23:41.080 us about production rates and how each of the individual companies, 0:23:41.080 --> 0:23:43.480 whether it's the Boeing but there's seven three seven, whether 0:23:43.960 --> 0:23:46.280 you know a ye Neo, if you could just give 0:23:46.320 --> 0:23:49.440